United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-13454
NATIONAL PROPERTY INVESTORS 7
(Exact name of registrant as specified in its charter)
California 13-3230613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL PROPERTY INVESTORS 7
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2003
Assets
Cash and cash equivalents $ 616
Receivables and deposits 462
Restricted escrows 376
Other assets 846
Assets held for sale (Note F) 1,993
Investment properties:
Land $ 3,024
Buildings and related personal property 37,307
40,331
Less accumulated depreciation (27,656) 12,675
$ 16,968
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 36
Tenant security deposit liabilities 111
Accrued property taxes 293
Other liabilities 300
Mortgage notes payable 20,704
Liabilities related to assets held for sale (Note F) 4,287
Partners' Deficit:
General partner $ (389)
Limited partners (60,517 units
issued and outstanding) (8,374) (8,763)
$ 16,968
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 7
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Restated) (Restated)
Revenues:
Rental income $ 1,488 $ 1,505 $ 4,390 $ 4,532
Other income 117 131 333 353
Total revenues 1,605 1,636 4,723 4,885
Expenses:
Operating 606 577 1,727 1,684
General and administrative 98 111 305 364
Depreciation 404 401 1,228 1,212
Interest 314 385 1,098 1,177
Property taxes 111 97 301 297
Total expenses 1,533 1,571 4,659 4,734
Income from continuing operations 72 65 64 151
Income (loss) from discontinued
operations (Note F) 24 (28) (100) (123)
Net income (loss) $ 96 $ 37 $ (36) $ 28
Net income (loss) allocated to
general partner (1%) $ 1 $ -- $ -- $ --
Net income (loss) allocated to
limited partners (99%) 95 37 (36) 28
$ 96 $ 37 $ (36) $ 28
Net income (loss) per limited partnership unit:
Income from continuing operations $ 1.18 $ 1.07 $ 1.05 $ 2.48
Income (loss) from discontinued
operations 0.39 (0.46) (1.64) (2.02)
$ 1.57 $ 0.61 $ (0.59) $ 0.46
Distributions per limited
partnership unit $ 10.72 $ 6.63 $ 37.54 $ 27.35
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 7
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 60,517 $ 1 $30,259 $30,260
Partners' deficit at
December 31, 2002 60,517 $ (366) $(6,066) $(6,432)
Distributions to partners -- (23) (2,272) (2,295)
Net loss for the nine months
ended September 30, 2003 -- -- (36) (36)
Partners' deficit at
September 30, 2003 60,517 $ (389) $(8,374) $(8,763)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 7
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2003 2002
Cash flows from operating activities:
Net (loss) income $ (36) $ 28
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation 1,586 1,559
Amortization of loan costs 53 49
Casualty gain (54) --
Loss on early extinguishment of debt 14 --
Change in accounts:
Receivables and deposits (144) 139
Other assets (112) (4)
Accounts payable (41) (37)
Tenant security deposit liabilities (1) 22
Accrued property taxes 293 276
Other liabilities (169) 188
Net cash provided by operating activities 1,389 2,220
Cash flows from investing activities:
Property improvements and replacements (426) (550)
Insurance proceeds received 59 --
Net receipts from (deposits to) restricted escrows 147 (44)
Net cash used in investing activities (220) (594)
Cash flows from financing activities:
Repayment of mortgage notes payable (7,600) --
Proceeds from mortgage notes payable 9,290 --
Payments on mortgage notes payable (349) (299)
Loan costs paid (213) --
Distributions to partners (2,295) (1,672)
Net cash used in financing activities (1,167) (1,971)
Net increase (decrease) in cash and cash equivalents 2 (345)
Cash and cash equivalents at beginning of period 614 912
Cash and cash equivalents at end of period $ 616 $ 567
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,285 $ 1,307
Supplemental disclosure of non-cash activity:
Replacement reserves in accounts receivable $ 93 $ --
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 7
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 7
(the "Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
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 NPI Equity Investments, Inc. (the "Managing General Partner"),
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three and
nine month periods ended September 30, 2003 are not necessarily indicative of
the results that may be expected for the fiscal year ending December 31, 2003.
For further information, refer to the financial statements and footnotes thereto
included in the Partnership's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2002. The Managing General Partner is an affiliate of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust.
Effective April 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64". SFAS No. 4 "Reporting Gains and Losses from Extinguishment of Debt,"
required that all gains and losses from extinguishment of debt be aggregated
and, if material, classified as an extraordinary item. SFAS No. 145 rescinds
SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should
only be classified as extraordinary if they are unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying statements of operations for 2003 reflect the loss on early
extinguishment of debt at Patchen Place and South Point Apartments (see "Note
C") in discontinued operations and in interest expense, respectively, rather
than as an extraordinary item.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
public business enterprises report information about long-lived assets that are
either being held for sale or have already been disposed of by sale or other
means. The standard requires that results of operations for a long-lived assets
that is being held for sale or has already been disposed of be reported as
discontinued operations on the statement of operations. In accordance with SFAS
144, Patchen Place Apartments are considered as assets held for sale as of
September 30, 2003 as the Partnership sold this property on October 31, 2003. As
a result, the accompanying statements of operations are restated as of January
1, 2002 to reflect the operations of Patchen Place Apartments as income (loss)
from discontinued operations. The balance sheet reflects the assets and
liabilities of Patchen Place Apartments as assets held for sale and liabilities
related to assets held for sale, respectively. Approximately $933,000 and
$909,000 in revenues for Patchen Place Apartments are included in the income
(loss) from discontinued operations for the nine months ended September 30, 2003
and 2002, respectively.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
Affiliates of the Managing General Partner were entitled to receive 5% of gross
receipts from all of the Partnership's properties as compensation for providing
property management services. The Partnership paid to such affiliates
approximately $271,000 and $283,000 for the nine months ended September 30, 2003
and 2002, respectively, which is included in operating expenses and discontinued
operations.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $178,000 and
$213,000 for the nine months ended September 30, 2003 and 2002, respectively,
which is included in general and administrative expense and investment
properties. Included in these amounts are fees related to construction
management services provided by an affiliate of the Managing General Partner of
approximately $13,000 and $24,000 for the nine months ended September 30, 2003
and 2002, respectively. The construction management service fees are calculated
based on a percentage of current year additions to investment properties.
For services relating to the administration of the Partnership and operation of
Partnership properties, the Managing General Partner is entitled to receive
payment for non-accountable expenses up to a maximum of $150,000 per year from
distributions from operations, based upon the number of Partnership units sold,
subject to certain limitations. The Managing General Partner received
approximately $91,000 in reimbursements for both of the nine month periods ended
September 30, 2003 and 2002, which is included in general and administrative
expenses.
For managing the affairs of the Partnership, the Managing General Partner is
entitled to receive a partnership management fee. The fee is equal to 4% of the
Partnership's adjusted cash from operations, as defined in the Partnership
Agreement, in any year, provided that 50% of the fee shall not be paid until the
Partnership has distributed to the limited partners adjusted cash from
operations in such year which is equal to 5% of the limited partners' adjusted
invested capital, as defined, on a non-cumulative basis. In addition, 50% of the
fee shall not be paid until the Partnership has distributed to the limited
partners adjusted cash from operations in such year which is equal to 8% of the
limited partners' adjusted invested capital on a non-cumulative basis. The fee
shall be paid when adjusted cash from operations is distributed to the limited
partners. The Managing General Partner was not entitled to receive this fee
during the nine months ended September 30, 2003. The Managing General Partner
was paid approximately $29,000 during the nine months ended September 30, 2002
for such fees.
NPI Equity, on behalf of the Partnership and certain affiliated partnerships,
has established a revolving credit facility (the "Partnership Revolver") to be
used to fund deferred maintenance and working capital needs of the Partnership
and certain other affiliated partnerships in the National Property Investors
Partnership Series. The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver will have
a term of 365 days, be unsecured and bear interest at the prime rate plus 2% per
annum. The maturity date of any such borrowing accelerates in the event of: (i)
the removal of NPI Equity as the managing general partner (whether or not for
cause); (ii) the sale or refinancing of a property by the Partnership (whether
or not a borrowing under the Partnership Revolver was made with respect to such
property); or (iii) the liquidation of the Partnership. At September 30, 2003,
the Partnership had no outstanding amounts due under this Partnership Revolver.
An affiliate of the Managing General Partner earned approximately $93,000 for
services related to the refinancings of Patchen Place and South Point Apartments
during the nine months ended September 30, 2003. These costs were capitalized
and are included in other assets on the balance sheet.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers compensation, property casualty and vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the
Managing General Partner. During the nine months ended September 30, 2003 and
2002, the Partnership was charged by AIMCO and its affiliates approximately
$92,000 and $78,000, respectively, for insurance coverage and fees associated
with policy claims administration.
Note C - Refinancing of Mortgage Notes Payable
On May 16, 2003, the Partnership refinanced the mortgage encumbering Patchen
Place Apartments. The refinancing replaced the existing mortgage of $3,000,000
with a new mortgage in the amount of $4,290,000. Total capitalized loan costs
were approximately $98,000 during the nine months ended September 30, 2003. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $7,000 during the nine months ended September 30, 2003, due to the
write off of unamortized loan costs and debt discounts and the payment of
prepayment penalties, which is included in loss from discontinued operations.
On June 27, 2003, the Partnership refinanced the mortgage encumbering South
Point Apartments. The refinancing replaced the existing mortgage of $4,600,000
with a new mortgage in the amount of $5,000,000. Total capitalized loan costs
were approximately $115,000 during the nine months ended September 30, 2003. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $7,000 during the nine months ended September 30, 2003, due to the
write off of unamortized loan costs and debt discounts and the payment of
prepayment penalties, which is included in interest expense.
Initially the May 16, 2003 refinancing of Patchen Place Apartments and the June
27, 2003 refinancing of South Point Apartments were under an interim credit
facility ("Interim Credit Facility") which also provided for the refinancing of
several other properties. The Interim Credit Facility created separate loans for
each property refinanced thereunder, which loans were not cross-collateralized
or cross-defaulted with each other. During the term of the Interim Credit
Facility, Patchen Place and South Point Apartments were required to make
interest-only payments. The first month's interest rate for Patchen Place
Apartments was 2.78% and for South Point Apartments was 2.60%.
As of July 1 and August 1, 2003, the loans on Patchen Place and South Point
Apartments, respectively, were assumed by a different lender. The credit
facility ("Permanent Credit Facility") with the new lender has a maturity of
five years with an option for the Partnership to elect one five-year extension.
This Permanent Credit Facility also created separate loans for each property
refinanced thereunder, which loans are not cross-collateralized or
cross-defaulted with each other. Each note under this Permanent Credit Facility
is initially a variable rate loan, and after three years the Partnership has the
option of converting the note to a fixed rate loan. The interest rate on the
variable rate loans is 85 basis points over the Fannie Mae discounted
mortgage-backed security index (1.9% per annum at September 30, 2003), and the
rate resets monthly. Each loan automatically renews at the end of each month. In
addition, monthly principal payments are required based on a 30-year
amortization schedule, using the interest rate in effect during the first month
that the properties are on the Permanent Credit Facility. The loans may be
prepaid without penalty.
Note D - Casualty Event
On February 15, 2003 an ice storm caused damage to exterior sections on some of
the buildings and to the landscaping at Patchen Place Apartments. No actual
units were damaged during this storm. Reconstruction costs of approximately
$68,000 have been incurred as of September 30, 2003. As a result of the damage,
approximately $40,000 of fixed assets and approximately $35,000 of accumulated
depreciation were written off resulting in a net write off of approximately
$5,000. The property received approximately $59,000 in proceeds from the
insurance company to repair the damage and recognized a casualty gain of
approximately $54,000, which is included in loss from discontinued operations,
as a result of the difference between the proceeds received and the net book
value of the assets written off.
Note E - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint (the "Heller action")
was filed against the same defendants that are named in the Nuanes action,
captioned Heller v. Insignia Financial Group. On or about August 6, 2001,
plaintiffs filed a first amended complaint. The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the Managing General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval, if it is granted, and to
provide partners with the independent appraisals at the time of these tenders.
The proposed settlement also provided for the limitation of the allowable costs
which the Managing General Partner or its affiliates will charge the
Partnerships in connection with this litigation and imposes limits on the class
counsel fees and costs in this litigation. On April 11, 2003, notice was
distributed to limited partners providing the details of the proposed
settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
filed an appeal seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. The Managing General Partner intends
to file a respondent's brief in support of the order approving settlement and
entering judgment thereto.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the Managing General
Partner, was served with a Complaint in the United States District Court,
District of Columbia alleging that AIMCO Properties L.P. willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week. The Complaint is styled as a
Collective Action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the Complaint
alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating
maintenance workers for time that they worked in responding to a call while
"on-call". The Complaint also attempts to certify a subclass for salaried
service directors who are challenging their classification as exempt from the
overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to
the Complaint denying the substantive allegations. Although the outcome of any
litigation is uncertain, in the opinion of the Managing General Partner the
claims will not result in any material liability to the Partnership.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Note F - Subsequent Event
On October 31, 2003, the Partnership sold Patchen Place Apartments to an
unrelated party for approximately $6,995,000. After payment of closing costs,
the net proceeds received by the Partnership were approximately $6,841,000. The
sale of the property resulted in a gain on the sale during the fourth quarter of
2003 of approximately $4,703,000. In accordance with SFAS No. 144, the assets
and liabilities of the property have been classified as held for sale as of
September 30, 2003 and the operations of the property have been shown as income
(loss) from discontinued operations for the three and nine months ended
September 30, 2003 and 2002. Revenues for the nine month periods ended September
30, 2003 and 2002 were approximately $933,000 and $909,000, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of five apartment complexes. The
following table sets forth the average occupancy of the properties for each of
the nine month periods ended September 30, 2003 and 2002:
Average Occupancy
2003 2002
Fairway View II Apartments 91% 93%
Baton Rouge, Louisiana
The Pines Apartments 92% 94%
Roanoke, Virginia
Patchen Place Apartments (1) 93% 87%
Lexington, Kentucky
Northwoods I and II Apartments 96% 95%
Pensacola, Florida
South Point Apartments 90% 92%
Durham, North Carolina
(1) The Managing General Partner attributes the increase in occupancy at
Patchen Place Apartments to increased marketing efforts.
Results of Operations
The Partnership's net loss for the nine months ended September 30, 2003 was
approximately $36,000 compared to net income of approximately $28,000 for the
nine months ended September 30, 2002. The Partnership's net income for the three
months ended September 30, 2003 was approximately $96,000 compared to net income
of approximately $37,000 for the three months ended September 30, 2002. On
October 30, 2003, the Partnership sold Patchen Place Apartments to an unrelated
party for approximately $6,995,000. After payment of closing costs, the net
proceeds received by the Partnership were approximately $6,841,000. The sale of
the property resulted in a gain on the sale during the fourth quarter of 2003 of
approximately $4,703,000. In accordance with SFAS No. 144, the assets and
liabilities of the property have been classified as held for sale as of
September 30, 2003 and the operations of the property have been shown as income
(loss) from discontinued operations for the three and nine months ended
September 30, 2003 and 2002. Revenues for the nine month periods ended September
30, 2003 and 2002 were approximately $933,000 and $909,000, respectively.
Excluding the income (loss) from discontinued operations, the Partnership's net
income from continuing operations for the nine months ended September 30, 2003
was approximately $64,000 compared to approximately $151,000 for the nine months
ended September 30, 2002. The Partnership's income from continuing operations
for the three months ended September 30, 2003 was approximately $72,000 compared
to net income from continuing operations of approximately $65,000 for the three
months ended September 30, 2002. The decrease in net income from continuing
operations for the nine months ended September 30, 2003 was due to a decrease in
total revenues partially offset by a decrease in total expenses. The increase in
income from continuing operations for the three months ended September 30, 2003
was due to a decrease in total expenses partially offset by a decrease in total
revenues.
The decrease in total revenues for the three and nine months ended September 30,
2003 was due to a decrease in rental and other income. Rental income decreased
primarily due to decreases in average rental rates at South Point and The Pines
Apartments and a decrease in occupancy at Fairway View II, The Pines, and South
Point Apartments and increased concessions at Northwoods I and II and The Pines
Apartments. These were partially offset by increased rental rates at Northwoods
I and II and Fairway View Apartments and reduced concessions at Southpoint
Apartments and reduced bad debt expense at Northwoods Apartments. Other income
decreased primarily due to decreased lease cancellation fees at Northwoods I and
II Apartments.
The decrease in total expenses for the three and nine months ended September 30,
2003 was due to a decrease in interest and general and administrative expenses
partially offset by an increase in operating expenses. Interest expense
decreased due to principal payments on the mortgages encumbering the
Partnership's properties which decreased the debt balance and the refinancing of
South Point Apartments in June 2003 at a lower interest rate. Operating expenses
increased primarily due to an increase in maintenance expenses. Maintenance
expense increased due to increases in contract labor for cleaning, trash
removal, yard and grounds work and interior painting at Fairway View II, The
Pines, and South Point Apartments.
General and administrative expenses decreased for the three and nine months
ended September 30, 2003 primarily due to a reduction in the cost of services
included in the management reimbursements paid to the Managing General Partner
as allowed under the Partnership Agreement. Also included in general and
administrative expenses at both September 30, 2003 and 2002 are costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit required by the Partnership Agreement.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, the
Managing General Partner may use rental concessions and rental rate reductions
to offset softening market conditions, accordingly, there is no guarantee that
the Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At September 30, 2003, the Partnership had cash and cash equivalents of
approximately $616,000 as compared to approximately $567,000 at September 30,
2002. Cash and cash equivalents increased by approximately $2,000 from the
Partnership's year ended December 31, 2002 due to approximately $1,389,000 of
cash provided by operating activities partially offset by approximately
$1,167,000 of cash used in financing activities and approximately $220,000 of
cash used in investing activities. Cash used in financing activities consisted
of payments of principal made on the mortgages encumbering the Partnership's
properties, repayment of the mortgage notes encumbering Patchen Place and South
Point Apartments, loan costs paid, and distributions to partners partially
offset by proceeds from mortgage notes payable due to the refinancing of Patchen
Place and South Point Apartments. Cash used in investing activities consisted of
property improvements and replacements partially offset by insurance proceeds
received and net withdrawals from escrow accounts maintained by the mortgage
lenders. The Partnership invests its working capital reserves in interest
bearing accounts.
NPI Equity, on behalf of the Partnership and certain affiliated partnerships,
has established a revolving credit facility (the "Partnership Revolver") to be
used to fund deferred maintenance and working capital needs of the Partnership
and certain other affiliated partnerships in the National Property Investors
Partnership Series. The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver will have
a term of 365 days, be unsecured and bear interest at the prime rate plus 2% per
annum. The maturity date of any such borrowing accelerates in the event of: (i)
the removal of NPI Equity as the managing general partner (whether or not for
cause); (ii) the sale or refinancing of a property by the Partnership (whether
or not a borrowing under the Partnership Revolver was made with respect to such
property); or (iii) the liquidation of the Partnership. At September 30, 2003,
the Partnership had no outstanding amounts due under this Partnership Revolver.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. The Managing General
Partner monitors developments in the area of legal and regulatory compliance and
is studying new federal laws, including the Sarbanes-Oxley Act of 2002. The
Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures
with regard to governance, disclosure, audit and other areas. In light of these
changes, the Partnership expects that it will incur higher expenses related to
compliance, including increased legal and audit fees. Capital improvements for
each of the Partnership's properties are detailed below.
Fairway View II
During the nine months ended September 30, 2003, the Partnership completed
approximately $34,000 of capital improvements at Fairway View II Apartments,
consisting primarily of roof upgrades and floor covering and air conditioning
unit replacements. These improvements were funded from operating cash flow. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $35,000 in capital
improvements during the remainder of 2003. The additional capital improvements
will consist primarily of floor covering, air conditioning unit and appliance
replacements and parking lot and balcony upgrades. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as capital reserves and the anticipated cash flow generated by
the property.
The Pines
During the nine months ended September 30, 2003, the Partnership completed
approximately $44,000 of capital improvements at The Pines Apartments,
consisting primarily of water heater, floor covering and appliance replacements.
These improvements were funded from operating cash flow. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $35,000 in capital improvements
during the remainder of 2003. The additional capital improvements will consist
primarily of floor covering, air conditioning unit, and appliance replacements.
Additional capital improvements may be considered and will depend on the
physical condition of the property as well as the anticipated cash flow
generated by the property.
Patchen Place
During the nine months ended September 30, 2003, the Partnership completed
approximately $183,000 of capital improvements at Patchen Place Apartments,
consisting primarily of roof upgrades, floor covering, air conditioning unit,
water heater, and appliance replacements. These improvements were funded from
operating cash flow, insurance proceeds, and replacement reserves. Patchen Place
was sold on October 31, 2003.
Northwoods I and II
During the nine months ended September 30, 2003, the Partnership completed
approximately $90,000 of capital improvements at Northwoods I and II Apartments,
consisting primarily of floor covering, air conditioning unit, and appliance
replacements and structural improvements. These improvements were funded from
operating cash flow. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$33,000 in capital improvements during the remainder of 2003. The additional
capital improvements will consist primarily of floor covering and appliance
replacements. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property.
South Point
During the nine months ended September 30, 2003, the Partnership completed
approximately $75,000 of capital improvements at South Point Apartments,
consisting primarily of floor covering, appliance and air conditioning unit
replacements. These improvements were funded from operating cash flow and
replacement reserves. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$10,000 in capital improvements during the remainder of 2003. The additional
capital improvements will consist primarily of floor covering and air
conditioning unit replacements. Additional capital improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and the anticipated cash flow generated by the property.
The additional capital improvements will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering the Partnership's investment properties of
approximately $24,976,000 has maturity dates ranging from October 1, 2012 to
December 1, 2021. The mortgage indebtedness encumbering Fairway View II, The
Pines, and Northwood I and II Apartments of approximately $15,714,000 that was
refinanced during 2000 and 2001 requires monthly payments until the loans mature
between January 2020 and December 2021 at which time the loans are scheduled to
be fully amortized. The mortgage indebtedness encumbering Patchen Place and
South Point Apartments of $9,262,000, that was refinanced during the nine months
ended September 30, 2003, has balloon payments due in September 2007. Patchen
Place Apartments was sold on October 31, 2003, at which time the mortgage was
repaid in full. The Managing General Partner will attempt to refinance the
indebtedness on South Point Apartments and/or sell the property prior to the
maturity date. If the property cannot be refinanced or sold for a sufficient
amount, the Partnership may risk losing the property through foreclosure.
On May 16, 2003, the Partnership refinanced the mortgage encumbering Patchen
Place Apartments. The refinancing replaced the existing mortgage of $3,000,000
with a new mortgage in the amount of $4,290,000. Total capitalized loan costs
were approximately $98,000 during the nine months ended September 30, 2003. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $7,000 during the nine months ended September 30, 2003, due to the
write off of unamortized loan costs and debt discounts and payment of prepayment
penalties, which are included in loss from discontinued operations.
On June 27, 2003, the Partnership refinanced the mortgage encumbering South
Point Apartments. The refinancing replaced the existing mortgage of $4,600,000
with a new mortgage in the amount of $5,000,000. Total capitalized loan costs
were approximately $115,000 during the nine months ended September 30, 2003. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $7,000 during the nine months ended September 30, 2003, due to the
write off of unamortized loan costs and debt discounts and payment of prepayment
penalties, which are included in interest expense.
Initially the May 16, 2003 refinancing of Patchen Place Apartments and the June
27, 2003 refinancing of South Point Apartments were under an interim credit
facility ("Interim Credit Facility") which also provided for the refinancing of
several other properties. The Interim Credit Facility created separate loans for
each property refinanced thereunder, which loans were not cross-collateralized
or cross-defaulted with each other. During the term of the Interim Credit
Facility, Patchen Place and South Point Apartments were required to make
interest-only payments. The first month's interest rate for Patchen Place
Apartments was 2.78% and for South Point Apartments was 2.60%.
As of July 1 and August 1, 2003, the loans on Patchen Place and South Point
Apartments, respectively, were assumed by a different lender. The credit
facility ("Permanent Credit Facility") with the new lender has a maturity of
five years with an option for the Partnership to elect one five-year extension.
This Permanent Credit Facility also created separate loans for each property
refinanced thereunder, which loans are not cross-collateralized or
cross-defaulted with each other. Each note under this Permanent Credit Facility
is initially a variable rate loan, and after three years the Partnership has the
option of converting the note to a fixed rate loan. The interest rate on the
variable rate loans is 85 basis points over the Fannie Mae discounted
mortgage-backed security index (1.9% per annum at September 30, 2003), and the
rate resets monthly. Each loan automatically renews at the end of each month. In
addition, monthly principal payments are required based on a 30-year
amortization schedule, using the interest rate in effect during the first month
that the properties are on the Permanent Credit Facility. The loans may be
prepaid without penalty.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled
to expire on December 31, 2008. Accordingly, prior to such date the Partnership
will need to either sell its investment properties or extend the term of the
Partnership.
The Partnership distributed the following amounts during the nine months ended
September 30, 2003 and 2002 (in thousands, except per unit data):
Per Limited Per Limited
Nine Months Ended Partnership Nine Months Ended Partnership
September 30, 2003 Unit September 30, 2002 Unit
Operations $ 948 $15.50 $1,430 $23.38
Refinancing 1,347 (1) 22.04 242 (2) 3.97
Total $2,295 $37.54 $1,672 $27.35
(1) Distribution from the refinancing of Patchen Place and South Point
Apartments during May 2003.
(2) Distribution from the remaining proceeds from the refinancing of Fairway
View II Apartments in November 2001 and the refinancing of Northwoods I
and II Apartments in August 2001, respectively.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings and/or property sales. The Partnership's cash available for
distribution is reviewed on a monthly basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures, to permit further distributions to its partners
during the remainder of 2003 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 41,649.67 limited partnership units
(the "Units") in the Partnership representing 68.82% of the outstanding units at
September 30, 2003. A number of these Units were acquired pursuant to tender
offers made by AIMCO or its affiliates. It is possible that AIMCO or its
affiliates will acquire additional Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the Managing General Partner. As a result of its ownership of 68.82% of
the outstanding Units, AIMCO and its affiliates are in a position to influence
all voting decisions with respect to the Partnership. However, DeForest Ventures
II L.P., from whom Insignia Properties LP ("IPLP") an affiliate of the Managing
General Partner and of AIMCO acquired 25,399 Units (41.97% of the units), agreed
for the benefit of non-tendering unit holders, that it would vote its Units: (i)
against any increase in compensation payable to the Managing General Partner or
to its affiliates; and (ii) on all other matters submitted by it or its
affiliates, in proportion to the votes cast by third party unit holders. Except
for the foregoing, no other limitations are imposed on IPLP's, AIMCO's or any
other affiliates right to vote each unit held. Although the Managing General
Partner owes fiduciary duties to the limited partners of the Partnership, the
Managing General Partner also owes fiduciary duties to AIMCO as its sole
stockholder. As a result, the duties of the Managing General Partner, as
managing general partner, to the Partnership and its limited partners may come
into conflict with the duties of the Managing General Partner to AIMCO, as its
sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned and
the Partnership fully reserves all balances outstanding over thirty days. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
ITEM 3. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Managing General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Managing General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint (the "Heller action")
was filed against the same defendants that are named in the Nuanes action,
captioned Heller v. Insignia Financial Group. On or about August 6, 2001,
plaintiffs filed a first amended complaint. The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the Managing General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval, if it is granted, and to
provide partners with the independent appraisals at the time of these tenders.
The proposed settlement also provided for the limitation of the allowable costs
which the Managing General Partner or its affiliates will charge the
Partnerships in connection with this litigation and imposes limits on the class
counsel fees and costs in this litigation. On April 11, 2003, notice was
distributed to limited partners providing the details of the proposed
settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
filed an appeal seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. The Managing General Partner intends
to file a respondent's brief in support of the order approving settlement and
entering judgment thereto.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the Managing General
Partner, was served with a Complaint in the United States District Court,
District of Columbia alleging that AIMCO Properties L.P. willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week. The Complaint is styled as a
Collective Action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the Complaint
alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating
maintenance workers for time that they worked in responding to a call while
"on-call". The Complaint also attempts to certify a subclass for salaried
service directors who are challenging their classification as exempt from the
overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to
the Complaint denying the substantive allegations. Although the outcome of any
litigation is uncertain, in the opinion of the Managing General Partner the
claims will not result in any material liability to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 3.4(a), Agreement of Limited Partnership, incorporated
by reference to Exhibit A to the Prospectus of the Partnership
dated July 5, 1978, included in the Partnership's Registration
Statement on Form S-11 (Reg. No. 2-599991).
Exhibit 3.4(b), Amendments to Agreement of Limited
Partnership, incorporated by reference to the Definitive Proxy
Statement of the Partnership, dated July 2, 1981.
Exhibit 3.4(c), Amendments to Agreement of Limited
Partnership, incorporated by reference to the Definitive Proxy
Statement of the Partnership, dated April 3, 1991.
Exhibit 3.4(d), Amendments to the Agreement of Limited
Partnership, incorporated by reference to the Statement
Furnished in Connection with the Solicitation of Consents of
the Partnership dated August 28, 1992.
Exhibit 31.1, Certification of equivalent of Chief Executive
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2, Certification of equivalent of Chief Financial
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1, Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2003.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NATIONAL PROPERTY INVESTORS 7
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Paul J. McAuliffe
Paul J. McAuliffe
Executive Vice President
and Chief Financial Officer
Date: November 12, 2003
Exhibit 31.1
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of National Property
Investors 7;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 12, 2003
/s/Patrick J. Foye
Patrick J. Foye
Executive Vice President of NPI Equity
Investments, Inc., equivalent of the chief
executive officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of National Property
Investors 7;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 12, 2003
/s/Paul J. McAuliffe
Paul J. McAuliffe
Executive Vice President and Chief Financial
Officer of NPI Equity Investments, Inc.,
equivalent of the chief financial officer of
the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of National Property
Investors 7 (the "Partnership"), for the quarterly period ended September 30,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Patrick J. Foye, as the equivalent of the chief executive
officer of the Partnership, and Paul J. McAuliffe, as the equivalent of the
chief financial officer of the Partnership, each hereby certifies, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: November 12, 2003
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: November 12, 2003
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 10.13
PURCHASE AND SALE CONTRACT
BETWEEN
NATIONAL PROPERTY INVESTORS 7,
a California limited partnership
AS SELLER
AND
VERMEIL, LLC,
a Kentucky limited liability company
AS PURCHASER
PATCHEN PLACE
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT (this "Contract") is entered into as of
the 31st day of July, 2003 (the "Effective Date") by and between NATIONAL
PROPERTY INVESTORS 7, a California limited partnership, having an address at
4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237 ("Seller")
and VERMEIL, LLC, a Kentucky limited liability company, having a principal
address at 501 S. Second Street, Suite 200, Louisville, Kentucky 40202
("Purchaser").
NOW, THEREFORE, in consideration of mutual covenants set forth herein,
Seller and Purchaser hereby agree as follows:
RECITALS
A. Seller owns the real estate located in Fayette County, Kentucky, as
more particularly described in Exhibit A attached hereto and made a part hereof,
and the improvements thereon, commonly known as PATCHEN PLACE.
B. Purchaser desires to purchase, and Seller desires to sell, such land,
improvements and certain associated property, on the terms and conditions set
forth below.
ARTICLE 1
DEFINED TERMS
1.1 Unless otherwise defined herein, any term with its initial letter
capitalized in this Contract shall have the meaning set forth in this ARTICLE 1.
1.1.1 "ADA" shall have the meaning set forth in Section 13.22. 1.1.2
1"Additional Deposit" shall have the meaning set forth in Section 2.2.2. 1.1.3
"AIMCO" shall have the meaning set forth in Section 14.2. 1.1.4 "AIMCO Marks"
means all words, phrases, slogans, materials, software, proprietary systems,
trade secrets, proprietary information and lists, and other intellectual
property owned or used by Seller, the Property Manager, or AIMCO in the
marketing, operation or use of 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).
1.1.5 "Broker" shall have the meaning set forth in Section 9.1. 1.1.6 "Business
Day" means any day other than a Saturday or Sunday or Federal holiday or legal
holiday in the States of Colorado, Texas, or Kentucky, or any day on which
Lender is not open for business.
1.1.7 "Closing" means the consummation of the purchase and sale and related
transactions contemplated by this Contract in accordance with the terms and
conditions of this Contract.
1.1.8 "Closing Date" means the date on which date the Closing of the conveyance
of the Property is required to be held pursuant to Section 5.1. 1.1.9 "Code"
shall have the meaning set forth in Section 2.3.6. 1.1.10 "Consent Contract"
shall have the meaning set forth in Section 14.2.
1.1.11 "Consultants" shall have the meaning set forth in Section 3.1. 1.1.12
"Damage Notice" shall have the meaning set forth in Section 11.1. 1.1.13 "Deed"
shall have the meaning set forth in Section 5.2.1. 1.1.14 "Deed of Trust" shall
have the meaning set forth in Section 4.5. 1.1.15 "Deposit" means, to the extent
actually deposited by Purchaser with Escrow Agent, the Initial Deposit and the
Additional Deposit. 1.1.16 "Escrow Agent" shall have the meaning set forth in
Section 2.2.1. 1.1.17 "Excluded Permits" means those Permits which, under
applicable law, are nontransferable and such other Permits, if any, as may be
designated as Excluded Permits on Schedule 1.1.17.
1.1.18 "Existing Survey" shall have the meaning set forth in Section 4.2. 1.1.19
"Feasibility Period" shall have the meaning set forth in Section 3.1.
1.1.20 "Financing Contingency Period" shall have the meaning set forth in
Section 3.7. 1.1.21 "Fixtures and Tangible Personal Property" means all
fixtures, furniture, furnishings, fittings, equipment, machinery, apparatus,
appliances and other articles of tangible personal property located on the Land
or in the Improvements as of the Effective Date and used or usable in connection
with the occupation or operation of all or any part of the Property, but only to
the extent transferable. The term "Fixtures and Tangible Personal Property" does
not include (a) equipment leased by Seller and the interest of Seller in any
equipment provided to the Property for use, but not owned or leased by Seller,
or (b) property owned or leased by any Tenant or guest, employee or other person
furnishing goods or services to the Property, or (c) property and equipment
owned by Seller, which in the ordinary course of business of the Property is not
used exclusively for the business, operation or management of the Property, or
(d) the property and equipment, if any, expressly identified in Schedule 1.1.21.
1.1.22 "Final Response Deadline" shall have the meaning set forth in Section
4.3. 1.1.23 "General Assignment" shall have the meaning set forth in Section
5.2.3.
1.1.24 "Good Funds" shall have the meaning set forth in Section 2.2.1.
1.1.25 "Improvements" means all buildings and improvements located on
the Land taken "as is."
1.1.26 "Initial Deposit" shall have the meaning set forth in Section 2.2.1.
1.1.27 "Land" means all of those certain tracts of land located in the State of
Kentucky described on Exhibit A, and all rights, privileges and appurtenances
pertaining thereto.
1.1.28 "Lease(s)" means the interest of Seller in and to all leases, subleases
and other occupancy contracts, whether or not of record, which provide for the
use or occupancy of space or facilities on or relating to the Property and which
are in force as of the Closing Date for the applicable Property.
1.1.29 "Leases Assignment" shall have the meaning set forth in Section
5.2.4.
1.1.30 "Lender" means Fannie Mae.
1.1.31 "Lender Fees" shall mean all fees and expenses (including, without
limitation, all prepayment penalties and pay-off fees) imposed or charged by
Lender or its counsel in connection with the Loan Payoff, and, to the extent
that the Loan Payoff occurs on a date other than as permitted under the Note and
Deed of Trust, any amounts of interest charged by Lender for the period from the
Closing Date to the permitted prepayment date, the amount of the Lender Fees to
be determined as of the Closing Date. 1.1.32 "Loan" means the indebtedness owing
to Lender evidenced by the Note.
1.1.33 "Loan Payoff" shall have the meaning set forth in Section 5.4.7. 1.1.34
"Losses" shall have the meaning set forth in Section 3.4.1. 1.1.35 "Materials"
shall have the meaning set forth in Section 3.5. 1.1.36 "Miscellaneous Property
Assets" means all contract rights, leases, concessions, warranties, plans,
drawings and other items of intangible personal property relating to the
ownership or operation of the Property and owned by Seller, excluding, however,
(a) receivables, (b) Property Contracts, (c) Leases, (d) Permits, (e) cash or
other funds, whether in petty cash or house "banks," or on deposit in bank
accounts or in transit for deposit, (f) refunds, rebates or other claims, or any
interest thereon, for periods or events occurring prior to the Closing Date, (g)
utility and similar deposits, (h) insurance or other prepaid items, (i) Seller's
proprietary books and records, or (j) any right, title or interest in or to the
AIMCO Marks. The term "Miscellaneous Property Assets" also shall include all of
Seller's rights, if any, in and to the name "PATCHEN PLACE" as it relates solely
to use in connection with the Property (and not with respect to any other
property owned or managed by Seller, Property Manager, AIMCO, or their
respective affiliates).
1.1.37 "Note" means that certain Multifamily Note in the original principal
amount of $4,290,000.00, dated May 16, 2003, executed by Seller and payable to
the order of Lender.
1.1.38 "Objection Deadline" shall have the meaning set forth in Section 4.3.
1.1.39 "Objection Notice" shall have the meaning set forth in Section 4.3.
1.1.40 "Objections" shall have the meaning set forth in Section 4.3. 1.1.41
"Permits" means all licenses and permits granted by any governmental authority
having jurisdiction over the Property owned by Seller and required in order to
own and operate the Property.
1.1.42 "Permitted Exceptions" shall have the meaning set forth in Section 4.4.
1.1.43 "Property" means (a) the Land and Improvements and all rights of Seller,
if any, in and to all of the easements, rights, privileges, and appurtenances
belonging or in any way appertaining to the Land and Improvements, (b) the
right, if any and only to the extent transferable, of Seller in the Property
Contracts, Leases, Permits (other than Excluded Permits), and the Fixtures and
Tangible Personal Property, and (c) the Miscellaneous Property Assets owned by
Seller which are located on the Property and used in its operation.
1.1.44 "Property Contracts" means all contracts, agreements, equipment leases,
purchase orders, maintenance, service, or utility contracts and similar
contracts, excluding Leases, which relate to the ownership, maintenance,
construction or repair and/or operation of the Property, but only to the extent
the assignment of such contract to Purchaser is permitted pursuant to the
express terms of such contract, and not including (a) any national contracts
entered into by Seller, Property Manager, or AIMCO with respect to the Property
(i) which terminate automatically upon transfer of the Property by Seller, or
(ii) which Seller, in Seller's sole discretion, elects to terminate with respect
to the Property effective as of the Closing Date, or (b) any property management
contract for the Property. 1.1.45 "Property Contracts Notice" shall have the
meaning set forth in Section 3.6.
1.1.46 "Property Manager" means the current property manager of the
Property.
1.1.47 "Proration Schedule" shall have the meaning set forth in Section
5.4.1.
1.1.48 "Purchase Price" means the consideration to be paid by Purchaser
to Seller for the purchase of the Property pursuant to Section 2.2.
1.1.49 "Regional Property Manager" shall have the meaning set forth in
Section 6.4.
1.1.50 "Response Deadline" shall have the meaning set forth in Section
4.3.
1.1.51 "Response Notice" shall have the meaning set forth in Section 4.3.
1.1.52 "Seller's Indemnified Parties" shall have the meaning set forth
in Section 3.4.1.
1.1.53 "Seller's Representations" shall have the meaning set forth in
Section 6.1.
1.1.54 "Survey" shall have the meaning ascribed thereto in Section 4.2.
1.1.55 "Survival Period" shall have the meaning set forth in Section 6.3.
1.1.56 "Survival Provisions" shall have the meaning set forth in Section
13.28.
1.1.57 "Tenant" means any person or entity entitled to occupy any portion of the
Property under a Lease. 1.1.58 "Tenant Deposits" means all security deposits,
prepaid rentals, cleaning fees and other refundable deposits and fees collected
from Tenants, plus any interest accrued thereon, paid by Tenants to Seller
pursuant to the Leases. Tenant Deposits shall not include any non-refundable
deposits or fees paid by Tenants to Seller, either pursuant to the Leases or
otherwise. 1.1.59 "Tenant Security Deposit Balance" shall have the meaning set
forth in Section 5.4.6.2.
1.1.60 "Terminated Contracts" shall have the meaning set forth in Section 3.6.
1.1.61 "Testing" shall have the meaning set forth in Section 14.2. 1.1.62
"Third-Party Reports" means any reports, studies or other information prepared
or compiled for Purchaser by any Consultant or other third-party in connection
with Purchaser's investigation of the Property. 1.1.63 "Title Commitment" shall
have the meaning ascribed thereto in Section 4.1.
1.1.64 "Title Documents" shall have the meaning set forth in Section 4.1.
1.1.65 "Title Insurer" shall have the meaning set forth in Section 2.2.1.
1.1.66 "Title Policy" shall have the meaning set forth in Section 4.1.
1.1.67 "Uncollected Rents" shall have the meaning set forth in Section
5.4.6.1.
1.1.68 "Vendor Terminations" shall have the meaning set forth in Section
5.2.5.
ARTICLE 2
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT 2.1 Purchase and
Sale. Seller agrees to sell and convey the Property to Purchaser and Purchaser
agrees to purchase the Property from Seller, all in accordance with the terms
and conditions set forth in this Contract. 2.2 Purchase Price and Deposit. The
total purchase price ("Purchase Price") for the Property shall be an amount
equal to Seven Million and No/100 ($7,000,000.00) less the Lender Fees which
amount shall be paid by Purchaser, as follows:
2.2.1 On the Effective Date, Purchaser shall deliver to Fidelity National Title
Insurance Company, c/o Lolly Avant, Vice President, 3D International Building,
1900 West Loop South, Suite 650, Houston, Texas 77027, 800-879-1677 ("Escrow
Agent" or "Title Insurer") an initial deposit (the "Initial Deposit") of
$70,000.00 by wire transfer of immediately available funds ("Good Funds"). The
Initial Deposit shall be held and disbursed in accordance with the escrow
provisions set forth in Section 2.3. 2.2.2 On the day that the Feasibility
Period expires, Purchaser shall deliver to Escrow Agent an additional deposit
(the "Additional Deposit") of $70,000.00 by wire transfer of Good Funds. The
Additional Deposit shall be held and disbursed in accordance with the escrow
provisions set forth in Section 2.3.
2.2.3 Intentionally Omitted.
2.2.4 The balance of the Purchase Price for the Property shall be paid to and
received by Escrow Agent by wire transfer of Good Funds no later than 11:00 a.m.
(in the time zone in which Escrow Agent is located) on the Closing Date (or such
earlier time as required by Seller's lender).
2.3 Escrow Provisions Regarding Deposit.
2.3.1 Escrow Agent shall hold the Deposit and make delivery of the Deposit to
the party entitled thereto under the terms of this Contract. Escrow Agent shall
invest the Deposit in such short-term, high-grade securities, interest-bearing
bank accounts, money market funds or accounts, bank certificates of deposit or
bank repurchase contracts as Escrow Agent, in its discretion, deems suitable,
and all interest and income thereon shall become part of the Deposit and shall
be remitted to the party entitled to the Deposit pursuant to this Contract.
2.3.2 Escrow Agent shall hold the Deposit until the earlier occurrence of (i)
the Closing Date, at which time the Deposit shall be applied against the
Purchase Price, or (ii) the date on which Escrow Agent shall be authorized to
disburse the Deposit as set forth in Section 2.3.3. The tax identification
numbers of the parties shall be furnished to Escrow Agent upon request. 2.3.3 If
the Deposit has not been released earlier in accordance with Section 2.3.2, and
either party makes a written demand upon Escrow Agent for payment of the
Deposit, Escrow Agent shall give written notice to the other party of such
demand. If Escrow Agent does not receive a written objection from the other
party to the proposed payment within 5 Business Days after the giving of such
notice, Escrow Agent is hereby authorized to make such payment (subject to
Purchaser's obligation under Section 3.5.2 to return all Third-Party Reports and
information and Materials provided to Purchaser as a pre-condition to the return
of the Deposit to Purchaser). If Escrow Agent does receive such written
objection within such 5-Business Day period, Escrow Agent shall continue to hold
such amount until otherwise directed by written instructions from the parties to
this Contract or a final judgment or arbitrator's decision. However, Escrow
Agent shall have the right at any time to deposit the Deposit and interest
thereon, if any, with a court of competent jurisdiction in the state in which
the Property is located. Escrow Agent shall give written notice of such deposit
to Seller and Purchaser. Upon such deposit, Escrow Agent shall be relieved and
discharged of all further obligations and responsibilities hereunder.
2.3.4 The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, that Escrow Agent shall
not be deemed to be the agent of either of the parties for any act or omission
on its part unless taken or suffered in bad faith in willful disregard of this
Contract or involving gross negligence. Seller and Purchaser jointly and
severally shall indemnify and hold Escrow Agent harmless from and against all
costs, claims and expenses, including reasonable attorney's fees, incurred in
connection with the performance of Escrow Agent's duties hereunder, except with
respect to actions or omissions taken or suffered by Escrow Agent in bad faith,
in willful disregard of this Contract or involving gross negligence on the part
of the Escrow Agent. 2.3.5 The parties shall deliver to Escrow Agent an executed
copy of this Contract, which shall constitute the sole instructions to Escrow
Agent. Escrow Agent shall execute the signature page for Escrow Agent attached
hereto with respect to the provisions of this Section 2.3; provided, however,
that (a) Escrow Agent's signature hereon shall not be a prerequisite to the
binding nature of this Contract on Purchaser and Seller, and the same shall
become fully effective upon execution by Purchaser and Seller, and (b) the
signature of Escrow Agent will not be necessary to amend any provision of this
Contract other than this Section 2.3.
2.3.6 Escrow Agent, as the person responsible for closing the transaction within
the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), shall file all necessary information, reports, returns,
and statements regarding the transaction required by the Code including, but not
limited to, the tax reports required pursuant to Section 6045 of the Code.
Further, Escrow Agent agrees to indemnify and hold Purchaser, Seller, and their
respective attorneys and brokers harmless from and against any Losses resulting
from Escrow Agent's failure to file the reports Escrow Agent is required to file
pursuant to this section. 2.3.7 The provisions of this Section 2.3 shall survive
the termination of this Contract, and if not so terminated, the Closing and
delivery of the Deed to Purchaser.
ARTICLE 3
FEASIBILITY PERIOD AND FINANCING CONTINGENCY PERIOD 3.1 Feasibility
Period. Subject to the terms of Section 3.3 and 3.4 and the right of Tenants
under the Leases, from the Effective Date to and including the date which is 30
days after the Effective Date (the "Feasibility Period"), Purchaser, and its
agents, contractors, engineers, surveyors, attorneys, and employees
(collectively, "Consultants") shall have the right from time to time to enter
onto the Property: 3.1.1 To conduct and make any and all customary studies,
tests, examinations, inquiries, and inspections, or investigations
(collectively, the "Inspections") of or concerning the Property (including,
without limitation, engineering and feasibility studies, evaluation of drainage
and flood plain, soil tests for bearing capacity and percolation and surveys,
including topographical surveys); 3.1.2 To confirm any and all matters which
Purchaser may reasonably desire to confirm with respect to the Property; 3.1.3
To ascertain and confirm the suitability of the Property for Purchaser's
intended use of the Property; and 3.1.4 To review the Materials at Purchaser's
sole cost and expense. 3.2 Expiration of Feasibility Period. If the results of
any of the matters referred to in Section 3.1 appear unsatisfactory to Purchaser
for any reason or if Purchaser elects not to proceed with the transaction
contemplated by this Contract for any other reason, or for no reason whatsoever,
in Purchaser's sole and absolute discretion, then Purchaser shall have the right
to terminate this Contract by giving written notice to that effect to Seller and
Escrow Agent on or before 5:00 p.m. (in the time zone in which the Escrow Agent
is located) on the date of expiration of the Feasibility Period. If Purchaser
exercises such right to terminate, this Contract shall terminate and be of no
further force and effect, subject to and except for Purchaser's liability
pursuant to Section 3.3 and any other provision of this Contract which survives
such termination, and Escrow Agent shall forthwith return the Initial Deposit to
Purchaser (subject to Purchaser's obligation under Section 3.5.2 to return all
Third-Party Reports and information and Materials provided to Purchaser as a
pre-condition to the return of the Initial Deposit). If Purchaser fails to
provide Seller with written notice of termination prior to the expiration of the
Feasibility Period in strict accordance with the notice provisions of this
Contract, Purchaser's right to terminate under this Section 3.2 shall be
permanently waived and this Contract shall remain in full force and effect, the
Deposit (including both the Initial Deposit and, when delivered in accordance
with Section 2.2.2, the Additional Deposit) shall be non-refundable, and
Purchaser's obligation to purchase the Property shall be non-contingent and
unconditional except only for satisfaction of the conditions expressly stated in
Section 8.1. 3.3 Conduct of Investigation. Purchaser shall not permit any
mechanic's 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 conducted by or
for Purchaser. Purchaser shall give notice to Seller a reasonable time prior to
entry onto the Property and shall permit Seller to have a representative present
during all Inspections conducted at the Property. Purchaser shall conduct and
shall cause its Consultants to conduct any and all Inspections in such a manner
as to avoid any disruption or disturbance of Tenants' occupancy of the Property.
All information made available by Seller to Purchaser in accordance with this
Contract or obtained by Purchaser in the course of its Inspections shall be
treated as confidential information by Purchaser, and, prior to the purchase of
the Property by Purchaser, Purchaser shall use its best efforts to prevent its
Consultants from divulging such information to any unrelated third parties
except as reasonably necessary to third parties engaged by Purchaser for the
limited purpose of analyzing and investigating such information for the purpose
of consummating the transaction contemplated by this Contract. The provisions of
this Section 3.3 shall survive the termination of this Contract, and if not so
terminated shall survive (except for the confidentiality provisions of this
Section 3.3) the Closing and delivery of the Deed to Purchaser. 3.4 Purchaser
Indemnification. 3.4.1 Purchaser shall indemnify, hold harmless and, if
requested by Seller (in Seller's sole discretion), defend (with counsel approved
by Seller) Seller, together with Seller's affiliates, parent and subsidiary
entities, successors, assigns, partners, managers, members, employees, officers,
directors, trustees, shareholders, counsel, representatives, agents, Property
Manager, Regional Property Manager, and AIMCO (collectively, including Seller,
"Seller's Indemnified Parties"), from and against any and all damages,
mechanics' liens, liabilities, losses, demands, actions, causes of action,
claims, costs and expenses (including reasonable attorneys' fees, including the
cost of in-house counsel and appeals) (collectively, "Losses") arising from or
related to Purchaser's or its Consultant's entry onto the Property, and any
Inspections or other matters performed by Purchaser with respect to the Property
during the Feasibility Period or otherwise. 3.4.2 Notwithstanding anything in
this Contract to the contrary, Seller shall have the right, without limitation,
to disapprove any and all entries, surveys, tests (including, without
limitation, a Phase II environmental study of the Property), investigations and
other matters that in Seller's reasonable judgment could result in any injury to
the Property or breach of any contract, or expose Seller to any Losses or
violation of applicable law, or otherwise adversely affect the Property or
Seller's interest therein. Purchaser shall use best efforts to minimize
disruption to Tenants in connection with Purchaser's or its Consultants'
activities pursuant to this Section. No consent by the Seller to any such
activity shall be deemed to constitute a waiver by Seller or assumption of
liability or risk by Seller. Purchaser hereby agrees to restore, at Purchaser's
sole cost and expense, the Property to the same condition existing immediately
prior to Purchaser's exercise of its rights pursuant to this Article 3.
Purchaser shall maintain (a) casualty insurance and comprehensive public
liability insurance with coverages of not less than $1,000,000.00 for injury or
death to one or more persons and $1,000,000.00 with respect to the property
damage, by water or otherwise, and (b) workmen's compensation insurance if
required by state law (and if none is required by state law, it is understood
that Purchaser shall assume all liability for its employees and Seller shall be
indemnified from liability for same). Additionally, Purchaser shall cause its
third party consultants to maintain (i) casualty insurance and comprehensive
public liability insurance with coverages of not less 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 $500,000.00 with respect to property damage, by water or
otherwise, and (ii) worker's compensation insurance for all of their respective
employees in accordance with the law of the state in which the Property is
located. Purchaser shall deliver proof of the insurance coverage required
pursuant to this Section 3.4.2 to Seller (in the form of a certificate of
insurance) prior to the earlier to occur of (x) Purchaser's or Purchaser's
Consultants' entry onto the Property, or (y) the expiration of 5 days after the
Effective Date. The provisions of this Section 3.4 shall survive the termination
of this Contract, and if not so terminated, the Closing and delivery of the Deed
to Purchaser. 3.5 Property Materials. 3.5.1 Within 10 days after the Effective
Date, and to the extent the same exist and are in Seller's possession or
reasonable control (subject to Section 3.5.2), Seller agrees to make the
documents set forth on Schedule 3.5 (the "Materials") available at the Property
for review and copying by Purchaser at Purchaser's sole cost and expense. In the
alternative, at Seller's option and within the foregoing 10-day period, Seller
may deliver some or all of the Materials to Purchaser, or make the same
available to Purchaser on a secure web site (Purchaser agrees that any item to
be delivered by Seller under this Contract shall be deemed delivered to the
extent available to Purchaser on such secured web site). To the extent that
Purchaser determines that any of the Materials have not been made available or
delivered to Purchaser pursuant to this Section 3.5.1, Purchaser shall notify
Seller and Seller shall use commercially reasonable efforts to deliver the same
to Purchaser within 5 Business Days after such notification is received by
Seller; provided, however, that under no circumstances will the Feasibility
Period be extended and Purchaser's sole remedy will be to terminate this
Contract pursuant to Section 3.2. 3.5.2 In providing such information and
Materials to Purchaser, other than Seller's Representations, Seller makes no
representation or warranty, express, written, oral, statutory, or implied, and
all such representations and warranties are hereby expressly excluded and
disclaimed. Any information and Materials provided by Seller to Purchaser under
the terms of this Contract is for informational purposes only and, together with
all Third-Party Reports, shall be returned by Purchaser to Seller as a condition
to return of the Deposit to Purchaser (if Purchaser is otherwise entitled to
such Deposit pursuant to the terms of this Contract) if this Contract is
terminated for any reason. Purchaser shall not in any way be entitled to rely
upon the accuracy of such information and Materials. Purchaser recognizes and
agrees that the Materials and other documents and information delivered or made
available by Seller pursuant to this Contract may not be complete or constitute
all of such documents which are in Seller's possession or control, but are those
that are readily available to Seller after reasonable inquiry to ascertain their
availability. Purchaser understands that, although Seller will use commercially
reasonable efforts to locate and make available the Materials and other
documents required to be delivered or made available by Seller pursuant to this
Contract, Purchaser will not rely on such Materials or other documents as being
a complete and accurate source of information with respect to the Property, and
will instead in all instances rely exclusively on its own Inspections and
Consultants with respect to all matters which it deems relevant to its decision
to acquire, own and operate the Property. 3.5.3 The provisions of this Section
3.5 shall survive the Closing and delivery of the Deed to Purchaser. 3.6
Property Contracts. On or before the expiration of the Feasibility Period,
Purchaser may deliver written notice to Seller (the "Property Contracts Notice")
specifying any Property Contracts with respect to which Purchaser desires to
have Seller deliver notices of termination at the Closing (the "Terminated
Contracts"); provided that (a) the effective date of such termination after
Closing shall be subject to the express terms of such Terminated Contracts, (b)
if any such Property Contract cannot by its terms be terminated, it shall be
assumed by Purchaser and not be a Terminated Contract, and (c) to the extent
that any such Terminated Contract requires payment of a penalty or premium for
cancellation, Purchaser shall be solely responsible for the payment of any such
cancellation fees or penalties. If Purchaser fails to deliver the Property
Contracts Notice on or before the expiration of the Feasibility Period, there
shall be no Terminated Contracts and Purchaser shall assume all Property
Contracts at the Closing. 3.7 Financing Contingency Period. 3.7.1 Purchaser
shall have a period of 45 days following the Effective Date (the "Financing
Contingency Period") to obtain a commitment for financing the acquisition of the
Property, the principal amount of which financing shall be limited to the
following parameters: (a) a loan-to-value ratio not less than 80% of the value
of the property, (b) bear interest at not more than 6.0% per annum, (c) a term
of 10 years, or such term as is customary for securitized loan transactions, and
(d) an amortization of not less than 30 years. In the event that, after using
commercially reasonable efforts, Purchaser is unable to obtain such commitment
for the acquisition of the Property prior to the end of the Financing
Contingency Period, Purchaser may, at its option, by the delivery of written
notice by Purchaser to Seller and Escrow Agent not later than 5:00 p.m., Texas
time, on the last day of the Financing Contingency Period, terminate this
Contract, whereupon this Contract shall terminate and the Deposit shall be
returned to Purchaser by Escrow Agent and this Contract shall automatically be
of no further force and effect and neither party shall have any further rights
or obligations hereunder, except as provided in Section 5.3. 3.7.2 Following the
expiration of the Financing Contingency Period, Purchaser assumes full
responsibility to expeditiously and diligently initiate and pursue all steps
necessary to obtain the funds required for settlement, and Purchaser's
acquisition of such funds shall not be a contingency or condition to the
Closing.
ARTICLE 4
TITLE
4.1 Title Documents. Within 10 calendar days after the Effective Date, Seller
shall cause to be delivered to Purchaser a standard form commitment for title
insurance ("Title Commitment") for the Property in an amount equal to the
Purchase Price from Title Insurer for an owner's title insurance policy (the
"Title Policy") on the most recent standard American Land Title Association
form, together with copies of all instruments identified as exceptions therein
(together with the Title Commitment, referred to herein as the "Title
Documents"). Seller shall be responsible only for payment of the basic premium
for the Title Policy. Purchaser shall be solely responsible for payment of all
other costs relating to procurement of the Title Commitment, the Title Policy,
and any requested endorsements. 4.2 Survey. Within 3 Business Days after the
Effective Date, Seller shall deliver to Purchaser or make available at the
Property any existing survey of the Property (the "Existing Survey") which to
Seller's knowledge is in Seller's possession or reasonable control (subject to
Section 3.5.2); provided, however, in the event that such Existing Survey was
prepared in connection with the sale of the Property, then Seller shall deliver
the same to Purchaser and Purchaser shall pay the costs thereof. Purchaser
acknowledges and agrees that delivery of the Existing Survey is subject to
Section 3.5.2. To the extent that Purchaser desires that a new survey of the
Property be prepared (or that the Existing Survey be updated), Purchaser shall
so advise Seller in writing no later than 5 Business Days after the Effective
Date, in which event Purchaser shall order such new or updated survey (together
with the Existing Survey, referred to herein as the "Survey") from the surveyor
who prepared the Existing Survey (or from such other surveyor as Purchaser
determines in its reasonable discretion). Purchaser shall be solely responsible
for the cost and expense of the preparation of any new survey or any update to
the Exiting Survey. 4.3 Objection and Response Process. On or before the date
which is 15 days after the Effective Date (the "Objection Deadline"), Purchaser
shall give written notice (the "Objection Notice") to the attorneys for Seller
of any matter set forth in the Title Documents or the Survey to which Purchaser
objects (the "Objections"). If Purchaser fails to tender an Objection Notice on
or before the Objection Deadline, Purchaser shall be deemed to have approved and
irrevocably waived any objections to any matters covered by the Title Documents
and the Survey. On or before 20 days after the Effective Date (the "Response
Deadline"), Seller may, in Seller's sole discretion, give Purchaser notice (the
"Response Notice") of those Objections which Seller is willing to cure, if any.
Seller shall be entitled to reasonable adjournments of the Closing Date to cure
the Objections. If Seller fails to deliver a Response Notice by the Response
Deadline, Seller shall be deemed to have elected not to cure or otherwise
resolve any matter set forth in the Objection Notice. If Purchaser is
dissatisfied with the Response Notice, Purchaser may, as its exclusive remedy,
elect by written notice given to Seller on or before 25 days after the Effective
Date (the "Final Response Deadline") either (a) to accept the Title Documents
and Survey with resolution, if any, of the Objections as set forth in the
Response Notice (or if no Response Notice is tendered, without any resolution of
the Objections) and without any reduction or abatement of the Purchase Price, or
(b) to terminate this Contract, in which event the Initial Deposit shall be
returned to Purchaser (subject to Purchaser's obligation under Section 3.5.2 to
return all Third-Party Reports and information and Materials provided to
Purchaser as a pre-condition to the return of the Initial Deposit). If Purchaser
fails to give notice to terminate this Contract on or before the Final Response
Deadline, Purchaser shall be deemed to have elected to approve and irrevocably
waived any objections to any matters covered by the Title Documents or the
Survey, subject only to resolution, if any, of the Objections as set forth in
the Response Notice (or if no Response Notice is tendered, without any
resolution of the Objections).
4.4 Permitted Exceptions. The Deed delivered pursuant to this Contract shall be
subject to the following, all of which shall be deemed "Permitted Exceptions":
4.4.1 All matters shown in the Title Documents and the Survey, other than (a)
those Objections, if any, which Seller has agreed to cure pursuant to the
Response Notice under Section 4.3, (b) mechanics' liens and taxes due and
payable with respect to the period preceding Closing, (c) the standard exception
regarding the rights of parties in possession which shall be limited to those
parties in possession pursuant to the Leases, and (d) the standard exception
pertaining to taxes which shall be limited to taxes and assessments payable in
the year in which the Closing occurs and subsequent taxes and assessments; 4.4.2
All Leases; 4.4.3 Intentionally Omitted; 4.4.4 Applicable zoning and
governmental regulations and ordinances; 4.4.5 Any defects in or objections to
title to the Property, or title exceptions or encumbrances, arising by, through
or under Purchaser; and 4.4.6 The terms and conditions of this Contract. 4.5
Existing Deed of Trust. It is understood and agreed that, whether or not
Purchaser gives an Objection Notice with respect thereto, any deeds of trust
and/or mortgages (including any and all mortgages which secure the Note) against
the Property (whether one or more, the "Deed of Trust") shall not be deemed
Permitted Exceptions, whether Purchaser gives written notice of such or not, and
shall be paid off, satisfied, discharged and/or cured by Seller at Closing,
provided that the Lender Fees due in connection with the Loan Payoff shall be
paid by Purchaser.
ARTICLE 5
CLOSING
5.1 Closing Date. The Closing shall occur 30 days following the expiration of
the Financing Contingency Period (the "Closing Date") through an escrow with
Escrow Agent, whereby the Seller, Purchaser and their attorneys need not be
physically present at the Closing and may deliver documents by overnight air
courier or other means. Notwithstanding the foregoing to the contrary, Seller
shall have the option, 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 preceding sentence, or to such other date
(either in the same month or the next) as Seller reasonably determines is
desirable in connection with the Loan Payoff. Further, the Closing Date may be
extended without penalty at the option of Seller to a date not later than 30
days following the Closing Date specified in the first sentence of this
paragraph above (or, if applicable, as extended by Seller pursuant to the second
sentence of this paragraph) to satisfy a condition to be satisfied by Seller, or
such later date as is mutually acceptable to Seller and Purchaser.
5.2 Seller Closing Deliveries. No later than 1 Business Day prior to the Closing
Date, Seller shall deliver to Escrow Agent, each of the following items:
5.2.1 Special Warranty Deed (the "Deed") in the form attached as Exhibit B to
Purchaser, subject to the Permitted Exceptions. 5.2.2 A Bill of Sale in the form
attached as Exhibit C. 5.2.3 A General Assignment in the form attached as
Exhibit D (the "General Assignment").
5.2.4 An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the "Leases Assignment"). 5.2.5 A letter prepared by Purchaser and
countersigned by Seller to each of the vendors under the Terminated Contracts
informing them of the termination of such Terminated Contract as of the Closing
Date (subject to any delay in the effectiveness of such termination pursuant to
the express terms of each applicable Terminated Contract) (the "Vendor
Terminations"). 5.2.6 A closing statement executed by Seller.
5.2.7 A title affidavit or at Seller's option an indemnity, as applicable, in
the customary form reasonably acceptable to Seller to enable Title Insurer to
delete the standard exceptions to the title insurance policy set forth in this
Contract (other than matters constituting any Permitted Exceptions and matters
which are to be completed or performed post-Closing) to be issued pursuant to
the Title Commitment; provided that such affidavit does not subject Seller to
any greater liability, or impose any additional obligations, other than as set
forth in this Contract.
5.2.8 A certification of Seller's non-foreign status pursuant to Section 1445 of
the Internal Revenue Code of 1986, as amended. 5.2.9 Resolutions, certificates
of good standing, and such other organizational documents as Title Insurer shall
reasonably require evidencing Seller's authority to consummate this transaction.
5.3 Purchaser Closing Deliveries. No later than 1 Business Day prior to the
Closing Date (except for the balance of the Purchase Price which is to be
delivered at the time specified in Section 2.2.4), Purchaser shall deliver to
the Escrow Agent (for disbursement to Seller upon the Closing) the following
items with respect to the Property being conveyed at such Closing: 5.3.1 The
full Purchase Price (with credit for the Deposit), plus or minus the adjustments
or prorations required by this Contract. 5.3.2 A title affidavit or at
Purchaser's option an indemnity pertaining to Purchaser's activity on the
Property prior to Closing, in the customary form reasonably acceptable to
Purchaser to enable Title Insurer to delete the standard exceptions to the title
insurance policy set forth in this Contract (other than matters constituting any
Permitted Exceptions and matters which are to be completed or performed
post-Closing) to be issued pursuant to the Title Commitment; provided that such
affidavit does not subject Purchaser to any greater liability, or impose any
additional obligations, other than as set forth in this Contract.
5.3.3 Any declaration or other statement which may be required to be submitted
to the local assessor with respect to the terms of the sale of the Property.
5.3.4 A closing statement executed by Purchaser.
5.3.5 A countersigned counterpart of the General Assignment.
5.3.6 A countersigned counterpart of the Leases Assignment.
5.3.7 Notification letters to all Tenants prepared and executed by Purchaser
in the form attached hereto as Exhibit F.
5.3.8 The Vendor Terminations.
5.3.9 Any cancellation fees or penalties due to any vendor under any Terminated
Contract as a result of the termination thereof. 5.3.10 Resolutions,
certificates of good standing, and such other organizational documents as Title
Insurer shall reasonably require evidencing Purchaser's authority to consummate
this transaction.
5.3.11 Intentionally Omitted.
5.3.12 The Lender Fees (subject to reduction from the Purchase Price in
accordance with Section 2.2).
5.4 Closing Prorations and Adjustments.
5.4.1 General. All normal and customarily proratable items, including, without
limitation, collected rents, operating expenses, personal property taxes, other
operating expenses and fees, shall be prorated as of the Closing Date, Seller
being charged or credited, as appropriate, for all of same attributable to the
period up to the Closing Date (and credited for any amounts paid by Seller
attributable to the period on or after the Closing Date, if assumed by
Purchaser) and Purchaser being responsible for, and credited or charged, as the
case may be, for all of same attributable to the period on and after the Closing
Date. Seller shall prepare a proration schedule (the "Proration Schedule") of
the adjustments described in this Section 5.4 prior to Closing. Such adjustments
shall be paid by Purchaser to Seller (if the prorations result in a net credit
to Seller) or by Seller to Purchaser (if the prorations result in a net credit
to Purchaser), by increasing or reducing the cash to be paid by Purchaser at
Closing. 5.4.2 Operating Expenses. All of the operating, maintenance, taxes
(other than real estate taxes, such as rental taxes), and other expenses
incurred in operating the Property that Seller customarily pays, and any other
costs incurred in the ordinary course of business for the management and
operation of the Property, shall be prorated on an accrual basis. Seller shall
pay all such expenses that accrue prior to Closing and Purchaser shall pay all
such expenses that accrue from and after the Closing Date.
5.4.3 Utilities. The final readings and final billings for utilities will be
made if possible as of the Closing Date, in which case Seller shall pay all such
bills as of the Closing Date and no proration shall be made at the Closing with
respect to utility bills. Otherwise, a proration shall be made based upon the
parties' reasonable good faith estimate and a readjustment made within 30 days
after the Closing, if necessary. Seller shall be entitled to the return of any
deposit(s) posted by it with any utility company, and Seller shall notify each
utility company serving the Property to terminate Seller's account, effective as
of noon on the Closing Date. 5.4.4 Real Estate Taxes. Any real estate ad valorem
or similar taxes for the Property, or any installment of assessments payable in
installments which installment is payable in the calendar year of Closing, shall
be prorated to the date of Closing, based upon actual days involved. The
proration of real property taxes or installments of assessments shall be based
upon the assessed valuation and tax rate figures for the year in which the
Closing occurs to the extent the same are available; provided, that in the event
that actual figures (whether for the assessed value of the Property or for the
tax rate) for the year of Closing are not available at the Closing Date, the
proration shall be made using figures from the preceding year. The proration of
real property taxes or installments of assessments shall be final and not
subject to re-adjustment after Closing.
5.4.5 Property Contracts. Purchaser shall assume at Closing the obligations
under the Property Contracts assumed by Purchaser, subject to proration of
operating expenses under Section 5.4.2.
5.4.6 Leases.
5.4.6.1 All collected rent (whether fixed monthly rentals, additional rentals,
escalation rentals, retroactive rentals, operating cost pass-throughs or other
sums and charges payable by Tenants under the Leases), income and expenses from
any portion of the Property shall be prorated as of the Closing Date (prorated
for any partial month). Purchaser shall receive all collected rent and income
attributable to dates from and after the Closing Date. Seller shall receive all
collected rent and income attributable to dates prior to the Closing Date.
Notwithstanding the foregoing, no prorations shall be made in relation to either
(a) non-delinquent rents which have not been collected as of the Closing Date,
or (b) delinquent rents existing, if any, as of the Closing Date (the foregoing
(a) and (b) referred to herein as the "Uncollected Rents"). In adjusting for
Uncollected Rents, no adjustments shall be made in Seller's favor for rents
which have accrued and are unpaid as of the Closing, but Purchaser shall pay
Seller such accrued Uncollected Rents as and when collected by Purchaser.
Purchaser agrees to bill Tenants of the Property for all Uncollected Rents and
to take reasonable actions to collect Uncollected Rents. After the Closing,
Seller shall continue to have the right, but not the obligation, in its own
name, to demand payment of and to collect Uncollected Rents owed to Seller by
any Tenant, which right shall include, without limitation, the right to continue
or commence legal actions or proceedings against any Tenant and the delivery of
the Leases Assignment shall not constitute a waiver by Seller of such right.
Purchaser agrees to cooperate with Seller in connection with all efforts by
Seller to collect such Uncollected Rents and to take all steps, whether before
or after the Closing Date, as may be necessary to carry out the intention of the
foregoing, including, without limitation, the delivery to Seller, within 7 days
after a written request, of any relevant books and records (including, without
limitation, rent statements, receipted bills and copies of tenant checks used in
payment of such rent), the execution of any and all consents or other documents,
and the undertaking of any act reasonably necessary for the collection of such
Uncollected Rents by Seller; provided, however, that Purchaser's obligation to
cooperate with Seller pursuant to this sentence shall not obligate Purchaser to
terminate any Tenant lease with an existing Tenant or evict any existing Tenant
from the Property.
5.4.6.2 At Closing, Purchaser shall receive a credit against the Purchase Price
in an amount equal to the received and unapplied balance of all cash (or cash
equivalent) Tenant Deposits, including, but not limited to, security, damage or
other refundable deposits or required to be paid by any of the Tenants to secure
their respective obligations under the Leases, together, in all cases, with any
interest payable to the Tenants thereunder as may be required by their
respective Tenant Lease or state law (the "Tenant Security Deposit Balance").
Any cash (or cash equivalents) held by Seller which constitute the Tenant
Security Deposit Balance shall be retained by Seller in exchange for the
foregoing credit against the Purchase Price and shall not be transferred by
Seller pursuant to this Contract (or any of the documents delivered at Closing),
but the obligation with respect to the Tenant Security Deposit Balance
nonetheless shall be assumed by Purchaser. The Tenant Security Deposit Balance
shall not include any non-refundable deposits or fees paid by Tenants to Seller,
either pursuant to the Leases or otherwise.
5.4.6.3 With respect to operating expenses, taxes, utility charges, other
operating cost pass-throughs, retroactive rental escalations, sums or charges
payable by Tenants under the Tenant Leases, to the extent that Seller has
received as of the Closing payments allocable to periods subsequent to Closing,
the same shall be properly prorated with an adjustment in favor of Purchaser,
and Purchaser shall reserve a credit therefor at Closing. With respect to any
payments received by Purchaser after the Closing allocable to Seller prior to
Closing, Purchaser shall promptly pay the same to Seller. 5.4.7 Existing Loan.
On the Closing Date, Seller shall pay (which payment may be made by Seller out
of the proceeds of the Purchase Price) the outstanding principal balance of the
Note, together with all interest accrued under the Note prior to the Closing
Date (the "Loan Payoff"). Purchaser shall pay all Lender Fees (subject to
reduction from the Purchase Price in accordance with Section 2.2). Any existing
reserves, impounds and other accounts maintained in connection with the Loan
shall be released in Good Funds to Seller at the Closing unless credited by
Lender against the amount due from Seller under the Note.
5.4.8 Insurance. No proration shall be made in relation to insurance premiums
and insurance policies will not be assigned to Purchaser. 5.4.9 Employees. All
of Seller's and Seller's manager's on-site employees shall have their employment
at the Property terminated as of the Closing Date. 5.4.10 Closing Costs.
Purchaser shall pay (a) one-half of any sales, use, gross receipts or similar
taxes, (b) the cost of recording any instruments required to discharge any liens
or encumbrances against the Property, (c) any premiums or fees required to be
paid by Purchaser with respect to the Title Policy pursuant to Section 4.1, and
(d) one-half of the customary closing costs of the Escrow Agent. Seller shall
pay (i) any transfer tax, (ii) one-half of any sales, use, gross receipts or
similar taxes, (iii) the base premium for the Title Policy to the extent
required by Section 4.1, and (iv) one-half of the customary closing costs of the
Escrow Agent.
5.4.11 Survival. The provisions of this Section 5.4 shall survive the Closing
and delivery of the Deed to Purchaser. 5.4.12 Possession. Possession of the
Property, subject to the Leases, Property Contracts which are not identified as
Terminated Contracts during the Feasibility Period (subject to the limitations
of Section 3.6), and Permitted Exceptions, shall be delivered to Purchaser at
the Closing upon release from escrow of all items to be delivered by Purchaser
pursuant to Section 5.3, including, without limitation, the Purchase Price. To
the extent reasonably available to Seller, originals or copies of the Leases and
Property Contracts, lease files, warranties, guaranties, operating manuals, keys
to the property, and Seller's books and records (other than proprietary
information) regarding the Property shall be made available to Purchaser at the
Property after the Closing.
5.5 Post Closing Adjustments. In general, and except as provided in this
Contract or the Closing Documents, Seller shall be entitled to all income, and
shall pay all expenses, relating to the operation of the Property for the period
prior to the Closing Date and Purchaser shall be entitled to all income, and
shall pay all expenses, relating to the operation of the Property for the period
commencing on and after the Closing Date. Purchaser or Seller may request that
Purchaser and Seller undertake to re-adjust any item on the Proration Schedule
(or any item omitted therefrom) in accordance with the provisions of Section 5.4
of this Contract; provided, however, that neither party shall have any
obligation to re-adjust any items (a) after the expiration of 60 days after
Closing, or (b) subject to such 60-day period, unless such items exceed
$5,000.00 in magnitude (either individually or in the aggregate). The provisions
of this Section 5.6 shall survive the Closing and delivery of the Deed to
Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER 6.1 Seller's
Representations. Except, in all cases, for any fact, information or condition
disclosed in the Title Documents, the Permitted Exceptions, the Property
Contracts, or the Materials, or which is otherwise known by Purchaser prior to
the Closing, Seller represents and warrants to Purchaser the following
(collectively, the "Seller's Representations") as of the Effective Date and as
of the Closing Date (provided that Purchaser's remedies if any such Seller's
Representations are untrue as of the Closing Date are limited to those set forth
in Section 8.1):
6.1.1 Seller is duly organized, validly existing and in good standing under the
laws of the state of its formation set forth in the initial paragraph of this
Contract; and, subject to Section 8.2.4, has or at the Closing shall have the
entity power and authority to sell and convey the Property and to execute the
documents to be executed by Seller and prior to the Closing will have taken as
applicable, all corporate, partnership, limited liability company or equivalent
entity actions required for the execution 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 not conflict with,
or result in a breach of, the terms, conditions or provisions of, or constitute
a default under, any contract to which Seller is a party or by which Seller is
otherwise bound, which conflict, breach or default would have a material adverse
affect on Seller's ability to consummate the transaction contemplated by this
Contract or on the Property. Subject to Section 8.2.4, this Contract is a valid,
binding and enforceable agreement against Seller in accordance with its terms;
6.1.2 Other than the Leases, the Property is not subject to any written lease
executed by Seller or, to Seller's knowledge, any other possessory interests of
any person; 6.1.3 Seller is not a "foreign person," as that term is used and
defined in the Internal Revenue Code, Section 1445, as amended; 6.1.4 Except for
any actions by Seller to evict Tenants under the Leases, and except for that
certain pending suit filed on March 8, 2002 with the Commonwealth of Kentucky
Fayette Circuit Court, between Dawn Summerville and AIMCO/dba Patchen Place
Apartments and/or Patchen Place Associates Limited Partnership, Case No.
02-CI-01005, to Seller's knowledge, there are no actions, proceedings,
litigation or governmental investigations or condemnation actions either pending
or threatened against the Property; 6.1.5 To Seller's knowledge, Seller has not
received any written notice from a governmental agency of any uncured material
violations of any federal, state, county or municipal law, ordinance, order,
regulation or requirement affecting the Property; and 6.1.6 To Seller's
knowledge, Seller has not received any written notice of any material default by
Seller under any of the Property Contracts that will not be terminated on the
Closing Date. 6.2 AS-IS. Except for Seller's Representations, the Property is
expressly purchased and sold "AS IS," "WHERE IS," and "WITH ALL FAULTS." The
Purchase Price and the terms and conditions set forth herein are the result of
arm's-length bargaining between entities familiar with transactions of this
kind, and said price, terms and conditions reflect the fact that Purchaser shall
have the benefit of, and is not relying upon, any information provided by Seller
or Broker or statements, representations or warranties, express or implied, made
by or enforceable directly against Seller or Broker, including, without
limitation, any relating to the value of the Property, the physical or
environmental condition of the Property, any state, federal, county or local
law, ordinance, order or permit; or the suitability, compliance or lack of
compliance of the Property with any regulation, or any other attribute or matter
of or relating to the Property (other than any covenants of title contained in
the Deed conveying the Property and Seller's Representations). Purchaser agrees
that Seller shall not 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 under
Purchaser, hereby fully releases Seller's Indemnified Parties from, and
irrevocably waives its right to maintain, any and all claims and causes of
action that it or they may now have or hereafter acquire against Seller's
Indemnified Parties with respect to any and all Losses arising from 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 has and shall have reviewed and conducted such independent
analyses, studies (including, without limitation, environmental studies and
analyses concerning the presence of lead, asbestos, PCBs and radon in and about
the Property), reports, investigations and inspections as it deems appropriate
in connection with the Property. If Seller provides or has provided any
documents, summaries, opinions or work product of consultants, surveyors,
architects, engineers, title companies, governmental authorities or any other
person or entity with respect to the Property, including, without limitation,
the offering prepared by Broker, Purchaser and Seller agree that Seller has done
so or shall do so only for the convenience of both parties, Purchaser shall not
rely thereon and the reliance by Purchaser upon any such documents, summaries,
opinions or work product shall not create or give rise to any liability of or
against Seller's Indemnified Parties. Purchaser shall rely only upon any title
insurance obtained by Purchaser with respect to title to the Property. Purchaser
acknowledges and agrees that no representation has been made and no
responsibility is assumed by Seller with respect to current and future
applicable zoning or building code requirements or the compliance of the
Property with any other laws, rules, ordinances or regulations, the financial
earning capacity or expense history of the Property, the continuation of
contracts, continued occupancy levels of the Property, or any part thereof, or
the continued occupancy by tenants of any Leases or, without limiting any of the
foregoing, occupancy at Closing. Prior to Closing, Seller shall have the right,
but not the obligation, to enforce its rights against any and all Property
occupants, guests or tenants. Purchaser agrees that the departure or removal,
prior to Closing, of any of such guests, occupants or tenants shall not be the
basis for, nor shall it give rise to, any claim on the part of Purchaser, nor
shall it affect the obligations of Purchaser under this Contract in any manner
whatsoever; and Purchaser shall close title and accept delivery of the Deed with
or without such tenants in possession and without any allowance or reduction in
the Purchase Price under this Contract. Purchaser hereby releases Seller from
any and all claims and liabilities relating to the foregoing matters. The
provisions of this Section 6.2 shall survive the Closing and delivery of the
Deed to Purchaser. 6.3 Survival of Seller's Representations. Seller and
Purchaser agree that Seller's Representations shall survive Closing for a period
of 6 months (the "Survival Period"). Seller shall have no liability after the
Survival Period with respect to Seller's Representations contained herein except
to the extent that Purchaser has requested arbitration against Seller during the
Survival Period for breach of any of Seller's Representations. Under no
circumstances shall Seller be liable to Purchaser for more than $50,000 in any
individual instance or in the aggregate for all breaches of Seller's
Representations, nor shall Purchaser be entitled to bring any claim for a breach
of Seller's Representations unless the claim for damage (either in the aggregate
or as to any individual claim) by Purchaser exceeds $5,000. In the event that
Seller breaches any representation contained in Section 6.1 and Purchaser had
knowledge of such breach prior to the Closing Date, Purchaser shall be deemed to
have waived any right of recovery, and Seller shall not have any liability in
connection therewith. 6.4 Definition of Seller's Knowledge. Any representations
and warranties made "to the knowledge of Seller" shall not be deemed to imply
any duty of inquiry. For purposes of this Contract, the term Seller's
"knowledge" shall mean and refer only to actual knowledge of the Designated
Representative of the Seller and shall not be construed to refer to the
knowledge of any other partner, officer, director, agent, employee or
representative of the Seller, or any affiliate of the Seller, or to impose upon
such Designated Representative any duty to investigate the matter to which such
actual knowledge or the absence thereof pertains, or to impose upon such
Designated Representative any individual personal liability. As used herein, the
term Designated Representative shall refer to Ms. Mindy Daugherty, who is the
Regional Property Manager handling this Property (the "Regional Property
Manager"). 6.5 Representations And Warranties Of Purchaser. For the purpose of
inducing Seller to enter into this Contract and to consummate the sale and
purchase of the Property in accordance herewith, Purchaser represents and
warrants to Seller the following as of the Effective Date and as of the Closing
Date: 6.5.1 Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of Kentucky. 6.5.2 Purchaser,
acting through any of its or their duly empowered and authorized officers or
members, has all necessary entity power and authority to own and use its
properties and to transact the business in which it is engaged, and has full
power and authority to enter into this Contract, to execute and deliver the
documents and instruments required of Purchaser herein, and to perform its
obligations hereunder; and no consent of any of Purchaser's partners, directors,
officers or members are required to so empower or authorize Purchaser. The
compliance with or fulfillment of the terms and conditions hereof will not
conflict with, or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, any contract to which Purchaser is a party or by
which Purchaser is otherwise bound, which conflict, breach or default would have
a material adverse affect on Purchaser's ability to consummate the transaction
contemplated by this Contract. This Contract is a valid, binding and enforceable
agreement against Purchaser in accordance with its terms. 6.5.3 No pending or,
to the knowledge of Purchaser, threatened litigation exists which if determined
adversely would restrain the consummation of the transactions contemplated by
this Contract or would declare illegal, invalid or non-binding any of
Purchaser's obligations or covenants to Seller. 6.5.4 Other than Seller's
Representations, Purchaser has not relied on any representation or warranty made
by Seller or any representative of Seller (including, without limitation,
Broker) in connection with this Contract and the acquisition of the Property.
6.5.5 The Broker and its affiliates do not, and will not at the Closing, have
any direct or indirect legal, beneficial, economic or voting interest in
Purchaser (or in an assignee of Purchaser, which pursuant to Section 13.3,
acquires the Property at the Closing), nor has Purchaser or any affiliate of
Purchaser granted (as of the Effective Date or the Closing Date) the Broker or
any of its affiliates any right or option to acquire any direct or indirect
legal, beneficial, economic or voting interest in Purchaser.
The provisions of this Section 6.5 shall survive the Closing and delivery
of the Deed to Purchaser.
ARTICLE 7
OPERATION OF THE PROPERTY
7.1 Leases and Property Contracts. During the period of time from the Effective
Date to the Closing Date, in the ordinary course of business Seller may enter
into new Property Contracts, new Leases, renew existing Leases or modify,
terminate or accept the surrender or forfeiture of any of the Leases, modify any
Property Contracts, or institute and prosecute any available remedies for
default under any Lease or Property Contract without first obtaining the written
consent of Purchaser; provided, however, Seller agrees that any such new
Property Contracts or any new or renewed Leases shall not have a term in excess
of 1 year (or such longer period of time for which such Property Contracts or
Leases are entered into by Seller in the ordinary course of its operation of the
Property) without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, conditioned or delayed.
7.2 General Operation of Property. Except as specifically set forth in this
Article 7, Seller shall operate the Property after the Effective Date in the
ordinary course of business, and except as necessary in the Seller's sole
discretion to address (a) any life or safety issue at the Property or (b) any
other matter which in Seller's reasonable discretion materially adversely
affecting the use, operation or value of the Property, Seller will not make any
material alterations to the Property or remove any material Fixtures and
Tangible Personal Property without the prior written consent of Purchaser which
consent shall not be unreasonably withheld, denied or delayed. 7.3 Liens. Other
than utility easements and temporary construction easements granted by Seller in
the ordinary course of business, Seller covenants that it will not voluntarily
create or cause any lien or encumbrance to attach to the Property between the
Effective Date and the Closing Date (other than Leases and Property Contracts as
provided in Section 7.1) unless Purchaser approves such lien or encumbrance,
which approval shall not be unreasonably withheld or delayed. If Purchaser
approves any such subsequent lien or encumbrance, the same shall be deemed a
Permitted Encumbrance for all purposes hereunder.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
8.1 Purchaser's Conditions to Closing. Purchaser's obligation to close
under this Contract, shall be subject to and conditioned upon the fulfillment
of each and all of the following conditions precedent:
8.1.1 All of the documents required to be delivered by Seller to Purchaser at
the Closing pursuant to the terms and conditions hereof shall have been
delivered; 8.1.2 Each of the representations, warranties and covenants of Seller
contained herein shall be true in all material respects as of the Closing Date;
8.1.3 Seller shall have complied with, fulfilled and performed in all material
respects each of the covenants, terms and conditions to be complied with,
fulfilled or performed by Seller hereunder; and 8.1.4 Neither Seller nor
Seller's general partner shall be a debtor in any bankruptcy proceeding nor
shall have been in the last 6 months a debtor in any bankruptcy proceeding.
Notwithstanding anything to the contrary, there are no other conditions on
Purchaser's obligation to Close except as expressly set forth in this Section
8.1. If any condition set forth in Sections 8.1.1, 8.1.3 or 8.1.4 is not met,
Purchaser may (a) waive any of the foregoing conditions and proceed to Closing
on the Closing Date with no offset or deduction from the Purchase Price, or (b)
if such failure constitutes a default by Seller, exercise any of its remedies
pursuant to Section 10.2. If the condition set forth in Section 8.1.2 is not
met, Purchaser may, as its sole and exclusive remedy, (i) notify Seller of
Purchaser's election to terminate this Contract and receive a return of the
Deposit from the Escrow Agent, or (ii) waive such condition and proceed to
Closing on the Closing Date with no offset or deduction from the Purchase Price.
8.2 Without limiting any of the rights of Seller elsewhere provided for in this
Contract, Seller's obligation to close with respect to conveyance of the
Property under this Contract shall be subject to and conditioned upon the
fulfillment of each and all of the following conditions precedent: 8.2.1 All of
the documents and funds required to be delivered by Purchaser to Seller at the
Closing pursuant to the terms and conditions hereof shall have been delivered;
8.2.2 Each of the representations, warranties and covenants of Purchaser
contained herein shall be true in all material respects as of the Closing Date;
8.2.3 Purchaser shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be complied
with, fulfilled or performed by Purchaser hereunder; and 8.2.4 Seller shall have
received all consents and approvals to the consummation of the transactions
contemplated hereby (a) of Seller's partners, members, managers, shareholders or
directors to the extent required by Seller's (or Seller's affiliates')
organizational documents, or (b) that are required by law. 8.2.5 [Intentionally
deleted].
If any of the foregoing conditions to Seller's obligation to close with
respect to conveyance of the Property under this Contract are not met, Seller
may (a) waive any of the foregoing conditions and proceed to Closing on the
Closing Date, or (b) terminate this Contract, and, if such failure constitutes a
default by Purchaser, exercise any of its remedies under Section 10.1.
ARTICLE 9
BROKERAGE
9.1 Indemnity. Seller represents and warrants to Purchaser that it has dealt
only with Hendricks & Partners, 1025 E. Maple, Suite 200, Birmingham, MI 48009
("Broker") in connection with this Contract. Seller and Purchaser each
represents and warrants to the other that, other than Broker, it has not dealt
with or utilized the services of any other real estate broker, sales person or
finder in connection with this Contract, and each party agrees to indemnify,
hold harmless, and, if requested in the sole and absolute discretion of the
indemnitee, defend (with counsel approved by the indemnitee) the other party
from and against all Losses relating to brokerage commissions and finder's fees
arising from or attributable to the acts or omissions of the indemnifying party.
The provisions of this Section 9.1 shall survive the termination of this
Contract, and if not so terminated, the Closing and delivery of the Deed to
Purchaser.
9.2 Survival. Seller agrees to pay Broker a commission according to the terms of
a separate Contract. Broker shall not be deemed a party or third party
beneficiary of this Contract.
9.3 Broker Signature Page. Broker shall execute the signature page for Broker
attached hereto solely for purposes of confirming the matters set forth therein;
provided, however, that (a) Broker's signature hereon shall not be a
prerequisite to the binding nature of this Contract on Purchaser and Seller, and
the same shall become fully effective upon execution by Purchaser and Seller,
and (b) the signature of Broker will not be necessary to amend any provision of
this Contract.
ARTICLE 10
DEFAULTS AND REMEDIES
10.1 Purchaser Default. If Purchaser defaults in its obligations hereunder to
(a) deliver the Initial Deposit or Additional Deposit, (b) deliver to the Seller
the deliveries specified under Section 5.3 on the date required thereunder, or
(c) deliver the Purchase Price at the time required by Section 2.2.4 and close
on the purchase of the Property on the Closing Date, then, immediately and
without notice or cure, Purchaser shall forfeit the Deposit, and the Escrow
Agent shall deliver the Deposit to Seller, and neither party shall be obligated
to proceed with the purchase and sale of the Property. If, Purchaser defaults in
any of its other representations, warranties or obligations under this Contract,
and such default continues for more than 10 days after written notice from
Seller, then Purchaser shall forfeit the Deposit, and the Escrow Agent shall
deliver the Deposit to Seller, and neither party shall be obligated to proceed
with the purchase and sale of the Property. The Deposit is liquidated damages
and recourse to the Deposit is, except for Purchaser's indemnity obligations
hereunder, Seller's sole and exclusive remedy for Purchaser's failure to perform
its obligation to purchase the Property or breach of a representation or
warranty. Seller expressly waives the remedies of specific performance and
additional damages for such default by Purchaser. SELLER AND PURCHASER
ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE
DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES RESULTING FROM A DEFAULT BY
PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY. SELLER AND PURCHASER
FURTHER AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIQUIDATE THE
AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST
PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY
PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY OBLIGATIONS
HEREUNDER.
10.2 Seller Default. If Seller, prior to the Closing, defaults in its
representations, warranties, covenants, or obligations under this Contract,
including to sell the Property as required by this Contract and such default
continues for more than 10 days after written notice from Purchaser, then, at
Purchaser's election and as Purchaser's sole and exclusive remedy, either (A)
this Contract shall terminate, and all payments and things of value, including
the Deposit, provided by Purchaser hereunder shall be returned to Purchaser
(subject to Purchaser's obligation under Section 3.5.2 to return all Third-Party
Reports and information and Materials provided to Purchaser as a pre-condition
to the return of the Deposit) and Purchaser may recover, as its sole recoverable
damages (but without limiting its right to receive a refund of the Deposit), its
direct and actual out-of-pocket expenses and costs (documented by paid invoices
to third parties) in connection with this transaction, which damages shall not
exceed $20,000 in aggregate, or (B) Purchaser may seek specific performance of
Seller's obligation to deliver the Deed pursuant to this Contract (but not
damages). Purchaser agrees that it shall promptly deliver to Seller an
assignment of all of Purchaser's right, title and interest in and to (together
with possession of) all plans, studies, surveys, reports, and other materials
paid for with the out-of-pocket expenses reimbursed by Seller pursuant to the
foregoing sentence. SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.2 IS
INTENDED TO AND DOES LIMIT THE AMOUNT OF DAMAGES DUE PURCHASER AND THE REMEDIES
AVAILABLE TO PURCHASER, AND SHALL BE PURCHASER'S EXCLUSIVE REMEDY AGAINST
SELLER, BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY SELLER
OF ITS REPRESENTATIONS, WARRANTIES, OR COVENANTS OR ITS OBLIGATION TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT. UNDER NO CIRCUMSTANCES MAY
PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE,
SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH PURCHASER SPECIFICALLY WAIVES,
FROM SELLER FOR ANY BREACH BY SELLER, OF ITS REPRESENTATIONS, WARRANTIES OR
COVENANTS OR ITS OBLIGATIONS UNDER THIS CONTRACT. PURCHASER SPECIFICALLY WAIVES
THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST THE PROPERTY UNLESS AND
UNTIL IT HAS IRREVOCABLY ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS CONTRACT
AND HAS FILED AN ACTION SEEKING SUCH REMEDY.
ARTICLE 11
RISK OF LOSS OR CASUALTY
11.1 Major Damage. In the event that the Property is damaged or destroyed by
fire or other casualty prior to Closing, and the cost of repair is more than
$300,000, then Seller shall have no obligation to repair such damage or
destruction and shall notify Purchaser in writing of such damage or destruction
(the "Damage Notice"). Within 10 days after Purchaser's receipt of the Damage
Notice, Purchaser may elect at its option to terminate this Contract by
delivering written notice to Seller. In the event Purchaser fails to terminate
this Contract within the foregoing 10-day period, this transaction shall be
closed in accordance with the terms of this Contract for the full Purchase Price
notwithstanding any such damage or destruction and Purchaser shall receive all
insurance proceeds pertaining thereto (plus a credit against the Purchase Price
in the amount of any deductible payable by Seller in connection therewith) at
Closing.
11.2 Minor Damage. In the event that the Property is damaged or destroyed by
fire or other casualty prior to the Closing, and the cost of repair is less than
$300,000, this transaction shall be closed in accordance with the terms of this
Contract, notwithstanding the damage or destruction; provided, however, Seller
shall make such repairs to the extent of any recovery from insurance carried on
the Property if they can be reasonably effected before the Closing. Subject to
Section 11.3, if Seller is unable to effect such repairs, then Purchaser shall
receive all insurance proceeds pertaining thereto (plus a credit against the
Purchase Price in the amount of any deductible payable by Seller in connection
therewith) at Closing. 11.3 Repairs. To the extent that Seller elects to
commence any repair, replacement or restoration of the Property prior to
Closing, then Seller shall be entitled to receive and apply available insurance
proceeds to any portion of such repair, replacement or restoration completed or
installed prior to Closing, with Purchaser being responsible for completion of
such repair, replacement or restoration after Closing from the balance of any
available insurance proceeds. The provisions of this Section 11.3 shall survive
the Closing and delivery of the Deed to Purchaser.
ARTICLE 12
EMINENT DOMAIN
12.1 Eminent Domain. In the event that, at the time of Closing, any material
part of the Property is (or previously has been) acquired, or is about to be
acquired, by any governmental agency by the powers of eminent domain or transfer
in lieu thereof (or in the event that at such time there is any notice of any
such acquisition or intent to acquire by any such governmental agency),
Purchaser shall have the right, at Purchaser's option, to terminate this
Contract by giving written notice within 10 days after Purchaser's receipt from
Seller of notice of the occurrence of such event, and if Purchaser so terminates
this Contract shall recover the Deposit hereunder (subject to Purchaser's
obligation under Section 3.5.2 to return all Third-Party Reports and information
and Materials provided to Purchaser as a pre-condition to the return of the
Deposit). If Purchaser fails to terminate this Contract within such 10-day
period, this transaction shall be closed in accordance with the terms of this
Contract for the full Purchase Price and Purchaser shall receive the full
benefit of any condemnation award. It is expressly agreed between the parties
hereto that this section shall in no way apply to customary dedications for
public purposes which may be necessary for the development of the Property.
ARTICLE 13
MISCELLANEOUS
13.1 Binding Effect of Contract. This Contract shall not be binding on either
party until executed by both Purchaser and Seller. As provided in Section 2.3.5
and Section 9.3 above, neither the Escrow Agent's nor the Broker's execution of
this Contract shall be a pre-requisite to its effectiveness.
13.2 Exhibits And Schedules. All Exhibits and Schedules, whether or not annexed
hereto, are a part of this Contract for all purposes. 13.3 Assignability. This
Contract is not assignable by Purchaser without first obtaining the prior
written approval of the Seller, except that Purchaser may assign this Contract
to one or more entities so long as (a) Purchaser is an affiliate of the
purchasing entity(ies), (b) Purchaser is not released from its liability
hereunder, and (c) Seller consents thereto (which consent shall not be
unreasonably withheld or delayed). As used herein, an affiliate is a person or
entity controlled by, under common control with, or controlling another person
or entity.
13.4 Binding Effect. Subject to Section 13.3, this Contract shall be binding
upon and inure to the benefit of Seller and Purchaser, and their respective
successors, heirs and permitted assigns.
13.5 Captions. The captions, headings, and arrangements used in this Contract
are for convenience only and do not in any way affect, limit, amplify, or modify
the terms and provisions hereof.
13.6 Number And Gender Of Words. Whenever herein the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate. 13.7 Notices. All notices,
demands, requests and other communications required or permitted hereunder shall
be in writing, and shall be (a) personally delivered with a written receipt of
delivery; (b) sent by a nationally recognized overnight delivery service
requiring a written acknowledgement of receipt or providing a certification of
delivery or attempted delivery; or (c) sent by certified or registered mail,
return receipt requested, or (d) sent by confirmed facsimile transmission with
an original copy thereof transmitted to the recipient by one of the means
described in subsections (a) through (c) no later than 3 Business Days
thereafter. All notices shall be deemed effective when actually delivered as
documented in a delivery receipt; provided, however, that if the notice was sent
by overnight courier or mail as aforesaid and is affirmatively refused or cannot
be delivered during customary business hours by reason of the absence of a
signatory to acknowledge receipt, or by reason of a change of address with
respect to which the addressor did not have either knowledge or written notice
delivered in accordance with this paragraph, then the first attempted delivery
shall be deemed to constitute delivery. Each party shall be entitled to change
its address for notices from time to time by delivering to the other party
notice thereof in the manner herein provided for the delivery of notices. All
notices shall be sent to the addressee at its address set forth following its
name below:
To Purchaser:
Vermeil, LLC
c/o Mackin and Company, Inc.
501 S. Second Street, Suite 200
Louisville, Kentucky 40202
Attention: Mr. Mike Mackin
Telephone: 502-533-4900
Facsimile: 502-581-1653
and a copy to:
Thomas, Dodson & Wolford
9200 Shelbyville Road
Louisville, Kentucky 40222
Attention: Hal Thomas, Esq.
Telephone: 502-426-1700
Facsimile: 502-426-0457
To Seller:
c/o AIMCO
Stanford Place 3
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Attention: Patrick Slavin
Telephone: 303-691-4340
Facsimile: 303-300-3282
And:
c/o AIMCO
Stanford Place 3
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Attention: Mr. Harry Alcock
Telephone: 303-691-4344
Facsimile: 303-300-3282
with copy to:
Chad Asarch, Esq.
Vice President and Assistant General Counsel
AIMCO
Stanford Place 3
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Telephone: 303-691-4303
Facsimile: 303-300-3260
and a copy to:
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800
Los Angeles, California 90017
Attention: Karen N. Higgins, Esq., and
Loretta Thompson, Esq.
Telephone: 213-688-3400
Facsimile: 213-688-3460
Any notice required hereunder to be delivered to the Escrow Agent shall be
delivered in accordance with above provisions as follows:
Fidelity National Title Insurance Company
3D International Building
1900 West Loop South, Suite 650
Houston, Texas 77027
Attention: Lolly Avant, Vice President
Telephone: 800-879-1677
Facsimile: 713-623-4406
Unless specifically required to be delivered to the Escrow Agent pursuant
to the terms of this Contract, no notice hereunder must be delivered to the
Escrow Agent in order to be effective so long as it is delivered to the other
party in accordance with the above provisions. 13.8 Governing Law And Venue. The
laws of the State of Kentucky shall govern the validity, construction,
enforcement, and interpretation of this Contract, unless otherwise specified
herein except for the conflict of laws provisions thereof. Subject to Section
13.25, all claims, disputes and other matters in question arising out of or
relating to this Contract, or the breach thereof, shall be decided by
proceedings instituted and litigated in a court of competent jurisdiction in the
state in which the Property is situated, and the parties hereto expressly
consent to the venue and jurisdiction of such court.
13.9 Entire Agreement. This Contract embodies the entire Contract between the
parties hereto concerning the subject matter hereof and supersedes all prior
conversations, proposals, negotiations, understandings and Contracts, whether
written or oral.
13.10 Amendments. This Contract shall not be amended, altered, changed,
modified, supplemented or rescinded in any manner except by a written contract
executed by all of the parties; provided, however, that, (a) as provided in
Section 2.3.5 above, the signature of the Escrow Agent shall not be required as
to any amendment of this Contract other than an amendment of Section 2.3, and
(b) as provided in Section 9.3 above, the signature of the Broker shall not be
required as to any amendment of this Contract. 13.11 Severability. In the event
that any part of this Contract shall be held to be invalid or unenforceable by a
court of competent jurisdiction, such provision shall be reformed, and enforced
to the maximum extent permitted by law. If such provision cannot be reformed, it
shall be severed from this Contract and the remaining portions of this Contract
shall be valid and enforceable.
13.12 Multiple Counterparts/Facsimile Signatures. This Contract may be executed
in a number of identical counterparts. This Contract may be executed by
facsimile signatures which shall be binding on the parties hereto, with original
signatures to be delivered as soon as reasonably practical thereafter.
13.13 Construction. No provision of this Contract shall be construed in favor
of, or against, any particular party by reason of any presumption with respect
to the drafting of this Contract; both parties, being represented by counsel,
having fully participated in the negotiation of this instrument. 13.14
Confidentiality. Purchaser shall not disclose the terms and conditions contained
in this Contract and shall keep the same confidential, provided that Purchaser
may disclose the terms and conditions of this Contract (a) as required by law,
(b) to consummate the terms of this Contract, or any financing relating thereto,
or (c) to Purchaser's or Seller's lenders, attorneys and accountants. Any
information and Materials provided by Seller to Purchaser hereunder are
confidential and Purchaser shall be prohibited from making such information
public to any other person or entity other than its agents and legal
representatives, without Seller's prior written authorization, which may be
granted or denied in Seller's sole discretion. Notwithstanding the foregoing,
the parties (and each employee, representative, or other agent of the parties)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and any facts that may be relevant to the tax structure of the
transaction, provided, however, that no party (and no employee, representative,
or other agent thereof) shall disclose any other information that is not
relevant to understanding the tax treatment and tax structure of the transaction
(including the identity of any party and any information that could lead another
to determine the identity of any party), or any other information to the extent
that such disclosure could result in a violation of any federal or state
securities law. 13.15 Time Of The Essence. It is expressly agreed by the parties
hereto that time is of the essence with respect to this Contract.
13.16 Waiver. No delay or omission to exercise any right or power accruing upon
any default, omission, or failure of performance hereunder shall impair any
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. No waiver, amendment, release, or modification of this Contract shall
be established by conduct, custom, or course of dealing and all waivers must be
in writing and signed by the waiving party. 13.17 Attorneys Fees. In the event
either party hereto commences litigation or arbitration against the other to
enforce its rights hereunder, the substantially prevailing party in such
litigation shall be entitled to recover from the other party its reasonable
attorneys' fees and expenses incidental to such litigation and arbitration,
including the cost of in-house counsel and any appeals.
13.18 Time Periods. Should the last day of a time period fall on a weekend or
legal holiday, the next Business Day thereafter shall be considered the end of
the time period.
13.19 1031 Exchange. Seller and Purchaser acknowledge and agree that the
purchase and sale of the Property may be part of a tax-free exchange under
Section 1031 of the Code for either Purchaser or Seller. Each party hereby
agrees to take all reasonable steps on or before the Closing Date to facilitate
such exchange if requested by the other party, provided that (a) no party making
such accommodation shall be required to acquire any substitute property, (b)
such exchange shall not affect the representations, warranties, liabilities and
obligations of the parties to each other under this Contract, (c) no party
making such accommodation shall incur any additional cost, expense or liability
in connection with such exchange (other than expenses of reviewing and executing
documents required in connection with such exchange), and (d) no dates in this
Contract will be extended as a result thereof. Notwithstanding anything to the
contrary contained in the foregoing, if Seller so elects to close the transfer
of the Property as an exchange, then (i) Seller, at its sole option, may
delegate its obligations to transfer the Property under this Contract, and may
assign its rights to receive the Purchase Price from Purchaser, to a deferred
exchange intermediary (an "Intermediary") or to an exchange accommodation
titleholder, as the case may be; (ii) such delegation and assignment shall in no
way reduce, modify or otherwise affect the obligations of Seller pursuant to
this Contract; (iii) Seller shall remain fully liable for its obligations under
this Contract as if such delegation and assignment shall not have taken place;
(iv) Intermediary or exchange accommodation titleholder, as the case may be,
shall have no liability to Purchaser; and (v) the closing of the transfer of the
Property to Purchaser shall be undertaken by direct deed from Seller (or, if
applicable, from other affiliates of Seller whom Seller will cause to execute
such deeds) to Purchaser or to exchange accommodation titleholder, as the case
may be. Notwithstanding anything to the contrary contained in the foregoing, if
Purchaser so elects to close the acquisition of the Property as an exchange,
then (i) Purchaser, at its sole option, may delegate its obligations to acquire
the Property under this Contract, and may assign its rights to receive the
Property from Seller, to an Intermediary or to an exchange accommodation
titleholder, as the case may be; (ii) such delegation and assignment shall in no
way reduce, modify or otherwise affect the obligations of Purchaser pursuant to
this Contract; (iii) Purchaser shall remain fully liable for its obligations
under this Contract as if such delegation and assignment shall not have taken
place; (iv) Intermediary or exchange accommodation titleholder, as the case may
be, shall have no liability to Seller; and (v) the closing of the acquisition of
the Property by Purchaser or the exchange accommodation titleholder, as the case
may be, shall be undertaken by direct deed from Seller (or, if applicable, from
other affiliates of Seller whom Seller will cause to execute such deeds) to
Purchaser (or to exchange accommodation titleholder, as the case may be). 13.20
No Personal Liability of Officers, Trustees or Directors of Seller's Partners.
Purchaser acknowledges that this Contract is entered into by Seller which is a
California limited partnership, and Purchaser agrees that none of Seller's
Indemnified Parties shall have any personal liability under this Contract or any
document executed in connection with the transactions contemplated by this
Contract.
13.21 No Exclusive Negotiations. Seller shall have the right, at all times prior
to the expiration of the Financing Contingency Period, to solicit backup offers
and enter into discussions, negotiations, or any other communications concerning
or related to the sale of the Property with any third-party; provided, however,
that such communications are subject to the terms of this Contract, and that
Seller shall not enter into any contract or binding Contract with a third-party
for the sale of the Property unless such Contract is contingent on the
termination of this Contract without the Property having been conveyed to
Purchaser.
13.22 ADA Disclosure. Purchaser acknowledges that the Property may be subject to
the federal Americans With Disabilities Act (the "ADA"), which requires, among
other matters, that tenants and/or owners of "public accommodations" remove
barriers in order to make the Property accessible to disabled persons and
provide auxiliary aids and services for hearing, vision or speech impaired
persons. Seller makes no warranty, representation or guarantee of any type or
kind with respect to the Property's compliance with the ADA (or any similar
state or local law), and Seller expressly disclaims any such representation.
13.23 No Recording. Purchaser shall not cause or allow this Contract or any
contract or other document related hereto, nor any memorandum or other evidence
hereof, to be recorded or become a public record without Seller's prior written
consent, which consent may be withheld at Seller's sole discretion. If the
Purchaser records this Contract or any other memorandum or evidence thereof,
Purchaser shall be in default of its obligations under this Contract. Purchaser
hereby appoints the Seller as Purchaser's attorney-in-fact to prepare and record
any documents necessary to effect the nullification and release of the Contract
or other memorandum or evidence thereof from the public records. This
appointment shall be coupled with an interest and irrevocable.
13.24 Relationship of Parties. Purchaser and Seller acknowledge and agree that
the relationship established between the parties pursuant to this Contract is
only that of a seller and a purchaser of property. Neither Purchaser nor Seller
is, nor shall either hold itself out to be, the agent, employee, joint venturer
or partner of the other party. 13.25 Dispute Resolution. Any controversy,
dispute, or claim of any nature arising out of, in connection with, or in
relation to the interpretation, performance, enforcement or breach of this
Contract (and any closing document executed in connection herewith), including
any claim based on contract, tort or statute, shall be resolved at the written
request of any party to this Contract by binding arbitration. The arbitration
shall be administered in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association. Any matter to be settled by
arbitration shall be submitted to the American Arbitration Association in the
state in which the Property is located. The parties shall attempt to designate
one arbitrator from the American Arbitration Association. If they are unable to
do so within 30 days after written demand therefor, then the American
Arbitration Association shall designate an arbitrator. The arbitration shall be
final and binding, and enforceable in any court of competent jurisdiction. The
arbitrator shall award attorneys' fees (including those of in-house counsel) and
costs to the prevailing party and charge the cost of arbitration to the party
which is not the prevailing party. Notwithstanding anything herein to the
contrary, this Section 13.25 shall not prevent Purchaser or Seller from seeking
and obtaining equitable relief on a temporary or permanent basis, including,
without limitation, a temporary restraining order, a preliminary or permanent
injunction or similar equitable relief, from a court of competent jurisdiction
located in the state in which the Property is located (to which all parties
hereto consent to venue and jurisdiction) by instituting a legal action or other
court proceeding in order to protect or enforce the rights of such party under
this Contract or to prevent irreparable harm and injury. The court's
jurisdiction over any such equitable matter, however, shall be expressly limited
only to the temporary, preliminary, or permanent equitable relief sought; all
other claims initiated under this Contract between the parties hereto shall be
determined through final and binding arbitration in accordance with this Section
13.25. 13.26 AIMCO Marks. Purchaser agrees that Seller, the Property Manager or
AIMCO, or their respective affiliates, are the sole owners of all right, title
and interest in and to the AIMCO Marks (or have the right to use such AIMCO
Marks pursuant to license agreements with third parties) and that no right,
title or interest in or to the AIMCO Marks is granted, transferred, assigned or
conveyed as a result of this Contract. Purchaser further agrees that Purchaser
will not use the AIMCO Marks for any purpose. 13.27 Non-Solicitation of
Employees. Purchaser acknowledges and agrees that, without the express written
consent of Seller, neither Purchaser nor any of Purchaser's employees,
affiliates or agents shall solicit any of Seller's employees or any employees
located at the Property (or any of Seller's affiliates' employees located at any
property owned by such affiliates) for potential employment.
13.28 Survival. Except for (a) all of the provisions of this Article 13 (other
than Section 13.19, 13.21 and 13.23), and (b) any provision of this Contract
which expressly states -that it shall so survive, and (c) any payment obligation
of Purchaser under this Contract (the foregoing (a), (b) and (c) referred to
herein as the "Survival Provisions"), none of the terms and provisions of this
Contract shall survive the termination of this Contract, and, if the Contract is
not so terminated, all of the terms and provisions of this Contract (other than
the Survival Provisions) shall be merged into the Closing documents and shall
not survive Closing. 13.29 Multiple Purchasers. As used in this Contract, the
term "Purchaser" means all entities acquiring any interest in the Property at
the Closing, including, without limitation, any assignee(s) of the original
Purchaser pursuant to Section 13.3 of this Contract. In the event that
"Purchaser" has any obligations or makes any covenants, representations or
warranties under this Agreement, the same shall be made jointly and severally by
all entities being a Purchaser hereunder. In the event that Seller receives
notice from any entity being a Purchaser hereunder, the same shall be deemed to
constitute notice from all entities being a Purchaser hereunder. In the event
that any entity being a Purchaser hereunder takes any action, breaches any
obligation or otherwise acts pursuant to the terms of this Contract, the same
shall be deemed to be the action of the other entity(ies) being a Purchaser
hereunder and the action of "Purchaser" under this Contract. In the event that
Seller is required to give notice or take action with respect to Purchaser under
this Contract, notice to any entity being a Purchaser hereunder or action with
respect to any entity being a Purchaser hereunder shall be a notice or action to
all entities being a Purchaser hereunder. In the event that any entity being a
Purchaser hereunder desires to bring an action or arbitration against Seller,
such action must be joined by all entities being a Purchaser hereunder in order
to be effective. In the event that there is any agreement by Seller to pay any
amount pursuant to this Contract to Purchaser under any circumstance, that
amount shall be deemed maximum aggregate amount to be paid to all parties being
a Purchaser hereunder and not an amount that can be paid to each party being a
Purchaser hereunder. In the event that Seller is required to return the Initial
Deposit, Additional Deposit or other amounts to Purchaser, Seller shall return
the same to any entity being a Purchaser hereunder and, upon such return, shall
have no further liability to any other entity being a Purchaser hereunder for
such amount. The foregoing provisions also shall apply to any documents,
including, without limitation, the General Assignment and Assumption and the
Assignment and Assumption of Leases and Security Deposits, executed in
connection with this Contract and the transaction(s) contemplated hereby.
ARTICLE 14
LEAD-BASED PAINT DISCLOSURE
14.1 Disclosure. Seller and Purchaser hereby acknowledge delivery of the Lead
Based Paint Disclosure attached as Exhibit G hereto. The provisions of this
Section 14.1 shall survive the Closing and delivery of the Deed to Purchaser.
14.2 Consent Contract. Testing (the "Testing") has been performed at the
Property with respect to lead-based paint. Law Engineering and Environmental
Services, Inc. performed the Testing and reported its findings in the Report of
Findings dated May 14, 2001, a copy of which is attached hereto as Exhibit H
(the "Report"). The Report certifies the Property as lead based paint free. By
execution hereof, Purchaser acknowledges receipt of a copy of the Report, the
Lead-Based Paint Disclosure Statement attached hereto as Exhibit G, and
acknowledges receipt of that certain Consent Agreement (the "Consent Contract")
by and among the United States Environmental Protection Agency (executed
December 19, 2001), the United States Department of Housing and Urban
Development (executed January 2, 2002), and Apartment Investment and Management
Company ("AIMCO") (executed December 18, 2001). Because the Property has been
certified as lead based paint free, Seller is not required under the Consent
Contract to remediate or abate any lead-based paint condition at the Property
prior to the Closing. Purchaser acknowledges and agrees that (1) after Closing,
the Purchaser and the Property shall be subject to the Consent Contract and the
provisions contained herein related thereto and (2) that Purchaser shall not be
deemed to be a third party beneficiary to the Consent Contract. The provisions
of this Section 14.2 shall survive the termination of this Contract, and if not
so terminated, the Closing and delivery of the Deed to Purchaser.
NOW, THEREFORE, the parties hereto have executed this Contract as of the
date first set forth above.
Seller:
NATIONAL PROPERTY INVESTORS 7,
a California limited partnership
By: NPI Equity Investments, Inc.,
a Florida corporation,
its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
Purchaser:
VERMEIL, LLC, a Kentucky limited
liability company
By: /s/Mike Mackin
Name: Mike Mackin
Title:Member and Manager
ESCROW AGENT SIGNATURE PAGE
The undersigned executes the Contract to which this signature page is
attached for the purpose of agreeing to the provisions of Section 2.3 of the
Contract, and hereby establishes August 1, 2003 as the date of opening of escrow
and designates 03-193561 as the escrow number assigned to this escrow.
ESCROW AGENT:
FIDELITY NATIONAL TITLE INSURANCE COMPANY
By: /s/Lolly Avant
Name:Lolly Avant
Title:Vice President
Page(s)
BROKER SIGNATURE PAGE
The undersigned Broker hereby executes this Broker Signature Page solely
to confirm the following: (a) Broker represents only the Seller in the
transaction described in the Contract to which this signature page is attached,
(b) Broker acknowledges that the only compensation due to Broker in connection
with the transaction described in the Contract to which this signature page is
attached is as set forth in a separate agreement between Seller and Broker
payable at the Closing, and (c) Broker represents and warrants to Seller that
Broker and its affiliates has not and will not receive any compensation (cash or
otherwise) from or on behalf of Purchaser or any affiliate thereof in connection
with the transaction, and do not, and will not at the Closing, have any direct
or indirect legal, beneficial, economic or voting interest in Purchaser (or in
an assignee of Purchaser, which pursuant to Section 13.3 of the Contract,
acquires the Property at the Closing) nor has Purchaser granted (as of the
Effective Date or the Closing Date) the Broker or any of its affiliates any
right or option to acquire any direct or indirect legal, beneficial, economic or
voting interest in Purchaser.
BROKER:
HENDRICKS & PARTNERS
By: /s/Todd Stofflet
Name: Todd Stofflet
Title: Senior Advisor
Exhibit 10.14
REINSTATEMENT & AMENDMENT
OF PURCHASE AND SALE CONTRACT
(Patchen Place Apartments)
THIS REINSTATEMENT AND AMENDMENT OF PURCHASE AND SALE CONTRACT
("Reinstatement") is entered into as of the 5th day of September, 2003 (the
"Effective Date") by and between NATIONAL PROPERTY INVENSTORS 7, a California
limited partnership, having a principal address at 4582 South Ulster Street
Parkway, Suite 1100, Denver, Colorado 80237 ("Seller") and VERMEIL, LLC, a
Kentucky limited liability company, having a principal address at 501 S. Second
Street, Suite 200, Louisville, Kentucky 40202 ( the "Purchaser").
RECITALS
A. Seller and Purchaser entered into a Purchase and Sale Contract dated as of
July 31, 2003 (the "Contract"), pursuant to which Seller agreed to sell to
Purchaser, and Purchaser agreed to buy from Seller the Property (as defined in
the Contract).
B. Pursuant to the terms of the Contract, Purchaser delivered to Escrow Agent an
Initial Deposit of $70,000.00, which Initial Deposit continues to be held by
Escrow Agent.
C. Pursuant to a letter to Seller dated as of September 2, 2003 from Purchaser,
Purchaser terminated the Contract. Seller and Purchaser have agreed to reinstate
and modify the terms of the Contract as set forth in this Reinstatement.
D. All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Contract.
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
Seller and Purchaser agree as follows:
AGREEMENTS
1. Reinstatement. The Contract is hereby reinstated as if such Contract had
never been terminated and shall remain in full force and effect and binding
on the parties hereto, subject to the terms and conditions thereof and
hereof.
2. Waiver of Feasibility Period Contingencies. Purchaser hereby agrees and
acknowledges that all contingencies relating to the Feasibility Period have
been satisfied or waived by Purchaser as of the Effective Date of this
Agreement. Additionally, Purchaser hereby acknowledges and agrees that all
contingencies relating to Purchaser's review of the Title Commitment and
Survey, as more particularly set forth in Section 4.1, Section 4.2 and
Section 4.3 of the Contract, have been waived by Purchaser as of the
Effective Date of this Agreement.
3. Waiver of Financing Contingency. Purchaser hereby agrees and acknowledges
that all contingencies relating to the Financing Contingency Period have been
satisfied or waived by Purchaser as of the Effective Date of this Agreement.
4. Closing Date. The first sentence of Section 5.1 of the Contract is hereby
deleted in its entirety and replaced with the following:
The Closing shall occur on October 31, 2003 (the "Closing Date")
through an escrow with Escrow Agent, whereby the Seller, Purchaser
and their attorneys need not be physically present at the Closing
and may deliver documents by overnight air courier or other means.
5. Additional Deposit. Purchaser shall deliver the Additional Deposit (as
defined in the Contract) by wire transfer of Good Funds in the amount of
$70,000.00 to Escrow Agent no later than 12:00 noon (in the time zone in which
the Escrow Agent is located) as of the Effective Date of this Reinstatement,
which funds together with the Initial Deposit shall be non-refundable when paid,
except as otherwise expressly provided in the Contract, and shall be held,
credited and disbursed in the manner provided for in the Contract with respect
to the Deposit.
6. Closing Credit. For valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser shall receive upon Closing a credit
in the amount of $26,050.00 ("Closing Credit"), which Closing Credit shall be
shown as a credit in favor of Purchaser and a debit against Seller on the final
closing settlement statement. 7. Effectiveness of Contract. Except as modified
by this Reinstatement, all the terms of the Contract shall remain unchanged and
in full force and effect.
8. Counterparts. This Reinstatement may be executed in counterparts, and all
counterparts together shall be construed as one document.
9. Telecopied Signatures. A counterpart of this Reinstatement signed by one
party to this Reinstatement and telecopied to the other party to this
Reinstatement or its counsel (i) shall have the same effect as an original
signed counterpart of this Reinstatement, and (ii) shall be conclusive proof,
admissible in judicial proceedings, of such party's execution of this
Reinstatement.
IN WITNESS WHEREOF, Seller and Purchaser have entered into this
Reinstatement and Amendment of Purchase and Sale Contract as of the date first
above stated.
Seller:
NATIONAL PROPERTY INVESTORS 7,
a California limited partnership
By: NPI Equity Investments, Inc.,
a Florida corporation,
its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
Purchaser:
VERMEIL, LLC,
a Kentucky limited liability company
By: /s/Mike Mackin
Name: Mike Mackin
Its: Member and Manager