<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
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Commission File Number 1-13232
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
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(Exact name of registrant as specified in its charter)
Maryland 84-1259577
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1873 S. Bellaire Street, Suite 1700, Denver, Colorado 80222-4348
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(Address of principal executive offices) (Zip Code)
(303) 757-8101
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address, and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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The number of shares of Class A Common Stock outstanding as of
August 13, 1996: 12,521,878
The number of shares of Class B Common Stock outstanding as of
August 13, 1996: 585,000
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
FORM 10-Q
INDEX
<TABLE>
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
(unaudited) and December 31, 1995 3
Consolidated Statements of Income for the Three and Six Months
Ended June 30, 1996 and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1995 (unaudited) 5
Notes to Consolidated Financial Statements
(unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 27
Signatures 28
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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(Unaudited) (Restated)
ASSETS
<S> <C> <C>
Real estate - net of accumulated depreciation of $37,797 and $28,737 $514,029 $448,425
Cash and cash equivalents 2,328 2,379
Restricted cash 10,166 18,630
Accounts receivable 1,874 1,581
Deferred financing costs 7,423 5,474
Other assets 4,297 3,872
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$540,117 $480,361
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LIABILITIES AND STOCKHOLDERS' EQUITY
Secured long-term notes payable $203,380 $173,502
Secured long-term tax-exempt bond financing 76,060 66,190
Secured short-term financing 28,172 29,000
Accounts payable, accrued and other liabilities 9,570 9,615
Resident security deposits and prepaid rents 3,351 2,646
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320,533 280,953
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Commitments and contingencies -- --
Minority interest in Operating Partnership 41,525 30,376
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Stockholders' equity:
Class A Common Stock, $.01 par value, 150,000,000 shares
authorized, 12,521,878 shares issued and outstanding 126 118
Class B Common Stock, $.01 par value, 685,000 shares
authorized, 585,000 shares issued and outstanding 6 6
Non-voting preferred stock, $.01 par value, 10,000,000
authorized, none issued and outstanding -- --
Additional paid-in capital 188,474 175,211
Accumulated deficit (10,547) (6,303)
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178,059 169,032
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$540,117 $480,361
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
------------------ ------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues $23,801 $18,573 $46,252 $36,939
Property operating expenses (9,449) (7,541) (18,153) (14,743)
Owned property management expense (679) (569) (1,339) (1,138)
------------------ ------------------ ---------------- -----------------
Income from property operations before depreciation 13,673 10,463 26,760 21,058
Depreciation (4,590) (3,634) (9,060) (7,283)
------------------ ------------------ ---------------- -----------------
Income from rental property operations 9,083 6,829 17,700 13,775
------------------ ------------------ ---------------- -----------------
SERVICE COMPANY BUSINESS
Management fees and other income 1,877 1,912 3,725 3,817
Management and other expenses (1,204) (1,157) (2,464) (2,493)
Corporate overhead allocation (147) 0 (296) 0
Amortization of management company goodwill (116) (115) (230) (195)
Other assets depreciation and amortization (44) (43) (92) (82)
------------------ ------------------ ---------------- -----------------
Income from service company business 366 597 643 1,047
Minority interests in service company business (16) 0 (2) 0
------------------ ------------------ ---------------- -----------------
Company's share of income from service company business 350 597 641 1,047
------------------ ------------------ ---------------- -----------------
GENERAL AND ADMINISTRATIVE EXPENSES (226) (447) (549) (1,093)
INTEREST EXPENSE (5,530) (2,809) (10,925) (5,313)
INTEREST INCOME 97 186 211 365
------------------ ------------------ ---------------- -----------------
INCOME BEFORE MINORITY INTEREST IN OPERATING
PARTNERSHIP 3,774 4,356 7,078 8,781
Minority interest in Operating Partnership (629) (409) (1,123) (829)
------------------ ------------------ ---------------- -----------------
NET INCOME $3,145 $3,947 $5,955 $7,952
------------------ ------------------ ---------------- -----------------
------------------ ------------------ ---------------- -----------------
Net income allocable to preferred stockholder $0 $1,836 $0 $3,672
------------------ ------------------ ---------------- -----------------
------------------ ------------------ ---------------- -----------------
Net income allocable to common stockholders $3,145 $2,111 $5,955 $4,280
------------------ ------------------ ---------------- -----------------
------------------ ------------------ ---------------- -----------------
Weighted average common shares and common
share equivalents outstanding 12,217 9,589 12,039 9,589
------------------ ------------------ ---------------- -----------------
------------------ ------------------ ---------------- -----------------
Net income per common share and common
share equivalent $0.26 $0.22 $0.49 $0.45
------------------ ------------------ ---------------- -----------------
------------------ ------------------ ---------------- -----------------
Dividends paid per common share $0.425 $0.415 $0.85 $0.83
------------------ ------------------ ---------------- -----------------
------------------ ------------------ ---------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 5,955 $ 7,952
---------------- -----------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 9,739 7,730
Minority interest in earnings 1,123 829
Changes in operating assets and liabilities:
(Increase) decrease in restricted cash 8,464 (3,281)
Increase in accounts receivable (293) (451)
Increase in other assets (439) (446)
Decrease in accounts receivable from affiliates -- 216
Increase (decrease) in accounts payable, accrued and other liabilities (45) (74)
Increase (decrease) in resident security deposits and prepaid rents 705 2
---------------- -----------------
Total adjustments 19,254 4,525
---------------- -----------------
Net cash provided by operating activities 25,209 12,477
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate (9,395) --
Capital replacements (2,385) (1,739)
Initial capital expenditures (1,630) (2,964)
Capital enhancements (129) --
Construction in progress (4,222) (64)
Increase in office equipment and leasehold improvements (313) (214)
---------------- -----------------
Net cash used in investing activities (18,074) (4,981)
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from secured tax-exempt bond financing 58,010 --
Proceeds from secured notes payable -- 57,000
Payment of loan costs (2,301) (3,580)
Principal paydowns on secured tax-exempt bond financing (48,140) --
Principal paydowns on secured notes payable (1,919) (39,179)
Borrowings on secured notes payable 56 --
Net (paydowns) borrowings on secured line of credit (828) (14,200)
Payment of dividend on mandatorily redeemable 1994 Cumulative
Convertible Senior Preferred Stock -- (3,673)
Payment of common stock dividend (10,199) (7,958)
Payment of distributions to minority interest in Operating Partnership (1,633) (1,363)
Payment of additional offering costs related to 1995 common
stock offering (232) --
---------------- -----------------
Net cash used in financing activities (7,186) (12,953)
---------------- -----------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (51) (5,457)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,379 7,144
---------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,328 $ 1,687
---------------- -----------------
---------------- -----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 11,107 $ 4,670
---------------- -----------------
---------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands except unit data)
(Unaudited)
NON CASH INVESTING AND FINANCING ACTIVITIES
In January 1996, the Company assumed $12,980 of notes payable secured by
first and second deeds of trust and issued 86,977 Operating Partnership Units
("OP Units") when the Company exercised its option to purchase the Peachtree
Park Apartments (consisting of 82,703 OP Units when the option was exercised
and 4,274 OP Units upon the completion of an audit of the property). The
total recorded value of the OP Units is $1,664.
In January 1996, the Company assumed $5,940 of secured notes payable for the
purchase of the Villa Ladera Apartments.
In April 1996, the Company issued 623,736 OP Units and 126,264 shares of
Class A common stock with a total recorded value of $15,219 when the Company
purchased the Sycamore Creek Apartments.
In April 1996, 173,641 OP Units with a recorded value of $3,397 were redeemed
in exchange for an equal number of shares of Class A Common Stock.
In May 1996, the Company assumed a $12,812 note payable secured by a first
deed of trust and issued 34,470 OP Units and 372,687 shares of Class A Common
Stock with a total recorded value of $8,347 when the Company purchased the
Somerset Village Apartments.
In June 1996, 1,718 OP Units were redeemed in exchange for an equal number of
shares of Class A Common Stock.
See accompanying notes to consolidated financial statements.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
June 30, 1996
(Unaudited)
NOTE 1 - ORGANIZATION
Apartment Investment and Management Company, a Maryland corporation
incorporated on January 10, 1994, (the "REIT" and, together with its
subsidiaries and operating affiliates, the "Company") acts as sole
general partner of AIMCO Properties, L.P. (the "Operating
Partnership"), through AIMCO-GP, Inc. and AIMCO-LP, Inc., wholly-owned
subsidiaries which hold all of the Company's partnership interests in,
and majority ownership of, the Operating Partnership.
On July 29, 1994, the Company completed its initial public offering
("IPO") of 9,075,000 shares of Class A Common Stock at $18.50 per
share, issued 966,000 shares of mandatorily redeemable 1994 Cumulative
Convertible Senior Preferred Stock ("Convertible Preferred Stock") and
513,514 unregistered shares of Class A Common Stock. Concurrently,
the Company engaged in a business combination and consummated a series
of related transactions which enabled the Company to continue and
expand the property management and related businesses of Property
Asset Management, L.L.C., Limited Liability Company and its affiliated
companies and PDI Realty Enterprises, Inc. (the "AIMCO Predecessors").
The AIMCO Predecessors received limited partnership interests in the
Operating Partnership ("OP Units") totaling 1,193,695 OP Units in
connection with these formation transactions.
Concurrent with the IPO, 650,000 shares of common stock held by four
of the Company's executive officers were reclassified as Class B
Common Stock. The Class B Common Stock is convertible into Class A
Common Stock, subject to certain conditions.
Since the IPO, the Company has completed an offering of an additional
2,706,423 shares of Common Stock at $19.125 per share, acquired 23
additional properties for 1,551,344 OP Units and 498,951 shares of
Class A Common Stock, repurchased the 966,000 shares of Convertible
Preferred Stock and 513,514 shares of unregistered Common Stock,
converted 65,000 shares of Class B Common Stock to 65,000 shares of
Class A Common Stock, redeemed 176,504 OP Units in exchange for an
equal number of shares of Class A Common Stock and financed $213.4
million of long-term, fixed rate, fully amortizing debt.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION (CONTINUED)
At June 30, 1996, 12,521,878 shares of Class A Common Stock and
2,568,535 OP Units were outstanding, for a combined total of
15,090,413 common shares and OP Units.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
consolidated accounts of the Company, the Operating Partnership and
its subsidiaries.
The unaudited consolidated financial statements of the Company as of
June 30, 1996 and for the three and six months ended June 30, 1996 and
1995 have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included and all such
adjustments are of a recurring nature. The consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Annual Report
on Form 10-K for the year ended December 31, 1995. It should be
understood that accounting measurements at interim dates inherently
involve greater reliance on estimates than at year end. The results
of operations for the interim periods presented are not necessarily
indicative of the results for the entire year.
In the second quarter of 1996, the Company adopted Emerging Task Force
(EITF) Issue Number 95-6 "Accounting by a Real Estate Investment Trust
for an Investment in a Service Corporation". The Company reports the
operations of the service company business on a consolidated basis
after adoption of EITF 95-6. Prior to the issuance of EITF 95-6, the
Company reported the service company business on the equity method.
The adoption of EITF 95-6 has no impact on net income, but does
increase management fees and other income, management and other
expenses, amortization of management company goodwill and depreciation
of non-real estate assets. The Company has restated the balance sheet
as of December 31, 1995 to reflect the retroactive application of the
change.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
NOTE 3- REAL ESTATE
In the first quarter of 1996, the Company exercised its option to
acquire the ownership interest of the Company's chairman in Peachtree
Park, a 295 apartment unit property located in Atlanta, Georgia. The
option was acquired in conjunction with the IPO in July 1994. The
Company issued 86,977 OP Units with a recorded value of $1,664,000,
paid $287,000 in cash and assumed $12,980,000 of indebtedness for the
total purchase price of $14,931,000. In addition, the Company
acquired the Villa Ladera Apartments, a 280 apartment unit property
located in Albuquerque, New Mexico for a purchase price of
$11,825,000. The consideration consisted of $5,885,000 in cash and
the assumption of $5,940,000 of indebtedness secured by a first trust
deed. The Company also purchased a parcel of vacant land adjacent to
the Villa Ladera Apartments for $425,000 in cash.
In the second quarter of 1996, the Company acquired the Sycamore Creek
Apartments, a 336 apartment unit property located in Tustin,
California for a purchase price of $16,669,000. The consideration
consisted of $1,450,000 in cash and the issuance of 623,736 OP Units
and 126,264 shares of common stock with an aggregate recorded value of
$15,219,000. The Company also acquired the Somerset Village
Apartments, a 486 apartment unit property located in Salt Lake City,
Utah for a purchase price of $22,068,000. The consideration consisted
of $900,000 in cash, the issuance of 34,470 OP Units and 372,687
shares of common stock with an aggregate recorded value of $8,347,000
and the assumption of $12,812,000 of indebtedness secured by a first
trust deed.
NOTE 4 - RESTRICTED CASH
In connection with the completion of the tax-exempt bond offerings in
June 1996 and the repayment of the existing tax-exempt bonds,
$10,000,000 in cash collateral held by the previous bondholder was
released to the Company.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
NOTE 5 - SECURED LONG-TERM NOTES PAYABLE
In January 1996, the Company assumed $12,980,000 in secured notes
payable in connection with the purchase of Peachtree Park. The
Peachtree Park indebtedness includes a $8,730,000 first mortgage
loan which bears interest at 7.1% and matures in May 1997 and a
$4,250,000 second participating mortgage loan, maturing May 1999,
which bears interest at a fixed rate of 10% plus 50% of the
property's available cash flow after debt service and payment of
a preferred return to the Company of $100,000 per year. In January
1996, the Company also assumed a $5,940,000 secured note payable
with an interest rate of 7.125%, maturing in December 2016, in
connection with the purchase of the Villa Ladera apartments.
In May 1996, the Company assumed $12,812,000 in notes payable secured
by a first deed of trust in connection with the purchase of Somerset
Village. The indebtedness bears interest at 8.125% and matures in
September 1999. The Company expects to refinance the debt at or prior
to its maturity.
NOTE 6 - SECURED LONG-TERM TAX-EXEMPT BOND FINANCING
In June 1996, the Company completed two tax-exempt bond offerings
totaling $58,010,000 on five Florida properties. Proceeds from the
bond offerings were used to repay the variable rate $48,140,000 tax-
exempt bonds securing four Florida properties and the $9,870,000 tax-
exempt revenue bonds which were purchased in connection with the
acquisition of a Florida property in December 1995. The bond
offerings include $48,140,000 in fully amortizing, 20 year mortgage
loans with an effective interest rate of 7.2% and a $9,870,000 fully
amortizing, 20 year mortgage loan with an effective interest rate of
7.3%. In addition to the five Florida properties, five other
properties were pledged as additional collateral to secure the
financings.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
NOTE 7 - SECURED SHORT-TERM FINANCING
During the six months ended June 30, 1996, the Company borrowed
$18,900,000 under its Credit Facility to fund the cash portion of the
purchase prices of the properties acquired during the period and the
construction in progress and renovation at certain properties owned by
the Company. In June 1996, the proceeds from the tax-exempt bond
offerings and the release of the restricted cash collateral were used
to paydown the outstanding balance on the line of credit. The balance
outstanding on the line of credit at June 30, 1996 was $3,172,000.
NOTE 8 - REGISTRATION STATEMENTS
In February 1996, the Company filed a registration statement with the
Securities and Exchange Commission relating to the resale of certain
shares of Class A Common Stock of the Company which may be issued in
exchange for OP Units which may be tendered for redemption by OP
Unitholders. The registration statement relates to OP Units issued
from inception through January 15, 1996 with the exception of the OP
Units held by executive officers of the Company. The registration
statement was declared effective by the Securities and Exchange
Commission in April 1996.
In May 1996, the Company filed a registration statement relating to
the resale of the 126,264 shares of Class A Common Stock issued in
connection with the acquisition of the Sycamore Creek Apartments. The
Company also filed registration statements for 150,000 shares of
Class A Common Stock relating to The 1994 Stock Option Plan of
Apartment Investment and Management Company and Affiliates, 500,000
shares of Class A Common Stock relating the 1996 Stock Award and
Incentive Plan and 1,000,000 shares of Class A Common Stock relating
to the Dividend Reinvestment and Share Purchase Plan. The
registration statements were declared effective in May 1996.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
NOTE 9 - SUBSEQUENT EVENTS
REPAYMENT OF SECOND PARTICIPATING MORTGAGE LOAN
On July 1, 1996, the Company repaid the second participating mortgage
loan assumed in connection with the purchase of the Peachtree Park
Apartments in January 1996 using borrowings under its line of credit.
The repayment included $4,250,000 in outstanding principal and
$2,654,000 in repayment of the participation interest due in
accordance with the loan. The $6,904,000 repayment consisted of
$5,736,000 in cash and the issuance of 63,152 OP Units with a recorded
value of $1,168,000.
DIVIDEND DECLARED
On July 25, 1996, the Board of Directors declared a cash dividend of
$0.425 per share of Class A Common Stock for the quarter ended June
30, 1996, payable on August 14, 1996 to stockholders of record on
August 7, 1996.
REPURCHASE OF COMMON STOCK
On July 25, 1996, the Company repurchased 126,264 shares of common
stock issued in connection with the purchase of the Sycamore Creek
Apartments in April 1996. The shares were purchased by the Company at
$20.50 per share and are currently held as treasury stock.
REGISTRATION STATEMENT
On July 26, 1996, the Company filed a registration statement relating
to the resale of the 372,688 shares of Class A Common Stock issued in
connection with the acquisition of the Somerset Village Apartments.
The registration statement was declared effective in August 1996.
CONTRACT TO ACQUIRE GENERAL PARTNERSHIP INTERESTS AND REAL PROPERTY
On July 29, 1996, the Company announced that it had entered into a
definitive contract to acquire entities affiliated with J.W. English,
a Houston, Texas based real estate syndicator and developer. The
acquisition includes the general partnership interests in 31 limited
partnerships holding 22 multifamily apartment properties aggregating
5,230 apartment units, primarily in Houston, Texas; title to a 104
unit apartment property in Houston; certain assets of J.W. English
Management Company which provides management services to the apartment
properties; and other real estate interests related to the J.W.
English Companies' operations in Houston, for an aggregate price of
$23.1 million, payable $15.2 million in
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)
OP Units and $7.9 million in cash. In addition, AIMCO expects to
incur an additional $1.1 million in transaction costs. The Company
has received an option, under certain circumstances, to acquire the
individual properties for specified prices approximating $155 million.
Prior to closing, the Company intends to make separate offers to
the limited partners of the various partnerships to acquire their
limited partnership interests for cash or OP Units. The limited
partners will be given the option of continuing as limited partners in
the existing partnerships. J.W. English and entities affiliated with
them have agreed to tender all limited partnership interests owned by
them in connection with such offers. Commencement of the tender
offers is subject to receipt of a fairness opinion from a national
investment banking firm.
SALE OF FOUR TEXAS PROPERTIES
On August 1, 1996, the Company sold four of its Texas properties (the
Dakota Apartments, Sterling Point Apartments and Woodcreek Apartments
in Dallas and the Ridgmar Park Apartments in Fort Worth) in a single
transaction for net cash proceeds totaling $17.3 million. The net
proceeds were used to paydown the balance outstanding under the
Company's line of credit of $9.2 million and to provide funds for
working capital and investment purposes. The properties were
acquired as part of a portfolio in conjunction with the Company's
initial public offering in July, 1994. The Company recognized a
modest gain on the sale.
CREDIT FACILITY
On August 13, 1996, the Company increased its revolving line of credit
with Bank of America NT&SA to $50 million from $40 million, reduced
its interest rate to LIBOR plus 1.625% from LIBOR plus 1.75% and
reduced its unused commitment fee to 0.125% from 0.375%. The
revolving line of credit has an initial term of two years and, subject
to certain customary conditions, the outstanding balance may be
converted to a three year term loan. The Company utilizes the line of
credit for general corporate purposes and to fund investments on an
interim basis.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
The Company is a real estate investment trust which holds a geographically
diversified portfolio of apartments, primarily serving the middle market. As of
June 30, 1996, the Company owned 60 multifamily apartment properties containing
15,850 apartment units. In addition to its owned properties, AIMCO managed
3,075 apartment units in 14 properties for affiliates and 15,627 apartment units
in 117 properties for nearly 80 third party-owners, bringing the total managed
portfolio to 191 multifamily apartment properties containing 34,552 apartment
units located in the Southeastern, Southcentral and Southwestern areas of the
United States. Of the 60 properties owned at June 30, 1996, four properties
with 1,265 apartment units were sold on August 1, 1996.
The following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
Consolidated Financial Statements and notes thereto.
RESULTS OF OPERATIONS
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1996 TO THE SIX MONTHS ENDED JUNE
30, 1995
The Company recognized net income of $5,955,000 for the six months ended
June 30, 1996. For the six months ended June 30, 1995, the Company recognized
net income of $7,952,000, of which $3,672,000 was allocable to the holder of the
Convertible Preferred Stock and $4,280,000 was allocable to the Class A common
stockholders. The increase in net income in 1996 was primarily the result of
the acquisition of twelve additional properties from December 1995 to May 1996
offset by increased interest expense associated with debt which was financed in
June and September 1995. These factors are discussed in more detail in the
following paragraphs.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the Company's 60 apartment
properties totaled $46,252,000 for the six months ended June 30, 1996 consisting
of $37,126,000 for the 46 "same store" properties, $789,000 for two properties
owned in 1995 and 1996 but for which operations are not comparable and
$8,337,000 for the 12 properties acquired from December 1995 to May 1996.
Property operations are not comparable for two properties owned during both the
first six months of 1995 and the first six months of 1996 due to the revision
of the rental structure of the properties in the third quarter of 1995 in
conjunction with the completion of the Company's tax restructuring. The rental
and other revenue for the six months ended June 30, 1996 for the 46 "same store"
properties of $37,126,000 compared to $35,785,000 for the six months ended June
30, 1995, representing an increase of $1,341,000 or 3.7%. Average monthly rent
per occupied unit for these 46 properties at June 30, 1996 and 1995 was $521 and
$501, respectively, an increase of 4.0%. The increase results from higher
rental rates charged upon renewal of existing tenant leases or upon the
execution of new tenant leases.
Operating expenses, consisting of on-site payroll costs, utilities (net of
reimbursements received from tenants), contract services, turnover costs,
repairs and maintenance, advertising and marketing and taxes and insurance
totaled $18,153,000 from 60 properties for the six months ended June 30, 1996,
consisting of $14,609,000 for the 46 "same store" properties, $408,000 for the
two non-comparable properties and $3,136,000 for the 12 properties acquired
from December 1995 to May 1996. Operating expenses for the 46 properties of
$14,609,000 for the six months ended June 30, 1996 compare to $14,121,000 for
the same period in 1995, reflecting an increase of $488,000, or 3.5%, primarily
in utility, turnover, payroll, taxes and insurance costs.
Owned property management expenses, representing the costs of managing the
Company's properties, totaled $1,339,000 for 60 properties for the six months
ended June 30, 1996, consisting of $1,059,000 for the 46 "same store"
properties, $21,000 for the two non-comparable properties and $259,000 for the
properties purchased from December 1995 to May 1996. The owned property
management expenses for the six months ended June 30, 1995 totaled $1,138,000,
consisting of $1,116,000 for the 46 "same store" properties and $22,000 for the
two non-comparable properties.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
PROPERTY MANAGEMENT
The Company's share of income from the service company business was
$641,000 for the six months ended June 30, 1996 compared to $1,047,000 for the
six months ended June 30, 1995. Management fees and other income totaled
$3,725,000 for the six months ended June 30, 1996 compared to $3,817,000 for the
six months ended June 30, 1995, reflecting a decrease of $92,000, or 2.4%.
Management and other expenses totaled $2,464,000 for the six months ended June
30, 1995 compared to $2,493,000 for the six months ended June 30, 1995,
reflecting a decrease of $29,000, or 1.2%. Each major source of revenue and
expense before amortization of management company goodwill, corporate overhead
allocations, depreciation and amortization and minority interest are described
below.
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------- ----------------
Properties managed for third parties
and affiliates
Management fees and other income $2,156,000 $2,274,000
Management and other expenses (1,961,000) (1,839,000)
---------- ----------
195,000 435,000
---------- ----------
Commercial asset management
Management and other income 595,000 801,000
Management and other expenses (206,000) (285,000)
---------- ----------
389,000 516,000
---------- ----------
Reinsurance operations
Revenues 771,000 526,000
Expenses (79,000) (230,000)
---------- ----------
692,000 296,000
---------- ----------
Other
Revenues 203,000 216,000
Expenses (218,000) (139,000)
---------- ----------
(15,000) 77,000
---------- ----------
$1,261,000 $1,324,000
---------- ----------
---------- ----------
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Net income from the management of properties for third parties and
affiliates was $195,000 for the six months ended June 30, 1996, compared to
$435,000 for the six months ended June 30, 1995, a decrease of $240,000, or
55.2%. The decrease in net income is due a decrease in management fees and
other income of $118,000, or 5.2% due to the acquisition by the Company during
December 1995 and the first six months of 1996 of seven properties previously
managed for third parties and affiliates. Management and other expenses
increased by $122,000, or 6.6% due to increased payroll costs partially offset
by an increase of $202,000 in the allocation of management costs to the
Company's owned properties.
Net income from commercial asset management was $389,000 for the six months
ended June 30, 1996 compared to $516,000 for the same period in 1995, a decrease
of $127,000, or 24.6% as a result of a reduction in the number of commercial
properties under management. The decline in revenues of $206,000, or 25.7% from
commercial asset management was partially offset by a decrease in related
management and other expenses of $79,000, or 27.7%, primarily due to a
reduction in personnel.
Net income from the reinsurance operations increased by $396,000, or 133.8%
due to increased premiums collected from a larger work force, improved loss
experience and the closure of claims for less than the amounts previously
reserved.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses totaled $549,000 for the six months
ended June 30, 1996 compared to $1,093,000 for the same period in 1995. The
amount presented for the six months in 1996 included $561,000 for payroll,
overhead and other costs associated with operating a public company and $284,000
for payroll and other costs incurred in the development of new business offset
by a corporate overhead allocation of $296,000 to the service company business.
The amount presented for the six months in 1995 included $691,000 for payroll,
overhead and other costs associated with operating a public company, and
$402,000 for payroll and other costs incurred in the development of new
business. The decrease in general and administrative expenses of $544,000, or
49.8% in 1996 is attributable to fewer personnel, a decrease in taxes and the
allocation of corporate overhead to the service companies. No corporate
overhead allocation was recorded for the six months ended June 30, 1995.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
INTEREST EXPENSE
Interest expense totaled $10,925,000 for the six months ended June 30, 1996
compared to $5,313,000 for the six months ended June 30, 1995. Interest
expense, which includes amortization of deferred financing costs and unused
commitment fees associated with the Company's Credit Facility, increased by
$5,612,000, or 105.6% in 1996. The increase was due primarily to an increase of
$5,907,000 in interest expense on secured notes payable from: (1) $57 million
borrowed in June 1995 to repay certain floating rate debt and amounts borrowed
under the Credit Facility; (2) $98 million borrowed in September 1995 to
repurchase all 966,000 outstanding shares of Convertible Preferred Stock and
513,514 shares of unregistered Class A Common Stock; (3) $25 million borrowed in
connection with the purchase of five properties in December 1995; and (4) $37
million assumed in connection with the purchase of five properties in December
1995 and the first six months of 1996. In addition, interest expense,
amortization of deferred financing costs and unused commitment fees on the
Credit Facility was $604,000 for the six months ended June 30, 1996 compared to
$899,000 for the six months ended June 30, 1995, a decrease of $295,000, or
32.8% as a result of lower amounts outstanding under the Credit Facility in
1996.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1996 TO THE THREE MONTHS ENDED
JUNE 30, 1995
The Company recognized net income of $3,145,000 for the three months ended
June 30, 1996. For the three months ended June 30, 1995, the Company recognized
net income of $3,947,000, of which $1,836,000 was allocable to the holder of the
Convertible Preferred Stock and $2,111,000 was allocable to the Class A common
stockholders. The increase in net income in 1996 was primarily the result of
the acquisition of twelve additional properties in December 1995 and the first
six months of 1996 offset by increased interest expense associated with debt
which was financed in June and September 1995. These factors are discussed in
more detail in the following paragraphs.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the Company's 60 apartment
properties totaled $23,801,000 for the three months ended June 30, 1996,
consisting of $18,670,000 for the 46 "same store" properties, $426,000 for the
two non-comparable properties and $4,705,000 for the 12 properties acquired from
December 1995 to May 1996. Rental and other income for the 46 "same store"
properties of $18,670,000 for the three months ended June 30, 1996 compare to
$17,990,000 for the three months ended June 30, 1995, representing an increase
of $680,000, or 3.8%.
Operating expenses, consisting of on-site payroll costs, utilities (net of
reimbursements received from tenants), contract services, turnover costs,
repairs and maintenance, advertising and marketing and taxes and insurance
totaled $9,449,000 from 60 properties for the three months ended June 30, 1996,
consisting of $7,482,000 for the 46 "same store" properties, $210,000 for the
two non-comparable properties and $1,757,000 for the 12 properties acquired from
December 1995 to May 1996. Operating expenses for the "same store" properties of
$7,482,000 for the three months ended June 30, 1996 compare to $7,215,000 for
the same period in 1995, reflecting an increase of $267,000, or 3.7%, primarily
in utility and turnover costs.
Owned property management expenses, representing the costs of managing the
Company's properties, totaled $679,000 for 60 properties for the three months
ended June 30, 1996, consisting of $530,000 for the 46 "same store" properties,
$10,000 for the non-comparable properties and $139,000 for the properties
purchased from December 1995 to May 1996. The owned property management
expenses for the three months ended June 30, 1995 totaled $569,000, consisting
of $558,000 for the 46 "same store' properties and $11,000 for the two non-
comparable properties.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
PROPERTY MANAGEMENT
The Company's share of income from the service company business was
$350,000 for the three months ended June 30, 1996 compared to $597,000 for the
three months ended June 30, 1995. Management fees and other income totaled
$1,877,000 for the three months ended June 30, 1996 compared to $1,912,000 for
the three months ended June 30, 1995, reflecting a decrease of $35,000, or 1.8%.
Management and other expenses totaled $1,204,000 for the three months ended June
30, 1995 compared to $1,157,000 for the three months ended June 30, 1995,
reflecting a decrease of $47,000, or 4.1%. Each major source of revenue and
expense before amortization of management company goodwill, corporate overhead
allocations, depreciation and amortization and minority interest are described
below.
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
------------------ ------------------
Properties managed for third parties
and affiliates
Management fees and other income $1,071,000 $1,180,000
Management and other expenses (989,000) (877,000)
---------- ----------
82,000 303,000
---------- ----------
Commercial asset management
Management and other income 232,000 376,000
Management and other expenses (111,000) (131,000)
---------- ----------
121,000 245,000
---------- ----------
Reinsurance operations
Revenues 463,000 240,000
Expenses (30,000) (89,000)
---------- ----------
433,000 151,000
---------- ----------
Other
Revenues 111,000 116,000
Expenses (74,000) (60,000)
---------- ----------
37,000 56,000
---------- ----------
$ 673,000 $ 755,000
---------- ----------
---------- ----------
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Net income from the management of properties for third parties and
affiliates was $82,000 for the three months ended June 30, 1996, compared to
$303,000 for the three months ended June 30, 1995, a decrease of $221,000, or
72.9%. The decrease in net income is primarily due the acquisition by the
Company during December 1995 and the first six months of 1996 of seven
properties previously managed for third parties and affiliates. In addition,
management and other expenses increased due to higher payroll costs partially
offset by an increase of $111,000 in the allocation of management costs to the
Company's owned properties.
Net income from commercial asset management was $121,000 for the three
months ended June 30, 1996 compared to $245,000 for the same period in 1995, a
decrease of $124,000, or 50.6% as a result of a reduction in the number of
commercial properties under management. The decline in revenues of $144,000, or
38.3% from commercial asset management was partially offset by a decrease in
related management and other expenses of $20,000, or 15.3%, primarily due to a
reduction in personnel.
Net income from the reinsurance operations increased by $282,000, or 186.8%
due to increased premiums collected from a larger work force, improved loss
experience and the closure of claims for less than the amounts previously
reserved.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses totaled $226,000 for the three months
ended June 30, 1996 compared to $447,000 for the same period in 1995. The
amount presented for the three months in 1996 included $284,000 for payroll,
overhead and other costs associated with operating a public company and $89,000
for payroll and other costs incurred in the development of new business offset
by a corporate overhead allocation of $147,000 to the service company business.
The amount presented for the three months in 1995 included $333,000 for payroll,
overhead and other costs associated with operating a public company, and
$114,000 for payroll and other costs incurred in the development of new
business. The decrease in general and administrative expenses of $221,000, or
49.4% in 1996 is attributable to fewer personnel, a decrease in taxes and the
allocation of corporate overhead to the service companies. No allocation of
corporate overhead was recorded for the three months ended June 30, 1995.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
INTEREST EXPENSE
Interest expense totaled $5,530,000 for the three months ended June 30,
1996 compared to $2,809,000 for the three months ended June 30, 1995. Interest
expense, which includes amortization of deferred financing costs and unused
commitment fees associated with the Company's Credit Facility, increased by
$2,721,000, or 96.9% in 1996. The increase was due primarily to increased
interest expense on secured notes payable from financings completed in June 1995
and September 1995 and borrowings made in connection with the purchase of eight
properties from December to May 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal demands for liquidity include normal operating
activities, payments of principal and interest on outstanding debt, capital
improvements, acquisitions of or investments in properties, dividends paid to
its stockholders and distributions paid to minority limited partners in the
Operating Partnership. The Company considers its cash provided by operating
activities to be adequate to meet normal operating requirements, principal and
interest payments on outstanding debt, dividends to stockholders and
distributions to minority limited partners. In the six months ended June 30,
1996, $2,385,000 in capital replacements, $1,630,000 in initial capital
expenditures and $129,000 in capital enhancements were spent. In addition, in
the six months ended June 30, 1996, the Company incurred $4,222,000 in costs
related to the construction and renovation of three properties. These
expenditures were funded by borrowings under the Credit Facility, working
capital reserves and net cash provided by operating activities. The Company
expects to incur an additional $2,970,000 in capital replacements (including
$773,000 of remaining unspent reserves for capital replacements) during the
balance of 1996 and $7,549,000 in initial capital expenditures during the
next twelve months, which will be funded by cash from operating activities
and borrowings under the Credit Facility.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
On August 13, 1996, the Company increased its revolving line of credit with
Bank of America NT&SA to $50 million from $40 million, reduced its interest rate
to LIBOR plus 1.625% from LIBOR plus 1.75% and reduced its unused commitment fee
to 0.125% from 0.375%. The revolving line of credit has an initial term of two
years and, subject to certain customary conditions, the outstanding balance may
be converted to a three year term loan. The Company utilizes the line of credit
for general corporate purposes and to fund investments on an interim basis.
The Company expects to meet its long-term liquidity requirements, such as
refinancing debt and property acquisitions, through long-term borrowings, both
secured and unsecured, the issuance of debt, Operating Partnership units or
equity securities and cash generated from operations. On October 18, 1995, the
Company filed a shelf registration statement with the Securities and Exchange
Commission with respect to an aggregate of $200 million of debt and equity
securities. The amount remaining under the shelf registration is $148.2
million.
As of June 30, 1996, the Company had outstanding indebtedness totaling
$307.6 million including $203.3 million of secured notes payable, $76.1 million
of secured tax-exempt debt, a secured one-year floating rate bridge loan of $25
million, and $3.2 million outstanding under its Credit Facility. The Company's
outstanding debt is secured by substantially all of the properties owned by the
Company. The weighted average interest rate on the Company's long-term
outstanding debt was 7.7% with a weighted average maturity of 11 years.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CONTINGENCIES
The Company has filed a request with the IRS for a private letter ruling
regarding the characterization of certain advances paid to the service company
business subsidiaries with respect to property management services provided to
properties managed by the Company for third parties and affiliates. The Company
believes and is seeking a determination that such amounts are not includable in
gross income for purposes of the REIT qualification tests for the Company's 1994
and 1995 taxable years. Although the Company intends to vigorously dispute any
determination that such amounts are includable in gross income, such a
determination, if ultimately upheld, would result in potential tax liability to
the Company of up to $1.4 million, plus interest. A determination by the IRS
that the advances paid to the service company business subsidiaries in 1994 and
1995 are includable in gross income will not affect the Company's status as a
REIT.
Certain of the Company's properties are, and some of the properties managed
by the Company for others may be, located on or near properties that have
contained underground storage tanks or on which activities have occurred which
could have released hazardous substances into the soil or groundwater. There
can be no assurances that such hazardous substances have not been released or
have not migrated, or in the future will not be released or will not migrate
onto the properties. In addition, the Company's Montecito property in Austin,
Texas, is located adjacent to, and may be partially on, land that was used as a
landfill. Low levels of methane and other landfill gas have been detected at
Montecito. The remediation of the landfill gas is now substantially complete.
The environmental authorities have preliminarily approved the methane gas
remediation efforts. Final approval of the site and the remediation process is
contingent upon the results of continued methane gas monitors to confirm the
effectiveness of the remediation efforts. Should further actionable levels of
methane gas be detected, a proposed contingent plan of passive methane gas
venting may be implemented. The Company believes the costs of such further
limited action, if any, will not be material. Testing has also been conducted
on Montecito to determine whether, and to what extent, groundwater has been
impacted. Test reports have indicated that the groundwater is not contaminated
at actionable levels.
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FUNDS FROM OPERATIONS AND CASH EARNED FOR SHAREHOLDERS
The Company measures its economic profitability based on Cash Earned For
Shareholders ("CEFS"). The Company defines CEFS as income before minority
interest based on generally accepted accounting principles plus real estate
depreciation and amortization of management company goodwill less any
preferred stock dividend payments ("Funds From Operations" or "FFO") less a
minimum annual provision for capital replacements of $300 per apartment unit.
FFO computations conform to the National Association of Real Estate
Investment Trusts' ("NAREIT") definition adjusted to add back amortization of
management company goodwill and deduct payment of dividends on preferred
stock.
FFO and CEFS do not represent cash generated from operating activities in
accordance with generally accepted accounting principles and therefore should
not be considered an alternative to net income as an indication of the Company's
performance or to net cash flows from operating activities as determined by
generally accepted accounting principles as a measure of liquidity and is not
necessarily indicative of cash available to fund cash needs.
For the three and six months ended June 30, 1996 and 1995, FFO and CEFS are
as follows:
<TABLE>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Income before minority interest
in Operating Partnership $ 3,774 $ 4,356 $ 7,078 $ 8,781
Owned properties depreciation 4,590 3,634 9,060 7,283
Amortization of management
company goodwill 116 115 230 195
Preferred stock dividend 0 (1,836) 0 (3,672)
------- ------- ------- -------
Funds From Operations 8,480 6,269 16,368 12,587
Capital Replacements (1,119) (939) (2,239) (1,877)
------- ------- ------- -------
Cash Earned For Shareholders $ 7,361 $ 5,330 $14,129 $10,710
------- ------- ------- -------
------- ------- ------- -------
Weighted average common shares,
common share equivalents and OP
Units outstanding 14,660 11,446 14.303 11,446
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INFLATION
Substantially all of the leases at the Company's apartment properties are
for a period of one year or less, allowing, at the time of renewal, for
adjustments in the rental rate and the opportunity to re-lease the apartment
unit at the prevailing market rate. The short term nature of these leases
generally serves to minimize the risk to the Company of the adverse effect of
inflation and the Company does not believe that inflation has had a material
adverse impact on its revenues.
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed with this report:
Exhibit
Number Description
- ------- -----------
3.1 Restated Articles of Incorporation of the Company
(incorporated by reference from the Company's Annual Report on
Form 10-K for fiscal year 1995).
3.2 Bylaws of the Company (incorporated by reference from the
Company's Annual Report on Form 10-K for fiscal year 1995).
10.1 Acquisition Agreement, dated as of April 30, 1996, by and
among the Company, AIMCO Somerset, Inc., AIMCO Properties,
L.P., Somerset REIT, Inc., RJ Holdings, Ltd., Somerset PAM
Partnership and RJ Equities, Inc.
10.2 Shareholder Registration Rights Agreement, dated as of May 31,
1996, by and between the Company and Somerset REIT, Inc.
10.3 Unitholder Registration Rights Agreement, dated as of May 31,
1996, by and among the Company and the investors listed on
Schedule A thereto
10.4 Amended and Restated Promissory Note, dated September 1,
1993, in the original principal amount of $13,200,000 by
Somerset Utah, L.P. in favor of Brazos Partners, L.P.
10.5 Acquisition and Contribution Agreement and Joint Escrow
Instructions, dated as of April 19, 1996 by and among the
Company, AIMCO Properties, L.P. and Thoner-Pankey
10.6 Registration Agreement, dated as of April 19, 1996, by and
among the Company and the investors listed on Schedule A
thereto (OP Units)
10.7 Registration Agreement, dated as of April 19, 1996, by and
among the Company and the investors listed on Schedule A
thereto (Class A Common Stock)
27.1 Financial Data Schedule
(b) Reports on Form 8-K for the quarter ended June 30, 1996:
None
<PAGE>
EXHIBIT INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- -------------
<S> <C> <C>
3.1 Restated Articles of Incorporation of the Company
(incorporated by reference from the Company's Annual Report on
Form 10-K for fiscal year 1995).
3.2 Bylaws of the Company (incorporated by reference from the
Company's Annual Report on Form 10-K for fiscal year 1995).
10.1 Acquisition Agreement, dated as of April 30, 1996, by and
among the Company, AIMCO Somerset, Inc., AIMCO Properties,
L.P., Somerset REIT, Inc., RJ Holdings, Ltd., Somerset PAM
Partnership and RJ Equities, Inc.
10.2 Shareholder Registration Rights Agreement, dated as of May 31,
1996, by and between the Company and Somerset REIT, Inc.
10.3 Unitholder Registration Rights Agreement, dated as of May 31,
1996, by and among the Company and the investors listed on
Schedule A thereto
10.4 Amended and Restated Promissory Note, dated September 1,
1993, in the original principal amount of $13,200,000 by
Somerset Utah, L.P. in favor of Brazos Partners, L.P.
10.5 Acquisition and Contribution Agreement and Joint Escrow
Instructions, dated as of April 19, 1996 by and among the
Company, AIMCO Properties, L.P. and Thoner-Pankey
10.6 Registration Agreement, dated as of April 19, 1996, by and
among the Company and the investors listed on Schedule A
thereto (OP Units)
10.7 Registration Agreement, dated as of April 19, 1996, by and
among the Company and the investors listed on Schedule A
thereto (Class A Common Stock)
27.1 Financial Data Schedule
</TABLE>
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGISTRANT:
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
Date: August 14, 1996 /s/ Leeann Morein
-----------------------
Leeann Morein
Senior Vice President and
Chief Financial Officer
(duly authorized officer and principal financial officer)
/s/ Patricia K. Heath
-----------------------
Patricia K. Heath
Vice President and
Chief Accounting Officer
(principal accounting officer)
<PAGE>
ACQUISITION AGREEMENT
dated as of
April 30, 1996
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO SOMERSET, INC.
AIMCO PROPERTIES, L.P.
SOMERSET REIT, INC.
RJ HOLDINGS, LTD.
SOMERSET PAM PARTNERSHIP
and
RJ EQUITIES, INC.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER
1.1 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Articles of Incorporation and By-Laws . . . . . . . . . . . . . . . . . 3
1.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Closing of Transfer Books . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
CONTRIBUTION OF PARTNERSHIP INTERESTS
2.1 Agreement To Contribute and To Accept Contribution. . . . . . . . . . . 6
2.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Partnership Agreement Approvals . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Somerset Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . . 8
3.4 Adverse Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Foreign Investment In Real Property Tax Act . . . . . . . . . . . . . . 9
3.8 Tax Advice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Investment Representations. . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
MANAGING GENERAL PARTNER
4.1 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . 10
4.2 Somerset Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.3 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SOMERSET REIT
5.1 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . 11
5.2 Board Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Organizational Documents. . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Stock PPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Foreign Investment In Real Property Tax Act . . . . . . . . . . . . . . 12
5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
6.1 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . 13
6.2 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . . 13
6.3 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
COVENANTS
7.1 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . 14
7.2 Shareholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Stock PPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.4 Compliance With Securities Laws . . . . . . . . . . . . . . . . . . . . 15
7.5 Execution of Registration Rights Agreements . . . . . . . . . . . . . . 16
7.6 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.7 Payment of Disposition Fee. . . . . . . . . . . . . . . . . . . . . . . 16
7.8 Determination of Net Working Capital. . . . . . . . . . . . . . . . . . 16
7.9 Further Action, Reasonable Efforts. . . . . . . . . . . . . . . . . . . 16
7.10 Conduct of Business of Somerset REIT Pending the Merger . . . . . . . . 17
7.11 Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . 17
7.12 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . 18
7.13 Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . 18
7.14 Tax Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.15 Amendment of Partnership Agreement. . . . . . . . . . . . . . . . . . . 19
7.16 Financial Statements of Somerset REIT . . . . . . . . . . . . . . . . . 19
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ARTICLE VIII
CONDITIONS TO CLOSING
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8.1 Conditions to Each Party's Obligation to Effect the Merger and
the Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Conditions to Obligations of the Buyers to Effect the Merger and
the Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Conditions to Obligations of the Sellers to Effect the Merger and
the Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX
TERMINATION, WAIVER AND AMENDMENT
9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 24
9.3 Amendment or Supplement. . . . . . . . . . . . . . . . . . . . . . . . 24
9.4 Extension of Time, Waiver, Etc. . . . . . . . . . . . . . . . . . . . 25
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.3 Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.9 Successors and Assigns; Third Parties. . . . . . . . . . . . . . . . . 27
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.12 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.14 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.15 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.16 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.17 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SCHEDULE A Description of the Property . . . . . . . . . . . . . . . . . 31
SCHEDULE B Somerset Utah, L.P. Partnership Interests . . . . . . . . . . 33
SCHEDULE C Tax Returns of Somerset REIT. . . . . . . . . . . . . . . . . 34
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EXHIBIT A Investor Questionnaire. . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Investor Certificate. . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C-1 Shareholder Registration Rights Agreement . . . . . . . . . C-1-1
EXHIBIT C-2 Unitholder Registration Rights Agreement. . . . . . . . . . C-2-1
EXHIBIT D-1 Assignment and Assumption of Partnership Interest (Sellers) D-1-1
EXHIBIT D-2 Assignment and Assumption of Partnership Interest
(Contributing Partners) . . . . . . . . . . . . . . . . . . D-2-1
EXHIBIT E Acknowledgment and Acceptance of Admission of
Limited Partner . . . . . . . . . . . . . . . . . . . . . . E-1
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT (the "AGREEMENT"), dated as of April 30, 1996,
by and among Apartment Investment and Management Company, a Maryland corporation
("AIMCO"), AIMCO Somerset, Inc., a Florida corporation ("AIMCO QRS"), AIMCO
Properties, L.P., a Delaware limited partnership ("AIMCO OP" and, together with
AIMCO and AIMCO QRS, the "BUYERS"), Somerset REIT, Inc., a Florida corporation
("SOMERSET REIT"), RJ Holdings, Ltd., a Florida limited partnership (the
"SPECIAL LIMITED PARTNER"), Somerset PAM Partnership, a Colorado general
partnership (the "MANAGING GENERAL PARTNER"), and RJ Equities, Inc., a Florida
corporation (the "CORPORATE GENERAL PARTNER" and, together with Somerset REIT,
the Special Limited Partner and the Managing General Partner, collectively, the
"SELLERS").
WHEREAS, all of the Sellers are partners of Somerset Utah, L.P., a
Colorado limited partnership (such limited partnership, "SOMERSET LP");
WHEREAS, Somerset LP is the owner of that certain apartment property
located in Salt Lake City, Utah known as Somerset Village, as more particularly
described in SCHEDULE A hereto (the "PROPERTY"); and
WHEREAS, the Boards of Directors of AIMCO QRS and Somerset REIT have
determined that the merger of AIMCO QRS with and into Somerset REIT on the terms
set forth in this Agreement (the "MERGER"), with Somerset REIT surviving as a
wholly owned subsidiary of AIMCO, is advisable and in the best interests of
their respective corporations and shareholders and have approved this Agreement;
WHEREAS, the parties hereto intend that the Merger will qualify as a
tax- free "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and in furtherance of that
intent, that certain of the shareholders of Somerset REIT will execute certain
documents regarding their holding of the shares of Class A Common Stock, par
value $.01 per share (the "AIMCO STOCK"), of AIMCO to be received in the Merger;
and
WHEREAS, immediately after the Merger is consummated, the Special
Limited Partner, the Managing General Partner and the Corporate General Partner
desire to contribute, and provide for the Class B Limited Partners of Somerset
LP (the "CLASS B LIMITED PARTNERS" and, together with the Sellers, the
"PARTNERS") to contribute, their respective partnership interests in Somerset
LP, as set forth on SCHEDULE B hereto (with respect to each Partner, such
Partner's "SOMERSET INTEREST"), to AIMCO OP in exchange for units of limited
partnership interest in AIMCO OP ("OP UNITS"), cash or a combination thereof,
and AIMCO OP desires to accept such contributions in exchange for such
consideration.
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NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 MERGER. Upon the terms and subject to the conditions of
this Agreement, as of the Effective Time (as defined in Section 1.2), in
accordance with the Florida Business Corporation Act, as amended (the "FBCA"),
AIMCO QRS shall be merged with and into Somerset REIT. Following the Merger,
Somerset REIT shall continue as the surviving corporation (sometimes referred to
herein as the "SURVIVING CORPORATION") and the separate corporate existence of
AIMCO QRS shall cease.
1.2 EFFECTIVE TIME OF THE MERGER. Upon the terms and subject to
the conditions hereof, articles of merger (the "ARTICLES OF MERGER") shall be
duly prepared, executed and acknowledged by the Surviving Corporation and
thereafter delivered to the Department of State of the State of Florida for
filing on the Closing Date (as defined in Section 1.3). The Merger shall become
effective as of the date and at such time (the "EFFECTIVE TIME") as the Articles
of Merger pursuant to Section 607.1105 of the FBCA and any other documents
necessary to effect the Merger in accordance with the FBCA are filed with the
Department of State of the State of Florida and become effective.
1.3 CLOSING. Subject to the satisfaction or waiver of all the
conditions to closing contained in Article VIII, the closing of the Merger shall
take place at 10:00 a.m., Los Angeles time, on a date to be specified by the
parties, which shall be no later than the fifth Business Day (as defined below)
after the satisfaction or waiver of the conditions contained in Article VIII, at
the offices of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los
Angeles, California 90071, unless another date or place is agreed to in writing
by the parties hereto. The date and time at which the closing of the Merger and
the subsequent closing of the Contribution (as defined in Section 2.2)
(collectively, the "CLOSING") occur is referred to herein as the "CLOSING DATE."
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day on
which banking institutions in Los Angeles are not required to be open.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the FBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of AIMCO QRS and Somerset REIT shall vest in the Surviving
Corporation, and all debts, liabilities and duties of AIMCO QRS and Somerset
REIT shall become the debts, liabilities and duties of the Surviving
Corporation.
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1.5 ARTICLES OF INCORPORATION AND BY-LAWS.
(a) ARTICLES OF INCORPORATION. The Articles of
Incorporation of AIMCO QRS in effect at the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation until amended in accordance with
applicable law.
(b) BY-LAWS. The By-Laws of AIMCO QRS in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation until amended
in accordance with applicable law.
1.6 DIRECTORS. The directors of AIMCO QRS at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Articles of Incorporation and By-
Laws of the Surviving Corporation and until his or her successor is duly elected
and qualified.
1.7 OFFICERS. The officers of AIMCO QRS at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Articles of Incorporation and By-
Laws of the Surviving Corporation and until his or her successor is duly
appointed and qualified.
1.8 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of common stock, par value $.01 per share (the "SOMERSET STOCK"), of
Somerset REIT, or of the holder of any shares of capital stock of AIMCO QRS:
(a) CAPITAL STOCK OF AIMCO QRS. Each issued and
outstanding share of common stock, par value $.01 per share, of AIMCO QRS shall
be converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK. All shares of Somerset
Stock that are owned by Somerset REIT as treasury stock shall be cancelled and
retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) EXCHANGE RATIO FOR SOMERSET STOCK. Each issued and
outstanding share of Somerset Stock (other than shares to be cancelled in
accordance with Section 1.8(b)) shall be converted into the right to receive a
number of shares of AIMCO Stock equal to (i) the Merger Consideration (as
defined below), DIVIDED by (ii) the aggregate number of shares of Somerset Stock
issued and outstanding immediately prior to the Effective Time; provided,
however, that AIMCO may, at its option, pay cash in lieu of issuing any
fractional shares of AIMCO Stock (based on a price of $20.50 per share of AIMCO
Stock). All such shares of Somerset Stock, when so converted, shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate (a "CERTIFICATE") that, immediately
prior to the
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Effective Time, represented outstanding shares of Somerset Stock shall cease
to have any rights with respect thereto, except the right to receive upon the
surrender of such Certificate, the shares of AIMCO Stock to which such holder
is entitled pursuant to this Section 1.8(c), each as represented by one or
more certificates to be issued or paid in consideration therefor in
accordance with Section 1.9, without interest.
(d) "MERGER CONSIDERATION" shall mean a number of shares of
AIMCO stock equal to (i) the sum of (A) $4,490,000, PLUS (B) the product of (x)
the Net Equity Value (as defined below), MULTIPLIED by (y) Somerset REIT's 70%
interest in Somerset LP, DIVIDED by (ii) $20.50.
(e) "NET EQUITY VALUE" shall mean the sum of (i) $17,410,000,
MINUS (ii) the Subordinated Disposition Fee referred to in Section 6.9.5 of the
Partnership Agreement of Somerset LP, which is equal to $328,500 (the
"SUBORDINATED DISPOSITION FEE"), PLUS (iii) the Net Working Capital (as defined
in Section 7.8), MINUS (iv) the amount outstanding as of the Closing Date under
that certain Amended and Restated Promissory Note, dated as of September 1,
1993, made by Somerset LP in favor of the Mortgagee (as defined in Section 8.2)
in the original principal amount of $13,200,000.
1.9 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, AIMCO shall mail to each holder of record of Somerset
Stock immediately prior to the Effective Time whose shares were converted,
pursuant to Section 1.8, into AIMCO Stock (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to AIMCO and
shall be in such form and have such other customary provisions as AIMCO may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing AIMCO Stock which
such holder has the right to receive pursuant to the provisions of this Article
I. Upon surrender of a Certificate for cancellation to AIMCO or to such other
agent or agents as may be appointed by AIMCO, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor certificates representing that number of shares of
AIMCO Stock which such holder has the right to receive pursuant to the
provisions of this Article I, and the Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of shares of Somerset
Stock which is not registered in the transfer records of Somerset REIT,
certificates representing the proper number of shares of AIMCO Stock may be
issued to a transferee if the Certificate representing such shares of Somerset
Stock is presented to AIMCO, accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section 1.9,
each Certificate shall be deemed, at any time after the Effective Time, to
represent only the right to receive upon
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such surrender certificates representing the shares of AIMCO Stock, as
contemplated by this Section 1.9.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SOMERSET
STOCK. No dividends or other distributions declared or made after the Effective
Time with respect to shares of AIMCO Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of AIMCO Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to the
effect of applicable law, following surrender of any such Certificate there
shall be paid to the record holder of the certificates representing shares of
AIMCO Stock issued in exchange therefor, without interest, (i) at the later of
(A) the time of such surrender and (B) the sixth day following the Effective
Time, the amount of dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to such shares of AIMCO Stock,
and (ii) if the payment date for any dividend or distribution payable with
respect to such shares of AIMCO Stock has not occurred prior to the surrender of
such Certificate, at the appropriate payment date therefor, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to the surrender of such Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN SOMERSET STOCK. All
shares of AIMCO Stock issued upon the surrender for exchange of shares of
Somerset Stock in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Somerset
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Somerset REIT on such
shares of Somerset Stock in accordance with the terms of this Agreement or prior
to the date hereof and which remain unpaid at the Effective Time, and from and
after the Effective Time there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Somerset
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged for shares of AIMCO Stock, as
provided in this Article I.
1.10 CLOSING OF TRANSFER BOOKS. From and after the Effective
Time, the stock transfer books of Somerset REIT shall be closed and no transfer
of shares of Somerset Stock shall thereafter be made. If, after the Effective
Time, Certificates are presented to AIMCO, they shall be cancelled and exchanged
for shares of AIMCO Stock, together with any dividends or distributions with
respect to shares of AIMCO Stock, as provided in this Article I.
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ARTICLE II
CONTRIBUTION OF PARTNERSHIP INTERESTS
2.1 AGREEMENT TO CONTRIBUTE AND TO ACCEPT CONTRIBUTION.
Effective immediately after the Effective Time, upon the terms and conditions
set forth herein, each of the Sellers other than Somerset REIT hereby agrees to
contribute and convey to AIMCO OP, and AIMCO OP agrees to accept from each such
Seller and from each other Partner (a "CONTRIBUTING PARTNER") who has agreed to
contribute and convey to AIMCO OP, such Partner's Somerset Interest, including
as to each Somerset Interest, without limitation, (i) all of such Partner's
interest in the capital of Somerset LP and such Partner's interest in all
profits and distributions of any kind to which such Partner shall at any time be
entitled in respect of its Somerset Interest; (ii) all other payments, if any,
due or to become due to such Partner in respect of such Partner's Somerset
Interest, under or arising out of the Partnership Agreement of Somerset LP,
whether as contractual obligations, damages, insurance proceeds, condemnation
awards or otherwise; (iii) all of such Partner's claims, rights, powers,
privileges, authority, options, security interests, liens and remedies, if any,
under or arising out of the Partnership Agreement of Somerset LP or such
Partner's ownership of its Somerset Interest; and (iv) all present and future
claims, if any, of such Partner against Somerset LP or its general partners
under or arising out of the Partnership Agreement of Somerset LP for monies
loaned or advanced, for services rendered or otherwise.
2.2 CONSIDERATION. In exchange for such contributions of
Somerset Interests, at the Closing, AIMCO OP shall deliver to each of the
Sellers (other than Somerset REIT) and each Contributing Partner:
(a) OP Units in an amount equal to (i) the product of (A) the
Net Equity Value, MULTIPLIED by (B) such Partner's Somerset Interest (such
product being such Partner's "CONTRIBUTION VALUE"), DIVIDED by (ii) $20.50 (and
rounded to the nearest whole number), or such lesser amount as may be requested
by such Partner; provided, that such Partner has delivered to AIMCO OP, at least
two business days prior to the Closing Date, (x) a written instrument in the
form of EXHIBIT A hereto (an "INVESTOR QUESTIONNAIRE"), completed to the
satisfaction of AIMCO OP, indicating that such Partner is an Accredited
Investor, as defined in Rule 501 of the General Rules and Regulations
promulgated under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and (y) a written instrument in the form of EXHIBIT B hereto (an "INVESTOR
CERTIFICATE"), completed to the satisfaction of AIMCO, requesting delivery of
OP Units to such Partner at the Closing; and
(b) a check payable in next-day funds to the order of such
Partner in an amount equal to (i) such Partner's Contribution Value, MINUS (ii)
the product of (A) the number of OP Units issued to such Partner pursuant to
clause (a) of this Section 2.2, MULTIPLIED by (B) $20.50.
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The contribution, conveyance and acceptance of Somerset Interests in exchange
for OP Units or cash pursuant to this Article II is herein referred to as the
"CONTRIBUTION." Notwithstanding anything to the contrary contained in this
Section 2.2, the amount of consideration delivered to any Partner pursuant to
this Section, whether in the form of OP Units or cash or a combination thereof,
shall be net of any Taxes (as defined in Section 5.9(a)), that are required by
law to be withheld by AIMCO OP, including, without limitation, if such Partner
fails to deliver a FIRPTA Certificate (as defined in Section 7.14 hereof).
2.3 PARTNERSHIP AGREEMENT APPROVALS. For purposes of the
Partnership Agreement of Somerset LP, each of the Sellers hereby approves and
consents to the Merger, the Contribution and all of the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing:
(a) Somerset REIT hereby consents to the admission of AIMCO OP
as a general partner of Somerset LP.
(b) The Corporate General Partner hereby (i) approves and
consents to the contribution of the Managing General Partner's Somerset Interest
to AIMCO OP, (ii) agrees that, notwithstanding Section 6.3.2(b) of the
Partnership Agreement of Somerset LP, AIMCO OP may serve as the general partner
in partnerships in which the Corporate General Partner is not also a general
partner, (iii) approves and consents to the contribution of Somerset Interests
to AIMCO OP pursuant to this Agreement, and (iv) approves and consents to the
admission of AIMCO OP as a general partner of Somerset LP.
(c) The Managing General Partner hereby (i) approves and
consents to the contribution of Somerset Interests to AIMCO OP pursuant to this
Agreement, and (ii) approves and consents to the admission of AIMCO OP as a
general partner of Somerset LP.
(d) The Special Limited Partner hereby approves and consents to
the admission of AIMCO OP as a general partner of Somerset LP.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby represents and warrants to the Buyers as
follows:
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3.1 ORGANIZATION. If such Seller is a corporation, partnership,
trust, limited liability company or other legal organization, it is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
3.2 SOMERSET OWNERSHIP. SCHEDULE B accurately sets forth such
Seller's ownership interest in Somerset LP.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Such Seller has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such Seller and the
consummation by such Seller of the transactions contemplated hereby have been
duly and validly authorized by all necessary action and no other proceedings are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, other than, in the case of Somerset REIT, the adoption of
this Agreement and approval of the Merger by holders of a majority of the
outstanding shares of Somerset Stock. This Agreement has been duly and validly
executed and delivered by such Seller and, assuming the due authorization,
execution and delivery thereof by the other parties hereto, constitutes the
legal, valid and binding obligation of such Seller, enforceable against such
Seller in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
3.4 ADVERSE CLAIMS. The Somerset Interest owned by such Seller
is owned free and clear of all security interests, liens, adverse claims,
pledges, options, rights of first refusal, agreements, limitations on voting
rights, charges and other encumbrances of any nature whatsoever.
3.5 LITIGATION. Such Seller has not received notice of any
action, suit or proceeding before any judicial or quasi-judicial body, by any
governmental authority or other third party, pending, or to such Seller's
knowledge, threatened, against or affecting all or any portion of the Property
or such Seller's Somerset Interest and, to its knowledge, there is no basis for
any such action. There are no actions, suits or proceedings pending,
contemplated or threatened in connection with all or any portion of the Property
or such Seller's Somerset Interest. Such Seller has not received notice of any
attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings pending, or, to its
knowledge, threatened, against Somerset LP or such Seller.
3.6 NO CONFLICTS. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with or, with or without notice or
the passage of time or both, result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, deed of trust,
mortgage, loan agreement, or other document or
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instrument or agreement, oral or written, to which such Seller is a party or
by which such Seller is bound, or any applicable regulation of any
governmental agency, or any judgment, order or decree of any court having
jurisdiction over such Seller.
3.7 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Such Seller is
not (and each of its shareholders or partners, if any, is not and at all times
since its formation has not been) a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate within the meaning of Section 1445
of the Code.
3.8 TAX ADVICE. Such Seller has been advised by counsel of its
own selection with respect to this Agreement and the tax implications of the
transactions contemplated hereby.
3.9 INVESTMENT REPRESENTATIONS. If such Seller has elected, or
will elect, to receive OP Units pursuant to Section 2.2:
(a) Such Seller is an "Accredited Investor," as such term
is defined in Regulation D under the Securities Act (an "ACCREDITED INVESTOR").
(b) Such Seller has received and reviewed AIMCO OP's
Private Placement Memorandum, dated April 5, 1996, relating to OP Units.
(c) Such Seller has had access to such additional financial
and other information, and has been afforded the opportunity to ask questions of
representatives of AIMCO OP and AIMCO, and to receive answers to those
questions, as it has deemed necessary in connection with its acquisition of OP
Units.
(d) Such Seller acknowledges that the OP Units that will be
acquired pursuant to this Agreement are being acquired in a transaction not
involving any public offering within the meaning of the Securities Act, and the
OP Units, and any AIMCO Stock that may be issued in exchange for OP Units
tendered for redemption, have not been, and may never be, registered under the
Securities Act.
(e) Such Seller agrees not to offer, sell, transfer or
otherwise dispose of the OP Units, or any AIMCO Stock issued in exchange for OP
Units tendered for redemption, in the absence of registration under the
Securities Act unless it delivers to AIMCO OP and AIMCO an opinion of counsel
reasonably satisfactory to AIMCO OP and AIMCO, in form and substance
satisfactory to AIMCO OP and AIMCO, to the effect that the proposed sale,
transfer or other disposition may be effected without registration under the
Securities Act and under applicable state securities and blue sky laws.
(f) Such Seller acknowledges that the OP Units, and any
AIMCO Stock issued in exchange for OP Units tendered for redemption, will be in
the
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form of physical certificates and that, unless and until such OP Units or
AIMCO Stock shall have been registered under the Securities Act, the
certificates will bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR
DELIVERS TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
(g) Such Seller has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an acquisition of the OP Units and is able to bear the economic risk of
a loss of an investment in the OP Units and is not acquiring any OP Units with a
view to the distribution thereof or any present intention of offering or selling
any thereof in a transaction that would violate the Securities Act or the
securities laws of any state or any other applicable jurisdiction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
MANAGING GENERAL PARTNER
In addition to the representations and warranties set forth in Article
III, the Managing General Partner hereby represents and warrants to the Buyers
as follows:
4.1 ORGANIZATION AND QUALIFICATION. Somerset LP is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Colorado, with its principal place of business in the State of
Utah, and has the requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted. Somerset LP is duly qualified or licensed as a
foreign limited partnership in each jurisdiction where the character of the
properties owned, leased or operated or the nature of the business conducted by
it makes such qualification or licensing necessary, including the State of Utah.
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4.2 SOMERSET OWNERSHIP. SCHEDULE B contains a complete and correct
list of all of the general and limited partners of Somerset LP and the ownership
interest of each partner in Somerset LP.
4.3 TAX MATTERS.
(a) Somerset LP has at all times since its formation been
classified for U.S. Federal income tax purposes as a partnership and not as an
association taxable as a corporation.
(b) Somerset LP is not, and at no time since its formation has
it been, a "publicly traded partnership" within the meaning of Section 7704 of
the Code. Somerset LP holds no material assets other than its interest in the
Property.
(c) Somerset LP has completed and delivered to the Buyers a
tax due diligence questionnaire with respect to the Property, and the responses
thereto are true, correct and complete.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SOMERSET REIT
In addition to the representations and warranties set forth in Article
III, Somerset REIT hereby represents and warrants to the Buyers as follows:
5.1 ORGANIZATION AND QUALIFICATION. Somerset REIT is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Florida, with its principal place of business in the State of
Utah, and has the requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted. Neither the ownership of its properties or
assets nor the nature of its business requires that it be qualified to do
business in any jurisdiction other than the State of Utah, where it is so
qualified.
5.2 BOARD APPROVAL. The Board of Directors of Somerset REIT has
approved this Agreement and the Merger, and Somerset REIT has delivered to AIMCO
a certificate executed by the Secretary of Somerset REIT certifying to such
effect.
5.3 ORGANIZATIONAL DOCUMENTS. Somerset REIT has delivered to AIMCO
a complete and correct copy of its articles of incorporation and by-laws, and
it is not in violation of its articles of incorporation or bylaws.
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5.4 CAPITALIZATION. The authorized capital stock of Somerset
REIT consists of 500 shares of Somerset Stock. The only shares of capital stock
of the Company issued and outstanding are 112.25 shares of Somerset Stock. All
of such shares of Somerset Stock have been validly issued, are fully paid and
nonassessable, and have been issued in full compliance with all Federal and
state securities laws. None of such shares of Somerset Stock has been issued in
violation of, or is subject to, any preemptive, subscription or other similar
rights. There are no outstanding subscriptions, options, rights, warrants,
convertible or exchangeable securities, phantom equity, or other agreements or
commitments which obligate Somerset REIT to issue or to transfer from treasury
any additional shares of its capital stock. There are no direct or indirect
subsidiaries of Somerset REIT or other entities in which Somerset REIT has an
equity or other ownership interest. Somerset REIT has no outstanding
contractual rights to repurchase, redeem or otherwise acquire any shares of
Somerset Stock or make any material investment (in the form of a loan, capital
contribution or otherwise) in any other person.
5.5 BUSINESS. At all times since its incorporation, the sole
business activity of Somerset REIT has been the exercise of its rights and
discharge of its duties relating to its Class A Limited Partnership interest in
Somerset LP, and Somerset REIT holds no material assets other than its Class A
Limited Partner interest in Somerset LP.
5.6 LITIGATION. Somerset REIT has not received notice of any
action, suit or proceeding before any judicial or quasi-judicial body, by any
governmental authority or other third party, pending, or to its knowledge,
threatened, against or affecting Somerset REIT and, to its knowledge, there is
no basis for any such action, suit or proceeding. Somerset REIT has not
received notice of any attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings that are pending, or, to its knowledge, threatened, against Somerset
REIT.
5.7 STOCK PPM. The information supplied by Somerset REIT for
inclusion in the Stock PPM (as defined in Section 7.3) will not, at the time it
is sent to Somerset REIT shareholders and at the Shareholders' Authorization
Date (as defined in Section 7.2), contain any untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. The Stock PPM, as to information supplied by Somerset
REIT, will comply in all material respects with all applicable provisions of
Regulation D of the Securities Act.
5.8 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. No shareholder
of Somerset REIT is a foreign person, foreign corporation, foreign partnership,
foreign trust or foreign estate within the meaning of Section 1445 of the Code.
5.9 TAXES. Attached hereto as SCHEDULE C are copies of all Federal,
state, local and foreign tax returns, declarations, statements, reports,
schedules, forms
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and information returns and all amended tax returns relating to Taxes (as
defined below) (collectively, "TAX RETURNS") that are required by applicable
law to be filed by Somerset REIT prior to or as of the date hereof. "TAXES"
shall mean all Federal, state, local and foreign taxes, and other assessments
of a similar nature (whether imposed directly or through withholding),
including any interest, additions to tax, or penalties applicable thereto.
All such Tax Returns and amendments thereto are true, complete and correct in
all material respects.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
Each of the Buyers hereby represents and warrants to the Sellers, as
follows:
6.1 ORGANIZATION AND QUALIFICATION.
(a) AIMCO is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland. AIMCO QRS is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida. Each of AIMCO and AIMCO QRS has its principal
place of business in the State of Colorado and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted. Each
of AIMCO and AIMCO QRS is duly qualified or licensed as a foreign corporation in
each jurisdiction where the character of the properties owned, leased or
operated or the nature of the business conducted by it makes such qualification
or licensing necessary.
(b) AIMCO OP is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware, with its
principal place of business in the State of Colorado, and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted. AIMCO OP is duly qualified or licensed as a foreign limited
partnership in each jurisdiction where the character of the properties owned,
leased or operated or the nature of the business conducted by AIMCO OP makes
such qualification or licensing necessary.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Such Buyer has all
necessary corporate or partnership power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by such Buyer and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate or partnership
action and no other proceedings on its part
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are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by such Buyer and, assuming the due authorization, execution and
delivery thereof by the other parties hereto, constitutes the legal, valid
and binding obligation of such Buyer, enforceable against it in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
6.3 NO CONFLICTS. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with, or, with or without notice
or the passage of time or both, result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, deed of trust,
mortgage, loan agreement, or other document or instrument to which such Buyer is
a party or by which it is bound, or any applicable regulation of any
governmental agency, or any judgment, order or decree of any court having
jurisdiction over it.
6.4 LITIGATION. AIMCO has not received notice of any material
action, suit or proceeding before any judicial or quasi-judicial body, by any
governmental authority or other third party, pending, or to its knowledge,
threatened, against or affecting AIMCO and, to its knowledge, there is no basis
for any such action, suit or proceeding. AIMCO has not received notice of any
attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings that are pending,
or, to its knowledge, threatened, against AIMCO.
ARTICLE VII
COVENANTS
7.1 NOTIFICATION OF CERTAIN MATTERS. Each of the parties hereto
shall give prompt notice to the other parties hereto of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied and (b) any
failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. The delivery of any
notice pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
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7.2 SHAREHOLDER APPROVALS.
(a) The Board of Directors of Somerset REIT shall recommend
that the shareholders of Somerset REIT approve this Agreement and the Merger.
Somerset REIT shall solicit written consents without a meeting from its
shareholders authorizing the Merger as promptly as practicable. The date on
which Somerset REIT receives such consents from the requisite number of
shareholders is hereinafter referred to as the "SHAREHOLDERS' AUTHORIZATION
DATE."
(b) AIMCO, as the sole shareholder of AIMCO QRS, shall
execute a written consent and take such other action as may be required to
approve this Agreement and the Merger.
7.3 STOCK PPM.
(a) As promptly as practicable after the execution of this
Agreement, AIMCO and Somerset REIT shall prepare a private placement memorandum
relating to the issuance of AIMCO Stock pursuant to the Merger and the
solicitation of written consents without a meeting from Somerset REIT's
shareholders authorizing the Merger (the "STOCK PPM"). Somerset REIT shall
furnish to AIMCO all information concerning Somerset REIT as AIMCO may
reasonably request in connection with the preparation of the Stock PPM. Each of
AIMCO and Somerset REIT shall cause the Stock PPM to comply as to form in all
material respects with the applicable provisions of Regulation D under the
Securities Act.
(b) Somerset REIT shall cause the information supplied by
it for inclusion in the Stock PPM not to contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading at the time
the Stock PPM (or any amendment or supplement thereto) is first mailed to the
shareholders of Somerset REIT or at the Shareholders' Authorization Date. If,
at any time prior to the Shareholders' Authorization Date, any event or
circumstance relating to Somerset REIT is discovered by Somerset REIT that
should be set forth in an amendment or a supplement to the Stock PPM, Somerset
REIT shall promptly inform AIMCO thereof.
(c) AIMCO shall cause the Stock PPM (excluding information
relating to Somerset REIT) not to contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading at the time the
Stock PPM (or any amendment or supplement thereto) is first mailed to the
shareholders of Somerset REIT or at the Shareholders' Authorization Date.
7.4 COMPLIANCE WITH SECURITIES LAWS. AIMCO shall take all or any
action required under any applicable Federal or state securities laws in
connection with
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the issuance of shares of AIMCO Stock pursuant to the Merger and the issuance
of OP Units pursuant to the Contribution.
7.5 EXECUTION OF REGISTRATION RIGHTS AGREEMENTS. AIMCO and Somerset
REIT shall execute and deliver the Registration Rights Agreement in the form
of EXHIBIT C-1 hereto (the "SHAREHOLDER REGISTRATION RIGHTS AGREEMENT") prior
to the Effective Time. AIMCO and the Partners who are to receive OP Units in
the Contribution shall execute and deliver the Registration Rights Agreement
in the form of EXHIBIT C-2 hereto (the "UNITHOLDER REGISTRATION RIGHTS
AGREEMENT") prior to the Effective Time.
7.6 CAPITAL EXPENDITURES. The Managing General Partner shall not,
after the date hereof, approve or permit capital expenditures relating to the
Property, other than normal recurring capital expenditures not in excess of
$10,000 per month, without the prior written consent of Somerset REIT.
7.7 PAYMENT OF DISPOSITION FEE. As soon as practicable after the
Effective Time, the Buyers shall cause Somerset LP to pay the Disposition Fee
to the Corporate General Partner and the Managing General Partner.
7.8 DETERMINATION OF NET WORKING CAPITAL. At least five business days
prior to the Closing Date, the Buyers shall provide Somerset REIT with an
estimate of Somerset LP's positive net working capital balance as of a
proposed Closing Date, taking into account all payments of fees, allocations
of income, gain and loss and distributions required to be made as of the
Closing Date pursuant to the Partnership Agreement of Somerset LP, including
distributions pursuant to Section 7.11. If Somerset REIT does not object to
the Buyer's estimate prior to the Closing Date, such amount shall be the "NET
WORKING CAPITAL." If Somerset REIT objects to the Buyers' estimate and the
Buyers and Somerset REIT are unable to agree to an amount within five
business days, then the Buyers and Somerset REIT shall, within five business
days thereafter, mutually agree on a nationally-recognized accounting firm to
determine Somerset LP's positive net working capital balance as of a proposed
Closing Date. The determination of such accounting firm shall then be the
"NET WORKING CAPITAL."
7.9 FURTHER ACTION, REASONABLE EFFORTS. Upon the terms and subject to
the conditions hereof, each of the parties hereto shall use its reasonable
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Merger and the
Contribution, including, without limitation, using its reasonable efforts to
obtain all licenses, permits, consents, approvals, authorizations,
certificates, qualifications and orders of, and make all filings and required
submissions with, all Federal, state and local governmental and regulatory
agencies, authorities, commissions and instrumentalities ("GOVERNMENTAL
ENTITIES") and all shareholders and partners of, and parties to contracts
with, any of the Buyers, the Sellers or Somerset LP, in each case, as are
necessary or desirable for the consummation of the Merger and the
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Contribution. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the Buyers and the Sellers shall use their reasonable best efforts to take
all such action. Each party shall use its reasonable best efforts not to
take any action, or enter into any transaction, that would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
7.10 CONDUCT OF BUSINESS OF SOMERSET REIT PENDING THE MERGER. Somerset
REIT covenants and agrees that, except as expressly permitted or contemplated
by this Agreement, until the Effective Time, unless AIMCO shall otherwise
agree in writing prior to the taking of any action prohibited by the terms of
this Section 7.10, Somerset REIT shall conduct its operations and business in
the ordinary and usual course of business and consistent with past practice.
Without limiting the generality of the foregoing, and except as otherwise
expressly permitted by this Agreement, prior to the Effective Time, without
the prior written consent of AIMCO, Somerset REIT will not: (a) amend or
modify its articles of incorporation or bylaws; (b) issue, sell, pledge or
dispose of, grant or otherwise create, or agree to issue, sell, pledge or
dispose of, grant or otherwise create any shares of its capital stock, any
debt or any securities convertible into or exchangeable for capital stock;
(c) purchase, redeem or otherwise acquire or retire, or offer to purchase,
redeem or otherwise acquire or retire, any shares of its capital stock
(including any options with respect to its capital stock and any security
convertible or exchangeable into its capital stock); (d) declare, set aside,
make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock (except as
provided in Section 7.11 of this Agreement), or subdivide, reclassify,
recapitalize, split, combine or exchange any of its shares of capital stock;
(e) incur or become contingently liable with respect to any indebtedness or
guarantee any such indebtedness or issue any debt securities or incur any
obligation or liability; (f) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business entity; (g)
mortgage or otherwise encumber or subject to any lien any of its properties
or assets; or (h) authorize any of, or commit or agree to take any of, the
foregoing actions.
7.11 DIVIDENDS AND DISTRIBUTIONS.
(a) Prior to the Effective Time, Somerset REIT shall pay cash
dividends to its shareholders with respect to its taxable year beginning on
January 1, 1996 and ending on the Closing Date, in an amount at least equal
to its "REIT taxable income" as defined in Section 857(b)(2) of the Code (but
without taking into account the deduction for dividends paid) for such
taxable year; provided, however, that Somerset REIT shall only be obligated
to pay dividends to its shareholders to the extent that it receives
distributions from Somerset LP pursuant to Section 7.11(b).
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(b) Prior to the Effective Time, the Managing General Partner and
the Corporate General Partner shall cause Somerset LP to make distributions
to its Partners in an aggregate amount equal to their best estimate of Cash
From Operations (as defined in the Agreement of Limited Partnership of
Somerset LP) for the period from January 1, 1995 through the Closing Date,
but only to the extent that such Cash From Operations has not previously been
distributed to Partners of Somerset LP.
7.12 ACCESS TO BOOKS AND RECORDS. Prior to the Effective Time,
Somerset REIT shall provide AIMCO with copies of, or access to, all of its
books and records.
7.13 TAX-FREE REORGANIZATION. None of the parties hereto shall take,
or cause to be taken, any action that would prevent the Merger from being
treated as a "reorganization" within the meaning of Section 368(a) of the
Code.
7.14 TAX CERTIFICATES.
(a) In order to ensure that the Merger is treated as a
"reorganization" within the meaning of Section 368(a) of the Code, prior to
the Effective Time, Somerset REIT shall execute and deliver to AIMCO a
certificate (the "SOMERSET REIT CONTINUITY CERTIFICATE"), in form and
substance reasonably satisfactory to AIMCO, to the effect that the management
of Somerset REIT has not been informed of any plan or intention on the part
of the shareholders of Somerset REIT to sell, exchange or otherwise dispose
of a number of shares of AIMCO Stock to be received pursuant to the Merger
that would reduce the collective ownership of AIMCO Stock by all former
Somerset REIT shareholders to a number of shares having a value, as of the
Effective Time, of less than 50% of the value of all of the formerly
outstanding shares of Somerset Stock as of such time.
(b) Somerset REIT shall use its best efforts to cause each holder
of 1% or more of the outstanding shares of Somerset Stock immediately prior
to the Effective Time to execute and deliver to AIMCO, prior to the Effective
Time, a certificate (each, a "SHAREHOLDER CONTINUITY CERTIFICATE"), in form
and substance reasonably satisfactory to AIMCO, indicating that such
shareholder will not sell more than 50% of the AIMCO Stock received by it in
the Merger for a period of two years.
(c) Each Seller shall execute and deliver to AIMCO, prior to the
Effective Time, a certificate (each, a "FIRPTA CERTIFICATE"), consistent with
the requirements of Section 1445(b)(2) of the Code and in form and substance
reasonably satisfactory to AIMCO, to the effect that such Seller is not a
foreign person and containing the Seller's tax identification number and
address.
(d) Somerset REIT shall execute and deliver to AIMCO, immediately
prior to the Effective Time, a certificate (the "DOMESTIC REIT CERTIFICATE"),
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in form and substance reasonably satisfactory to AIMCO, to the effect that
Somerset REIT is, as of the Effective Time, and has been at all times since
its formation in 1993, a "domestically controlled REIT" within the meaning of
Section 897(h)(4)(B) of the Code.
7.15 AMENDMENT OF PARTNERSHIP AGREEMENT. Prior to the Effective Time,
the Sellers shall amend the Partnership Agreement of Somerset LP to the
extent necessary to permit the transactions contemplated by this Agreement,
including, without limitation, the deletion of Sections 10.1.1, 10.1.4, 10.7,
11.1.1, 17.2 and 17.5.1 thereof or the amendment of such provisions on terms
that are satisfactory to AIMCO.
7.16 FINANCIAL STATEMENTS OF SOMERSET REIT. If any shareholders of
Somerset REIT have not approved the Merger, prior to the Effective Time,
Somerset REIT shall provide AIMCO with (a) a balance sheet of Somerset REIT
as of the latest available date and not more than 10 months prior to the date
of the Effective Time, (b) a profit and loss statement of Somerset REIT for
the 12-month period ended as of the date of such balance sheet, and (c) such
other financial and other information as AIMCO may reasonably require in
order for the Surviving Corporation to comply with the provisions of Florida
law relating to dissenters' rights in connection with the Merger.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER AND THE
CONTRIBUTION. The respective obligations of each party to this Agreement to
effect the Merger and the Contribution, to the extent each is a party to such
transaction, shall be subject to the following conditions:
(a) BOARD APPROVALS. The Board of Directors of AIMCO and the
Board of Directors of Somerset REIT shall have approved this Agreement and
the Merger.
(b) SOMERSET REIT SHAREHOLDER APPROVAL. This Agreement and the
Merger shall have been approved and adopted by the shareholders of Somerset
REIT, in accordance with the FBCA and all other applicable laws.
(c) GOVERNMENTAL APPROVALS. All consents, approvals and action
of Governmental Entities required to permit the consummation of the Merger
and the Contribution shall have been obtained or made, free of any condition
that would have a material adverse effect on AIMCO or Somerset LP, and all
required authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entity shall have been obtained or filed or shall
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have occurred. AIMCO and AIMCO OP shall have received all state securities
or "blue sky" permits and other authorizations necessary to issue the AIMCO
Stock in the Merger and the OP Units in the Contribution.
(d) NO INJUNCTIONS. No action shall have been taken, and no
statute, rule, regulation, executive order, decree, or injunction shall have
been enacted, entered, promulgated or enforced (and not repealed, superseded
or otherwise make inapplicable), by any court or Governmental Entity which
prohibits the consummation of the transactions contemplated by this Agreement.
(e) NO RESTRAINING ORDERS. No court of competent jurisdiction
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the Merger
or the Contribution which has not been lifted (each party agreeing to use its
reasonable efforts to have any such injunction, order or decree lifted).
(f) NET WORKING CAPITAL DETERMINATION. The amount of Net Working
Capital shall have been determined pursuant to Section 7.8.
8.2 CONDITIONS TO OBLIGATIONS OF THE BUYERS TO EFFECT THE MERGER AND
THE CONTRIBUTION. The obligations of the Buyers to effect the Merger and the
Contribution are subject to the satisfaction of the following conditions,
unless waived by the Buyers:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained herein (including Articles III, IV and V)
shall be true and correct at and as of the Effective Time with the same force
and effect as though made at and as of the Effective Time (except to the
extent a representation or warranty speaks specifically as of an earlier
date) or except as contemplated by this Agreement).
(b) COVENANTS. The Sellers shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by them
prior to the Effective Time.
(c) SELLERS' CERTIFICATES. Each of the Sellers shall have
delivered to AIMCO a certificate, dated the Closing Date and, if the Seller
is a corporation, signed by its President, certifying as to its compliance
with Sections 8.2(a) and (b).
(d) TITLE REPORT. AIMCO OP shall have obtained the following:
(a) an extended coverage preliminary title report (the "PTR") relating to the
Property, issued by Stewart Title Guaranty Company (in such capacity, the
"TITLE COMPANY"), together with legible copies of all documents referenced as
exceptions therein (the "UNDERLYING DOCUMENTS"); and (b) a current or
currently updated as-built American Land Title Association survey of the
Property (the "SURVEY"), in form reasonably satisfactory to
20
<PAGE>
AIMCO OP and the Title Company, prepared and certified to AIMCO OP, the Title
Company, the Sellers and such other persons or entities as AIMCO OP may, in
its discretion, request, by a surveyor licensed in the State of Utah, showing
all improvements, all recorded or visible easements, all roads, all
utilities, the number of parking spaces, access to and from the land, and
drainage ditches, set-back lines, protrusions, encroachments, and recorded or
visible encumbrances affecting the same.
(e) TITLE TO PROPERTY. As of the Closing Date, Somerset LP shall
have fee simple title to the Property, subject only to the Permitted
Exceptions, including the lien of that certain Amended and Restated Deed of
Trust Including Security Agreement, Assignment of Leases and Rents and
Fixture Filing (the "DEED OF TRUST"), made by Somerset LP in favor of Brazos
Partners, L.P., a Delaware limited partnership ("BRAZOS"), dated as of
September 1, 1993 (the Deed of Trust and related loan documents,
collectively, the "MORTGAGE"), which secures the obligations of Somerset LP
under the Note. As used herein, "MORTGAGEE" refers to Brazos or, in the event
that there is a successor to Brazos's interest in the Mortgage as of the
Closing Date, such successor.
(f) TITLE POLICY. The Title Company shall have indicated to
AIMCO OP that, as of the Closing Date, it is prepared and irrevocably
committed to issue to Somerset LP an American Land Title Association extended
coverage owner's policy of title insurance in favor of Somerset LP for the
Property in the amount designated by AIMCO OP showing fee title to the
Property vested in Somerset LP, with those endorsements reasonably requested
by AIMCO OP, including, without limitation, a non-imputation endorsement,
subject only to the Permitted Exceptions (the "OWNER'S TITLE POLICY").
(g) MORTGAGEE CONSENT. AIMCO OP shall have obtained the
Mortgagee's written consent (the "MORTGAGEE CONSENT") to the Merger and the
Contribution.
(h) INVESTOR QUESTIONNAIRES. Each of the shareholders of
Somerset REIT shall have completed, executed and delivered to AIMCO an
Investor Questionnaire, and no more than 35 shareholders of Somerset REIT
shall have indicated therein that they are not Accredited Investors.
(i) INVESTOR CERTIFICATES. Each of the Sellers (other than
Somerset REIT) and each of the Contributing Partners shall have completed,
executed and delivered to AIMCO an Investor Certificate.
(j) CONTINUITY CERTIFICATE. Somerset REIT shall have delivered
to AIMCO the Somerset REIT Continuity Certificate.
21
<PAGE>
(k) FIRPTA CERTIFICATES. Each of the Sellers, the Contributing
Partners and the holders of at least 50% of the outstanding shares of
Somerset Stock shall have delivered to AIMCO a FIRPTA Certificate.
(l) DOMESTIC REIT CERTIFICATE. Somerset REIT shall have
delivered to AIMCO the Domestic REIT Certificate.
(m) ASSIGNMENT OF PARTNERSHIP INTERESTS. Each Seller (other than
Somerset REIT) and each of the Contributing Partners shall have delivered to
AIMCO OP, at least two business days prior to the Closing Date, an executed
Assignment and Assumption of Partnership Interest in the form of EXHIBIT D-1,
in the case of the Sellers, and in the form of EXHIBIT D-2, in the case of
any Contributing Partners, in each case, completed to the reasonable
satisfaction of AIMCO OP.
(n) AMENDMENT OF PARTNERSHIP AGREEMENT. Each of the Sellers
shall have executed and delivered to each other and to AIMCO OP an amendment
to the Partnership Agreement of Somerset LP that satisfies the requirements
of Section 7.15 hereof.
(o) PROOF OF AUTHORITY. Each of those Sellers that is a
corporation, partnership, trust or limited liability company shall have
delivered to the Buyers proof of such corporate, partnership, trust or
limited liability company authority and authorization to enter into this
Agreement and the transactions contemplated hereby, and such proof of the
power and authority of the individual(s) executing or delivering any
instruments, documents or certificates on behalf of such Seller to act for
and bind it as may be reasonably required by the Buyers or the Title Company.
(p) ACKNOWLEDGMENT. Each Seller (other than Somerset REIT) and
each Contributing Partner shall have delivered executed counterparts of the
Acknowledgment and Acceptance of Admission of Limited Partner substantially
in the form attached hereto as EXHIBIT E.
(q) BOOKS AND RECORDS. Somerset REIT shall have delivered to
AIMCO all of its books and records, including, without limitation, all
records of all proceedings of and actions taken by, its shareholders and
board of directors, and all records relating to the issuance and transfer of
Somerset Stock.
(r) OTHER. The Sellers shall have delivered to the Buyers such
other documents and instruments, signed and properly acknowledged by the
Sellers, if appropriate, as may be reasonably required by the Buyers or the
Title Company, or otherwise in order to effectuate the provisions of this
Agreement and the Closing of the transactions contemplated herein.
22
<PAGE>
8.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO EFFECT THE MERGER AND
THE CONTRIBUTION. The obligations of the Sellers to effect the Merger and
the Contribution are subject to the satisfaction of the following conditions,
unless waived by the Sellers:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyers contained herein shall be true and correct at and as
of the Effective Time with the same force and effect as though made at and as
of the Effective Time (except to the extent a representation or warranty
speaks specifically as of an earlier date or except as contemplated by this
Agreement).
(b) COVENANTS. The Buyers shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by them
prior to the Effective Time.
(c) AIMCO CERTIFICATE. AIMCO shall have delivered to Somerset
REIT a certificate dated the Closing Date and signed by its President or any
Vice President, certifying as to the Buyer's compliance with Sections 8.3(a)
and (b).
(d) REGISTRATION RIGHTS AGREEMENTS. AIMCO shall have executed
and delivered the Shareholder Registration Rights Agreement and the
Unitholder Registration Rights Agreement.
(e) OTHER. The Buyers shall have delivered such other documents
and instruments, properly signed and acknowledged if appropriate, as
reasonably may be required in order to effectuate the provisions of this
Agreement and the closing of the transactions contemplated herein.
ARTICLE IX
TERMINATION, WAIVER AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the respective shareholders of AIMCO QRS and
Somerset REIT:
(a) by the mutual written consent of AIMCO and Somerset REIT;
(b) by AIMCO or Somerset REIT if (i) any Governmental Entity, the
consent of which is a condition to the obligations of the Buyers and the
Sellers to consummate the Merger and the Contribution, shall have determined
not to grant its consent and all appeals of such determination shall have
been taken and have been unsuccessful or (ii) any court of competent
jurisdiction shall have issued an order, judg-
23
<PAGE>
ment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment or
decree shall have become final and nonappealable;
(c) by AIMCO if the requisite approval of the shareholders of
Somerset REIT shall not have been obtained within 60 days after AIMCO
provides the Stock PPM to Somerset REIT;
(d) by AIMCO if (i) there has been a material breach by the
Sellers of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within ten business days
following receipt by the breaching party of notice of such breach; or (ii)
the Board of Directors of AIMCO shall have determined not to approve the
transactions contemplated by this Agreement;
(e) by Somerset REIT if there has been a material breach by the
Buyers of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within ten business days
following receipt by the breaching party of notice of such breach;
(f) by AIMCO if all or any material portion of the Property is
taken by condemnation or eminent domain (or is the subject of a pending or
contemplated taking which has not been consummated); and
(g) by AIMCO if any material part of the Property is damaged or
destroyed by earthquake, flood, landslide, fire or other casualty.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by AIMCO or Somerset REIT as provided in Section 9.1 hereof, this
Agreement shall forthwith become void and there shall be no liability on the
part of the Buyers, the Sellers or their respective officers or directors;
provided that, if this Agreement is so terminated by a party because one or
more of the conditions to such party's obligations hereunder is not satisfied
as a result of the other party's willful failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies for breach of contract or otherwise, including, without
limitation, damages relating thereto, shall survive such termination
unimpaired.
9.3 AMENDMENT OR SUPPLEMENT. At any time before or after approval of
this Agreement by the shareholders of Somerset REIT and prior to the
Effective Time, this Agreement may be amended or supplemented in writing by
AIMCO and Somerset REIT with respect to any of the terms contained in this
Agreement, except that (a) following approval by the shareholders of Somerset
REIT there shall be no amendment or supplement which by law requires further
approval by such shareholders without further approval by the shareholders of
Somerset REIT, and (b) no amendment or supplement
24
<PAGE>
may impose any additional obligation on, or alter the consideration to be
received by, any Seller without the written consent of such Seller.
9.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the Effective
Time, AIMCO, on behalf of the Buyers, and Somerset REIT, on behalf of the
Sellers, may:
(a) extend the time for the performance of any of the
obligations or acts of the Sellers or the Buyers, as the case may be;
(b) waive any inaccuracies in the representations and warranties
of the Sellers or the Buyers, as the case may be, contained herein or in any
document delivered pursuant hereto; or
(c) waive compliance with any of the agreements or conditions of
the Sellers or the Buyers, as the case may be, contained herein; PROVIDED,
HOWEVER, that no failure or delay by any party in exercising any right
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right hereunder.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 GOVERNING LAW. This Agreement and the legal relations between the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Florida, without regard to its principles of
conflicts of law.
10.2 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules attached hereto, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, letters of intent, negotiations and discussions, whether oral
or written, of the parties, and there are no warranties, representations or
other agreements, express or implied, made to either party by the other party
in connection with the subject matter hereof except as specifically set forth
herein or in the documents delivered pursuant hereto or in connection
herewith.
10.3 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
25
<PAGE>
10.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing
and may be given personally, by registered or certified mail, or by Federal
Express (or other reputable overnight delivery service):
if to AIMCO, AIMCO OP or AIMCO QRS, to it at:
510 West Sixth Street, Suite 1000
Los Angeles, California 90014
Attention: Mr. Peter K. Kompaniez
Telephone: (213) 680-2936
and
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Harry Alcock
Telephone: (303) 757-8600
if to the Managing General Partner, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Steven Ira
Telephone: (303) 757-8600
if to Somerset REIT, the Special Limited Partner, or the Corporate
General Partner, to it at:
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Mr. Todd Sheets
Telephone: (813) 573-3800
or to such other address or such other person as the addressee party shall
have last designated by notice to the other party. All Notices shall be
deemed to have been given when received.
10.5 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, all fees and expenses incurred by any party
hereto in connection with this Agreement shall be borne by such party;
provided, however, that if the Merger and the Contribution are consummated,
the Buyers will pay all real estate and other closing costs and costs
associated with the issuance of AIMCO Stock and OP
26
<PAGE>
Units, other than costs, if any, the payment of which by the Buyers would
constitute "boot" or "additional consideration" for purposes of Section
356(a) of the Code.
10.6 ASSIGNMENT. No party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this
Agreement, or to delegate any duties or obligations arising under this
Agreement, voluntarily, involuntarily, or by operation of law, without the
prior written consent of the other parties hereto.
10.7 SURVIVAL. All representations, warranties and agreements
contained in this Agreement (other than the representations and warranties of
Somerset REIT set forth in Article V) shall survive the Closing
notwithstanding any investigation conducted with respect thereto or any
knowledge acquired as to the accuracy or inaccuracy of any such
representation or warranty.
10.8 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction.
10.9 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of Section 10.5 hereof, all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors and assigns.
Except as specifically set forth or referred to herein, nothing herein
expressed or implied is intended or shall be construed to confer upon or give
to any person or entity, other than the parties hereto and their successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
10.10 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one
and the same instrument.
10.11 HEADINGS. The Section headings of this Agreement are for
convenience of reference only and shall not be deemed to modify, explain,
restrict, alter or affect the meaning or interpretation of any provision
hereof.
10.12 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
10.13 CONSTRUCTION. This Agreement shall not be construed more
strictly against one party hereto than against any other party hereto merely
by virtue of the fact that it may have been prepared by counsel for one of
the parties.
27
<PAGE>
10.14 EXHIBITS. All exhibits attached hereto are hereby incorporated
by reference as though set out in full herein.
10.15 ATTORNEYS' FEES. In the event that either party hereto brings an
action or proceeding against the other party to enforce or interpret any of
the covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover
all costs and expenses of such action or proceeding, including, without
limitation, attorneys' fees, charges, disbursements and the fees and costs of
expert witnesses.
10.16 BROKERS. The parties hereby represent, warrant to and agree with
each other that they have not had, and shall not have, any dealings with any
third party to whom the payment of any broker's fee, finder's fee, commission
or other similar compensation shall or may become due or payable in
connection with the transaction contemplated hereby. The Sellers shall
indemnify, defend and hold the Buyers harmless from and against any and all
claims, losses, damages, costs and expenses (including reasonable attorneys'
fees, charges and disbursements) incurred by the Buyers by reason of any
breach or inaccuracy of the representation, warranty and agreement of the
Sellers contained in this Section. The Buyers shall indemnify, protect,
defend and hold the Sellers harmless from and against any and all claims,
losses, damages, costs and expenses (including reasonable attorneys' fees,
charges and disbursements) incurred by the Sellers by reason of any breach or
inaccuracy of the representation, warranty and agreement of the Buyers
contained in this Section. The provisions of this Section shall survive the
Closing or earlier termination of this Agreement.
10.17 DISSENTERS' RIGHTS. To the extent that any holder of Somerset
Stock possesses and exercises dissenter's rights or appraisal rights, if any,
under state law, any cash or other consideration paid to such holder shall be
paid by Somerset REIT or the Surviving Corporation and will not be paid or
funded, directly or indirectly, by the Buyers.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY,
a Maryland corporation
By: /s/ PETER KOMPANIEZ
---------------------------------
Name: Peter Kompaniez
Its: Vice Chairman
AIMCO SOMERSET, INC.,
a Florida Corporation
By: /s/ Peter Kompaniez
---------------------------------
Name: Peter Kompaniez
Its: Vice Chairman and Executive
Vice President
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.,
its general partner
By: /s/ Peter Kompaniez
----------------------------
Name: Peter Kompaniez
Its: Vice President
SOMERSET REIT, INC.,
a Florida corporation
By: /s/ Todd Sheets
---------------------------------
Name: Todd Sheets
Its: President
29
<PAGE>
RJ HOLDINGS, LTD.
a Florida limited partnership
By: RJ Partners, Inc.,
---------------------------------
a Florida corporation,
its general partner
By: /s/ Francis S. Godbold
--------------------------
Name: Francis S. Godbold
Its: President
SOMERSET PAM PARTNERSHIP,
a Colorado general partnership
By: Property Asset Management, LLC,
---------------------------------
Limited Liability Company, a
Colorado limited liability
company, its general partner
By: /s/ Steven Ira
----------------------------
Name: Steven Ira
Its: Chief Manager
RJ EQUITIES, INC.,
a Florida corporation
By: /s/ Todd Sheets
---------------------------------
Name: Todd Sheets
Its: Vice President
30
<PAGE>
SCHEDULE A
DESCRIPTION OF THE PROPERTY
That certain real property located in Salt Lake County,
State of Utah, more specifically described as follows:
Beginning at a point South 89 DEG. 52'15" West 53.00 feet from the
Northeast corner of the Southwest Quarter of Section 34, Township 1
South, Range 1 West, Salt Lake Base and Meridian, running thence South 0
DEG. 0 DEG. 1'15" East 339.94 feet; thence South 89 DEG. 55'47" West 874.92
feet; thence South 25 DEG. West 716.22 feet; thence South 89 DEG. 59'18"
West 88.67 feet; thence South 0 DEG. 01'15" East 340.00 feet; thence
South 89 DEG. 59'18" West 282.60 feet; thence North 32 DEG. West 248.71
feet; thence North 375.00 feet; thence North 16 DEG. West 380.00 feet;
thence North 374.98 feet; thence North 89 DEG. 52'15" East 1785.17 feet
to the point of beginning.
Less and excepting therefrom the following: Beginning at a point
South 89 DEG. 52'15" West 53.00 feet from the Northeast corner of the
Southwest quarter of Section 34, Township 1 South, Range 1 West, Salt
Lake Base and Meridian, running thence South 0 DEG. 01'15" East 80.17
feet; thence South 89 DEG. 52'15" West 91.75 feet to a point of a 390.00
foot radius curve to the right, the radius point of which bears North 0
DEG. 07'45" West; thence Northwesterly along the arc of said curve
113.07 feet through a central angle of 16 DEG. 36'42" to a point of a
572.5 foot radius curve to the left, the radius point of which bears
South 16 DEG. 28'57" West; thence Northwesterly along the arc of said
curve 165.98 feet through a central angle of 16 DEG. 36'42" to a point
of tangency; thence South 89 DEG. 52'15" West 1418.19 feet; thence North
40.00 feet; thence North 89 DEG. 52'15" East 1785.17 feet to the point
of beginning.
Together with a non-exclusive easement for ingress and egress for
pedestrian and vehicular traffic over, on and across the following
described land: Beginning at a point South 0 DEG. 01'15" East 500.43
feet and South 89 DEG. 58'45" West 53.00 feet from the Northeast corner
of the Southwest Quarter of Section 34, Township 1 South, Range 1 West,
Salt Lake Base and Meridian, running thence South 0 DEG. 01'15" East
50.00 feet; thence South 89 DEG. 58'45" West 80.00 feet; thence
Northwesterly 240.90 feet along the arc of a 225.00 foot radius curve to
the right (long chord bears North 59 DEG. 20'52" West 229.56 feet);
thence Northwesterly 88.47 feet along the arc of an 82.56 foot radius
curve to the left (long chord bears North 59 DEG. 22'22" West 84.30
feet); thence South 89 DEG. 55'47" West 548.31 feet; thence North 25
DEG. East 55.19 feet; thence North 89 DEG. 55'47" East 669.92 feet;
thence South
31
<PAGE>
0 DEG. 01'15" East 107.68 feet; thence Southeasterly 139.24 feet along
the arc of a 175.00 foot radius curve to the left (long chord bears
South 67 DEG. 13'36" East 135.60 feet); thence North 89 DEG. 58'45" East
80.00 feet to the point of beginning.
32
<PAGE>
SCHEDULE B
SOMERSET UTAH, L.P. PARTNERSHIP INTERESTS
SOMERSET UTAH, L.P. PARTNERS PERCENTAGE INTEREST
- ---------------------------- -------------------
Somerset REIT, Inc. 70.0%
RJ Holdings, Ltd. 16.17%
Somerset PAM Partnership 8.33%
RJ Equities, Inc. 0.50%
Class B Limited Partners:
Fred Tripp 1.545%
Bill Chatfield 0.7%
Jim Hemphill 0.45%
Steve Duncan 0.335%
Pat Sullivan 0.335%
Jack Harmon 0.31%
Sally Law 0.31%
Christopher Morson 0.28%
Mark Smith 0.225%
Margaret Staner 0.17%
Chuck Ballou 0.17%
Joe Castro 0.17%
33
<PAGE>
SCHEDULE C
TAX RETURNS OF SOMERSET REIT
34
<PAGE>
EXHIBIT A
INVESTOR QUESTIONNAIRE
A-1
<PAGE>
EXHIBIT B
INVESTOR CERTIFICATE
Reference is made to the Acquisition Agreement, dated as of April 30, 1996,
by and among Apartment Investment and Management Company, AIMCO Somerset, Inc.,
AIMCO Properties, L.P., Somerset REIT, Inc., RJ Holdings, Ltd., Somerset PAM
Partnership, and RJ Equities, Inc. (the "Acquisition Agreement"). Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
thereto in the Acquisition Agreement. Pursuant to Section 2.2(a) of the
Acquisition Agreement, the undersigned hereby requests delivery of OP Units at
the Closing in exchange for the contribution of the undersigned's Somerset
Interest, as follows:
/ / Deliver the maximum number of OP Units issuable based on the undersigned's
Contribution Value, as described in the Acquisition Agreement.
/ / Deliver up to _____ OP Units and the remainder in cash.
/ / Deliver all cash.
/ / Other. Please specify:
---------------------------------------
- ----------------------------- ------------------------------
Date of Execution Taxpayer Identification Number
If the interest in Somerset Utah, L.P. If the interest in Somerset Utah,
is held by an Individual: L.P. is NOT held by an Individual:
- ----------------------------- ------------------------------
Name of Individual Name of Entity
(Please Type or Print) (Please Type or Print)
By:
- ----------------------------- ----------------------------
Signature Name:
Title:
- -----------------------------
Name of Spouse if Co-Owner
(Please type or Print)
- -------------------------------
Signature of Spouse if Co-Owner
B-1
<PAGE>
EXHIBIT C-1
SHAREHOLDER REGISTRATION RIGHTS AGREEMENT
C-1-1
<PAGE>
EXHIBIT C-2
UNITHOLDER REGISTRATION RIGHTS AGREEMENT
C-2-1
<PAGE>
EXHIBIT D-1
ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTEREST (SELLERS)
This Assignment and Assumption of Partnership Interest (this
"ASSIGNMENT") is entered into as of this ____ day of _____, 1996 by and between
______________________ ("ASSIGNOR"), and AIMCO Properties, L.P., a Delaware
limited partnership ("ASSIGNEE"). Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Acquisition
Agreement, dated as of April 30, 1996 (the "ACQUISITION AGREEMENT"), by and
among Apartment Investment and Management Company, AIMCO Somerset, Inc.,
Assignee, Somerset REIT, Inc., RJ Holdings, Ltd., Somerset PAM Partnership and
RJ Equities, Inc.
WHEREAS, pursuant to that certain Agreement of Limited Partnership of
Somerset Utah, L.P., dated June 10, 1993 (the "PARTNERSHIP AGREEMENT"), among
Somerset PAM Partnership, RJ Equities, Inc., Somerset REIT, Inc., RJ Holdings,
Ltd. and the Class B Limited Partners (as defined therein), Assignor is a
partner in Somerset Utah, L.P., a Colorado limited partnership ("Somerset LP"),
and owns the partnership interest in Somerset LP set forth on SCHEDULE A hereto
opposite Assignor's name (Assignor's "SOMERSET INTEREST");
WHEREAS, pursuant to Article II of the Acquisition Agreement,
immediately after the Merger is consummated, Assignor has agreed to contribute,
and Assignee has agreed to accept from Assignor, Assignor's Somerset Interest in
exchange for OP Units and/or cash, as provided therein; and
WHEREAS, Assignor desires to assign to Assignee, and Assignee desires
to accept from Assignor, all of Assignor's right, title and interest in and to
Assignor's Somerset Interest, on the terms and conditions set forth herein and
in the Acquisition Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. Assignor hereby represents and warrants to Assignee and the
other Buyers that Assignor is the lawful owner of and has good title to
Assignor's Somerset Interest; that Assignor has the full right and authority to
execute this Assignment; and that Assignor's Somerset Interest is free and clear
of all liens or encumbrances of any kind or character whatsoever, other than
liens in favor of Assignee.
2. In consideration of the transfer to Assignor of OP Units and/or
cash pursuant to the Acquisition Agreement, Assignor hereby unconditionally and
D-1-1
<PAGE>
irrevocably transfers, assigns and sets over to Assignee all of Assignor's
right, title and interest in and to Assignor's Somerset Interest, including,
without limitation, (i) all of Assignor's interest in the capital of Somerset LP
and Assignor's interest in all profits and distributions of any kind to which
Assignor shall at any time be entitled in respect of its Somerset Interest; (ii)
all other payments, if any, due or to become due to Assignor in respect of
Assignor's Somerset Interest, under or arising out of the Partnership Agreement
of Somerset LP, whether as contractual obligations, damages, insurance proceeds,
condemnation awards or otherwise; (iii) all of Assignor's claims, rights,
powers, privileges, authority, options, security interests, liens and remedies,
if any, under or arising out of the Partnership Agreement of Somerset LP or
Assignor's ownership of its Somerset Interest; and (iv) all present and future
claims, if any, of Assignor against Somerset LP or its general partners under or
arising out of the Partnership Agreement of Somerset LP for monies loaned or
advanced, for services rendered or otherwise.
3. Assignee hereby accepts Assignor's Somerset Interest and agrees
to assume Assignor's obligations under the Partnership Agreement with respect to
Assignor's Somerset Interest from and after the date hereof.
4. This Assignment shall take effect immediately after the Effective
Time.
5. This Assignment shall inure to the benefit of and be binding upon
Assignor and Assignee and their respective successors and assigns.
6. This Assignment shall be construed and enforced in accordance
with the laws of the State of Colorado.
7. This Assignment may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall together
constitute one and the same instrument.
D-1-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
as of the day and year first written above.
"Assignor"
--------------------------------------------
By: ,
----------------------
Its: ,
---------------------
By:
----------------------
Name:
--------------------
Its:
---------------------
"Assignee"
AIMCO PROPERTIES, L.P., a Delaware
limited partnership
By: AIMCO-GP, INC., its general partner
By:
----------------------
Name:
--------------------
Its:
---------------------
D-1-3
<PAGE>
SCHEDULE A
SOMERSET UTAH, L.P. PARTNERSHIP INTERESTS
SOMERSET UTAH, L.P. PARTNERS PERCENTAGE INTEREST
- ---------------------------- -------------------
Somerset REIT, Inc. 70.0%
RJ Holdings, Ltd. 16.17%
Somerset PAM Partnership 8.33%
RJ Equities, Inc. 0.50%
Class B Limited Partners:
Fred Tripp 1.545%
Bill Chatfield 0.7%
Jim Hemphill 0.45%
Steve Duncan 0.335%
Pat Sullivan 0.335%
Jack Harmon 0.31%
Sally Law 0.31%
Christopher Morson 0.28%
Mark Smith 0.225%
Margaret Staner 0.17%
Chuck Ballou 0.17%
Joe Castro 0.17%
D-1-4
<PAGE>
EXHIBIT D-2
ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTEREST (CONTRIBUTING PARTNERS)
This Assignment and Assumption of Partnership Interest (this
"ASSIGNMENT") is entered into as of this ____ day of _____, 1996 by and between
______________________ ("ASSIGNOR"), and AIMCO Properties, L.P., a Delaware
limited partnership ("ASSIGNEE"). Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Acquisition
Agreement, dated as of April 30, 1996 (the "ACQUISITION AGREEMENT"), by and
among Apartment Investment and Management Company, AIMCO Somerset, Inc.,
Assignee, Somerset REIT, Inc., RJ Holdings, Ltd. Somerset PAM Partnership, and
RJ Equities, Inc .
WHEREAS, pursuant to that certain Agreement of Limited Partnership of
Somerset Utah, L.P., dated June 10, 1993 (the "PARTNERSHIP AGREEMENT"), among
Somerset PAM Partnership, RJ Equities, Inc., Somerset REIT, Inc., RJ Holdings,
Ltd. and the Class B Limited Partners (as defined therein), Assignor is a
partner in Somerset Utah, L.P., a Colorado limited partnership ("Somerset LP"),
and owns the partnership interest in Somerset LP set forth on SCHEDULE A hereto
opposite Assignor's name (Assignor's "SOMERSET INTEREST");
WHEREAS, pursuant to Article II of the Acquisition Agreement,
immediately after the Merger is consummated, Assignee has agreed to accept from
each Contributing Partner such Partner's Somerset Interest in exchange for OP
Unites and/or cash, as provided therein; and
WHEREAS, Assignor desires to assign to Assignee, and Assignee desires
to accept from Assignor, all of Assignor's right, title and interest in and to
Assignor's Somerset Interest, on the terms and conditions set forth herein and
in the Acquisition Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. Assignor hereby represents and warrants to Assignee and the
other Buyers that Assignor is the lawful owner of and has good title to
Assignor's Somerset Interest; that Assignor has the full right and authority to
execute this Assignment and consummate the transactions contemplated hereby;
that Assignor's Somerset Interest is owned free and clear of all security
interests, liens, adverse claims, pledges, options, rights of first refusal,
agreements, charges and other encumbrances of any kind or character whatsoever;
that Assignor is not (and each of its shareholders or partners, if any, is not
and at all times since its formation has not been) a foreign person, foreign
corporation, foreign partnership, foreign trust or
D-2-1
<PAGE>
foreign estate within the meaning of Section 1445 of the Code; and that
Assignor has been advised by counsel of its own selection with respect to
this Assignment and the tax implications of the transactions contemplated
hereby.
2. If Assignor has elected, or will elect, to receive OP Units
pursuant to Section 2.2 of the Acquisition Agreement, Assignor hereby represents
and warrants to Assignee that:
(a) Assignor is an "Accredited Investor," as such term is
defined in Regulation D under the Securities Act;
(b) Assignor has received and reviewed Assignee's Private
Placement Memorandum, dated April 5, 1996, relating to OP Units;
(c) Assignor has had access to such additional financial and
other information, and has been afforded the opportunity to ask questions of
representatives of Assignee and AIMCO, and to receive answers to those
questions, as it has deemed necessary in connection with its acquisition of OP
Units;
(d) Assignor acknowledges that the OP Units that will be
acquired pursuant to this Assignment are being acquired in a transaction not
involving any public offering within the meaning of the Securities Act, and the
OP Units, and any AIMCO Stock that may be issued in exchange for OP Units
tendered for redemption, have not been, and may never be, registered under the
Securities Act;
(e) Assignor agrees not to offer, sell, transfer or otherwise
dispose of the OP Units, or any AIMCO Stock issued in exchange for OP Units
tendered for redemption, in the absence of registration under the Securities Act
unless it delivers to Assignee and AIMCO an opinion of counsel reasonably
satisfactory to Assignee and AIMCO, in form and substance satisfactory to
Assignee and AIMCO, to the effect that the proposed sale, transfer or other
disposition may be effected without registration under the Securities Act and
under applicable state securities and blue sky laws;
(f) Assignor acknowledges that the OP Units, and any AIMCO Stock
issued in exchange for OP Units tendered for redemption, will be in the form of
physical certificates and that, unless and until such OP Units or AIMCO Stock
shall have been registered under the Securities Act, the certificates will bear
a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DIS-
D-2-2
<PAGE>
POSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR
DELIVERS TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
(g) Assignor has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
acquisition of the OP Units and is able to bear the economic risk of a loss of
an investment in the OP Units and is not acquiring any OP Units with a view to
the distribution thereof or any present intention of offering or selling any
thereof in a transaction that would violate the Securities Act or the securities
laws of any state or any other applicable jurisdiction.
3. Assignor shall execute and deliver to AIMCO, prior to the
Effective Time, a certificate consistent with the requirements of Section
1445(b)(2) of the Code and in form and substance reasonably satisfactory to
AIMCO, to the effect that Assignor is not a foreign person and containing
Assignor's tax identification number and address.
4. Assignor hereby approves and consents to the Merger, the
Contribution and all of the other transactions contemplated by the Acquisition
Agreement, including, without limitation, the admission of Assignee as a general
partner of Somerset LP.
5. In consideration of the transfer to Assignor of OP Units and/or
cash pursuant to the Acquisition Agreement, Assignor hereby unconditionally and
irrevocably transfers, assigns and sets over to Assignee all of Assignor's
right, title and interest in and to Assignor's Somerset Interest, including,
without limitation, (i) all of Assignor's interest in the capital of Somerset LP
and Assignor's interest in all profits and distributions of any kind to which
Assignor shall at any time be entitled in respect of its Somerset Interest; (ii)
all other payments, if any, due or to become due to Assignor in respect of
Assignor's Somerset Interest, under or arising out of the Partnership Agreement
of Somerset LP, whether as contractual obligations, damages, insurance proceeds,
condemnation awards or otherwise; (iii) all of Assignor's claims, rights,
powers, privileges, authority, options, security interests, liens and remedies,
if any, under or arising out of the Partnership Agreement of Somerset LP or
Assignor's ownership of its Somerset Interest; and (iv) all present and future
claims, if any, of Assignor against Somerset LP or its general partners under or
arising out of the Partnership Agreement of Somerset LP for monies loaned or
advanced, for services rendered or otherwise.
D-2-3
<PAGE>
6. Assignee hereby accepts Assignor's Somerset Interest and agrees
to assume Assignor's obligations under the Partnership Agreement with respect to
Assignor's Somerset Interest from and after the date hereof.
7. This Assignment shall take effect immediately after the Effective
Time. Assignor acknowledges and agrees that this Assignment shall be of no
force or effect if the Merger does not occur for any reason, including the
termination of the Acquisition Agreement.
8. This Assignment shall inure to the benefit of and be binding upon
Assignor and Assignee and their respective successors and assigns.
9. This Assignment shall be construed and enforced in accordance
with the laws of the State of Colorado.
10. This Assignment may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall together
constitute one and the same instrument.
D-2-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of
the day and year first written above.
"Assignor"
---------------------------------------
By:
--------------------------,
Its:
-------------------------,
By:
--------------------------
Name:
-------------------------
Its:
--------------------------
"Assignee"
AIMCO PROPERTIES, L.P., a Delaware
limited partnership
By: AIMCO-GP, INC., its general partner
By:
--------------------------
Name:
-------------------------
Its:
--------------------------
D-2-5
<PAGE>
SCHEDULE A
SOMERSET UTAH, L.P. PARTNERSHIP INTERESTS
-----------------------------------------
SOMERSET UTAH, L.P. PARTNERS PERCENTAGE INTEREST
- ---------------------------- -------------------
Somerset REIT, Inc. 70.0%
RJ Holdings, Ltd. 16.17%
Somerset PAM Partnership 8.33%
RJ Equities, Inc. 0.50%
Class B Limited Partners:
Fred Tripp 1.545%
Bill Chatfield 0.7%
Jim Hemphill 0.45%
Steve Duncan 0.335%
Pat Sullivan 0.335%
Jack Harmon 0.31%
Sally Law 0.31%
Christopher Morson 0.28%
Mark Smith 0.225%
Margaret Staner 0.17%
Chuck Ballou 0.17%
Joe Castro 0.17%
D-2-6
<PAGE>
EXHIBIT E
ACKNOWLEDGEMENT AND ACCEPTANCE
OF ADMISSION OF LIMITED PARTNER
This Acknowledgment and Acceptance of Admission of Limited Partner
(this "Acknowledgment") is made as of ______ __, 1996, between AIMCO-GP, Inc., a
Delaware corporation ("AIMCO-GP"), and _______________ ("Admitted").
Capitalized terms used in this Acknowledgment without definition have the
meanings given them in that certain First Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 (the
"Partnership Agreement").
WHEREAS, AIMCO-GP is the general partner of AIMCO Properties, L.P., a
Delaware limited partnership (the "Partnership" or "AIMCO OP"), under the
Partnership Agreement;
WHEREAS, Admitted has contributed to the Partnership certain interests
in Somerset Utah, L.P., a Colorado limited partnership, in exchange for
Partnership Common Units; and
WHEREAS, AIMCO-GP desires to evidence the admission of Admitted as an
Additional Limited Partner in the Partnership, and Admitted desires to evidence
its acceptance of such admission to the Partnership.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, AIMCO-GP and Admitted hereby agree
as follows:
1. Exhibit "A" to the Partnership Agreement is hereby amended and
supplemented by the addition of the line items set forth in Exhibit "A" attached
to this Acknowledgment.
2. In accordance with Sections 4.2A and 12.2.A of the Partnership
Agreement, AIMCO-GP hereby admits Admitted as an Additional Limited Partner of
the Partnership with the interests in the Partnership set forth in Exhibit "A"
to this Acknowledgment.
3. AIMCO-GP hereby certifies that a true and correct copy of the
Partnership Agreement is annexed hereto and made a part hereof.
4. This Acknowledgment shall be binding upon the parties hereto and
their respective successors, assigns, heirs and legal representatives and may be
relied upon by them and by other third parties.
E-1
<PAGE>
5. By its signature below, Admitted hereby accepts admission to the
Partnership as an Additional Limited Partner and agrees to be bound by all of
the provisions of the Partnership Agreement, which are incorporated herein by
this reference, including without limitation the power of attorney set forth in
Section 2.4 of the Partnership Agreement.
E-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Acknowledgment and the attachment counterpart signature page to the Partnership
Agreement effective as of the date first written above.
AIMCO-GP: AIMCO-GP, INC.,
a Delaware corporation
By:
--------------------------
Name:
------------------------
Title:
-------------------------
ADMITTED: -----------------------------------
By:
--------------------------
Name:
-------------------------
Title:
-------------------------
E-3
<PAGE>
COUNTERPART SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., DATED AS OF JULY 29, 1994.
-----------------------------------
By:
--------------------------
Name:
-------------------------
Title:
-------------------------
<PAGE>
EXHIBIT A
PARTNERS, CONTRIBUTIONS AND
PARTNERSHIP INTERESTS
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Name and Address of Additional Net Agreed Value of Contributed Partnership Common Units
Limited Partner Property
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SHAREHOLDER REGISTRATION RIGHTS AGREEMENT
This Shareholder Registration Rights Agreement (this "AGREEMENT")
is entered into as of the 31st day of May, 1996, by and between Apartment
Investment and Management Company, a Maryland corporation (the "COMPANY"),
and Somerset REIT, Inc., a Florida corporation ("SOMERSET REIT").
WHEREAS, that certain Acquisition Agreement, dated as of April 30,
1996 (the "ACQUISITION AGREEMENT"), by and among the Company, AIMCO Somerset,
Inc., AIMCO Properties, L.P., Somerset REIT, RJ Holdings, Ltd., Somerset PAM
Partnership, and RJ Equities, Inc., provides for the merger (the "MERGER") of
AIMCO Somerset, Inc. with and into Somerset REIT, with Somerset REIT as the
surviving corporation;
WHEREAS, subject to the terms and conditions set forth in the
Acquisition Agreement, at the effective time of the Merger, each issued and
outstanding share of common stock, par value $.01 per share ("SOMERSET
STOCK"), of Somerset REIT (other than treasury shares) will be converted into
the right to receive a number of shares of the Company's Class A Common
Stock, par value $.01 per share (the "COMMON STOCK"), equal to the Per Share
Consideration (as defined in the Acquisition Agreement);
WHEREAS, in connection with the Acquisition Agreement, the Company
has agreed to register the shares of Common Stock issued in the Merger (the
"REGISTRABLE SHARES") for sale by the former shareholders of Somerset REIT
who receive such shares in the Merger (the "INVESTORS") and certain
tranferees; and
WHEREAS, the parties hereto desire to enter into this agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and subject to the terms and conditions set
forth herein, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In this Agreement the following
terms shall have the following respective meanings:
C-1-1
<PAGE>
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule 501
of the General Rules and Regulations promulgated under the Securities Act.
"AFFILIATE" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the person specified.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the relevant time.
"HOLDERS" shall mean (i) each of the Investors, and (ii) each
Person holding Registrable Shares as a result of a transfer or assignment to
that Person of Registrable Shares made by an Investor in accordance with this
Agreement other than pursuant to an effective registration statement or Rule
144 under the Securities Act.
"PERSON" shall mean an individual, corporation, partnership,
estate, trust, association, private foundation, joint stock company or other
entity.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
Registrable Shares in accordance with the method or methods of distribution
designated by the Holders, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRABLE SHARES" shall have the meaning ascribed to it in the
recitals to this Agreement.
"REGISTRATION EXPENSES" shall mean all out-of-pocket expenses
(excluding Selling Expenses) incurred by the Company in complying with
Section 2 hereof, including, without limitation, the following: (a) all
registration, filing and listing fees; (b) fees and expenses of compliance
with federal and state securities or real estate syndication laws (including,
without limitation, reasonable fees and disbursements of counsel in
connection with state securities and real estate syndication qualifications
of the Registrable Shares under the laws of such jurisdictions as the
C-1-2
<PAGE>
Holders may designate); (c) printing (including, without limitation, expenses
of printing or engraving certificates for the Registrable Shares in a form
eligible for deposit with The Depository Trust Company and otherwise meeting
the requirements of any securities exchange on which they are listed and of
printing registration statements and prospectuses), messenger, telephone,
shipping and delivery expenses; (d) fees and disbursements of counsel for the
Company; (e) fees and disbursements of all independent public accountants of
the Company (including without limitation the expenses of any annual or
special audit and "cold comfort" letters required by the managing
underwriter); (f) securities act liability insurance if the Company so
desires; (g) fees and expenses of other Persons reasonably necessary in
connection with the registration, including any experts, retained by the
Company; (h) fees and expenses incurred in connection with the listing of the
Registrable Shares on each securities exchange on which securities of the
same class are then listed; and (i) fees and expenses associated with any
NASD filing required to be made in connection with the registration statement.
"RIGHTS" shall have the meaning ascribed to it in Section 6 of this
Agreement.
"RULE 144" shall mean Rule 144 promulgated by the Commission under
the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
Section 2. REGISTRATION.
(a) The Company shall prepare and file with the Commission,
within two months after the date hereof, a registration statement for the
purpose of effecting a Registration of the sale of Registrable Shares by the
Holders thereof; shall use its best efforts to effect such Registration
within one month after the filing thereof (including, without limitation, the
execution of an undertaking to file post-effective amendments and appropriate
qualification under applicable state securities and real estate syndication
laws); and shall keep such Registration continuously effective until the
earlier of (i) the third anniversary hereof, (ii) the date on which all
Registrable Shares have been sold pursuant to such registration statement or
Rule
C-1-3
<PAGE>
144, and (iii) the date on which all of the Registrable Shares may be sold in
accordance with Rule 144 under the Securities Act; PROVIDED, HOWEVER, that
the Company shall not be obligated to take any action to effect any such
Registration, qualification or compliance pursuant to this Section 2 in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such Registration,
qualification or compliance unless the Company is already subject to service
in such jurisdiction.
Notwithstanding the foregoing, the Company shall have the right
(the "SUSPENSION RIGHT") to defer such filing (or suspend sales under any
filed registration statement or defer the updating of any filed registration
statement and suspend sales thereunder) for a period of not more than 120
days during any one-year period ending on December 31, if the Company shall
furnish to the Holders a certificate signed by the President or any other
executive officer or any director of the Company stating that in the judgment
of the Company it would be detrimental to the Company and its shareholders to
file such registration statement or amendment thereto at such time (or
continue sales under a filed registration statement) and therefore the
Company has elected to defer the filing of such registration statement (or
suspend sales under a filed registration statement).
(b) The Company shall promptly notify the Holders of the
occurrence of the following events:
(i) the filing with the Commission of the registration
statement, any supplement to the prospectus or any amendment or post-
effective amendment to the registration statement and, with respect to
the registration statement or any post-effective amendment, when the
same has become effective;
(ii) any request by the Commission for amendments or
post-effective amendments to the registration statement or supplements
to the prospectus or for additional information;
(iii) the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for that purpose;
C-1-4
<PAGE>
(iv) the suspension of an effective registration
statement by the Company in accordance with the last paragraph of
Section 2(a) above;
(v) the Company's receipt of any notification of the
suspension of the qualification of any shares of Common Stock covered
by the registration statement for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose; and
(vi) the existence of any event, fact or circumstance
that results in the registration statement, the prospectus or any
document incorporated therein by reference containing an untrue
statement of material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading during the distribution of securities.
The Company agrees to use its best effort to obtain the withdrawal of any order
suspending the effectiveness of the registration statement or any state
qualification at the earliest possible moment.
(c) The Company shall provide to each Holder, at no cost to the
Holders, promptly upon the effectiveness thereof, five copies of the prospectus
and any post-effective amendment or supplement thereto, together with a copy of
the registration statement and any amendment thereto used to effect the
Registration of the Registrable Shares, each prospectus contained in such
registration statement or post-effective amendment and any amendment or
supplement thereto including financial statements and schedules, all documents
incorporated therein by reference and all exhibits thereto. The Company shall
also provide the Holders with such other documents as the requesting Holders may
reasonably request in order to facilitate the disposition of the Registrable
Shares covered by such registration statement. The Company consents to the use
of each prospectus or any supplement thereto by the Holders in connection with
the offering and sale of the shares covered by such registration statement or
any amendment thereto.
(d) The Company agrees to use its best efforts to cause the
shares covered by the registration statement to be registered with or approved
by such state securities authorities as may be necessary to enable the Holders
to consummate the disposition of such shares pursuant to the plan of
distribution set forth in the registration statement.
C-1-5
<PAGE>
(e) Subject to the Company's Suspension Right, if any event,
fact or circumstance requiring an amendment to the registration statement or
supplement to the prospectus shall exist, immediately upon becoming aware
thereof the Company agrees to notify the Holders and prepare and furnish to the
Holders a post-effective amendment to the registration statement or supplement
to the prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Shares, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(f) The Company agrees to seek the listing of all Registrable
Shares covered by the registration statement on each securities exchange on
which securities of the same class are then listed.
(g) The Company agrees to use its best efforts to comply with
the Securities Act and the Exchange Act, and, as soon as reasonably practicable
following the end of any fiscal year during which a registration statement
effecting a Registration of the Registrable Shares shall have been effective, to
make available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act.
(h) The Company agrees to cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold pursuant to a Registration and not bearing any
Securities Act legend; and enable certificates for such Registrable Shares to be
issued for such numbers of shares and registered in such names as the selling
Holders may reasonably request at least two business days prior to any sale of
Registrable Shares.
Section 3. EXPENSES OF REGISTRATION. The Company shall pay all
Registration Expenses incurred in connection with the registration,
qualification or compliance pursuant to Section 2 hereof. All Selling Expenses
incurred in connection with the sale of Registrable Shares by any of the
Holders shall be borne by the Holder selling such Registrable Shares. Each
Holder shall pay the expenses of its own counsel.
Section 4. INFORMATION TO BE FURNISHED BY HOLDERS. As a condition to
the inclusion of each Holder's Registrable Shares in the Registration provided
for in Section 2, each Holder shall (a) furnish to the Company such information
as the Company may reasonably request in writing (which request shall be
submitted a
C-1-6
<PAGE>
reasonable period of time in advance of the filing of the registration
statement or amendment or supplement thereto with respect to which the
requested information relates) and as shall be required in connection with
the Registration and related proceedings referred to in Section 2 hereof, and
(b) execute and deliver to the Company an indemnification agreement in the
form attached hereto as EXHIBIT A (each, an "INDEMNIFICATION AGREEMENT"). If
any Holder fails to provide the Company with such information, or fails to
execute and deliver to the Company an Indemnification Agreement, within three
weeks of the Company's request, the Company shall no longer have any
obligations under Section 2 hereof with respect to such Holder or such
Holder's Registrable Shares.
Section 5. TRANSFER OF EXCHANGE AND REGISTRATION RIGHTS. The
rights of each Investor under Section 2 hereof and the related rights of each
Investor hereunder (the "RIGHTS") may be assigned by each Investor (i) if the
Investor is a corporation, to a shareholder or shareholders of such Investor,
(ii) if the Investor is a partnership, to a partner or partners of that
partnership, (iii) if the Investor is an individual, to a family member, (iv)
upon the death of the Investor, to the heirs of the Investor by virtue of the
Investor's will or the laws of descent and distribution, or (v) if the Investor
is a corporation or a partnership, to any Person into or with which the Investor
is merged or consolidated or to which the Investor sells all or substantially
all of its assets, in each case, only in connection with the transfer of
Registrable Shares originally owned by the Investor; PROVIDED that (w) in each
case, the transferee is an Accredited Investor, (x) such transfer is otherwise
effected in accordance with applicable securities laws and the Company shall
have been provided by the transferor and the transferee with such evidence
thereof as the Company may request, including representations by the transferee
in form and content reasonably acceptable to the Company, (y) the Company is
given written notice of such transfer prior to such transfer (or, in the case of
the death of the Investor, as soon as practicable following the death of the
Investor), and (z) the transferee by written agreement delivered to the Company
acknowledges that such transferee is bound by the terms of this Agreement. In
the event of any such permitted transfer, the defined term "HOLDERS" shall from
and after such transfer include such transferee.
Section 6. RULE 144 SALES.
(a) The Company covenants that it will file the reports required
to be filed by the Company under the Exchange Act, so as to enable any Holder to
sell Registrable Shares pursuant to Rule 144 under the Securities Act.
C-1-7
<PAGE>
(b) In connection with any sale, transfer or other disposition
by any Holder of any Registrable Shares pursuant to Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable Shares
to be sold and not bearing any Securities Act legend, and enable certificates
for such Registrable Shares to be for such number of shares and registered in
such names as the selling Holders may reasonably request at least two business
days prior to any sale of Registrable Shares.
Section 7. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York.
(b) ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
(c) AMENDMENT. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby.
(d) NOTICES, ETC. Each notice, demand, request, request for
approval, consent, approval, disapproval, designation or other communication
(each of the foregoing being referred to herein as a notice) required or desired
to be given or made under this Agreement shall be in writing (except as
otherwise provided in this Agreement), and shall be effective and deemed to have
been received (i) when delivered in person, (ii) when sent by fax with receipt
acknowledged, (iii) five (5) days after having been mailed by certified or
registered United States mail, postage prepaid, return receipt requested, or
(iv) the next business day after having been sent by a nationally recognized
overnight mail or courier service, receipt requested. Notices shall be
addressed as follows: (a) if to Somerset REIT, to it at 880 Carillon Parkway,
St. Petersburg, Florida 33716, Attention: Mr. Todd Sheets (Fax: (813)
573-8247), or (b) if to the Company, at the address of its principal executive
offices and addressed to the attention of the President, or at such other
address or fax number as the Company shall have furnished to Somerset REIT. Any
notice or other communication required to be given hereunder to a Holder in
connection with a registration may instead be given to the designated
representative of such Holder.
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<PAGE>
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which may be executed by fewer than all of the parties
hereto (PROVIDED that each party executes one or more counterparts), each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
(f) SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
(g) SECTION TITLES. Section titles are for descriptive purposes
only and shall not control or alter the meaning of the Agreement as set forth in
the text.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns.
(i) REMEDIES. The Company and Somerset REIT acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that the Company and Somerset
REIT, in addition to any other remedy to which it may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of
another party under this Agreement in accordance with the terms and conditions
of this Agreement in any court of the United States or any State thereof having
jurisdiction.
(j) ATTORNEYS' FEES. If the Company, Somerset REIT or any
Holder brings an action to enforce its rights under this Agreement, the
prevailing party in the action shall be entitled to recover its costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred in
connection with such action, including any appeal of such action.
C-1-9
<PAGE>
The foregoing Agreement is hereby executed as of the date first above
written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ Peter K. Kompaniez
----------------------------------
Name: Peter K. Kompaniez
--------------------------------
Title: Vice Chairman
-------------------------------
SOMERSET REIT, INC.
By: /s/ Todd Sheets
----------------------------------
Name: Todd Sheets
--------------------------------
Title: President
-------------------------------
C-1-10
<PAGE>
UNITHOLDER REGISTRATION RIGHTS AGREEMENT
This Unitholder Registration Rights Agreement (this "AGREEMENT") is
entered into as of the 31st day of May, 1996, by and among Apartment
Investment and Management Company, a Maryland corporation (the "COMPANY"),
and the persons listed on SCHEDULE A hereto (each, an "INVESTOR").
WHEREAS, pursuant to that certain Acquisition Agreement, dated as of
April 30, 1996 (the "ACQUISITION AGREEMENT"), by and among the Company, AIMCO
Somerset, Inc., AIMCO Properties, L.P., a Delaware limited partnership
("AIMCO OP"), Somerset REIT, Inc., RJ Holdings, Ltd., Somerset PAM
Partnership and RJ Equities, Inc., the Investors will be issued up to _____
units of limited partnership interest in AIMCO OP (the "ISSUED OP UNITS")
upon the contribution of certain assets to AIMCO OP, all of which Issued OP
Units when surrendered for redemption may be acquired by the Company in
exchange for shares of the Company's Class A Common Stock, par value $.01 per
share (the "COMMON STOCK"), subject to certain restrictions under the
agreement of limited partnership of AIMCO OP (the "OP PARTNERSHIP AGREEMENT")
and the Company's charter;
WHEREAS, in connection with the Acquisition Agreement, the Company has
agreed to register for sale by the Investors and certain transferees, the
shares of Common Stock received by the Investors in exchange for Issued OP
Units that are surrendered for redemption (collectively, the "REGISTRABLE
SHARES"); and
WHEREAS, the parties hereto desire to enter into this agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and subject to the terms and conditions set
forth herein, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In this Agreement the following terms
shall have the following respective meanings:
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule 501 of
the General Rules and Regulations promulgated under the Securities Act.
C-2-1
<PAGE>
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the person specified.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the relevant time.
"HOLDERS" shall mean (i) each of the Investors, (ii) each Person holding
OP Units as a result of a Permitted Transfer (as such term is defined in the
OP Agreement) to that Person of OP Units made by an Investor in accordance
with the provisions of the OP Agreement, and (iii) each Person holding
Registrable Shares as a result of a transfer or assignment to that Person of
Registrable Shares made by an Investor in accordance with this Agreement
other than pursuant to an effective registration statement or Rule 144 under
the Securities Act.
"INDEMNIFIED PARTY" shall have the meaning ascribed to it in Section
4(c) of this Agreement.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in Section
4(c) of this Agreement.
"OP UNITS" shall mean units of limited partnership interest in AIMCO OP.
"PERSON" shall mean an individual, corporation, partnership, estate,
trust, association, private foundation, joint stock company or other entity.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
Registrable Shares in accordance with the method or methods of distribution
designated by the Holders, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRABLE SHARES" shall have the meaning ascribed to it in the
recitals to this Agreement.
C-2-2
<PAGE>
"REGISTRATION EXPENSES" shall mean all out-of-pocket expenses (excluding
Selling Expenses) incurred by the Company in complying with Section 2 hereof,
including, without limitation, the following: (a) all registration, filing
and listing fees; (b) fees and expenses of compliance with federal and state
securities or real estate syndication laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with state
securities and real estate syndication qualifications of the Registrable
Shares under the laws of such jurisdictions as the Holders may designate);
(c) printing (including, without limitation, expenses of printing or
engraving certificates for the Registrable Shares in a form eligible for
deposit with The Depository Trust Company and otherwise meeting the
requirements of any securities exchange on which they are listed and of
printing registration statements and prospectuses), messenger, telephone,
shipping and delivery expenses; (d) fees and disbursements of counsel for the
Company; (e) fees and disbursements of all independent public accountants of
the Company (including without limitation the expenses of any annual or
special audit and "cold comfort" letters required by the managing
underwriter); (f) securities act liability insurance if the Company so
desires; (g) fees and expenses of other Persons reasonably necessary in
connection with the registration, including any experts, retained by the
Company; (h) fees and expenses incurred in connection with the listing of the
Registrable Shares on each securities exchange on which securities of the
same class are then listed; and (i) fees and expenses associated with any
NASD filing required to be made in connection with the registration statement.
"RIGHTS" shall have the meaning ascribed to it in Section 6 of this
Agreement.
"RULE 144" shall mean Rule 144 promulgated by the Commission under the
Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the relevant time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
Section 2. REGISTRATION.
(a) The Company shall prepare and file with the Commission,
within 10 months after the date hereof, a registration statement for the
purpose of
C-2-3
<PAGE>
effecting a Registration of the sale of Registrable Shares by the Holders
thereof; shall use its best efforts to effect such Registration on or prior
to the first anniversary of the date hereof (including, without limitation,
the execution of an undertaking to file post-effective amendments and
appropriate qualification under applicable state securities and real estate
syndication laws); and shall keep such Registration continuously effective
until the earlier of (i) the third anniversary hereof, (ii) the date on which
all Registrable Shares have been sold pursuant to such registration statement
or Rule 144, and (iii) the date on which all of the Registrable Shares may be
sold in accordance with Rule 144 under the Securities Act; PROVIDED, HOWEVER,
that the Company shall not be obligated to take any action to effect any such
Registration, qualification or compliance pursuant to this Section 2 in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such Registration,
qualification or compliance unless the Company is already subject to service
in such jurisdiction.
Notwithstanding the foregoing, the Company shall have the
right (the "SUSPENSION RIGHT") to defer such filing (or suspend sales under
any filed registration statement or defer the updating of any filed
registration statement and suspend sales thereunder) for a period of not more
than 120 days during any one-year period ending on December 31, if the
Company shall furnish to the Holders a certificate signed by the President or
any other executive officer or any director of the Company stating that in
the judgment of the Company it would be detrimental to the Company and its
shareholders to file such registration statement or amendment thereto at such
time (or continue sales under a filed registration statement) and therefore
the Company has elected to defer the filing of such registration statement
(or suspend sales under a filed registration statement).
(b) The Company shall promptly notify the Holders of the
occurrence of the following events:
(i) the filing with the Commission of the registration
statement, any supplement to the prospectus or any amendment or post-
effective amendment to the registration statement and, with respect to
the registration statement or any post-effective amendment, when the
same has become effective;
(ii) any request by the Commission for amendments or
post-effective amendments to the registration statement or supplements
to the prospectus or for additional information;
C-2-4
<PAGE>
(iii) the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for that purpose;
(iv) the suspension of an effective registration statement
by the Company in accordance with the last paragraph of Section 2(a) above;
(v) the Company's receipt of any notification of the
suspension of the qualification of any shares of Common Stock covered by
the registration statement for sale in any jurisdiction or the initiation
or threat of any proceeding for that purpose; and
(vi) the existence of any event, fact or circumstance that
results in the registration statement, the prospectus or any document
incorporated therein by reference containing an untrue statement of
material fact or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not misleading during
the distribution of securities.
The Company agrees to use its best effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement or any state
qualification at the earliest possible moment.
(c) The Company shall provide to each Holder, at no cost to
the Holders, promptly upon the effectiveness thereof, five copies of the
prospectus and any post-effective amendment or supplement thereto, together
with a copy of the registration statement and any amendment thereto used to
effect the Registration of the Registrable Shares, each prospectus contained
in such registration statement or post-effective amendment and any amendment
or supplement thereto including financial statements and schedules, all
documents incorporated therein by reference and all exhibits thereto. The
Company shall also provide the Holders with such other documents as the
requesting Holders may reasonably request in order to facilitate the
disposition of the Registrable Shares covered by such registration statement.
The Company consents to the use of each prospectus or any supplement thereto
by the Holders in connection with the offering and sale of the shares covered
by such registration statement or any amendment thereto.
(d) The Company agrees to use its best efforts to cause the
shares covered by the registration statement to be registered with or
approved by
C-2-5
<PAGE>
such state securities authorities as may be necessary to enable the Holders
to consummate the disposition of such shares pursuant to the plan of
distribution set forth in the registration statement.
(e) Subject to the Company's Suspension Right, if any
event, fact or circumstance requiring an amendment to the registration
statement or supplement to the prospectus shall exist, immediately upon
becoming aware thereof the Company agrees to notify the Holders and prepare
and furnish to the Holders a post-effective amendment to the registration
statement or supplement to the prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Shares, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(f) The Company agrees to seek the listing of all
Registrable Shares covered by the registration statement on each securities
exchange on which securities of the same class are then listed.
(g) The Company agrees to use its best efforts to comply
with the Securities Act and the Exchange Act, and, as soon as reasonably
practicable following the end of any fiscal year during which a registration
statement effecting a Registration of the Registrable Shares shall have been
effective, to make available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(h) The Company agrees to cooperate with the selling
Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Shares to be sold pursuant to a Registration and not
bearing any Securities Act legend; and enable certificates for such
Registrable Shares to be issued for such numbers of shares and registered in
such names as the selling Holders may reasonably request at least two
business days prior to any sale of Registrable Shares.
Section 3. EXPENSES OF REGISTRATION. The Company shall pay all
Registration Expenses incurred in connection with the registration,
qualification or compliance pursuant to Section 2 hereof. All Selling
Expenses incurred in connection with the sale of Registrable Shares by any of
the Holders shall be borne by the Holder selling such Registrable Shares.
Each Holder shall pay the expenses of its own counsel.
C-2-6
<PAGE>
Section 4. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal expenses),
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any registration statement or prospectus, or
any amendment or supplement thereto, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission,
made in reliance upon and in conformity with information furnished in writing
to the Company by such Holder or underwriter for inclusion therein.
(b) Each Holder will indemnify the Company, each of its
directors and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, against all claims,
losses, damages and liabilities (including reasonable legal fees and
expenses) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement or
prospectus, or any amendment or supplement thereto, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
ease to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus, in reliance upon and in conformity with
information furnished in writing to the Company by such Holder for inclusion
therein.
(c) Each party entitled to indemnification under this
Section 4 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, but the omission to so notify the Indemnifying Party shall not
relieve it from any liability which it may have to the Indemnified Party
otherwise than pursuant to the provisions of this Section 4 and then, only to
the extent of the actual damages suffered by such delay in notification. The
Indemnifying Party shall assume the defense of such
C-2-7
<PAGE>
action, including the employment of counsel to be chosen by the Indemnifying
Party to be reasonably satisfactory to the Indemnified Party and payment of
expenses. The Indemnified Party shall have the right to employ its own
counsel in any such case, but the legal fees and expenses of such counsel
shall be at the expense of the Indemnified Party, unless the employment of
such counsel shall have been authorized in writing by the Indemnifying Party
in connection with the defense of such action, or the Indemnifying Party
shall not have employed counsel to take charge of the defense of such action
or the Indemnified Party shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to
those available to the Indemnifying Party (in which case the Indemnifying
Party shall not have the right to direct the defense of such action on behalf
of the Indemnified Party), in any of which events such fees and expenses
shall be borne by the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 4
is unavailable to a party that would have been an Indemnified Party under
this Section in respect of any expenses, claims, losses, damages and
liabilities referred to herein, then each party that would have been an
Indemnifying Party hereunder shall, in lieu of indemnifying such Indemnified
Party, contribute to the amount paid or payable by such Indemnified Party as
a result of such expenses, claims, losses, damages and liabilities in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and such Indemnified Party on the other in
connection with the statement or omission which resulted in such expenses,
claims, losses, damages and liabilities, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or such Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and each holder of Registrable Shares agrees that it would not be just and
equitable if contribution pursuant to this Section were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section
4(d).
C-2-8
<PAGE>
(e) No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 5. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder shall
furnish to the Company such information as the Company may reasonably request
in writing (which request shall be submitted a reasonable period of time in
advance of the filing of the registration statement or amendment or
supplement thereto with respect to which the requested information relates)
and as shall be required in connection with the Registration and related
proceedings referred to in Section 2 hereof. If any Holder fails to provide
the Company with such information within three weeks of the Company's
request, the Company shall no longer have any obligations under Section 2
hereof with respect to such Holder or such Holder's Registrable Shares.
Section 6. TRANSFER OF EXCHANGE AND REGISTRATION RIGHTS. The rights of
each Investor under Section 2 hereof and the related rights of each Investor
hereunder (the "RIGHTS") may be assigned by each Investor (i) if the Investor
is a corporation, to a shareholder or shareholders of such Investor, (ii) if
the Investor is a partnership, to a partner or partners of that partnership,
(iii) if the Investor is an individual, to a Family Member (as such term is
defined in the OP Agreement), (iv) upon the death of the Investor, to the
heirs of the Investor by virtue of the Investor's will or the laws of descent
and distribution, or (v) if the Investor is a corporation or a partnership,
to any Person into or with which the Investor is merged or consolidated or to
which the Investor sells all or substantially all of its assets, in each
case, only in connection with the transfer of Registrable Shares originally
owned by the Investor or OP Units originally owned by the Investor in respect
of which the Registrable Shares were issued; PROVIDED that (w) in each case,
the transferee is an Accredited Investor, (x) such transfer is otherwise
effected in accordance with applicable securities laws and the Company shall
have been provided by the transferor and the transferee with such evidence
thereof as the Company may request, including representations by the
transferee in form and content reasonably acceptable to the Company, (y) the
Company is given written notice of such transfer prior to such transfer (or,
in the case of the death of the Investor, as soon as practicable following
the death of the Investor), and (z) the transferee by written agreement
delivered to the Company acknowledges that such transferee is bound by the
terms of this Agreement. In the event of any such permitted transfer, the
defined term "HOLDERS" shall from and after such transfer include such
transferee.
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<PAGE>
Section 7. ADDITIONAL REPRESENTATIONS. Each Holder of OP Units agrees
that upon surrender of any such OP Units for redemption as provided in the OP
Partnership Agreement, such Holder shall make such investment and other
representations in connection with (and as a condition to) the issuance of
Common Stock in exchange for such OP Units as the Company or AIMCO OP may
reasonably request.
Section 8. RULE 144 SALES.
(a) The Company covenants that it will file the reports
required to be filed by the Company under the Exchange Act, so as to enable
any Holder to sell Registrable Shares pursuant to Rule 144 under the
Securities Act.
(b) In connection with any sale, transfer or other
disposition by any Holder of any Registrable Shares pursuant to Rule 144
under the Securities Act, the Company shall cooperate with such Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold and not bearing any Securities Act legend, and
enable certificates for such Registrable Shares to be for such number of
shares and registered in such names as the selling Holders may reasonably
request at least two business days prior to any sale of Registrable Shares.
Section 9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York.
(b) ENTIRE AGREEMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof.
(c) AMENDMENT. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby.
(d) NOTICES, ETC. Each notice, demand, request, request
for approval, consent, approval, disapproval, designation or other
communication (each of the foregoing being referred to herein as a notice)
required or desired to be given or made under this Agreement shall be in
writing (except as otherwise provided in this Agreement), and shall be
effective and deemed to have been received (i) when
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<PAGE>
delivered in person, (ii) when sent by fax with receipt acknowledged, (iii)
five (5) days after having been mailed by certified or registered United
States mail, postage prepaid, return receipt requested, or (iv) the next
business day after having been sent by a nationally recognized overnight mail
or courier service, receipt requested. Notices shall be addressed as
follows: (a) if to an Investor, at such Investor's address or fax number set
forth below its signature hereon, or at such other address or fax number as
the Investor shall have furnished to the Company in writing, or (b) if to any
assignee or transferee of an Investor, at such address or fax number as such
assignee or transferee shall have furnished the Company in writing, or (c) if
to the Company, at the address of its principal executive offices and
addressed to the attention of the President, or at such other address or fax
number as the Company shall have furnished to the Investors or any assignee
or transferee. Any notice or other communication required to be given
hereunder to a Holder in connection with a registration may instead be given
to the designated representative of such Holder.
(e) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which may be executed by fewer than all of
the parties hereto (PROVIDED that each party executes one or more
counterparts), each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(f) SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision.
(g) SECTION TITLES. Section titles are for descriptive
purposes only and shall not control or alter the meaning of the Agreement as
set forth in the text.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties hereto and their respective successors and assigns.
(i) REMEDIES. The Company and the Investors acknowledge
that there would be no adequate remedy at law if any party fails to perform
any of its obligations hereunder, and accordingly agree that the Company and
each Holder, in addition to any other remedy to which it may be entitled at
law or in equity, shall be entitled to compel specific performance of the
obligations of another party under this Agreement in accordance with the
terms and conditions of this Agreement in any court of the United States or
any State thereof having jurisdiction.
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<PAGE>
(j) ATTORNEYS' FEES. If the Company or any Holder brings
an action to enforce its rights under this Agreement, the prevailing party in
the action shall be entitled to recover its costs and expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection with
such action, including any appeal of such action.
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<PAGE>
The foregoing Agreement is hereby executed as of the date first above
written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ Peter Kompaniez
-------------------------------------
Name: Peter Kompaniez
Title: Vice Chairman
INVESTOR:
Name: Teresa L. Barnes
By: /s/
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Investor's Address:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Phone:
----------------------------------
Fax:
----------------------------------
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<PAGE>
Schedule A
INVESTORS
C-2-14
<PAGE>
AMENDED AND RE-STATED
PROMISSORY NOTE
Stockton, California
$13,200,000.00 SEPTEMBER 1 1993
THIS AMENDED AND RESTATED PROMISSORY NOTE ("Note") is executed as of the
lst day of September, 1993, by SOMERSET UTAH L.P., a Colorado limited
partnership ("Borrower"), to the order of BRAZOS PARTNERS, L.P., a Delaware
limited partnership ("Lender").
THIS NOTE AMENDS, RESTATES AND REPLACES in its entirety that certain
Promissory Note dated August 7, 1984 in the original Principal amount of
$14,580,000.00 wherein A. G. Spanos Construction, Inc., a California
corporation, was designated as Maker, and FCA American Mortgage Corporation,
a California corporation, was designated as Holder, said note having been
previously modified Borrower having succeeded to Maker's interest and Lender
having succeeded to Holder's interest.
I
DEFINITIONS
Borrower agrees that, for the purposes of this Note, the following terms
shall have the following respective meanings ascribed thereto.
1.1 "Dollars" shall mean dollars in lawful currency of The United States
of America.
1.2 "Default Rate" shall mean Five Percent (5%) per annum in excess of
the Interest Rate but not in excess of the maximum interest rate permitted by
law.
1.3 "Interest Rate" shall mean Eight and One-Eighth Percent (8.125%)
per annum for the first five (5) Loan Years and Eleven Percent (11.0%) per
annum in the sixth Loan Year.
1.4 "Loan Year" shall mean the period of twelve (12) consecutive
calendar months next following the month in which Lender has approved the
assumption of this Note by Borrower, Borrower has paid to Lender the amount
necessary to reduce the outstanding Principal Balance to the stated amount of
this Note, and all other documentation related to such assumption has been
executed by Borrower and accepted by Lender (the "Assumption Date") and each
period of twelve (12) consecutive calendar months thereafter to and including
the Maturity Date; provided, however, if the assumption occurs on the first
day of a calendar month, the Loan Year shall include such month.
<PAGE>
1.5 "Maturity Date,, shall mean September 1, 1999, or (except for
purposes of Paragraph 2.2 hereof) such earlier date the entire Outstanding
Principal Balance and accrued and unpaid interest thereon, and any other sums
which are due and payable pursuant to the terms and provisions of this Note,
are due and payable by reason of the acceleration of the maturity of this
Note.
1.6 "Restated Principal Amount" shall mean Thirteen Million Two Hundred
Thousand Dollars ($13,200,000.00).
1.7 "Outstanding Principal Balance" shall mean the Restated Principal
Amount plus the aggregate of all sums advanced by Lender after the date
hereof to or for the benefit of Borrower hereunder and not repaid.
1.8 "Payment Date" shall mean the first day of each month during the
term hereof.
1.9 "Term" shall mean the period from the date of this Note to the
Maturity Date.
II
PAYMENT OF INTEREST AND PRINCIPAL
For Value Received, Borrower hereby promises to pay to the order of
Lender the principal amount of Thirteen Million Two Hundred Thousand Dollars
($13,200,000.00), together with interest as provided hereinbelow as follows:
2.1 PAYMENT OF INTEREST AND PRINCIPAL.
(a) Interest shall accrue on the Outstanding Principal Balance at
the Interest Rate.
(b) Interest and principal shall be payable in equal monthly
installments based upon a three hundred twenty nine (329) month
amortization of the outstanding Principal Balance with interest at the
Interest Rate (which installments are $100,263.47 per month for the first
five Loan Years, but which will increase in the sixth Loan Year due to the
increased interest rate), commencing on the second month of the first Loan
Year and on each Payment Date thereafter. The payment due on October 1,
1993, will exceed $100,263.47 by the amount of additional monthly interest
to be paid on the higher principal balance of this Note prior to the date
of this Note.
(c) The Outstanding Principal Balance shall be payable in full on the
Maturity Date.
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<PAGE>
(d) BORROWER HEREBY ACKNOWLEDGES AND UNDERSTANDS THAT A SUBSTANTIAL
PORTION OF THE RESTATED PRINCIPAL BALANCE OF THE NOTE SHALL BE UNPAID AND
DUE ON THE MATURITY DATE.
2.2 PREPAYMENT. Upon thirty (30) days' prior written notice to Lender,
Borrower may prepay this Note in full or in part by first paying all other
amounts due under this Note and the Deed of Trust (as defined below) in the
order of priority set forth in paragraph 2.6 of this Note, and the balance
shall be applied as a reduction of the Outstanding Principal Balance without
any prepayment premium. Prepayments shall not reduce the monthly payment but
instead shall have the affect of reducing the period of amortization.
2.3 DEFAULT INTEREST. Subsequent to a Default and the expiration of
the applicable cure period, if any, any advance by Lender under any Loan
Document and any principal or accrued interest not paid when due shall bear
interest at the Default Rate.
2.4 PRINCIPAL AND INTEREST AT MATURITY. The entire Outstanding Principal
Balance and accrued and unpaid interest thereon, and any and all other sums
which are due and payable pursuant to the terms and provisions of the Note, the
Deed of Trust or the other Loan Documents (as defined in the Deed of Trust)
shall be due and payable on the Maturity Date.
2.5 CALCULATION OF INTEREST. All interest on this Note shall be
calculated on the basis of twelve 30-day months; for portions of the
Outstanding Principal Balance which are outstanding for less than a full
calendar month, interest on such portion of the Outstanding Principal Balance
shall be calculated on the basis of a 360-day year and the actual number of
days elapsed in any portion of a month for which interest may be due on such
portion of the Outstanding Principal Balance.
2.6 APPLICATION OF PAYMENTS PRIOR TO DEFAULT. Prior to the invocation
of the terms and provisions of Paragraph 3.2 hereof, all monies paid by
Borrower to Lender shall be applied in the following order of priority: (a)
first, toward repayment of all amounts advanced by Lender under the
provisions of the Loan Documents to protect and preserve the collateral (if
any); (b) next, toward payment of the deposits for Taxes and Insurance
Premiums required under Paragraph 9 of the Deed of Trust (as hereinafter
defined); (c) next, toward payment of all amounts due and owing pursuant to
Paragraph 3.5 hereof (if any); (d) next, toward payment of all amounts due
and owing pursuant to Paragraph 3.4 hereof (if any); (e) next, toward payment
of interest which has accrued on the Outstanding Principal Balance and which
is due and payable; (f) next, toward the payment of all amounts due and owing
pursuant to Paragraph 2.2 hereof (if any); and (g) last, toward payment of
the Outstanding Principal Balance.
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<PAGE>
2.7 PAYMENTS AFTER DEFAULT. All unpaid interest that has accrued on
the Outstanding Principal Balance, whether prior or subsequent to the
occurrence of the Default, shall be paid at the time of, and as a condition
precedent to, the curing of the Default. While any Default (after expiration
of the applicable cure period, if any) exists, Lender is expressly authorized
to apply payments made to it as it may elect against (1) any or all amounts,
or portions thereof, then due and payable hereunder, (2) the Outstanding
Principal Balance, or (3) any combination thereof.
2.8 PLACE OF PAYMENT. Payments and prepayments to be made under this
Note are to be made at such place as the legal holder of this Note may from
time to time in writing appoint, and, in the absence of such appointment,
then at the following address:
Brazos Partners, L.P.
400 East Main Street
P.O. Box 300 A
Stockton, CA 95201-0300
Attn: Kris De Graff
III
SECURITY, DEFAULTS, AND REMEDIES
3.1 SECURITY FOR PAYMENT. The payment of this Note is secured by,
among other things, a Deed of Trust dated August 7, 1984, recorded August 10,
1984 as Entry No. 3979442, Book 5581, page 725 of the records of the Salt
Lake County Recorder, made by Borrower's predecessor in interest, A.G. Spanos
Construction, Inc., as Trustor, to Paramount Title Company, as Trustee, in
favor of Lender's predecessor in interest FCA American Mortgage corporation,
as Beneficiary, as amended and restated of even date herewith by an Amended
and Restated Deed of Trust Including Security Agreement with Assignment of
Rents and Leases and Fixture Filing (the "Deed of Trust"), constituting a
first lien on certain real estate in the City of West Valley City, County of
Salt Lake, State of Utah, commonly known as Somerset Village Apartments (the
"Premises"). By this reference, the Deed of Trust is incorporated by
reference as if fully set forth herein. This Note is also secured by an
Assignment of Leases and Rentals, a Collateral Assignment of Development
Materials and an Assignment of Contract Documents, all dated August 7, 1984,
(all of which, together with this Note and the Deed of Trust are referred to
as the "Loan Documents").
3.2 OCCURRENCE OF DEFAULT; ACCELERATION OF MATURITY DATE. It is
agreed that upon occurrence of any of the following events of default under
this Note (a "Default"):
(a) default in the payment of principal or interest when due; or
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<PAGE>
(b) occurrence of a Prohibited Transfer under the Deed of Trust (as
defined therein); or
(c) default in the performance or observance of any other covenant
or agreement of Borrower contained herein; or
(d) occurrence of any other Default under the Deed of Trust (as
defined therein) (after the applicable cure period, if any); or
(e) occurrence of any other Default (as defined therein) under any
of the other Loan Documents (after the applicable cure period, if any),
the entire Outstanding Principal Balance of this Note, irrespective of the
maturity date specified herein, together with the then accrued interest
thereon, and all other amounts payable under this Note or the Loan Documents
at the election of the Lender, and without notice of such election, shall
become immediately due and payable.
Notwithstanding the foregoing, in the event Borrower's Default is not
related to the payment of money by Borrower pursuant to the terms of any of
the Loan Documents and is not a default under subparagraphs (c), (d) or (e)
of paragraph 18 of the Deed of Trust, Lender agrees to give Borrower thirty
(30) days written notice of such Default. If such Default is not cured
within such thirty (30) day period, Lender may pursue the rights and remedies
provided in this Note and the Loan Documents; provided, however, that if such
Default cannot be cured within such thirty (30) day period, there shall be no
Default hereunder provided that (i) Borrower commences to cure such Default
promptly after receiving such notice and proceeds diligently thereafter to
cure such Default (ii) the security of the Lender is not materially adversely
affected by such delay, and (iii) such Default is cured within 90 days of the
date such notice was provided to Borrower.
3.3 NATURE OF REMEDIES. The remedies of Lender as provided herein or
in the Deed of Trust or any of the other Loan Documents, shall be cumulative
and concurrent, and may be pursued singularly, successively or together, at
the sole discretion of Lender, and may be exercised as often as occasion
therefor shall arise. Failure of Lender, for any period of time or on more
than one occasion, to exercise its option to accelerate the Maturity Date of
this Note shall not constitute a waiver of the right to exercise the same at
any time thereafter or in the event of any subsequent Default. No act of
omission or commission of Lender, including specifically any failure to
exercise any right, remedy or recourse, shall be deemed to be a waiver or
release of the same; any such waiver or release is to be effected only
through a written document executed by Lender and then only to the extent
specifically recited therein. A waiver or release in connection
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<PAGE>
with any one event shall not be construed as a waiver or release of any
subsequent event or as a bar to any subsequent exercise of Lender's rights or
remedies hereunder. Notice of the exercise of any right or remedy granted to
Lender by this Note is not required to be given.
3.4 PAYMENT OF ATTORNEYS' FEES AND COSTS. If: (i) this Note or any
Loan Document is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding; (ii) if
an attorney is retained to represent Lender in any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors'
rights and involving a claim under this Note or any of the Loan Documents;
(iii) if an attorney is retained to protect or enforce the lien of the Deed
of Trust or any of the Loan Documents; or (iv) if an attorney is retained to
represent Lender in any other proceedings whatsoever in connection with this
Note, the Deed of Trust, any of the Loan Documents or any property subject
thereto, then Borrower shall pay to Lender all reasonable attorneys' fees,
costs and expenses incurred in connection therewith, in addition to all other
amounts due hereunder.
3.5 LATE CHARGE. If any installment of interest or principal is not
paid within five (5) days of the date the installment is due, Borrower shall
pay to Lender a late charge of Six Percent (6%) of the amount so overdue in
order to defray part of the expense incident to handling such delinquent
payment or payments. Such late charge shall be in addition to and separate
from any increase in interest due hereunder as a result of calculation of
interest due hereunder at the Default Rate.
IV
OTHER GENERAL AGREEMENTS
4.1 NOTICES. Any notice which any party hereto may desire or may be
required to give to any other party hereto shall be in writing, and shall be
deemed given (i) if and when personally delivered, (ii) upon receipt if sent
by a nationally recognized overnight courier addressed to a party at its
address set forth below, or (iii) on the third (3rd) business day after being
deposited in United States registered or certified mail, postage prepaid,
addressed to a party at its address set forth below, or at such other place
as such party may have designated to all other parties by notice in writing
in accordance herewith:
(a) If to Borrower: Somerset Utah L.P.
1873 S. Bellaire Street
Suite 1700
Denver, CO 80222
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<PAGE>
(b) If to Lender: Brazos Partners, L.P.
P.0. Box 141749
Irving, TX 75014-1749
and
Brazos Partners, L.P.
400 East Main Street
P.0. Box 300A
Stockton, CA 95201-0300
Except as otherwise specifically required herein, notice of the exercise
of any right or option granted to Lender by this Note is not required to be
given.
4.2 GOVERNING LAW AND OTHER AGREEMENTS. Borrower agrees that: (i) this
instrument and the rights and obligations of the parties hereunder shall be
governed by the laws of the State of Utah, without reference to the conflict
of law principles of such state; (ii) the obligation evidenced by this Note
is an exempted transaction under the Truth In Lending Act, 15 U.S.C. Section
1601, et seq.; (iii) said obligation constitutes a business loan within the
purview of the Utah Code; and (iv) upon the Maturity Date, Lender shall not
have any obligation to refinance the indebtedness evidenced by this Note or
to extend further credit to Borrower.
4.3 INTERPRETATION. The headings of sections and paragraphs in this
Note are for convenience only and shall not be construed in any way to limit
or define the content, scope, or intent of the provisions hereof. As used in
this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this
Note comports with all applicable law. However, if any provision in this
Note is found by a court of law to be in violation of any applicable law, and
if such court should declare such provision of this Note to be unlawful, void
or unenforceable as written, then it is the intent of all parties to the
fullest possible extent that it is legal, valid and enforceable, that the
remainder of this Note shall be construed as if such unlawful, void or
unenforceable provision were not contained therein, and that the rights,
obligations and interests of Borrower and the holder hereof under the
remainder of this Note shall continue in full force and effect; provided,
however, that if any provision of this Note which is found to be in violation
of any applicable law concerns the imposition of interest hereunder, the
rights, obligations and interests of Borrower and Lender with respect to the
imposition of interest hereunder shall be governed and controlled by the
provisions of Paragraph 4.5 hereof. Time is of the essence of this Note.
4.4 WAIVER. Borrower and any and all others who are now or may become
liable for all or part of the obligations of Borrower under this Note
(collectively the "Obligors") agree to be jointly
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<PAGE>
and severally bound hereby and jointly and severally, to the extent permitted
by law: (i) waive and renounce any and all redemption and exemption rights
and the benefit of all valuation and appraisement privileges against the
indebtedness evidenced by this Note or by any extension or renewal hereof;
(ii) waive presentment and demand for payment, notices of nonpayment and of
dishonor, protest of dishonor, and notice of protest; (iii) waive all notices
in connection with the delivery and acceptance hereof and except as herein
provided all other notices in connection with the performance, default, or
enforcement of the payment hereof or hereunder; (iv) waive any and all lack
of diligence and delays in the enforcement of the payment hereof; (v) subject
to the provisions of section 4.7 agree that the liability of each of Obligors
shall be unconditional and without regard to the liability of any other
person or entity for the payment hereof, and shall not in any manner be
affected by any indulgence or forbearance granted or consented to by Lender
to any of them with respect hereto; (vi) consent to any and all extensions of
time, renewals, waivers, or modifications that may be granted by Lender with
respect to the payment or other provisions hereof, and to the release of any
security at any time given for the payment hereof, or any part thereof, with
or without substitution, and to the release of any person or entity liable
for the payment hereof; and (vii) consent to the addition of any and all
other makers, endorsers, guarantors, and other obligors for the payment
hereof, and to the acceptance of any and all other security for the payment
hereof, and agree that the addition of any such obligors or security shall
not affect the liability of any of obligors for the payment hereof.
4.5 EXCESS INTEREST. It being the intention of Lender and Borrower to
comply with the laws of the State of Utah with regard to the rate of interest
charged hereunder, it is agreed that, notwithstanding any provision to the
contrary in this Note, or any of the other Loan Documents, no such provision
shall require the payment or permit the collection of any amount ("Excess
Interest") in excess of the maximum amount of interest permitted by law to be
charged for the use or detention, or the forbearance in the collection, of
all or any portion of the indebtedness evidenced by this Note. If any Excess
Interest is provided for, or is adjudicated to be provided for, in this Note
or any of the other Loan Documents, then in such event:
(a) the provisions of this paragraph shall govern and control;
(b) neither Borrower nor any of the other Obligors shall be
obligated to pay any Excess Interest;
(c) any Excess Interest that Lender may have received hereunder
shall, at the option of Lender, be (i) applied as a credit against the
then Outstanding Principal Balance due under this Note, accrued and
unpaid interest thereon not to
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<PAGE>
exceed the maximum amount permitted by law, or both, (ii) refunded to
the payor thereof, or (iii) any combination of the foregoing;
(d) the applicable interest rate or rates shall be automatically
subject to reduction to the maximum lawful rate allowed to be contracted
for in writing under the applicable usury laws of the aforesaid State, and
this Note, the Deed of Trust, and the other Loan Documents shall be deemed
to have been, and shall be, reformed and modified to reflect such reduction
in such interest rate or rates; and
(e) neither Borrower nor any of the other Obligors shall have any
action or remedy against Lender for any damages whatsoever or any defense
to enforcement of the Note, Deed of Trust or any of the other Loan
Documents arising out of the payment or collection of any Excess Interest.
4.6 SUCCESSORS, LENDERS AND ASSIGNS. Upon any endorsement, assignment,
or other transfer of this Note by Lender or by operation of law, the term
"Lender," as used herein, shall mean such endorsee, assignee, or other
transferee or successor to Lender then becoming the holder of this Note. This
Note shall inure to the benefit of Lender and its successors and assigns and
shall be binding upon the undersigned and its successors and assigns. The
terms "Borrower" and "Obligors," as used herein, shall include the respective
successors, assigns, legal and personal representatives, executors,
administrators, devisees, legatees and heirs of Borrower and any other
Obligors.
4.7 NO PERSONAL LIABILITY - LIMITATIONS. Without in any manner
releasing, impairing or otherwise affecting this Note, the Deed of Trust or
any other instrument securing this Note or the validity thereof or hereof or
the lien thereof, there is no personal liability of Borrower or any
corporation, partnership, individual, or firm which is a present or future
partner of Borrower, or of any present or future partner of Borrower, or any
of their respective successors or assigns, hereunder or under any of the
other Loan Documents entered into for the loan evidenced hereby, and no
monetary or deficiency judgment shall be sought or enforced against Borrower
or any corporation, partnership, individual, or firm which is a present or
future partner or present or future constituent entity of Borrower, or of any
present or future partner of Borrower, or any of their respective successors
or assigns; provided, however, that a judgment may be sought against Borrower
to the extent necessary to enforce the rights of Lender in, to, or against
the Premises securing the indebtedness evidenced by this Note and covered by
the Deed of Trust and the other Loan Documents. Notwithstanding any of the
foregoing, Borrower and any corporation, partnership, limited liability
company, individual or firm which is or acts as a present or future general
partner of Borrower, or any of their respective successors or assigns shall
remain obligated and
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<PAGE>
personally liable for each of the following, and nothing contained in this
paragraph shall be deemed to prejudice the rights of Lender: (1) to recover
all loss, damage, cost and expense (including attorneys fees) incurred by
Lender as a result of breach of Borrower's warranties, representations,
covenants and indemnities contained in Paragraph 36 or Paragraph 43 of the
Deed of Trust; (2) to recover all loss, damage, cost and expense (including
attorney's fees) incurred by Lender as a result of intentional or negligent
waste of the Premises; (3) to recover all rents, revenues, issues and profits
from the Premises (a) received during the period of any default under the
Loan Documents, after expiration of applicable cure periods or after
acceleration of the indebtedness and other sums owing under the Loan
Documents and (b) not applied to payment of such indebtedness or other sums
or to payment of the normal operating expenses of the Premises; (4) to
recover all rents from the Premises collected more than one month in advance
which are not earned at the time of occurrence of any default under the Loan
Documents after expiration of applicable cure periods and which are not
applied to payment of the aforesaid indebtedness or other sums or to payment
of the normal operating expenses of the Premises; (5) to recover all
insurance proceeds and condemnation awards in respect of the Premises which
are not applied in accordance with the provisions of the Loan Documents; and
(6) to recover any amounts required to be paid by Borrower for taxes and
insurance premiums and Tax and Insurance Deposits where such amounts have not
been timely paid by Borrower. Borrower promises to pay to Lender all amounts
described in clauses (1) through (6) above on demand by Lender and agrees
that it will be personally liable for payment of all such sums.
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<PAGE>
IN WITNESS WHEREOF, Borrower has through its duly authorized officers
executed and delivered this Note as of the day and year first above written.
SOMERSET UTAH L.P.
a Colorado limited partnership
By: Somerset PAM Partnership,
a Colorado general
partnership, a general partner
By: Property Asset Management, LLC,
Limited Liability Company, a
Colorado limited liability company
By: /s/ Stephen D. Ira
------------------------------
Stephen D. Ira
Chief Manager
By: R.J. Equities, Inc., a Florida
corporation, a general partner
By: [NAME ILLEGIBLE]
-----------------------------------
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<PAGE>
ACQUISITION AND CONTRIBUTION AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
DATED
APRIL 19, 1996,
BY AND AMONG
AIMCO PROPERTIES, L.P.,
AND
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
COLLECTIVELY AS TRANSFEREE,
AND
THONER-PANKEY
AS TRANSFEROR
<PAGE>
ACQUISITION AND CONTRIBUTION AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS ACQUISITION AND CONTRIBUTION AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this "AGREEMENT") is made and entered into as of April 19, 1996
(the "EXECUTION DATE"), by and among AIMCO PROPERTIES, L.P., a Delaware limited
partnership (the "OPERATING PARTNERSHIP"), APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, a Maryland corporation (the "REIT", and, collectively with the
Operating Partnership, "TRANSFEREE"), and THONER-PANKEY, a California joint
venture ("TRANSFEROR"), for the purpose of setting forth the agreement of the
parties and of instructing Stewart Title Guaranty Company ("ESCROW AGENT"), with
respect to the transactions contemplated by this Agreement.
R E C I T A L S:
A. Transferor is the owner of a fee simple interest in those certain
parcels of real property located at 13841 Tustin East Drive and 13802 Tustin
East Drive in the City of Tustin, County of Orange, State of California, each as
more particularly described on EXHIBIT "A" attached hereto (each, a "LAND
PARCEL" and collectively, the "LAND"). The Land, together with the Improvements,
the balance of the "Real Property," the "Personal Property" and the "Intangible
Property" (each as hereinafter defined), shall be collectively referred to
herein as the "PROPERTY."
B. Transferor desires to transfer and contribute the Property to
Transferee in exchange for "Ownership Units" (as hereinafter defined) and cash,
and Transferee desires to accept the transfer and contribution of the Property
upon and subject to the terms and conditions set forth in this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Transferee and Transferor hereby
agree, and instruct Escrow Agent, as follows:
<PAGE>
1. TRANSFER AND CONTRIBUTION.
Subject to all of the terms and conditions of this Agreement,
Transferor agrees to transfer, contribute and convey to Transferee, and
Transferee agrees to accept from Transferor, the Property, upon the terms and
conditions set forth herein. Transferor shall transfer an undivided interest in
the Property to the REIT, the percentage of which shall be determined by
dividing (i) the aggregate "Unit Value" (as defined in Section 7.2.1 below) of
the "Shares" (as defined in Section 2.2 below) issued to the "Ownership Unit
Recipients" (as defined in Section 2.2 below) by the REIT, by (ii) the total
"Contribution Value" (as defined in Section 2 below). Transferor shall
contribute the remaining undivided interest in the Property to the Operating
Partnership.
2. CONTRIBUTION VALUE.
The contribution value of the Property (the "CONTRIBUTION VALUE") shall be
equal to the aggregate Unit Value of 750,000 Ownership Units, subject to
adjustment as hereinafter provided, plus One Million Four Hundred Forty-Five
Thousand Dollars ($1,445,000) in cash (the "CASH AMOUNT"), which shall be
payable as set forth below:
2.1 DEPOSIT. On or before the Execution Date, Transferee shall
deposit into "Escrow" (as hereinafter defined) the sum of Two Hundred Fifty
Thousand Dollars ($250,000.00) (which amount, together with any and all interest
and dividends earned thereon, shall hereinafter be referred to as the
"DEPOSIT"), by wire transfer or by certified or bank check payable to the order
of Escrow Agent.
Escrow Agent shall invest the Deposit in insured money market accounts,
certificates of deposit, United States Treasury Bills or such other instruments
as Transferee may instruct from time to time. At the "Closing" (as hereinafter
defined), the Deposit shall be applied to Transferor's share of the "Closing
Costs" (as hereinafter defined). In the event that the contribution and
acceptance of the Property is not consummated for any reason other than a
default under this Agreement solely on the part of Transferee, the Deposit shall
be returned to Transferee.
2.2 BALANCE. At the Closing, the balance of the Contribution Value
shall be payable as follows:
2
<PAGE>
(a) ISSUANCE OF OWNERSHIP UNITS. Pursuant to the direction of
Transferor, Transferee shall issue to the constituent partners of Transferor or
their respective designees, as set forth on SCHEDULE 2.2 attached hereto and
made a part hereof (collectively, the "OWNERSHIP UNIT RECIPIENTS"), in the
amounts and units designated on SCHEDULE 2.2 hereto, the aggregate number of
Seven Hundred Fifty Thousand (750,000) Ownership Units. As used herein,
"OWNERSHIP UNITS" shall mean limited partnership units in the Operating
Partnership ("OP UNITS"), or shares of the common stock of the REIT ("SHARES").
Distributions or dividends, as applicable, with respect to such OP Units and
Shares are made with the same frequency and in the same amount; provided,
however, that the initial distributions with respect to OP Units accrue only for
the period applicable from the date of the issuance of such OP Units to the
distributee.
(b) ADDITIONAL CASH. On or before the date that is two (2)
Business Days prior to the Closing Date, Transferee shall deposit into Escrow
the sum of One Million One Hundred Ninety-Five Thousand Dollars ($1,195,000).
2.3 ADJUSTMENT FOR PRORATIONS AND CLOSING COSTS.
(a) CREDIT AMOUNT. On the Closing Date, Transferee shall
receive as a credit against the Contribution Value an amount (the "CREDIT
AMOUNT") equal to the sum of: (i) security deposits which were paid by "Tenants"
(as hereinafter defined) to or for the account of Transferor, plus accrued
interest, if and to the extent required to be paid to such Tenants on such
security deposits, (ii) expenses and other sums owed by Transferor to Tenants
for work or disputes which occurred prior to the Closing Date (as evidenced in
any agreement or correspondence from Transferor or its agents), and (iii) the
amount, if any, by which prorated amounts allocated to Transferor pursuant to
Section 7.6(a) below exceed prorated amounts allocated to Transferee pursuant to
Section 7.6(a) below.
(b) SATISFACTION OF CREDIT AMOUNT. In the event that the Credit
Amount plus the sum of all amounts required to be disbursed pursuant to Section
7.5.2(c) below is more than the Cash Amount (the amount of such deficit being
referred to herein as the "SHORTFALL AMOUNT"), then Transferor shall cause the
Shortfall Amount to be paid to Transferee by depositing cash in an amount equal
to the Shortfall Amount on or before the Closing Date.
(c) APPLICATION OF BALANCE OF CASH AMOUNT. In the event that
the Credit Amount plus the sum of all amounts required to be disbursed pursuant
to section 7.5.2(c) below is less than the Cash Amount (the amount of
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such positive balance being referred to herein as the "CASH AMOUNT BALANCE"),
then the Cash Amount Balance shall be applied to satisfy Transferor's share of
Closing Costs, with the remainder, if any, disbursed to Transferor at Closing
pursuant to section 7.5.2(d).
3. OPENING OF ESCROW.
On or before the second (2nd) Business Day after the Execution Date,
Transferee and Transferor shall cause an escrow ("ESCROW") to be opened with
Escrow Agent by delivery to Escrow Agent of a fully executed copy of this
Agreement (the "OPENING OF ESCROW"). This Agreement shall constitute escrow
instructions to the Escrow Agent as well as the agreement of the parties.
Escrow Agent is hereby appointed and designated to act as the Escrow Agent and
instructed to deliver, pursuant to the terms of this Agreement, the documents
and funds to be deposited into Escrow as herein provided. The parties hereto
shall execute such additional escrow instructions (not inconsistent with this
Agreement as determined by counsel for Transferee and Transferor) as Escrow
Agent shall deem reasonably necessary for its protection, including Escrow
Agent's general provisions (as may be modified by Transferee, Transferor and
Escrow Agent). In the event of any inconsistency between this Agreement and
such additional escrow instructions, the provisions of this Agreement shall
govern.
4. ACTIONS PENDING CLOSING.
4.1 TITLE DOCUMENTS.
4.1.1 TITLE AND SURVEYS. Not later than three (3) days after
the Execution Date, Transferee, at its sole cost and expense, shall (a) cause
Stewart Title Guaranty Company (in such capacity, "TITLE COMPANY") to issue a
current preliminary report for an ALTA extended coverage policy of title
insurance for each Land Parcel (collectively, the "PTRs"), together with legible
copies of all documents referenced as exceptions therein (the "UNDERLYING
DOCUMENTS"); (b) upon reasonable notice to Transferor, cause an ALTA Survey of
each Land Parcel and the Improvements located thereon (collectively, the
"SURVEYS") to be prepared; and (c) cause a search for filings pursuant to the
Uniform Commercial Code with regard to the Personal Property (the "UCC SEARCH")
to be performed. Copies of the PTRs, the Underlying Documents, the Surveys and
the UCC Search (collectively, the "TITLE DOCUMENTS") shall be delivered to
Transferor and Transferee.
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4.1.2 TRANSFEREE'S REVIEW OF TITLE. Transferee shall have two
(2) days after its receipt of all of the Title Documents to notify Transferor in
writing (the "TRANSFEREE'S OBJECTION LETTER") of any objection which Transferee
may have to any matters reported or shown in the Title Documents or any updates
thereof (provided, however, that if any such updates are received by Transferee,
Transferee shall have an additional two (2) days following Transferee's receipt
of such update and legible copies of all documents referenced therein to notify
Transferor of objections to items shown on any such update which were not
disclosed on the previously delivered Title Documents). In addition to the
Leases, matters reported in or shown by the Title Documents (or any updates
thereof) and not timely objected to by Transferee as provided above shall be
deemed to be "PERMITTED EXCEPTIONS." Transferor shall have no obligation to
cure or correct any matter objected to by Transferee, other than any "Monetary
Encumbrances" (as hereinafter defined). However, as soon as practicable, but in
any event not later than two (2) days after Transferor's receipt of Transferee's
Objection Letter, Transferor may elect, by delivering written notice of such
election to Transferee and Escrow Agent, to remove or, to Transferee's
reasonable satisfaction, insure over any matters objected to in Transferee's
Objection Letter. If Transferor fails to remove or satisfactorily insure over
any exceptions or matters objected to by Transferee, then Transferee may (i)
terminate this Agreement (in which case Escrow Agent shall return the Deposit to
Transferee, the parties shall equally share the cancellation charges of Escrow
Agent and Title Company, if any, and neither party shall thereafter have any
rights or obligations to the other hereunder, other than pursuant to any
provision hereof which expressly survives the termination of this Agreement);
(ii) extend the Closing Date to allow Transferor a reasonable period of time to
remove such objected to exceptions or matters to the extent that Transferor is
diligently working to cure or discharge such exceptions; or (iii) proceed to a
timely Closing whereupon such objected to exceptions or matters shall be deemed
to be Permitted Exceptions. In any event Transferor shall discharge and remove
any and all liens affecting the Property which secure an obligation to pay money
(other than installments of real estate taxes not delinquent as of the Closing)
(such liens being referred to herein as "MONETARY ENCUMBRANCES") and, even
though Transferee does not expressly disapprove such Monetary Encumbrances, such
Monetary Encumbrances shall not be Permitted Exceptions.
4.1.3 CONDITION OF TITLE AT CLOSING. Upon the Closing,
Transferor shall contribute, transfer and convey to each of the Operating
Partnership and the REIT fee simple title to the Real Property by duly executed
and acknowledged grant deeds for each Land Parcel, in the form of EXHIBIT "B"
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attached hereto (collectively, the "DEEDS"), subject only to the Permitted
Exceptions. Prior to Closing, Transferor shall not take any action or commit or
suffer any acts which would give rise to a variance from the current legal
description of the Real Property, or cause the creation of any exception or
encumbrance against or respecting the Real Property without the prior written
consent of Transferee, which consent may be withheld in Transferee's sole and
absolute discretion.
4.2 PHYSICAL CONDITION. Transferee acknowledges and agrees that, (i)
prior to the date hereof, Transferee has conducted such inspections and
investigations of the physical condition of the Improvements as Transferee deems
necessary and appropriate, and (ii) subject to Section 6.1.3 hereof, Transferee
accepts the physical condition of the Improvements on an "as-is" basis.
5. DESCRIPTION OF PROPERTY.
5.1 THE IMPROVEMENTS. As used herein, the term "IMPROVEMENTS" shall
mean all buildings, improvements, structures and fixtures now or hereafter
located on or in the Land, including, without limitation, those certain
buildings located at 13841 Tustin East Drive, Tustin, California being used for
residential apartments, containing 232 units and known as "Sycamore Creek
Apartments" and those certain buildings located at 13802 Tustin East Drive,
Tustin, California containing 104 units and known as "Tustin Woods Apartments."
5.2 THE REAL PROPERTY. As used herein, the term "REAL PROPERTY"
shall include (i) the Land, (ii) the Improvements, (iii) all apparatus,
equipment and appliances affixed to and used in connection with the operation or
occupancy of the Land and the Improvements (such as heating, air conditioning or
mechanical systems and facilities used to provide any utility services,
refrigeration, ventilation, waste disposal or other services) and now or
hereafter located on or in the Land or the Improvements, and (iv) all of the
rights, privileges and easements appurtenant to or used in connection with the
Land and the Improvements, including, without limitation, all minerals, oil, gas
and other hydrocarbon substances, all development rights, air rights, water,
water rights and water stock relating to the Land, all strips and gores, all of
Transferor's right, title and interest in and to any streets, alleys, easements,
rights-of-way, public ways, or other rights appurtenant, adjacent or connected
to the Land.
5.3 THE PERSONAL PROPERTY. As used herein, the term "PERSONAL
PROPERTY" shall mean all of that certain tangible personal property, equipment
and supplies owned by Transferor and situated at the Real Property and used by
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Transferor in connection with the use, operation, maintenance or repair of the
Real Property, including, without limitation, all Personal Property described on
EXHIBIT "C" attached hereto.
5.4 THE INTANGIBLE PROPERTY. As used herein, the term "INTANGIBLE
PROPERTY" shall mean all of that certain intangible property owned by Transferor
and used by Transferor in connection with the Real Property and/or the Personal
Property, including, without limitation, all of Transferor's right, title and
interest in, to and under: (i) the Leases, all contract rights, books, records,
reports, test results, environmental assessments, if any, as-built plans,
specifications and other similar documents and materials relating to the use,
operation, maintenance, repair, construction or fabrication of the Real Property
or the Personal Property; (ii) all rights, if any, in and to the names "Sycamore
Creek Apartments" and "Tustin Woods Apartments;" (iii) all transferable business
licenses, architectural, site, landscaping or other permits, applications,
approvals, authorizations and other entitlements affecting the Real Property;
and (iv) all transferable guarantees, warranties and utility contracts relating
to the Real Property.
6. CONDITIONS TO CLOSING.
6.1 TRANSFEREE'S CONDITIONS. The obligation of Transferee to accept
the Property in accordance with this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at Closing) (the "TRANSFEREE'S CLOSING CONDITIONS"),
which conditions may be waived, or the time for satisfaction thereof extended,
by Transferee only in a writing executed by Transferee (provided, however, that
any such waiver shall not affect Transferee's ability to pursue any remedy it
may have with respect to any breach hereunder by Transferor):
6.1.1 TITLE. Title Company shall be prepared and irrevocably
committed to issue to Transferee an American Land Title Association extended
coverage owner's policy of title insurance in favor of Transferee for each Land
Parcel in the amounts designated by Transferee (which amounts in the aggregate
shall not exceed the Contribution Value) showing fee title to the Property
vested in Transferee or Transferee's nominee, with those endorsements reasonably
requested by Transferee, subject only to the Permitted Exceptions (collectively,
the "OWNER'S TITLE POLICIES").
6.1.2 TRANSFEROR'S DUE PERFORMANCE. All of the representations
and warranties of Transferor set forth in this Agreement shall be true,
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correct and complete in all material respects as of the Closing Date, and
Transferor, on or prior to the Closing Date, shall have complied with and/or
performed all of the obligations, covenants and agreements required on the
part of Transferor to be complied with or performed pursuant to the terms of
this Agreement.
6.1.3 PHYSICAL CONDITION OF PROPERTY. Subject to the provisions
of Section 12 below, the physical condition of the Property shall be
substantially the same on the Closing Date as on the Execution Date, except for
reasonable wear and tear and any damages due to any act of Transferee or
Transferee's representatives.
6.1.4 BANKRUPTCY. No action or proceeding shall have been
commenced by or against Transferor under the federal bankruptcy code or any
state law for the relief of debtors or for the enforcement of the rights of
creditors and no attachment, execution, lien or levy shall have attached to or
been issued with respect to Transferor's interest in the Property or any portion
thereof.
6.1.5 LEASES. At the Closing, Transferor shall assign all of
Transferor's rights and remedies under the Leases (including, without
limitation, the right to any security deposits and prepaid rent) to Transferee
and Transferee shall assume the obligations of Transferor with respect thereto,
pursuant to assignments of leases and security deposits (collectively, the
"ASSIGNMENTS OF LEASES") in the form of EXHIBIT "E" attached hereto.
6.1.6 BILL OF SALE. At the Closing, Transferor shall deliver to
Transferee bills of sale and assignments (collectively, the "BILLS OF SALE"), by
which Transferor shall transfer to Transferee all the Personal Property and the
Intangible Property, but excluding the Leases, in each case free of all liens
and encumbrances, in the form of EXHIBIT "F" attached hereto.
6.1.7 NON-FOREIGN AFFIDAVIT; CALIFORNIA FORM 590 RE. On or
before the Closing, Transferor shall deliver to Transferee Non-foreign
Affidavits (collectively "NON-FOREIGN AFFIDAVIT") in the form of EXHIBIT "H"
attached hereto, and California Franchise Tax Board Forms 590 RE ("FORMS 590
RE"), executed by Transferor and each of the constituent partners of Transferor,
as set forth on SCHEDULE 8.10.
6.1.8 ACKNOWLEDGMENT. At the Closing, Transferor shall deliver
to Transferee acknowledgments (collectively, the "ACKNOWLEDGMENTS"), pursuant to
which each of the recipients of OP Units accepts its limited partner-
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ship interest in, and is admitted as a limited partner of, the OP, in form and
substance reasonably satisfactory to Transferor and Transferee.
6.1.9 NO MORATORIA. No moratorium, statute, regulation,
ordinance, legislation, order, judgment, ruling or decree of any governmental
agency or of any court shall have been enacted, adopted, issued, entered or
pending which is directed specifically at the Property and which would have a
material adverse effect on the value of the Property.
6.1.10 INVESTOR QUESTIONNAIRE. On or before the Closing,
Transferor shall deliver to Transferee Investor Questionnaires (collectively,
"INVESTOR QUESTIONNAIRES") in form and substance satisfactory to Transferee,
executed by each of the Ownership Unit Recipients.
6.2 FAILURE OF TRANSFEREE'S CLOSING CONDITIONS. Subject to
Transferee's rights hereunder under Section 13.2 hereof with respect to any
default by Transferor (including, without limitation, any default in the
performance of any covenants of Transferor set forth in this Section 6), if any
of the Transferee's Closing Conditions have not been fulfilled within the
applicable time periods, Transferee may:
(a) waive the Transferee's Closing Condition and close Escrow in
accordance with this Agreement, without adjustment or abatement of the
Contribution Value; or
(b) terminate this Agreement by written notice to Transferor and to
Escrow Agent, in which event Escrow Agent shall return the Deposit to
Transferee, all other documents, instruments and funds delivered into Escrow
shall be returned to the party that delivered the same into Escrow, Transferor
shall pay for all of the cancellation charges of Title Company and Escrow Agent,
if any, and Transferee shall be entitled to pursue all of its rights and
remedies pursuant to Section 13.2 hereof.
6.3 TRANSFEROR'S CONDITIONS. The obligation of Transferor to
contribute the Property in accordance with this Agreement is subject to the
conditions concurrent set forth in this Section 6.3 (the "TRANSFEROR'S CLOSING
CONDITIONS"), which conditions may be waived, or the time for satisfaction
thereof extended, by Transferor only in a writing executed by Transferor
(provided, however, that any such waiver shall not affect Transferor's ability
to pursue any remedy it may have with respect to any breach hereunder by
Transferee).
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All of the representations and warranties of Transferee set forth in this
Agreement shall be true, correct and complete in all material respects as of
the Closing Date, and Transferee, on or prior to the Closing Date, shall have
complied with and/or performed all of the obligations, covenants and
agreements required on the part of Transferee to be complied with or
performed pursuant to the terms of this Agreement.
6.4 FAILURE OF TRANSFEROR'S CLOSING CONDITIONS. If any of
Transferor's Closing Conditions have not been fulfilled within the applicable
time periods, Transferor shall have, as its sole and exclusive remedy hereunder,
the right to retain Transferor's deposit as liquidated damages as set forth in
Section 13.1 hereof.
7. CLOSING.
7.1 CLOSING DATE. Subject to the provisions of this Agreement, the
"Closing" (as defined below) shall take place on April 11, 1996 (the "INTENDED
CLOSING DATE"), subject to Transferee's right to extend the Closing Date
pursuant to Section 4.1.2(iii) hereof and Transferee's and Transferor's
respective rights to extend the Closing Date pursuant to Section 7.2.2(a) and
7.2.3(a) below, or on such other date as the parties hereto may agree. As used
herein, the following terms shall have the following meanings: (i) the "CLOSING"
shall mean the recordation of the Deeds in the Official Records of the County of
Orange (the "OFFICIAL RECORDS"); and (ii) the "CLOSING DATE" shall mean the date
upon which the Closing actually occurs.
7.2 VARIATIONS IN UNIT VALUE.
7.2.1 UNIT VALUE DEFINITIONS. As used herein, "UNIT VALUE"
shall mean, on any given day, with respect to each Ownership Unit, the price per
share on the New York Stock Exchange (the "NYSE") for the Shares at the close of
the immediately preceding day on which the Shares are traded. As used herein,
"AVERAGE UNIT VALUE" shall mean, on any given day, with respect to each
Ownership Unit, the average of the prices per share on the NYSE for the Shares
at the close of the five (5) immediately preceding days on which the Shares are
traded.
7.2.2 TRANSFEREE'S RIGHT TO EXTEND CLOSING DATE OR TERMINATE
AGREEMENT. In the event that the Average Unit Value as of the Intended Closing
Date is greater than $22.00 (the "TRANSFEREE CAP PRICE"), then Transfer-
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ee, in its sole and absolute discretion by written notice to Transferor and
Escrow Agent delivered on the Intended Closing Date, may:
(a) terminate this Agreement, in which case Escrow Agent shall
return the Deposit to Transferee, all other documents, instruments and
funds delivered into Escrow shall be returned to the party that delivered
the same into Escrow, the parties shall equally share the cancellation
charges of Escrow Agent and Title Company, if any, and neither party shall
thereafter have any rights or obligations to the other hereunder, other
than pursuant to any provision hereof which expressly survives the
termination of this Agreement; or
(b) elect to extend the Closing Date to a date that is not later
than thirty (30) Business Days following the Intended Closing Date or such
later date as to which Transferor and Transferee may agree in writing, and
the Closing shall occur on the date (the "TRANSFEREE EXTENDED CLOSING
DATE") thereafter selected by Transferee upon five (5) Business Days' prior
written notice to Transferor and Escrow Agent, provided that such
Transferee Extended Closing Date shall occur within such thirty (30)
Business Day period following the Intended Closing Date.
7.2.3 TRANSFEROR'S RIGHT TO EXTEND CLOSING DATE OR TERMINATE
AGREEMENT. In the event that the Average Unit Value as of the Intended Closing
Date is less than $18.75 (the "TRANSFEROR FLOOR PRICE"), then Transferor, in its
sole and absolute discretion by written notice to Transferor and Escrow Agent
delivered on the Intended Closing Date, may:
(a) terminate this Agreement, in which case Escrow Agent shall
return the Deposit to Transferee, all other documents, instruments and
funds delivered into Escrow shall be returned to the party that delivered
the same into Escrow, the parties shall equally share the cancellation
charges of Escrow Agent and Title Company, if any, and neither party shall
thereafter have any rights or obligations to the other hereunder, other
than pursuant to any provision hereof which expressly survives the
termination of this Agreement; or
(b) elect to extend the Closing Date to a date that is not later
than thirty (30) Business Days following the Intended Closing Date or such
later date as to which Transferor and Transferee may agree in writing, and
the Closing shall occur on the date (the "TRANSFEROR EXTENDED
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CLOSING DATE") thereafter selected by Transferor upon five (5) Business
Days' prior written notice to Transferee and Escrow Agent, provided that
such Transferor Extended Closing Date shall occur within such thirty (30)
Business Day period following the Intended Closing Date.
7.2.4 OVERRIDING TERMINATION RIGHT.
(a) Notwithstanding anything to the contrary herein, in the
event that the Average Unit Value as of the Transferor Extended Closing
Date or the Transferee Extended Closing Date (each, an "EXTENDED CLOSING
DATE"), as applicable, is greater than the Transferee Cap Price on the date
that is one (1) Business Day prior to such Extended Closing Date, then this
Agreement shall terminate, in which case Escrow Agent shall return the
Deposit to Transferee, all other documents, instruments and funds delivered
into Escrow shall be returned to the party that delivered the same into
Escrow, the parties shall equally share the cancellation charges of Escrow
Agent and Title Company, if any, and neither party shall thereafter have
any rights or obligations to the other hereunder, other than pursuant to
any provision hereof which expressly survives the termination of this
Agreement; provided, however, that this Agreement shall continue in full
force and effect in the event that Transferee, in its sole and absolute
discretion, delivers written notice to Transferor and Escrow Agent on or
before the date that is one (1) Business Day prior to such Extended Closing
Date that Transferee is waiving its termination right pursuant to this
Section 7.2.4(a).
(b) Notwithstanding anything to the contrary herein, in the
event that the Average Unit Value as of the applicable Extended Closing
Date is less than the Transferor Floor Price on the date that is one (1)
Business Day prior to such Extended Closing Date, then this Agreement shall
terminate, in which case Escrow Agent shall return the Deposit to
Transferee, all other documents, instruments and funds delivered into
Escrow shall be returned to the party that delivered the same into Escrow,
the parties shall equally share the cancellation charges of Escrow Agent
and Title Company, if any, and neither party shall thereafter have any
rights or obligations to the other hereunder, other than pursuant to any
provision hereof which expressly survives the termination of this
Agreement; provided, however, that this Agreement shall continue in full
force and effect in the event that Transferor, in its sole and absolute
discretion, delivers written notice to Transferee and Escrow Agent on or
before the
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date that is one (1) Business Day prior to such Extended Closing Date
that Transferor is waiving its termination right pursuant to this
Section 7.2.4(b).
7.3 DELIVERIES BY TRANSFEROR. On or before the Closing Date,
Transferor, at its sole cost and expense, shall deliver or cause to be delivered
into Escrow the following documents and instruments, each dated as of the
Closing Date, in addition to the other items and payments required by this
Agreement to be delivered by Transferor:
7.3.1 DEEDS. The original executed and acknowledged Deeds
conveying the Real Property to Transferee, in such undivided interests as
directed by Transferee;
7.3.2 NON-FOREIGN AFFIDAVIT; FORM 590 RE. The original Non-
foreign Affidavits and Forms 590 RE, executed by Transferor and each of the
constituent partners of Transferor, as set forth on SCHEDULE 8.10;
7.3.3 ASSIGNMENTS OF LEASES. Four (4) original executed
counterparts of each of the Assignments of Leases, in such undivided interests
as directed by Transferee;
7.3.4 BILLS OF SALE. Four (4) original executed counterparts of
each of the Bills of Sale, in such undivided interests as directed by
Transferee;
7.3.5 PROOF OF AUTHORITY. Such proof of Transferor's authority
and authorization to enter into this Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s) executing
or delivering any instruments, documents or certificates on behalf of Transferor
to act for and bind Transferor as may be reasonably required by Title Company or
Transferee;
7.3.6 REGISTRATION RIGHTS AGREEMENTS. Four (4) original
executed counterparts of a Registration Rights Agreement in the form of EXHIBIT
"J-1" attached hereto and made a part hereof and four (4) original executed
counterparts of a Registration Rights Agreement in the form of EXHIBIT "J-2"
attached hereto and made a part hereof (collectively, the "REGISTRATION RIGHTS
AGREEMENTS");
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7.3.7 CASH. Cash in an amount equal to the amount by which
Transferor's share of Closing Costs exceeds the Cash Amount Balance;
7.3.8 INVESTOR QUESTIONNAIRES. Investor Questionnaires,
executed by each of the Ownership Unit Recipients; and,
7.3.9 ACKNOWLEDGMENTS. From each of the Ownership Unit
Recipients receiving OP Units, two (2) original executed counterparts the
Acknowledgments;
7.3.10 OTHER. Such other documents and instruments, signed and
properly acknowledged by Transferor, if appropriate, as may be reasonably
required by Transferee, Title Company, Escrow Agent, or otherwise in order to
effectuate the provisions of this Agreement and the Closing of the transactions
contemplated herein.
7.4 DELIVERIES BY TRANSFEREE. On or before the Closing, Transferee,
at its sole cost and expense, shall deliver or cause to be delivered into Escrow
(i) cash in an amount equal to Transferee's share of prorations and Closing
Costs, as provided in Sections 7.6 and 7.7, respectively, and the balance of the
Cash Amount as provided in Section 2.2(b) above, (ii) four (4) original executed
and acknowledged counterparts of each of the Assignments of Leases, (iii) four
(4) original counterparts of each of the Registration Rights Agreements,
executed by the REIT; (iv) certificates (the "CERTIFICATES") representing
750,000 Ownership Units, (v) two (2) executed original counterparts of each of
the Acknowledgments, executed by AIMCO-G.P., Inc., a Delaware corporation, and
(v) such other documents and instruments, signed and properly acknowledged by
Transferee, if appropriate, as may reasonably be required by Transferor, Escrow
Agent or otherwise in order to effectuate the provisions of this Agreement and
the closing of the transactions contemplated herein.
7.5 ACTIONS BY ESCROW AGENT. Provided that Escrow Agent shall not
have received written notice from Transferee or Transferor of the failure of any
condition to the Closing or of the termination of the Escrow and this Agreement,
when Transferee and Transferor have deposited into Escrow the documents and
funds required by this Agreement, and Title Company is irrevocably committed to
issue the Owner's Title Policies concurrently with the Closing, Escrow Agent
shall, in the order and manner herein below indicated, take the following
actions:
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7.5.1 RECORDING. Following Title Company's acknowledgement that
it is prepared and irrevocably committed to issue the Owner's Title Policies to
Transferee, cause the Deeds and any other documents which the parties hereto may
mutually direct to be recorded in the Official Records and obtain conformed
copies thereof for distribution to Transferee and Transferor.
7.5.2 FUNDS AND CERTIFICATES. Upon receipt of confirmation of
the recordation of the Deeds and such other documents as were recorded pursuant
to Section 7.5.1 above, disburse all funds and deliver the Certificates
deposited with it by Transferee as follows:
(a) pursuant to the "Closing Statement" (as hereinafter
defined), retain for Escrow Agent's own account all escrow fees and costs,
disburse to Title Company the fees and expenses incurred in connection with the
issuance of the Owner's Title Policies, and disburse to any other persons or
entities entitled thereto the amount of any other Closing Costs;
(b) deliver to Transferor the Certificates;
(c) disburse funds necessary to discharge and release any and
all Monetary Encumbrances against the Property;
(d) pay to Transferor the remaining Cash Amount Balance, if any,
after all disbursements pursuant to (a) and (c) above have been completed; and
(e) disburse to Transferee any remaining funds in the possession
of Escrow Agent after payments pursuant to (a), (c) and (d) above have been
completed.
7.5.3 TITLE POLICY. Cause Title Company to issue the Owner's
Title Policies to Transferee.
7.5.4 DELIVERY OF DOCUMENTS. Deliver (a) to Transferee and
Transferor each, two (2) originals of all documents deposited into Escrow, other
than the Deeds, the Non-foreign Affidavits, and the Forms 590 RE, and (b) to
Transferee, the Non-foreign Affidavits and the Forms 590 RE.
7.6 PRORATIONS.
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(a) Rentals, revenues, and other income, if any, from the
Property, taxes, assessments, improvement bonds, service or other contract
fees, utility costs, and other expenses affecting the Property shall be
prorated between Transferee and Transferor as of the Closing Date;
provided, however, that Transferor shall receive a credit at the Closing in
an amount equal to the rentals that are delinquent as of the Closing Date,
but only to the extent that such delinquent rentals are due and owing from
Tenants occupying a portion of the Property on the Closing Date; and
provided further, that Transferee shall be entitled to any and all payments
subsequently received in satisfaction of such delinquent rentals,
notwithstanding the fact that such rentals are attributable to a period
prior to Closing. For purposes of calculating prorations, Transferee shall
be deemed to be title holder of the Property, and therefore entitled to the
income and responsible for the expenses, after 12:01 a.m. on the Closing
Date. After the Closing, Transferor shall have no right to proceed in any
manner or make any claim against "Tenants" (as hereinafter defined) for
rents that were delinquent as of the Closing Date, except to the extent
that any such person no longer occupies any portion of the Property. All
non-delinquent real estate taxes or assessments on the Property shall be
prorated based on the actual current tax bill, but if such tax bill has not
yet been received by Transferor by the Closing Date or if supplemental
taxes are assessed after the Closing for the period prior to the Closing,
the parties shall make any necessary adjustment after the Closing by cash
payment to the party entitled thereto so that Transferor shall have borne
all real property taxes, including all supplemental taxes, allocable to the
period prior to the Closing and Transferee shall bear all real property
taxes, including all supplemental taxes, allocable to the period from and
after the Closing. If any expenses attributable to the Property and
allocable to the period prior to the Closing are discovered or billed after
the Closing, the parties shall make any necessary adjustment after the
Closing by cash payment to the party entitled thereto so that Transferor
shall have borne all expenses allocable to the period prior to the Closing
and Transferee shall bear all expenses allocable to the period from and
after the Closing. The provisions of this Section 7.6 shall survive the
Closing.
(b) Two (2) days prior to the Closing, Escrow Agent shall
deliver to each of the parties for their review and approval a preliminary
closing statement (the "PRELIMINARY CLOSING STATEMENT") setting forth (i)
the proration amounts allocable to each of the parties pursuant to this
Section 7.6, and (ii) the Closing Costs. Based on each of the party's
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comments, if any, regarding the Preliminary Closing Statement, Escrow Agent
shall revise the Preliminary Closing Statement and deliver a final, signed
version of a closing statement to each of the parties at the Closing (the
"CLOSING STATEMENT").
7.7 CLOSING COSTS. Each party shall pay its own costs and expenses
arising in connection with the Closing (including, without limitation, its own
attorney and advisor fees), except the following costs (the "CLOSING COSTS"):
(a) all documentary transfer, stamp, sales and other taxes
related to the transfer of the Property, which shall be paid by Transferor;
(b) Escrow Agent's escrow fees and costs, which shall be paid
one-half (1/2) by Transferor and one-half (1/2) by Transferee as to the first
$1,000.00, with the balance, if any, to be paid by Transferee;
(c) the cost of the Surveys (if not already paid), which shall
be paid by Transferee;
(d) the cost of the Owner's Title Policies and all endorsements
thereto, which shall be paid by Transferee;
(e) all recording fees, which shall be paid by Transferor;
(f) any and all prepayment or other penalties or amounts due and
payable in connection with the discharge and satisfaction of any Monetary
Encumbrances; and
(g) the sum of $300,000.00 due and payable to The Jeffrey Stone
Company, James Olsson and Property Asset Brokerage (collectively, the "BROKERS")
pursuant to separate agreements with the Brokers (the "BROKERAGE AGREEMENT"),
which shall be paid by the Transferor.
7.8 DELIVERIES OUTSIDE OF ESCROW. Transferor shall deliver
possession of the Property, subject only to the Permitted Exceptions, to
Transferee upon the Closing. Further, Transferor hereby covenants and agrees to
deliver to Transferee, on or prior to the Closing, the following items:
7.8.1 INTANGIBLE PROPERTY. The Intangible Property, including,
without limitation, the original Leases.
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7.8.2 PERSONAL PROPERTY. The Personal Property, including,
without limitation, any and all keys, pass cards, remote controls, security
codes, computer software and other devices relating to access to the
Improvements.
7.8.3 NOTICES.
(a) NOTICES TO TENANTS. A letter for each Tenant in form and
substance reasonably acceptable to Transferee, duly executed by Transferor,
dated as of the Closing Date and addressed to the Tenants, informing such
Tenants of the transfer of the Property and the assignment of the Leases to
Transferee together with an instruction to pay all amounts due under the
Leases following the Closing Date to Transferee.
(b) SERVICE CONTRACTS NOTICES. A letter to each of the vendors
of the service contracts for the Property (collectively, the "SERVICE
CONTRACTS") in form and substance reasonably acceptable to Transferee, duly
executed by Transferor, dated as of the Closing Date and addressed to each
Service Contract vendor, informing said vendors of the assignment of the
Service Contracts to Transferee.
8. TRANSFEROR'S REPRESENTATIONS AND WARRANTIES.
Transferor represents and warrants to and agrees with Transferee, as
of the Execution Date and as of the Closing, as follows (where a representation
or warranty is made based on Transferor's "actual knowledge" it is agreed that
this term shall mean for purposes of this Section 8, the actual knowledge of
Transferor (including, without limitation, the actual knowledge of James
Birmingham) without having undertaken any special investigation or inquiry
regarding the subject matter of that representation or warranty):
8.1 TITLE. Transferor is the legal and equitable owner of the
Property and Transferor has the full right to convey the Property.
8.2 LEASES.
8.2.1 LEASE SCHEDULE. The schedule attached hereto as EXHIBIT
"I" (the "LEASE SCHEDULE") is true, correct and complete with respect to: (i)
the leases, licenses, tenancies and other occupancy agreements (whether written
or oral) now in effect at the Property (the "LEASES"), (ii) the dates of the
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Leases and of all amendments thereof, (iii) the identities of the tenants under
the Leases (the "TENANTS"), (iv) the space occupied by the Tenants, (v) the
commencement and expiration dates of the Leases, (vi) the annual rents payable
thereunder, (vii) the base year for any escalated rent thereunder, (viii) the
currently escalated rents, (ix) any options to renew or cancel the Leases, (x)
any rights of first refusal and (xi) any outstanding agreements, written or
oral, to amend or otherwise modify any of the Leases.
8.2.2 LEASE REVIEW. True and complete copies of all Leases and
all amendments, guarantees and other documents relating thereto have been or
shall be made available to Transferee, its agents and representatives for
inspection, copying or both at Transferor's principal place of business during
normal business hours; provided, however, that for purposes of this Agreement,
Transferee may rely on the data set forth on the Lease Schedule. Upon the
written request of Transferee at any time prior to the Closing, Transferor shall
promptly deliver to Transferee a written explanation of any inconsistencies or
differences between the Lease Schedule and the Leases to the extent that any
such inconsistencies or differences are identified to Transferor by Transferee
in such written request.
8.2.3 SECURITY DEPOSITS. Except as set forth on the Lease
Schedule, there are no security deposits held by the landlord under any of the
Leases and there are no arrearages in rent or additional rent under any of the
Leases.
8.2.4 NO PRE-PAID RENT. No Tenant has paid any rent for more
than one (1) month in advance, except as may otherwise be set forth on the Lease
Schedule.
8.3 EXISTING CONTRACTS. Neither Transferor nor any agent of
Transferor has executed any service, maintenance, repair, management, supply or
other contracts affecting the Property which would be binding on Transferee
subsequent to the Closing, except as set forth on SCHEDULE 8.3 attached hereto.
8.4 INSURANCE. True, correct and complete copies of all insurance
policies maintained by Transferor with respect to the Property have been or
shall be made available to Transferee, its agents and representatives for
inspection, copying or both at Transferor's principal place of business during
normal business hours. Transferor will maintain such insurance policies from
the Execution
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Date through the Closing Date or earlier termination of this Agreement and
all premiums due on such insurance policies have been paid by Transferor.
8.5 LITIGATION. To Transferor's actual knowledge, there are no
actions, suits or proceedings before any judicial or quasi-judicial body, by any
governmental authority or other third party, pending or threatened against or
affecting all or any portion of the Property and, to Transferor's actual
knowledge, there is no basis for any such action. There are no actions, suits
or proceedings pending, contemplated or threatened by Transferor in connection
with all or any portion of the Property or Transferor's ownership, rights, use,
development or maintenance thereof, including, without limitation, tax reduction
proceedings; and from and after the date hereof, Transferor shall not commence
or allow to be commenced on its behalf any action, suit or proceeding with
respect to all or any portion of the Property without the prior written consent
of Transferee. To Transferor's actual knowledge, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or threatened against
Transferor. In the event any proceeding of the character described in this
Section 8.6 is initiated prior to the Closing, Transferor shall promptly advise
Transferee in writing.
8.6 COMPLIANCE WITH LAWS. To the Transferor's actual knowledge,
except as disclosed on Schedule 8.6 hereto, the Property is in material
compliance with all existing laws, rules, regulations, ordinances and orders of
all applicable federal, state, city and other governmental authorities in effect
as of the date of this Agreement (collectively, "LAWS"), including, without
limitation, all Laws with respect to zoning, building, subdivision, fire and
health codes, environmental protection and sanitation and pollution control.
Except as disclosed on Schedule 8.6 hereto, Transferor has received no notice
of, and has no actual knowledge of, any condition currently or previously
existing on the Property or any portion thereof which may give rise to any
violation of any existing Law applicable to the Property if it were disclosed to
the authorities having jurisdiction over the Property.
8.7 CONDEMNATION; SPECIAL ASSESSMENTS. To Transferor's actual
knowledge, there are no pending or contemplated condemnation, eminent domain or
similar proceedings or special assessments which would affect the Property or
any part thereof in any way whatsoever.
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8.8 TOXIC OR HAZARDOUS MATERIALS.
8.8.1 DEFINITIONS.
(a) "ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from the manufacture, treatment, processing,
distribution, use, transport, handling, deposit, storage, disposal, leaking or
other presence, or release into the environment of any "Material of
Environmental Concern" (as defined below) in, at, on, under or about any
location, whether or not owned or operated by Transferor.
(b) "ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment, including, without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
(c) "MATERIAL OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products.
8.8.2 REPRESENTATIONS AND WARRANTIES. Transferor represents and
warrants to and agrees with Transferee that, as of the Execution Date, and as of
the Closing, to Transferor's actual knowledge: (i) Transferor is in material
compliance with all applicable Environmental Laws relating to the Property,
which compliance includes, but is not limited to, the possession by Transferor
of all permits and other governmental authorities required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; (ii)
Transferor has not received any communication (written or oral), whether from a
governmental authority, citizens group, or employee, that alleges that
Transferor is not in such full compliance; (iii) there is no Environmental Claim
pending or threatened with regard to the Property; and (iv) without in any way
limiting the generality of the foregoing, (a) Transferor has not, disposed or
arranged for the disposal of Materials of Environmental Concern on the Property,
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(b) there are no underground storage tanks located on the Property, (c)
Transferor has not received any notice from any governmental agency, tenant or
third party, pursuant to any notification laws in the State of California or
otherwise, that there is asbestos contained in or forming part of any
Improvement, including, without limitation, any building, building component,
structure or office space on the Property, and (d) no polychlorinated biphenyls
(PCBs) are used or stored at the Property.
8.8.3 INDEMNIFICATION. Transferor agrees to indemnify,
reimburse, defend, and hold Transferee harmless from, for and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties, reasonable attorneys' fees, disbursements and expenses, and
reasonable consultants' fees, disbursements and expenses, asserted against,
resulting to, imposed on, or incurred by Transferee, directly or indirectly, in
connection with (i) the breach of any representation or warranty set forth in
Section 8.8.2 of this Agreement or (ii) any event or condition, whether known or
unknown to Transferor or disclosed in any report provided to Transferee, which
results, directly or indirectly, in an Environmental Claim, to the extent such
event or condition occurred, existed, or arose out of conditions that occurred
or existed, or were caused, in whole or in part, during the period in which
Transferor owned the Property, except for the existence of asbestos-containing
materials on the Property and those matters specifically identified for
remediation or abatement in environmental assessments of the Property performed
by Transferee in connection with this transaction. The obligation of the
constituent partners of the Transferor to indemnify Transferee pursuant to this
Section shall be several but not joint and shall be limited to the proportionate
share of the Contribution Value received by each such constituent partner at the
Closing, as set forth on the notice to be delivered by Transferor to Transferee
pursuant to Section 2.2 of this Agreement.
8.8.4 SURVIVAL. Notwithstanding the limitations of any
provision to the contrary contained herein, the representations, warranties,
covenants and indemnification set forth in this Section 8.8 shall survive the
Closing.
8.9 NO CONFLICTS. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, and compliance with the
terms of this Agreement will not conflict with, or, with or without notice or
the passage of time or both, result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, deed of trust,
mortgage, loan agreement, or other document, or instrument or agreement, oral or
written, to
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which Transferor is a party or by which Transferor or the Property is bound,
or any applicable regulation of any governmental agency, or any judgment,
order or decree of any court having jurisdiction over Transferor or all or
any portion of the Property.
8.10 DUE ORGANIZATION; CONSENTS. Transferor is a joint venture duly
organized, validly existing and in good standing under the laws of the State of
California, with its principal place of business in the State of California.
All requisite action has been taken by Transferor in connection with entering
into this Agreement, and will be taken prior to the Closing in connection with
the execution and delivery of the instruments referenced herein and the
consummation of the transaction contemplated hereby. No consent of any partner,
shareholder, beneficiary, creditor, investor, judicial or administrative body,
governmental authority or other party is required in connection herewith which
has not been obtained. The schedule of constituent partners of Transferor
attached as SCHEDULE 8.10 hereto is true, correct and complete.
8.11 TRANSFEROR AUTHORITY; VALIDITY OF AGREEMENTS. Transferor has
full right, power and authority to contribute and convey the Property to
Transferee as provided in this Agreement and to carry out its obligations
hereunder. The individual(s) executing this Agreement and the instruments
referenced herein on behalf of Transferor have the legal power, right and actual
authority to bind Transferor to the terms hereof and thereof. This Agreement
is, and all instruments, documents and agreements to be executed by Transferor
in connection herewith shall be, duly authorized, executed and delivered by
Transferor and shall be valid, binding and enforceable obligations of
Transferor.
8.12 INDEMNIFICATION. Transferor and each of the Ownership Unit
Recipients agree to indemnify, reimburse, defend, and hold harmless Transferee
for, from, and against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties, reasonable attorneys' fees,
disbursements and expenses, and reasonable consultants' fees, disbursements and
expenses, asserted against, resulting to, imposed on, or incurred by Transferee,
directly or indirectly, in connection with the breach of any representation,
warranty or agreement of Transferor set forth in this Section 8. The obligation
of the constituent partners of the Transferor to indemnify Transferee pursuant
to this Section shall be several but not joint and shall be limited to the
proportionate share of the Contribution Value received by each such constituent
partner at the Closing, as set forth on the
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notice to be delivered by Transferor to Transferee pursuant to Section 2.2 of
this Agreement.
8.13 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Neither Transferor
nor any of the Ownership Unit Recipients is a foreign person, foreign
corporation, foreign partnership, foreign trust or foreign estate within the
meaning of Section 1445 of the Internal Revenue Code of 1986, as amended (the
"IRC").
8.14 PROPERTY QUESTIONNAIRE. Transferor has completed for Transferee
a tax due diligence questionnaire with respect to the Property, and to
Transferor's actual knowledge, the responses therein are true, correct and
complete.
8.15 OWNERSHIP UNITS.
8.15.1 OWNERSHIP UNIT RECIPIENT REPRESENTATIONS. Transferor
hereby represents and warrants and agrees, on behalf of itself and each of the
Ownership Unit Recipients (and in so doing represents that it has the authority
from the Ownership Unit Recipients to make the representations, warranties,
acknowledgements and agreements made in this Agreement on their behalf):
(a) Transferor and each of the Ownership Unit Recipients are,
and at the Closing will be, an "Accredited Investor" as defined in Rule 501 of
the General Rules and Regulations promulgated under the Securities Act of 1933,
as amended (the "ACT").
(b) Transferor and each of the Ownership Unit Recipients
(i) have received and reviewed that certain Private Placement Memorandum, dated
as of April 3, 1996, and (ii) have had access to such additional financial and
other information, and have been afforded the opportunity to ask questions of
representatives of the Operating Partnership and the REIT, and to receive
answers to those questions, as they have deemed necessary in connection with the
acquisition of the Ownership Units that may be acquired pursuant hereto.
(c) Transferor and each of the Ownership Unit Recipients
(i) acknowledge that the Ownership Units that will be acquired pursuant to this
Agreement are being acquired in transactions not involving any public offering
within the meaning of the Act, and that the Ownership Units have not been
registered and may never be registered under the Act, and (ii) agree not to
offer, sell,
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transfer or otherwise dispose of all or any portion of the Ownership Units in
the absence of registration under the Act unless they deliver to the
Operating Partnership and the REIT an opinion of counsel reasonably
satisfactory to the Operating Partnership and the REIT, in form and substance
satisfactory to the Operating Partnership and the REIT, to the effect that
the proposed sale, transfer or other disposition may be effected without
registration under the Act and under applicable state securities or blue sky
laws.
(d) Transferor and each of the Ownership Unit Recipients
acknowledge and agree that the Ownership Units will be in the form of physical
certificates and that unless such Ownership Units shall have been registered
under the Act, the certificates will bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY
AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS.
(e) Transferor and each of the Ownership Unit Recipients
(i) have such knowledge and experience in financial and business matters that
each such party is capable of evaluating the merits and risks of an acquisition
of the Ownership Units and is able to bear the economic risk of a loss of an
investment in the Ownership Units and (ii) are not acquiring any Ownership Units
with a view to the distribution of the Ownership Units or any present intention
of offering or selling any of the Ownership Units in a transaction that would
violate the Act or the securities laws of any state or any other applicable
jurisdiction.
(f) With respect to individual or partnership tax and other
economic considerations involved in the transactions contemplated by this
Agreement, including an investment in Ownership Units, neither Transferor nor
the Ownership Unit Recipients are relying on Transferee (or any agent or
representative of Transferee). Transferor and each of the Ownership Unit
Recipients
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have carefully considered and have, to the extent each believes such
discussion necessary, discussed with its professional legal, tax, accounting and
financial advisors the suitability of an investment in the Ownership Units for
its particular tax and financial situation and has determined that the Ownership
Units being acquired by Transferor and the Ownership Unit Recipients are a
suitable investment for Transferor and the Ownership Unit Recipients.
8.15.2 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations
or warranties by Transferor, on behalf of itself or the Ownership Unit
Recipients, in this Agreement, nor any document, exhibit, statement, certificate
or schedule heretofore or hereinafter furnished to the Transferee pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make the statements or facts contained
therein not misleading.
8.16 SURVIVAL. All of the representations, warranties and agreements
of Transferor (on behalf of itself and each of the Ownership Unit Recipients)
set forth in this Agreement shall be true upon the Execution Date, shall be
deemed to be repeated at and as of the Closing Date (except as otherwise
disclosed in writing to Transferee) and shall survive the delivery of the Deeds
and the Closing.
9. TRANSFEREE'S REPRESENTATIONS AND WARRANTIES.
Transferee represents and warrants to Transferor, as of the Execution
Date and as of the Closing, as follows:
9.1 NO CONFLICTS. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, and compliance with the
terms of this Agreement will not conflict with, or, with or without notice or
the passage of time or both, result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, deed of trust,
mortgage, loan agreement, or other document or instrument to which Transferee is
a party or by which Transferee is bound, or any applicable regulation of any
governmental agency, or any judgment, order or decree of any court having
jurisdiction over Transferee or all or any portion of the Property.
9.2 DUE ORGANIZATION; CONSENTS. The Operating Partnership is a
limited partnership duly organized and existing in good standing under the laws
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of the State of Delaware, with its principal place of business in the State of
Colorado. The REIT is a corporation duly organized and existing in good
standing under the laws of the State of Maryland, with its principal place of
business in the State of Colorado. All requisite corporate and partnership
action has been taken by Transferee in connection with entering into this
Agreement, and will be taken prior to the Closing in connection with, the
execution and delivery of the instruments referenced herein and the consummation
of the transactions contemplated hereby. No consent of any officer, director,
partner, shareholder, beneficiary, creditor, investor, judicial or
administrative body, governmental authority or other party is required in
connection herewith which has not been obtained.
9.3 TRANSFEREE'S AUTHORITY; VALIDITY OF AGREEMENTS. Transferee has
full right, power and authority to accept the Property from Transferor as
provided in this Agreement and to carry out its obligations hereunder. The
individual(s) executing this Agreement and the instruments referenced herein on
behalf of Transferee have the legal power, right and actual authority to bind
Transferee to the terms hereof and thereof. This Agreement is, and all other
documents and instruments to be executed and delivered by Transferee in
connection with this Agreement shall be, duly authorized, executed and delivered
by Transferee and shall be valid, binding and enforceable obligations of
Transferee.
9.4 FREQUENCY AND AMOUNT OF DIVIDENDS AND DISTRIBUTIONS.
Distributions or dividends, as applicable, with respect to OP Units and Shares
are made with the same frequency and in the same amount; provided, however, that
the initial distributions with respect to OP Units accrue only for the period
applicable from the date of the issuance of such OP Units to the distributee.
9.5 INDEMNIFICATION. Transferee agrees to indemnify, reimburse,
defend, and hold harmless Transferor and each of the Ownership Unit Recipients
for, from, and against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties, reasonable attorneys' fees,
disbursements and expenses, and reasonable consultants' fees, disbursements and
expenses, asserted against, resulting to, imposed on, or incurred by Transferor,
directly or indirectly, in connection with the breach of any representation,
warranty or agreement of Transferee set forth in this Section 9.
9.6 SURVIVAL. All of the representations, warranties and agreements
of Transferee set forth in this Agreement shall be true upon the Execution Date,
shall be deemed to be repeated at and as of the Closing Date (except as
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otherwise set forth in writing to Transferor) and shall survive the delivery of
the Deed and the Closing.
10. ADDITIONAL COVENANTS OF TRANSFEROR.
10.1 In addition to the covenants and agreements of Transferor set
forth elsewhere in this Agreement, Transferor covenants and agrees that between
the Execution Date and the Closing Date:
10.1.1 TITLE. Transferor shall not directly or indirectly sell,
contribute, assign or create any right, title or interest whatsoever in or to
the Property, or create or permit to exist thereon any lien, charge or
encumbrance other than the Permitted Exceptions, or enter into any agreement to
do any of the foregoing, including, without limitation, any new leases (or
renewals, modifications or extensions of any Leases) or any new service
contracts (or renewals, modifications or extensions of any existing service
contracts), without the prior written consent of Transferee (which consent may
be granted or withheld in Transferee's sole and absolute discretion).
10.1.2 DEVELOPMENT ACTIVITIES. Transferor shall not take any
actions with respect to the development of the Property, including, without
limitation, applying for, pursuing, accepting or obtaining any permits,
approvals or other development entitlements from any governmental or other
regulatory entities or finalizing or entering into any agreements relating
thereto without the prior written consent of Transferee (which consent may be
granted or withheld in Transferee's sole and absolute discretion). Transferor
hereby agrees to reasonably cooperate with Transferee in Transferee's efforts to
obtain such governmental approvals as Transferee deems necessary to permit
Transferee to operate the Property as Transferee wishes.
10.1.3 NO PRE-PAID RENT. Transferor shall not accept any rent
from any Tenant (or any new tenant under any new lease to which Transferee has
consented) for more than one (1) month in advance of the payment date.
10.1.4 NOTICE OF CHANGE IN CIRCUMSTANCES. Transferor shall
promptly notify Transferee of any change (collectively, the "CHANGES") in any
condition with respect to the Property or any portion thereof or of any event or
circumstance of which Transferor obtains knowledge subsequent to the Execution
Date which (a) materially affects the Property or any portion thereof, or the
use or operation of the Property or any portion thereof, (b) makes any
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representation or warranty of Transferor to Transferee under this Agreement
untrue or misleading in any material respect, or (c) makes any covenant or
agreement of Transferor under this Agreement incapable or substantially less
likely of being performed, it being expressly understood that Transferor's
obligation to provide information to Transferee under this Section 10.1.5 shall
in no way relieve Transferor of any liability for a breach by Transferor of any
of its representations, warranties, covenants or agreements under this
Agreement. In addition to the foregoing, on or before the Due Diligence
Termination Date, Transferor shall deliver to Transferee written notice of any
Changes of which Transferor has knowledge that have occurred since or subsequent
to the Execution Date.
10.1.5 NO DEFAULTS; MAINTENANCE OF PROPERTY. Transferor shall
not default with respect to the performance of any material obligation relating
to the Property, including, without limitation, the payment of all amounts due
and the performance of all obligations with respect to any existing indebtedness
or existing leases or contracts affecting the Property. Transferor shall
operate and maintain the Property in accordance with Transferor's past practice
and all applicable Laws, rules and regulations affecting the Property or any
portion thereof.
10.1.6 EXCLUSIVE NEGOTIATIONS. Transferor shall (i) remove the
Property from the market, and (ii) cease and refrain from any and all
negotiations with any other prospective optionees or purchasers of the Property.
10.1.7 SERVICE, MANAGEMENT AND EMPLOYMENT CONTRACTS. Transferor
shall not enter into, extend, renew or replace any existing service, property
management or employment contracts in respect of the Property without the prior
written consent of Transferee (which consent may be withheld in Transferee's
sole and absolute discretion), unless the same shall be cancellable without
penalty or premium, upon not more than thirty (30) days' notice from the owner
of the Property.
10.1.8 NEW LEASES. At Transferee's request, Transferor shall
advise Transferee of any and all negotiations with current or potential tenants
of the Property. Transferor shall not enter into any new lease or extend any
Lease for a term in excess of one (1) year without Transferee's prior written
consent, which consent may be withheld in Transferee's sole and absolute
discretion.
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11. ADDITIONAL COVENANTS OF TRANSFEREE.
In addition to the covenants and agreements of Transferee set forth
elsewhere in this Agreement, Transferee covenants and agrees that from the
Closing until the earlier to occur of (i) the date that is five (5) years after
the Closing Date, or (ii) the date on which Transferor and the Ownership Unit
Recipients collectively hold less than four hundred sixty thousand and fifty-
four (460,054) Ownership Units, Transferee will not voluntarily transfer all or
any portion of the Property in a transaction that could reasonably be expected
to result in recognition of taxable gains by Transferor or the Ownership Unit
Recipients. Transferor and each of the Ownership Unit Recipients acknowledge
and agree that a tax-deferred exchange of the Property or any portion thereof
pursuant to Section 1031 of the IRC would not reasonably be expected to result
in recognition of taxable gains by Transferor or the Ownership Unit Recipients
and, therefore, is a permitted disposition pursuant to the foregoing sentence.
Notwithstanding anything to the contrary in the first (1st) sentence of this
Section 11, Transferor acknowledges and agrees that Transferee may contribute
all or any portion of the Property to an affiliate of Transferee and that such
contribution is permitted hereunder, provided that any such permitted transferee
agrees to be bound by the provisions of this Section 11.
12. RISK OF LOSS.
12.1 CONDEMNATION. If, prior to the Closing, all or any material
portion of either or both of the Land Parcels or any other part of the Property
is taken by condemnation or eminent domain (or is the subject of a pending or
contemplated taking which has not been consummated), Transferor shall
immediately notify Transferee of such fact. In such event, Transferee shall
have the option to terminate this Agreement upon written notice to Transferor
given not later than thirty (30) days after receipt of such notice from
Transferor. Upon such termination, Escrow Agent shall return the Deposit to
Transferee, the parties shall equally share the cancellation charges of Escrow
Agent and Title Company, if any, and neither party shall have any further rights
or obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement. Transferee shall have no
right to terminate this Agreement as a result of any non-material taking of the
Property. If Transferee does not elect or has no right to terminate this
Agreement, Transferor shall assign and turn over to Transferee, and Transferee
shall be entitled to receive and keep, all awards for the taking by condemnation
and Transferee shall be deemed to have
30
<PAGE>
accepted the Property subject to the taking without reduction in the
Contribution Value.
12.2 CASUALTY. Prior to the Closing and notwithstanding the pendency
of this Agreement, the entire risk of loss or damage by earthquake, flood,
landslide, fire or other casualty shall be borne and assumed by Transferor. If,
prior to the Closing any material part of the Improvements located on either or
both of the Land Parcels or any other part of the Property is damaged or
destroyed by earthquake, flood, landslide, fire or other casualty, Transferor
shall immediately notify Transferee of such fact. In such event, Transferee
shall have the option to terminate this Agreement in the same manner as provided
in Section 12.1 hereof upon written notice to Transferor given not later than
thirty (30) days after receipt of any such notice from Transferor. Transferee
shall have no right to terminate this Agreement as a result of any non-material
damage or destruction of the Property. If Transferee does not elect or has no
right to terminate this Agreement, Transferor shall assign and turn over, and
Transferee shall be entitled to receive and keep, all insurance proceeds payable
with respect to such damage or destruction (which shall then be repaired or not
at Transferee's option and cost) and Transferee shall receive as a credit
against the Contribution Value an amount equal to the deductible amount with
respect to the insurance and the parties shall proceed to the Closing pursuant
to the terms hereof without modification of the terms of this Agreement. If
Transferee does not elect or has no right to terminate this Agreement by reason
of any casualty, Transferee shall have the right to participate in any
adjustment of the insurance claim.
13. LIQUIDATED DAMAGES; SPECIFIC PERFORMANCE.
13.1 LIQUIDATED DAMAGES. IN THE EVENT THAT THE ESCROW AND THIS
TRANSACTION FAIL TO CLOSE SOLELY AS A RESULT OF THE DEFAULT OF TRANSFEREE IN THE
PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, TRANSFEREE AND TRANSFEROR
AGREE THAT TRANSFEROR'S ACTUAL DAMAGES WOULD BE IMPRACTICABLE OR EXTREMELY
DIFFICULT TO FIX. THE PARTIES THEREFORE AGREE THAT IN THE EVENT THAT ESCROW AND
THIS TRANSACTION FAIL TO CLOSE SOLELY AS A RESULT OF THE DEFAULT OF TRANSFEREE
IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, TRANSFEROR, AS TRANSFEROR'S
SOLE AND EXCLUSIVE REMEDY, IS ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF
THE DEPOSIT (EXCLUSIVE OF INTEREST AND DIVIDENDS EARNED THEREON). IN THE EVENT
ESCROW
31
<PAGE>
FAILS TO CLOSE SOLELY AS A RESULT OF TRANSFEREE'S DEFAULT, THEN (1) THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF TRANSFEREE AND TRANSFEROR
HEREUNDER AND THE ESCROW CREATED HEREBY SHALL TERMINATE, (2) ESCROW AGENT
SHALL, AND IS HEREBY AUTHORIZED AND INSTRUCTED TO, RETURN PROMPTLY TO
TRANSFEREE AND TRANSFEROR ALL DOCUMENTS AND INSTRUMENTS TO THE PARTIES WHO
DEPOSITED THE SAME, (3) ESCROW AGENT SHALL DELIVER THE DEPOSIT (EXCLUSIVE OF
INTEREST AND DIVIDENDS EARNED THEREON) TO TRANSFEROR PURSUANT TO TRANSFEROR'S
INSTRUCTIONS, AND THE SAME SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES,
(4) ALL TITLE AND ESCROW CANCELLATION CHARGES, IF ANY, SHALL BE CHARGED TO
TRANSFEREE AND (5) ESCROW AGENT SHALL DELIVER TO TRANSFEREE ALL INTEREST AND
DIVIDENDS EARNED ON THE DEPOSIT.
TRANSFEROR AND TRANSFEREE ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE PROVISIONS OF THIS SECTION 13.1, AND BY THEIR INITIALS
IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
- ------------ ------------
Transferor's Transferee's
Initials Initials
13.2 DEFAULT BY TRANSFEROR. In the event that the Closing of
the transaction contemplated in this Agreement does not occur by reason of
any default by Transferor, then (i) Escrow Agent shall return the Deposit to
Transferee and (ii) Transferee shall be entitled to pursue any remedy
available to it hereunder, at law or in equity, including, without
limitation, the specific performance of this Agreement.
14. BROKERS.
Transferee and Transferor each hereby represent, warrant to
and agree with each other that it has not had, and shall not have, any
dealings with any third party to whom the payment of any broker's fee,
finder's fee, commission or other similar compensation ("COMMISSION") shall
or may become due or payable in connection with the transaction contemplated
hereby, other than with
32
<PAGE>
Brokers pursuant to the Brokerage Agreement. Transferor hereby agrees to pay
all Commission due and payable to Brokers in connection with the transaction
contemplated hereby pursuant to the Brokerage Agreement. Transferor shall
indemnify, defend and hold Transferee harmless from and against any and all
claims, losses, damages, costs and expenses (including reasonable attorneys'
fees, charges and disbursements) incurred by Transferee by reason of any
breach or inaccuracy of the representation, warranty and agreement of
Transferor contained in this Section 14. Transferee shall indemnify,
protect, defend and hold Transferor harmless from and against any and all
claims, losses, damages, costs and expenses (including reasonable attorneys'
fees, charges and disbursements) incurred by Transferor by reason of any
breach or inaccuracy of the representation, warranty and agreement of
Transferee contained in this Section 14. The provisions of this Section 14
shall survive the Closing or earlier termination of this Agreement.
15. INDEMNIFICATION.
Transferee hereby agrees to indemnify, defend and hold Transferor
harmless from and against any claims, demands, obligations, losses, costs,
damages, liabilities, judgments or expenses (including reasonable attorneys'
fees, charges and disbursements) arising out of or in connection with the
ownership, operation or maintenance of the Property after the Closing.
Transferor hereby agrees to indemnify, defend and hold Transferee harmless from
and against any claims, demands, obligations, losses, costs, damages,
liabilities, judgments or expenses (including reasonable attorneys' fees,
charges and disbursements) arising out of or in connection with the ownership,
operation or maintenance of the Property prior to the Closing. Each party shall
do, execute and deliver, or shall cause to be done, executed and delivered, all
such further acts and instruments which the other party may reasonably request
in order to more fully effectuate the indemnifications provided for in this
Agreement. The provisions of this Section 15 shall survive the Closing.
16. MISCELLANEOUS PROVISIONS.
16.1 GOVERNING LAW; JURISDICTION AND VENUE. This Agreement and
the legal relations between the parties hereto shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to its principles of conflicts of law. The parties hereto agree
that any action or proceeding instituted by either party under or pursuant to
this Agreement with respect to any matter arising or growing out of this
Agreement
33
<PAGE>
shall be brought only in the State of California. Transferor and Transferee
executed this Agreement in Orange County, California, and performance of this
Agreement is required in Orange County, State of California.
16.2 ENTIRE AGREEMENT; MODIFICATIONS; WAIVER.
16.2.1 ENTIRE AGREEMENT. This Agreement, including the
exhibits and schedules attached hereto, constitutes the entire agreement between
Transferee and Transferor pertaining to the subject matter hereof and supersedes
all prior agreements, understandings, letters of intent, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to
either party by the other party in connection with the subject matter hereof
except as specifically set forth herein or in the documents delivered pursuant
hereto or in connection herewith. Without limiting the foregoing, upon the
execution of this Agreement, that certain letter agreement, dated March 15, 1996
from Mr. Pankey and Mr. Birmingham to Mr. Jeffrey E. Stone shall terminate and
be of no further force or effect.
16.2.2 MODIFICATION. No supplement, modification, waiver
or termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
16.3 NOTICES. All notices, consents, requests, reports, demands
or other communications hereunder (collectively, "NOTICES") shall be in writing
and may be given personally, by registered or certified mail, or by Federal
Express (or other reputable overnight delivery service).
To Transferee: AIMCO Properties, L.P.
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Harry Alcock
Telephone: (303) 757-8101
34
<PAGE>
and to: AIMCO Properties, L.P.
510 West 6th Street, Suite 1000
Los Angeles, California 90014
Attention: Mr. Peter K. Kompaniez
Telephone: (213) 680-2936
With A Copy To: Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rand S. April, Esq.
Telephone: (213) 687-5060
To Transferor: Thoner-Pankey
1801 Parkcourt Place, Building I
Santa Ana, California 92701-5083
Attention: David Poole and Jim Birmingham
Telephone: (714) 558-1921
With A Copy To: Sikora & Price, Inc.
2913 Pullman Street, Suite B
Santa Ana, California 92705-5818
Attention: Steven C. Crooke
Telephone: (714) 261-2233
To Escrow Stewart Title Guaranty Company
Agent: 1980 Post Oak Boulevard, Suite 610
Houston, Texas 77056
Attention: Ms. Lolly Avant
Telephone: (713) 625-8136
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given when received.
16.4 EXPENSES. Subject to the provision for payment of Closing
Costs in accordance with Section 7.7 hereof, whether or not the transactions
contemplated by this Agreement shall be consummated, all fees and expenses
incurred by any party hereto in connection with this Agreement shall be borne by
such party.
35
<PAGE>
16.5 ASSIGNMENT.
16.5.1 TRANSFEROR'S RIGHT TO ASSIGN. Transferor shall have
the right, power and authority, without Transferee's consent, to assign this
Agreement or any portion of this Agreement or Transferor's rights hereunder pro
rata to the Ownership Unit Recipients in accordance with the proportionate share
of the Contribution Value distributed to each of them; provided, however, that
(i) such assignee assumes the obligations of Transferor hereunder, and (ii) no
such assignment or delegation shall relieve Transferor of its obligations or
liabilities under this Agreement. Except as provided in the preceding sentence,
Transferor shall not have the right to assign, this Agreement or any portion
therefor to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily or by operation of law, without Transferee's prior
written consent.
16.5.2 TRANSFEREE'S RIGHT TO ASSIGN. Transferee shall have
the right, power and authority to assign this Agreement or any portion of this
Agreement or Transferee's rights hereunder or to delegate any duties or
obligations arising under this Agreement, voluntarily, involuntarily or by
operation of law, without Transferor's consent, to any affiliate of Transferee;
provided, however, that no such assignment or delegation shall relieve
Transferee of its obligations or liabilities under this Agreement. Except as
provided in the preceding sentence, Transferee shall not have the right to
assign, this Agreement or any portion thereof or to delegate any duties or
obligations arising under this Agreement, voluntarily, involuntarily or by
operation of law, without Transferor's prior written consent.
16.6 SEVERABILITY. Any provision or part of this Agreement
which is invalid or unenforceable in any situation in any jurisdiction shall, as
to such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in any
other situation or in any other jurisdiction.
16.7 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and
without waiver of the provisions of Section 16.5 hereof, all of the rights,
duties, benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors and assigns.
Except as specifically set forth or referred to herein, nothing herein expressed
or implied is intended or shall be construed to confer upon or give to any
person or entity, other than the
36
<PAGE>
parties hereto and their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
16.8 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
16.9 HEADINGS. The Section headings of this Agreement are for
convenience of reference only and shall not be deemed to modify, explain,
restrict, alter or affect the meaning or interpretation of any provision hereof.
16.10 TIME OF ESSENCE. Time shall be of the essence with
respect to all matters contemplated by this Agreement.
16.11 FURTHER ASSURANCES. In addition to the actions recited
herein and contemplated to be performed, executed, and/or delivered by
Transferor and Transferee, Transferor and Transferee agree to perform, execute
and/or deliver or cause to be performed, executed and/or delivered at closing or
after Closing any and all such further acts, instruments, deeds and assurances
as may be reasonably required to consummate the transactions contemplated
hereby.
16.12 NUMBER AND GENDER. Whenever the singular number is used,
and when required by the context, the same includes the plural, and the
masculine gender includes the feminine and neuter genders.
16.13 CONSTRUCTION. This Agreement shall not be construed more
strictly against one party hereto than against any other party hereto merely by
virtue of the fact that it may have been prepared by counsel for one of the
parties.
16.14 POST-CLOSING ACCESS TO RECORDS. Upon receipt by Transferor
of Transferee's reasonable written request at anytime and from time to time
within a period of three (3) years after the Closing, Transferor shall, at
Transferor's principal place of business, during Transferor's normal business
hours, make all of Transferor's records relating to the Property available to
Transferee for inspection and copying (at Transferee's sole cost and expense).
16.15 EXHIBITS. All exhibits attached hereto are hereby
incorporated by reference as though set out in full herein.
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<PAGE>
16.16 ATTORNEYS' FEES. In the event that either party hereto
brings an action or proceeding against the other party to enforce or interpret
any of the covenants, conditions, agreements or provisions of this Agreement,
the prevailing party in such action or proceeding shall be entitled to recover
all costs and expenses of such action or proceeding, including, without
limitation, attorneys' fees, charges, disbursements and the fees and costs of
expert witnesses.
16.17 BUSINESS DAYS. As used herein, the term "BUSINESS DAY"
shall mean a day that is not a Saturday, Sunday or legal holiday. In the event
that the date for the performance of any covenant or obligation under this
Agreement shall fall on a Saturday, Sunday or legal holiday, the date for
performance thereof shall be extended to the next Business Day.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
TRANSFEREE:
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.,
its general partner
By: /s/ Peter K. Kompaniez
-------------------------------
Name: Peter K. Kompaniez
Its: Vice President
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY, a Maryland
corporation
By: /s/ Peter K. Kompaniez
----------------------------------
Name: Peter K. Kompaniez
Its: Vice Chairman
TRANSFEROR:
THONER-PANKEY, a California joint ven-
ture
By /s/ Homer E. Lindley
----------------------------------
Name: Homer E. Lindley
By: /s/ Gared N. Smith
-----------------------------------
Name: Gared N. Smith
By: /s/ Edgar E. Pankey
-------------------------------------
Name: Edgar E. Pankey
39
<PAGE>
By: BIRMINGHAM-THONER DEVEL-
OPMENT COMPANY, a California
limited partnership (formerly known
as Thoner & Birmingham Develop-
ment Co., a partnership)
By: /s/ James J. Birmingham
-----------------------------
Name: James J. Birmingham
Its: General Partner
By: PANKEY GROUP, a California gen-
eral partnership
By: /s/ Edgar E. Pankey
--------------------------
Name: Edgar E. Pankey
Its: Managing General Partner
40
<PAGE>
LIST OF EXHIBITS
EXHIBIT "A" LEGAL DESCRIPTION
EXHIBIT "B" FORM OF DEEDS
EXHIBIT "C" SCHEDULE OF PERSONAL PROPERTY
EXHIBIT "D" INTENTIONALLY OMITTED
EXHIBIT "E" FORM OF ASSIGNMENT OF LEASES
EXHIBIT "F" FORM OF BILL OF SALE AND ASSIGNMENT
EXHIBIT "G" INTENTIONALLY OMITTED
EXHIBIT "H" FORM OF NON-FOREIGN AFFIDAVIT
EXHIBIT "I" LEASE SCHEDULE
EXHIBIT "J-1" REGISTRATION RIGHTS AGREEMENT (Common Stock)
EXHIBIT "J-2" REGISTRATION RIGHTS AGREEMENT (OP Units)
SCHEDULE 2.2 OWNERSHIP UNIT RECIPIENTS
SCHEDULE 3.8 SERVICE CONTRACTS
SCHEDULE 8.6 COMPLIANCE WITH LAWS
41
<PAGE>
EXHIBIT 10.6
REGISTRATION AGREEMENT
For valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, this REGISTRATION AGREEMENT (this "AGREEMENT") is
entered into as of the 19th day of April, 1996, by and among APARTMENT
INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "COMPANY"),
and the persons listed on SCHEDULE A hereto (each, an "INVESTOR").
WHEREAS, pursuant to that certain Acquisition and Contribution
Agreement and Joint Escrow Instructions, dated as of April 19, 1996 (the
"ACQUISITION AGREEMENT"), by and among the Company, AIMCO Properties, L.P., a
Delaware limited partnership ("AIMCO OP"), and Thoner-Pankey, a California
joint venture, the Investors were issued 1,247,472 units of limited
partnership interest in AIMCO OP (the "ISSUED OP UNITS") upon the
contribution of certain assets to AIMCO OP, all of which Issued OP Units when
surrendered for redemption may be acquired by the Company in exchange for
shares of the Company's Class A Common Stock, par value $.01 per share (the
"COMMON STOCK"), subject to certain restrictions under the agreement of
limited partnership of AIMCO OP (the "OP PARTNERSHIP AGREEMENT") and the
Company's charter;
WHEREAS, in connection with the foregoing, the Company has agreed
to register for sale by the Investors, the shares of Common Stock which may
be received by the Investors in exchange for Issued OP Units that are
surrendered for redemption (collectively, the "REGISTRABLE SHARES"); and
WHEREAS, the parties hereto desire to enter into this agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and subject to the terms and conditions set
forth herein, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In this Agreement the following
terms shall have the following respective meanings:
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule 501
of the General Rules and Regulations promulgated under the Securities Act.
<PAGE>
"AFFILIATE" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the person specified.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"DEMAND NOTICE" shall have the meaning ascribed thereto in Section
2(a) hereof.
"DEMAND REGISTRATION" shall have the meaning ascribed thereto in
Section 2(b) hereof.
"EFFECTIVENESS PERIOD" shall have the meaning ascribed thereto in
Section 2(c) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the relevant time.
"HOLDERS" shall mean (i) each of the Investors, (ii) each Person
holding OP Units as a result of a Permitted Transfer (as such term is defined
in the OP Partnership Agreement) to that Person of OP Units made by an
Investor in accordance with the provisions of the OP Partnership Agreement,
and (iii) each Person holding Registrable Shares as a result of a transfer or
assignment to that Person of Registrable Shares made by an Investor in
accordance with this Agreement other than pursuant to an effective
registration statement or Rule 144 under the Securities Act.
"INDEMNIFIED PARTY" shall have the meaning ascribed to it in
Section 4(c) of this Agreement.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in
Section 4(c) of this Agreement.
"OP UNITS" shall mean units of limited partnership interest in
AIMCO OP.
"PERSON" shall mean an individual, corporation, partnership,
estate, trust, association, private foundation, joint stock company or other
entity.
2
<PAGE>
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
all Registrable Shares in accordance with the method or methods of
distribution designated by the Holders, and the declaration or ordering of
the effectiveness of such registration statement by the Commission.
"REGISTRABLE SHARES" shall have the meaning ascribed to it in the
recitals to this Agreement.
"REGISTRATION EXPENSES" shall mean all out-of-pocket expenses
(excluding Selling Expenses) incurred by the Company in complying with
Section 2 hereof, including, without limitation, the following: (a) all
registration, filing and listing fees; (b) fees and expenses of compliance
with federal and state securities or real estate syndication laws (including,
without limitation, reasonable fees and disbursements of counsel in
connection with state securities and real estate syndication qualifications
of the Registrable Shares under the laws of such jurisdictions as the Holders
may designate); (c) printing (including, without limitation, expenses of
printing or engraving certificates for the Registrable Shares in a form
eligible for deposit with The Depository Trust Company and otherwise meeting
the requirements of any securities exchange on which they are listed and of
printing registration statements and prospectuses), messenger, telephone,
shipping and delivery expenses; (d) fees and disbursements of counsel for the
Company; (e) fees and disbursements of all independent public accountants of
the Company (including without limitation the expenses of any annual or
special audit and "cold comfort" letters required by the managing
underwriter); (f) securities act liability insurance if the Company so
desires; (g) fees and expenses of other Persons reasonably necessary in
connection with the registration, including any experts, retained by the
Company; (h) fees and expenses incurred in connection with the listing of the
Registrable Shares on each securities exchange on which securities of the
same class are then listed; and (i) fees and expenses associated with any
NASD filing required to be made in connection with the registration statement.
"RIGHTS" shall have the meaning ascribed to it in Section 6 of this
Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
3
<PAGE>
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
Section 2. DEMAND REGISTRATION.
(a) From and after the date that is one (1) year after the
date hereof, any Holder shall have the right, by written notice (the "Demand
Notice") given to the Company so long as this Agreement has not been
terminated in accordance with Section 9(a) hereof, to request the Company to
register all of such Holder's Registrable Shares under and in accordance with
the provisions of the Securities Act. The Holders shall be entitled in the
aggregate to one Demand Registration pursuant to this Section 2.
(b) The Company shall file with the Commission within ninety
(90) days of the date on which the Company first receives the Demand Notice
given by any of the Holders pursuant to Section 2(a) hereof, and use
commercially reasonable efforts to cause be declared effective as soon as
possible thereafter, a registration statement under the Securities Act on the
appropriate form for a "shelf" registration, relating to all of the
Registrable Shares (a "Demand Registration"). Notwithstanding the foregoing,
the Company shall have the right (the "Suspension Right") to defer the filing
or effectiveness of such registration statement (or suspend sales under any
filed registration statement or defer the updating of any filed registration
statement and suspend sales thereunder) for a period of not more than 120
days during any twelve-month period if the Company shall furnish to the
Holders a certificate signed by the President or any other executive officer
or any director of the Company stating that in the judgment of the Company it
would be detrimental to the Company and its shareholders to file such
registration statement or amendment thereto or cause such registration
statement or amendment thereto to be declared effective at such time (or
continue sales under a filed registration statement) and therefore the
Company has elected to defer the filing or declaration of effectiveness of
such registration statement (or suspend sales under a filed registration
statement).
(c) The Company agrees to use commercially reasonable efforts
to keep the registration statement filed pursuant to this Section 2
continuously effective and usable for the resale of Registrable Shares for a
period of twenty (20) years from the date on which the Commission declares
such registration statement effective or such shorter period which will
terminate when all the Registrable Shares covered by such registration
statement have been sold pursuant to such Registration Statement.
Notwithstanding the foregoing, the Company shall have the right (the
4
<PAGE>
"Suspension Right") to defer such filing (or suspend sales under any filed
registration statement or defer the updating of any filed registration
statement and suspend sales thereunder) for a period of not more than 90 days
during any one-year period if the Company shall furnish to the Holders a
certificate signed by the President or any other executive officer or any
director of the Company stating that in the judgment of the Company it would
be detrimental to the Company and its shareholders to file such registration
statement or amendment thereto at such time (or continue sales under a filed
registration statement) and therefore the Company has elected to defer the
filing of such registration statement (or suspend sales under a filed
registration statement); provided, however, that at least sixty (60) days
shall have elapsed between the expiration of any ninety-day period in one
such one-year period and the commencement of any ninety-day period in the
next succeeding one-year period.
(d) In the case of a proposed offering pursuant to a Demand
Registration, the Company may, in its sole discretion, include other
securities of the Company in such Demand Registration (whether for the
account of the Company or otherwise, including without limitation securities
of the Company held by other security holders, if any, who have piggyback
registration rights with respect thereto) on the same terms and conditions as
the Registrable Shares.
(e) The Company shall promptly notify the Holders of the
occurrence of the following events:
(i) the filing with the Commission of the registration
statement, any supplement to the prospectus or any amendment or post-
effective amendment to the registration statement and, with respect to
the registration statement or any post-effective amendment, when the
same has become effective;
(ii) any request by the Commission for amendments or
post-effective amendments to the registration statement or supplements
to the prospectus or for additional information;
(iii) the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for that purpose;
5
<PAGE>
(iv) the suspension of an effective registration
statement by the Company in accordance with the last paragraph of
Section 2(a) above;
(v) the Company's receipt of any notification of the
suspension of the qualification of any shares of Common Stock covered
by the registration statement for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose; and
(vi) the existence of any event, fact or circumstance
that results in the registration statement, the prospectus or any
document incorporated therein by reference containing an untrue
statement of material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading during the distribution of securities.
The Company agrees to use its best effort to obtain the withdrawal
of any order suspending the effectiveness of the registration statement or
any state qualification at the earliest possible moment.
(f) The Company shall provide to each Holder, at no cost to
the Holders, promptly upon the effectiveness thereof, five copies of the
prospectus and any post-effective amendment or supplement thereto, together
with a copy of the registration statement and any amendment thereto used to
effect the Registration of the Registrable Shares, each prospectus contained
in such registration statement or post-effective amendment and any amendment
or supplement thereto including financial statements and schedules, all
documents incorporated therein by reference and all exhibits thereto. The
Company shall also provide the Holders with such other documents as the
requesting Holders may reasonably request in order to facilitate the
disposition of the Registrable Shares covered by such registration statement.
The Company consents to the use of each prospectus or any supplement thereto
by the Holders in connection with the offering and sale of the shares covered
by such registration statement or any amendment thereto.
(g) The Company agrees to use its best efforts to cause the
shares covered by the registration statement to be registered with or
approved by such state securities authorities as may be necessary to enable
the Holders to consummate the disposition of such shares pursuant to the plan
of distribution set forth in the registration statement.
6
<PAGE>
(h) Subject to the Company's Suspension Right, if any event,
fact or circumstance requiring an amendment to the registration statement or
supplement to the prospectus shall exist, immediately upon becoming aware
thereof the Company agrees to notify the Holders and prepare and furnish to
the Holders a post-effective amendment to the registration statement or
supplement to the prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Shares, the prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(i) The Company agrees to seek the listing of all Registrable
Shares covered by the registration statement on each securities exchange on
which securities of the same class are then listed.
(j) The Company agrees to use its best efforts to comply with
the Securities Act and the Exchange Act, and, as soon as reasonably
practicable following the end of any fiscal year during which a registration
statement effecting a Registration of the Registrable Shares shall have been
effective, to make available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(k) The Company agrees to cooperate with the selling Holders
to facilitate the timely preparation and delivery of certificates
representing Registrable Shares to be sold pursuant to a Registration and not
bearing any Securities Act legend; and enable certificates for such
Registrable Shares to be issued for such numbers of shares and registered in
such names as the selling Holders may reasonably request at least two
business days prior to any sale of Registrable Shares.
(l) If for any reason the Company is unable to register the
resale of any unissued Registrable Shares pursuant to the Demand
Registration, then upon the subsequent issuance of such previously unissued
Registrable Shares and upon a subsequent Demand for registration by the
Holders of such Registrable Shares, the Company shall file such an additional
Registration Statement and take such additional actions as may be required to
register the resale of such previously unissued Registrable Shares in
accordance with this Section 2.
Section 3. EXPENSES OF REGISTRATION. The Company shall bear all
Registration Expenses incurred in connection with the registration,
qualification or
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<PAGE>
compliance pursuant to Section 2 hereof. All Selling Expenses incurred in
connection with the sale of any Registrable Shares by a Holder shall be borne
by such Holder. Each Holder shall bear the expenses of its own counsel.
Section 4. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal expenses),
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any registration statement or prospectus, or
any amendment or supplement thereto, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission,
made in reliance upon and in conformity with information furnished in writing
to the Company by such Holder or underwriter for inclusion therein.
(b) Each Holder will indemnify the Company, each of its
directors and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, against all claims,
losses, damages and liabilities (including reasonable legal fees and
expenses) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement or
prospectus, or any amendment or supplement thereto, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
ease to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus, in reliance upon and in conformity with
information furnished in writing to the Company by such Holder for inclusion
therein.
(c) Each party entitled to indemnification under this Section
4 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, but the
8
<PAGE>
omission to so notify the Indemnifying Party shall not relieve it from any
liability which it may have to the Indemnified Party otherwise than pursuant
to the provisions of this Section 4 and then, only to the extent of the
actual damages suffered by such delay in notification. The Indemnifying
Party shall assume the defense of such action, including the employment of
counsel to be chosen by the Indemnifying Party to be reasonably satisfactory
to the Indemnified Party and payment of expenses. The Indemnified Party
shall have the right to employ its own counsel in any such case, but the
legal fees and expenses of such counsel shall be at the expense of the
Indemnified Party, unless the employment of such counsel shall have been
authorized in writing by the Indemnifying Party in connection with the
defense of such action, or the Indemnifying Party shall not have employed
counsel to take charge of the defense of such action or the Indemnified Party
shall have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified
Party), in any of which events such fees and expenses shall be borne by the
Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation.
(d) If the indemnification provided for in this Section 4 is
unavailable to a party that would have been an Indemnified Party under this
Section in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party that would have been an Indemnifying
Party hereunder shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a
result of such expenses, claims, losses, damages and liabilities in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and such Indemnified Party on the other in
connection with the statement or omission which resulted in such expenses,
claims, losses, damages and liabilities, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or such Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and each holder of Registrable Shares agrees that it would not be just and
equitable if contribution pursuant to this Section were determined by pro
rata
9
<PAGE>
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 4(d).
(e) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 5. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder
shall furnish to the Company such information as the Company may reasonably
request in writing (which request shall be submitted a reasonable period of
time in advance of the filing of the registration statement or amendment or
supplement thereto with respect to which the requested information relates)
and as shall be required in connection with the Registration and related
proceedings referred to in Section 2 hereof. If any Holder fails to provide
the Company with such information within two weeks of the Company's request,
the Company shall no longer have any obligations under Section 2 hereof with
respect to such Holder or such Holder's Registrable Shares.
Section 6. TRANSFER OF EXCHANGE AND REGISTRATION RIGHTS. The
rights of each Investor under Section 2 hereof and the related rights of each
Investor hereunder (the "RIGHTS") may be assigned by each Investor (i) if the
Investor is a corporation, to a shareholder or shareholders of such Investor,
(ii) if the Investor is a partnership, to a partner or partners of that
partnership, (iii) if the Investor is an individual, to a Family Member (as
such term is defined in the OP Partnership Agreement), (iv) upon the death of
the Investor, to the heirs of the Investor by virtue of the Investor's will
or the laws of descent and distribution, or (v) if the Investor is a
corporation or a partnership, to any Person into or with which the Investor
is merged or consolidated or to which the Investor sells all or substantially
all of its assets, in each case, only in connection with the transfer of
Registrable Shares originally owned by the Investor or OP Units originally
owned by the Investor in respect of which the Registrable Shares were issued;
PROVIDED that (w) in each case, the transferee is an Accredited Investor, (x)
such transfer is otherwise effected in accordance with applicable securities
laws and the Company shall have been provided by the transferor and the
transferee with such evidence thereof as the Company may request, including
representations by the transferee in form and content reasonably acceptable
to the Company, (y) the Company is given written notice of such transfer
prior to such transfer (or, in the case of the death of the Investor, as soon
as practicable following the death of the Investor), and (z) the transferee
by written agreement delivered to the Company acknowledges that such
transferee is bound by the terms of this Agreement. In the event of any such
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<PAGE>
permitted transfer, the defined term "HOLDERS" shall from and after such
transfer include such transferee.
Section 7. ADDITIONAL REPRESENTATIONS. Each Holder of OP Units
agrees that upon surrender of any such OP Units for redemption as provided in
the OP Partnership Agreement, such Holder shall make such investment and
other representations in connection with (and as a condition to) the issuance
of Common Stock in exchange for such OP Units as the Company or AIMCO OP may
reasonably request.
Section 8. RULE 144 SALES.
(a) The Company covenants that it will file the reports
required to be filed by the Company under the Exchange Act, so as to enable
any Holder to sell Registrable Shares pursuant to Rule 144 under the
Securities Act.
(b) In connection with any sale, transfer or other
disposition by any Holder of any Registrable Shares pursuant to Rule 144
under the Securities Act, the Company shall cooperate with such Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold and not bearing any Securities Act legend, and
enable certificates for such Registrable Shares to be for such number of
shares and registered in such names as the selling Holders may reasonably
request at least two business days prior to any sale of Registrable Shares.
Section 9. MISCELLANEOUS.
(a) TERMINATION. This Agreement and the obligations of the
Company hereunder shall terminate on the earlier of (i) the twentieth (20th)
anniversary of the date hereof and (ii) the first date on which no
Registrable Shares remain outstanding.
(b) GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York.
(c) ENTIRE AGREEMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof.
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<PAGE>
(d) AMENDMENT. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby.
(e) NOTICES, ETC. Each notice, demand, request, request for
approval, consent, approval, disapproval, designation or other communication
(each of the foregoing being referred to herein as a notice) required or
desired to be given or made under this Agreement shall be in writing (except
as otherwise provided in this Agreement), and shall be effective and deemed
to have been received (i) when delivered in person, (ii) when sent by fax
with receipt acknowledged, (iii) five (5) days after having been mailed by
certified or registered United States mail, postage prepaid, return receipt
requested, or (iv) the next business day after having been sent by a
nationally recognized overnight mail or courier service, receipt requested.
Notices shall be addressed as follows: (a) if to an Investor, at such
Investor's address or fax number set forth below its signature hereon, or at
such other address or fax number as the Investor shall have furnished to the
Company in writing, or (b) if to any assignee or transferee of an Investor,
at such address or fax number as such assignee or transferee shall have
furnished the Company in writing, or (c) if to the Company, at the address of
its principal executive offices and addressed to the attention of the
President, or at such other address or fax number as the Company shall have
furnished to the Investors or any assignee or transferee. Any notice or
other communication required to be given hereunder to a Holder in connection
with a registration may instead be given to the designated representative of
such Holder.
(f) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which may be executed by fewer than all of
the parties hereto (PROVIDED that each party executes one or more
counterparts), each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(g) SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision.
(h) SECTION TITLES. Section titles are for descriptive
purposes only and shall not control or alter the meaning of the Agreement as
set forth in the text.
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<PAGE>
(i) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns.
(j) REMEDIES. The Company and the Investors acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that the Company and each
Holder, in addition to any other remedy to which it may be entitled at law or
in equity, shall be entitled to compel specific performance of the
obligations of another party under this Agreement in accordance with the
terms and conditions of this Agreement in any court of the United States or
any State thereof having jurisdiction.
(k) ATTORNEYS' FEES. If the Company or any Holder brings an
action to enforce its rights under this Agreement, the prevailing party in
the action shall be entitled to recover its costs and expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection with
such action, including any appeal of such action.
13
<PAGE>
The foregoing Agreement is hereby executed as of the date first above
written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ Peter K. Kompaniez
-----------------------------------
Name: Peter K. Kompaniez
Title: Vice Chairman
INVESTOR:
Name: Edgar E. Pankey, Trustee Under Declaration
of Trust dated December 6, 1985
/s/ Edgar E. Pankey
---------------------------------------------------
Edgar E. Pankey, Trustee Under Declaration of
Trust dated December 6, 1985
Investor's Address:
320 West Main Street
Tustin, California 92680
Phone:___________________
Fax: ____________________
Name:
Homer E. Lindley, Trustee of The Homer E. Lindley and
Avonelle Lindley Family Trust dated June 29, 1989
/s/ Homer E. Lindley
---------------------------------------------------
Homer E. Lindley, Trustee of The Homer E. Lindley
and Avonelle Lindley Family Trust dated June 29, 1989
14
<PAGE>
Investor's Address:
P. O. Box 10213
Santa Ana, California 92701
Phone:___________________
Fax: ____________________
Name: Gared N. Smith
/s/ Gared N. Smith
---------------------------------------------------
Gared N. Smith
Investor's Address
424 Rivera Terrace
Corona del Mar, California 92625
Phone: ____________________
Fax: ____________________
Name: J & H Birmingham 1989 Trust dated
August 21, 1989
By: /s/ James Birmingham
------------------------------------------------
Name: James Birmingham
Its: Trustee
Investor's Address:
1801-I Parkcourt Place, Suite 101
Santa Ana, California 92701
Phone: ________________
Fax: ________________
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Name: Pankey Group, a California
General Partnership
By: /s/ Edgar Pankey
------------------------------------------------
Name: Edgar Pankey
Its: General Partner
Investor's Address:
320 W. Main Street
Tustin, CA 92680
Phone: _________________
Fax: _________________
16
<PAGE>
Schedule A
INVESTORS
- - Edgar E. Pankey, Trustee Under Declaration of Trust dated December 6, 1985
- - Homer E. Lindley, Trustee of the The Homer E. Lindley and Avonelle Lindley
Family Trust dated June 29, 1989
- - Gared N. Smith
- - J & H Birmingham 1989 Trust dated August 21, 1989
- - Pankey Group, a California General Partnership
17
<PAGE>
REGISTRATION AGREEMENT
For valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, this REGISTRATION AGREEMENT (this "AGREEMENT") is
entered into as of the 19 day of April, 1996, by and among APARTMENT
INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "COMPANY"),
and the persons listed on SCHEDULE A hereto (each, an "INVESTOR").
WHEREAS, pursuant to that certain Acquisition and Contribution
Agreement and Joint Escrow Instructions, dated as of April 19, 1996 (the
"ACQUISITION AGREEMENT"), by and among the Company, AIMCO Properties, L.P., a
Delaware limited partnership ("AIMCO OP"), and Thoner-Pankey, a California
joint venture, the Company issued to the Investors 126,264 shares
(collectively, the "REGISTRABLE SHARES") of the Company's Class A Common
Stock, par value $.01 per share (the "COMMON STOCK");
WHEREAS, in connection with the foregoing, the Company has agreed
to register the Registrable Shares for sale by the Investors; and
WHEREAS, the parties hereto desire to enter into this agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and subject to the terms and conditions set
forth herein, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In this Agreement the following
terms shall have the following respective meanings:
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule 501
of the General Rules and Regulations promulgated under the Securities Act.
"AFFILIATE" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the person specified.
<PAGE>
"BUSINESS DAY" shall mean a day that is not a Saturday, Sunday or
legal holiday.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the relevant time.
"GUARANTEED PRICE" shall mean a price of $20.50 per Registrable
Share.
"GUARANTEED PRICE DIFFERENTIAL" shall mean, with respect to any
Investor, an amount equal to (i) the number of Registrable Shares issued to
any Investor multiplied by the Guaranteed Price, minus (ii) the aggregate
amount of the proceeds received or to be received by such Investor pursuant
to sales consummated in accordance with Section 4(b) hereof.
"HOLDERS" shall mean (i) each of the Investors, and (ii) each
Person holding Registrable Shares as a result of a transfer or assignment to
that Person of Registrable Shares made by an Investor in accordance with this
Agreement other than pursuant to an effective registration statement or Rule
144 under the Securities Act.
"INDEMNIFIED PARTY" shall have the meaning ascribed to it in
Section 5(c) of this Agreement.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in
Section 5(c) of this Agreement.
"PERSON" shall mean an individual, corporation, partnership,
estate, trust, association, private foundation, joint stock company or other
entity.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
all Registrable Shares in accordance with the method or methods of
distribution designated by the Holders, and the declaration or ordering of
the effectiveness of such registration statement by the Commission.
2
<PAGE>
"REGISTRABLE SHARES" shall have the meaning ascribed to it in the
recitals to this Agreement.
"REGISTRATION EXPENSES" shall mean all out-of-pocket expenses
(excluding Selling Expenses) incurred by the Company in complying with
Section 2 hereof, including, without limitation, the following: (a) all
registration, filing and listing fees; (b) fees and expenses of compliance
with federal and state securities or real estate syndication laws (including,
without limitation, reasonable fees and disbursements of counsel in
connection with state securities and real estate syndication qualifications
of the Registrable Shares under the laws of such jurisdictions as the Holders
may designate); (c) printing (including, without limitation, expenses of
printing or engraving certificates for the Registrable Shares in a form
eligible for deposit with The Depository Trust Company and otherwise meeting
the requirements of any securities exchange on which they are listed and of
printing registration statements and prospectuses), messenger, telephone,
shipping and delivery expenses; (d) fees and disbursements of counsel for the
Company; (e) fees and disbursements of all independent public accountants of
the Company (including without limitation the expenses of any annual or
special audit and "cold comfort" letters required by the managing
underwriter); (f) securities act liability insurance if the Company so
desires; (g) fees and expenses of other Persons reasonably necessary in
connection with the registration, including any experts, retained by the
Company; (h) fees and expenses incurred in connection with the listing of the
Registrable Shares on each securities exchange on which securities of the
same class are then listed; and (i) fees and expenses associated with any
NASD filing required to be made in connection with the registration statement.
"RESTRICTED SALE PERIOD" shall mean the period commencing on the
date hereof and ending on the date that is ninety (90) days after the date
hereof.
"RIGHTS" shall have the meaning ascribed to it in Section 7 of this
Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
3
<PAGE>
Section 2. REGISTRATION.
(a) The Company shall prepare and file with the Commission on
or prior to May 21, 1996, a registration statement for the purpose of
effecting a Registration of the sale of Registrable Shares by the Holders
thereof; shall use its best efforts to effect such Registration on or prior
to June 20, 1996 (including, without limitation, the execution of an
undertaking to file post-effective amendments and appropriate qualification
under applicable state securities and real estate syndication laws); and
shall keep such Registration continuously effective until (i) the earlier of
(A) the later of June 20, 1998 or the second anniversary of the date upon
which the registration statement used to effect the Registration is first
declared effective by the Commission, (B) the date on which all Registrable
Shares have been sold pursuant to such registration statement, and (C) the
date on which all of the Registrable Shares may be sold in accordance with
Rule 144 under the Securities Act; PROVIDED, HOWEVER, that the Company shall
not be obligated to take any action to effect any such Registration,
qualification or compliance pursuant to this Section 2 in any particular
jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such Registration, qualification
or compliance unless the Company is already subject to service in such
jurisdiction.
Notwithstanding the foregoing, the Company shall have the right to
suspend the use of the registration statement for one or more reasonable
lengths of time (a "Delay Period") which periods shall not, in the aggregate,
exceed 120 days in any period of twelve months, if the Company shall furnish
to the Holders a certificate signed by the President or any other executive
officer or any director of the Company stating that in the judgment of the
Company it would be detrimental to the Company and its shareholders to
continue sales under a filed registration statement and therefore the Company
has elected to suspend sales under a filed registration statement. The
Company shall provide written notice to the Holders of the beginning and end
of each Delay Period and the Holders shall cease all disposition efforts with
respect to Registrable Shares held by them immediately upon receipt of notice
of the beginning of any Delay Period. The time period for which the Company
is required to maintain the effectiveness of the Registration Statement shall
be extended by the aggregate number of days of all Delay Periods and such
period or the extension thereof required by the preceding sentence is
hereafter referred to as the "Effectiveness Period."
(b) The Company shall promptly notify the Holders of the
occurrence of the following events:
4
<PAGE>
(i) the filing with the Commission of the registration
statement, any supplement to the prospectus or any amendment or post-
effective amendment to the registration statement and, with respect to
the registration statement or any post-effective amendment, when the
same has become effective;
(ii) any request by the Commission for amendments or
post-effective amendments to the registration statement or supplements
to the prospectus or for additional information;
(iii) the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for that purpose;
(iv) the suspension of an effective registration
statement by the Company in accordance with the last paragraph of
Section 2(a) above;
(v) the Company's receipt of any notification of the
suspension of the qualification of any shares of Common Stock covered
by the registration statement for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose; and
(vi) the existence of any event, fact or circumstance
that results in the registration statement, the prospectus or any
document incorporated therein by reference containing an untrue
statement of material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading during the distribution of securities.
The Company agrees to use its best effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement or any state
qualification at the earliest possible moment.
(c) The Company shall provide to each Holder, at no cost to
the Holders, promptly upon the effectiveness thereof, five copies of the
prospectus and any post-effective amendment or supplement thereto, together
with a copy of the registration statement and any amendment thereto used to
effect the Registration of the Registrable Shares, each prospectus contained
in such registration statement or
5
<PAGE>
post-effective amendment and any amendment or supplement thereto including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits thereto. The Company shall also provide the
Holders with such other documents as the requesting Holders may reasonably
request in order to facilitate the disposition of the Registrable Shares
covered by such registration statement. The Company consents to the use of
each prospectus or any supplement thereto by the Holders in connection with
the offering and sale of the shares covered by such registration statement or
any amendment thereto.
(d) The Company agrees to use its best efforts to cause the
shares covered by the registration statement to be registered with or
approved by such state securities authorities as may be necessary to enable
the Holders to consummate the disposition of such shares pursuant to the plan
of distribution set forth in the registration statement.
(e) Subject to the Company's Suspension Right, if any event,
fact or circumstance requiring an amendment to the registration statement or
supplement to the prospectus shall exist, immediately upon becoming aware
thereof the Company agrees to notify the Holders and prepare and furnish to
the Holders a post-effective amendment to the registration statement or
supplement to the prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Shares, the prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) The Company agrees to seek the listing of all Registrable
Shares covered by the registration statement on each securities exchange on
which securities of the same class are then listed.
(g) The Company agrees to use its best efforts to comply with
the Securities Act and the Exchange Act, and, as soon as reasonably
practicable following the end of any fiscal year during which a registration
statement effecting a Registration of the Registrable Shares shall have been
effective, to make available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(h) The Company agrees to cooperate with the selling Holders
to facilitate the timely preparation and delivery of certificates
representing Registrable Shares to be sold pursuant to a Registration and not
bearing any
6
<PAGE>
Securities Act legend; and enable certificates for such Registrable Shares to
be issued for such numbers of shares and registered in such names as the
selling Holders may reasonably request at least two business days prior to
any sale of Registrable Shares.
Section 3. EXPENSES OF REGISTRATION. The Company shall pay for
all Registration Expenses incurred in connection with the registration,
qualification or compliance pursuant to Section 2 hereof. All Selling
Expenses incurred in connection with the sale of any Registrable Shares by a
Holder shall be borne by the Company. Each Holder shall bear the expenses of
its own counsel.
Section 4. RESTRICTIONS ON TRANSFERABILITY. In consideration for
the Company's agreement to effect the Registration of the Registrable Shares,
the Investors hereby covenant and agree as follows:
(a) The Investors shall not sell, transfer, assign, convey,
pledge or hypothecate the Registrable Shares during the Restricted Sale
Period without obtaining the prior written consent of the Company to such
sale, transfer, assignment, conveyance, pledge or hypothecation. The Company
may, in its sole and absolute discretion, (i) withhold such consent for any
reason, or (ii) condition such consent upon the satisfaction of any terms and
conditions, including, without limitation, such transferee's execution of a
written agreement to be bound by the terms of this provision.
(b) Each of the Investors agrees that during the Restricted
Sale Period, such Investor will sell all or any portion of its Registrable
Shares at the request of the Company, and on the terms and conditions
specified by the Company, if the Company identifies a buyer for such
Registrable Shares.
(c) Within five (5) Business Days of the expiration of the
Restricted Sale Period, (i) the Company shall pay an amount equal to the
Guaranteed Price Differential to each Investor, if any, with respect to which
the Guaranteed Price Differential is a positive number, and (ii) each
Investor, if any, with respect to which the Guaranteed Price Differential is
a negative number, shall pay the Company an amount equal to such Guaranteed
Price Differential. In the event that the Guaranteed Price Differential with
respect to any Investor equals zero, then neither the Company nor such
Investor shall have any rights against or liability to such other party
pursuant to this Section 4(c). Payment shall be made by check and shall be
sent to the address for notice to such party pursuant to Section 9(d) hereof.
7
<PAGE>
(d) The Investors hereby authorize the Company to hold the
certificates representing the Registrable Shares in its custody during the
Restricted Sale Period. In the event that any of the Registrable Shares have
not been sold pursuant to subparagraph (b) above at the end of the Restricted
Sale Period, then the holder of such Registrable Shares shall promptly, but
in any event not later than five (5) Business Days after the expiration of
the Restricted Sale Period, take any and all action necessary or appropriate
to transfer such Registrable Shares to the Company or its designee.
(e) In the event that, during the Restricted Sale Period, any
Investor is the holder of record of one or more Registrable Shares on any
record date with respect to which a dividend has been declared in respect of
such Registrable Shares, such Investor shall immediately convey and deliver
to the Company any and all dividends paid in respect of such Registrable
Shares.
(f) The Investors hereby agree to take any and all action
reasonably requested by the Company that the Company deems necessary in order
to effect the disposition of the Registrable Shares as requested by the
Company pursuant to this Section 4, including, without limitation, execution
of stock powers, spousal consents, letters of transmittal and other customary
documentation.
(g) The provisions of this Section 4 shall survive the
termination of this Agreement.
Section 5. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal expenses),
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any registration statement or prospectus, or
any amendment or supplement thereto, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission,
made in reliance upon and in conformity with information furnished in writing
to the Company by such Holder or underwriter for inclusion therein.
8
<PAGE>
(b) Each Holder will indemnify the Company, each of its
directors and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, against all claims,
losses, damages and liabilities (including reasonable legal fees and
expenses) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement or
prospectus, or any amendment or supplement thereto, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
ease to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus, in reliance upon and in conformity with
information furnished in writing to the Company by such Holder for inclusion
therein.
(c) Each party entitled to indemnification under this Section
5 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, but the omission to so notify the Indemnifying Party shall not
relieve it from any liability which it may have to the Indemnified Party
otherwise than pursuant to the provisions of this Section 5 and then, only to
the extent of the actual damages suffered by such delay in notification. The
Indemnifying Party shall assume the defense of such action, including the
employment of counsel to be chosen by the Indemnifying Party to be reasonably
satisfactory to the Indemnified Party and payment of expenses. The
Indemnified Party shall have the right to employ its own counsel in any such
case, but the legal fees and expenses of such counsel shall be at the expense
of the Indemnified Party, unless the employment of such counsel shall have
been authorized in writing by the Indemnifying Party in connection with the
defense of such action, or the Indemnifying Party shall not have employed
counsel to take charge of the defense of such action or the Indemnified Party
shall have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified
Party), in any of which events such fees and expenses shall be borne by the
Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an
9
<PAGE>
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section 5 is
unavailable to a party that would have been an Indemnified Party under this
Section in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party that would have been an Indemnifying
Party hereunder shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a
result of such expenses, claims, losses, damages and liabilities in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and such Indemnified Party on the other in
connection with the statement or omission which resulted in such expenses,
claims, losses, damages and liabilities, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or such Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and each holder of Registrable Shares agrees that it would not be just and
equitable if contribution pursuant to this Section were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section
5(d).
(e) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 6. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder
shall furnish to the Company such information as the Company may reasonably
request in writing (which request shall be submitted a reasonable period of
time in advance of the filing of the registration statement or amendment or
supplement thereto with respect to which the requested information relates)
and as shall be required in connection with the Registration and related
proceedings referred to in Section 2 hereof. If any Holder fails to provide
the Company with such information within two weeks of the Company's request,
the Company shall no longer have any obligations under Section 2 hereof with
respect to such Holder or such Holder's Registrable Shares.
Section 7. TRANSFER OF EXCHANGE AND REGISTRATION RIGHTS. Subject
to the provisions of Section 4(a) hereof, the rights of each Investor under
Section 2
10
<PAGE>
hereof and the related rights of each Investor hereunder (the "RIGHTS") may
be assigned by each Investor (i) if the Investor is a corporation, to a
shareholder or shareholders of such Investor, (ii) if the Investor is a
partnership, to a partner or partners of that partnership, (iii) if the
Investor is an individual, to a family member, (iv) upon the death of the
Investor, to the heirs of the Investor by virtue of the Investor's will or
the laws of descent and distribution, or (v) if the Investor is a corporation
or a partnership, to any Person into or with which the Investor is merged or
consolidated or to which the Investor sells all or substantially all of its
assets, in each case, only in connection with the transfer of Registrable
Shares originally owned by the Investor; PROVIDED that (w) in each case, the
transferee is an Accredited Investor, (x) such transfer is otherwise effected
in accordance with applicable securities laws and the Company shall have been
provided by the transferor and the transferee with such evidence thereof as
the Company may request, including representations by the transferee in form
and content reasonably acceptable to the Company, (y) the Company is given
written notice of such transfer prior to such transfer (or, in the case of
the death of the Investor, as soon as practicable following the death of the
Investor), and (z) the transferee by written agreement delivered to the
Company acknowledges that such transferee is bound by the terms of this
Agreement. In the event of any such permitted transfer, the defined term
"HOLDERS" shall from and after such transfer include such transferee.
Section 8. RULE 144 SALES.
(a) The Company covenants that it will file the reports
required to be filed by the Company under the Exchange Act, so as to enable
any Holder to sell Registrable Shares pursuant to Rule 144 under the
Securities Act.
(b) In connection with any sale, transfer or other
disposition by any Holder of any Registrable Shares pursuant to Rule 144
under the Securities Act, the Company shall cooperate with such Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold and not bearing any Securities Act legend, and
enable certificates for such Registrable Shares to be for such number of
shares and registered in such names as the selling Holders may reasonably
request at least two business days prior to any sale of Registrable Shares.
Section 9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York.
11
<PAGE>
(b) ENTIRE AGREEMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof.
(c) AMENDMENT. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby.
(d) NOTICES, ETC. Each notice, demand, request, request for
approval, consent, approval, disapproval, designation or other communication
(each of the foregoing being referred to herein as a notice) required or
desired to be given or made under this Agreement shall be in writing (except
as otherwise provided in this Agreement), and shall be effective and deemed
to have been received (i) when delivered in person, (ii) when sent by fax
with receipt acknowledged, (iii) five (5) days after having been mailed by
certified or registered United States mail, postage prepaid, return receipt
requested, or (iv) the next business day after having been sent by a
nationally recognized overnight mail or courier service, receipt requested.
Notices shall be addressed as follows: (a) if to an Investor, at such
Investor's address or fax number set forth below its signature hereon, or at
such other address or fax number as the Investor shall have furnished to the
Company in writing, or (b) if to any assignee or transferee of an Investor,
at such address or fax number as such assignee or transferee shall have
furnished the Company in writing, or (c) if to the Company, at the address of
its principal executive offices and addressed to the attention of the
President, or at such other address or fax number as the Company shall have
furnished to the Investors or any assignee or transferee. Any notice or
other communication required to be given hereunder to a Holder in connection
with a registration may instead be given to the designated representative of
such Holder.
(e) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which may be executed by fewer than all of
the parties hereto (PROVIDED that each party executes one or more
counterparts), each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(f) SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision.
12
<PAGE>
(g) SECTION TITLES. Section titles are for descriptive
purposes only and shall not control or alter the meaning of the Agreement as
set forth in the text.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns.
(i) REMEDIES. The Company and the Investors acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that the Company and each
Holder, in addition to any other remedy to which it may be entitled at law or
in equity, shall be entitled to compel specific performance of the
obligations of another party under this Agreement in accordance with the
terms and conditions of this Agreement in any court of the United States or
any State thereof having jurisdiction.
(j) ATTORNEYS' FEES. If the Company or any Holder brings an
action to enforce its rights under this Agreement, the prevailing party in
the action shall be entitled to recover its costs and expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection with
such action, including any appeal of such action.
13
<PAGE>
The foregoing Agreement is hereby executed as of the date first above
written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ Peter K. Kompaniez
------------------------------------------------
Name: Peter K. Kompaniez
Title: Vice Chairman
INVESTOR:
Name: Edgar E. Pankey, Trustee Under Declaration
of Trust dated December 6, 1985
/s/ Edgar E. Pankey
---------------------------------------------------
Edgar E. Pankey, Trustee Under Declaration of
Trust dated December 6, 1985
Investor's Address:
320 West Main Street
Tustin, California 92680
Phone: ___________________
Fax: ___________________
Name:
Homer E. Lindley, Trustee of The Homer E. Lindley and
Avonelle Lindley Family Trust dated June 29, 1989
/s/ Homer E. Lindley
-----------------------------------------------------
Homer E. Lindley, Trustee of The Homer E. Lindley and
Avonelle Lindley Family Trust dated June 29, 1989
14
<PAGE>
Investor's Address:
P. O. Box 10213
Santa Ana, California 92701
Phone: ___________________
Fax: ___________________
Name: J & H Birmingham 1989 Trust
dated August 21, 1989
By: /s/ James Birmingham
------------------------------------------------
Name: James Birmingham
Its: Trustee
Investor's Address:
1801-I Parkcourt Place, Suite 101
Santa Ana, California 92701
Phone: __________________
Fax: __________________
Name: Lawrence S. Graven
/s/ Lawrence S. Graven
---------------------------------------------------
Lawrence S. Graven
Investor's Address:
523 W. Sixth Street, Suite 1130
Los Angeles, California 90014
Phone: _________________
Fax: _________________
15
<PAGE>
Schedule A
INVESTORS
- - Edgar E. Pankey, Trustee Under Declaration of Trust dated December 6, 1985
- - Homer E. Lindley, Trustee of The Homer E. Lindley and Avonelle Lindley
Family Trust dated June 29, 1989
- - J & H Birmingham 1989 Trust dated August 21, 1989
- - Lawrence S. Graven
16
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<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,328
<SECURITIES> 0
<RECEIVABLES> 1,874
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<CURRENT-ASSETS> 14,368<F1>
<PP&E> 551,826
<DEPRECIATION> 37,797
<TOTAL-ASSETS> 540,117
<CURRENT-LIABILITIES> 41,093<F2>
<BONDS> 279,440
0
0
<COMMON> 132
<OTHER-SE> 188,474
<TOTAL-LIABILITY-AND-EQUITY> 540,117
<SALES> 23,801
<TOTAL-REVENUES> 25,678<F3>
<CGS> 11,332<F4>
<TOTAL-COSTS> 16,229
<OTHER-EXPENSES> 226
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 3,145
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,145
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<CHANGES> 0
<NET-INCOME> 3,145
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26<F5>
<FN>
<F1>INCLUDES CASH, RESTRICTED CASH AND ACCOUNTS RECEIVABLE
<F2>INCLUDES SECURED SHORT-TERM FINANCING ACCTS PAYABLE AND ACCRUED LIABILITIES,
AND RESIDENT SECURITY DEPOSITS AND PREPAID RENTS
<F3>INCLUDES RENTAL AND OTHER PROPERTY REVENUES AND MANAGEMENT FEES AND OTHER
INCOME
<F4>INCLUDES PROPERTY OPERATING EXPENSES, OWNED PROPERTY MANAGEMENT EXPENSE,
MANAGEMENT AND OTHER EXPENSES
<F5>INCLUDES CGS AND DEPRECIATION, CORPORATE OVERHEAD ALLOCATION AMORTIZATION OF
MANAGEMENT COMPANY GOODWILL AND OTHER ASSETS DEPRECIATION AND AMORTIZATION
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