Exhibit 10.6
ASSIGNMENT AGREEMENT
This Assignment Agreement (the “Agreement”) is made as of May 19, 2011 (the “Effective Date”), by and among Real Estate Associates Limited IV, a California limited partnership (the “Assignor”); Linda Kittleson ( “Assignee”), and Duane A. Kittleson in his capacity as general partner of Green-Ko Enterprises, a limited partnership formed under the laws of the State of Wisconsin (the “Partnership”) (the “General Partner” and together with the Assignor, and the Assignee, each a “Party“ and, as the context requires, any two or more, collectively, the “Parties”), with reference to the following:
A. The Partnership is governed by that certain Amended and Restated Agreement and Certificate of Limited Partnership of the Partnership, dated December 18 1982, as it may have been amended from time to time (the “Amended Partnership Agreement”) (any capitalized word or phrase used but not defined herein shall have the meaning set forth in the Amended Partnership Agreement).
B. The General Partner is the operating general partner of the Partnership and Assignor is the limited partner of the Partnership.
C. The Partnership is a plaintiff in various lawsuits filed in the United States Court of Federal Claims against the United States of America (the “Government”) seeking compensation for the Government’s alleged repudiation of certain contract rights held by the Partnership and others relating to multi-family housing properties which are part of the rural housing program under Section 515 and 521 of the Housing Act of 1949 (the “Litigation”).
D. Assignor has agreed to sell and assign all of its interest in the Partnership to the Assignee and withdraw from the Partnership, the Assignee has agreed to purchase such interest, and the General Partner has consented to such assignment and withdrawal, all pursuant to the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual promises and for such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
2. Consideration. In consideration for Assignor’s Interest, at the Closing, the Assignee shall pay to Assignor Sixty Three Thousand Four Hundred Ten and no/100 Dollars ($63,410.00), less $32,632.00 withheld to pay State of Wisconsin withholding tax on nonresident partners for the year ended December 31, 2010 and an estimate of such tax for 2011 in the amount of $684.00 (the “2011 estimate”). The Partnership will hold the amountwithheld to pay the 2011 Wisconsin withholding tax until the proper amount of such withholding is determined in 2012 and shall refund to Assignee the amount not needed, if any, to pay such tax at the time the actual amount is determined (the “Payment”). The Payment will be paid by wire transfer of immediately available funds pursuant to instructions from Assignor through a mutually agreeable escrow agent.
5. Representations and Warranties.
(c) Assignor’s Interest represents all of the interest in the Partnership owned by the Assignor. Assignor possesses no other equity in the Partnership or any other right to receive payment upon the sale or other disposition of the Partnership, or the Partnership’s assets, or otherwise.
5.2 As a material inducement to Assignor entering into this Agreement, the Assignee hereby represents and warrants to Assignor that (i) the execution and delivery of this Agreement by the Assignee and the performance of the transactions contemplated herein have been duly authorized by all requisite proceedings; (ii) assuming the due and proper execution and delivery by Assignor, this Agreement is binding upon and enforceable against the Assignee in accordance with its terms; (iii)Assignee has not incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement, (iv) Assignee is aware of the restrictions on transfer or encumbrance of the Interest under the Amended Partnership Agreement, as well as the transfer restrictions imposed by the Securities Act of 1933, as amended, and applicable state securities laws (the “Securities Laws”), is able to bear the economic risk of his investment in the Interest, is aware that he must hold the Interest for an indefinite period and that the Interest has not been registered under the applicable Securities Laws and may not be sold or otherwise transferred unless permitted by the terms of the Amended Partnership Agreement and the Interest is registered, or an exemption from the registration requirements is available with respect thereto, under the Securities Laws, (v) Assignee is acquiring the Interest for her own account and not with a view to resell, transfer or otherwise dispose of it, and (vi) Assignee is an affiliate of the General Partner and is experienced in financial transactions such as ownership of the Interest, understands the business and operations of the Partnership, and has had an opportunity to ask questions about and seek information about the Partnership and the Partnership’s Project, and has not relied upon any express or implied representations or warranties from Assignor with regard to the Interest, the Partnership, or the Project. The foregoing representations and warranties are true and correct as of the Effective Date and as of Closing, and shall survive the Effective Date, Closing and the withdrawal of Assignor from the Partnership.
5.4 Except as expressly provided in this Section 5, no Party has made any other representation or warranty concerning the Interest, the Partnership, the Project or any other matter.
(a) Extension of the statute of limitations for assessing or computing any tax liability against the Partnership (or the amount or character of any Partnership tax items);
(b) Settlement of any audit with the IRS concerning the adjustment or readjustment of any partnership item(s) (within the meaning of Section 6231(a)(3) of the Code);
(c) Filing of a request for an administrative adjustment with the IRS at any time or filing of a petition for judicial review with respect to any such request;
(d) Initiation or settlement of any judicial review or action concerning the amount or character of any partnership tax item(s) (within the meaning of Section 6231(a)(3) of the Code); or
(e) Intervention in any action brought by any other Partner for judicial review of a final adjustment.
7.1 The Assignor and the General Partner, on behalf of the Partnership, acknowledge and agree that, as of the Closing, Assignor will no longer be a limited partner of the Partnership and all of Assignor’s rights and obligations under the Amended Partnership Agreement and under any and all other written or oral agreements by and among Assignor, the Partnership, and/or the General Partner shall be terminated and of no further force or effect as of the Closing, except with respect to the Assignor’s representations, warranties and covenants set forth herein. Without limitation to the generality of the foregoing, Assignor hereby waives any and all rights and claims with respect to (a) Assignor’s Interest, except as set forth in Section 6, above, and then solely with respect to Assignor’s interest in the matters specified therein, and (b) Assignor’s role as a limited partner of the Partnership set forth in the Amended Partnership Agreement or otherwise. Notwithstanding anything contained in this Agreement, the Partnership and the General Partner acknowledge that matters may arise after the Closing that relate back to events that occurred prior to the Closing (for purposes of illustration and not limitation, audits by the IRS). If such matters may affect the Assignor, the Partnership and the General Partner agree that they shall conduct themselves in a manner which is consistent with their obligations to the Assignor of good faith and fair dealing.
If to the Assignor:
c/o National Partnership Investments Corp.
6701 Center Drive, Suite 520
Los Angeles, California 90045
Attention: Asset Management
with a copy to:
c/o Apartment Investment and Management Company
4582 S. Ulster St., Suite 1100
Attention: Legal Department
Denver, Colorado 80237
If to the Assignee, the Partnership, or the General Partner:
Duane A. Kittleson
DAK Developers/Management, Inc.
1020 Lincoln Ave.
Fennimore, WI 53809
Any of the Parties may designate a change of address by Notice in writing to the other Parties. Whenever in this Agreement the giving of Notice by mail or otherwise is required, the giving of such Notice may be waived in writing by the person or persons entitled to receive such Notice.
7.11 In interpreting this Agreement it shall be presumed that the Agreement was jointly drafted and no presumption shall arise against any Party in the event of any ambiguity.
[Signature Page to Follow]
IN WITNESS WHEREOF, the General Partner, the Assignee, and the Assignor have entered into this Agreement as of the date set forth above.
GENERAL PARTNER:
/s/ DUANE A. KITTLESON
DUANE A. KITTLESON
ASSIGNEE:
/s/ LINDA KITTLESON
LINDA KITTLESON
ASSIGNOR:
REAL ESTATE ASSOCIATES LIMITED IV,
a California limited partnership
By National Partnership Investments Corp.,
a California corporation, its General Partner
By: /s/John McGrath
Name: John McGrath
Title: Senior Vice President
Chyane Group LLC hereby joins this Assignment Agreement for the purpose of agreeing to its release of the Assignor Parties set forth in Section 4.1 hereof.
CHYANE GROUP LLC
By: /s/ Duane A. Kittleson
Duane A. Kittleson