UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to ________________
Commission file number 0-13261
SHELTER PROPERTIES VI
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0755618
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SHELTER PROPERTIES VI
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2005
Assets
Cash and cash equivalents $ 104
Receivables and deposits 149
Restricted escrow 107
Other assets 243
Investment properties:
Land $ 588
Buildings and related personal property 9,603
10,191
Less accumulated depreciation (6,599) 3,592
Assets held for sale (Note A) 1,570
$ 5,765
Liabilities and Partners' Capital (Deficiency)
Liabilities
Accounts payable $ 119
Tenant security deposit liabilities 36
Accrued property taxes 41
Other liabilities 142
Due to affiliates (Note C) 658
Mortgage notes payable 6,190
Liabilities related to assets held for sale (Note A) 1,822
Partners' Capital (Deficiency)
General partners $ 198
Limited partners (42,324 units issued and
outstanding) (3,441) (3,243)
$ 5,765
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
(Restated) (Restated)
Revenues:
Rental income $ 408 $ 406 $ 812 $ 828
Other income 47 47 96 95
Total revenues 455 453 908 923
Expenses:
Operating 306 226 546 417
General and administrative 45 73 77 130
Depreciation 95 99 190 197
Interest 100 93 199 189
Property taxes 22 21 44 43
Total expenses 568 512 1,056 976
Loss from continuing operations (113) (59) (148) (53)
(Loss) income from discontinued
operations (Note A) (23) 32 (41) 50
Net loss $ (136) $ (27) $ (189) $ (3)
Net loss allocated to general
partners (1%) $ (1) $ -- $ (2) $ --
Net loss allocated to limited
partners (99%) (135) (27) (187) (3)
$ (136) $ (27) $ (189) $ (3)
Per limited partnership unit:
Loss from continuing operations $ (2.65) $ (1.40) $ (3.45) $ (1.23)
(Loss) income from discontinued
operations (0.54) 0.76 (0.97) 1.16
Net loss per limited partnership unit $ (3.19) $ (0.64) $ (4.42) $ (0.07)
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 42,324 $ 2 $42,324 $42,326
Partners' capital (deficiency)
at December 31, 2004 42,324 $ 200 $(3,254) $(3,054)
Net loss for the six months
ended June 30, 2005 -- (2) (187) (189)
Partners' capital (deficiency)
at June 30, 2005 42,324 $ 198 $(3,441) $(3,243)
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2005 2004
Cash flows from operating activities:
Net loss $ (189) $ (3)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 318 662
Amortization of loan costs 23 32
Change in accounts:
Receivables and deposits (12) (19)
Other assets (7) (105)
Accounts payable 61 (38)
Tenant security deposit liabilities 9 (3)
Accrued property taxes (31) 110
Other liabilities (38) (256)
Due to affiliates -- 84
Net cash provided by operating activities 134 464
Cash flows from investing activities:
Property improvements and replacements (233) (189)
Net withdrawals from (deposits to) restricted escrows 55 (3)
Net cash used in investing activities (178) (192)
Cash flows from financing activities:
Payments on mortgage notes payable (121) (260)
Advances from affiliate 30 250
Repayment of advances from affiliate (30) (250)
Net cash used in financing activities (121) (260)
Net (decrease) increase in cash and cash equivalents (165) 12
Cash and cash equivalents at beginning of period 269 255
Cash and cash equivalents at end of period $ 104 $ 267
Supplemental disclosure of cash flow information:
Cash paid for interest $ 221 $ 565
Supplemental disclosure of non-cash activity:
Property improvements and replacements included in
accounts payable $ 32 $ 32
Included in property improvements and replacements for the six months ended June
30, 2005 and 2004 are approximately $42,000 and $66,000 of improvements which
were included in accounts payable at December 31, 2004 and 2003, respectively.
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Shelter Properties VI (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. The general
partner responsible for management of the Partnership's business is Shelter
Realty VI Corporation ("the Corporate General Partner"). The Corporate General
Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The non-corporate
general partner, AIMCO Properties, L.P., is also an affiliate of AIMCO. In the
opinion of the Corporate General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended June 30,
2005 are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2005. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 2004.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying statements of operations for the three and six months ended June
30, 2004 have been restated as of January 1, 2004 to reflect the operations of
River Reach Apartments and Carriage House Apartments as (loss) income from
discontinued operations. The Partnership sold River Reach Apartments to a third
party in August 2004 and has entered into a contract to sell Carriage House
Apartments to a third party in August 2005. In accordance with SFAS No. 144, the
assets and liabilities of Carriage House Apartments have been classified as held
for sale at June 30, 2005 on the balance sheet.
Note B - Reconciliation of Cash Flows
The following, as required by the partnership agreement of the Partnership (the
"Partnership Agreement"), is a reconciliation of "Net cash provided by operating
activities" on the accompanying statements of cash flows to "Net cash from
operations", as defined in the Partnership Agreement. However, "Net cash from
operations" should not be considered an alternative to net loss as an indicator
of the Partnership's operating performance or to cash flows as a measure of
liquidity.
Six Months Ended
June 30,
2005 2004
(in thousands)
Net cash provided by operating activities $ 134 $ 464
Payments on mortgage notes payable (121) (260)
Property improvements and replacements (233) (189)
Change in restricted escrows, net 55 (3)
Changes in reserves for net operating
liabilities 18 227
Additions to operating reserves -- (239)
Net cash used in operations $ (147) $ --
The Corporate General Partner reserved approximately $239,000 during the six
months ended June 30, 2004 to fund capital improvements at the Partnership's
investment properties.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and depends on the Corporate General Partner
and its affiliates for the management and administration of all Partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and (ii) reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
Affiliates of the Corporate General Partner 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
$62,000 and $132,000 for the six months ended June 30, 2005 and 2004,
respectively, which are included in operating expenses and (loss) income from
discontinued operations.
Affiliates of the Corporate General Partner charged the Partnership for
reimbursement of accountable administrative expenses amounting to approximately
$54,000 and $82,000 for the six months ended June 30, 2005 and 2004,
respectively, which are included in general and administrative expenses,
investment properties, and assets held for sale. The portion of these
reimbursements included in investment properties and assets held for sale for
the six months ended June 30, 2005 and 2004 are fees related to construction
management services provided by an affiliate of the Corporate General Partner of
approximately $16,000 and $5,000, respectively. The construction management
service fees are calculated based on a percentage of additions to investment
properties.
Pursuant to the Partnership Agreement and in connection with the sale of
Foxfire/Barcelona Village during 2000, Nottingham Square Apartments in December
2002, and River Reach Apartments in August 2004, the Corporate General Partner
is entitled to a commission of up to 1% for its assistance in the sale. Payment
of such commission is subordinate to the limited partners receiving a cumulative
7% return on their investment. This return has not yet been met; accordingly,
the combined fees of approximately $658,000 have been accrued and are included
in due to affiliates.
During the six months ended June 30, 2005 and 2004, an affiliate of the
Corporate General Partner advanced the Partnership approximately $30,000 and
$250,000, respectively, to cover capital expenditures and operating expenses at
Village Gardens Apartments and additional costs related to the sale of
Nottingham Square Apartments, respectively. Interest was charged at the prime
rate plus 1%. Interest expense on these advances was less than $1,000 and
approximately $3,000 for the six months ended June 30, 2005 and 2004,
respectively. During the six months ended June 30, 2005 and 2004, the
Partnership made payments of approximately $30,000 and $250,000, respectively,
on the outstanding loans. At June 30, 2005, there were no such advances or
associated accrued interest due to an affiliate of the Corporate General
Partner. Subsequent to June 30, 2005, an affiliate of the Corporate General
Partner advanced the Partnership approximately $61,000 to fund capital
expenditures and operating expenses at Village Gardens Apartments.
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, general
liability and vehicle liability. The Partnership insures its properties above
the AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the Corporate General Partner. During the six months ended
June 30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates
approximately $40,000 and $74,000, respectively, for insurance coverage and fees
associated with policy claims administration.
Note D - Contingencies
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 Corporate 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 Corporate 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 captioned Heller v.
Insignia Financial Group (the "Heller action") was filed against the same
defendants that are named in the Nuanes action. 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 28, 2002, the trial court granted defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. 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 ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeals reversed the trial court's order striking
the first amended complaint.
The Corporate 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.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the Corporate General Partner, are defendants in a lawsuit
alleging that they 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 attempts to bring 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. and NHP Management Company failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the complaint
alleges AIMCO Properties L.P. and NHP Management Company failed to comply with
the FLSA in compensating maintenance workers for time that they worked in excess
of 40 hours in a week. On June 23, 2005 the Court conditionally certified the
collective action on both the on-call and overtime issues. The Court ruling
allows plaintiffs to provide notice of the collective action to all non-exempt
maintenance workers from August 7, 2000 through the present. Those employees
will have the opportunity to opt-in to the collective action. Defendants have
asked the Court to reconsider its ruling or in the alternative certify the
ruling for appeal on that issue. After the notice goes out, defendants will have
the opportunity to move to decertify the collective action. The Court further
denied plaintiffs' Motion for Certification of the state subclass. Although the
outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe
that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Corporate General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's financial condition or results of
operations.
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.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, and potential fines or
penalties imposed by such agencies in connection therewith, the presence of
hazardous substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership, operation and management of its properties,
the Partnership could potentially be liable for environmental liabilities or
costs associated with its properties.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold and for personal injury
claims related to mold exposure. Affiliates of the Corporate General Partner
have implemented a national policy and procedures to prevent or eliminate mold
from its properties and the Corporate General Partner believes that these
measures will minimize the effects that mold could have on residents. To date,
the Partnership has not incurred any material costs or liabilities relating to
claims of mold exposure or to abate mold conditions. Because the law regarding
mold is unsettled and subject to change the Corporate General Partner can make
no assurance that liabilities resulting from the presence of or exposure to mold
will not have a material adverse effect on the Partnership's financial condition
or results of operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, AIMCO believes the areas of investigation have included AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates,
capitalization of payroll and certain other costs, tax credit transactions, and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Corporate General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's financial condition or results of
operations.
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 three apartment complexes,
one of which is classified as held for sale at June 30, 2005 (as discussed in
"Results of Operations"). The following table sets forth the average occupancy
of the remaining properties for each of the six months ended June 30, 2005 and
2004:
Average
Occupancy
Property 2005 2004
Rocky Creek Apartments (1)
Augusta, Georgia 91% 94%
Village Gardens Apartments
Fort Collins, Colorado 83% 83%
(1) The Corporate General Partner attributes the decrease in average occupancy
at Rocky Creek Apartments to increased home purchases in the Augusta area
and recent military deployments.
The Partnership's financial results depend upon a number of factors including
the ability to attract and maintain tenants at the investment properties,
interest rates on mortgage loans, costs incurred to operate the investment
properties, general economic conditions and weather. As part of the ongoing
business plan of the Partnership, the Corporate General Partner monitors the
rental market environment of its investment properties to assess the feasibility
of increasing rents, maintaining or increasing occupancy levels and protecting
the Partnership from increases in expenses. As part of this plan, the Corporate
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 Corporate General Partner may use
rental concessions and rental rate reductions to offset softening market
conditions; accordingly, there is no guarantee that the Corporate General
Partner will be able to sustain such a plan. Further, a number of factors that
are outside the control of the Partnership such as the local economic climate
and weather can adversely or positively affect the Partnership's financial
results.
Results of Operations
The Partnership realized a net loss of approximately $136,000 and $189,000 for
the three and six months ended June 30, 2005, respectively, compared to net loss
of approximately $27,000 and $3,000 for the three and six months ended June 30,
2004, respectively. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", the accompanying statements of operations for the three and
six months ended June 30, 2004 have been restated as of January 1, 2004 to
reflect the operations of River Reach Apartments and Carriage House Apartments
as (loss) income from discontinued operations. The Partnership sold River Reach
Apartments to a third party on August 30, 2004 and has entered into a contract
to sell Carriage House Apartments to a third party in August 2005. In accordance
with SFAS No. 144, the assets and liabilities of Carriage House Apartments have
been classified as held for sale at June 30, 2005.
The operations of River Reach Apartments and Carriage House Apartments, loss of
approximately $23,000 and $41,000 for the three and six months ended June 30,
2005, respectively, and income of approximately $32,000 and $50,000 for the
three and six months ended June 30, 2004 respectively, are shown as (loss)
income from discontinued operations. Included in (loss) income from discontinued
operations are revenues of approximately $187,000 and $365,000 for the three and
six months ended June 30, 2005, respectively, and approximately $894,000 and
$1,784,000 for the three and six months ended June 30, 2004, respectively.
The Partnership recognized loss from continuing operations of approximately
$113,000 and $148,000 for the three and six months ended June 30, 2005,
respectively, compared to loss from continuing operations of approximately
$59,000 and $53,000 for the three and six months ended June 30, 2004,
respectively. The increase in loss from continuing operations for the three
months ended June 30, 2005 is due to an increase in total expenses. The increase
in loss from continuing operations for the six months ended June 30, 2005 is due
to an increase in total expenses and a decrease in total revenues. The increase
in total expenses for both the three and six months ended June 30, 2005 is due
to increases in both operating and interest expenses, partially offset by
decreases in both depreciation and general and administrative expenses. Property
tax expense remained comparable for both periods. The increase in operating
expenses for both periods is due to increases in payroll related expenses at
both of the Partnership's investment properties, contract maintenance expense at
Rocky Creek Apartments and advertising expense at Village Gardens Apartments.
Interest expense increased for both periods primarily due to an increase in the
interest rate on the variable rate mortgage encumbering Rocky Creek Apartments,
partially offset by scheduled principal payments made on the mortgages
encumbering the Partnership's investment properties, which reduced the carrying
balance of the loans. The decrease in depreciation expense for both periods is
due to property improvements and replacements placed into service at Village
Gardens Apartments in prior years becoming fully depreciated during 2005.
General and administrative expenses decreased for both the three and six months
ended June 30, 2005 due to a decrease in management reimbursements to the
Corporate General Partner as allowed under the Partnership Agreement primarily
as a result of the 2004 sale of River Reach Apartments. Also included in general
and administrative expenses for both the three and six months ended June 30,
2005 and 2004 are costs associated with the quarterly and annual communications
with investors and regulatory agencies and the annual audit required by the
Partnership Agreement.
The decrease in total revenues for the six months ended June 30, 2005 is due to
a decrease in rental income. Other income remained constant for the six months
ended June 30, 2005. The decrease in rental income is due to the decreases in
occupancy at Rocky Creek Apartments and the average rental rate at Village
Gardens Apartments. Total revenues remained relatively constant for the three
months ended June 30, 2005, as both rental and other income remained relatively
constant.
Liquidity and Capital Resources
At June 30, 2005 the Partnership had cash and cash equivalents of approximately
$104,000, compared to approximately $267,000 at June 30, 2004. Cash and cash
equivalents decreased approximately $165,000, from December 31, 2004, due to
approximately $178,000 and $121,000 of cash used in investing and financing
activities, respectively, partially offset by approximately $134,000 of cash
provided by operating activities. Cash used in investing activities consisted of
property improvements and replacements, partially offset by net receipts from an
escrow account maintained by the mortgage lender. Cash used in financing
activities consisted of principal payments made on the mortgages encumbering the
Partnership's properties and payments on advances from an affiliate of the
Corporate General Partner, partially offset by advances received from an
affiliate. The Partnership invests its working capital reserves in interest
bearing accounts.
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 investment 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 Corporate
General Partner monitors developments in the area of legal and regulatory
compliance. For example, 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. Capital improvements planned for
each of the Partnership's properties are detailed below.
Rocky Creek Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $60,000 in capital improvements at Rocky Creek Apartments,
consisting primarily of recreation facility and sewer upgrades and floor
covering replacement. The improvements were funded from operating cash flow. The
Partnership regularly evaluates the capital improvement needs of the property.
While the Partnership has no material commitments for property improvements and
replacements, certain routine capital expenditures are anticipated during 2005.
Such capital expenditures will depend on the physical condition of the property
as well as anticipated cash flow generated by the property.
Carriage House Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $129,000 in capital improvements at Carriage House Apartments,
consisting primarily of exterior painting, heating and air conditioning upgrades
and floor covering replacement. These improvements were funded from replacement
reserves and operating cash flow. The Partnership has entered into a contract to
sell Carriage House Apartments to a third party in August 2005.
Village Gardens Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $34,000 in capital improvements at Village Gardens Apartments,
consisting primarily of interior improvements and floor covering replacement.
These improvements were funded from operating cash flow and advances from an
affiliate of the Corporate General Partner. The Partnership regularly evaluates
the capital improvement needs of the property. While the Partnership has no
material commitments for property improvements and replacements, certain routine
capital expenditures are anticipated during 2005. Such capital expenditures will
depend on the physical condition of the property as well as anticipated cash
flow generated by the property.
Capital expenditures will be incurred only if cash is available from operations,
Partnership reserves, or advances from an affiliate of the Corporate General
Partner. To the extent that 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 encumbering
Village Gardens Apartments of approximately $3,993,000 matures in January 2021
at which time the mortgage is scheduled to be fully amortized. The mortgage
encumbering Rocky Creek Apartments of approximately $2,197,000 has a maturity
date of September 15, 2007 at which time a balloon payment of approximately
$2,068,000 is due. The Corporate General Partner has the option to extend the
maturity on the Rocky Creek Apartments loan for another five years. After that
period the Corporate General Partner will attempt to refinance such indebtedness
and/or sell the property. If the property cannot be refinanced or sold, the
Partnership will risk losing such property through foreclosure.
There were no distributions to the partners during the six months ended June 30,
2005 and 2004. Future cash distributions will depend on the levels of net cash
generated from operations, the timing of debt maturities, property sales and/or
refinancings. The Partnership's cash available for distribution is reviewed on a
monthly basis. There can be no assurance that the Partnership will generate
sufficient funds from operations, after required capital improvements, to permit
any distributions to its partners during 2005 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 28,435 limited partnership units
(the "Units") in the Partnership representing 67.18% of the outstanding Units at
June 30, 2005. 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 Corporate General Partner. As a result of its ownership of 67.18% of
the outstanding Units, AIMCO and its affiliates are in a position to control all
such voting decisions with respect to the Partnership. Although the Corporate
General Partner owes fiduciary duties to the limited partners of the
Partnership, the Corporate General Partner also owes fiduciary duties to AIMCO
as its sole stockholder. As a result, the duties of the Corporate General
Partner, as corporate general partner, to the Partnership and its limited
partners may come into conflict with the duties of the Corporate 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
The Partnership's 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 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.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line basis over the term of the lease. The Partnership evaluates all
accounts receivable from residents and establishes an allowance, after the
application of security deposits, for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.
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 Corporate 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 Corporate 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 Corporate 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 Corporate 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 captioned Heller v.
Insignia Financial Group (the "Heller action") was filed against the same
defendants that are named in the Nuanes action. 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 28, 2002, the trial court granted defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. 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 ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeals reversed the trial court's order striking
the first amended complaint.
The Corporate 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.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the Corporate General Partner, are defendants in a lawsuit
alleging that they 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 attempts to bring 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. and NHP Management Company failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the complaint
alleges AIMCO Properties L.P. and NHP Management Company failed to comply with
the FLSA in compensating maintenance workers for time that they worked in excess
of 40 hours in a week. On June 23, 2005 the Court conditionally certified the
collective action on both the on-call and overtime issues. The Court ruling
allows plaintiffs to provide notice of the collective action to all non-exempt
maintenance workers from August 7, 2000 through the present. Those employees
will have the opportunity to opt-in to the collective action. Defendants have
asked the Court to reconsider its ruling or in the alternative certify the
ruling for appeal on that issue. After the notice goes out, defendants will have
the opportunity to move to decertify the collective action. The Court further
denied plaintiffs' Motion for Certification of the state subclass. Although the
outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe
that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Corporate General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.
Item 5. Other Information
None.
Item 6. Exhibits
See Exhibit Index Attached.
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.
SHELTER PROPERTIES VI
By: Shelter Realty VI Corporation
Corporate General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: August 15, 2005
SHELTER PROPERTIES VI
EXHIBIT INDEX
Exhibit Number Description of Exhibit
3 See Exhibit 4 (a)
4 (a) Amended and Restated Certificate and Agreement of
Limited Partnership (included as Exhibit A to the
Prospectus of Registrant dated March 22, 1984
contained in Amendment No. 1 to Registration
Statement No. 2-86995, of Registrant filed March 21,
1984 (the "Prospectus") and incorporated herein by
reference.)
(b) Subscription Agreement and Signature Page (included as
Exhibits 4 (A) and 4 (B) 8 to the Prospectus and
incorporated herein by reference).
10(iii) Contracts related to refinancings of debt:
(g) Multifamily Note dated December 15, 2000 between Shelter
Properties VI and Reilly Mortgage Group, Inc., a
District of Columbia corporation, securing Village
Gardens Apartments filed as Exhibit 10(iii)(g) to the
Partnership's Form 8-K Filed February 1, 2001 and
incorporated herein by reference.
(h) Multifamily Deed of Trust, Assignment of Rents, and
Security Agreement dated December 15, 2000 between
Shelter VI and Reilly Mortgage Group, Inc., a District
of Columbia corporation, securing Village Gardens
Apartments. Filed as Exhibit 10(iii)(h) to the
Partnership's Form 8-K filed February 1, 2001 and
incorporated herein by reference.
(j) Loan Agreement by and among Shelter Properties VI, and other affiliated
partnerships, and GMAC Commercial Mortgage
Corporation, a California corporation, to secure
credit facility, dated September 16, 2002. Filed as
Exhibit 10(iii)(j) of the Partnership's Quarterly
Report on Form 10-QSB for the quarterly period ended
September 30, 2002 and incorporated herein by
reference.
(k) Multifamily Note by and among Shelter Properties VI and
GMAC Commercial Mortgage Corporation, a California
corporation, to secure loan for Rocky Creek Apartments.
Filed as Exhibit 10(iii)(k) of the Partnership's
Quarterly Report on Form 10-QSB for the quarterly period
ended September 30, 2002 and incorporated herein by
reference.
(l) Multifamily Note by and among Shelter Properties VI and
GMAC Commercial Mortgage Corporation, a California
corporation, to secure loan for Carriage House
Apartments. Filed as Exhibit 10(iii)(l) of the
Partnership's Quarterly Report on Form 10-QSB for the
quarterly period ended September 30, 2002 and
incorporated herein by reference.
10(iv) Contracts related to disposition of properties:
(g) Purchase and Sale Contract between Shelter Properties VI
Limited Partnership, a South Carolina limited
partnership, and Neighborhood Realty, Inc., a Florida
corporation, dated June 23, 2004 filed with Form 8-K on
September 3, 2004 and incorporated herein by reference.
(h) Amendment of Purchase and Sale Contract between Shelter
VI Limited Partnership, a South Carolina limited
Partnership, and JNM River Reach, Ltd., a Florida
limited partnership, dated August 30, 2004 filed with
Form 8-K on September 3, 2004 and incorporated herein by
reference.
(i) Purchase and Sale Contract between Shelter VI Limited
Partnership and Juniper Investment Group, Ltd., dated
May 19, 2005.
(j) First Amendment to Purchase and Sale Contract - Carriage
House Apartments, dated June 7, 2005.
(k) Second Amendment to Purchase and Sale Contract -
Carriage House Apartments, dated July 7, 2005.
(l) Third Amendment to Purchase and Sale Contract - Carriage
House Apartments, dated July 26, 2005.
31.1 Certification of equivalent of Chief Executive
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-4(a), as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
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.
32.1 Certification of the equivalent of the Chief
Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
VI;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: August 15, 2005
/s/Martha L. Long
Martha L. Long
Senior Vice President of Shelter Realty VI
Corporation, equivalent of the chief
executive officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
VI;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: August 15, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President of Shelter Realty VI
Corporation, 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 Shelter Properties VI
Limited Partnership (the "Partnership"), for the quarterly period ended June 30,
2005 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Martha L. Long, as the equivalent of the chief executive officer
of the Partnership, and Stephen B. Waters, 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/Martha L. Long
Name: Martha L. Long
Date: August 15, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: August 15, 2005
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 104i
PURCHASE AND SALE CONTRACT
AMONG
SHELTER PROPERTIES VI LIMITED PARTNERSHIP, a South Carolina limited partnership
(f/k/a Shelter Properties VI); GLEN HOLLOW LIMITED PARTNERSHIP, an Illinois
limited partnership (f/k/a Regency Glen Hollow Limited Partnership); MISTY WOODS
CPF 19 LIMITED PARTNERSHIP, a Delaware limited partnership; TRIANON, LTD., a
North Carolina limited partnership; NATIONAL PINETREE LIMITED PARTNERSHIP, a
North Carolina limited partnership; QUAIL WOODS APARTMENT PARTNERS, L.P., a
Delaware limited partnership; REDDMAN-OXFORD ASSOCIATES LIMITED PARTNERSHIP, a
Maryland limited partnership; NEW SNOWDEN VILLAGE I, L.P., a Delaware limited
partnership; AND SNOWDEN VILLAGE ASSOCIATES, L.P., a Delaware limited
partnership,
AS SELLERS
AND
JUNIPER INVESTMENT GROUP, LTD.,
a Texas limited partnership
AS PURCHASER
Table of Contents
Page
ARTICLE I DEFINED TERMS......................................................1
ARTICLE II PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT.......................8
2.1 Purchase and Sale................................................8
2.2 Purchase Price and Deposit.......................................8
2.3 Escrow Provisions Regarding Deposit..............................8
ARTICLE III FEASIBILITY PERIOD..............................................10
3.1 Feasibility Period..............................................10
3.2 Expiration of Feasibility Period................................10
3.3 Conduct of Investigation........................................11
3.4 Purchaser Indemnification.......................................11
3.5 Property Materials..............................................12
3.6 Property Contracts..............................................13
ARTICLE IV TITLE............................................................13
4.1 Title Documents.................................................13
4.2 Survey..........................................................14
4.3 Objection and Response Process..................................14
4.4 Permitted Exceptions............................................15
4.5 Existing Deed of Trust..........................................15
4.6 Purchaser Financing.............................................16
ARTICLE V CLOSING...........................................................16
5.1 Closing Date....................................................16
5.2 Seller Closing Deliveries.......................................16
5.3 Purchaser Closing Deliveries....................................17
5.4 Closing Prorations and Adjustments..............................18
5.5 Post Closing Adjustments........................................23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER...........24
6.1 Seller's Representations........................................24
6.2 AS-IS...........................................................25
6.3 Survival of Seller's Representations............................26
6.4 Definition of Seller's Knowledge................................26
6.5 Representations And Warranties Of Purchaser.....................26
ARTICLE VII OPERATION OF THE PROPERTIES.....................................27
7.1 Leases and Property Contracts...................................27
7.2 General Operation of Property...................................28
7.3 Liens...........................................................28
7.4 Roof Repairs....................................................28
ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING................................28
8.1 Purchaser's Conditions to Closing...............................28
8.2 Sellers' Conditions to Closing..................................29
ARTICLE IX BROKERAGE........................................................30
9.1 Indemnity.......................................................30
9.2 Brokers' Commission.............................................31
9.3 Brokers' Signature Page.........................................31
ARTICLE X DEFAULTS AND REMEDIES.............................................31
10.1 Purchaser Default...............................................31
10.2 Seller Default..................................................32
ARTICLE XI RISK OF LOSS OR CASUALTY.........................................33
11.1 Major Damage....................................................33
11.2 Minor Damage....................................................33
11.3 Repairs.........................................................33
ARTICLE XII EMINENT DOMAIN..................................................34
12.1 Eminent Domain..................................................34
ARTICLE XIII MISCELLANEOUS..................................................34
13.1 Binding Effect of Contract......................................34
13.2 Exhibits And Schedules..........................................34
13.3 Assignability...................................................34
13.4 Binding Effect..................................................35
13.5 Captions........................................................35
13.6 Number And Gender Of Words......................................35
13.7 Notices.........................................................35
13.8 Governing Law And Venue.........................................37
13.9 Entire Agreement................................................37
13.10 Amendments......................................................38
13.11 Severability....................................................38
13.12 Multiple Counterparts/Facsimile Signatures......................38
13.13 Construction....................................................38
13.14 Confidentiality.................................................38
13.15 Time Of The Essence.............................................38
13.16
Waiver............................................................38
13.17 Attorneys' Fees.................................................39
13.18 Time Periods....................................................39
13.19 1031 Exchange...................................................39
13.20 No Personal Liability of Officers, Trustees or Directors of
Seller's Partners...............................................40
13.21 No Exclusive Negotiations.......................................40
13.22 ADA Disclosure..................................................40
13.23 No Recording....................................................40
13.24 Relationship of Parties.........................................40
13.25 Dispute Resolution..............................................40
13.26 AIMCO Marks.....................................................41
13.27 Non-Solicitation of Employees...................................41
13.28 Survival........................................................41
13.29 Multiple Purchasers.............................................41
13.30 Sellers' Several Obligations....................................42
13.31 Obligation to Close on all Properties...........................42
ARTICLE XIV LEAD-BASED PAINT DISCLOSURE.....................................42
14.1 Disclosure......................................................42
14.2 Consent Agreement - Pre-1978 Certified..........................42
14.3 Consent Agreement - Pre-1978-LBP, But No LBP Hazards............43
EXHIBITS LIST
EXHIBIT A-1 LEGAL DESCRIPTION OF CARRIAGE HOUSE....................A-1-1
EXHIBIT A-2 LEGAL DESCRIPTION OF GLEN HOLLOW.......................A-2-1
EXHIBIT A-3 LEGAL DESCRIPTION OF MISTY WOODS.......................A-3-1
EXHIBIT A-4 LEGAL DESCRIPTION OF THE OAKS AT EDGEMONT..............A-4-1
EXHIBIT A-5 LEGAL DESCRIPTION OF PINETREE (NC).....................A-5-1
EXHIBIT A-6 LEGAL DESCRIPTION OF QUAIL WOODS.......................A-6-1
EXHIBIT A-7 LEGAL DESCRIPTION OF REDDMAN'S PIER....................A-7-1
EXHIBIT A-8 LEGAL DESCRIPTION OF SNOWDEN VILLAGE I.................A-8-1
EXHIBIT A-9 LEGAL DESCRIPTION OF SNOWDEN VILLAGE II................A-9-1
EXHIBIT B-1 FORM OF SPECIAL WARRANTY DEED (North Carolina).........B-1-1
EXHIBIT B-2 FORM OF SPECIAL WARRANTY DEED (Virginia)...............B-2-1
EXHIBIT C FORM OF BILL OF SALE.....................................C-1
EXHIBIT D GENERAL ASSIGNMENT AND ASSUMPTION........................D-1
EXHIBIT E ASSIGNMENT AND ASSUMPTION OF LEASES AND
SECURITY DEPOSITS........................................E-1
EXHIBIT F NOTICE TO VENDOR REGARDING TERMINATION
OF CONTRACT..............................................F-1
EXHIBIT G TENANT NOTIFICATION......................................G-1
EXHIBIT H LEAD-BASED PAINT DISCLOSURE..............................H-1
EXHIBIT I ASSIGNMENT OF CONSTRUCTION CONTRACT......................I-1
SCHEDULE A SELLER INFORMATION SCHEDULE.....................Schedule A-1
SCHEDULE 1.1.29 LIST OF EXCLUDED FIXTURES AND TANGIBLE
PERSONAL PROPERTY............................Schedule 1.1.29
SCHEDULE 3.5 LIST OF MATERIALS...............................Schedule 3.5
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT (this "Contract") is entered into as of
the 19th day of May, 2005 (the "Effective Date"), by the selling parties
identified on Schedule A (the "Seller Information Schedule") having an address
at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237
(individually a "Seller" and collectively "Sellers"), and Juniper Investment
Group, Ltd., a Texas limited partnership, having a principal address at 6750
West Loop South, Suite 850, Bellaire, Texas 77401 ("Purchaser").
NOW, THEREFORE, in consideration of mutual covenants set forth herein,
Sellers and Purchaser hereby agree as follows:
RECITALS
A.....Each Seller owns the real estate commonly known as and identified by
the "Community Name" listed on the Seller Information Schedule and as more
particularly described in Exhibits A-1 to A-9 attached hereto and made a part
hereof, and the improvements thereon.
B.....Purchaser desires to purchase, and each Seller desires to sell, the
land, improvements and certain associated property described in this Contract on
the terms and conditions set forth below.
ARTICLE I
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 "Additional Deposit" shall have the meaning set forth in Section 2.2.2.
1.1.3 "AIMCO" means Apartment Investment and Management Company.
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 a Seller, its Property Manager, or AIMCO
in the marketing, operation or use of a 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 "Applicable Share" means, a fraction, the numerator of which is the
Property's Base Purchase Price set forth on the Seller Information Schedule, and
the denominator of which is $62,300,000.00.
1.1.6 [Intentionally left blank.]
1.1.7 [Intentionally left blank.]
1.1.8 [Intentionally left blank.]
1.1.9 [Intentionally left blank.]
1.1.10......"Assumption Property" means a Property identified as an Assumption
Property on the Seller Information Schedule. There are no Assumption Properties
that are subject to this Contract.
1.1.11......"Base Purchase Price" means the "Base Purchase Price" for a Property
set forth on the Seller Information Schedule.
1.1.12......"Broker" shall have the meaning set forth in Section 9.1.
1.1.13......"Business Day" means any day other than a Saturday or Sunday or
Federal holiday or legal holiday in the States of Colorado, Texas, North
Carolina or Virginia.
1.1.14......"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.
1.1.15......"Closing Date" means the date on which the Closing of the conveyance
of the Properties is required to be held pursuant to Section 5.1.
1.1.16......"Code" shall have the meaning set forth in Section 2.3.6.
1.1.17......"Consent Agreement" shall have the meaning set forth in Section
14.2.
1.1.18......"Consultants" shall have the meaning set forth in Section 3.1.
1.1.19......"Damage Notice" shall have the meaning set forth in Section 11.1.
1.1.20......"Deed" shall have the meaning set forth in Section 5.2.1.
1.1.21......"Deed of Trust" means any deeds of trust and/or mortgages which
secure a Note against a Payoff Property.
1.1.22......"Deposit" means, to the extent actually deposited by Purchaser with
Escrow Agent, the Initial Deposit and the Additional Deposit.
1.1.23......"Escrow Agent" shall have the meaning set forth in Section 2.2.1.
1.1.24......"Excluded Permits" means, with respect to each Property, those
Permits which, under applicable law, are nontransferable and such other Permits,
if any, as may be designated as Excluded Permits on the Seller Information
Schedule.
1.1.25......"Existing Survey" shall have the meaning set forth in Section 4.2.
1.1.26......"Feasibility Period" shall have the meaning set forth in Section
3.1.
1.1.27......"FHA " shall have the meaning set forth in Section 13.22.
1.1.28......"Final Response Deadline" shall have the meaning set forth in
Section 4.3.
1.1.29......"Fixtures and Tangible Personal Property" means, with respect to
each Property, all fixtures, furniture, furnishings, fittings, equipment,
machinery, apparatus, appliances and other articles of tangible personal
property located on such Property as of the Effective Date and used or usable in
connection with the occupation or operation of all or any part of such Property,
but only to the extent transferable. The term "Fixtures and Tangible Personal
Property" does not include (a) equipment leased by the applicable Seller and the
interest of the applicable Seller in any equipment provided to its Property for
use, but not owned or leased by such Seller, or (b) property owned or leased by
any Tenant or guest, employee or other person furnishing goods or services to
such Property, or (c) property and equipment owned by the applicable Seller,
which in the ordinary course of business of such Property is not used
exclusively for the business, operation or management of such Property, or (d)
the property and equipment, if any, expressly identified in Schedule 1.1.29 or
listed on the Seller Information Schedule as "Excluded FF&E."
1.1.30......"General Assignment" shall have the meaning set forth in Section
5.2.3.
1.1.31......"Good Funds" shall have the meaning set forth in Section 2.2.1.
1.1.32......"Improvements" means all buildings and improvements located on the
Land corresponding to each Property, taken "as is."
1.1.33......"Initial Deposit" shall have the meaning set forth in Section 2.2.1.
1.1.34......"Land" means, with respect to each Property, the corresponding tract
of land described on Exhibits A-1 to A-9, and all rights, privileges and
appurtenances pertaining thereto.
1.1.35......"LBP Report" means, with respect to a Property, the report
identified on the Seller Information Schedule, prepared by the consultant
identified therein with respect to lead-based paint.
1.1.36......"Lease(s)" means, with respect to each Property, the interest of the
applicable 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 such Seller's Property and which are in force as of
the Closing Date for the applicable Property.
1.1.37......"Leases Assignment" shall have the meaning set forth in Section
5.2.4.
1.1.38......"Lender" means, with respect to each Property, those "Lenders"
identified on the Seller Information Schedule, each of whose servicer, if any,
also is identified on the Seller Information Schedule.
1.1.39......"Lender Fees" means, with respect to each Payoff Property, all fees
and expenses (including, without limitation, all prepayment penalties and
pay-off fees) imposed or charged by each 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 applicable Note and Deed of Trust, any amounts
of interest charged by the applicable Lender for the period from the Closing
Date to the permitted prepayment date. The exact amount of the Lender Fees shall
be determined as of the Closing Date.
1.1.40......"Loan" means the indebtedness owing to Lender evidenced by a Note.
1.1.41......[Intentionally left blank.]
1.1.42......[Intentionally left blank.]
1.1.43......[Intentionally left blank.]
1.1.44......[Intentionally left blank.]
1.1.45......"Loan Payoff" shall have the meaning set forth in Section 5.4.7.
1.1.46......"Losses" shall have the meaning set forth in Section 3.4.1.
1.1.47......"Materials" shall have the meaning set forth in Section 3.5.
1.1.48......"Miscellaneous Property Assets" means, with respect to each
Property, all contract rights, leases, concessions, warranties, plans, drawings
and other items of intangible personal property relating to the ownership or
operation of a Property and owned by its respective Seller, excluding, however,
with respect to each Property (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) such 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 the applicable
Seller's rights, if any, in and to the name "Community Name" identified in the
Seller Information Schedule as it relates solely to use in connection with the
applicable Property (and not with respect to any other property owned or managed
by any Seller, Property Manager, AIMCO, or their respective affiliates).
1.1.49......"Note" means, with respect to each Property, the promissory note(s)
identified in the Seller Information Schedule.
1.1.50......"Objection Deadline" shall have the meaning set forth in Section
4.3.
1.1.51......"Objection Notice" shall have the meaning set forth in Section 4.3.
1.1.52......"Objections" shall have the meaning set forth in Section 4.3.
1.1.53......"Payoff Property" means those Properties for which the Loan will be
paid off at Closing and identified as a Payoff Property on the Seller
Information Schedule. All Properties subject to this Contract are Payoff
Properties.
1.1.54......"Permits" means, with respect to each Property, all licenses and
permits granted by any governmental authority having jurisdiction over such
Property and required in order to own and operate such Property.
1.1.55......"Permitted Exceptions" shall have the meaning set forth in Section
4.4.
1.1.56......"Prohibited Person" means any of the following: (a) a person or
entity that is listed in the Annex to, or is otherwise subject to the provisions
of, Executive Order No. 13224 on Terrorist Financing (effective September 24,
2001) (the "Executive Order"); (b) a person or entity owned or controlled by, or
acting for or on behalf of any person or entity that is listed in the Annex to,
or is otherwise subject to the provisions of, the Executive Order; (c) a person
or entity that is named as a "specially designated national" or "blocked person"
on the most current list published by the U.S. Treasury Department's Office of
Foreign Assets Control ("OFAC") at its official website,
http://www.treas.gov/offices/enforcement/ofac; (d) a person or entity that is
otherwise the target of any economic sanctions program currently administered by
OFAC; or (e) a person or entity that is affiliated with any person or entity
identified in clause (a), (b), (c) and/or (d) above.
1.1.57......"Property" means (a) the Land and Improvements and all rights of the
applicable Seller, if any, in and to all of the easements, rights, privileges,
and appurtenances belonging or in any way appertaining to such Land and
Improvements, (b) the right, if any and only to the extent transferable, of such
Seller in the Property Contracts, Leases, Permits (other than Excluded Permits),
and the Fixtures and Tangible Personal Property related to such Land and
Improvements, and (c) the Miscellaneous Property Assets owned by Seller which
are located on such Land and Improvements and used in its operation.
1.1.58......"Property Contracts" means, with respect to each Property, 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 such
Property, but only to the extent assignable by their terms or applicable law
(including any contracts that are assignable with the consent of the applicable
vendor), and not including (a) any national contracts entered into by the
applicable Seller, Property Manager, or AIMCO with respect to the applicable
Property (i) which terminate automatically upon transfer of such Property by
such Seller, or (ii) which such Seller, in Seller's sole discretion, elects to
terminate with respect to such Property effective as of the Closing Date, or (b)
any property management contract for such Property. Property Contracts shall not
include forward or similar long-term contracts to purchase electricity, natural
gas, or other utilities, which contracts shall be "Utility Contracts" governed
by the provisions of Section 5.4.12.
1.1.59......"Property Contracts Notice" shall have the meaning set forth in
Section 3.6.
1.1.60......"Property Manager" means the current property manager of each
Property.
1.1.61......"Proration Schedule" shall have the meaning set forth in Section
5.4.1.
1.1.62......"Purchase Price" shall have the meaning set forth in Section 2.2.
1.1.63......"Records Disposal Notice" shall have the meaning set forth in
Section 5.4.13.
1.1.64......"Records Hold Period" shall have the meaning set forth in
Section 5.4.13.
1.1.65......"Regional Property Manager" means, with respect to each Property,
the individual identified in the Seller Information Schedule.
1.1.66......"Reinstatement Notice" shall have the meaning set forth in Section
8.1.
1.1.67......"Remediation" shall have the meaning set forth in Section 14.2.
1.1.68......"Required Assignment Consent" shall have the meaning set forth in
Section 3.6.
1.1.69......[Intentionally left blank.]
1.1.70......"Response Deadline" shall have the meaning set forth in Section
4.3.
1.1.71......"Response Notice" shall have the meaning set forth in Section 4.3.
1.1.72......"Seller's Indemnified Parties" shall have the meaning set forth
in Section 3.4.1.
1.1.73......"Seller Information Schedule" shall have the meaning set forth in
the introductory paragraph.
1.1.74......"Seller's Property-Related Files and Records" shall have the
meaning set forth in Section 5.4.13.
1.1.75......"Seller's Representations" shall have the meaning set forth in
Section 6.1.
1.1.76......"Seller's Representative" means AIMCO.
1.1.77......[Intentionally left blank.]
1.1.78......"Survey" shall have the meaning ascribed thereto in Section 4.2.
1.1.79......"Survival Period" shall have the meaning set forth in Section 6.3.
1.1.80......"Survival Provisions" shall have the meaning set forth in Section
13.28.
1.1.81......"Tax Year" shall have the meaning set forth in Section 5.4.14.3.
1.1.82......"Tenant" means any person or entity entitled to occupy any portion
of the applicable Property under a Lease.
1.1.83......"Tenant Deposits" means, with respect to a Property, 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
the applicable Seller pursuant to its Leases. Tenant Deposits shall not include
any non-refundable deposits or fees paid by Tenants to the applicable Seller,
either pursuant to the Leases or otherwise.
1.1.84......"Tenant Security Deposit Balance" shall have the meaning set forth
in Section 5.4.6.2.
1.1.85......"Terminated Contracts" shall have the meaning set forth in
Section 3.6.
1.1.86......"Termination Notice" shall have the meaning set forth in Section
8.1.
1.1.87......"Testing" shall have the meaning set forth in Section 14.2.
1.1.88......"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 a Property.
1.1.89......"Title Commitment" shall have the meaning ascribed thereto in
Section 4.1.
1.1.90......"Title Documents" shall have the meaning set forth in Section 4.1.
1.1.91......"Title Insurer" shall have the meaning set forth in Section 2.2.1.
1.1.92......"Title Policy" shall have the meaning set forth in Section 4.1.
1.1.93......"Uncollected Rents" shall have the meaning set forth in Section
5.4.6.1.
1.1.94......"Utility Contract " shall have the meaning set forth in Section
5.4.12.
1.1.95......"Vendor Terminations" shall have the meaning set forth in
Section 5.2.5.
ARTICLE II
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT
2.1 Purchase and Sale. Each Seller agrees to sell and convey its Property listed
on the Seller Information Schedule to Purchaser and Purchaser agrees to purchase
such Property from each Seller, all in accordance with the terms and conditions
set forth in this Contract.
2.2 Purchase Price and Deposit. The Base Purchase Price for each Property is set
forth in the Seller Information Schedule, and, in the case of a Payoff Property,
also shall be reduced by the Lender Fees applicable to such Property (the
"Purchase Price"). The Purchase Price for each Property shall be paid as
follows:
2.2.1 On or before two (2) Business Days after the Effective Date, Purchaser
shall deliver to Stewart Title Guaranty Company, National Title Services, 1980
Post Oak Blvd., Suite 610, Houston, Texas 77056, Attention: Ms. Wendy Howell,
Phone 713-625-8136, Fax 713-552-1703 ("Escrow Agent" or "Title Insurer") an
initial deposit (the "Initial Deposit") of $375,000.00 by wire transfer of
immediately available funds ("Good Funds"). On the Effective Date, $100,000.00
of the Initial Deposit ("$100,000.00 Deposit") shall be nonrefundable to
Purchaser, subject only to failure to close pursuant to Sellers' Conditions to
Closing in Sections 8.2.4 and 8.2.6, Seller Default in Section 10.2 and
Purchaser's right to terminate in Section 4.3, if Seller delivers Survey or
Title that is unmarketable or if an Environmental Report requires the
intervention of a regulatory agency. The Initial Deposit shall be held and
disbursed in accordance with the escrow provisions set forth in Section 2.3. The
Initial Deposit shall be allocated among the Sellers of the Properties pursuant
to the Applicable Share attributable to each of their respective Properties.
2.2.2 On the day that the Feasibility Period expires, Purchaser shall deliver to
Escrow Agent an additional deposit (the "Additional Deposit") of $375,000.00 by
wire by transfer of Good Funds. The Additional Deposit shall be held and
disbursed in accordance with the escrow provisions set forth in Section 2.3. The
Additional Deposit shall be allocated among the Sellers of the Properties
pursuant to the Applicable Share attributable to each of their respective
Properties.
2.2.3 [Intentionally left blank.]
2.2.4 The balance of the Purchase Price for each 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 any 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 for each Property, 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 Purchaser or Seller's Representative makes a written demand upon
Escrow Agent for payment of the Deposit, Escrow Agent shall give written notice
to the other parties of such demand. If Escrow Agent does not receive a written
objection from another 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 a Property is located. Escrow Agent shall
give written notice of such deposit to Seller's Representative and Purchaser.
Upon such deposit, Escrow Agent shall be relieved and discharged of all further
obligations and responsibilities hereunder. Sellers hereby appoint Seller's
Representative to give and receive notices to Escrow Agent regarding the
Deposit.
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 any 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. Sellers 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 Sellers, and the same shall become
fully effective upon execution by Purchaser and Sellers, 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, Sellers, 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 Deeds to
Purchaser.
ARTICLE III
FEASIBILITY PERIOD
3.1 Feasibility Period. Subject to the terms of Sections 3.3 and 3.4 and the
right of Tenants under the Leases, from the Effective Date to and including the
date which is 45 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 Properties:
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 Properties (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 Properties;
3.1.3 To ascertain and confirm the suitability of the property for
Purchaser's intended use of the Properties; 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 in its entirety with respect to all Properties (but not in part with
respect to less than all Properties) by giving written notice to that effect to
Seller's Representative 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 the Survival Provisions, and, except as otherwise provided in Section
4.3, Escrow Agent shall forthwith return the Initial Deposit, less the
$100,000.000 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's Representative 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
Properties 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 any 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 the applicable Seller a reasonable time prior to
entry onto its Property and shall permit such Seller to have a representative
present during all Inspections conducted at its Property. All information made
available by any of the Sellers 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
Properties 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 Deeds to Purchaser.
3.4 Purchaser Indemnification.
3.4.1 Purchaser shall indemnify, hold harmless and, if requested by a Seller (in
such Seller's sole discretion), defend (with counsel approved by such Seller)
such Seller, together with such 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 such
Seller, "Seller's Indemnified Parties"), from and against any and all damages,
mechanics' liens, liabilities, penalties, interest, 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
such Seller's Property, and any Inspections or other matters performed by
Purchaser with respect to such Property during the Feasibility Period or
otherwise.
3.4.2 Notwithstanding anything in this Contract to the contrary, Purchaser shall
not be permitted to perform any invasive tests on the Property without Seller's
prior written consent, which consent may be withheld in Seller's sole
discretion. Further, Seller's Representative shall have the right, without
limitation, to disapprove any and all entries, surveys, tests (including,
without limitation, a Phase II environmental study of its Property),
investigations and other matters that in such Seller's Representative's
reasonable judgment could result in any injury to its Property or breach of any
contract, or expose the applicable Seller to any Losses or violation of
applicable law, or otherwise adversely affect such Property or such 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 Seller' Representative to any such activity shall
be deemed to constitute a waiver by the applicable Seller or assumption of
liability or risk by such Seller. Purchaser hereby agrees to restore, at
Purchaser's sole cost and expense, each Property to the same condition existing
immediately prior to Purchaser's exercise of its rights pursuant to this Article
3. Purchaser shall maintain and cause its third party consultants to maintain
(a) 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 $1,000,000.00
with respect to property damage, and (b) worker's compensation insurance for all
of their respective employees in accordance with the law of the state(s) in
which the Properties are located. Purchaser shall deliver proof of the insurance
coverage required pursuant to this Section 3.4.2 to Sellers (in the form of a
certificate of insurance) prior to the earlier to occur of (i) Purchaser's or
Purchaser's Consultants' entry onto any of the Properties, or (ii) the
expiration of 5 days after the Effective Date.
3.4.3 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 Deeds 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 a Seller's possession or reasonable control (subject to Section
3.5.2), each Seller agrees to make the documents set forth on Schedule 3.5 (the
"Materials") relating to its Property available at its Property for review and
copying by Purchaser at Purchaser's sole cost and expense. In the alternative,
at a Seller's option and within the foregoing 10-day period, such Seller may
deliver some or all of its Materials to Purchaser, or make the same available to
Purchaser on a secure web site (Purchaser agrees that any item to be delivered
by a 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 the
applicable Seller and such Seller shall use commercially reasonable efforts to
deliver the same to Purchaser within 5 Business Days after such notification is
received by such 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, each 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 any of the Sellers 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 all applicable Sellers 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 Sellers pursuant to this Contract may not be complete or constitute
all of such documents which are in a Seller's possession or control, but are
those that are readily available to such Seller after reasonable inquiry to
ascertain their availability. Purchaser understands that, although each Seller
will use commercially reasonable efforts to locate and make available the
Materials and other documents required to be delivered or made available by it
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
such Seller's 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 Properties.
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 each Seller (a "Property Contracts
Notice") specifying any Property Contracts of such Seller which Purchaser
desires to terminate 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 (and, to the extent that the
effective date of termination of any Terminated Contract is after the Closing
Date, Purchaser shall be deemed to have assumed all of the applicable Seller's
obligations under such Terminated Contract as of the Closing Date), (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 a Property Contracts Notice to
a Seller on or before the expiration of the Feasibility Period, there shall be
no Terminated Contracts with respect to such Seller (or its Property) and
Purchaser shall assume all Property Contracts of such Seller at the Closing. To
the extent that any Property Contract to be assumed by Purchaser (including any
Property Contracts that, because of advance notice requirements, will be
temporarily assumed by Purchaser pending the effective date of termination after
the Closing Date) is assignable but requires the applicable vendor to consent to
the assignment or assumption of the Property Contract by the applicable Seller
to Purchaser, then, prior to the Closing, Purchaser shall be responsible for
obtaining from each applicable vendor a consent (each a "Required Assignment
Consent") to the assignment of the Property Contract to Purchaser (and the
assumption by Purchaser of all obligations under such Property Contract). If a
vendor does not cooperate with Purchaser, Seller shall reasonably assist
Purchaser in obtaining such vendor consent so long as Seller does not incur any
costs. Purchaser shall indemnify, hold harmless and, if requested by the
applicable Seller (in such Seller's sole discretion), defend (with counsel
approved by such Seller) such Seller's Indemnified Parties from and against any
and all Losses arising from or related to Purchaser's failure to obtain any
Required Assignment Consent.
ARTICLE IV
TITLE
4.1 Title Documents. Within 7 calendar days after the Effective Date, each
Seller shall cause to be delivered to Purchaser a standard form commitment for
title insurance ("Title Commitment") for such Seller's Property in an amount
equal to the Property's Base 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"). Consistent with local custom, each Seller of a Property
located in Virginia shall be responsible only for payment of the basic premium
for the Title Policy for its Property, and 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 with respect to each of the
Properties located in Virginia, including for "extended" coverage. Consistent
with local custom, each Seller of a North Carolina property shall have no
liability for payment of any title costs or expenses and Purchaser shall be
solely responsible for payment of all costs relating to the procurement of the
Title Commitment, the Title Policy (including the basic premium and all other
costs) and any requested endorsements with respect to each of the Properties
located in North Carolina, including the "extended" coverage.
4.2 Survey. Within 7 calendar days after the Effective Date, each Seller shall
deliver to Purchaser or make available at such Seller's Property any existing
survey of such Property (the "Existing Survey") which to such Seller's knowledge
is in such Seller's possession or reasonable control (subject to Section 3.5.2).
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 a Property be prepared (or that the Existing Survey be updated), Purchaser
shall request the same in writing to Seller's Representative no later than 10
calendar days after the Effective Date. Any such new or updated survey shall be
delivered to Purchaser. Seller also independently may elect to order a new or
updated survey of the Property either before or after the Effective Date (such
new or updated survey whether requested by Purchaser or ordered by Seller),
together with the Existing Survey, is referred to herein as the "Survey"). Any
new or updated survey may be ordered by Seller from the surveyor who prepared
the Existing Survey (or from such other surveyor as such Seller determines in
its reasonable discretion). Purchaser shall be solely responsible for the cost
and expense of the preparation only of any new or updated survey ordered or
requested by Purchaser pursuant to the terms of this Section 4.2.
4.3 Objection and Response Process. On or before the date which is 21 calendar
days after the Effective Date (the "Objection Deadline"), Purchaser shall, on a
Property-by-Property basis, give written notice (the "Objection Notice") to the
attorneys for Sellers of any matter set forth in any Title Documents or Surveys
which renders the Title or Survey to such Property unmarketable, and, if
Purchaser produces environmental reports on a Property ("Environmental
Reports"), any matter set forth in the Environmental Report for such Property
requiring the intervention of a regulatory agency (the "Objections"). If
Purchaser fails to tender an Objection Notice with respect to a Property 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 for such Property and environmental matters regarding such
Property. On or before 7 calendar days after the Objection Deadline (the
"Response Deadline"), a Seller who has received an Objection Notice may, in such
Seller's sole discretion, give Purchaser notice (the "Response Notice") of those
Objections which such Seller is willing to cure, if any. Sellers shall be
entitled to reasonable adjournments of the Closing Date to cure any Objections
applicable to any Seller. If a Seller fails to deliver a Response Notice by the
Response Deadline, such 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 any Response Notice, Purchaser may, as its exclusive remedy,
elect by written notice given to Seller's Representative on or before 3 business
days after the Response Deadline (the "Final Response Deadline") either (a) to
accept the Title Documents, Survey and environmental condition of such Property
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 its entirety regarding all Properties (but not less
than all Properties), in which event the Initial Deposit, including the
$100,000.00 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). The $100,000.00 Deposit shall be returned to Purchaser only
under the limited conditions stated in this Section 4.3, Sellers' failure to
satisfy the Conditions to Closing pursuant to Sections 8.2.4 and 8.2.6 and
Seller Default pursuant to Section 10.2. 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 applicable to each
Property, subject only to resolution, if any, of the Objections as set forth in
the Response Notice for such Property (or if no Response Notice is tendered,
without any resolution of the Objections).
4.4 Permitted Exceptions. The Deed for each Property 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 for such Property,
other than (a) those Objections, if any, which the applicable 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 for such Property;
4.4.3 [Intentionally left blank.]
4.4.4 Applicable zoning and governmental regulations and ordinances;
4.4.5 Any defects in or objections to title to such 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 for a Property, any
deeds of trust and/or mortgages which secure a Note (collectively, a "Deed of
Trust") shall not be deemed Permitted Exceptions for such Property, whether
Purchaser gives further written notice of such or not, and shall, pursuant to
Section 5.4.7, be paid off, satisfied, discharged and/or cured from proceeds of
the Purchase Price at Closing, provided that the Lender's Fees due in connection
with such Loan Payoff shall be paid by Purchaser. It is further understood and
agreed that, provided that Purchaser provides prompt notice to Seller, any tax
lien for delinquent property taxes, mechanic's liens for work authorized by the
applicable Seller and judgment liens against the applicable Seller shall not be
deemed a Permitted Exception, and shall be paid off, satisfied, discharged
and/or cured by the applicable Seller at or before Closing.
4.6 Purchaser Financing. Purchaser assumes full responsibility to obtain the
funds required for settlement, and Purchaser's acquisition of such funds shall
not be a contingency to the Closing.
ARTICLE V
CLOSING
5.1 Closing Date. The Closing shall occur 30 days after the expiration of the
Feasibility Period (the "Closing Date") through an escrow with Escrow Agent,
whereby the Sellers, 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, any 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 such Seller reasonably determines is
desirable in connection with the Loan Payoff and the exercise of such option
shall extend the Closing Date for all Properties. Further, the Closing Date may
be extended without penalty at the option of any Seller either (i) 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 any Seller pursuant to
the second sentence of this paragraph) to satisfy any condition to Closing, (ii)
such later date as is mutually acceptable to Seller and Purchaser.
Provided that Purchaser is not in default under the terms of this Contract,
Purchaser shall be permitted a one-time, 30-day extension of the Closing Date
specified in the first sentence of this Section 5.1 by (i) delivering written
notice to Seller no later than 5 business days prior to the scheduled Closing
Date, and (ii) simultaneously with such notice to Seller, delivering to Escrow
Agent the amount of $100,000.00, which amount when received by Escrow Agent
shall be added to the Deposit hereunder, shall be non-refundable (except as
otherwise expressly provided herein with respect to the Deposit), and shall be
held, credited and disbursed in the same manner as provided hereunder with
respect to the Deposit.
5.2 Seller Closing Deliveries. No later than 1 Business Day prior to the Closing
Date, each Seller shall, with respect to each Property to be conveyed by such
Seller hereunder, deliver to Escrow Agent, each of the following items:
5.2.1 Special Warranty Deed (the "Deed") in the form attached as Exhibit B-1 for
Properties located in the state of North Carolina and in the form attached as
Exhibit B-2 for the Properties located in Virginia, 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 in the form attached hereto as Exhibit F prepared by Purchaser
and countersigned by such 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 such Seller.
5.2.7 A title affidavit or at such Seller's option an indemnity, as applicable,
in the customary form reasonably acceptable to such 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
such Seller to any greater liability, or impose any additional obligations,
other than as set forth in this Contract; and
5.2.8 A certification of such 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 such Seller's
authority to consummate this transaction.
5.2.10......If applicable pursuant to the provisions of Section 7.4, an
assignment of the contracts for the Quail Woods Property referred to in Section
7.4, in the form attached hereto as Exhibit I.
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 the applicable Seller upon the Closing)
the following items with respect to each Property being conveyed at such
Closing:
5.3.1 The full Purchase Price for such Property (with credit for the Allocated
Share of 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 applicable 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 such 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 at such Property prepared and executed
by Purchaser in the form attached hereto as Exhibit G.
5.3.8 The Vendor Terminations (Purchaser shall be solely responsible for
identifying each of the Terminated Contracts (subject to the terms and
conditions of Section 3.6) and addressing and preparing each of the Vendor
Terminations for execution by Purchaser and the applicable Seller).
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......If applicable pursuant to the provisions of Section 7.4, a
countersigned counterpart of an assignment of the contracts for the Quail Woods
Property referred to in Section 7.4, in the form attached hereto as Exhibit I.
5.3.12......With respect to each Payoff Property, the Lender Fees (subject to
reduction from the Purchase Price in accordance with Section 2.2).
5.4 Closing Prorations and Adjustments. The prorations set forth in this Section
5.4 shall be on a Property-by-Property basis and not among, or between,
Properties, and shall not be allocated on an Applicable Share basis. 5.4.1
General. With respect to each Property, 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, the applicable Seller being charged or credited, as
appropriate, for all of the same attributable to the period up to the Closing
Date (and credited for any amounts paid by the applicable 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
the same attributable to the period on and after the Closing Date. Each 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 the applicable Seller (if the prorations result in a net credit
to such Seller) or by such Seller to Purchaser (if the prorations result in a
net credit to Purchaser for such Property), by increasing or reducing the cash
to be paid by Purchaser at Closing for such Property.
5.4.2 Operating Expenses.
5.4.2.1.....With respect to each Property, all of the operating, maintenance,
taxes (other than real estate taxes, such as rental taxes), and other expenses
incurred in operating such Property that such Seller customarily pays, and any
other costs incurred in the ordinary course of business for the management and
operation of such Property, shall be prorated on an accrual basis. Each 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.
5.4.2.2.....Purchaser acknowledges that following the Effective Date the Seller
of the Quail Woods Property will pursue the capital improvements and maintenance
repairs contemplated by Section 7.4. To the extent that any of such repair and
installation work is incomplete as of the Closing and the contracts with respect
thereto are to be assigned to and assumed by Purchaser as provided in Section
7.4, such Seller agrees to credit to Purchaser at the Closing any amount which
remains unpaid and owing to the contractor to whom payment is owed and Purchaser
agrees, in conjunction with its assumption of such contracts, to assume the
remaining payment obligations owing by such Seller thereunder.
5.4.3 Utilities. With respect to each Property, the final readings and final
billings for utilities will be made if possible as of the Closing Date, in which
case each 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. Each
Seller shall be entitled to the return of any deposit(s) posted by it with any
utility company, and such Seller shall notify each utility company serving its
Property to terminate its account, effective as of noon on the Closing Date.
5.4.4 Real Estate Taxes. Any real estate ad valorem or similar taxes for a
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 (assuming payment at the earliest time to allow for the
maximum possible discount) 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 such 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 (assuming payment at the earliest
time to allow for the maximum possible discount). 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; however, operating expenses
shall be prorated under Section 5.4.2.
5.4.6 Leases.
5.4.6.1.....With respect to each Property, 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 a 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. Each 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 a Seller's favor for rents which have accrued and
are unpaid as of the Closing, but Purchaser shall pay to such Seller such
accrued Uncollected Rents as and when collected by Purchaser, except that
Purchaser may first apply such collected rents to current rents due to
Purchaser. Purchaser agrees to bill Tenants of the Properties for all
Uncollected Rents and to take reasonable actions to collect Uncollected Rents.
After the Closing, each 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 such 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 any Seller of such right; provided, however, that the
foregoing right of Seller shall be limited to actions seeking monetary damages
and, in no event, shall Seller seek to evict any Tenants in any action to
collect Uncollected Rents. Purchaser agrees to cooperate with each Seller in
connection with all efforts by such 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 each 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 such
Seller; provided, however, that Purchaser's obligation to cooperate with a
Seller pursuant to this sentence shall not obligate Purchaser to commence any
legal action with any Tenant, to terminate any Tenant Lease with an existing
Tenant, to evict any existing Tenant from a Property or to incur any third party
expenses whatsoever.
5.4.6.2.....At Closing, with respect to each Property, Purchaser shall receive a
credit against the applicable 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 a Seller which constitute the Tenant Security Deposit Balance shall be
retained by the applicable Seller in exchange for the foregoing credit against
the applicable Purchase Price and shall not be transferred by such 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 any 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 for a Property, to the extent that
the applicable 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 for such Property. With respect to any payments received by Purchaser
after the Closing allocable to a Seller prior to Closing, Purchaser shall
promptly pay the same to the applicable Seller.
5.4.7 Existing Loans. Purchaser acknowledges that Purchaser had the opportunity
to assume each Note or to cause prepayment of such Note at Closing (but in
either event, Purchaser would pay the Lender Fees pursuant to Section 2.2).
Purchaser has elected to cause the debt to be prepaid. Therefore, on the Closing
Date, a sufficient amount of the proceeds of the Purchase Price will be used to
pay the outstanding principal balance of the applicable Note together with all
interest accrued under such Note prior to the Closing Date (the "Loan Payoff"),
and 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 the applicable Seller unless credited by Lender against the amount due under
the Note.
5.4.8 [Intentionally left blank.]
5.4.9 Insurance. No proration shall be made in relation to insurance premiums
and insurance policies will not be assigned to Purchaser.
5.4.10......Employees. All of each Seller's and each Seller's manager's on-site
employees shall have their employment at the applicable Property terminated as
of the Closing Date.
5.4.11......Closing Costs. With respect to each Property located in Virginia,
Purchaser shall pay any state, county, grantor, transfer, sales, use, gross
receipts or similar taxes, the cost of recording any instruments required to
discharge any liens or encumbrances against such Property, any premiums or fees
required to be paid by Purchaser with respect to the applicable Title Policy
pursuant to Section 4.1, and one-half of the customary closing costs of the
Escrow Agent. With respect to each Property located in Virginia, each Seller
shall pay the base premium for its Title Policy to the extent required by
Section 4.1, and one-half of the customary closing costs of the Escrow Agent.
With respect to each Property located in North Carolina, Purchaser shall pay any
sales, use, gross receipts or similar taxes, the cost of recording any
instruments required to discharge any liens or encumbrances against such
Property, any premiums or fees required to be paid by Purchaser with respect to
the applicable Title Policy pursuant to Section 4.1, and one-half of the
customary closing costs of the Escrow Agent. With respect to each Property
located in North Carolina, each Seller shall pay no costs or expenses in
connection with the Title Policy but shall pay the transfer tax or similar taxes
and one-half of the customary closing costs of the Escrow Agent.
5.4.12......Utility Contracts. No Seller has entered into an agreement for the
purchase of electricity, gas or other utility service for its Property or a
group of properties (including such Property) (a "Utility Contract").
[Remainder of provision intentionally deleted.]
5.4.13......Possession. Possession of each 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 applicable Purchase Price. To the extent
reasonably available to each Seller, originals or copies of its Leases and
Property Contracts, lease files, warranties, guaranties, operating manuals, keys
to the property, and such Seller's books and records relating to its Property to
be conveyed by such Seller (other than proprietary information) (collectively,
"Seller's Property-Related Files and Records") regarding the applicable Property
shall be made available to Purchaser at such Property after the Closing.
Purchaser agrees, for a period of not less than 5 years after the Closing (the
"Records Hold Period"), to (a) provide and allow the applicable Seller
reasonable access to Seller's Property-Related Files and Records for purposes of
inspection and copying thereof, and (b) reasonably maintain and preserve
Seller's Property-Related Files and Records. If at any time after the Records
Hold Period, Purchaser desires to dispose of any Seller's Property-Related Files
and Records, Purchaser must first provide the applicable Seller prior written
notice (the "Records Disposal Notice"). Such Seller shall have a period of 30
days after receipt of the Records Disposal Notice to enter the applicable
Property (or such other location that such records are then stored) and remove
or copy those of Seller's Property-Related Files and Records that such Seller
desires to retain. Purchaser agrees (i) to include the covenants of this Section
5.4.13 pertaining to Seller's Property-Related Files and Records in any
management contract for each Property (and to bind the manager thereunder to
such covenants), and (ii) to bind any future purchaser of such Property to the
covenants of this Section 5.4.13 pertaining to Seller's Property-Related Files
and Records. Purchaser shall indemnify, hold harmless and, if requested by each
Seller (in such Seller's sole discretion), defend (with counsel approved by such
Seller) such Seller's Indemnified Parties from and against any and all Losses
arising from or related to Purchaser's failure to comply with the provisions of
this Section 5.4.13.
5.4.14......Tax Appeals. Purchaser acknowledges that some of the Sellers have
filed appeals (each an "Appeal") with respect to real estate ad valorem or other
similar property taxes applicable to its Property (the "Property Taxes") as
listed on the Seller Information Schedule.
5.4.14.1....If an Appeal relates to any Tax Year (defined below) prior to the
Tax Year in which the Closing occurs, such Seller shall be entitled, in such
Seller's sole discretion, to continue to pursue such Appeal after the Closing
Date, and, in the event that the Appeal is successful in reducing the amount of
Property Taxes payable with respect to any such prior Tax Year, such Seller
shall be entitled to the full amount of any rebate, refund or reduction
(collectively, a "Refund") resulting from the Appeal. Such Seller shall not be
obligated to continue to pursue any Appeal with respect to the Property,
including, without limitation, any Appeal that relates to a Tax Year during or
after the Tax Year in which Closing occurs.
5.4.14.2....If an Appeal relates to the Tax Year in which Closing occurs, then,
prior to the Closing, such Seller shall notify Purchaser whether Seller desires
to continue to process the Appeal from and after the Closing Date. If Seller
fails to notify Purchaser of its election to continue the Appeal, such Seller
will be deemed to have elected not to continue the Appeal from and after the
Closing Date and the provisions of Section 5.4.14.2(b) shall apply.
(a) If such Seller elects to continue the Appeal, then, from and after the
Closing Date, such Seller agrees that it will continue, at such Seller's sole
cost and expense, to reasonably process the Appeal to conclusion with the
applicable taxing authority (including any further appeals which such Seller
deems reasonable to pursue). In the event that the Appeal is successful in
reducing the amount of Property Taxes payable with respect to the Tax Year in
which Closing occurs, then Purchaser and such Seller shall share any Refund on a
pro rata basis (in accordance with the number of days in the Tax Year of Closing
that each held title to the Property) after first reimbursing such Seller for
its actual, reasonable and documented third-party costs (collectively, the
"Third-Party Costs") incurred in connection with the Appeal. If Third-Party
Costs equal or exceed the amount of the Award, then such Seller shall be
entitled to the full amount of the Award.
(b) If such Seller does not elect to continue the Appeal, then, from and after
the Closing Date, Purchaser may, as determined in Purchaser's sole discretion,
continue, at Purchaser's sole cost and expense, to reasonably process the Appeal
to conclusion with the applicable taxing authority (including any further
appeals which Purchaser deems reasonable to pursue). In the event that the
Appeal is successful in reducing the amount of Property Taxes payable with
respect to the Tax Year in which Closing occurs, then Purchaser and such Seller
shall share any Refund on a pro rata basis (in accordance with the number of
days in the Tax Year of Closing that each held title to the Property) after
first reimbursing each of Purchaser and such Seller for their respective
Third-Party Costs incurred in connection with the Appeal. If Third-Party Costs
equal or exceed the amount of the Award, then the Award shall be applied to such
Third-Party Costs on a pro rata basis, with each of Purchaser and such Seller
receiving a portion of the Award equal to the product of (i) a fraction, the
numerator of which is the respective party's Third-Party Costs, and the
denominator of which is the total of both parties' Third-Party Costs, and (ii)
the amount of the Award.
5.4.14.3....For purposes of this Section 5.4.14, "Tax Year" shall mean each
12-month period for which the applicable taxing authority assesses Property
Taxes, which may or may not be a calendar year.
5.4.15......Survival. The provisions of this Section 5.4 shall survive the
Closing and delivery of the Deed to Purchaser.
5.5 Post Closing Adjustments. In general, and except as provided in this
Contract or the Closing Documents, each Seller shall be entitled to all income,
and shall pay all expenses, relating to the operation of its 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 such Property for the
period commencing on and after the Closing Date. Purchaser or a Seller may
request that Purchaser and such 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 for any Property (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) with respect to such Property. The provisions of this Section
5.5 shall survive the Closing and delivery of the Deeds to Purchaser.
ARTICLE VI
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, each Seller, individually and severally with respect only
to itself and its Property, 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 Such Seller is duly organized, validly existing and in good standing under
the laws of the state of its formation set forth on the Seller Information
Schedule; and, subject to Section 8.2.4, has or at the Closing shall have the
entity power and authority to sell and convey its Property and to execute the
documents to be executed by such 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 such Seller
is a party or by which such Seller is otherwise bound, which conflict, breach or
default would have a material adverse affect on such 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 such Seller in accordance with its terms;
6.1.2 Other than the Leases, such Seller's Property is not subject to any
written lease executed by such Seller or, to such Seller's knowledge, any other
possessory interests of any person;
6.1.3 Such 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 as set forth on the Seller Information Schedule and for (a) any
actions by such Seller to evict Tenants under its Leases, or (b) any matter
covered by Seller's current insurance policy(ies), to such Seller's knowledge,
there are no actions, proceedings, litigation or governmental investigations or
condemnation actions either pending or threatened against such Seller's
Property;
6.1.5 To such Seller's knowledge, such 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 such Seller's Property; and
6.1.6 To such Seller's knowledge, such Seller has not received any written
notice of any material default by such Seller under any of its Property
Contracts that will not be terminated on the Closing Date.
6.2 AS-IS. Except for Seller's Representations, each Property is expressly
purchased and sold "AS IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase
Price for each Property 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
Sellers or Broker or statements, representations or warranties, express or
implied, made by or enforceable directly against Sellers or Broker, including,
without limitation, any relating to the value of any Property, the physical or
environmental condition of any Property, any state, federal, county or local
law, ordinance, order or permit; or the suitability, compliance or lack of
compliance of any Property with any regulation, or any other attribute or matter
of or relating to any Property (other than any covenants of title contained in
the Deed conveying a Property and Seller's Representations with respect to such
Property). Purchaser agrees that Sellers shall not be responsible or liable to
Purchaser for any defects, errors or omissions, or on account of any conditions
affecting the Properties. Purchaser, its successors and assigns, and anyone
claiming by, through or under Purchaser, hereby fully releases each of 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 any 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 Properties. 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 Properties), reports, investigations and
inspections as it deems appropriate in connection with the Properties. If
Sellers provide or have 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
Properties, including, without limitation, the offering prepared by Broker,
Purchaser and Sellers agree that Sellers have done so or shall do so only for
the convenience of the 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 any
Seller's Indemnified Parties. Purchaser shall rely only upon any title insurance
obtained by Purchaser with respect to title to the Properties. Purchaser
acknowledges and agrees that no representation has been made and no
responsibility is assumed by Sellers with respect to current and future
applicable zoning or building code requirements or the compliance of the
Properties with any other laws, rules, ordinances or regulations, the financial
earning capacity or expense history of the Properties, the continuation of
contracts, continued occupancy levels of the Properties, 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, each Seller shall have the
right, but not the obligation, to enforce its rights against any and all of its
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
applicable Deed with or without such tenants in possession and without any
allowance or reduction in the applicable Purchase Price under this Contract.
Purchaser hereby releases Sellers 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 Deeds to Purchaser.
6.3 Survival of Seller's Representations. Sellers and Purchaser agree that
Seller's Representations shall survive Closing for a period of 6 months (the
"Survival Period"). No Seller shall have liability after the Survival Period
with respect to any of its Seller's Representations contained herein except to
the extent that Purchaser has requested arbitration against such Seller during
the Survival Period for breach of any of such Seller's Representations. Each
Seller shall be liable only for the breach of its own Seller's Representations.
Further, the liability for each Seller for breach of its Seller's
Representations shall be limited to, and capped at, $50,000 for such Seller's
Property for which a breach of Seller's Representations occurred, on a
Property-by-Property basis if a Seller is selling more than one Property. Such
cap on liability shall apply for any individual breach or in the aggregate for
all breaches of such Seller's Representations with respect to such Property.
Purchaser shall not 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 for a Property exceeds $5,000. In the event
that a 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 such 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 [such] 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 Regional Property Manager of such
Seller and shall not be construed to refer to the knowledge of any other
partner, officer, director, agent, employee or representative of such Seller, or
any affiliate of such Seller, or to impose upon such Regional Property Manager
any duty to investigate the matter to which such actual knowledge or the absence
thereof pertains, or to impose upon such Regional Property Manager any
individual personal liability.
6.5 Representations And Warranties Of Purchaser. For the purpose of inducing
Sellers to enter into this Contract and to consummate the sale and purchase of
the Properties in accordance herewith, Purchaser represents and warrants to
Sellers the following as of the Effective Date and as of the Closing Date:
6.5.1 Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Texas.
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 Sellers.
6.5.4 Other than Seller's Representations, Purchaser has not relied on any
representation or warranty made by Sellers or any representative of Sellers
(including, without limitation, Broker) in connection with this Contract and the
acquisition of the Properties.
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 any 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.
6.5.6 Purchaser is not a Prohibited Person.
6.5.7 To Purchaser's knowledge, none of its investors, affiliates or brokers or
other agents (if any), acting or benefiting in any capacity in connection with
this Contract is a Prohibited Person.
6.5.8 The funds or other assets Purchaser will transfer to Seller under this
Contract are not the property of, or are beneficially owned, directly or
indirectly, by a Prohibited Person.
6.5.9 The funds or other assets Purchaser will transfer to Seller under this
Contract are not the proceeds of specified unlawful activity as defined by 18
U.S.C. ss. 1956(c)(7).
The provisions of this Section 6.5 shall survive the Closing and delivery
of the Deed to Purchaser.
ARTICLE VII
OPERATION OF THE PROPERTIES
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 each Seller may,
with respect to its Property, 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, each Seller
agrees that after the expiration of the Feasibility Period any such new Property
Contracts shall be terminable upon thirty (30) days prior written notice, and
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 such Seller in the ordinary course of its operation of its 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, each Seller shall operate its Property after the Effective Date in
the ordinary course of business, and except as necessary in such Seller's sole
discretion to address (a) any life or safety issue at its Property or (b) any
other matter which in such Seller's reasonable discretion materially adversely
affects the use, operation or value of such Property, such Seller will not make
any material alterations to its 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 a Seller in the ordinary course of business, each Seller covenants
that it will not voluntarily create or cause any lien or encumbrance to attach
to its 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.
7.4 Roof Repairs. Seller of the Quail Woods Property has commenced roof repairs
on the Quail Woods Property and such Seller agrees to diligently pursue (a) the
roof repairs to the Quail Woods Property, and (b) to provide to Purchaser an
accounting of actual costs (to the extent available) of the repairs to date not
later than 5 Business Days after the expiration of the Feasibility Period. In
the event that any of such repairs and/or replacements are not completed on the
Closing Date, such Seller shall assign to Purchaser at the Closing, by execution
and delivery of the assignment attached hereto as Exhibit I, the contract(s)
whose work remains incomplete and Purchaser agrees to assume such contracts and
the remaining payment obligations thereunder at the Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 Purchaser's Conditions to Closing. Subject to the provisions of this Section
8.1, 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 Sellers to Purchaser at
the Closing pursuant to the terms and conditions hereof shall have been
delivered;
8.1.2 Each of Seller's Representations shall be true in all material respects as
of the Closing Date;
8.1.3 Each 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 such Seller hereunder; and
8.1.4 No Seller nor any of Seller's general partners 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, 8.1.2, 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
for any Property, or (b) notify Seller's Representative (a "Termination Notice")
in writing of Purchaser's decision to terminate this Contract for the Property
for which there was such a failure of condition or default and receive a return
of the Allocated Share of the Deposit from the Escrow Agent (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 Allocated Share of the Deposit). If Seller's Representative receives a
Termination Notice, Seller's Representative may, within 3 Business Days after
receiving the Termination Notice, give Purchaser written notice (a
"Reinstatement Notice") that Purchaser either must purchase all of the
Properties or terminate this Contract for all of the Properties. Purchaser
shall, within 3 Business Days after receiving a Reinstatement Notice, give
Seller's Representative written notice of whether it desires to purchase all of
the Properties or terminate this Contract in its entirety; Purchaser's failure
to provide Seller's Representative with written notice that it desires to
terminate this Contract in its entirety shall be deemed Purchaser's decision to
purchase all of the Properties.
8.2 Sellers' Conditions to Closing. Without limiting any of the rights of any
Seller elsewhere provided for in this Contract, each Seller's obligation to
close with respect to conveyance of its 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;
8.2.4 Such Seller shall have received all consents, documentation and approvals
necessary to consummate and facilitate the transactions contemplated hereby,
including, without limitation, a tax free exchange pursuant to Section 13.19
(and the amendment of such Seller's (or such Seller's affiliates' partnership or
other organization documents in connection therewith) (a) from Seller's
unaffiliated partners, members, managers, shareholders or directors to the
extent required by Seller's (or Seller's affiliates') organizational documents,
and (b) as required by law;
8.2.5 [Intentionally left blank]; and
8.2.6 AIMCO shall, directly or indirectly, own more than 50% of the voting
interests in each Seller at the time of Closing.
If any of the foregoing conditions in Sections 8.2.1 through 8.2.5 to a
Seller's obligation to close with respect to conveyance of its Property under
this Contract are not met, such Seller may (a) waive any of the foregoing
conditions and proceed to Closing on the Closing Date, (b) terminate this
Contract either in its entirety or with respect to its Property, and, if such
failure constitutes a default by Purchaser, exercise any of its remedies under
Section 10.1. If a Seller terminates this Contract with respect to its Property,
the remaining Sellers may elect either to terminate this Contract or proceed to
close the remaining Properties. The termination of this Contract by any Seller
pursuant to this Section 8.2 shall be exercised by written notice from Seller's
Representative to Purchaser by 12:00 p.m. (of the time zone in which the Escrow
Agent is located) of the Closing Date.
If the condition set forth in Section 8.2.6 has not occurred for any
Seller, then this Contract shall terminate in its entirety.
If the conditions set forth in Section 8.2.4 or Section 8.2.6 have not
occurred for any Seller and this Contract is terminated in its entirety,
Purchaser shall recover the entire Deposit (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 the condition set forth in Section 8.2.4 is not met and such
Seller terminates this Contract with respect to its Property, Purchaser shall
recover the entire Deposit allocated to such Seller and Property pursuant to the
Applicable Share attributable to such Property.
ARTICLE IX
BROKERAGE
9.1 Indemnity. New Snowden Village, L.P., a Delaware limited partnership and
Snowden Village Associates, L.P., a Delaware limited partnership, severally and
individually, represents and warrants to Purchaser that it has dealt exclusively
with Cushman & Wakefield, Inc., 1801 K Street, NW Suite 1100, Washington, D.C.
20006, in connection with the sale of Snowden Village I and Snowden Village II.
In connection with the sale of the remaining Properties, each of the remaining
Sellers, severally and individually, represents and warrants to Purchaser that
it has dealt exclusively with Holliday Fenoglio Fowler, L.P., 950 East Paces
Ferry Road, Suite 825, Atlanta, GA 30326 (Cushman & Wakefield, Inc. and Holliday
Fenoglio Fowler, L.P. are collectively, "Brokers"). Each Seller, severally and
individually, and Purchaser each represents and warrants to the other that,
other than Brokers, 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 Deeds to Purchaser.
9.2 Brokers' Commission. If the Closing occurs, New Snowden Village, L.P. and
Snowden Village Associates, L.P. each agrees to pay Cushman & Wakefield, Inc. a
commission according to the terms of a separate contract. If the Closing occurs,
each of the other Sellers agree to pay Holliday Fenoglio Fowler, L.P. a
commission according to the terms of a separate contract. Brokers shall not be
deemed a party or third party beneficiary of this Contract.
9.3 Brokers' Signature Page. As a condition to each Seller's obligation to pay
the commission pursuant to Section 9.2, Brokers shall execute the signature page
for Brokers attached hereto solely for purposes of confirming the matters set
forth therein; provided, however, that (a) Brokers' signature hereon shall not
be a prerequisite to the binding nature of this Contract on Purchaser and
Sellers, and the same shall become fully effective upon execution by Purchaser
and Sellers, and (b) the signature of Brokers will not be necessary to amend any
provision of this Contract.
ARTICLE X
DEFAULTS AND REMEDIES
10.1 Purchaser Default. If Purchaser defaults in its obligations hereunder to
(a) deliver the Initial Deposit or Additional Deposit (or any other deposit or
payment required of Purchaser hereunder), (b) deliver to Sellers the deliveries
specified under Section 5.3 on the date required thereunder, or (c) deliver the
Purchase Price for each Property at the time required by Section 2.2.4 and close
on the purchase of the Properties on the Closing Date, then, immediately and
without notice or cure, Purchaser shall forfeit the Deposit, and the Escrow
Agent shall deliver the Allocated Share of the Deposit to each Seller, and
neither party shall be obligated to proceed with the purchase and sale of the
Properties. 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's Representative, then
Purchaser shall forfeit the Deposit, and the Escrow Agent shall deliver the
Allocated Share of the Deposit to each 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 and confidentiality obligations hereunder, Sellers' sole and exclusive
remedy for Purchaser's failure to perform its obligation to purchase the
Properties or breach of a representation or warranty. Sellers expressly waive
the remedies of specific performance and additional damages for such default by
Purchaser. SELLERS AND PURCHASER ACKNOWLEDGE THAT SELLERS' DAMAGES WOULD BE
DIFFICULT TO DETERMINE, AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF
SELLERS' DAMAGES RESULTING FROM A DEFAULT BY PURCHASER IN ITS OBLIGATION TO
PURCHASE THE PROPERTY. SELLERS AND PURCHASER FURTHER AGREE THAT THIS SECTION
10.1.1 IS INTENDED TO AND DOES LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLERS, AND
SHALL BE SELLERS' 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 AND CONFIDENTIALITY OBLIGATIONS HEREUNDER.
10.2 Seller Default. If a Seller, prior to the Closing, defaults in its
representations, warranties, covenants, or obligations under this Contract,
including to sell its 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, Purchaser may
either (A) seek specific performance of the defaulting Seller's obligations to
deliver its Deed pursuant to this Contract (but not damages), or (B) give a
Termination Notice to Seller's Representative of Purchaser's decision to
terminate this Contract for the Property for which there was such a default and
receive a return of the Allocated Share of the Deposit from the Escrow Agent
(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 Allocated Share of the Deposit). If Seller's Representative
receives a Termination Notice, Seller's Representative may, within 3 Business
Days after receiving the Termination Notice, give Purchaser a Reinstatement
Notice that Purchaser either must purchase all of the Properties or terminate
this Contract for all of the Properties. Purchaser shall, within 3 Business Days
after receiving a Reinstatement Notice, give Seller's Representative notice of
whether it desires to purchase all of the Properties or terminate this Contract
in its entirety; Purchaser's failure to provide Seller's Representative notice
that it desires to terminate this Contract in its entirety shall be deemed
Purchaser's decision to purchase all of the Properties. If this Contract is
terminated in whole or in part, Purchaser shall recover the Allocated Share of
Deposit for the terminated Properties (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 Allocated Share of the Deposit), its direct and
actual out-of-pocket expenses and costs (documented by paid invoices to third
parties) in connection with the Properties for which this Contract has been
terminated, which damages shall not exceed $25,000 per terminated Property. If
this Contract is terminated in whole or in part, Purchaser agrees that it shall
promptly deliver to each 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 Sellers pursuant to the foregoing sentence. SELLERS 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 SELLERS, BOTH AT LAW AND IN EQUITY ARISING
FROM OR RELATED TO A BREACH BY ANY 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 SELLERS FOR ANY BREACH BY A 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 ANY PROPERTY UNLESS AND UNTIL IT HAS IRREVOCABLY ELECTED TO SEEK
SPECIFIC PERFORMANCE OF THIS CONTRACT AND HAS FILED AN ACTION SEEKING SUCH
REMEDY.
ARTICLE XI
RISK OF LOSS OR CASUALTY
11.1 Major Damage. If a Property is damaged or destroyed by fire or other
casualty prior to Closing, and the cost of repair is more than $250,000, then
the applicable 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 give a Termination Notice for the
damaged Property to Seller's Representative. If Seller's Representative receives
a Termination Notice, Seller's Representative may, within 3 Business Days after
receiving the Termination Notice, give Purchaser a Reinstatement Notice that
Purchaser either must purchase all of the Properties or terminate this Contract
for all of the Properties. Purchaser shall, within 3 Business Days after
receiving a Reinstatement Notice, give Seller's Representative notice of whether
it desires to purchase all of the Properties or terminate this Contract in its
entirety; Purchaser's failure to provide Seller's Representative notice that it
desires to terminate this Contract in its entirety shall be deemed Purchaser's
decision to purchase all of the Properties. If this Contract is not terminated,
this transaction shall be closed in accordance with the terms of this Contract
for the full Purchase Price for the damaged Property notwithstanding any such
damage or destruction and Purchaser shall receive all insurance proceeds
pertaining thereto (plus a credit against the applicable Purchase Price in the
amount of any deductible payable by the applicable Seller in connection
therewith) at Closing. If this Contract is terminated in whole or in part from
such damage, Purchaser shall recover the Allocated Share of the Deposit for the
terminated Properties (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 a return of the Allocated Share of the Deposit).
11.2 Minor Damage. If a Property is damaged or destroyed by fire or other
casualty prior to the Closing, and the cost of repair is equal to or less than
$250,000, this transaction shall be closed in accordance with the terms of this
Contract, notwithstanding the damage or destruction; provided, however, the
applicable Seller shall make such repairs to the extent of any recovery from
insurance carried on such Property if they can be reasonably effected before the
Closing. Subject to Section 11.3, if the applicable Seller is unable to effect
such repairs, then Purchaser shall receive all insurance proceeds pertaining
thereto (plus a credit against the Purchase Price for the damaged Property in
the amount of any deductible payable by the applicable Seller in connection
therewith) at Closing.
11.3 Repairs. To the extent that a Seller elects to commence any repair,
replacement or restoration of its damaged Property prior to Closing, then such
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 Deeds to Purchaser.
ARTICLE XII
EMINENT DOMAIN
12.1 Eminent Domain. If, at the time of Closing, any material part of a 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 give a Termination Notice to Seller's
Representative for the Property for which there was such a condemnation. If
Seller's Representative receives a Termination Notice, Seller's Representative
may, within 3 Business Days after receiving the Termination Notice, give
Purchaser a Reinstatement Notice that Purchaser either must purchase all of the
Properties or terminate this Contract for all of the Properties. Purchaser
shall, within 3 Business Days after receiving a Reinstatement Notice, give
Seller's Representative written notice of whether it desires to purchase all of
the Properties or terminate this Contract in its entirety; Purchaser's failure
to provide Seller's Representative with written notice that it desires to
terminate this Contract in its entirety shall be deemed Purchaser's decision to
purchase all of the Properties. If this Contract is not terminated, this
transaction shall be closed in accordance with the terms of this Contract for
the full Purchase Price for the affected Property 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 a Property. If
this Contract is terminated in whole or in part from such condemnation,
Purchaser shall recover the Allocated Share of the Deposit for the terminated
Properties (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 a return of the Allocated Share of the Deposit).
ARTICLE XIII
MISCELLANEOUS
13.1 Binding Effect of Contract. This Contract shall not be binding on any party
until executed by both Purchaser and all Sellers. 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 prerequisite 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's Representative, 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, (c) Purchaser provides written notice to
Seller's Representative of any proposed assignment no later than 10 days prior
to the Closing Date, and (d) Seller's Representative 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 Sellers 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; (c) sent
by certified 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:
......Juniper Investment Group, Ltd.
6750 West Loop South
Suite 850
Bellaire, Texas 77401
Attention: J. Douglas Rippeto, Jr.
Telephone: 713-972-9302
Facsimile: 713-972-9311
and a copy to:
Kerr & Negron, P.C.
750 East Mulberry
Suite 510
San Antonio, Texas 78212
Attention: Richard Kerr
Telephone: 210-738-8750
Facsimile: 210-738-8788
To any Seller or Seller's Representative:
c/o AIMCO
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
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
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Telephone: 303-691-4303
Facsimile: 303-300-3260
and a copy to:
Argent Real Estate
1401 Brickell Avenue
Suite 520
Miami, Florida 33131
Attention: David Marquette
Telephone: 305-371-9299
Facsimile: 305-675-2998
and a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
1225 17th Street, Suite 2300
Denver, Colorado 80202
Attention: Beverly J. Quail, Esq.
Telephone: 303-299-7305
Facsimile: 303-296-3956
Any notice required hereunder to be delivered to the Escrow Agent shall be
delivered in accordance with above provisions as follows:
Stewart Title Guaranty Company
National Title Services
1980 Post Oak Blvd., Suite 610
Houston, Texas 77056
Attention: Ms. Wendy Howell
Telephone: 713-625-8161
Facsimile: 713-552-1703
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 North Carolina 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 agreements, 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. If 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 Sellers' lenders, attorneys and accountants.
Any information and Materials provided by Sellers 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 the prior written authorization of Seller's
Representative, which may be granted or denied in the sole discretion of
Seller's Representative. Notwithstanding the provisions of Section 13.9,
Purchaser agrees that the covenants, restrictions and agreements of Purchaser
contained in any confidentiality agreement executed by Purchaser prior to the
Effective Date shall survive the execution of this Contract and shall not be
superseded hereby.
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. Sellers and Purchaser acknowledge and agree that the
purchase and sale of each Property may be part of a tax-free exchange under
Section 1031 of the Code for either Purchaser or a 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 a Seller so elects to close the transfer
of a Property as an exchange, then (i) such Seller, at its sole option, may
delegate its obligations to transfer a 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 such Seller pursuant
to this Contract; (iii) such 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 such Seller (or, if applicable, from other affiliates of such Seller whom
such 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 a Property as an exchange, then (i) Purchaser, at its sole
option, may delegate its obligations to acquire such Property under this
Contract, and may assign its rights to receive the Property from such 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 such Seller; and (v) the closing of the acquisition of such Property by
Purchaser or the exchange accommodation titleholder, as the case may be, shall
be undertaken by direct deed from the applicable Seller (or, if applicable, from
other affiliates of such Seller whom such Seller will cause to execute such
deeds) to Purchaser (or to exchange accommodation titleholder, as the case may
be). Notwithstanding anything in this Section 13.19 to the contrary, any Seller
shall have the right to extend the Closing Date (as previously extended pursuant
to Section 5.1) for up to 30 days in order to facilitate a tax free exchange
pursuant to this Section 13.19, and to obtain all documentation in connection
therewith.
13.20 No Personal Liability of Officers, Trustees or Directors of Seller's
Partners. Purchaser agrees that none of any 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. Sellers shall have the right, at all times
prior to the expiration of the Feasibility Period, to solicit backup offers and
enter into discussions, negotiations, or any other communications concerning or
related to the sale of any Property with any third-party; provided, however,
that such communications are subject to the terms of this Contract, and that
Sellers shall not enter into any contract with a third-party for the sale of any
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 Properties may be subject
to the federal Americans With Disabilities Act (the "ADA") and the federal Fair
Housing Act (the "FHA"). The ADA requires, among other matters, that tenants
and/or owners of "public accommodations" remove barriers in order to make a
property accessible to disabled persons and provide auxiliary aids and services
for hearing, vision or speech impaired persons. Sellers make no warranty,
representation or guarantee of any type or kind with respect to any Property's
compliance with the ADA or the FHA (or any similar state or local law), and
Sellers expressly disclaim 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 the prior written
consent of Seller's Representative, which consent may be withheld in the sole
discretion of Seller's Representative. 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's
Representative 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 Sellers 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 Sellers
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
substantially prevailing party and charge the cost of arbitration to the party
which is not the substantially prevailing party. Notwithstanding anything herein
to the contrary, this Section 13.25 shall not prevent Purchaser or Sellers 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 Sellers, 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 (a) prior to the expiration of
the Feasibility Period, solicit any of Seller's employees or any employees
located at the Property for potential employment, or (b) at any time, solicit
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 and 13.21), 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 any Properties 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 a 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 a Seller or Seller's
Representative 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 a 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
a Seller to pay any amount pursuant to this Contract to Purchaser under any
circumstance, that amount shall be deemed the 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 a Seller is
required to return the Initial Deposit, Additional Deposit or other amount to
Purchaser, such 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.
13.30 Sellers' Several Obligations. Purchaser agrees that, notwithstanding any
other provision of this Contract to the contrary, the representations,
warranties, obligations, and covenants of each Seller are individual and
several, and not joint and several, and that each Seller is responsible and
liable only for its own Property and its own representations, warranties,
obligations, and covenants. Purchaser agrees that it shall look solely to the
applicable Seller for any amount due hereunder or, obligation owed hereunder,
and further waives any and all claims against any other party or Property for
payment or performance of the same, including, without limitation, any other
Seller or AIMCO, or any partner, member, manager, shareholder, director,
officer, employee, affiliate, representative or agent of any Seller or AIMCO.
13.31 Obligation to Close on all Properties. Except as expressly set forth in
this Contract, Purchaser's obligation to purchase the Properties is not
severable and Purchaser must purchase all of the Properties. Similarly, except
as expressly stated this Contract, Sellers' obligations to sell the Properties
are not severable and Sellers must sell all of the Properties to Purchaser.
ARTICLE XIV
LEAD-BASED PAINT DISCLOSURE
14.1 Disclosure. Sellers and Purchaser hereby acknowledge delivery of the Lead
Based Paint Disclosure attached as Exhibit H hereto. The provisions of this
Section 14.1 shall survive the Closing and delivery of the Deeds to Purchaser.
14.2 Consent Agreement - Pre-1978 Certified. The provisions of this Section 14.2
apply to those Properties identified on the Seller Information Schedule as
"Pre-1978-Certified." Testing with respect to lead-based paint ("Testing") in
accordance with the requirements of the Consent Agreement ("Consent Agreement")
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 AIMCO (executed December 18, 2001),
has been performed at each Property identified as "Pre-1978, Certified" with
respect to lead-based paint. The "LPB Consultant" identified on the Seller
Information Schedule prepared the report with respect to the Property identified
therein. A copy of each report will be provided to Purchaser with the Materials.
Each report certifies the respective Property as lead based paint free. By
execution hereof, Purchaser acknowledges receipt of a copy of the reports, the
Lead-Based Paint Disclosure Statement attached hereto as Exhibit H, and
acknowledges receipt of the Consent Agreement. Because the applicable Property
has been certified as lead based paint free, the applicable Seller is not
required under the Consent Agreement to remediate or abate any lead-based paint
condition at its Property prior to the Closing. Purchaser acknowledges and
agrees that (1) after Closing, Purchaser and the applicable Property shall be
subject to the Consent Agreement and the provisions contained herein related
thereto and (2) Purchaser shall not be deemed to be a third party beneficiary to
the Consent Agreement. 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.
14.3 Consent Agreement - Pre-1978-LBP, But No LBP Hazards. The provisions of
this Section 14.4 apply to those Properties identified on the Seller Information
Schedule as "Pre-1978, Lead-Based Paint Present, No Lead-Based Hazard." Testing
has been performed at the applicable Property with respect to lead-based paint.
The "LBP Consultant" identified on the Seller Information Schedule prepared the
report with respect to the Property identified therein. A copy of the report
with respect to the Property will be provided to Purchaser with the Materials.
The report certifies the applicable Property as free of (a) lead based hazards,
(b) dust lead hazards and (c) soil lead hazards. By execution hereof, Purchaser
acknowledges receipt of a copy of the report, the Lead-Based Paint Disclosure
Statement attached hereto as Exhibit H, and the Consent Agreement. Because the
applicable Property has been certified as free of (x) lead based hazards, (y)
dust lead hazards and (z) soil lead hazards, the applicable Seller is not
required under the Consent Agreement to remediate or abate any lead-based paint
condition at such Property prior to the Closing. Purchaser acknowledges and
agrees that (1) after Closing, the Purchaser and the applicable Property shall
be subject to the Consent Agreement and the provisions contained herein related
thereto and (2) Purchaser shall not be deemed to be a third party beneficiary to
the Consent Agreement. The provisions of this Section 14.3 shall survive the
termination of this Contract, and if not so terminated, the Closing and delivery
of the Deed to Purchaser.
[Remainder of Page Intentionally Left Blank]
NOW, THEREFORE, the parties hereto have executed this Contract as of the
date first set forth above.
Seller:
SHELTER PROPERTIES VI LIMITED PARTNERSHIP, a
South Carolina limited partnership (f/k/a
Shelter Properties VI)
By: Shelter Realty VI Corporation, a South
Carolina corporation, its Managing
General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
GLEN HOLLOW LIMITED PARTNERSHIP, an Illinois
limited partnership (f/k/a Regency Glen Hollow
Limited Partnership)
By: AIMCO Holdings, L.P., a Delaware limited
partnership, its general partner
By: AIMCO Holdings QRS, Inc., a
Delaware corporation, its general
partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
(Signatures Continued on Next Page) MISTY WOODS
CPF 19 LIMITED PARTNERSHIP, a Delaware limited
partnership
By: CPF Misty Woods GP, L.L.C., a South
Carolina limited liability company, its
general partner
By: Century Properties Fund XIX, a
California limited partnership, its
sole member
By: Fox Partners II, a California
general partnership, its general
partner
By: Fox Capital Management
Corporation, a California
corporation
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
TRIANON, LTD., a North Carolina limited
partnership
By: AmReal Corporation, a South Carolina
corporation, its Managing General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
NATIONAL PINETREE LIMITED PARTNERSHIP, a North
Carolina limited partnership
By: NPI III Pinetree, Inc., a North Carolina
corporation, its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
QUAIL WOODS APARTMENT PARTNERS, L.P., a
Delaware limited partnership
By: AIMCO Holdings, L.P., a Delaware limited
partnership, its general partner
By: AIMCO Holdings QRS, Inc., a Delaware
corporation, its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
REDDMAN-OXFORD ASSOCIATES LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Reddman Corporation, a Maryland
corporation , its Managing General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior vice President
NEW SNOWDEN VILLAGE I, L.P., a Delaware
limited partnership
By: New Snowden GP, L.L.C., a South Carolina
limited liability company, its General
Partner
By: Snowden Village Associates, L.P., a
Delaware limited partnership, its
Manager
By: MAE JMA, Inc., a Delaware
corporation, its Managing General
Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
SNOWDEN VILLAGE ASSOCIATES, L.P., a Delaware
limited partnership,
By: MAE JMA, Inc., a Delaware corporation,
its Managing General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
Purchaser:
JUNIPER INVESTMENT GROUP, LTD.,
a Texas limited partnership
By: Juniper Investment Group, GP, Inc., a
Texas corporation
By: /s/J. Douglas Rippeto, Jr.
Name: J. Douglas Rippeto, Jr.
Title: President
Purchaser's Tax Identification Number/Social
Security Number:
20-2835535
Exhibit 104j
This First Amendment to Purchase and Sale Contract (this
"Amendment") is entered into as of the 7th day of June, 2005, by and between the
"Sellers" identified in the Contract (defined below) and signing this Amendment
as Seller (collectively referred to as "Seller"), and JUNIPER INVESTMENT GROUP,
LTD., a Texas limited partnership ("Buyer"), with respect to the following:
A. Seller and Buyer entered into that certain Purchase and Sale Contract
dated May 19, 2005 (the "Contract") pursuant to which Seller intended to sell,
and Purchaser intended to purchase, those certain nine (9) properties comprising
the North Carolina Pool properties as more particularly described in the
Contract.
B. Seller and Buyer desire, inter alia, to amend the Contract as
hereinafter set forth to extend the Objection Deadline for title and survey and
to ratify and affirm the Contract.
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
hereby agree as follows:
1. Definitions. Except as provided herein, all capitalized terms used
herein and not otherwise defined herein shall have the meaning
ascribed to them in the Contract.
2. Amendment. Section 4.3 of the Contract is amended by deleting the
first five sentences in their entiry and replacing the with the
following five sentences:
On or before Wednesday, June 16, 2005 (the "Objection Deadline"),
Purchaser shall, on a Property-by-Property basis, give written
notice (the "Objection Notice") to the attorneys for Sellers of any
matter set forth in any Title Documents or Surveys which renders the
Title or Survey to such Property unmarketable, and, on or before the
date which is 21 calendar days after the Effective Date (the
"Environmental Objection Deadline"), if Purchaser produces
environmental reports on a Property ("Environmental Reports"), any
matter set forth in the Environmental Report for such Property
requiring the intervention of a regulatory agency (collectively
referred to as the "Objections"). If Purchaser fails to tender an
Objection Notice with respect to a Property on or before the
Objection Deadline or the Environmental Objection Deadline, as
applicable, Purchaser shall be deemed to have approved and
irrevocably waived any objections to any matters covered by the
Title Documents and the Survey for such Property and environmental
matters regarding such Property. On or before 7 calendar days after
the Objection Deadline or Environmental Objection Deadline (each a
"Response Deadline"), a Seller who has received an Objection Notice
may, in such Seller's sole discretion, give Purchaser notice (the
"Response Notice") of those Objections which such Seller is willing
to cure, if any. Sellers shall be entitled to reasonable
adjournments of the Closing Date to cure any Objections applicable
to any Seller. If a Seller fails to deliver a Response Notice by the
applicable Response Deadline, such Seller shall be deemed to have
elected not to cure or otherwise resolve any matter set forth in the
Objection Notice.
3. Counterparts. This Amendment may be executed in a number of
identical counterparts. If so executed, each of such counterparts is
to be deemed an original for all purposes and all such counterparts
shall collectively constitute one Amendment.
4. Transmission. This Amendment may be transmitted between the parties
by facsimile machine. The parties intend that faxed signatures
constitute original signatures and that a facsimile-transmitted
Amendment containing signatures (original or faxed) of all of the
parties is binding on the parties.
5. Effect of Amendment. Except as expressly amended hereby, the
Contract is hereby ratified and affirmed and shall be in full force
and effect in accordance with its terms. In the event of any
conflict between the terms of the Contract and the terms of this
Amendment, the terms of this Amendment shall control.
IN WITNESS WHEREOF, Seller and Buyer have entered into this Amendment as
of the date first written above.
SELLER:
SHELTER PROPERTIES VI LIMITED PARTNERSHIP
a South Carolina limited partnership
(f//k/a Shelter Properties VI)
By: Shelter Realty VI Corporation,a
South Carolina corporation, its
Managing General Partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
GLEN HOLLOW LIMITED PARTNERSHIP, an
Illinois limited partnership (f/k/a
Regency Glen Hollow Limited Partnership)
By: AIMCO Holdings, L.P., a Delaware
limited partnership, its general partner
By: AIMCO Holdings QRS, Inc.,a Delaware
corporation, its general partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
MISTY WOODS CPF 19 LIMITED PARTNERSHIP
a Delaware limited partnership
By: CPF Misty Woods GP, L.L.C., a South
Carolina limited liability company, its
general partner
By: Century Properties Fund XIX,
a California limited partnership, its
sole member
By: Fox Partners II, a
California general Partnership, its
general partner
By: Fox Capital Management
Corporation, a California corporation
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
TRIANON, LTD., a North Carolina limited
partnership
By: AmReal Corporation, a South Carolina
corporation, its Managing General
Partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
By: AIMCO Properties, L.P., a Delaware
limited partnership, its General
Partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
NATIONAL PINETREE LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: NPI III Pinetree, Inc., a North
Carolina corporation,
its general partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
QUAIL WOODS APARTMENT PARTNERS, L.P., a
Delaware limited partnership
By: AIMCO Holdings, L.P., a Delaware
limited partnership, its general
partner
By: AIMCO Holdings QRS, Inc., a
Delaware corporation, its general
partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
REDDMAN-OXFORD ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership
By: Reddman Corporation, a Maryland
corporation,its Managing General Partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
NEW SNOWDEN VILLAGE I, L.P., a Delaware
limited partnership
By: New Snowden GP, L.L.C., a South
Carolina limited liability company,its
General Partner
By: Snowden Village Associates, L.P., a
Delaware limited partnership,
Its Manager
By: MAE JMA, Inc., a Delaware
Corporation, its Managing General
Partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
SNOWDEN VILLAGE ASSOCIATES,L.P., a Delaware
limited partnership
By: MAE JMA, Inc., a Delaware
Corporation,
Its Managing General Partner
By: /s/Brian Bornhorst,
Brian Bornhorst
Vice President
BUYER:
JUNIPER INVESTMENT GROUP, LTD.,
a Texas limited partnership
By: Juniper Investment Group GP, Inc., a
Texas corporation, its general partner
By: /s/ J. Douglas Rippeto, Jr.
J. Douglas Rippeto, Jr.,
President
Receipted By:
Stewart Title Company
By: ____________________________________
Wendy Howell
Title: ___________________________________
Date: ___________________________________
Exhibit 104k
SECOND AMENDMENT TO PURCHASE AND SALE CONTRACT
This Second Amendment to Purchase and Sale Contract (this "Amendment") is
entered into effective as of the 7th day of July, 2005, by and between the
"Sellers" identified in the Contract (defined below) and signing this Amendment
as Seller (collectively referred to as "Seller"), and JUNIPER INVESTMENT GROUP,
LTD., a Texas limited partnership ("Purchaser"), with respect to the following:
A. Seller and Purchaser entered into that certain Purchase and Sale
Contract dated May 19, 2005 (the "Contract"), as amended by that certain First
Amendment to Purchase and Sale Contract dated June 7, 2005, pursuant to which
Seller intended to sell, and Purchaser intended to purchase, those certain nine
(9) properties comprising the North Carolina Pool properties as more
particularly described in the Contract.
B. On July 5, 2005 Purchaser's counsel delivered to Seller a letter
terminating the Contract under Section 3.2 of the Contract.
C. Seller and Purchaser desire, inter alia, to amend the Contract as
hereinafter set forth to require additional funds of the Initial Deposit to be
nonrefundable, to extend the expiration date of the Feasibility Period, to
reduce the Base Purchase Price of Quail Woods, to extend the Closing Date and to
reinstate the Contract.
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser
hereby agree as follows:
6. Definitions. Except as provided herein, all capitalized terms used
herein and not otherwise defined herein shall have the meaning
ascribed to them in the Contract.
7. Withdrawal of Purchaser's Termination of the Contract. Seller and
Purchaser agree that Purchaser's notice of termination of the
Contract is withdrawn and that the Contract is in full force and
effect. The parties agree that Stewart Title Insurance Company
shall retain the Initial Deposit in its capacity as Escrow Agent
pursuant to the terms of the Contract. Neither Seller nor
Purchaser is aware of a default under the Contract by the other
party.
8. Section 2.2.1. Section 2.2.1 of the Contract is amended by deleting
the second sentence and replacing it with the following:
On July 7, 2005, a total of $250,000.00 of the Initial Deposit
("$250,000.00 Deposit") shall be nonrefundable to Purchaser, subject
only to failure to close pursuant to Sellers' Conditions to Closing
in Sections 8.2.4 and 8.2.6 and Seller Default in Section 10.2.
9. Definition of $100,000.00 Deposit Deleted. Each place in the
Contract that the term "$100,000.00 Deposit" appears, such term is
deleted and replaced with the term "$250,000.00 Deposit."
10. Section 3.1. The first sentence of Section 3.1 is amended by
deleting the phrase "the date which is 45 days after the Effective
Date (the `Feasibility Period')" and replacing it with the phrase
"July 26, 2005 (the `Feasibility Period')."
11. Section 4.3. Purchaser acknowledges that Purchaser's right to
terminate the Contract due to title and survey matters under Section
4.3 has expired and is of no further force or effect.
12. Section 5.1. Section 5.1 of the Contract is amended by deleting the
first sentence in its entirety and replacing it with the following:
The Closing shall occur on August 16, 2005 (the "Closing Date")
through an escrow with Escrow Agent, whereby the Sellers, Purchaser
and their attorneys need not be physically present at the Closing
and may deliver documents by overnight air courier or other means.
13. Schedule A. Schedule A of the Contract is amended by deleting
$5,570,000.00 as the Base Purchase Price for Quail Woods and
replacing that amount with $5,530,000.00 as the Base Purchase Price
for Quail Woods.
14. Counterparts. This Amendment may be executed in a number of
identical counterparts. If so executed, each of such counterparts is
to be deemed an original for all purposes and all such counterparts
shall collectively constitute one Amendment.
15. Transmission. This Amendment may be transmitted between the parties
by facsimile machine. The parties intend that faxed signatures
constitute original signatures and that a facsimile-transmitted
Amendment containing signatures (original or faxed) of all of the
parties is binding on the parties.
16. Effect of Amendment. Except as expressly amended hereby, the
Contract is hereby ratified and affirmed and shall be in full force
and effect in accordance with its terms. In the event of any
conflict between the terms of the Contract and the terms of this
Amendment, the terms of this Amendment shall control.
(Remainder of page Intentionally Left Blank)
IN WITNESS WHEREOF, Seller and Purchaser have entered into this Amendment
as of the date first written above.
SELLER:
SHELTER PROPERTIES VI LIMITED PARTNERSHIP
a South Carolina limited partnership
(f//k/a Shelter Properties VI)
By: Shelter Realty VI Corporation, a
South Carolina corporation,
its Managing General Partner
By: /s/Patrick F. Slavin
Patrick F.Slavin,Senior Vice President
GLEN HOLLOW LIMITED PARTNERSHIP,
an Illinois limited partnership
(f/k/a Regency Glen Hollow Limited
Partnership)
By: AIMCO Holdings, L.P., a Delaware
limited partnership, its general
partner
By: AIMCO Holdings QRS, Inc., a Delaware
corporation, its general partner
By: /s/Patrick F. Slavin
Patrick F. Slavin, Senior Vice
President
(Signatures Continued on Next Page)
MISTY WOODS CPF 19 LIMITED PARTNERSHIP
a Delaware limited partnership
By: CPF Misty Woods GP, L.L.C., a South
Carolina limited liability company,
its general partner
By: Century Properties Fund XIX,
a California limited partnership, its
sole member
By: Fox Partners II, a California general
Partnership, its general partner
By: Fox Capital Management Corporation,
a California corporation
By: /s/Patrick F. Slavin
Patrick F. Slavin
Senior Vice President
TRIANON, LTD., a North Carolina limited
partnership
By: AmReal Corporation, a South Carolina
corporation, its Managing General
Partner
By: /s/Patrick F. Slavin
Patrick F. Slavin, Senior Vice
President
By: AIMCO Properties, L.P., a Delaware
limited partnership, its General
Partner
By: /s/Patrick F. Slavin
Patrick F. Slavin, Senior Vice
President
NATIONAL PINETREE LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: NPI III Pinetree, Inc., a North
Carolina corporation,
its general partner
By: /s/Patrick F. Slavin
Patrick F. Slavin, Senior Vice
President
QUAIL WOODS APARTMENT PARTNERS, L.P., a
Delaware limited partnership
By: AIMCO Holdings, L.P., a Delaware
limited partnership, its general
partner
By: AIMCO Holdings QRS, Inc.,a Delaware
corporation, its general partner
By: /s/Patrick F. Slavin
Patrick F. Slavin, Senior Vice President
REDDMAN-OXFORD ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership
By: Reddman Corporation,a Maryland
corporation, its Managing General
Partner
By: /s/Patrick F. Slavin
Patrick F. Slavin, Senior Vice
President
NEW SNOWDEN VILLAGE I, L.P., a Delaware
limited partnership
By: New Snowden GP, L.L.C., a South
Carolina limited liability company, its
General Partner
By: Snowden Village Associates, L.P., a
Delaware limited partnership, its
Manager
By: MAE JMA, Inc., a Delaware Corporation,
its Managing General Partner
By: /s/Patrick F. Slavin
Patrick F. Slavin
Senior Vice President
SNOWDEN VILLAGE ASSOCIATES, L.P.,
a Delaware limited partnership
By: MAE JMA, Inc., a Delaware Corporation,
its Managing General Partner
By: /s/Patrick F. Slavin
Patrick F. Slavin
Senior Vice President
PURCHASER:
JUNIPER INVESTMENT GROUP, LTD.,
a Texas limited partnership
By: Juniper Investment Group GP, Inc., a
Texas corporation, its general partner
By: /s/J. Douglas Rippeto, Jr.
J. Douglas Rippeto, Jr.,
President
Receipted By:
Stewart Title Company
By: ____________________________________
Wendy Howell
Title: ___________________________________
Date: ___________________________________
Exhibit 104l
This Third Amendment to Purchase and Sale Contract (this "Amendment") is entered
into as of the 26th day of July, 2005, by and between the "Sellers" identified
in the Contract (defined below) and signing this Amendment as Seller
(collectively referred to as "Seller"), and JUNIPER INVESTMENT GROUP, LTD., a
Texas limited partnership ("Purchaser"), with respect to the following:
A. Seller and Purchaser entered into that certain Purchase and Sale
Contract dated May 19, 2005 (the "Contract"), as amended by that certain First
Amendment to Purchase and Sale Contract dated June 7, 2005 and that certain
Second Amendment to Purchase and Sale Contract dated July 7, 2005, pursuant to
which Seller intended to sell, and Purchaser intended to purchase, those certain
nine (9) properties comprising the North Carolina Pool properties as more
particularly described in the Contract.
B. Seller and Purchaser desire, inter alia, to amend the Contract as
hereinafter set forth to require all of the Initial Deposit to be nonrefundable,
to extend the expiration date of the Feasibility Period and to extend the
Closing Date.
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser
hereby agree as follows:
1. Definitions. Except as provided herein, all capitalized terms used
herein and not otherwise defined herein shall have the meaning
ascribed to them in the Contract.
2. Section 2.2.1. Section 2.2.1 of the Contract is amended by deleting
the second sentence and replacing it with the following:
On July 26, 2005, the Initial Deposit shall be nonrefundable to
Purchaser, subject only to failure to close pursuant to Sellers'
Conditions to Closing in Sections 8.2.4 and 8.2.6 and Seller Default
in Section 10.2.
3. Section 3.1. The first sentence of Section 3.1 is amended by
deleting the phrase "July 26, 2005" and replacing it with the phrase
"August 12, 2005."
4. Section 4.3. The third sentence from the end of Section 4.3 is
amended by deleting the phrase "including the $250,000.00 Deposit."
5. Section 4.3. The second sentence from the end of Section 4.3 is
deleted in its entirety.
6. Section 5.1. Section 5.1 of the Contract is amended by deleting the
first sentence in its entirety and replacing it with the following:
The Closing shall occur on August 31, 2005 (the "Closing Date")
through an escrow with Escrow Agent, whereby the Sellers, Purchaser
and their attorneys need not be physically present at the Closing
and may deliver documents by overnight air courier or other means.
7. Counterparts. This Amendment may be executed in a number of
identical counterparts. If so executed, each of such counterparts is
to be deemed an original for all purposes and all such counterparts
shall collectively constitute one Amendment.
8. Transmission. This Amendment may be transmitted between the parties
by facsimile machine. The parties intend that faxed signatures
constitute original signatures and that a facsimile-transmitted
Amendment containing signatures (original or faxed) of all of the
parties is binding on the parties.
9. Effect of Amendment. Except as expressly amended hereby, the
Contract is hereby ratified and affirmed and shall be in full force
and effect in accordance with its terms. In the event of any
conflict between the terms of the Contract and the terms of this
Amendment, the terms of this Amendment shall control.
IN WITNESS WHEREOF, Seller and Purchaser have entered into this Amendment as
of the date first written above.
SELLER:
SHELTER PROPERTIES VI LIMITED PARTNERSHIP
a South Carolina limited partnership
(f//k/a Shelter Properties VI)
By:Shelter Realty VI Corporation,
a South Carolina
corporation, its Managing General Partner
By:/s/Patrick F. Slavin
GLEN HOLLOW LIMITED PARTNERSHIP, an Illinois
limited partnership (f/k/a Regency
Glen Hollow Limited Partnership)
By: AIMCO Holdings, L.P., a Delaware limited
partnership, its general partner
By: AIMCO Holdings QRS, Inc., a Delaware
corporation, its general partner
By:/s/Patrick F. Slavin
MISTY WOODS CPF 19 LIMITED PARTNERSHIP
a Delaware limited partnership
By: CPF Misty Woods GP, L.L.C., a South
Carolina limited liability company,
its general partner
By: Century Properties Fund XIX,a California
limited partnership, its sole member
By: Fox Partners II, a California general
Partnership, its general partner
By: Fox Capital Management Corporation,
a California corporation
By:/s/Patrick F. Slavin
TRIANON, LTD., a North Carolina limited
partnership
By: AmReal Corporation, a South Carolina
corporation, its Managing General
Partner
By:/s/Patrick F. Slavin
By: AIMCO Properties, L.P., a Delaware
limited partnership, its General Partner
By:/s/Patrick F. Slavin
NATIONAL PINETREE LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: NPI III Pinetree, Inc., a North
Carolina corporation,
its general partner
By:/s/Patrick F. Slavin
QUAIL WOODS APARTMENT PARTNERS, L.P., a
Delaware limited partnership
By: AIMCO Holdings, L.P., a Delaware limited
partnership, its general partner
By: AIMCO Holdings QRS, Inc., a Delaware
corporation, its general partner
By:/s/Patrick F. Slavin
REDDMAN-OXFORD ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership
By:Reddman Corporation, a Maryland
corporation, its Managing General Partner
By:/s/Patrick F. Slavin
NEW SNOWDEN VILLAGE I, L.P., a Delaware
limited partnership
By: New Snowden GP, L.L.C., a South Carolina
limited liability company, its General
Partner
By: Snowden Village Associates, L.P., a
Delaware limited partnership, its
Manager
By: MAE JMA, Inc., a Delaware
Corporation, its Managing General
Partner
By:/s/Patrick F. Slavin
SNOWDEN VILLAGE ASSOCIATES, L.P., a Delaware
limited partnership
By:MAE JMA, Inc., a Delaware Corporation,
its Managing General Partner
By:/s/Patrick F. Slavin
PURCHASER:
JUNIPER INVESTMENT GROUP, LTD.,
a Texas limited partnership
By: Juniper Investment Group GP, Inc., a
Texas corporation, its general partner
By: /s/J. Douglas Rippeto, Jr.
J. Douglas Rippeto, Jr., President
Receipted By:
Stewart Title Company
By: ____________________________________
Wendy Howell
Title: ___________________________________
Date: ___________________________________