UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 25, 2009
ANGELES INCOME PROPERTIES, LTD. 6
(Exact name of Registrant as specified in its charter)
California | 0-16210 | 95-4106139 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
Of incorporation or | File Number) | Identification Number) |
Organization) | | |
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Angeles Income Properties, Ltd. 6, a California limited partnership (the “Registrant”), owns a 99% interest in Lazy Hollow Partners, a California general partnership (the “Partnership”). The Partnership owns Lazy Hollow Apartments (“Lazy Hollow”), a 178-unit apartment complex located in Columbia, Maryland. On September 25, 2009, the Partnership and eight other entities (together the “Selling Entities”) that collectively own nine apartment complexes containing an aggregate of 2,393 units entered into a Purchase and Sale Contract (the “Purchase Contract”) with a third party, Standard Portfolios LLC, a Delaware limited liability company (the “Purchaser”), to sell nine apartment complexes (together the “Properties” and individually a “Property”) owned by the Selling Entities to the Purchaser for a total sales price of $156,097,000, $17,510,000 of which will be allocated to Lazy Hollow. Each of the Selling Entities is affiliated with the Partnership and the General Partner of the Registrant.
The following is a summary of the terms and conditions of the Purchase Agreement, which summary is qualified in its entirety by reference to the Purchase Contract, a copy of which is attached hereto as an exhibit.
PURCHASE PRICE. The total purchase price is $156,097,000, $17,510,000 of which will be allocated to Lazy Hollow, subject to certain prorations and adjustments at the closing. The Purchaser delivered an initial deposit of $2,500,000, of which the Partnership is allocated approximately $280,000 relating to Lazy Hollow. An additional deposit (the “Additional Deposit”) of $700,000, of which the Partnership is allocated approximately $78,000 relating to Lazy Hollow, is due to the escrow agent on or before November 16, 2009, the expiration of the Feasibility Period. The deposits are nonrefundable unless the Purchaser is unable to either a) assume the existing Property mortgage in identified mortgage assumption properties (a “Assumption Property”) or b) obtain new financing for Properties that are not identified as mortgage assumption properties (a “Payoff Property”), as specified in the Purchase Contract. The applicable share of the deposit not refunded shall be credited against the purchase price at closing.
LOAN CONTINGENCY. The Purchaser agreed to assume the mortgage on Lazy Hollow at closing. In the event that the Purchaser notifies the Partnership prior to closing that loan assumption approval was not obtained, the Purchaser used its best efforts to obtain such loan assumption approval and the Purchaser complied in all material aspects with its obligations under the Purchase Contract, then the Purchaser may terminate the contract. Additionally, with respect to the Lazy Hollow Property, the Purchase Contract is conditioned upon the Purchaser obtaining a second mortgage loan on the Lazy Hollow Property of $4,400,000. If the Purchaser is unable to obtain a second mortgage loan on the Lazy Hollow Property prior to the closing date, then the Purchaser may terminate the contract. The Partnership has also agreed that the Partnership or its affiliate will offer partial financing to the Purchaser related to the acquisition of Lazy Hollow and one other Property (the “Seller Loan”). The Seller Loan will be in an amount equal to $3,500,000. Prior to November 16, 2009, the Selling Entities and the Purchaser will agree on the allocation of the Seller Loan. Interest on the Seller Loan will be payable at a rate of 6% per annum and have a term of five years.
CLOSING. The expected closing date for Lazy Hollow is December 15, 2009. The Purchaser has the right to accelerate the closing date for all properties prior to December 15, 2009 provided that the Payoff Properties close on the same date and the Purchaser delivers a written notice (the “Closing DateAcceleration Notice”) to the Selling Entities no later than fifteen days prior to the desired closing date. In addition, with respect to the Payoff Properties, the Selling Entities have the option, by delivering written notice to the Purchaser, to extend the closing date to either the last business day of December or January 10, 2010. The closing is also subject to customary closing conditions and deliveries.
COSTS AND FEES. With respect to Lazy Hollow, the Purchaser will pay (i) any recording fees and sales, use, gross receipts or similar taxes; (ii) any mortgage or similar taxes on new financing obtained by the Purchaser; (iii) any premiums or fees required to be paid by the Purchaser with respect to the title policy; and (iv)one-half of the customary closing costs. The Partnership will pay (i) the base premium for its title policy; (ii) the cost of recording any instruments required to discharge any liens or encumbrances against its Property; and (iii) one-half of the customary closing costs. In addition, with respect to Lazy Hollow, the Purchaser will also complete and deliver the appropriate tax, affidavit, recordation, intake sheet and transfer forms required by the State of Maryland and Howard County and shall share equally in the costs of all applicable transfer and recording taxes and fees.
REPRESENTATIONS AND WARRANTIES. The Selling Entities and the Purchaser each made limited representations and warranties to the other.
RISK OF LOSS. The Partnership has no obligation to repair any loss or damage to Lazy Hollow by reason of any insured or uninsured casualty during the period through and including the closing date in excess of 10 percent of the allocated purchase price and shall notify the Purchaser in writing of such damages. The Purchaser may elect to terminate the Purchase Contract with respect to Lazy Hollow within ten days after notification of a casualty loss in excess of 10 percent of the allocated purchase price. With respect to any loss or damage less than 10 percent of the allocated purchase price, the Partnership agreed to either complete repairs if possible prior to the closing date or assign any insurance proceeds to the Purchaser. The Partnership agreed to maintain in full force and effect until the closing date all existing insurance coverage on Lazy Hollow.
ASSIGNMENT. With the exception of an assignment to an affiliate of the Purchaser, the Purchase Contract is not assignable to the Purchaser without the prior written approval of the Selling Entities.
DEFAULTS AND REMEDIES. If the Purchaser defaults on its obligations to deliver when required any required deposits, the purchase price for Lazy Hollow or any other specified deliveries, the Purchaser will forfeit its deposit to the Partnership, and neither the Purchaser nor the Partnership will be obligated to proceed with the purchase and sale of Lazy Hollow. The Selling Entities expressly waived the remedies of specific performance and additional damages for defaults by the Purchaser.
If the Partnership, prior to the closing, defaults in its representations, warranties, covenants, or obligations the Purchaser has the option of, (i) subject to certain conditions, seeking specific performance of the Partnership’s obligations pursuant to the Purchase Contract (but not damages); or (ii) terminating the Purchase Contract for the Property or Properties for which there was a default and receiving a return of the applicable deposit for such Property or Properties and its actual third-party costs incurred by the Purchaser, not to exceed $75,000 per terminated Property.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.39 Purchase and Sale Contract between Lazy Hollow Partners, a California general partnership, and the affiliated Selling Entities and Standard Portfolios LLC, a Delaware limited liability company, dated September 25, 2009.*
*Schedules and supplemental materials to the exhibit have been omitted but will be provided to the Securities and Exchange Commission upon request.
The agreement included as an exhibit to this Form 8-K contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
· should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
· have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
· may apply standards of materiality in a way that is different from what may be viewed as material to an investor; and
· were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Registrant acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 8-K not misleading. Additional information about the Registrant may be found elsewhere in this Form 8-K and the Registrant’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
