Exhibit 10.1
CONTRACT FOR PURCHASE AND SALE OF PARTNERSHIP INTERESTS
This Contract for Purchase and Sale of Partnership Interests (the “Contract”) is madeand entered into as of November 17, 2009 (the “Effective Date”), by and between National TaxCredit, Inc., a California corporation (the “General Partner”); National Tax Credit Partners, L.P.,a California limited partnership (the “Limited Partner” and together with the General Partner, collectively, “Sellers” and, individually, each a “Seller”); and Oswald Investments, L.C., an Iowalimited liability company, or its assign (“GP Purchaser”); and Ted Oswald, individually or hisassigns (“LP Purchaser” and together with GP Purchaser, collectively, “Purchaser”).
RECITALS
A. Grinnell Park, Limited Partnership, anIowalimited partnership (the“Partnership”). owns the real property located in Louisa County, Iowa, known and described asthe Grinnell Park Apartments complex, and more specifically described in the legal descriptionattached hereto as Exhibit “A,” together with any and all easements, rights-of-way, privileges,benefits, contract rights, development rights, permits, licenses or approvals, improvements, orappurtenances arising from, pertaining to or associated with said real property (collectively, the“Property”). Property also includes all of the Partnership’s rights, if any, in and to the name"Grinnell Park” as it relates solely to use in connection with the Property (and not with respect toany other property owned or managed by the Partnership, the Partnership’s property manager("Property Manager"), Apartment Investment and Management Company ("AIMCO"), or theirrespective affiliates). Property also includes all receivables, cash or other funds, whether inpetty cash or house "banks," or on deposit in bank accounts or in transit for deposit, but doesnot include any right, title or interest in or to all words, phrases, slogans, materials, software,proprietary systems, trade secrets, proprietary information and lists, and other intellectualproperty owned or used by the Property Manager or AIMCO in the marketing, operation or useof the Property (or in the marketing, operation or use of any other properties managed by the Property Manager or owned by AIMCO or an affiliate of either Property Manager or AIMCO.
B. The General Partner owns all of the general partner limited partnership interests of the Partnership (the “GP Interest”) and the Limited Partner owns all of the limited partnerlimited partnership interests of the Partnership (the “LP Interest” and together with the GPInterest, collectively, the “Interests”).
C. GP Purchaser desires to purchase the GP Interest, LP Purchaser desires topurchase the LP Interest, and Sellers desire to sell, the Interests to Purchaser on the terms andconditions set forth below.
AGREEMENT
1. Purchase andSale. Sellers agree to bargain, sell, grant, convey and deliver,and Buyer agrees to purchase and accept the Interests for the price and on the terms andconditions set forth herein.
2. Purchase Price and Method of Payment; Escrow. The purchase price for theInterests (the "Purchase Price") shall be a sum equal to the outstanding principal balance ofthe “Loan” (as that term is hereinafter defined), together with all accrued but unpaid interest (ifany) thereon, as of the Closing Date, plus the amount of Twenty Thousand and no/100 Dollars($20,000.00), payable, as follows:
(a) Upon the execution and delivery hereof, Purchaser shall deliver to FirstAmerican Title Insurance Company of New York, located at 633 3rd Avenue, New York City,New York, 10017, telephone number (212) 922-9700 ("Escrow Agent") the sum of TwoThousand and no/100 Dollars ($2,000.00) by wire transfer of immediately available funds("Good Funds") as a good faith deposit (the “Initial Deposit”).
After the end of the “Feasibility Period” (as that term is hereinafter defined), the Deposit and any and all additional deposits hereunder (collectively, the “Deposit”) will be nonrefundable, exceptupon Sellers’ default or as provided in this Contract.
(b) The Deposit shall be credited against the Purchase Price at the closing ofthe sale by Sellers and the purchase by Purchaser of the Interests in accordance with the terms and provisions of this Contract (herein referred to as the “Closing”).
(c) Purchaser recognizes and agrees that, in connection with a loan (the"Loan") made to the Partnership by the United States Department of Agriculture, FarmersHome Administration ("USDA"), the Property presently is encumbered by a mortgage datedJune 27, 1990 (the "Mortgage") and certain other security and related documents in connectionwith the Loan (collectively, the "Encumbrances"). The Loan is evidenced by that certainpromissory note, dated June 27, 1990, in the stated principal amount of $632,440.00(the"Note," and together with the Mortgage, a Consolidated RRH Loan Agreement, theEncumbrances and any other documents executed by the Partnership in connection with the Loan, the "Loan Documents"), executed by the Partnership and payable to the order of USDA.At the Closing, subject to the occurrence of the "Loan Continuation and Release" (as hereinafterdefined), Purchaser shall receive a credit against the Purchase Price in the amount of theoutstanding principal balance of the Note, together with all accrued but unpaid interest (if any)thereon, as of the Closing Date (collectively, the "Loan Balance").
(d) The balance of the Purchase Price, Eighteen Thousand and no/$100Dollars ($18,000.00) shall be paid to and received by Escrow Agent by wire transfer of GoodFunds at Closing.
3. Feasibility Period.
(a) Subject to the terms of Sections 3(c) and 3(d) and the rights of “Tenants”under the “Leases” (as those terms are hereinafter defined), from the Effective Date to andincluding the date which is thirty (30) days after the Effective Date (the "Feasibility Period"),Purchaser and its agents, contractors, engineers, surveyors, attorneys, and employees(collectively, "Consultants"), at no cost or expense to Sellers, shall have the opportunity toconduct such tests, studies, inspections, evaluations, investigations and appraisals of or concerning the Property as Purchaser may desire, review the “Materials” (as that term ishereinafter defined), and otherwise confirm any and all matters which Purchaser mayreasonably desire to confirm with respect to the Property and Purchaser's intended use thereof(collectively, the "Inspections").
(b) If any of the matters in Section 3(a) or any title or survey matters are unsatisfactory to Purchaser for any reason, or for no reason whatsoever, in Purchaser's soleand absolute discretion, then Purchaser shall have the right to terminate this Contract by giving written notice to that effect to Sellers and Escrow Agent no later than 5:00 p.m. on or before thedate of expiration of the Feasibility Period. If Purchaser provides such notice, this Contract shallterminate and be of no further force and effect subject to and except for the Survival Provisions,and Escrow Agent shall return the Deposit to Purchaser. If Purchaser fails to provide Sellers with written notice of termination prior to the expiration of the Feasibility Period, Purchaser'sright to terminate under this Section 3(b) shall be permanently waived and this Contract shall remain in full force and effect, the Deposit shall be non-refundable, and Purchaser's obligationto purchase the Interests shall be conditional only as provided in Section 11(b).
(c) Purchaser shall not permit any mechanics' or materialmen's liens or any
other liens to attach to the Property by reason of the performance of any work or the purchase of any materials by Purchaser or any other party in connection with any Inspections conductedby or for Purchaser. Purchaser shall give reasonable advanced notice to Sellers prior to anyentry onto the Property and shall permit Sellers to have a representative present during allInspections conducted at the Property. Purchaser shall take all reasonable actions andimplement all protections necessary to ensure that all actions taken in connection with theInspections, and all equipment, materials and substances generated, used or brought onto theProperty pose no material threat to the safety of persons, property or the environment.
(ii) Notwithstanding anything in this Contract to the contrary,
Purchaser shall not be permitted to perform any invasive tests on the Property without theGeneral Partner's prior written consent, which consent may be withheld in the General Partner'ssole discretion. Further, the General Partner shall have the right, without limitation, to disapprove any and all entries, surveys, tests (including, without limitation, a Phase IIenvironmental study of the Property), investigations and other matters that in the GeneralPartner's reasonable judgment could result in any injury to the Property or breach of anycontract, or expose Sellers to any Losses or violation of applicable law, or otherwise adverselyaffect the Property or Sellers’ interests therein. Purchaser shall use reasonable efforts tominimize disruption to Tenants in connection with Purchaser's or its Consultants' activitiespursuant to this Section. No consent by the General Partner to any such activity shall bedeemed to constitute a waiver by the General Partner or assumption of liability or risk by Sellers. Purchaser hereby agrees to restore, at Purchaser's sole cost and expense, theProperty to the same condition existing immediately prior to Purchaser's exercise of its rightspursuant to thisArticle III. Purchaser shall maintain and cause its third party consultants tomaintain (a) casualty insurance and commercial general liability insurance with coverages of notless than $1,000,000.00 for injury or death to any one person and $3,000,000.00 for injury or death to more than one person and $1,000,000.00 with respect to property damage, and (b) worker's compensation insurance for all of their respective employees in accordance with thelaw of the state in which the Property is located. Purchaser shall deliver proof of the insurancecoverage required pursuant to this Section 3(d)(ii) to the General Partner (in the form of acertificate of insurance) prior to the earlier to occur of (I) Purchaser's or Purchaser's
Consultants' entry onto the Property, or (II) the expiration of five (5) days after the EffectiveDate.
4. Property Materials and Contracts.
(a) In order to allow Purchaser to expeditiously and timely complete itsInspections, Sellers shall deliver or make available to Purchaser within fifteen (15) days after theEffective Date the items and materials (collectively, the "Materials") described on Exhibit “C” inthe possession of Sellers or within its reasonable control. In providing the Materials toPurchaser, other than "Sellers’ Representations" (as hereinafter defined), neither Seller makesany representation or warranty, express, written, oral, statutory, or implied, and all suchrepresentations and warranties are hereby expressly excluded and disclaimed. All Materials areprovided for informational purposes only. Recognizing that the Materials delivered or made available by Sellers pursuant to this Contract may not be complete or constitute all of such documents which are in the Partnership's possession or control, but are those that are readilyand reasonably available to the Partnership, after using commercially reasonable efforts to obtain same, Purchaser shall not in any way be entitled to rely upon the completeness oraccuracy of the Materials and will instead in all instances rely exclusively on its own Inspectionsand consultants with respect to all matters which it deems relevant to its decision to acquire theInterests. Seller shall permit Purchaser to access all report and records Seller has filed with theUSDA Rural Development.
(b) In the event that this Contract shall be terminated by either party for anyreason whatsoever prior to Closing, Purchaser shall redeliver to Sellers all originals and copiesof all Materials, as well as copies of any and all tests, permits, approvals, licenses, reports,studies, plans, audits, assessments, surveys, appraisals or other documents, data orinformation about or concerning the Interests and/or the Property or the development thereofwhich have been prepared or obtained by Purchaser.
5. Title. Within ten (10) days after the Effective Date hereof, Sellers shall deliver to
Purchaser, to the extent in Sellers’ possession or otherwise reasonably available to Sellers, acopy of what Sellers reasonably believe to be the most recent title insurance policy issued withrespect to the Property (the “Prior Policy”). Purchaser, shall have the right, but not theobligation, to obtain, at Purchaser’s sole cost and expense, a title insurance commitment (the“Title Commitment”) for an owner's title insurance policy covering title to the Property on orafter the date hereof. Purchaser shall furnish a copy of the Title Commitment, and all titleexceptions referred to therein, to Seller.
6. [Intentionally Omitted]
7. Assumed Encumbrances.
(a) Purchaser agrees that, at the Closing (i) Purchaser shall reaffirm all of the
Partnership's obligations under the Note and all of the other Loan Documents and accept title tothe Property subject to the Mortgage and the other Loan Documents, and (ii) USDA shallrelease Sellers, as well as any guarantors, if any, and other obligated parties (other than thePartnership) under the Loan Documents, from all obligations under the Loan Documents (andany related guarantees or letters of credit), including, without limitation, any obligation to makepayments of principal and interest under the Note, to replenish any unfunded required accounts,escrows or reserves and/or cure any physical deficiencies at the Property, all in form andsubstance satisfactory to Sellers (collectively, the foregoing (i) and (ii) referred to herein as the
"Loan Continuation and Release"). Purchaser further acknowledges that the Loan Documentsrequire the satisfaction by Purchaser of certain requirements as set forth therein to allow for theLoan Continuation and Release. Accordingly, Purchaser, at its sole cost and expense shallsatisfy the requirements set forth in the Loan Documents to allow for the Loan Continuation andRelease, including, without limitation, submitting a complete application to USDA for assumption of the Loan together with all documents and information required in connection therewith (the"Loan Continuation Application") no later than the expiration of the Feasibility Period.Purchaser shall provide Sellers with a copy of the Loan Continuation Application and shallprovide evidence of its submission to USDA within three (3) business days after such submittal.Purchaser acknowledges and agrees that Purchaser is solely responsible for the preparationand submittal of the Loan Continuation Application, including the collection of all materials,documents, certificates, financials, signatures, and other items required to be submitted toUSDA in connection with the Loan Continuation Application.
(b) Purchaser shall pay all fees and expenses (including, without limitation,all servicing fees and charges, assumption fees, and other fees to release Sellers of all liabilityunder the Loan) imposed or charged by USDA or its counsel (such fees and expensescollectively being referred to as the "USDA Fees"), in connection with the Loan ContinuationApplication and the Loan Continuation and Release.
(c) Additionally, Purchaser shall be responsible for (i) replacing (andincreasing to the extent required by USDA) of all reserves, impounds, operating accounts andother accounts required to be maintained in connection with the Loan, (ii) funding any additionalreserves, impounds or accounts required by USDA to be maintained by Purchaser in connectionwith the Loan after the Loan Continuation and Release and (iii) making any repairs,replacements and improvements to the Property as required by USDA.
(d) Purchaser agrees promptly to deliver to USDA all documents andinformation required by the Loan Documents, and such other information or documentation as USDA reasonably may request, including, without limitation, financial statements, income tax returns and other financial information for Purchaser and any required guarantor. Sellers agreethat they will cooperate with Purchaser and USDA, at no cost or expense to Sellers, inconnection with Purchaser's application to USDA for approval of the Loan Continuation andRelease.
8. Representations, Warranties and Covenants of Sellers.
(a) The General Partner hereby represents, warrants and covenants to and
with Purchaser as follows:
(i) The General Partner is validly existing and in good standing under
the laws of the state of its formation and, subject to Section 8(b)(iii), and any approvals requiredfrom Lender for the Loan Continuation and Release, has or at the Closing shall have the entity power and authority to sell and convey the GP Interest and to execute the documents to beexecuted by the General Partner and prior to the Closing will have taken as applicable, allcorporate, partnership, limited liability company or equivalent entity actions required for theexecution and delivery of this Contract, and the consummation of the transactions contemplated by this Contract. The compliance with or fulfillment of the terms and conditions hereof will notconflict with, or result in a breach of, the terms, conditions or provisions of, or constitute adefault under, any contract to which the General Partner is a party or by which the GeneralPartner is otherwise bound, which conflict, breach or default would have a material adverse
affect on the General Partner's ability to consummate the transaction contemplated by thisContract or on the Property.
(ii) The Partnership is a limited partnership validly existing and ingood standing under the laws governing limited partnerships, as adopted in the state of itsformation. The Partnership has taken all requisite action in order to conduct lawfully its businessin the state in which the Property is situated. The Partnership has the full power and authority tocarry on its business, including without limitation, to own, lease and operate the Property.
(iii) Subject to the approvals and consents required from the limitedpartners of the Limited Partner, this Contract is a valid and binding agreement against theGeneral Partner in accordance with its terms.
(iv) The GP Interest is not subject to any lien, pledge or encumbranceof any nature whatsoever and Purchaser shall acquire the same free of any rights or claimsthereto by any other party.
(v) Except for (I) any actions by the Partnership to evict Tenantsunder the Leases, or (II) any matter covered by the Partnership's current insurance policy(ies),to the General Partner's knowledge, there are no material actions, proceedings, litigation orgovernmental investigations or condemnation actions either pending or threatened against theProperty which will adversely impact the General Partner's ability to convey the GP Interest;
(vi) To the General Partner's knowledge, the Partnership has notreceived any written notice from a governmental agency of any uncured material violations ofany federal, state, county or municipal law, ordinance, order, regulation or requirement affecting the Property, other than normal regulatory correspondence from Lender;
(vii) To the General Partner's knowledge, the Partnership has notreceived any written notice of any material default by the Partnership under any of the PropertyContracts;
(b) The Limited Partner hereby represents, warrants and covenants to and
with Purchaser as follows:
(i) The Limited Partner is validly existing and in good standing under the laws of the state of its formation and, subject to Section 8(b)(iii), and any approvals requiredfrom Lender for the Loan Continuation and Release, has or at the Closing shall have the entitypower and authority to sell and convey the LP Interest and to execute the documents to beexecuted by the Limited General Partner.
(ii) The execution and delivery of this Contract and the closing of thetransaction contemplated herein shall not and do not constitute a violation or breach by the Limited Partner of any provision of any agreement or other instrument to which the LimitedPartner is a party or to which the Limited Partner may be subject although not a party, nor resultin or constitute a violation or breach of any judgment, order, writ, injunction or decree issuedagainst the Limited Partner, or by which the Limited Partner is bound or subject
(iii) The Limited Partner has the full right, power and authority to enterinto and deliver this Contract and to consummate the purchase and sale of the Interests in
accordance herewith and to perform all covenants and agreements of Sellers hereunder subject to approval of the Limited Partner’s limited partners.
(iv) The person or persons executing this Contract on behalf of the
Limited Partner are fully and duly authorized to do so by the Limited Partner, and any and allactions required to make this Contract and the performance thereof legally binding obligations ofthe Limited Partner, have been duly and legally taken. No further consent, authorization orapproval of any person or entity is required for the Limited Partner to enter into or perform thistransaction, other than the approval of the Limited Partner’s limited partners, which shall occuron or before the Closing Date.
(c) Purchaser agrees that neither Seller shall be responsible or liable to
Purchaser for any defects, errors or omissions, or on account of any conditions affecting the Property. Purchaser, its successors and assigns, and anyone claiming by, through or underPurchaser, hereby fully releases Sellers’ Indemnified Parties from, and irrevocably waives itsright to maintain, any and all claims and causes of action that it or they may now have orhereafter acquire against Sellers’ Indemnified Parties with respect to any and all Losses arisingfrom or related to any defects, errors, omissions or other conditions affecting the Property.Purchaser represents and warrants that, as of the date hereof and as of the Closing Date, it hasand shall have reviewed and conducted such independent analyses, studies (including, withoutlimitation, environmental studies and analyses concerning the presence of lead, asbestos, waterintrusion and/or fungal growth and any resulting damage, PCBs and radon in and about theProperty), reports, investigations and inspections as it deems appropriate in connection with theProperty.
(d) Sellers and Purchaser agree that the foregoing representations and
warranties of Sellers (collectively, "Sellers’ Representations") shall survive Closing for a periodof six months (the "Survival Period"). Sellers shall have no liability after the Survival Periodwith respect to their respective Sellers’ Representations contained herein except to the extentthat Purchaser has requested arbitration against Sellers during the Survival Period for breach of any of Sellers’ Representations. Under no circumstances shall Sellers be liable to Purchaser formore than $20,000 in any individual instance or in the aggregate for all breaches of Sellers’Representations, nor shall Purchaser be entitled to bring any claim for a breach of Sellers’Representations unless the claim for damages (either in the aggregate or as to any individualclaim) by Purchaser exceeds $5,000. In the event that either Seller breaches anyrepresentation contained in Section 8(a) or 8(b) and Purchaser had knowledge of such breachprior to the Closing Date, and elected to close regardless, Purchaser shall be deemed to havewaived any right of recovery, and Sellers shall not have any liability in connection therewith.
(e) Any representations and warranties made "to the knowledge of the
General Partner" shall not be deemed to imply any duty of inquiry. For purposes of thisContract, the term the General Partner's "knowledge" shall mean and refer only to actualknowledge of the "Asset Manager" (as hereinafter defined) and shall not be construed to refer tothe knowledge of any other partner, officer, director, agent, employee or representative of the General Partner, or any affiliate of the General Partner, or to impose upon such Asset Managerany duty to investigate the matter to which such actual knowledge or the absence thereofpertains, or to impose upon such Asset Manager any individual personal liability. As usedherein, the term Asset Manager shall refer to Jacques Logan, who is the Asset Managerhandling this Property (the "Asset Manager").
(g) The General Partner agrees that it shall cause the Partnership to maintainthe Property as it now is until Closing, ordinary wear and tear and damage as provided inSection 12(c) excepted, and that the General Partner will cause the Partnership to refrain from any use of the Property for any purpose or in any manner which would adversely affect thePartnership’s continued use of the Property as a multifamily development. In the event of suchactions, Purchaser may, without liability, refuse to accept the assignment and transfer of the Interests, in which event the consideration paid under this Contract shall be refunded.
9. Representations, Warranties and Covenants of Purchaser. Purchaser
hereby represents, warrants and covenants to and with Sellers as follows:
(a) The person or persons executing this Contract on behalf of Purchaser arefully and duly authorized to do so by Purchaser and any and all actions required to make thisContract, have been duly and legally taken. No further consent, authorization or approval of anyperson or entity is required for Purchaser to enter into this Contract.
(b) The execution and delivery of this Contract and the consummation of thetransaction contemplated herein shall not and do not constitute a violation or breach byPurchaser of any provision of any Contract or other instrument to which Purchaser is a party orto which Purchaser may be subject although not a party, nor result in or constitute a violation orbreach of any judgment, order, writ, injunction or decree issued against Purchaser, or by whichPurchaser is bound or subject.
10. Continuing Representations and Warranties. The representations and
warranties of the parties contained herein shall be deemed to be continuing representations andwarranties which are true and correct in all material respects on the Effective Date hereof and shall remain true and correct at all times up to the Closing Date, with the same force and effectas though such representations and warranties had been made as of Closing; provided,however, that, no representations or warranties of either party shall survive Closing, unless specifically provided to so survive herein, or in the Closing documents.
11. Conditions Precedent to Obligations of Purchaser and Sellers.
(a) The obligations of Purchaser and Sellers hereunder to close upon thepurchase of the Interests are subject to and contingent upon obtaining the consent of USDA forthe transactions contemplated by this Contract, including the continuation of the currentmortgage under its current terms and conditions and the continuation of the Rental AssistanceAgreement (the "RA Agreement"), by and between the Partnership and the United States ofAmerica, acting through the Rural Housing Service (collectively, the “Closing Contingency”)having been met or satisfied to the satisfaction of Purchaser and Sellers. The satisfaction of the Closing Contingency shall be the sole responsibility and at the sole cost of Purchaser, with thecooperation of, and at no cost, expense or liability to, Sellers. In the event that such conditionhas not been satisfied on or before the expiration of the Feasibility Period, then Purchaser mayeither terminate this Contract, or waive such Closing Contingency, in which event the Depositshall be nonrefundable thereafter for any reason other than a default by Sellers. If the consent of USDA is not obtained by the Closing Date, then either Purchaser or Sellers may terminatethis Contract by giving written notice to the other, and thereafter neither party shall have anyfurther obligation hereunder (except those which by their terms survive the termination of thisContract and Sellers shall retain the Deposit.
(b) Provided Purchaser has not elected to terminate this Agreement duringthe Feasibility Period. Purchaser's obligation to close under this Contract shall be subject to andconditioned upon the fulfillment of the following conditions precedent:
(i) All of the documents required to be delivered by Sellers toPurchaser at the Closing pursuant to the terms and conditions hereof shall have been delivered;
(ii) Each of Sellers’ Representations shall be true in all materialrespects as of the Closing Date;
(iii) The Loan Continuation and Release shall have been approvedand shall occur upon Closing;
(iv) Approval of the “Credit Agency” (as that term is defined in Section42(h)(7)(A) of the Internal Revenue Code of 1986, as amended) of the state in which the Property is located to the transactions contemplated by this Contract, to the extent suchapproval is required (“Credit Agency Approval”); and
(v) Sellers shall have complied with, fulfilled and performed in allmaterial respects each of the covenants, terms and conditions to be complied with, fulfilled orperformed by Sellers hereunder.
(vi) All management contracts for the Property shall terminate on theClosing Date and Purchaser shall not have any further obligations to pay any sums notexpressly provided for in this Agreement to Seller or Seller’s Indemnified Parties after theClosing Date.
Notwithstanding anything to the contrary, there are no other conditions to Purchaser'sobligation to Close except the Closing Contingency or as expressly set forth in this Section11(b). If any of the conditions set forth in subparagraphs (i), (ii), or (v) is not met, Purchaser may (I) waive any of such conditions and proceed to Closing on the Closing Date with no offset ordeduction from the Purchase Price, or (II) if such failure constitutes a default by Sellers,exercise any of its remedies pursuant to Section 17(b). If either of the conditions set forth in subparagraph (iii) or (iv) is not met on or before the Closing Date [as may be extended pursuant to Section 13(b)], Escrow Agent shall promptly release the Deposit to Seller.
(c) Without limiting any of the rights of Sellers elsewhere provided for in this
Contract, Sellers’ obligation to close with respect to transfer of the Interests under this Contract shall be subject to and conditioned upon the fulfillment of the following conditions precedent:
(i) All of the documents and funds required to be delivered byPurchaser to Sellers at the Closing pursuant to the terms and conditions hereof shall have beendelivered;
(ii) Each of the representations, warranties and covenants ofPurchaser contained herein shall be true in all material respects as of the Closing Date;
(iii) Purchaser shall have complied with, fulfilled and performed in allmaterial respects each of the covenants, terms and conditions to be complied with, fulfilled orperformed by Purchaser hereunder;
(iv) There shall not be pending or, to the knowledge of eitherPurchaser or Sellers, any litigation or threatened litigation which, if determined adversely, wouldrestrain the consummation of any of the transactions contemplated by this Contract or declare illegal, invalid or nonbinding any of the covenants or obligations of Purchaser;
(v) Sellers shall have received all consents, documentation andapprovals necessary to consummate and facilitate the transactions contemplated hereby (and the amendment of Sellers’ (or Sellers’ affiliates') partnership or other organizational documentsin connection therewith), (a) from Sellers’ partners, members, managers, shareholders ordirectors to the extent required by Sellers’ (or Sellers’ affiliates') organizational documents, and(b) as required by law;
(vii) The Loan Continuation and Release shall have been approvedand shall occur upon Closing; and
(viii) Simultaneous closings under each of the other “AdditionalContracts” as that term is hereinafter defined.
If any of the foregoing conditions to Sellers’ obligation to close with respect to the transfer of the Interests under this Contract are not met, Sellers may (I) waive any of theforegoing conditions and proceed to Closing on the Closing Date, or (II) terminate this Contract,and, if such failure constitutes a default by Purchaser, exercise any of its remedies underSection 17(a). If the condition set forth in subparagraph (v) is not met on or before the ClosingDate [as may be extended pursuant to Section 13(b)], Sellers may (x) waive any of theforegoing conditions and proceed to Closing on the Closing Date, or (y) terminate this Contractand the Deposit shall be promptly released to Purchaser. If either of the conditions set forth insubparagraphs (vi) or (vii) is not met on or before the Closing Date [as may be extendedpursuant to Section 13(b)], Escrow Agent shall promptly release the Deposit to Seller.
12. Purchase and Sale of Other Properties.
(a) Simultaneously with the execution and delivery of this Contract, Sellers(or affiliates of Sellers’) and Purchaser are entering into four (4) separate additional contracts(each, an “Additional Contract” and any two (2) or more, as the context requires, collectively, the “Additional Contracts”), each for the purchase and sale of an apartment complex locatedin the state of Iowa and specifically, (i) Grimes Park Apartments, located in Grimes, (ii) NorwalkApartments, located in Norwalk, (iii) North Liberty, located in North Liberty, and (iv) ColumbusJunction Park Apartments, located in Columbus.
(b) Notwithstanding anything contained in this Contract or any of theAdditional Contracts to the contrary, and without limiting any of the rights of Sellers underSection 11(c) or any other provision of this Contract, if Purchaser (or an assignee ofPurchaser’s) elects, for whatever reason, to terminate any Additional Contract or the closing thetransaction contemplated by such Additional Contract will not occur for any reason on the termsand conditions therein contained, Sellers shall have the right, in their sole and absolutediscretion, to terminate this Contract. Upon such termination (i) provided Purchaser is not indefault of any of its obligations hereunder or any of its obligations under the AdditionalContracts, including, without limitation, the Additional Contract which has been terminated, Purchaser shall receive a refund of the Deposit and (ii) neither party shall have any furtherobligations under this Contract except for those which by the terms herein survive a termination.
13. Closing.
(a) The Closing of this transaction shall be held on or before the date sixty(60) days after the Effective Date (the “Closing Date”), at 10:00 A.M., subject to extension asprovided in subparagraph (b), below, or such other time as may be mutually agreed upon bySellers and Purchaser, at the offices of Escrow Agent, or by mail.
(b) Notwithstanding the foregoing to the contrary, Sellers shall have theoption, by delivering written notice to Purchaser, to extend the Closing Date to the last business day of the month in which the Closing Date otherwise would occur pursuant to the precedingsentence, in connection with the Loan Continuation and Release. Further, the Closing Datemay be extended without penalty at the option of Sellers to a date following the Closing Datespecified in the first sentence of this paragraph above (or, if applicable, as extended by Sellerspursuant to the preceding sentence) (i) in order to finalize the drafting with USDA and USDA'scounsel of all documents necessary or desirable to accomplish the Loan Continuation andRelease and/or (ii) in order to obtain all necessary corporate and partnership consents for, andmake all necessary governmental filings required of Sellers as a result of, the transactionscontemplated by this Agreement, but in no event shall the Closing Date be extended beyondDecember 31, 2009.
(c) The General Partner shall cause the Partnership to maintain the Property up to the Closing Date in the same condition as existed on the Effective Date, subject only toreasonable wear and tear and subsection (d), below.
(d) Risk of loss to the Property between the Effective Date and the date ofthe Closing shall be borne by Seller. In the event of any casualty to the Property prior to closingwhere the cost to repair shall not exceed $150,000.00 (as estimated by a licensed contractorselected by Sellers and reasonably acceptable to Purchaser), the Closing shall proceed and atClosing Sellers shall release all of their rights to all insurance proceeds with regard to thecasualty and shall credit Purchaser against the Purchase Price for the amount of anydeductible. In the event of any casualty to the Property prior to Closing where the cost to repairshall exceed $150,000.00, Purchaser shall have the right to either: (i) elect to proceed to close whereupon at Closing Sellers shall assign all insurance proceeds with regard to the casualty toPurchaser and shall credit Purchaser against the Purchase Price for the amount of anydeductible or (ii) Purchaser shall have the right, within ten (10) days after receiving notice ofsuch casualty, to terminate this Contract upon written notice to Seller, whereupon the Depositshall be returned to Purchaser and the parties released of all further obligations hereunder,except as to those which by their terms survive a termination of this Contract. Seller shallmaintain insurance coverage on the Property in the ordinary course of business.
(e) To the extent reasonably available to Seller, originals or copies of the Leases and Property Contracts, lease files, warranties, guaranties, operating manuals, keys tothe property, and the Partnership's books and records (other than proprietary information) up through and including the Closing Date (collectively, "Partnership's Property-Related Filesand Records") regarding the Property shall be made available to Purchaser at the Property (ordelivered to Purchaser if not available at the Property) after the Closing. Purchaser agrees, fora period of not less than three (3) years after the Closing (the "Records Hold Period"), to (i)provide and allow Sellers reasonable access to Partnership's Property-Related Files andRecords for purposes of inspection and copying thereof, and (ii) reasonably maintain andpreserve Sellers’ Property-Related Files and Records.
14. Closing Documents.
(a) Sellers shall execute, acknowledge (where indicated) and/or deliver to
Purchaser at Closing the following:
(i) If appropriate, a non-foreign certificate in compliance with Section1445 of the Internal Revenue Code;
(ii) Two (2) counterparts of the Second Amendment to Amended andRestated Certificate and Agreement of Limited Partnership, a copy of which is attached heretoas Exhibit “B” (the “LPA Amendment”);
(iii) The Amendment to Certificate of Limited Partnership forfiling/recording with the appropriate governmental agency of the state in which the Property islocated (the “LP Certificate Amendment”); and
(iv) Sellers’ closing statement.
(b) Purchaser shall execute and/or deliver to Sellers at Closing:
(i) Two counterparts of the LPA Amendment;
(ii) The LP Certificate Amendment;
(iii) Purchaser’s closing statement;
(iv) The Purchase Price, subject to credits and prorations as providedherein, by delivery of the balance of the Purchase Price to the Escrow Agent, which shall be theClosing Agent, by wire transfer; and
15. Closing Expenses. Each party shall bear and pay its own attorneys' fees andexpenses. Other than such fees and expenses, Purchaser shall pay all costs and expenses ofClosing, including, but not limited to, escrow costs and fees, recording and filing fees, andtransfer and any other taxes (excluding income, franchise and similar taxes) relating to thepurchase and sale of the Interests as contemplated by this Contract.
16. Prorations. There shall be no prorations.
(a) By Purchaser.If the sale contemplated by this Contract is not completed
as a result of a default of Purchaser, Sellers’ sole and exclusive remedy shall be to retain theDeposit paid or deposited hereunder, as agreed upon full liquidated damages for such defaultby Purchaser, and the parties hereunder shall have no further rights or liabilities under this Contract. Each Seller hereby expressly waives and releases any right to sue Purchaser forspecific performance or to assert that Sellers’ actual damages exceed the Deposit, which waiverand release is a substantial inducement to Purchaser entering into this Contract.
(b) By Sellers.If the sale contemplated by this Contract is not completed as a result of a default of either Seller, Purchaser shall have and be entitled to the right to seekspecific performance of this Contract, or to terminate this Contract and demand and receive a refund of the Deposit, which shall be Purchaser’s sole and exclusive remedies.
(c) Surviving Obligations.The remedies of Sellers and Purchaser shallinclude any of those necessary or appropriate to enforce surviving obligations as provided in Section 3(d)(i).
18. Condemnation. If, prior to Closing, the Property or any material portion thereofin the reasonable discretion of Purchaser, is condemned or taken under power of eminent domain, or if either Seller receives any bona fide written notice or knowledge that any suchtaking is threatened or contemplated by any governmental agency or entity or any other entityhaving the power of eminent domain, then, in any such event, Sellers shall promptly give noticethereof to Purchaser in writing. Purchaser shall then have the options of either (a) terminatingthis Contract and receiving a refund of the Deposit paid hereunder, with neither party thereafterhaving any further obligations to the other hereunder, or (b) waiving such matters andproceeding to close this transaction without reduction in the Purchase Price, and thePartnership shall be entitled to receive and retain any and all awards or monies payable as aresult of any such taking. Purchaser shall make such election by giving written notice thereof toSellers within ten (10) days after receipt of such notice from Seller(s).
19. Escrow Agent and Escrow Procedure.
(b) If prior to the Closing Date either party makes a written demand uponEscrow Agent for payment of the Deposit, Escrow Agent shall give written notice to the otherparty of such demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice, EscrowAgent is hereby authorized to make such payment. If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwisedirected by written instructions from the parties to this Contract or a final judgment or arbitrator'sdecision. However, Escrow Agent shall have the right at any time to deliver the Deposit andinterest thereon, if any, with a court of competent jurisdiction in the state in which the Property islocated. Escrow Agent shall give written notice of such deposit to Sellers and Purchaser.
(c) The parties acknowledge that Escrow Agent is acting solely as astakeholder at their request and for their convenience, and that Escrow Agent shall not bedeemed to be the agent of either of the parties for any act or omission on its part unless takenor suffered in bad faith in willful disregard of this Contract or involving gross negligence. Sellersand Purchaser jointly and severally shall indemnify and hold Escrow Agent harmless from andagainst all costs, claims and expenses, including reasonable attorney's fees, incurred inconnection with the performance of Escrow Agent's duties hereunder, except with respect toactions or omissions taken or suffered by Escrow Agent in bad faith, in willful disregard of thisContract or involving gross negligence on the part of the Escrow Agent.
(d) The parties shall deliver to Escrow Agent an executed copy of this
Contract. Escrow Agent shall execute the signature page for Escrow Agent attached heretowhich shall confirm Escrow Agent's agreement to comply with the terms of Sellers’ closinginstruction letter delivered at Closing and the provisions of this Section 19.
(a) Sellers represent and warrant to Purchaser that they have dealt only with
CB Richard Ellis, Michael Sakich, 311 S. Wacker Drive, Suite 400, Chicago, IL 60606("Broker") in connection with this Contract. Sellers and Purchaser each represents andwarrants to the other that, other than Broker, it has not dealt with or utilized the services of anyother real estate broker, sales person or finder in connection with this Contract, and each partyagrees to indemnify, hold harmless, and, if requested in the sole and absolute discretion of theindemnitee, defend (with counsel approved by the indemnitee) the other party from and againstall Losses relating to brokerage commissions and finder's fees arising from or attributable to the acts or omissions of the indemnifying party.
(b) If the Closing occurs, Sellers agree to pay Broker a commission according to the
terms of a separate contract. Broker shall not be deemed a party or third party beneficiary ofthis Contract. As a condition to Sellers’ obligation to pay the commission, Broker shall executethe signature page for Broker attached hereto solely for purposes of confirming the matters set forth therein.
21. Notices. Any notice required or permitted to be given under this Contract shallbe in writing, and shall be deemed to have been given when delivered, if delivered by handdelivery, or when transmitted by telecopier, or deposited with any nationally or regionallyestablished overnight courier service, deposited in the United States Post Office, registered orcertified mail, postage prepaid, return receipt requested, if mailed. Notices hall be addressed asfollows:
(a) If to Purchaser:
c/o Oswald Investments1909 Sycamore Avenue Granger, Iowa 50109 Attention: Ted OswaldTelephone: (515) 689-8593Facsimile: (515) 999-2018
William R. Stiles, Esq.
Smith, Schneider, Stiles & Serangeli, P.C.The Equitable Building
604 Locust Street, Suite 1000
Des Moines, Iowa 50309
Telephone (515) 245-6789
Fax (515) 244-1328
(b) To Seller:
c/o AIMCO
6701 Center Drive
Suite520
Los Angeles, California 90045Attention: Peter Stoughton Telephone: (310) 258-5100 Facsimile: 310-258-5180
with copy to:
AIMCO
4582 South Ulster StreetParkwaySuite1100
Denver, Colorado 80237
Attention: John Spiegleman, Esq.Telephone: (303) 691-4303
Facsimile: (720) 200-6882
and a copy to:
Law Offices of Peter H. Alpert, Inc. 601 S. Figueroa Street, Suite 2330Los Angeles, California 90017Attention: Peter H. Alpert, Esq. Telephone: (213) 687-1510
Facsimile: (213) 687-1511
or such other address either party from time to time specify in writing to the other.
Any notice required hereunder to be delivered to the Escrow Agent shall be delivered inaccordance with above provisions as follows:
First American Title Insurance Company of New York633 3rd Avenue
New York City, New York 10017
Attention: _____________________
Telephone: 212-922-9700
Facsimile:
Unless specifically required to be delivered to the Escrow Agent pursuant to the terms ofthis Contract, no notice hereunder must be delivered to the Escrow Agent in order to beeffective so long as it is delivered to the other party in accordance with the above provisions.
22. Miscellaneous.
(a) Successors and Assigns.Subject to the provisions of subparagraph (j),below, this Contract shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and permitted assigns.
(b) Amendments and Termination.Except as otherwise provided herein, thisContract may be amended or modified by, and only by, a written instrument executed by Sellers and Purchaser, acting by their respective duly authorized agents or representatives; provided, however, that, (a) the signatures of Escrow Agent and Broker shall not be required as to any amendment of this Contract other than an amendment of Section 19 or Section 20, respectively.
(c) Governing Law.This Contract shall be governed by and construed in accordance with the laws of the state in which the Property is located.
(d) Contract Construction.Purchaser and Sellers acknowledge that this Contract was prepared after substantial negotiations between the parties. This Contract shall not be interpreted against either party solely because such party or its counsel drafted theContract.
(e) Section and Section Headings.The section and paragraph headingsinserted in this Contract are for convenience only and are intended to, and shall not beconstrued to, limit, enlarge or affect the scope or intent of this Contract, nor the meaning of anyprovision hereof.
(f) Counterparts. This Contract may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shallconstitute one and the same document.
(g) Merger of Prior Contracts.This Contract supersedes all prior Contracts and understandings between the parties hereto relating to the subject matter hereof.
(h) Time. Time is of the essence of this Contract. When any time periodspecified herein falls or ends upon a Saturday, Sunday or legal holiday, the time period shall beautomatically extended to 5:00 P.M. on the next ensuing business day.
(i) Test and Studies.If Purchaser terminates this Contract for any reason,Purchaser shall deliver to Seller, at no charge to Seller, copies of all surveys, soil tests, trafficand other studies and testing, plans, specifications, engineering drawings and all otherinformation owned by or in the possession of Purchaser which pertain to the Property orPurchaser's Intended Use. This paragraph shall survive the Closing.
(j) Assignment.Purchaser shall have the right to assign this Contract atClosing to a related entity wholly owned or controlled by the principals of Purchaser, without theconsent of Sellers so long as such assignment is made in writing which provide that theassignee expressly assumes and agrees to pay and perform all of Purchaser’s duties,obligations, liabilities and responsibilities hereunder, is executed by both the assignor and the
assignee, and fully-executed counterparts thereof are delivered to Seller. All other assignmentsrequire Sellers’ approval, in Sellers’ discretion. Upon any assignment, Purchaser shall remainliable hereunder.
(k) Attorneys’ Fees.If either party shall bring an action to enforce the terms
of this Contract, the prevailing party in such litigation shall be entitled to recover its reasonableattorneys’ fees and costs from the other party, including any such fees and costs incurred on anappeal.
[Signatures on following page(s)]
IN WITNESS WHEREOF, Purchaser and Sellers have caused this Contract to beexecuted as of the Effective Date.
SELLERS: NATIONAL TAX CREDIT, INC.,
a California corporation
By: /s/Michael J. Hornbrook
Name: Michael J. Hornbrook
Title: Senior Vice President
NATIONAL TAX CREDIT PARTNERS, L.P.,
a California limited partnership
By National Partnership Investments Corp.,
a California corporation,
its General Partner
By: /s/Michael J. Hornbrook
Name: Michael J. Hornbrook
Title: Senior Vice President
PURCHASER: OSWALD INVESTMENTS, L.C.,
an Iowa limited liability company
By: /s/Ted Oswald
Name: Ted Oswald
Title: Managing Member
IN WITNESS WHEREOF, this Amendment has been duly executed as of the Effective
Date.
INCOMING GENERALPARTNER
and OPERATING GENERAL PARTNER:
a
By
Its
INCOMING LIMITED PARTNER and
LIMITED PARTNER:
WITHDRAWING PARTNERS: NATIONAL TAX CREDIT, INC.,
a California corporation
By: /s/Michael J. Hornbrook
Name: Michael J. Hornbrook
Title: Senior Vice President
NATIONAL TAX CREDIT PARTNERS, L.P.,
a California limited partnership
By National Partnership Investments Corp.,
a California corporation,
General Partner
By: /s/Michael J. Hornbrook
Name: Michael J. Hornbrook
Title: Senior Vice President