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 September 30, 2005
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from _________to _________
Commission file number 0-14554
NATIONAL PROPERTY INVESTORS 8
(Exact name of small business issuer as specified in its charter)
California 13-3254885
(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 ___
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes __ No X_
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
NATIONAL PROPERTY INVESTORS 8
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2005
Assets
Cash and cash equivalents $ 422
Receivables and deposits 263
Restricted escrows 18
Other assets 601
Investment properties:
Land $ 1,970
Buildings and related personal property 33,549
35,519
Less accumulated depreciation (25,882) 9,637
$ 10,941
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 444
Tenant security deposit liabilities 101
Accrued property taxes 483
Other liabilities 204
Due to affiliate (Note B) 3,174
Mortgage notes payable 14,513
Partners' Deficit
General partner $ (302)
Limited partners (44,882 units
issued and outstanding) (7,676) (7,978)
$ 10,941
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Rental income $ 1,011 $ 961 $ 2,986 $ 2,778
Other income 70 85 245 237
Total revenues 1,081 1,046 3,231 3,015
Expenses:
Operating 549 525 1,512 1,470
General and administrative 42 35 137 124
Depreciation 386 380 1,149 1,145
Interest 337 302 997 904
Property taxes (Note D) 109 (86) 320 179
Total expenses 1,423 1,156 4,115 3,822
Net loss $ (342) $ (110) $ (884) $ (807)
Net loss allocated to general
partner (1%) $ (3) $ (1) $ (9) $ (8)
Net loss allocated to limited
partners (99%) (339) (109) (875) (799)
$ (342) $ (110) $ (884) $ (807)
Net loss per limited partnership
unit $ (7.55) $ (2.43) $(19.50) $(17.80)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 44,882 $ 1 $22,441 $22,442
Partners' deficit at
December 31, 2004 44,882 $ (293) $(6,801) $(7,094)
Net loss for the nine months
ended September 30, 2005 -- (9) (875) (884)
Partners' deficit at
September 30, 2005 44,882 $ (302) $(7,676) $(7,978)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2005 2004
Cash flows from operating activities:
Net loss $ (884) $ (807)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation 1,149 1,145
Amortization of loan costs 26 22
Change in accounts:
Receivables and deposits (19) (169)
Other assets (24) (58)
Accounts payable 56 24
Tenant security deposit liabilities (8) (4)
Accrued property taxes 30 (120)
Due to affiliate 244 141
Other liabilities (32) (49)
Net cash provided by operating activities 538 125
Cash flows used in investing activities:
Property improvements and replacements (1,019) (686)
Cash flows from financing activities:
Payments on mortgage note payable (365) (340)
Advances from affiliate 1,057 861
Repayment of advances from affiliate (12) --
Net cash provided by financing activities 680 521
Net increase (decrease) in cash and cash equivalents 199 (40)
Cash and cash equivalents at beginning of period 223 146
Cash and cash equivalents at end of period $ 422 $ 106
Supplemental disclosure of cash flow information:
Cash paid for interest $ 824 $ 832
Supplemental disclosure of non-cash flow activity:
Property improvements and replacements in accounts payable $ 330 $ 63
Included in property improvements and replacements for the nine months ended
September 30, 2005 are approximately $281,000 of improvements which were
included in accounts payable at December 31, 2004.
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 8
(the "Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of NPI Equity Investments, Inc. ("NPI Equity" or the "Managing
General Partner"), the general partner of the Partnership, which is wholly-owned
by Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended September 30, 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.
Certain reclassifications have been made to the 2004 balances to conform to the
2005 presentation.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and depends on the Managing General Partner and
its affiliates for the management and administration of all Partnership
activities. The Partnership Agreement provides for (i) payments to affiliates
for services and (ii) reimbursement of certain expenses incurred by affiliates
on behalf of the Partnership.
Affiliates of the Managing General Partner receive 5% of gross receipts from
both of the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$161,000 and $149,000 for the nine months ended September 30, 2005 and 2004,
respectively, which is included in operating expense.
Affiliates of the Managing General Partner charged the Partnership reimbursement
of accountable administrative expenses amounting to approximately $189,000 and
$150,000 for the nine months ended September 30, 2005 and 2004, respectively,
which is included in general and administrative expense and investment
properties. The portion of these reimbursements included in investment
properties for the nine months ended September 30, 2005 and 2004 are fees
related to construction management services provided by an affiliate of the
Managing General Partner of approximately $71,000 and $50,000, respectively. The
construction management service fees are calculated based on a percentage of
additions to the investment properties. Approximately $333,000 of the
accountable administrative expenses were accrued at September 30, 2005 and are
included in due to affiliate.
For services relating to the administration of the Partnership and operation of
its properties, the Managing General Partner is entitled to receive payment for
non-accountable expenses up to a maximum of $150,000 per year of distributions
from operations based upon the number of Partnership units sold, subject to
certain limitations. The Managing General Partner was not entitled to receive a
reimbursement during the nine months ended September 30, 2005 and 2004 because
there were no distributions from operations during these periods.
For managing the affairs of the Partnership, the Managing General Partner of the
Partnership is entitled to receive a partnership management fee. The fee is
equal to 4% of the Partnership's adjusted cash from operations, as defined in
the Partnership Agreement, in any year, provided that 50% of the fee shall not
be paid until the Partnership has distributed to the limited partners adjusted
cash from operations in such year which is equal to 5% of the limited partners'
adjusted invested capital, as defined, on a non-cumulative basis. In addition,
50% of the fee shall not be paid until the Partnership has distributed to the
limited partners adjusted cash from operations in such year which is equal to 8%
of the limited partners' adjusted invested capital on a non-cumulative basis.
The fee shall be paid when adjusted cash from operations is distributed to the
limited partners. The Managing General Partner was not entitled to receive this
fee during the nine months ended September 30, 2005 and 2004.
NPI Equity, on behalf of the Partnership and certain affiliated partnerships,
has established a revolving credit facility (the "Partnership Revolver") to be
used to fund deferred maintenance and working capital needs of the Partnership
and certain other affiliated partnerships in the National Property Investors
Partnership Series. The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver will have
a term of 365 days, be unsecured and bear interest at the prime rate plus 2%
(8.75% at September 30, 2005) per annum. The maturity date of any such borrowing
accelerates in the event of: (i) the removal of NPI Equity as the managing
general partner (whether or not for cause); (ii) the sale or refinancing of a
property by the Partnership (whether or not a borrowing under the Partnership
Revolver was made with respect to such property); or (iii) the liquidation of
the Partnership. The Managing General Partner has exceeded this credit limit.
The Managing General Partner advanced the Partnership approximately $223,000
under the Partnership Revolver during the nine months ended September 30, 2005.
In addition, the Managing General Partner advanced approximately $834,000 for
costs associated with the redevelopment project at Huntington Athletic Club, as
discussed below. The Managing General Partner advanced the Partnership
approximately $861,000 during the nine months ended September 30, 2004. Interest
expense during the nine months ended September 30, 2005 and 2004 was
approximately $152,000 and $45,000, respectively. During the nine months ended
September 30, 2005, the Partnership made payments on the outstanding loans and
accrued interest of $30,000. There were no payments made on outstanding loans
during the nine months ended September 30, 2004. At September 30, 2005, the
amount of the outstanding loans and accrued interest was approximately
$2,841,000 and is included in due to affiliate. Subsequent to September 30,
2005, the Managing General Partner advanced approximately $63,000 of additional
funds to the Partnership.
The Partnership is currently undergoing a substantial redevelopment project at
Huntington Athletic Club Apartments. It is estimated that the costs associated
with this renovation will be approximately $2.6 million. In order to fund these
renovations, the Partnership sought the consent of its limited partners to
obtain a $2.0 million loan from an affiliate of the Managing General Partner.
The consent to the loan was obtained on November 5, 2004. The funds advanced per
this consent bear interest at 10% per annum. The balance of the costs associated
with the redevelopment is expected to be funded from operations. As of September
30, 2005 the Managing General Partner had advanced a total of approximately
$853,000 per this consent.
Upon sale of Partnership properties, the Managing General Partner will be
entitled to an incentive compensation fee equal to a declining percentage of the
difference between the total amount distributed to limited partners and the
appraised value of their investment at February 1, 1992. The percentage amount
to be realized by the Managing General Partner, if any, will be dependent upon
the year in which the property is sold. Payment of the incentive compensation
fee is subordinated to the receipt by the limited partners, of: (a)
distributions from capital transaction proceeds of an amount equal to their
present appraised investment in the Partnership at February 1, 1992; and (b)
distributions from all sources (capital transactions as well as cash flow) of an
amount equal to six percent (6%) per annum cumulative, noncompounded, on their
present appraised investment in the Partnership at February 1, 1992.
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 Managing General Partner. During the nine months ended
September 30, 2005 and 2004, the Partnership was charged by AIMCO and its
affiliates approximately $83,000 and $73,000, respectively, for insurance
coverage and fees associated with policy claims administration.
Note C - 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 Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint 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.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
AIMCO Properties L.P. and NHP Management Company, both affiliates of the
Managing 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, filed in the United States District Court for the District of
Columbia, 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. In June 2005 the Court conditionally certified the collective action
on both the on-call and overtime issues, which allows the 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, and AIMCO Properties, L.P. and NHP Management
Company will have the opportunity to move to decertify the collective action.
Because the court denied plaintiffs' motion to certify state subclasses, on
September 26, 2005, the plaintiffs filed a class action with the same
allegations in the Superior Court of California (Contra Costa County). 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
Managing 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 Managing General Partner have
implemented a national policy and procedures to prevent or eliminate mold from
its properties and the Managing 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 Managing 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
Managing 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.
Note D - Indiana Property Taxes
During 2003, the state of Indiana implemented a reassessment of property tax
values. The Partnership appealed the reassessed property tax value of
Williamsburg on the Lake Apartments. In the state of Indiana property tax bills
are paid one year in arrears. Due to the Partnership's appeal of the reassessed
property value, the property tax accrual for 2003 and, in certain situations,
the remaining liability for the 2002 property tax bills was based on the
property tax value as estimated by a third party property tax specialist. The
appeal was settled during the three months ended September 30, 2004 and the
final property value was lower than the amount estimated by the third party.
Therefore, property tax expense for 2002 and 2003 was reduced by approximately
$152,000 and the estimate for property taxes which will be due for 2004 was
reduced by approximately $57,000 during the three months ended September 30,
2004 based on this revised property value.
Note E - Subsequent Event
Subsequent to September 30, 2005, the Partnership entered into a sale contract
with a third party to sell Williamsburg on the Lake Apartments for a purchase
price of approximately $12,000,000. The anticipated closing date is November 30,
2005. For the nine months ended September 30, 2005 the property had total
revenues of approximately $2,024,000 and a net loss of approximately $450,000.
The net book value of Williamsburg on the Lakes assets at September 30, 2005 was
approximately $2,798,000.
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 two apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 2005 and 2004:
Average Occupancy
Property 2005 2004
Williamsburg on the Lake Apartments 95% 85%
Indianapolis, Indiana
Huntington Athletic Club Apartments 94% 94%
Morrisville, North Carolina
The Managing General Partner attributes the increase in occupancy at
Williamsburg on the Lake Apartments to an aggressive marketing campaign and
reduced rental rates.
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 Managing 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 Managing
General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, the Managing General Partner may use
rental concessions and rental rate reductions to offset softening market
conditions; accordingly, there is no guarantee that the Managing General Partner
will be able to sustain such a plan. 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.
The Partnership is currently undergoing a substantial redevelopment project at
Huntington Athletic Club Apartments. It is estimated that the costs associated
with this renovation will be approximately $2.6 million. In order to fund these
renovations, the Partnership sought the consent of its limited partners to
obtain a $2.0 million loan from an affiliate of the Managing General Partner.
The consent to the loan was obtained on November 5, 2004. The funds advanced per
this consent bear interest at 10% per annum. The balance of the costs associated
with the redevelopment is expected to be funded from operations. As of September
30, 2005 the Managing General Partner had advanced a total of approximately
$853,000 per this consent.
Results of Operations
The Partnership's net loss for the three and nine months ended September 30,
2005 was approximately $342,000 and $884,000 compared to a net loss of
approximately $110,000 and $807,000 for the three and nine months ended
September 30, 2004. The increase in net loss for the three and nine months ended
September 30, 2005 is a result of an increase in total expenses partially offset
by an increase in total revenues.
Total expenses increased for the three and nine months ended September 30, 2005
due to increases in operating, general and administrative, interest and property
tax expenses. Operating expenses increased for the three and nine months ended
September 30, 2005 primarily due to increases in property expenses. The increase
in operating expenses for the nine months ended September 30, 2005 was also due
to increases in administrative expense and management fees partially offset by
reduced maintenance expense. The increase in operating expenses for the three
months ended September 30, 2005 was also due to an increase in maintenance
expenses. The increase in property expense for the nine months ended September
30, 2005 was primarily due to increases in referral fees at both of the
Partnership's investment properties, appliance rental expenses at Williamsburg
on the Lake Apartments and utility expense at Huntington Athletic Club partially
offset by a decrease in salaries and other related benefits at both of the
Partnership's investment properties and utility expense at Williamsburg on the
Lake Apartments. The increase in property expense for the three months ended
September 30, 2005 was primarily due to increases in utility expenses at both of
the Partnership's investment properties, referral fees at Huntington Athletic
Club and salaries and other related benefits and appliance rental expenses at
Williamsburg on the Lake Apartments, partially offset by a decrease in salaries
and other related benefits at Huntington Athletic Club. Administrative expense
increased for the nine months ended September 30, 2005 primarily due to resident
eviction costs and phone sales at Williamsburg on the Lake Apartments, partially
offset by a decrease in applicant screening costs and the costs of appealing the
property tax value in 2004 at Williamsburg on the Lake Apartments. Management
fees increased primarily due to an increase in rental revenues at Williamsburg
on the Lake Apartments. Maintenance expense decreased for the nine months ended
September 30, 2005 due to decreases in contract services, building repairs and
equipment maintenance at Williamsburg on the Lake Apartments, partially offset
by an increase in damage expenses incurred during the nine months ended
September 30, 2005 caused by minor casualties at Williamsburg on the Lake
Apartments. The increase in maintenance expense for the three months ended
September 30, 2005 was primarily due to increases in damage expenses incurred
during the nine months ended September 30, 2005 caused by minor casualties at
Williamsburg on the Lake Apartments and contract services at both of the
Partnership's investment properties. Interest expense increased for the three
and nine months ended September 30, 2005 primarily due to an increase in
interest on advances from the Managing General Partner due to the interest being
calculated on a substantially higher balance. Property tax expense increased for
the three and nine months ended September 30, 2005 primarily due to a
reassessment of the property value at Williamsburg on the Lake Apartments as
discussed below.
During 2003, the state of Indiana implemented a reassessment of property tax
values. The Partnership appealed the reassessed property tax value of
Williamsburg on the Lake Apartments. In the state of Indiana, property tax bills
are paid one year in arrears. Due to the Partnership's appeal of the reassessed
property value, the property tax accrual for 2003 and, in certain situations,
the remaining liability for the 2002 property tax bills was based on the
property tax value as estimated by a third party property tax specialist. The
appeal was settled during the three months ended September 30, 2004 and the
final property value was lower than the amount estimated by the third party.
Therefore, property tax expense for 2002 and 2003 was reduced by approximately
$152,000 and the estimate for property taxes which will be due for 2004 was
reduced by approximately $57,000 during the three months ended September 30,
2004 based on this revised property value.
General and administrative expenses increased for the three and nine months
ended September 30, 2005 primarily due to an increase in the costs of services
included in the management reimbursements to the General Partner as allowed
under the Partnership Agreement. The increase in general and administrative
expenses for the three months ended September 30, 2005 was also due to an
increase in costs associated with the annual audit required by the Partnership
Agreement. Also included in general and administrative expenses at both
September 30, 2005 and 2004 are costs associated with the quarterly and annual
communications with investors and regulatory agencies.
Total revenues increased for the three and nine months ended September 30, 2005
due to an increase in rental income. The increase in total revenues for the
three months ended September 30, 2005 was partially offset by a decrease in
other income. The increase in rental income for the three and nine months ended
September 30, 2005 was due to an increase in occupancy and a decrease in bad
debt expense at Williamsburg on the Lake Apartments and an increase in average
rental rates at Huntington Athletic Club Apartments, partially offset by a
decrease in average rental rates at Williamsburg on the Lake Apartments. The
decrease in other income for the three months ended September 30, 2005 was
primarily due to a decrease in lease cancellation fees at Williamsburg on the
Lake Apartments.
Liquidity and Capital Resources
At September 30, 2005, the Partnership had cash and cash equivalents of
approximately $422,000 compared to approximately $106,000 at September 30, 2004.
The increase of approximately $199,000 in cash and cash equivalents since
December 31, 2004 is due to approximately $680,000 and $538,000 of cash provided
by financing and operating activities, respectively, partially offset by
approximately $1,019,000 of cash used in investing activities. Cash provided by
financing activities consisted of advances from an affiliate of the Managing
General Partner partially offset by payments of principal made on the mortgages
encumbering the Partnership's investment properties and repayments of advances
from an affiliate of the Managing General Partner. Cash used in investing
activities consisted of property improvements and replacements. The Partnership
invests its working capital reserves in interest bearing accounts.
NPI Equity, on behalf of the Partnership and certain affiliated partnerships,
has established a revolving credit facility (the "Partnership Revolver") to be
used to fund deferred maintenance and working capital needs of the Partnership
and certain other affiliated partnerships in the National Property Investors
Partnership Series. The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver will have
a term of 365 days, be unsecured and bear interest at the prime rate plus 2%
(8.75% at September 30, 2005) per annum. The maturity date of any such borrowing
accelerates in the event of: (i) the removal of NPI Equity as the managing
general partner (whether or not for cause); (ii) the sale or refinancing of a
property by the Partnership (whether or not a borrowing under the Partnership
Revolver was made with respect to such property); or (iii) the liquidation of
the Partnership. The Managing General Partner has exceeded this credit limit.
The Managing General Partner advanced the Partnership approximately $1,057,000
during the nine months ended September 30, 2005, of which approximately $834,000
was for costs associated with the redevelopment project at Huntington Athletic
Club Apartments, as discussed below. The Managing General Partner advanced the
Partnership approximately $861,000 during the nine months ended September 30,
2004. Interest expense during the nine months ended September 30, 2005 and 2004
was approximately $152,000 and $45,000, respectively. During the nine months
ended September 30, 2005, the Partnership made payments on the outstanding loans
and accrued interest of $30,000. There were no payments made on outstanding
loans during the nine months ended September 30, 2004. At September 30, 2005,
the amount of the outstanding loans and accrued interest was approximately
$2,841,000. Subsequent to September 30, 2005, the Managing General Partner
advanced approximately $63,000 of additional funds to the Partnership.
The Partnership is currently undergoing a substantial redevelopment project at
Huntington Athletic Club Apartments. It is estimated that the costs associated
with this renovation will be approximately $2.6 million. In order to fund these
renovations, the Partnership sought the consent of its limited partners to
obtain a $2.0 million loan from an affiliate of the Managing General Partner.
The consent to the loan was obtained on November 5, 2004. The funds advanced per
this consent bear interest at 10% per annum. The balance of the costs associated
with the redevelopment is expected to be funded from operations. As of September
30, 2005 the Managing General Partner had advanced a total of approximately
$853,000 per this consent.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. The Managing General
Partner monitors developments in the area of legal and regulatory compliance.
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 for each of the
Partnership's properties are detailed below.
Williamsburg on the Lake Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $279,000 of capital improvements at Williamsburg on the Lake
Apartments consisting primarily of floor covering and appliance replacements,
electrical upgrades, air conditioning unit replacements, plumbing improvements
and other building improvements. These 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. The Partnership has signed a contract to sell this property in
November 2005.
Huntington Athletic Club Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $716,000 of capital improvements arising from the redevelopment of
the property. Additional capital improvements of approximately $73,000 during
the nine months ended September 30, 2005 consisted primarily of floor covering
and appliance replacements. These improvements were funded from operating cash
flow and advances from the Managing General Partner. The Partnership regularly
evaluates the capital improvement needs of the property. The Partnership has
committed to a substantial redevelopment project at Huntington Athletic Club
Apartments which includes site improvements and exterior building upgrades. It
is estimated that the costs associated with this renovation will be
approximately $2.6 million. In order to fund these renovations, the Partnership
sought the consent of its limited partners to a $2.0 million loan from an
affiliate of the Managing General Partner. The consent to the loan was obtained
November 5, 2004. The balance of the costs associated with the redevelopment is
expected to be funded from operating cash flow. The redevelopment project is
scheduled to be completed during the first quarter of 2006. The budgeted
spending for this project for 2005 is approximately $1,566,000. Certain other
routine capital expenditures are anticipated during 2005. Additional
improvements may be considered and 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
and advances from the Managing 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
indebtedness encumbering the Partnership's properties of approximately
$14,513,000 is amortized over 20 years and matures June 1, 2020 and January 1,
2022 at which time the loans are scheduled to be fully amortized.
There were no distributions during the nine months ended September 30, 2005 and
2004. Future cash distributions will depend on the levels of cash generated from
operations, the timing of debt maturities, refinancings, and/or property sales.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Given the balance of outstanding loans to the Managing General Partner,
it is not expected that the Partnership will generate sufficient funds from
operations, after required capital improvements, to permit any distributions to
its partners during the foreseeable future.
Subsequent to September 30, 2005, the Partnership entered into a sale contract
with a third party to sell Williamsburg on the Lake Apartments for a purchase
price of approximately $12,000,000. The anticipated sale date is November 30,
2005.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 27,772 limited partnership units
(the "Units") in the Partnership representing 61.88% of the outstanding units at
September 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 Managing General Partner. As a result of its ownership of 61.88% of
the outstanding Units, AIMCO and its affiliates are in a position to influence
all voting decisions with respect to the Partnership. However, DeForest Ventures
II L.P., from whom an affiliate of AIMCO and the Managing General Partner,
through its merger with Insignia, acquired 16,447 units, had agreed for the
benefit of third party unitholders, that it would vote these units: (i) against
any increase in compensation payable to the Managing General Partner or to its
affiliates; and (ii) on all other matters submitted by it or its affiliates, in
proportion to the votes cast by third party unit holders. Except for the
foregoing, no other limitations are imposed on AIMCO or its affiliates' right to
vote each unit held. Although the Managing General Partner owes fiduciary duties
to the limited partners of the Partnership, the Managing General Partner also
owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties
of the Managing General Partner, as managing general partner, to the Partnership
and its limited partners may come into conflict with the duties of the Managing
General Partner to AIMCO as its sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
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 Managing General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Managing General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint 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.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
AIMCO Properties L.P. and NHP Management Company, both affiliates of the
Managing 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, filed in the United States District Court for the District of
Columbia, 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. In June 2005 the Court conditionally certified the collective action
on both the on-call and overtime issues, which allows the 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, and AIMCO Properties, L.P. and NHP Management
Company will have the opportunity to move to decertify the collective action.
Because the court denied plaintiffs' motion to certify state subclasses, on
September 26, 2005, the plaintiffs filed a class action with the same
allegations in the Superior Court of California (Contra Costa County). 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
Managing 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 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.
NATIONAL PROPERTY INVESTORS 8
By: NPI EQUITY INVESTMENTS, INC.
Managing General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: November 14, 2005
NATIONAL PROPERTY INVESTORS 8
Exhibit Index
Exhibit Number Description of Exhibit
2.5 Master Indemnity Agreement (1)
3.4 Agreement of Limited Partnership (2)
Amendments to Agreement of Limited Partnership (3)
Amendments to Agreement of Limited Partnership (4)
Amendments to Agreement of Limited Partnership (5)
10.26 Multifamily Note dated May 8, 2000, by and between National
Property Investors 8, a California limited partnership, and
GMAC Commercial Mortgage Corporation, a California
Corporation, relating to Huntington Athletic Club
(incorporated by reference to Exhibit 10.26 filed with the
Registrant's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 2000).
10.27 Multifamily note dated December 6, 2001 by and between
National Property Investors 8, a California limited
partnership, and GMAC Commercial Mortgage Corporation, a
California Corporation, relating to Williamsburg Apartments
(incorporated by reference to Exhibit 10.27 filed with the
Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 2001).
10.28 Purchase and Sale Contract between National Property Investors
8, a California limited partnership, and Prime Quest
Management, LLC, an Illinois limited liability company dated
August 16, 2005.
10.29 First Amendment to Purchase and Sale Contract between National
Properties Investors 8 and Prime Quest Management, LLC, dated
September 16, 2005.
10.30 Reinstatement and Second Amendment to the Purchase and Sale
Contract between National Properties Investors 8 and Prime
Quest Management, LLC, dated October 11, 2005.
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
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.
(1) Incorporated by reference to Exhibit 2.5 to Form 8-K filed
by Insignia Financial Group, Inc. with the Securities and
Exchange Commission on September 1, 1995.
(2) Incorporated by reference to Exhibit A to the Prospectus of
the Registrant dated May 13, 1985 contained in the
Registrant's Registration Statement on Form S-11 (Reg. No.
2-95864).
(3) Incorporated by reference to Exhibits 3, 4(b) to the
Registrant's Form 10-K for the fiscal year ended December
31, 1985.
(4) Incorporated by reference to the definitive Proxy Statement of
the Registrant dated April 3, 1991.
(5) Incorporated by reference to the Statement Furnished in
Connection with the Solicitation Of Consents of the Registrant
dated August 28, 1992.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of National Property
Investors 8;
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: November 14, 2005
/s/Martha L. Long
Martha L. Long
Senior Vice President of NPI
Equity Investments, Inc.,
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 National Property
Investors 8;
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: November 14, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President of NPI Equity Investments,
Inc., equivalent of the chief financial
officer of the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of National Property
Investors 8 (the "Partnership"), for the quarterly period ended September 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: November 14, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 14, 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 10.28
PURCHASE AND SALE CONTRACT
AMONG
ABINGTON-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership,
ABINGTON II-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
HUNT CLUB ASSOCIATES, LTD.,
a Texas limited partnership
PICKWICK PLACE AP XII, LP,
a South Carolina limited partnership
NATIONAL PROPERTY INVESTORS 8
a California limited partnership
AS SELLERS
AND
PRIME QUEST MANAGEMENT, LLC,
an Illinois limited liability company
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.......................................9
2.3 Escrow Provisions Regarding Deposit..............................9
ARTICLE III FEASIBILITY PERIOD...........................................11
3.1 Feasibility Period..............................................11
3.2 Expiration of Feasibility Period................................11
3.3 Conduct of Investigation........................................12
3.4 Purchaser Indemnification.......................................12
3.5 Property Materials..............................................13
3.6 Property Contracts..............................................14
ARTICLE IV TITLE........................................................15
4.1 Title Documents.................................................15
4.2 Survey..........................................................15
4.3 Objection and Response Process..................................15
4.4 Permitted Exceptions............................................16
4.5 Existing Deed of Trust..........................................17
4.6 Assumed Encumbrances............................................17
4.7 Purchaser Financing.............................................21
ARTICLE V CLOSING......................................................21
5.1 Closing Date....................................................21
5.2 Seller Closing Deliveries.......................................21
5.3 Purchaser Closing Deliveries....................................22
5.4 Closing Prorations and Adjustments..............................23
5.5 Post Closing Adjustments........................................27
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.......28
6.1 Seller's Representations........................................28
6.2 AS-IS...........................................................30
6.3 Survival of Seller's Representations............................31
6.4 Definition of Seller's Knowledge................................31
6.5 Representations And Warranties Of Purchaser.....................32
ARTICLE VII OPERATION OF THE PROPERTIES..................................33
7.1 Leases and Property Contracts...................................33
7.2 General Operation of Property...................................33
7.3 Liens...........................................................34
ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING..............................34
8.1 Purchaser's Conditions to Closing...............................34
8.2 Sellers' Conditions to Closing..................................35
ARTICLE IX BROKERAGE....................................................36
9.1 Indemnity.......................................................36
9.2 Broker Commission...............................................36
9.3 Broker Signature Page...........................................36
ARTICLE X DEFAULTS AND REMEDIES........................................37
10.1 Purchaser Default...............................................37
10.2 Seller Default..................................................37
ARTICLE XI RISK OF LOSS OR CASUALTY.....................................38
11.1 Major Damage....................................................38
11.2 Minor Damage....................................................39
11.3 Repairs.........................................................39
ARTICLE XII EMINENT DOMAIN...............................................39
12.1 Eminent Domain..................................................39
ARTICLE XIII MISCELLANEOUS................................................40
13.1 Binding Effect of Contract......................................40
13.2 Exhibits And Schedules..........................................40
13.3 Assignability...................................................40
13.4 Binding Effect..................................................40
13.5 Captions........................................................40
13.6 Number And Gender Of Words......................................40
13.7 Notices.........................................................40
13.8 Governing Law And Venue.........................................42
13.9 Entire Agreement................................................43
13.10 Amendments......................................................43
13.11 Severability....................................................43
13.12 Multiple Counterparts/Facsimile Signatures......................43
13.13 Construction....................................................43
13.14 Confidentiality.................................................43
13.15 Time Of The Essence.............................................43
13.16 Waiver..........................................................43
13.17 Attorneys Fees..................................................44
13.18 Time Periods....................................................44
13.19 1031 Exchange...................................................44
13.20 No Personal Liability of Officers, Trustees or Directors of
Seller's Partners...............................................45
13.21 No Exclusive Negotiations.......................................45
13.22 ADA Disclosure..................................................45
13.23 No Recording....................................................45
13.24 Relationship of Parties.........................................45
13.25 Dispute Resolution..............................................45
13.26 AIMCO Marks.....................................................46
13.27 Non-Solicitation of Employees...................................46
13.28 Survival........................................................46
13.29 Multiple Purchasers.............................................46
13.30 Sellers' Several Obligations....................................47
13.31 Obligation to Close on all Properties...........................47
ARTICLE XIV LEAD-BASED PAINT DISCLOSURE..................................48
14.1 Disclosure......................................................48
14.2 Intentionally Omitted...........................................48
14.3 Consent Agreement - Pre-1978 Certified. ........................48
14.4 Consent Agreement - Pre-1978-LBP, But No LBP Hazards............48
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT (this "Contract") is entered into as of
the 16th day of August, 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 PRIME QUEST
MANAGEMENT, LLC, an Illinois limited liability company, having a principal
address at 2824 W. Coyle, Chicago, IL, 60645 ("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-5 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 the aggregate of all of the Properties' Base
Purchase Prices set forth on the Seller Information Schedule.
1.1.6 "Assumed Deed of Trust" means, with respect to the Assumption Property,
the deed of trust or mortgage identified on the Seller Information Schedule.
1.1.7 "Assumed Encumbrance" means, (a) with respect to the Assumption Property,
all security and related documents in connection with the Loan for an Assumption
Property, including the Assumed Deed of Trust, and (b) with respect to
Williamsburg on the Lake, Abington I and Abington II, the HAP Contracts.
1.1.8 "Assumed Loan Documents" means, with respect to the Assumption Property,
the Note, Assumed Deed of Trust, Assumed Encumbrances and any other documents
executed in connection with the Loan for such Assumption Property.
1.1.9 "Assumption Lender Fees" shall have the meaning set forth in
Section 4.6.5.
1.1.10......"Assumption Property" means the Property identified as an Assumption
Property on the Seller Information Schedule for which the Loan and Assumed Loan
Documents will be assumed by Purchaser at Closing. Williamsburg on the Lake is
the sole Assumption Property.
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, Illinois or
Indiana.
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 date 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" means the 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).
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......"HAP Approval" shall have the meaning set forth in Section
4.6.3.2.
1.1.33......"HAP Assumption" shall have the meaning set forth in Section
4.6.2.2.
1.1.34......"HAP Assumption Application" shall have the meaning set forth in
Section 4.6.3.2.
1.1.35......"HAP Contracts" shall have the meaning set forth in Section
4.6.1.2.
1.1.36......"Housing Authority" shall have the meaning set forth in Section
4.6.1.2.
1.1.37......"Housing Authority Requirements" shall have the meaning set forth
in Section 4.6.3.2.
1.1.38......"Improvements" means all buildings and improvements located on the
Land corresponding to each Property, taken "as is."
1.1.39......"Initial Deposit" shall have the meaning set forth in
Section 2.2.1.
1.1.40......"Land" means, with respect to each Property, the corresponding tract
of land described on Exhibits A-1 to A-5, and all rights, privileges and
appurtenances pertaining thereto.
1.1.41......"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.
1.1.42......"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.
1.1.43......"Leases Assignment" shall have the meaning set forth in
Section 5.2.4.
1.1.44......"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.
1.1.45......"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.
1.1.46......"Loan" means the indebtedness owing to Lender evidenced by a Note.
1.1.47......"Loan Assumption Application" shall have the meaning set forth in
Section 4.6.3.1.
1.1.48......"Loan Assumption Application Submittal Deadline" shall have the
meaning set forth in Section 4.6.3.1.
1.1.49......"Loan Assumption and Release" shall have the meaning set forth in
Section 4.6.2.1.
1.1.50......"Loan Balance" shall have the meaning set forth in Section 2.2.3.
1.1.51......"Loan Payoff" shall have the meaning set forth in Section 5.4.7.
1.1.52......"Losses" shall have the meaning set forth in Section 3.4.1.
1.1.53......"Materials" shall have the meaning set forth in Section 3.5.
1.1.54......Materials Security Deposit" means a portion of the Initial Deposit,
or at such time as the Additional Deposit has been delivered, the entire
Deposit, equal to $64,000.00.
1.1.55......"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).
1.1.56......"New Exception" shall have the meaning set forth in
Section 4.4.2.
1.1.57......"New Exception Review Period" shall have the meaning set forth in
Section 4.4.2.
1.1.58......"Note" means, with respect to each Property, the promissory note(s)
identified in the Seller Information Schedule.
1.1.59......"Objection Deadline" shall have the meaning set forth in
Section 4.3.
1.1.60......"Objection Notice" shall have the meaning set forth in
Section 4.3.
1.1.61......"Objections" shall have the meaning set forth in Section 4.3.
1.1.62......"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. Except for Williamsburg on the Lake, all Properties are
Payoff Properties.
1.1.63......"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.
1.1.64......"Permitted Exceptions" shall have the meaning set forth in
Section 4.4.
1.1.65......"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.
1.1.66......"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.
1.1.67......"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.
1.1.68......"Property Contracts Notice" shall have the meaning set forth in
Section 3.6.
1.1.69......"Property Manager" means the current property manager of each
Property.
1.1.70......"Proration Schedule" shall have the meaning set forth in
Section 5.4.1.
1.1.71......"Purchase Price" shall have the meaning set forth in Section 2.2.
1.1.72......"Records Disposal Notice" shall have the meaning set forth in
Section 5.4.13.
1.1.73......"Regional Property Manager" means, with respect to each Property,
the individual identified in the Seller Information Schedule.
1.1.74......"Reinstatement Notice" shall have the meaning set forth in
Section 8.1.
1.1.75......"Related Contract" means, individually, the Purchase and Sale
Contract of even date herewith between Purchaser and Salem Courthouse, L.P., for
the sale of the property commonly known as "Salem Courthouse Apartments", in
Indiana, and the Purchase and Sale Contract of even date herewith between
Purchaser and Wyckford Commons, L.P., for the sale of the property commonly
known as "Wyckford Commons Apartments", in Indiana. "Related Contracts" means,
collectively, both Related Contracts.
1.1.76......Rent-Ready Condition" means the physical condition to which Seller,
in the ordinary course of its business, would prepare Tenant Units in
anticipation of renting such Tenant Units to Prospective Tenants.
1.1.77......"Rent Roll" shall have the meaning set forth in Section 3.5.3.
1.1.78......"Required Assignment Consent" shall have the meaning set forth in
Section 3.6.
1.1.79......"Required Fund Amounts" shall have the meaning set forth in
Section 4.6.6.1.
1.1.80......"Required Return Documents" shall have the meaning set forth in
Section 3.5.2.
1.1.81......"Response Deadline" shall have the meaning set forth in
Section 4.3.
1.1.82......"Response Notice" shall have the meaning set forth in Section 4.3.
1.1.83......""Seller's Indemnified Parties" shall have the meaning set forth
in Section 3.4.1.
1.1.84......"Seller Information Schedule" shall have the meaning set forth in
the introductory paragraph.
1.1.85......"Seller's Property-Related Files and Records" shall have the meaning
set forth in Section 5.4.13.
1.1.86......"Seller's Representations" shall have the meaning set forth in
Section 6.1.
1.1.87......"Seller's Representative" means AIMCO.
1.1.88......"Separate Closing Conditions" shall have the meaning set forth in
Section 4.6.9.
1.1.89......"Specific AIMCO Provisions" shall have the meaning set forth in
Section 4.6.2.1.
1.1.90......"Survey" shall have the meaning ascribed thereto in Section 4.2.
1.1.91......"Survival Period" shall have the meaning set forth in Section 6.3.
1.1.92......"Survival Provisions" shall have the meaning set forth in Section
13.28.
1.1.93......"Tenant" means any person or entity entitled to occupy any portion
of the applicable Property under a Lease.
1.1.94......"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.
1.1.95......"Tenant Security Deposit Balance" shall have the meaning set
forth in Section 5.4.6.2.
1.1.96......Tenant Unit" means each apartment in the Property.
1.1.97......"Terminated Contracts" shall have the meaning set forth in
Section 3.6.
1.1.98......"Termination Notice" shall have the meaning set forth in Section
8.1.
1.1.99......"Testing" means testing required at a Property with respect to
lead-based paint in accordance with the requirements of the Consent Agreement.
1.1.100....."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, but
excluding any attorney work product.
1.1.101....."Title Commitment" shall have the meaning ascribed thereto in
Section 4.1.
1.1.102....."Title Documents" shall have the meaning set forth in Section
4.1.
1.1.103....."Title Insurer" shall have the meaning set forth in Section 2.2.1.
1.1.104....."Title Policy" shall have the meaning set forth in Section 4.1.
1.1.105....."Uncollected Rents" shall have the meaning set forth in Section
5.4.6.1.
1.1.106....."Utility Contract " shall have the meaning set forth in Section
5.4.12.
1.1.107....."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 Within one Business Day after the Effective Date, Purchaser shall deliver
to Fidelity National Title Company, c/o Lolly Avant, National Commercial Closing
Specialist, 1900 West Loop South, Suite 650, Houston, Texas 77027, telephone:
800-879-1677; fax: 713-623-4406, e-mail: lavant@fidelitynt.com ("Escrow Agent"
or "Title Insurer") an initial deposit (the "Initial Deposit") of $320,748 by
wire transfer of immediately available funds ("Good Funds"). The Initial Deposit
shall be held and disbursed in accordance with the escrow provisions set forth
in Section 2.3. The Initial Deposit shall be allocated among the Sellers of the
Properties pursuant to the Applicable Share attributable to each of their
respective Properties. Notwithstanding anything in this Contract to the
contrary, Purchaser shall have the right, in its sole and absolute discretion,
to recover the entirety of the Deposit (other than the Material Security
Deposit, the return of which is covered by Section 3.5.2) if it terminates this
Contract prior to the expiration of the Feasibility Period, even if Purchaser is
in default at the time of such termination; provided, however, Purchaser shall
not have the right to recover the Deposit if Purchaser is in default and such
default has caused a Loss to Seller arising from personal injury, property
damage or lien (but Purchaser shall be precluded from recovery of the Deposit
(less the Materials Security Deposit) only to the extent of such Loss).
2.2.2 Within one Business Day after the Feasibility Period expires, Purchaser
shall deliver to Escrow Agent an additional deposit (the "Additional Deposit")
of $449,047 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 At the Closing, subject to the occurrence of the Loan Assumption and
Release, Purchaser shall, with respect to the Assumption Property, receive a
credit against the Purchase Price for such Assumption Property in the amount of
the outstanding principal balance of the applicable Note, together with all
accrued but unpaid interest (if any) thereon, as of the Closing Date (the "Loan
Balance").
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 1:00 p.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 At any time on or before the date on which the Feasibility Period expires,
but except as otherwise provided in the proviso of the last sentence of Section
2.2.1, if Escrow Agent shall receive a demand from Purchaser, requesting a
return of the Initial Deposit, then Escrow Agent shall promptly, without the
need of confirmation from, and irrespective of any notice to the contrary sent
to it by, Seller, return an amount equal to the Initial Deposit less the
Materials Security Deposit to Purchaser, in which event this Contract shall be
deemed to have been terminated by Purchaser and the Materials Security Deposit
shall be returned to Purchaser only upon Sellers' written confirmation that
Purchaser has returned all Third-Party Reports and Required Return Documents
provided to Purchaser. If, after the expiration of the Feasibility Period, the
Deposit has not been released earlier in accordance with Section 2.3.2 or the
preceding sentence of this Section 2.3.3, 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 Required
Return Documents provided to Purchaser as a pre-condition to the return of the
Materials Security 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, and 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
September 16, 2005 (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 Escrow Agent shall forthwith return the
Initial Deposit to Purchaser (subject to Purchaser's obligation under Section
3.5.2 to return all Third-Party Reports and Required Return Documents provided
to Purchaser as a pre-condition to the return of the Materials Security
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 (which may be delivered telephonically) 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. Purchaser shall take all reasonable actions and
implement all protections necessary to ensure that all actions taken in
connection with the investigations and inspections of each Property, and all
equipment, materials and substances generated, used or brought onto each
Property pose no material threat to the safety of persons or the environment and
cause no damage to such Property or other property of any Seller or other
persons. 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
commercially reasonable efforts and diligence 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") to the extent arising from or related to Purchaser's or its
Consultants' 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 any Property without Seller's
Representative's prior written consent, which consent may be withheld in
Seller's Representative'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 commercially reasonable 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 Buyer'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. All computer disks of due diligence
materials and surveys (collectively, the "Required Return Documents"), together
with all Third-Party Reports, shall be returned by Purchaser to all applicable
Sellers as a condition to return of the Materials Security Deposit to Purchaser
(if Purchaser is otherwise entitled to the 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 In addition to the items set forth on Schedule 3.5, no later than 10 days
after the Effective Date, each Seller shall deliver to Purchaser (or otherwise
make available to Purchaser as provided under Section 3.5.1) a rent roll for its
Property listing the move-in date, monthly base rent payable, lease expiration
date and unapplied security deposit for each Lease (the "Rent Roll"). The Rent
Roll shall be part of the Materials for all purposes under this Contract and
such Seller makes no representations or warranties regarding the Rent Roll other
than the express representation set forth in Section 6.1.7. Each Seller shall
update the Rent Roll in accordance with Section 5.2.11.
3.5.4 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 Contract 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 by the applicable Seller to
Purchaser (and the assumption by Purchaser of all obligations under such
Property Contract). 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"). Each Seller shall be responsible only for payment of the
basic premium for the Title Policy for its Property. 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, including for "extended" coverage.
4.2 Survey. Within 3 Business 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, in which event such Seller's
Representative shall order such new or updated survey (together with the
Existing Survey, is referred to herein as the "Survey") from the surveyor who
prepared the Existing Survey (or from such other surveyor as such Seller
determines in its reasonable discretion); provided, however, that nothing herein
shall be deemed to extend either the Feasibility Period, the Objection Deadline
or the Final Response Deadlines. Purchaser shall pay to the applicable Seller
75% of the costs of the applicable Existing Survey and any new or updated survey
requested pursuant to the terms of this Section 4.2; the applicable Seller shall
be responsible for the remaining 25% of such costs. Purchaser's obligation to
make the payments to Sellers set forth in the preceding sentence shall survive
the termination of this Contract or the Closing; provided, however, if Purchaser
terminates this Contract within 14 days after the Effective Date, then Purchaser
shall have no obligation to pay such Survey costs.
4.3 Objection and Response Process. On or before September 7, 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 to which Purchaser objects
(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. On or before
September 14, 2005 (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 the expiration of the Feasibility Period
(the "Final Response Deadline") either (a) to accept the Title Documents and
Survey with resolution, if any, of the Objections as set forth in the Response
Notice (or if no Response Notice is tendered, without any resolution of the
Objections) and without any reduction or abatement of the Purchase Price, or (b)
to terminate this Contract in its entirety regarding all Properties (but not
less than all Properties), in which event the Initial Deposit shall be returned
to Purchaser (subject to Purchaser's obligation under Section 3.5.2 to return
all Third-Party Reports and Required Return Documents provided to Purchaser as a
pre-condition to the return of the Materials Security Deposit). If Purchaser
fails to give notice to terminate this Contract on or before the Final Response
Deadline, Purchaser shall be deemed to have elected to approve and irrevocably
waived any objections to any matters covered by the Title Documents or the
Survey 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.
4.4.1 The Deed for each Property delivered pursuant to this Contract shall be
subject to the following, all of which shall be deemed "Permitted Exceptions":
4.4.1.1.....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;
4.4.1.2.....All Leases for such Property;
4.4.1.3.....The Assumed Encumbrances;
4.4.1.4.....Applicable zoning and governmental regulations and ordinances;
4.4.1.5.....Any defects in or objections to title to such Property, or title
exceptions or encumbrances, arising by, through or under Purchaser; and
4.4.1.6.....The terms and conditions of this Contract.
4.4.2 If at any time after the expiration of the Feasibility Period any update
of the Title Commitment discloses any material additional items that materially
adversely affect title to any of the Properties and (a) that have not been
caused by, through or under Purchaser or its Consultants, (b) that were not
disclosed on any version of the Title Commitments delivered to Purchaser during
the Feasibility Period, and (c) which the applicable Seller does not agree to
cure (with such decision to cure to be in such Seller's sole and absolute
discretion) (the "New Exception"), then Purchaser shall have the lesser of (a) a
period of 5 days from the date of its receipt of such updated Title Commitment
or (b) the Scheduled Closing Date (the "New Exception Review Period") to review
and to approve or disapprove of the same. If the New Exception is unacceptable
to it, Purchaser, at its sole option, may elect either: (i) to terminate this
Contract in its entirety with respect to all of the Properties, in which event
this Contract shall be of no further force and effect subject to and except for
the Survival Provisions, and Escrow Agent shall forthwith return the Deposit to
Purchaser (subject to Purchaser's obligation under Section 3.5.2 to return all
Third-Party Reports and Required Return Documents provided to Purchaser as a
pre-condition to the return of the Materials Security Deposit); or (ii) to waive
such objections and proceed with the transactions contemplated by this Contract,
in which event Purchaser shall be deemed to have approved the New Exception and
the same shall be a Permitted Exception. If Purchaser fails to notify Seller of
its election to terminate this Contract in accordance with the foregoing clause
(i) prior to the expiration of the New Exception Review Period, Purchaser shall
be deemed to have elected to approve and irrevocably waive any objections to the
New Exception and the same shall be a Permitted Exception.
4.5 Existing Deed of Trust. The provisions of this Section 4.5 apply only to
Payoff Properties. It is understood and agreed that, whether or not Purchaser
gives an Objection Notice with respect thereto for a Payoff Property, any deeds
of trust and/or mortgages which secure a Note for a Payoff Property
(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 (subject
to reduction of the Purchase Price in accordance with Section 2.2).
4.6 Assumed Encumbrances.
4.6.1 Certain agreements presently encumber both the Williamsburg on the Lake
and Abington I and II Properties which must be assumed by Purchaser at the
Closing:
4.6.1.1.....Purchaser recognizes and agrees that, in connection with the Loan on
the Assumption Property made by Lender, the Assumption Property is encumbered by
the Assumed Deed of Trust and the Assumed Encumbrances. The Loan is evidenced by
the Note applicable to such Assumption Property. Within 7 days after the
Effective Date, the Seller of the Assumption Property agrees that it will make
available to Purchaser (in the same manner in which such Seller is permitted to
make the Materials available to Purchaser under Section 3.5.1) copies of the
Assumed Loan Documents which are in such Seller's possession or reasonable
control (subject to Section 3.5.2).
4.6.1.2.....Purchaser recognizes and agrees that the Williamsburg on the Lake
Property and Abington I and II Properties are the subject of one or more HAP
contracts (collectively, the "HAP Contracts") which regulate Section 8 payments
to such Properties under existing vouchers issued by the applicable local
housing authority (the "Housing Authority"). The HAP Contracts shall be deemed
Assumed Encumbrances for all purposes hereunder. Within 7 days after the
Effective Date, the Williamsburg on the Lake Property and Abington I and II
Sellers agree that they will make available to Purchaser (in the same manner in
which such Sellers are permitted to make the Materials available to Purchaser
under Section 3.5.1) copies of the HAP Contracts which are in such Sellers'
possession or reasonable control (subject to Section 3.5.2).
4.6.2 With respect to the Assumed Loan Documents and the HAP Contracts,
Purchaser agrees as follows:
4.6.2.1.....Purchaser agrees that, at the Closing, (a) Purchaser shall assume
the applicable Seller's obligations under the Note and all of the other
applicable Assumed Loan Documents and accept title to the Assumption Property
subject to the Deed of Trust and the Assumed Encumbrances applicable to such
Assumption Property, and (b) the applicable Lender shall release the applicable
Seller, as well as any guarantors and other obligated parties under the Assumed
Loan Documents, from all obligations under the Assumed Loan Documents (and any
related guarantees or letters of credit), including, without limitation, any
obligation to make payments of principal and interest under the applicable Note
(collectively, the foregoing (a) and (b) referred to herein as the "Loan
Assumption and Release"). Purchaser acknowledges and agrees that (x) certain of
the provisions of the Assumed Loan Documents may have been negotiated for the
exclusive benefit of the applicable Seller, AIMCO or their respective affiliates
(the "Specific AIMCO Provision"), and (y) unless the Lender otherwise agrees in
such Lender's sole and arbitrary discretion, Purchaser will not be permitted to
assume the benefit of the Specific AIMCO Provisions and the same shall be of no
further force or effect from and after the Closing Date.
4.6.2.2.....Purchaser agrees that, at the Closing, either (a) Purchaser shall
assume all obligations under the HAP Contracts and accept title to Williamsburg
on the Lake Property and Abington I and Abington II subject to the same, or (b)
the existing HAP Contracts shall be terminated, and Purchaser shall enter into
replacement HAP contracts which are acceptable to the Housing Authority
(collectively, the foregoing (a) and (b) referred to herein as the "HAP
Assumption").
4.6.3 With respect to the Loan Assumption and Release and the HAP Assumption,
Purchaser agrees as follows:
4.6.3.1.....Purchaser further acknowledges that the Assumed Loan Documents
require the satisfaction by Purchaser of certain requirements as set forth
therein to allow for the Loan Assumption and Release. Accordingly, Purchaser, at
its sole cost and expense and within 17 days after the Effective Date (the "Loan
Assumption Application Submittal Deadline"), shall submit the application to the
applicable Lender for assumption of each new Loan and approval of the Loan
Assumption and Release, together with all documents and information required by
the Assumed Loan Documents which Purchaser reasonably believes is required based
on information received from the Lender (the "Loan Assumption Application").
4.6.3.2.....Purchaser further acknowledges that the HAP Contracts require the
satisfaction by Purchaser of certain requirements as set forth therein to allow
for the HAP Assumption. Accordingly, no later than the Loan Assumption
Application Submittal Deadline, Purchaser, at its sole cost and expense, shall
meet with the Housing Authority and, pursuant to the HAP Contracts and form
HUD-542641, shall submit all applications, documents, information, materials and
fees (collectively, the "HAP Assumption Application") required by the Housing
Authority in order for the Housing Authority to review and approve Purchaser's
request that the Housing Authority approve the HAP Assumption (the "HAP
Approval"). In addition to the foregoing, Purchaser recognizes and agrees that
the Housing Authority requires Purchaser to complete and return each of the
following (together with such other requirements as the Housing Authority may
from time to time impose, the "Housing Authority Requirements"): (i) IHA Section
8 - Proof of Property Ownership Form, (ii) Form W9, (iii) Change of Address
Form, (iv) list of tenant names, (v) list of property addresses, and (vi) proof
of ownership of the property in the forms approved by the Housing Authority.
Purchaser agrees, at Purchaser's sole cost and expense, to submit the Housing
Authority Requirements to the Housing Authority at such times and in such form
as the Housing Authority requires (Purchaser acknowledges that all submitted
materials must, in accordance with Housing Authority rules, be uniform in name
as well as list the property addresses), together with any fee required by the
Housing Authority in connection therewith. All such Housing Authority
Requirements shall be submitted by Purchaser within such time frames as are
necessary in order for the Closing to proceed on the scheduled Closing Date.
Further, Purchaser shall make such filings post-Closing as required by the
Housing Authority for the HAP Approval. The provisions of this Section 4.6.3.2
shall survive Closing.
4.6.3.3.....Purchaser agrees to provide Seller's Representative with a copy of
the Loan Assumption Application and the HAP Assumption Application no later than
2 Business Days prior to the Loan Assumption Application Submittal Deadline and
shall provide evidence of its submission to Lender and to the Housing Authority
on or before the Loan Assumption Application Submittal Deadline. Purchaser
acknowledges and agrees that Purchaser is solely responsible for the preparation
and submittal of the Loan Assumption Application and the HAP Assumption
Application, including the collection of all materials, documents, certificates,
financials, signatures, and other items required to be submitted to Lender and
the Housing Authority in connection therewith.
4.6.4 Purchaser shall comply with the applicable Lender's assumption guidelines
in connection with each Loan Assumption and Release and the Housing Authority's
guidelines in connection with the HAP Assumption. Purchaser shall be
responsible, at its sole cost and expense, for correcting and re-submitting any
deficiencies noted by such Lender or the Housing Authority in connection with a
Loan Assumption Application or the HAP Assumption Application no later than 3
Business Days after notification from such Lender or the Housing Authority of
such deficiency. Purchaser also shall provide Seller's Representative with a
copy of any correspondence from a Lender or the Housing Authority with respect
to a Loan Assumption Application or the HAP Assumption Application no later than
3 Business Days after receipt of such correspondence from such Lender or the
Housing Authority. Purchaser acknowledges that a Lender's assumption guidelines
may not be consistent with the provisions of the applicable Assumed Loan
Documents concerning the Loan Assumption and Release. Purchaser shall coordinate
with such Lender to comply with the appropriate provisions of both the
applicable Assumed Loan Documents and such Lender's assumption guidelines in
order to allow for the Loan Assumption and Release.
4.6.5 Purchaser shall pay all fees and expenses (including, without limitation,
all servicing fees and charges, transfer fees, assumption fees, title fees,
endorsement fees, and other fees to release each Seller of all liability under a
Loan) imposed or charged by the Lender or the Housing Authority or their counsel
(such fees and expenses collectively being referred to as the "Assumption Lender
Fees"), in connection with each Loan Assumption Application, each Loan
Assumption and Release, the HAP Assumption Application, and the HAP Assumption.
The provisions of this Section 4.6.5 shall survive the termination of this
Contract and the Closing.
4.6.6 In connection with the Loan Assumption and Release and the HAP Assumption,
Purchaser agrees as follows:
4.6.6.1.....Purchaser shall be responsible for (a) replacing (and increasing to
the extent required by the applicable Lender or the Housing Authority) all
reserves, impounds and other accounts required to be maintained in connection
with each Loan or the HAP Contracts, and (b) funding any additional reserves,
impounds, escrows or accounts required by a Lender or the Housing Authority to
be maintained by Purchaser in connection with each Loan after the Loan
Assumption and Release or the HAP Contracts after the HAP Assumption (the
foregoing amounts in (a) and (b) collectively referred to herein as the
"Required Fund Amounts"). Any existing reserves, impounds, escrows and other
accounts required to be replaced by Purchaser pursuant to the foregoing sentence
shall be released in Good Funds to the applicable Seller at the Closing. The
provisions of this Section 4.6.6 shall survive the Closing.
4.6.7 Purchaser agrees promptly to deliver to each Lender all documents and
information required by the Assumed Loan Documents. Purchaser also agrees to
deliver to Lender and the Housing Authority such other information or
documentation as such Lender or the Housing Authority reasonably may request,
including, without limitation, financial statements, income tax returns and
other financial information for Purchaser and any required guarantor. The
applicable Sellers agree that it will cooperate with Purchaser and the
applicable Lender and the Housing Authority, at no material cost or expense to
such Seller, in connection with Purchaser's application to Lender and the
Housing Authority for approval of the applicable Loan Assumption and Release and
the HAP Assumption.
4.6.8 No later than 10 days after the Effective Date, Purchaser shall order a
Phase I Environmental study for the Assumption Property (prepared by an
environmental engineer reasonably acceptable to Seller's Representative and
Lender), and covenants that such Phase I Environmental study shall be delivered
to Seller's Representative and Lender no later than 10 days prior to the Closing
Date in connection with and as a precondition to a Loan Assumption and Release
for the Assumption Property.
4.6.9 If either (i) Lender has not approved the Loan Assumption and Release for
Williamsburg on the Lake, or (ii) the Housing Authority has not approved the HAP
Assumption for Williamsburg on the Lake Property and Abington I and II
(collectively, (i) and (ii) are referred to herein as the ("Separate Closing
Conditions") on or before November 15, 2005, then Sellers may, in their sole and
absolute discretion, by written notice to Purchaser (a) terminate this Contract
in its entirety, in which case the Deposit shall be returned to Purchaser
(subject to Purchaser's obligation under Section 3.5.2 to return all Third-Party
Reports and Required Return Documents provided to Purchaser as a pre-condition
to the return of the Materials Security Deposit) (except if Purchaser is in
default of its obligations under this Contract, including this Section 4.6, in
which case Sellers shall have the rights set forth in Section 10.1), (b)
terminate this Contract with respect solely to (I) Williamsburg on the Lake if
Lender has not approved the Loan Assumption and Release, and/or (II)
Williamsburg on the Lake, Abington I and II, as applicable, if the Housing
Authority has not approved the HAP Assumption, and Purchaser and the remaining
Sellers shall proceed to close the other Properties as provided in this Contract
at the time provided therefor in Section 5.1 (and, to the extent Sellers
terminate this Contract with respect to such Properties, the Applicable Share of
the Deposit for Williamsburg on the Lake and/or Abington I and Abington II, as
applicable, shall be returned to Purchaser (subject to Purchaser's obligation
under Section 3.5.2 to return all Third-Party Reports and Required Return
Documents provided to Purchaser as a pre-condition to the return of the
Materials Security Deposit, or, if the Applicable Share of the Deposit is less
than the Materials Security Deposit, as a condition to the return of the
Applicable Share of the Deposit), except if Purchaser is in default under this
Contract in which event the applicable Seller may retain such Applicable Share
in accordance with its remedies pursuant to Section 10.1), or (c) extend the
date for Closing all of the Properties until December 15, 2005; provided,
however, if Sellers have selected the option set forth in subsection (c) above,
and either of the Separate Closing Conditions have not occurred by December 15,
2005, then Sellers again shall have the options set forth in subsections (a) and
(b) (with respect to the Properties for which the Separate Closing Conditions
have not been met) above, and if Sellers select the option set forth in
subsection (b) above, the Closing Date shall be December 22, 2005.
4.6.10......Purchaser shall be in default hereunder if (a) Purchaser fails to
submit a complete Loan Assumption Application for the Assumption Property or to
submit a complete HAP Assumption Application for Williamsburg on the Lake,
Abington I and Abington II by the Loan Assumption Application Submittal
Deadline, or (b) Purchaser fails to comply with its other obligations hereunder
with respect to the Loan Assumption and Release for the Assumption Property or
its obligations hereunder with respect to the HAP Assumption for Williamsburg on
the Lake, Abington I and Abington II, and, in either such event, Sellers may
exercise their remedies under Section 10.1.
4.7 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 on the earlier of (a) 10 days after
satisfaction of the Separate Closing Conditions, or (b) November 15, 2005 (the
date on which the Closing is to occur, being 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; provided, however, that in no event shall
the Closing occur earlier than October 14, 2005. Notwithstanding the foregoing
to the contrary, any of the Hunt Club, Abington I and Abington II Sellers shall
have the option, by delivering written notice to Purchaser no later than 9 days
prior to the Closing Date identified in subclause (a) of this Section 5.1, to
extend the Closing Date for up to 33 days in connection with their Loan Payoffs,
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) to a date 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) in order to finalize the drafting with a Lender or a Lender's counsel
of all documents necessary or desirable to accomplish a Loan Assumption and
Release, (iii) as provided in Section 4.6.9, or (iv) such later date as is
mutually acceptable to Seller and Purchaser.
5.2 Seller Closing Deliveries. No later than 1 Business Day prior to the Closing
Date, 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 Limited Warranty Deed (the "Deed") in the form attached as Exhibit B to
Purchaser, subject to the Permitted Exceptions.
5.2.2 A Bill of Sale in the form attached as Exhibit C.
5.2.3 A General Assignment in the form attached as Exhibit D (the "General
Assignment").
5.2.4 An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the "Leases Assignment").
5.2.5 A letter 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 HAP Assignment Agreement in form and content required by the Housing
Authority (and reasonably approved by Seller).
5.2.7 A closing statement executed by such Seller.
5.2.8 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.
5.2.9 A certification of such Seller's non-foreign status pursuant to Section
1445 of the Internal Revenue Code of 1986, as amended.
5.2.10......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.
5.2.11......An updated Rent Roll reflecting the information required in Section
3.5.3; provided, however, that the content of such updated Rent Roll shall in no
event expand or modify the conditions to Purchaser's obligation to close as
specified under Section 8.1.
5.2.12......A Sale Disclosure Statement as required under Indiana law when each
Deed is recorded.
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 Applicable
Share of the Deposit) and, if applicable for the Assumption Property, the Loan
Balance, 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......A HAP Assignment Agreement in form and content required by the
Housing Authority (and reasonably approved by Purchaser).
5.3.11......Resolutions, certificates of good standing, and such other
organizational documents as Title Insurer shall reasonably require evidencing
Purchaser's authority to consummate this transaction.
5.3.12......With respect to the Assumption Property, all documents, instruments,
guaranties, Assumption Lender Fees, Required Fund Amounts, and other items or
funds required by the applicable Lender to cause the applicable Loan Assumption
and Release.
5.3.13......With respect to each Payoff Property, the Lender Fees (subject to
reduction from the Purchase Price in accordance with Section 2.2).
5.3.14......A Sales Disclosure Statement as required under Indiana law and when
each Deed is recorded.
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. 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.
5.4.3 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 and Personal Property Taxes. Any real estate ad valorem,
personal property or similar taxes for a Property, or any installment of
assessments payable in installments which installment is payable in calendar
year 2006, with respect to the calendar year of Closing, shall be prorated to
the date of Closing, based upon actual days involved. By way of illustration and
not limitation, if Closing were to occur in September 2005, the 2004 calendar
year real estate and personal property taxes payable in 2005 shall be the
responsibility of the applicable Seller, with the 2005 calendar year real estate
and personal property taxes payable in 2006 being prorated between the
applicable Seller and Purchaser to the date of Closing. 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, however, 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 105% of the assessed valuation and tax rate
figures from the preceding year (assuming payment at the earliest time to allow
for the maximum possible discount). The proration of real or personal 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. 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.
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 terminate any Tenant Lease with an existing
Tenant or evict any existing Tenant from a Property. Notwithstanding anything in
this provision to the contrary but subject to Seller's right to demand payment
of and to collect Uncollected Rents in accordance with this Section, Purchaser's
obligation to collect Uncollected Rents shall be limited to Uncollected Rents of
not more than 60 days past due and Purchaser's collection of rents shall be
applied, first, towards current rent due and owing under the Leases, and,
second, to Uncollected Rents.
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
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 constitutes 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 receive 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 Loan-Payoff Properties. This Section 5.4.7 shall be applicable
only to Payoff Properties. Purchaser acknowledges that Purchaser had the
opportunity to assume each Note for a Payoff Property or to cause prepayment of
such Note at Closing (but in either event, Purchaser would pay the Lender Fees).
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 Existing Loan-Assumption Property. This Section 5.4.8 is applicable only
to the Assumption Property. The Seller of the Assumption Property shall be
responsible for all principal required to be paid under the terms of the Note
applicable to the Assumption Property prior to Closing, together with all
interest accrued under such Note prior to Closing, all of which may be a credit
against the Purchase Price for its Property as provided in Section 2.2.3.
Purchaser shall be responsible for all Assumption Lender Fees and all other
fees, penalties, interest and other amounts due and owing under the Assumed Loan
Documents as a result of any Loan Assumption and Release. As set forth in
Section 4.5.3, any existing reserves, impounds and other accounts maintained in
connection with the applicable Loan and required to be replaced by Purchaser,
shall be released in Good Funds to Seller at the Closing.
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, Purchaser shall pay
any transfer, mortgage assumption (if applicable), 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.
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.
5.4.12......Utility Contracts. If any 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"), or an
affiliate of such Seller has entered into a Utility Contract, such Utility
Contract shall be identified on the Seller Information Schedule and, as set
forth on the Seller Information Schedule, either (a) Purchaser either shall
assume the Utility Contract with respect to such Property, or (b) the reasonably
calculated costs of the Utility Contract attributable to such Property from and
after the Closing shall be paid to the applicable Seller at the Closing and such
Seller shall remain responsible for payments under the Utility Contract.
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. Prior
to Closing, Sellers shall be entitled to copy any of Seller's Property-Related
Files and Records, and, following Closing, shall be entitled to retain such
copies for Sellers' own use. With respect to any of Seller's Related Files that
are not copied pursuant to the foregoing sentence, if at any time after Closing
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 where such records are then stored) and remove or copy those of
Seller's Property-Related Files and Records that such Seller desires to retain.
5.4.14......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 90 days after Closing, or (b) subject to such 90-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, and, with respect to the Assumption
Property and Abington I and Abington II, any approvals required from the Lender
for a Loan Assumption and Release and from the Housing Authority for the HAP
Assumption, as applicable, 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 such 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.
6.1.7 To the knowledge of such Seller, the Rent Roll (as updated pursuant to
Section 5.2.11) for such Seller's Property is accurate in all material respects.
6.1.8 With respect to such Seller no Bankruptcy/Dissolution Event (as defined
herein) has occurred with respect to (a) such Seller; or (b) to such Seller's
knowledge, any general partner of such Seller. "Bankruptcy/Dissolution Event"
means the occurrence of any of the following: (a) the commencement of a case
under Title 11 of the U.S. Code, as now constituted or hereafter amended, or
under any other applicable federal or state bankruptcy law or other similar law;
(b) the appointment of a trustee or receiver of any property interest; (c) an
assignment for the benefit of creditors; (d) an attachment, execution or other
judicial seizure of a substantial property interest; (e) the taking of, failure
to take, or submission or any action indicating an inability to meet its
financial obligations as they accrue; or (f) a dissolution or liquidation, death
or incapacity;
6.1.9 Such Seller has not intentionally omitted or eliminated any items which
otherwise would be required to be delivered by such Seller as part of the
Materials;
6.1.10......To such Seller's knowledge: (A) no hazardous or toxic materials or
other substances regulated by applicable federal or state environmental laws are
stored by such Seller on, in or under such Seller's Property in quantities which
violate applicable laws governing such materials or substances, and (B) such
Seller's Property is not used by such Seller for the storage, treatment,
generation or manufacture of any hazardous or toxic materials or other
substances in a manner which would constitute a violation of applicable federal
or state environmental laws;
6.1.11......With respect to such Seller's Property, there are no apartments
occupied by any employees of such Seller, Property Manager or AIMCO, except (a)
if such occupant is paying substantially market rent for such apartment, or (b)
as set forth on Schedule 6.1.11; and
6.1.12......Except for any employment agreements which would not be binding on
Purchaser after the Closing, there are no collective bargaining or other
employment agreements with respect to the personnel employed by such Seller in
the operation and maintenance of such Seller's Property.
6.1.13......With respect to a Seller's Property located in Indiana, the
transactions contemplated by this Contract are not subject to the Indiana
Responsible Property Transfer Law (Ind. Code 13-25-3-1 et seq.) because such
Property does not constitute "property" as such term is used and defined in the
Indiana Responsible Property Transfer Law.
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,
water intrusion and/or fungal growth and any resulting damage, 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 9 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.
Under no circumstances shall Sellers in aggregate (together with the "sellers"
under the Related Contracts) be liable to Purchaser for more than $1,000,000.00
in any individual instance or in the aggregate, under this Contract and the
Related Contracts, for all breaches of Seller's Representations by all "Sellers"
under this Contract and the Related Contracts; provided, however, that the
foregoing $1,000,000.00 cap shall reduce on a pro rata basis (based on relevant
purchase prices) when and if this Contract or any of the Related Contracts is
terminated with respect to one or more of the properties to be sold pursuant
thereto. For example (but not by way of limitation), if the purchase price of
the terminated property is $12,000,000 and the aggregate purchase price for all
of the properties under this Contract and the Related Contracts is $61,000,000,
then the foregoing cap would be reduced by an amount equal to (12/61 x
$1,000,000), or $196,721, to a revised cap of $803,279. Purchaser shall not be
entitled to bring any claim for a breach of Seller's Representations unless the
claim for damages (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 limited liability company duly organized, validly existing
and in good standing under the laws of Illinois.
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 to 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 any such new Property Contracts or any new or renewed Leases shall
not have a term in excess of 1 year (or such longer period of time for which
such Property Contracts or Leases are entered into by 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. With respect to the Leases and Property Contracts,
Sellers also covenant as follows:
7.1.1 After the expiration of the Feasibility Period, Sellers will only enter
into new Property Contracts to the extent such Property Contracts are terminable
upon 30 days' prior written notice.
7.1.2 After the expiration of the Feasibility Period, Sellers will materially
comply with all Property Contracts.
7.1.3 No later than 5 days prior to the expiration of the Feasibility Period,
each Seller will deliver to Purchaser an updated Rent Roll for its Property,
and, no later than 5 days after the end of each calendar month between the
expiration of the Feasibility Period and the Closing Date, each Seller will
provide Purchaser with an updated Rent Roll for each of its Property; provided,
however, that the content of any updated Rent Roll delivered pursuant to this
Section 7.1.3 shall in no event expand or modify the conditions to Purchaser's
obligation to close as specified under Section 8.1.
7.2 General Operation of Property.
7.2.1 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. Each Seller also
covenants as follows from and after the expiration of the Feasibility Period:
7.2.1.1.....Such Seller agrees to maintain its existing insurance policies (or
replacement policies on comparable terms) covering its Property in full force
and effect through the Closing Date.
7.2.1.2.....In accordance with such Seller's ordinary course of business with
respect to the Property, such Seller shall make necessary reasonable repairs to
its Property and keep its Property in substantially the same condition as of the
expiration of the Feasibility Period, ordinary wear and tear, casualty and
condemnation excepted and subject to the provisions of Article 11 and Article
12; provided, however, that the foregoing covenant shall not obligate any Seller
in any manner to upgrade or make capital improvements to Property.
7.2.1.3.....Such Seller will not sell or otherwise dispose of any Fixtures and
Tangible Personal Property except in the ordinary course of such Seller's
business.
7.2.2 Each Seller agrees that, with respect its Property, at the Closing,
Purchaser shall receive a credit against the Purchase Price in an amount equal
to the product of (a) the number of Tenant Units at such Property that, as of
the Closing Date, have been vacant for more than 7 days and are not in
Rent-Ready Condition, and (b) $400.
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.
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.
8.1.5 Title Insurer shall be prepared to issue the Title Policy subject only to
the Permitted Exceptions and the payment of any applicable fees and charges.
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 Applicable 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
Required Return Documents provided to Purchaser as a pre-condition to the return
of the Materials Security Deposit, or, if the Applicable Share of the Deposit is
less than the Materials Security Deposit, as a condition to the return of the
Applicable 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 organizational 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. If a Seller fails to obtain any consents required by
Section 8.2.4(a) hereof, and this Contract is terminated with respect to such
Seller's Property and such Property is not conveyed to Purchaser because of such
failures, then each Seller shall pay Purchaser its direct and actual
out-of-pocket expenses and costs (documented by paid invoices to third parties)
in connection with its Property for which this Contract has been so terminated,
which damages shall not exceed $25,000 (individually) for each Property so
terminated.
8.2.5 With respect to the Assumption Property, the applicable Loan Assumption
and Release shall have occurred;
8.2.6 With respect to Williamsburg on the Lake, Abington I and Abington II, HAP
Approval is obtained and the HAP Assumption occurs; and
8.2.7 There shall not be pending or, to the knowledge of either Purchaser or the
applicable Seller, any litigation or threatened litigation which, if determined
adversely, would restrain the consummation of any of the transactions
contemplated by this Contract or declare illegal, invalid or nonbinding any of
the covenants or obligations of the Purchaser.
If any of the foregoing conditions in Sections 8.2.1 through 8.2.4 or
8.2.7 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 conditions set forth in Sections 8.2.5 or 8.2.6 are not satisfied
on or before the Closing Date, then Sellers shall have the rights set forth in
Section 4.6.9.
Notwithstanding anything in this Contract to the contrary, if any of the
conditions set forth in this Section 8.2 are not satisfied with respect to the
sale of Abington I, then the conditions precedent to the sale of Abington II
shall be deemed not to have been satisfied for either Purchaser or Sellers, and
if any of the conditions set forth in this Section 8.2 are not satisfied with
respect to the sale of Abington II, then the conditions precedent to the sale of
Abington I shall be deemed not to have been satisfied for either Purchaser or
Sellers, unless the same are waived in the sole and absolute discretion of the
Purchaser and Sellers of Abington I and Abington II. Notwithstanding anything in
this Contract to the contrary, neither Seller of either Abington I nor Abington
II shall be obligated to sell their respective Property unless simultaneously
therewith both Properties are acquired by Purchaser, and Purchaser shall not be
obligated to purchase either Abington I or Abington II unless simultaneously
therewith both Properties are sold to Purchaser by their respective Sellers.
ARTICLE IX
BROKERAGE
9.1 Indemnity. Each Seller, severally and individually, represents and warrants
to Purchaser that it has dealt only with Marcus & Millichap, 101 West Ohio
Street, 15th Floor, Indianapolis, Indiana 46204 ("Broker") in connection with
this Contract. Each Seller, severally and individually, and Purchaser each
represents and warrants to the other that, other than Broker, it has not dealt
with or utilized the services of any other real estate broker, sales person or
finder in connection with this Contract, and each party agrees to indemnify,
hold harmless, and, if requested in the sole and absolute discretion of the
indemnitee, defend (with counsel approved by the indemnitee) the other party
from and against all Losses relating to brokerage commissions and finder's fees
arising from or attributable to the acts or omissions of the indemnifying party.
The provisions of this Section 9.1 shall survive the termination of this
Contract, and if not so terminated, the Closing and delivery of the Deeds to
Purchaser.
9.2 Broker Commission. If the Closing occurs, each Seller agrees to pay
Broker a commission according to the terms of a separate contract. Broker
shall not be deemed a party or third party beneficiary of this Contract.
9.3 Broker Signature Page. As a condition to each Seller's obligation to pay the
commission pursuant to Section 9.2, Broker shall execute the signature page for
Broker attached hereto solely for purposes of confirming the matters set forth
therein; provided, however, that (a) Broker's signature hereon shall not be a
prerequisite to the binding nature of this Contract on Purchaser and Sellers,
and the same shall become fully effective upon execution by Purchaser and
Sellers, and (b) the signature of Broker 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 Applicable 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
Applicable Share of the Deposit to each Seller, and neither party shall be
obligated to proceed with the purchase and sale of the Property; provided,
however, if the Purchaser default is not capable of being cured, does not
preclude Purchaser from Closing (and Purchaser is ready, willing and able to
timely Close), and does not materially adversely affect Seller or the ownership,
operation or maintenance of any Property (or create any liability or Loss for
any Seller or any Property), then such default shall not permit Sellers to
retain the Deposit if they terminate this Contract because of such default.
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 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 Applicable 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 Required Return Documents provided to Purchaser as a pre-condition
to the return of the Materials Security Deposit, or, if the Applicable Share of
the Deposit is less than the Materials Security Deposit, as a condition to the
return of the Applicable 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. (If Seller's Representative fails to
respond to the Termination Notice (or to give a Reinstatement Notice) Sellers
shall be deemed to have agreed to sell all Properties except the Property for
which the Termination Notice was given.) 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 Applicable Share of
Deposit for the terminated Properties (subject to Purchaser's obligation under
Section 3.5.2 to return all Third-Party Reports and Required Return Documents
provided to Purchaser as a pre-condition to the return of the Materials Security
Deposit, or, if the Applicable Share of the Deposit is less than the Materials
Security Deposit, as a condition to the return of the Applicable Share of the
Deposit) and Purchaser may recover, as its sole recoverable damages (but without
limiting its right to receive a refund of the Applicable 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 in aggregate
$200,000 under this Contract and the Related Contracts, in the aggregate;
provided, however, that the foregoing $200,000 cap shall reduce on a pro rata
basis (in accordance with relative purchase prices) when and if this Contract or
any of the Related Contracts is terminated with respect to one or more of the
properties to be sold pursuant thereto. For example (but not by way of
limitation), if the purchase price of the terminated property is $12,000,000 and
the aggregate purchase price for all of the properties under this Contract and
the Related Contracts is $61,000,000, then the foregoing cap would be reduced by
an amount equal to (12/61 x $200,000), or $39,344, to a revised cap of $160,656.
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 (other than Purchaser's attorney's work
product) 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 $300,000, 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 Applicable 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 Required Return Documents provided to
Purchaser as a pre-condition to the return of the Materials Security Deposit,
or, if the Applicable Share of the Deposit is less than the Materials Security
Deposit, as a condition to the return of the Applicable 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 less than $300,000,
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 uninsured loss (but only to the extent not repaired prior to Closing) or
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
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 Applicable 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 Required Return Documents provided to Purchaser as a
pre-condition to the return of the Materials Security Deposit, or, if the
Applicable Share of the Deposit is less than the Materials Security Deposit, as
a condition to the return of the Applicable 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, and (c) Purchaser provides written notice
to Seller's Representative of any proposed assignment no later than 10 days
prior to the Closing Date. As used herein, an affiliate is a person or entity
controlled by, under common control with, or controlling another person or
entity. An "affiliate" of Purchaser expressly includes any entity which is
controlled, directly or indirectly, by any combination of (i) Purchaser, (ii)
Norm Schwab, or (iii) Michael Aufrecht.
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:
Prime Quest Management, LLC
2824 W. Coyle
Chicago, Illinois 60645
Attention: Eli Stefansky
Telephone: 773-508-9104
Facsimile: 773-508-9107
......with copy to:
Pircher, Nichols & Meeks
900 North Michigan Avenue, Suite 1050
Chicago, Illinois 60611
Attention: Real Estate Notices (JDL/EF)
......Telephone: 312-915-3112
Facsimile: 312-915-3348
......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.
......Senior Vice President and Associate 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:
......Brownstein Hyatt & Farber, P.C.
......410 17th Street, 22nd Floor
......Denver, Colorado 80202
......Attention: Gary M. Reiff, Esq. and Joshua J. Widoff, Esq.
......Telephone: 303-223-1100
......Facsimile: 303-223-1111
Any notice required hereunder to be delivered to the Escrow Agent shall be
delivered in accordance with above provisions as follows:
Fidelity National Title Company
c/o Lolly Avant, National Commercial Closing Specialist
1900 West Loop South, Suite 650
Houston, Texas 77027
Telephone: 800-879-1677
Facsimile: 713-623-4406
Unless specifically required to be delivered to the Escrow Agent pursuant
to the terms of this Contract, no notice hereunder must be delivered to the
Escrow Agent in order to be effective so long as it is delivered to the other
party in accordance with the above provisions.
13.8 Governing Law And Venue. The laws of the State of Indiana 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. Neither Seller nor Purchaser shall 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,
investors, 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 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).
13.20 No Personal Liability of Officers, Trustees or Directors of Seller's
Partners. Purchaser agrees that none of any Seller's Indemnified Parties (except
for the Seller entities themselves) 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 enter into discussions,
negotiations, or any other communications concerning or related to the sale of
any Property with any third-party.
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 of Indiana. The parties shall
attempt to designate one arbitrator from the American Arbitration Association.
If they are unable to do so within 30 days after written demand therefor, then
the American Arbitration Association shall designate an arbitrator. The
arbitration shall be final and binding, and enforceable in any court of
competent jurisdiction. The arbitrator shall award attorneys' fees (including
those of in-house counsel) and costs to the prevailing party and charge the cost
of arbitration to the party which is not the prevailing party. Notwithstanding
anything herein to the contrary, this Section 13.25 shall not prevent Purchaser
or 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's Representative, neither
Purchaser nor any of Purchaser's employees, affiliates or agents shall solicit
any of Seller's employees or any employees located at any Property (or any of
any 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 Contract, 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 in this Contract, Sellers' obligations to sell the
Properties are not severable and Sellers must sell all of the Properties to
Purchaser. Further, notwithstanding anything in this Contract to the contrary,
and unless Sellers agree in their sole and absolute discretion, Purchaser may
not close on the acquisition of any of the Properties unless Purchaser
simultaneously, or prior to such Closing Date, has acquired both properties that
are the subject to the Related Contracts (and, if Sellers elect in their sole
discretion, then the Closing Date hereunder will be extended to accommodate a
simultaneous closing with the properties that are the subject of one or more of
the Related Contracts). Without limiting the foregoing, if Purchaser has the
right to terminate either of the Related Contracts, and does so terminate one or
both Related Contracts (including, without limitation, pursuant to Sections 3.2
or 4.3 thereof), Sellers shall have the option (but not the obligation) to
terminate this Contract in its entirety. In addition, if the seller under either
of the Related Contracts terminates such Related Contract for any reason, then
Sellers may (but are not obligated to) terminate this Contract within 10 days
after the termination of the Related Contract. A default by the Purchaser under
either Related Contract is, at the option of the Sellers under this Contract, a
default by the Purchaser hereunder.
13.32 Non-Refundable Purchaser Lender Fees. If this Contract is terminated (in
accordance with the terms and conditions hereof) in its entirety because of
either (a) a Seller default, or (b) the failure of a Seller to obtain the
consents required by Section 8.2.4(a), then, in addition to any other payments
hereunder, Sellers shall pay Purchaser its actual and documented fees which
Purchaser has paid to third-party prospective lenders (in conjunction with
potential financing associated with Purchaser's acquisition of the Properties)
for application fees, rate-lock fees, and third-party reports in an amount not
to exceed (in aggregate for all Sellers) $32,000.
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 Intentionally Omitted.
14.3 Consent Agreement - Pre-1978 Certified. The provisions of this Section 14.3
apply to those Properties identified on the Seller Information Schedule as
"Pre-1978-Certified." Testing 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 and the Lead-Based Paint Disclosure Statements described on
the Seller Information Schedule, 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 14.3 shall survive the termination of this Contract, and if not
so terminated, the Closing and delivery of the Deed to Purchaser.
14.4 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 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 Reports and the Lead-Based Paint
Disclosure Statements described on the Seller Information Schedule, and
acknowledges receipt of 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 14.4 shall survive the termination of this
Contract, and if not so terminated, the Closing and delivery of the Deeds 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.
Sellers:
ABINGTON-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
By: ABINGTON CORPORATION, a
Maryland corporation,
Its Managing General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
AND
By: ZIMCO XXIV L.L.C., a Maryland
limited liability company,
Its General Partner
By: ZIMCO/Abington
Corporation,
a Maryland corporation,
Its Managing Member
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
ABINGTON II-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
By: ABINGTON II CORPORATION,
a Maryland corporation
Its General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
AND
By: ZIMCO XXIII L.L.C. a Maryland
limited liability company
Its General Partner
By: ZIMCO/Abington II
Corporation,
a Maryland corporation
Its Managing Member
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
HUNT CLUB ASSOCIATES, LTD.,
a Texas limited partnership
By: MBRF Hunt Club GP, LLC,
a South Carolina limited liability
company,
Its general partner
By: Multi-Benefit Realty
Funds '87-1, a California
Limited Partnership,
Its manager
By: Con Cap Equities,
Inc.,
a Delaware corporation,
Its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
PICKWICK PLACE AP XII, LP,
a South Carolina limited partnership
By: ANGELES PARTNERS XII GP, LP,
a South Carolina limited
partnership,
Its General Partner
By: ANGELES REALTY
CORPORATION II,
a California corporation
Its General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
NATIONAL PROPERTY INVESTORS 8
a California limited partnership
By: NPI EQUITY INVESTMENTS, INC.,
a Florida corporation
Its General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
Purchaser:
PRIME QUEST MANAGEMENT, LLC, an Illinois
limited liability company
By: /s/Eli Stefansky
Name: Eli Stefansky
Title:President
Purchaser's Tax Identification
Number/Social Security Number:
Exhibit 10.29
FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT (this "Amendment") is
made and entered into this 16th day of September, 2005 (the "Amendment Date"),
by and among ABINGTON-OXFORD ASSOCIATES, L.P., a Indiana limited partnership,
ABINGTON II-OXFORD ASSOCIATES, L.P., a Indiana limited partnership, HUNT CLUB
ASSOCIATES, LTD., a Texas limited partnership, PICKWICK PLACE AP XII, LP, a
South Carolina limited partnership, and NATIONAL PROPERTY INVESTORS 8, a
California limited partnership, on the one hand (each individually a "Seller"
and collectively the "Sellers"), and PRIME QUEST MANAGEMENT, LLC, an Illinois
limited liability company ("Purchaser").
RECITALS:
WHEREAS, Sellers and Purchaser entered into that certain Purchase and Sale
Contract dated August 16, 2005 (the "Contract"), for certain parcels of real
property all situated in Marion County, Indiana, and more specifically described
in the Contract; and
WHEREAS, Sellers and Purchaser desire to amend the Contract on the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants set forth in the
Contract and herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Sellers and Purchaser agree to
amend the Contract as follows:
AGREEMENT:
1. Extension of Feasibility Period. Section 3.1 of the Contract is hereby
amended to provide that the Feasibility Period shall expire on September 23,
2005. Notwithstanding the foregoing, Purchaser agrees that the updated Rent
Rolls delivered by Sellers on September 8, 2005, are sufficient to satisfy the
requirement under Section 7.1.3 of the Contract that each Seller deliver an
updated Rent Roll for its Property no later than 5 days prior to the expiration
of the Feasibility Period (and Sellers will not be required to re-deliver an
updated Rent Rolls in advance of the extended Feasibility Period).
2. Section 4.6.3.2. The reference in Section 4.6.3.2 of the Contract to "form
HUD-542641" is hereby changed to "form HUD-52641."
3. Miscellaneous. The following provisions shall apply with respect to this
Amendment:
(a) Except as modified in this Amendment, the Contract, is in full force and
effect and is hereby ratified by Sellers and Purchaser.
(b) Capitalized terms used, but not defined, in this Amendment shall have the
same meaning as set forth in the Contract.
(c) In the event of any conflict between the Contract and this Amendment, the
terms and conditions of this Amendment shall control.
(d) This Amendment may be executed in counterparts, each of which (or any
combination of which) when signed by all of the parties shall be deemed an
original, but all of which when taken together shall constitute one agreement.
Executed copies hereof may be delivered by telecopier and upon receipt shall be
deemed originals and binding upon the parties hereto, and actual originals shall
be promptly delivered thereafter.
[Signatures appear on following pages.]
NOW, THEREFORE, the parties hereto have executed this Amendment as of the
date first set forth above.
Sellers:
ABINGTON-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
By: ABINGTON CORPORATION,a
Maryland corporation,
Its Managing General Partner
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
AND
By: ZIMCO XXIV L.L.C., a Maryland
limited liability company,
Its General Partner
By: ZIMCO/Abington Corporation,
a Maryland corporation,
Its Managing Member
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
ABINGTON II-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
By: ABINGTON II CORPORATION,
a Maryland corporation
Its General Partner
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
AND
By: ZIMCO XXIII L.L.C. a Maryland
limited liability company
Its General Partner
By: ZIMCO/Abington II Corporation,
a Maryland corporation
Its Managing Member
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
HUNT CLUB ASSOCIATES, LTD.,
a Texas limited partnership
By: MBRF Hunt Club GP, LLC,
a South Carolina limited liability
company,
Its general partner
By: Multi-Benefit Realty
Funds '87-1, a California
Limited Partnership,
Its manager
By: Con Cap Equities,
Inc.,
a Delaware corporation,
Its general partner
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
PICKWICK PLACE AP XII, LP,
a South Carolina limited partnership
By: ANGELES PARTNERS XII GP, LP,
a South Carolina limited partnership,
Its General Partner
By: ANGELES REALTY CORPORATION II,
a California corporation
Its General Partner
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
NATIONAL PROPERTY INVESTORS 8
a California limited partnership
By: NPI EQUITY INVESTMENTS, INC.,
a Florida corporation
Its General Partner
By: /s/Steven D. Cordes
Name: Steven D. Cordes
Title:Senior Vice President
Purchaser:
PRIME QUEST MANAGEMENT, LLC, an Illinois
limited liability company
By: /s/Eli Stefansky
Name: Elil Stefansky
Title:President
Exhibit 10.30
REINSTATEMENT AND SECOND AMENDMENT TO
PURCHASE AND SALE CONTRACT
THIS REINSTATEMENT AND SECOND AMENDMENT TO PURCHASE AND SALE CONTRACT
(this "Amendment") is made and entered into as of the 11th day of October, 2005
(the "Amendment Date"), by and among ABINGTON-OXFORD ASSOCIATES, L.P., a Indiana
limited partnership, ABINGTON II-OXFORD ASSOCIATES, L.P., a Indiana limited
partnership, HUNT CLUB ASSOCIATES, LTD., a Texas limited partnership, PICKWICK
PLACE AP XII, LP, a South Carolina limited partnership, and NATIONAL PROPERTY
INVESTORS 8, a California limited partnership, on the one hand (each
individually a "Seller" and collectively the "Sellers"), and PRIME QUEST
MANAGEMENT, LLC, an Illinois limited liability company ("Purchaser"), on the
other hand.
Recitals:
WHEREAS, Sellers and Purchaser entered into that certain Purchase and Sale
Contract, dated August 16, 2005, as amended by that First Amendment to Purchase
and Sale Contract, dated September 16, 2005 (as so amended, the "Contract"), for
certain parcels of real property, all situated in Marion County, Indiana, and
more specifically described in the Contract.
WHEREAS, Pursuant to Section 3.2 of the Contract, Purchaser terminated the
Contract by written notice dated September 23, 2005.
WHEREAS, Seller and Purchaser desire to reinstate and ratify the Contract
and to amend the Contract on the terms set forth herein.
NOW, THEREFORE, in consideration of the Contract, the covenants, promises,
agreements, and conditions contained herein, and for other good and valuable
consideration, the receipt, sufficiency, and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Agreement:
1. Reinstatement. The Contract is hereby reinstated, as amended herein, ratified
and affirmed and is effective as of the Amendment Date as if the termination
pursuant to Section 3.2 had not occurred.
2. Purchase Price and Seller Information Schedule. Section 2.2 of the Contract,
and the Seller Information Schedule attached to the Contract, are amended to
provide that the Base Purchase Price for each Property is as stated on Schedule
2 attached hereto. The Seller Information Schedule is hereby amended to the
extent required to be consistent with the revised Base Purchase Prices reflected
on Schedule 2. The Base Purchase Price adjustment is in full satisfaction of all
issues and objections raised by Purchaser regarding the Properties.
3. Additional Deposit. In consideration of Sellers' execution of this Amendment,
within one Business Day after the Amendment Date, Purchaser shall deliver to the
Escrow Agent the Additional Deposit of $449,047 by wire by transfer of Good
Funds.
4. Feasibility Period. The Feasibility Period under the Contract shall be deemed
to have expired for all purposes under the Contract on the Amendment Date.
Purchaser hereby agrees that it has completed its review of the Properties and
hereby waives its right to further object (pursuant to Sections 3.2 or 4.3 of
the Contract or otherwise) to any matter concerning the Title Documents, the
Survey, the Property Contracts, the Leases, the Miscellaneous Property Assets,
the physical condition of the Properties, or otherwise with respect to the
Properties; provided, however, that the foregoing waiver shall not waive any of
Purchaser's express rights under the Contract which are applicable to the time
period following expiration of the Feasibility Period. Purchaser agrees that
Sellers have made all required deliveries required under the Contract and
performed all of Sellers' required obligations under the Contract through the
date hereof. Purchaser agrees that Purchaser's right to terminate the Contract
is irrevocably waived, the Deposit (including the Additional Deposit to be
delivered to Escrow Agent as required hereunder) is non-refundable, and
Purchaser's obligation to purchase the Properties is non-contingent and
unconditional except only for the satisfaction of the conditions expressly
stated in Section 8.1 of the Contract.
5. Separate Closing Conditions. The reference in Section 4.6.9 of the Contract
to "November 15, 2005" is hereby deleted and replaced with "November 30, 2005."
Subsection (c) of the last sentence of Section 4.6.9 is hereby amended and
restated in its entirety as follows: "(c) extend the date for Closing all of the
Properties until December 15, 2005; provided, however, if Sellers have selected
the option set forth in subsection (c) above, and either of the Separate Closing
Conditions have not occurred by December 15, 2005, then Sellers again shall have
the options set forth in subsections (a) and (b) (with respect to the Properties
for which the Separate Closing Conditions have not been met) above, and if
Sellers select the option set forth in subsection (b) above, the Closing Date
shall be December 22, 2005 (subject to extension by Seller to any date on or
before December 30, 2005, in accordance with the second sentence of Section
5.1)."
6. Closing Date. Section 5.1 of the Contract is hereby deleted in its entirety
and the following substituted therefor:
"Closing Date. The Closing shall occur on November 30, 2005 (the
"Closing Date") through an escrow with Escrow Agent, whereby the
Seller, Purchaser and their attorneys need not be physically present
at the Closing and may deliver documents by overnight air courier or
other means. Notwithstanding the foregoing to the contrary, any of
the Hunt Club, Abington I and Abington II Sellers shall have the
option, by delivering written notice to Purchaser no later than 9
days prior to the Closing Date identified in the first sentence of
this Section 5.1, to extend the Closing Date to any date on or
before December 30, 2005, in connection with their Loan Payoffs, 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) to a date 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) in order to finalize the drafting with a
Lender or a Lender's counsel of all documents necessary or desirable
to accomplish a Loan Assumption and Release, (iii) as provided in
Section 4.6.9, or (iv) such later date as is mutually acceptable to
Sellers and Purchaser."
7. Damage Examples. The examples set forth in Sections 6.3 and 10.2 of the
Contract are hereby revised to reflect an aggregate Purchase Price of
$60,000,000 (and, as a result, the revised cap in such examples would be
$800,000 and $160,000, respectively).
8. Rent Roll Delivery. Purchaser agrees that the updated Rent Rolls previously
delivered by Sellers are sufficient to satisfy the requirement under Section
7.1.3 of the Contract that each Seller deliver an updated Rent Roll for its
Property no later than 5 days prior to the expiration of the Feasibility Period
(and Sellers will not be required to re-deliver any updated Rent Rolls in
advance of the execution of this Amendment).
9. Ratification of Contract. All terms and provisions of the Contract not
specifically modified or amended by this Amendment shall remain in full force
and effect, and the Contract, as expressly modified herein, is hereby ratified,
confirmed and approved in all respects by the parties hereto.
10. Miscellaneous. The following provisions shall apply with respect to this
Amendment:
a. Capitalized terms used, but not otherwise defined, herein shall have the same
meaning as ascribed to such terms in the Contract.
b. In the event of any conflict between the Contract and this Amendment, the
terms and conditions of this Amendment shall control.
c. This Amendment may be executed in counterparts, each of which (or any
combination of which) when signed by all of the parties shall be deemed an
original, but all of which when taken together shall constitute one agreement.
Executed copies hereof may be delivered by telecopier and upon receipt shall be
deemed originals and binding upon the parties hereto, and actual originals shall
be promptly delivered thereafter.
[Signatures appear on following pages.]
NOW, THEREFORE, the parties hereto have executed this Reinstatement and
Second Amendment to Purchase and Sale Contract as of the date first set forth
above.
Sellers:
ABINGTON-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
By: ABINGTON CORPORATION, a
Maryland corporation,
Its Managing General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
AND
By: ZIMCO XXIV L.L.C., a Maryland
limited liability company,
Its General Partner
By: ZIMCO/Abington Corporation,
a Maryland corporation,
Its Managing Member
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
ABINGTON II-OXFORD ASSOCIATES, L.P.,
a Indiana limited partnership
By: ABINGTON II CORPORATION,
a Maryland corporation
Its General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title:Senior Vice President
AND
By: ZIMCO XXIII L.L.C. a Maryland
limited liability company
Its General Partner
By: ZIMCO/Abington II
Corporation,
a Maryland corporation
Its Managing Member
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
HUNT CLUB ASSOCIATES, LTD.,
a Texas limited partnership
By: MBRF Hunt Club GP, LLC,
a South Carolina limited liability
company,
Its general partner
By: Multi-Benefit Realty
Funds '87-1, a California
Limited Partnership,
Its manager
By: Con Cap Equities,
Inc.,
a Delaware corporation,
Its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
PICKWICK PLACE AP XII, LP,
a South Carolina limited partnership
By: ANGELES PARTNERS XII GP, LP,
a South Carolina limited
partnership,
Its General Partner
By: ANGELES REALTY
CORPORATION II,
a California corporation
Its General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
NATIONAL PROPERTY INVESTORS 8
a California limited partnership
By: NPI EQUITY INVESTMENTS, INC.,
a Florida corporation
Its General Partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
Purchaser:
PRIME QUEST MANAGEMENT, LLC, an Illinois
limited liability company
By: /s/Eli Stefansky
Name: Eli Stefansky
Title: Manager