UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 14, 2005
NATIONAL PROPERTY INVESTORS 7
(Exact name of Registrant as specified in its charter)
California 0-13454 13-3230613
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant 's telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
National Property Investors 7 (the "Registrant") owns Fairway View II
Apartments, a 204-unit apartment complex located in Baton Rouge, Louisiana
("Fairway View II"). On November 14, 2005, the Partnership and seven other
partnerships that own nine apartment complexes containing a total of 2,167 units
(the "Selling Partnerships") entered into a Purchase and Sale Agreement (the
"Purchase Agreement") with a third party, California State Teachers' Retirement
System, a public entity (the "Calstrs"), to sell nine apartment complexes
(collectively the "Properties" and individually a "Property") owned by the
Selling Partnerships to SH Partners, L.P., a Delaware limited partnership ("SH
Partners"), which is a joint venture between Calstrs and AIMCO Properties, LP,
an affiliate of the Registrant's general partner ("AIMCO Properties"). Although
AIMCO Properties owns an interest in the Purchaser, AIMCO Properties will not be
entitled to receive any distributions or allocations of gain or loss with
respect to the Purchaser's investment in the Properties. The Purchaser has
agreed to pay the Selling Partnerships a total base purchase price of
$98,010,000, of which $9,790,000 will be allocated to Fairway View II. The total
purchase price will be reduced by a credit for immediate capital needs of
$11,190,000, of which $2,040,000 will be allocated to Fairway View II, resulting
in a net purchase price allocation to Fairway View II of $7,750,000. Each of the
Selling Partnerships is affiliated with AIMCO Properties.
The following is a summary of the terms and conditions of the Purchase
Agreement, which summary is qualified in its entirety by reference to the
Purchase Agreement, a copy of which is attached as an exhibit.
PURCHASE PRICE. The total net purchase price is $86,820,000, of which
approximately $7,750,000 will be allocated to Fairway View II.
CLOSING. The expected closing dates for the transaction are December 22, 2005
with respect to five of the Selling Partnerships and January 10, 2006 with
respect to four of the Selling Partnerships, including the Registrant. The
closing is also subject to customary closing conditions and deliveries,
including consent of a majority of the Registrant's limited partners who are not
affiliated with AIMCO Properties.
LIMITED PARTNER APPROVAL. On or before the closing date, holders of a majority
of the outstanding limited partnership interests, excluding interests held by
AIMCO Properties or its affiliates, shall have approved an amendment to the
Registrant's partnership agreement which permits the sale of the property to the
Purchaser. In the event the amendment is not approved, Calstrs will have the
option of purchasing Fairway View II, subject to applicable limited partner
approval.
COSTS AND FEES. With respect to Fairway View II, the Purchaser will pay sales,
use, gross receipts or similar taxes, recording costs, any premiums or fees
required to be paid with respect to the title policy and half of the customary
closing costs of the escrow agent.
REPRESENTATIONS AND WARRANTIES. The Selling Partnerships and the Purchaser each
made limited representations and warranties to the other.
RISK OF LOSS. The risk of loss or damage to the nine apartment complexes by
reason of any insured or uninsured casualty during the period through and
including the closing date will be borne by the Selling Partnerships. The
Selling Partnerships must maintain all of their existing insurance coverage on
the nine apartment complexes in full force and effect until the closing date.
ASSIGNMENT. With the exception of an assignment to S.H. Partners, L.P. or any
subsidiary of S.H. Partners, L.P., the Purchase Agreement is not assignable by
the Purchaser without first obtaining the prior written approval of the Selling
Partnerships.
DEFAULTS AND REMEDIES. If the Purchaser defaults in its obligations to deliver
when required any required deposits, the purchase price or any other specified
deliveries, then, immediately and without notice or cure, the Selling
Partnerships will be entitled to liquidated damages in the amount of $1,100,000,
and neither party shall be obligated to proceed with the purchase and sale of
the nine apartment complexes.
If the Selling Partnerships, prior to the closing, default in their
representations, warranties, covenants, or obligations then the Purchaser has
the option of (i) seeking specific performance of the Selling Partnership's
obligation to deliver the deed pursuant to the Purchase Agreement or (ii)
terminating the Purchase Agreement and have returned any deposits made by the
Purchaser, and recovering, as its sole recoverable damages its documented direct
and actual out-of-pocket expenses and costs up to $100,000 per Property.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.27 Purchase and Sale Agreement and Joint Escrow Instructions between
National Property Investors 7, a California Limited Partnership, and
the affiliated Selling Partnerships and California State Teachers'
Retirement System, a public entity, dated November 14, 2005.*
*Schedules and supplemental materials to the exhibit have been omitted but will
be provided to the Securities and Exchange Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL PROPERTY INVESTORS 7
By: NPI EQUITY INVESTMENTS, INC.
Managing General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
Date: December 13, 2005
Exhibit 10.27
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
dated
NOVEMBER 14, 2005,
by and among
CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM,
as Buyer,
and
WINDSOR HILLS I, L.P.,
NATIONAL PROPERTY INVESTORS 6,
NATIONAL PROPERTY INVESTORS 7,
TAHF II LIMITED PARTNERSHIP,
COUCH-OXFORD ASSOCIATES LIMITED PARTNERSHIP,
PEPPERMILL VILLAGE-OXFORD ASSOCIATES L.P.,
WILLIAMSBURG INVESTORS LIMITED PARTNERSHIP AND
MAYFAIR VILLAGE LIMITED PARTNERSHIP
collectively, as Sellers
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE.............................................1
2. PURCHASE PRICE................................................2
2.1 Intentionally Omitted...................................2
2.2 Payment of Purchase Price...............................2
2.3 Adjustment for Prorations and Credits...................2
2.4 Loan Obligations........................................3
2.5 Independent Contract Consideration......................3
3. OPENING OF ESCROW.............................................3
4. ACTIONS PENDING CLOSING.......................................4
4.1 Due Diligence...........................................4
4.2 Title...................................................6
4.3 Limited Partner Approvals...............................8
5. DESCRIPTION OF PROPERTIES.....................................8
5.1 The Improvements........................................8
5.2 The Real Property.......................................8
5.3 The Personal Property...................................8
5.4 The Intangible Property.................................9
6. CONDITIONS TO CLOSING.........................................9
6.1 Buyer's Closing Conditions..............................9
6.2 Failure of Buyer's Closing Conditions..................11
6.3 Sellers' Closing Conditions............................11
6.4 Failure of Sellers' Closing Conditions.................13
6.5 Loan Obligations.......................................14
7. CLOSING......................................................14
7.1 Closing Date...........................................14
7.2 Deliveries by Sellers..................................14
7.3 Deliveries by Buyer....................................15
7.4 Actions by Escrow Agent................................16
7.5 Prorations.............................................17
7.6 Closing Costs..........................................23
7.7 Deliveries Outside of Escrow...........................23
7.8 Access to Records......................................24
8. SELLERS' REPRESENTATIONS AND WARRANTIES......................24
8.1 Due Organization.......................................24
8.2 Sellers' Authority; Validity of Agreements.............25
8.3 Leases.................................................25
8.4 Contracts..............................................25
8.5 Violations of Laws.....................................25
8.6 Litigation.............................................26
8.7 Zoning and Condemnation................................26
8.8 Environmental..........................................26
8.9 Employees..............................................26
8.10 Personal Property......................................26
8.11 Property Documents.....................................26
8.12 Seller's Knowledge.....................................26
8.13 Survival...............................................26
9. BUYER'S REPRESENTATIONS AND WARRANTIES.......................27
9.1 Due Organization.......................................27
9.2 Buyer's Authority; Validity of Agreements..............27
9.3 Prohibited Person......................................27
9.4 Survival...............................................28
10. ADDITIONAL COVENANTS AND AGREEMENTS..........................28
10.1 As-Is..................................................28
10.2 Changes in Conditions..................................28
10.3 Exclusive Negotiations.................................29
10.4 Property Management....................................29
11. RISK OF LOSS AND ONGOING OPERATIONS..........................29
11.1 Condemnation...........................................29
11.2 Casualty...............................................30
11.3 Ongoing Operations.....................................30
12. REMEDIES.....................................................31
12.1 Liquidated Damages.....................................31
12.2 Default by Sellers.....................................32
13. BROKERS......................................................32
14. MISCELLANEOUS PROVISIONS.....................................33
14.1 Governing Law..........................................33
14.2 Entire Agreement.......................................33
14.3 Modification; Waiver...................................33
14.4 Notices................................................33
14.5 Expenses...............................................34
14.6 Assignment.............................................34
14.7 Severability...........................................35
14.8 Successors and Assigns; Third Parties..................35
14.9 Execution of Documents and Funding by Buyer............35
14.10 Headings...............................................35
14.11 Time of Essence........................................35
14.12 Further Assurances.....................................35
14.13 Number and Gender......................................36
14.14 Construction...........................................36
14.15 Exhibits and Schedules.................................36
14.16 Attorneys' Fees........................................36
14.17 Business Days..........................................36
14.18 Early Termination......................................36
14.19 Waiver of Known Defaults...............................36
14.20 Section 1031 Exchange..................................36
14.21 Counsel................................................37
14.22 Multiple Buyers........................................37
14.23 Sellers' Several Obligations...........................38
14.24 Obligation to Close on all Properties..................38
14.25 AIMCO Marks............................................38
14.26 ADA Disclosure.........................................38
14.27 Lead-Based Paint Disclosure............................39
14.28 Waiver of Consumer Rights..............................40
14.29 Texas Real Estate License Act..........................40
14.30 State of Louisiana Special Provisions..................41
14.31 State of Virginia Special Provisions...................42
14.32 State of Indiana Special Provisions....................42
14.33 Arbitration............................................42
LIST OF SCHEDULES AND EXHIBITS......................................1
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into as of November 14, 2005 (the "Execution
Date"), by and among CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM, a public
entity ("Buyer"), and each of the following parties (each, a "Seller" and,
collectively, "Sellers"): WINDSOR HILLS I, L.P., a Delaware limited partnership,
NATIONAL PROPERTY INVESTORS 6, a California limited partnership, NATIONAL
PROPERTY INVESTORS 7, a California limited partnership, TAHF II LIMITED
PARTNERSHIP, a Delaware limited partnership, COUCH-OXFORD ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership, PEPPERMILL VILLAGE-OXFORD
ASSOCIATES L.P., an Indiana limited partnership, WILLIAMSBURG INVESTORS LIMITED
PARTNERSHIP, an Indiana limited partnership, and MAYFAIR VILLAGE LIMITED
PARTNERSHIP, an Indiana limited partnership. The purpose of this Agreement is to
set forth the agreement of the parties and instruct Stewart Title Guaranty
Company ("Escrow Agent"), with respect to the transaction contemplated by this
Agreement.
R E C I T A L S
A.....Each Seller owns the real property commonly known as and
identified by the "Community Name" listed on the Seller Information Schedule
attached hereto as Schedule "A" (the "Seller Information Schedule"), and as more
particularly described on Exhibits "A-1" to "A-9" attached hereto (each, a "Land
Parcel" and, collectively, the "Land Parcels"). Each Land Parcel, together with
the "Improvements," the balance of the "Real Property," the "Personal Property,"
and the "Intangible Property" (each as hereinafter defined) all related thereto,
is sometimes referred to herein as a "Property" and, collectively together with
each other Property identified herein, as the "Properties."
B.....Each Seller desires to sell, transfer and convey to Buyer, and
Buyer desires to purchase and acquire from each Seller, the Property owned by
such Seller identified on the Seller Information Schedule, upon and subject to
the terms and conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Sellers hereby agree,
and instruct Escrow Agent, as follows:
1. PURCHASE AND SALE. Subject to all of the terms and conditions of this
Agreement, each Seller agrees to sell, transfer and convey to Buyer, and Buyer
agrees to purchase and acquire from each Seller, a good and marketable fee
simple interest in the Property owned by such Seller identified on the Seller
Information Schedule, upon and subject to the terms and conditions set forth
herein.
2. PURCHASE PRICE. The base purchase price for each Seller's Property (each, a
"Base Purchase Price") is set forth on the Seller Information Schedule. Each
Base Purchase Price shall be reduced by the "Lender Fees" (as hereinafter
defined) applicable to such Property (the sum of each Base Purchase Price, as so
reduced for its Property, being hereinafter referred to as the "Purchase
Price"). The Purchase Price shall be payable as follows:
2.1 Intentionally Omitted.
2.2 Payment of Purchase Price. At the "Closing" (as hereinafter defined), Buyer
shall deposit into Escrow Agent's "Escrow" (as hereinafter defined) account at
State Street Bank and Trust in Boston, Massachusetts ("State Street Bank") the
total amount of the Purchase Price, net of all prorations and adjustments as
provided herein.
2.3 Adjustment for Prorations and Credits. Subject to the terms of Section 7.5
hereof, on the "Closing Date" (as hereinafter defined), Buyer shall receive as a
credit against the portion of the Purchase Price payable with respect to each
Property, an amount equal to the sum of all: (a) deposits which were paid by
tenants of such Property (collectively, together with all tenants of each other
Property, "Tenants") to or for the account of the Seller of such Property (as
more particularly described in Section 7.5.6.2 hereof); (b) expenses and other
sums owed by the Seller of such Property to Tenants of such Property for any
work or disputes which occurred prior to the Closing Date (as acknowledged in
any agreement or correspondence executed by the Seller of such Property or any
of such Seller's agents); (c) rentals already received by the Seller of such
Property attributable to the period from and after the Closing Date; and (d) the
amount, if any, by which prorated amounts and "Closing Costs" (as hereinafter
defined) allocated to the Seller of such Property pursuant to Sections 7.5 and
7.6 hereof exceed prorated amounts and Closing Costs allocated to Buyer pursuant
to Sections 7.5 and 7.6 hereof. Subject to the terms of the last sentence of
this Section 2.3, Buyer shall also receive as a credit against the Purchase
Price an amount equal to $11,190,000.00 (which the parties acknowledge is for
immediate capital needs for the Properties), and such amount shall be allocated
among the Sellers of the Properties as set forth on the Seller Information
Schedule (as allocated with respect to each Property, a "Credit for Capital
Needs"). The parties hereto acknowledge and agree that Buyer has had no
involvement in the allocation of such amount or the Purchase Price and shall
have no responsibility or liability to any Seller or any other person or entity
with respect thereto. Notwithstanding the foregoing: (i) certain Sellers have
commenced or are scheduled to commence shortly certain construction work
relating to certain Properties, all as more particularly described on Schedule
"B" attached hereto (the "Work"); (ii) the maximum cost of the Work for each
such Property (the "Maximum Cost") is set forth on Schedule "B" attached hereto;
(iii) in the event that the applicable Seller completes or causes to be
completed prior to the Closing any percentage of such Work with respect to its
Property (such completed percentage being hereinafter referred to as the
"Completed Percentage"), such Seller shall deliver written notice of such fact
to Buyer; (iv) upon Buyer's receipt of any such written notice, Buyer shall
inspect the applicable Property to confirm that it agrees that such Completed
Percentage of the Work has been completed; (v) any such inspection by Buyer
shall be completed on or before a date mutually approved by the applicable
Seller and Buyer but in no event later than the Closing (such approved date
being hereinafter referred to as the "Review Date"); (vi) in the event that
Buyer agrees with such Seller that such Completed Percentage of the Work has
been completed, then (A) such Seller shall pay the cost of such Completed
Percentage of the Work and deliver to Buyer evidence thereof together with
executed lien releases from the applicable contractors and subcontractors for
such Completed Percentage of the Work (in forms required by applicable laws),
(B) the Credit for Capital Needs for such Property shall be reduced by an amount
equal to the product of the Completed Percentage multiplied by the Maximum Cost
for such Work relating to such Property, and (C) Buyer shall assume such
Seller's rights and obligations accruing from and after the Closing Date under
any executed construction contracts to the extent relating to any portion of the
Work that is not completed prior to the Closing; (vii) in the event that Buyer
disagrees with Seller that any such Work has been completed (or any other
dispute arises between the parties relating to the Work under this Section 2.3,
the parties shall proceed to arbitration in accordance with the terms of Section
14.33 hereof; and (viii) in the event that the applicable Seller completes or
causes to be completed any portion of the Work after the Review Date but prior
to the Closing, such Seller shall not pay the cost of such completed portion of
the Work and, instead, Buyer shall assume such Seller's rights and obligations
under any executed construction contracts to the extent relating to such
completed portion of the Work and any portion of the Work that is not completed
prior to the Closing, and Buyer shall be solely responsible for approving and
paying for such portions of the Work under such contracts.
2.4 Loan Obligations. Sellers have advised Buyer that, as of the Execution Date,
each Property is encumbered by the loan described on the Seller Information
Schedule applicable to such Property (each, a "Loan Obligation" and,
collectively, the "Loan Obligations"). The Loan Obligations shall be paid off,
satisfied, discharged and/or cured by Sellers from proceeds of the Purchase
Price at Closing, provided that the Lender Fees due in connection with such
payoffs shall be paid by Buyer and deducted from the Purchase Price as provided
herein. As used herein, the term "Lender Fees" shall mean with respect to each
Property, all fees and expenses (including, without limitation, all prepayment
penalties and pay-off fees) imposed or charged by the lender or its counsel in
connection with the payoff of such Property's Loan Obligation, and, to the
extent that such payoff occurs on a date other than as permitted under the
documents evidencing such Loan Obligation, any amounts of interest charged by
such 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.
2.5 Independent Contract Consideration. Sellers and Buyer agree that the amount
of One Hundred Dollars ($100.00) has been bargained for and paid by Buyer to
Seller as consideration for Sellers' execution and delivery of this Agreement
and for Buyer's right of review, inspection and termination, and is independent
of any other consideration or payment provided for in this Agreement and,
notwithstanding anything to the contrary contained herein, is non-refundable in
all events.
3. OPENING OF ESCROW. On or before the second (2nd) "Business Day" (as
hereinafter defined) after the full execution of this Agreement by Buyer and
Sellers, Buyer and Sellers shall cause an escrow ("Escrow") to be opened with
Escrow Agent (the "Opening of Escrow") by delivery to Escrow Agent of a fully
executed copy of this Agreement. Escrow Agent shall promptly deliver to Buyer
and Sellers written notice of the date of the Opening of Escrow. This Agreement
shall constitute escrow instructions to Escrow Agent as well as the agreement of
the parties. Escrow Agent is hereby appointed and designated to act as Escrow
Agent and instructed to deliver, pursuant to the terms of this Agreement, the
documents and funds to be deposited into Escrow as herein provided. The parties
hereto shall execute such additional escrow instructions (not inconsistent with
this Agreement as determined by counsel for Buyer and Sellers) as Escrow Agent
shall deem reasonably necessary for its protection, including Escrow Agent's
general provisions (as may be modified by Buyer, Sellers and Escrow Agent). In
the event of any inconsistency between the provisions of this Agreement and such
additional escrow instructions, the provisions of this Agreement shall govern.
4. ACTIONS PENDING CLOSING.
4.1 Due Diligence. Buyer's obligation to consummate the transactions
contemplated by this Agreement is subject to and conditioned upon Buyer's
approval, deemed approval or waiver of the right to approve of the items set
forth in this Article 4 prior to 5:00 p.m. P.S.T. on the Execution Date.
4.1.1 Property Documents. Prior to the Execution Date, each Seller has made
available to Buyer for its review and copying at Buyer's sole cost and expense
(by, at each Seller's option, either providing Buyer with access at such
Seller's Property to, or making available to Buyer on a secure web site) copies
of all contracts, all documents, all books and records other than proprietary
information (collectively, together with all such books and records owned by
each other Seller, "Sellers' Property-Related Files and Records"), and all other
materials relating to the Property owned by such Seller, to the extent that such
items exist and are in such Seller's possession (collectively, together with all
such materials made available by each other Seller, the "Property Documents"),
including, without limitation, the following items: (i) leases and other
occupancy agreements now in effect at the Property owned by such Seller
(collectively, together with all such agreements now in effect at each other
Property, the "Leases"); (ii) as-built plans and specifications; (iii)
structural and mechanical reports; (iv) plans and maps (including, without
limitation, topographical maps); (v) governmental permits, approvals and
licenses; (vi) title policies; (vii) surveys; (viii) construction warranties;
(ix) land studies; (x) property tax statements and assessed value notices; (xi)
insurance policies; and (xii) "Assumed Service Contracts" (as hereinafter
defined).
4.1.2 Buyer's Diligence Tests. Buyer hereby acknowledges that prior to the
Execution Date, Buyer, its agents and its representatives have been entitled at
Buyer's sole cost and expense to: (a) enter onto the Properties to perform any
inspections, investigations, studies and tests of the Properties (including,
without limitation, physical, structural, mechanical, architectural,
engineering, soils, geotechnical and environmental tests that Buyer deems
reasonable); (b) cause an environmental assessment of the Properties to be
performed; (c) review all Property Documents (except as provided in Section 4.2
hereof); and (d) investigate such other matters as Buyer may have desired. Buyer
shall indemnify, protect, defend and hold Sellers (and Sellers' partners,
shareholders, agents, employees and representatives) harmless from and against
any and all claims (including, without limitation, claims for mechanic's liens
or materialmen's liens), causes of action, demands, obligations, losses,
damages, liabilities, judgments, costs and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements)
(collectively, "Claims") in connection with or arising out of any inspections
carried on by or on behalf of Buyer in connection with Buyer's (or it's agent's)
due diligence inspections and/or assessments of the Properties; provided,
however, that Buyer shall not indemnify any Seller for any Claims caused by such
Seller's gross negligence or willful misconduct, or any physical condition
(including, without limitation, any environmental condition) existing on any
Property prior to Buyer's or its agent's entry thereon. The foregoing
indemnification shall survive the Closing or the earlier termination of this
Agreement for a period of one (1) year; provided, however, that for matters as
to which any Seller has given Buyer written notice within such one (1) year
period, such indemnification related to the matters in such written notice shall
survive until all liabilities arising out of the matters described in such
written notice have been satisfied. In the event that this Agreement is
terminated for any reason, (i) Buyer shall repair any damage to the Properties
caused by its entry thereon and restore the same to the condition in which it
existed prior to such entry and (ii) except to the extent the same would impact
any attorney-client privilege, Buyer shall deliver to Sellers, upon any Seller's
request and without charge therefor, the results and copies of any and all
inspections, studies, tests, surveys, or other reports made by or for Buyer with
respect to the Properties. The provisions of the foregoing sentence shall
survive the Closing or the earlier termination of this Agreement. Buyer shall
use commercially reasonable efforts to minimize disruption to Tenants in
connection with Buyer's or its consultants' activities pursuant to this Section.
Buyer has maintained and caused 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. Buyer has delivered proof of the insurance coverage
required pursuant to this Section to Sellers (in the form of a certificate of
insurance) prior to the Execution Date.
4.1.3 Buyer's Termination Right. Buyer hereby acknowledges and agrees that,
other than as set forth in Section 4.1 hereof, Buyer has no right, whatsoever,
to terminate this Agreement as a result of its due diligence efforts described
in this Section 4.1; provided, however, that Buyer retains the right to
terminate this Agreement as provided elsewhere in this Agreement.
4.1.4 Confidentiality. All information and Property Documents made available by
any of the Sellers to Buyer in accordance with this Agreement or obtained by
Buyer in the course of its inspections of the Properties shall be treated as
confidential information by Buyer, and, prior to the purchase of the Properties
by Buyer, Buyer shall use its best efforts to prevent its consultants from
divulging such information to any unrelated third parties except as reasonably
necessary to third parties engaged by Buyer for the limited purpose of analyzing
and investigating such information for the purpose of consummating the
transaction contemplated by this Agreement. Buyer shall not disclose the terms
and conditions contained in this Agreement and shall keep the same confidential,
provided that Buyer may disclose the terms and conditions of this Agreement (a)
as required by law, (b) to consummate the terms of this Agreement, or any
financing relating thereto, or (c) to Buyer's or Sellers' advisors, lenders,
attorneys and accountants. The provisions of this Section 4.1.4 shall survive
the termination of this Agreement.
4.2 Title.
4.2.1 Deliveries by Sellers. Prior to the Execution Date, Sellers, at their sole
cost and expense, have caused Stewart Title Guaranty Company (in such capacity,
"Title Company") to issue and deliver to Buyer (a) a current preliminary title
report for an extended coverage owner's policy of title insurance (or local
equivalent such as the most recent standard form promulgated by the Texas State
Department of Insurance in accordance with the Texas Title Act for use in
writing title insurance in the State of Texas, for any Real Property located in
Texas) for the Real Property portion of each Property (collectively, the "PTRs")
and (b) copies of all documents referenced as exceptions therein (collectively,
the "Underlying Documents"). Sellers have provided to Buyer any existing
as-built surveys of the Real Property portion of each Property to the extent
that such surveys exists and are in any Seller's possession (collectively, the
"Surveys"). Prior to the Closing, Sellers will cause each Survey to be certified
to Buyer, the applicable Seller and Title Company in form and substance
reasonably satisfactory to Buyer (the "Survey Certifications"). The PTRs, the
Underlying Documents, the Surveys and the Survey Certifications shall be
collectively referred to herein as the "Title Documents."
4.2.2 Buyer's Review of Title and Surveys. Prior to the Execution Date, Buyer
has notified Sellers in writing of any objections which Buyer has to any matters
reported or shown in the Title Documents (collectively, all such objection
letters for all Properties being hereinafter referred to as "Buyer's Objection
Letter"). If and when Buyer receives any updates to the Title Documents (and
when Buyer receives the Survey Certifications), Buyer shall have an additional
three (3) Business Days following Buyer's receipt of any such update and copies
of all documents referenced therein (or the Survey Certifications, as the case
may be), to notify Sellers of objections to items shown on any such update which
were not disclosed on the previously delivered Title Documents (or to notify
Sellers of any objections to the Survey Certifications, as the case may be)
(collectively, all such updated objection letters for all Properties being
hereinafter referred to as an "Updated Objection Letter"). Matters reported in
or shown by the Title Documents (or any updates thereof) and not timely objected
or previously objected to by Buyer as provided above shall be deemed to be
"Permitted Exceptions." Except as expressly provided in Section 4.2.3 hereof,
Sellers shall have no obligation to cure or correct any matter objected to by
Buyer in Buyer's Objection Letter or any Updated Objection Letter (and Sellers
have elected not to cure or correct any matter objected to by Buyer in Buyer's
Objection Letter). Buyer acknowledges that it has no right to terminate this
Agreement as a result of any matter or exception objected to by Buyer in Buyer's
Objection Letter and, instead, Buyer shall proceed to a timely Closing whereupon
all matters and exceptions objected to by Buyer in Buyer's Objection Letter
shall be deemed to be Permitted Exceptions. On or before the first (1st)
Business Day following Sellers' receipt of any Updated Objection Letter, Sellers
may elect, by delivering written notice of such election to Buyer and Escrow
Agent ("Sellers' Response") to cause Title Company to remove or insure over all
matters objected to in such Updated Objection Letter; provided, however, that if
Sellers elect to cause the Title Company to insure over (i.e., provide
affirmative insurance against loss resulting from) any objectionable matter,
Buyer shall have the right to accept or reject such insurance in its reasonable
discretion as an acceptable cure. If Sellers fail to deliver Sellers' Response
within the time frame set forth above, it shall be deemed to be an election by
Sellers not to cause Title Company to so remove or insure over such objections.
If Sellers elect not to cause Title Company to so remove or insure (or if Buyer
rejects any such insurance in accordance with the terms hereof), then Buyer must
elect, by delivering written notice of such election to Sellers and Escrow Agent
on or before the earlier to occur of the third (3rd) Business Day following
Buyer's receipt of Sellers' Response or (b) if no Sellers' Response is received
by Buyer, the third (3rd) Business Day following the date on which Sellers shall
have been deemed to have responded, as provided above, to: (i) terminate this
Agreement (in which case the parties shall equally share the cancellation
charges of Escrow Agent and Title Company, if any, and no party shall thereafter
have any rights or obligations to the other hereunder, other than pursuant to
any provision hereof which expressly survives the termination of this
Agreement); or (ii) proceed to a timely Closing whereupon such objected to
exceptions or matters shall be deemed to be Permitted Exceptions. In the event
that Buyer fails to make such election on a timely basis, then Buyer shall be
deemed to have elected to terminate this Agreement, in which case the provisions
of the preceding clause (i) shall apply.
4.2.3 Sellers' Obligations. Notwithstanding anything to the contrary contained
in this Agreement, and notwithstanding any approval or consent given or deemed
given by Buyer hereunder, Sellers shall, all at no cost or expense to Buyer,
satisfy the Title Company as to Sellers' power and authority to enter into this
Agreement, deliver to the Title Company an owner's affidavit satisfactory to the
Title Company, convey the Properties to Buyer and otherwise consummate the
transactions contemplated hereby and cause to be released and reconveyed from
the Properties on or prior to the Closing (a) any exceptions or other matters
affecting title to the Properties which are created by any Seller after the date
of this Agreement, and (b) except for real estate taxes not yet due or payable,
all mortgages, deeds of trust and other monetary encumbrances, including without
limitation all mechanics' liens.
4.2.4 Condition of Title at Closing. Upon the Closing, each Seller shall sell,
transfer and convey to Buyer fee simple title to the Real Property owned by such
Seller by a duly executed and acknowledged deed in the form of Exhibits "B-1" to
"B-5" attached hereto (as applicable for the State in which such Real Property
is located) (collectively, the "Deeds"), subject only to the Permitted
Exceptions applicable to such Real Property.
4.3 Limited Partner Approvals. The Seller of each "Public Property" (as
hereinafter defined), shall use commercially reasonable efforts to obtain, as
soon as practicable, the "Public Partnership Amendments" (as hereinafter
defined) related thereto, as described in (and subject to the terms of) Section
6.3.5 hereof.
5. DESCRIPTION OF PROPERTIES.
5.1 The Improvements. As used herein, the term "Improvements" shall mean all of
Sellers' right, title and interest in and to all buildings, improvements,
structures and fixtures now or hereafter located on or in the Land Parcels.
5.2 The Real Property. As used herein, the term "Real Property" shall mean,
collectively, all of Sellers' right, title and interest in and to: (a) the Land
Parcels; (b) the Improvements; (c) all apparatus, equipment and appliances
affixed to and used in connection with the operation or occupancy of the Land
Parcels and/or any of the Improvements (such as heating, air conditioning or
mechanical systems and facilities used to provide any utility services,
refrigeration, ventilation, waste disposal or other services) and now or
hereafter located on or in the Land Parcels and/or any of the Improvements; and
(d) all of Sellers' rights, privileges and easements appurtenant to or used in
connection with the Land Parcels and/or any of the Improvements, including,
without limitation, all minerals, oil, gas and other hydrocarbon substances, all
development rights, air rights, water, water rights and water stock relating to
the Land Parcels, all strips and gores, streets, alleys, easements,
rights-of-way, public ways, or other rights of Sellers appurtenant, adjacent or
connected to the Land Parcels.
5.3 The Personal Property. As used herein, the term "Personal Property" shall
mean all of Sellers' right, title and interest in and to that certain tangible
personal property, equipment and supplies owned by Sellers and situated at the
Real Property and used by Sellers exclusively in connection with the use,
operation, maintenance or repair of all or any portion of the Real Property as
of the Closing Date, including, without limitation, all of the personal property
described on Exhibit "C-1" attached hereto. Notwithstanding the foregoing, the
term Personal Property does not include any "Excluded Personal Property." As
used herein, the term "Excluded Personal Property" shall mean all (a) equipment
leased by any Seller and the interest of any 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 any Property, or (c) property and equipment owned by any
Seller, which in the ordinary course of business of such Seller's Property is
not used exclusively for the business, operation or management of such Property,
or (d) "Buyer's Access Computer Hardware and Software," "AIMCO Benchmark Series
Books," "Connect: Remote Horizon Software," and all other software installed on
any computers transferred as part of the transaction contemplated hereby, or (e)
the property and equipment, if any, expressly identified on the Seller
Information Schedule as "Excluded FF&E" which is described on Exhibit "C-2"
attached hereto.
5.4 The Intangible Property. As used herein, the term "Intangible Property"
shall mean all of Sellers' right, title and interest in and to that certain
intangible property owned by Sellers and used by Sellers exclusively in
connection with all or any portion of the Real Property and/or the Personal
Property, including, without limitation, all of Sellers' right, title and
interest, if any, in and to: (a) the Leases, the Assumed Service Contracts,
Sellers' Property-Related Files and Records, all reports, test results,
environmental assessments, if any, as-built plans, specifications and other
similar documents and materials relating to the use, operation, maintenance,
repair, construction or fabrication of all or any portion of the Real Property
and/or the Personal Property; (b) all rights, if any, in and to the community
names set forth on the Seller Information Schedule; (c) all transferable
business licenses, architectural, site, landscaping or other permits (other than
the "Excluded Permits," as hereinafter defined), applications, approvals,
authorizations and other entitlements affecting any portion of the Real
Property; and (d) all transferable guarantees, warranties and utility contracts
relating to all or any portion of the Real Property. As used herein, the term
"Excluded Permits" shall mean 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, each of which Excluded Permits are
described on Exhibit "D-1" attached hereto. As used herein, the term "Assumed
Service Contracts" shall mean 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 which are identified on
Exhibit "D-2" attached hereto (collectively, the "Service Contracts"), 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
shall not include any "Excluded Service Contracts." As used herein, the term
"Excluded Service Contracts" shall mean: (i) any national contracts entered into
by any Seller, Property manager, or Apartment Investment and Management Company
("AIMCO") with respect to any Property (x) which terminate automatically upon
transfer of such Property by the Seller of such Property, or (y) which the
Seller of such Property, in such Seller's sole discretion, elects to terminate
with respect to such Property effective as of the Closing Date; (ii) any
property management contract for any Property; or (iii) any forward or similar
long-term contracts to purchase electricity, natural gas, or other utilities,
which contracts shall be "Utility Contracts" (as hereinafter defined) governed
by the terms of Section 7.5.9 hereof, each of which are described on Exhibit
"D-3" attached hereto.
6. CONDITIONS TO CLOSING.
6.1 Buyer's Closing Conditions. The obligation of Buyer to complete the
transaction contemplated by this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at the Closing) (the "Buyer's Closing Conditions"), which
conditions may be waived, or the time for satisfaction thereof extended, by
Buyer only in a writing executed by Buyer:
6.1.1 Title. Title Company shall be prepared and irrevocably committed to issue
to any entity taking title to a Property (each a "Buyer Party" and collectively,
the "Buyer Parties") (with an effective date not earlier than the Closing Date),
an extended coverage owner's policy of title insurance (or local equivalent) in
favor of the applicable Buyer Party for the Real Property portion of each
Property, in each case, (a) showing fee title vested in the applicable Buyer
Party, (b) with liability coverage in an amount equal to the Base Purchase Price
for such Property, (c) with those endorsements or amendments reasonably
requested by the Buyer Parties, including without limitation, non-imputation
endorsements) (provided that all such endorsements or amendments are available
in the State in which such Property is located and are paid for by Buyer), (d)
containing no exceptions other than the Permitted Exceptions applicable to such
Property, (e) with the arbitration provision, and the creditors' rights
exclusion deleted, and (f) otherwise in a form reasonably acceptable to the
Buyer Parties (collectively, the "Owner's Title Policies").
6.1.2 Sellers' Due Performance. All of the representations and warranties of
Sellers set forth in this Agreement shall be true, correct and complete in all
material respects as of the Closing Date, and Sellers, on or prior to the
Closing Date, shall have complied with and/or performed all of the obligations,
covenants and agreements required on the part of Sellers to be complied with or
performed pursuant to the terms of this Agreement.
6.1.3 Physical Condition of Properties. Subject to the terms of Section 11
hereof, the physical condition of the Properties shall be substantially the same
on the Closing Date as on July 12, 2005 (the "Inspection Date"), except for
reasonable wear and tear and any damages due to any act of Buyer or Buyer's
representatives.
6.1.4 No Material Adverse Change. In Buyer's reasonable determination, there
shall have been no material adverse change in or addition to the information or
items reviewed and approved by Buyer prior to the Inspection Date.
6.1.5 Bankruptcy. No action or proceeding shall have been commenced by or
against any Seller under the federal bankruptcy code or any state law for the
relief of debtors or for the enforcement of the rights of creditors, and no
attachment, execution, lien or levy shall have attached to or been issued with
respect to any Seller's interest in its Property or any portion thereof.
6.1.6 Leases. At the Closing, each Seller shall assign all of its rights and
remedies under the Leases applicable to its Property (including, without
limitation, its right to any security deposits and prepaid rent) to Buyer, and
Buyer shall assume the obligations of each Seller with respect thereto, pursuant
to an assignment and assumption of leases and security deposits for each
Property, each in the form of Exhibit "E" attached hereto (collectively, the
"Assignments of Leases").
6.1.7 Bills of Sale and Assignment. At the Closing, each Seller shall transfer
to Buyer (and Buyer shall assume each Seller's obligations, if any, with respect
to) all of the Personal Property and the Intangible Property (other than the
Leases) relating to such Seller's Property, in each case free of all liens and
encumbrances (other than the Permitted Exceptions applicable to such Property),
pursuant to a bill of sale, assignment and assumption for each Property, each in
the form of Exhibit "F" attached hereto (collectively, the "Bills of Sale and
Assignment").
6.1.8 Non-Foreign Affidavits. At the Closing, each Seller shall deliver to Buyer
a non-foreign affidavit in the form of Exhibit "G" attached hereto executed by
such Seller (collectively, the "Non-Foreign Affidavits").
6.1.9 Guaranty. At the Closing, Sellers shall cause AIMCO to execute and deliver
to Buyer and each entity taking title to a Property a guaranty of Sellers'
obligations hereunder in the form attached hereto as Exhibit "L" (the
"Guaranty").
6.1.10 Deliveries. Sellers shall have delivered to Escrow Agent or Buyer, as the
case may be, such documents or instruments as are required to be delivered by
Sellers pursuant to the terms of this Agreement.
6.1.11 SH Amendment. At the Closing, the applicable parties shall enter into an
amendment to the partnership agreement for SH Partners, L.P., in the form
attached hereto as Exhibit "M" (the "SH Amendment").
6.2 Failure of Buyer's Closing Conditions. If any of Buyer's Closing Conditions
have not been fulfilled within the applicable time periods, Buyer may:
6.2.1 waive the Buyer's Closing Condition and close Escrow in accordance with
this Agreement, without adjustment or abatement of the Purchase Price; or
6.2.2 terminate this Agreement by written notice to Sellers and Escrow Agent, in
which event all documents, instruments and funds delivered into Escrow shall be
returned to the party that delivered the same into Escrow, Sellers shall pay for
all of the cancellation charges of Title Company and Escrow Agent, if any, and
to the extent that the failure of any applicable Buyer's Closing Condition is
caused by any Seller's default hereunder, Buyer shall be entitled to pursue its
rights and remedies pursuant to the terms of Section 12.2 hereof.
6.3 Sellers' Closing Conditions. The obligation of Sellers to complete the
transaction contemplated by this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at the Closing) (the "Sellers' Closing Conditions"),
which conditions may be waived, or the time for satisfaction thereof extended,
by Sellers only in a writing executed by Sellers:
6.3.1 Buyer's Due Performance. All of the representations and warranties of
Buyer set forth in this Agreement shall be true, correct and complete in all
material respects as of the Closing Date, and Buyer, on or prior to the Closing
Date, shall have complied with and/or performed all of the obligations,
covenants and agreements required on the part of Buyer to be complied with or
performed pursuant to the terms of this Agreement.
6.3.2 Bankruptcy. No action or proceeding shall have been commenced by or
against Buyer under the federal bankruptcy code or any state law for the relief
of debtors or for the enforcement of the rights of creditors.
6.3.3 Deliveries. Buyer shall have delivered to Escrow Agent or Sellers, as the
case may be, such documents or instruments as are required to be delivered by
Buyer pursuant to the terms of this Agreement.
6.3.4 SH Amendment. At the Closing, the applicable parties shall enter into the
SH Amendment.
6.3.5 Limited Partner Approvals.
...... 6.3.5.1 General. Subject to the terms of this Section 6.3.5,
on or before the Closing Date, holders of a majority of the outstanding limited
partnership interests (excluding interests held by AIMCO Properties, L.P. and
its affiliates) of each "Public Partnership" (as hereinafter defined) shall have
approved an amendment to the agreement of limited partnership of such Public
Partnership which permits the sale of the Property(ies) owned or controlled by
such Public Partnership (each a "Public Property" and, collectively, together
with all of the Properties owned by all of the Public Partnerships, the "Public
Properties") to Buyer under the terms hereof (collectively, the "Public
Partnership Amendments"). As used herein, the term "Public Partnership" shall
mean each of the following entities, individually (and the term "Public
Partnerships" shall mean all of the following entities, collectively): (a)
Shelter Properties I Limited Partnership (which is the sole limited partner of
both (i) the Seller of the Property commonly known as Windsor Hills and the (ii)
general partner of the Seller of the Property commonly known as Windsor Hills)
("Shelter"); (b) National Properties Investors 6 (which is the Seller of the
Properties commonly known as Place Du Plantier and Fairway View I) ("NPI6"); and
(c) National Properties Investors 7 (which is the Seller of the Property
commonly known as Fairway View II) ("NPI7").
...... 6.3.5.2 Shelter and NPI6. Notwithstanding anything to the
contrary contained herein (including, without limitation, the terms of Section
6.4 hereof), but subject to the terms of Section 6.3.5.3 hereof, in the event
that the Public Partnership Amendment for either Shelter or NPI6 is not approved
as described above, then: (a) the parties shall proceed to Closing on the
Closing Date with respect to all of the Properties other than the Public
Properties owned or controlled by such Public Partnership (as if the terms of
this Agreement (including, without limitation, the terms of Section 2 hereof) to
the extent related to such Public Properties (the "Excluded Terms") were not
included in this Agreement); (b) Buyer shall have the right (but not the
obligation) to cause the parties to proceed to Closing on the Closing Date (or
such later date as is required by the applicable Seller in order to satisfy the
obligations related to the partnership agreement for such Public Partnership in
connection with such transfer, but no later than June 30, 2006) with respect to
the Properties owned or controlled by such Public Partnership, provided that
such transfer shall be done as a "Third Party Sale" (as hereinafter defined)
with the remainder of the Excluded Terms otherwise applying thereto (but without
any need for a Public Partnership Amendment related thereto); and (c) in the
event that Buyer does not elect to cause the parties to proceed to Closing under
the terms of clause (b) above, then (i) the applicable Seller shall elect (by
delivering written notice of such election to Buyer and Escrow Agent) to either
(i) extend the Closing for the Properties owned or controlled by such Public
Partnership until approval of the Public Partnership Amendment is obtained (but
no later than June 30, 2006), in which case, at such extended Closing, the
Excluded Terms shall apply, or (ii) terminate the portions of this Agreement
constituting the Excluded Terms (which provisions shall thereafter be of no
further force or effect, other than to the extent that such provisions expressly
survive the termination of this Agreement).
...... 6.3.5.3 NPI7. Notwithstanding anything to the contrary
contained herein (including, without limitation, the terms of Section 6.4
hereof), but subject to the terms of Section 6.3.5.2 hereof, in the event that
the Public Partnership Amendment for NPI7 is not approved as described above,
then: (a) the parties shall proceed to Closing on the Closing Date with respect
to all of the Properties other than the Public Property owned by NPI7 (as if the
terms of this Agreement (including, without limitation, the terms of Section 2
hereof) to the extent related to such Public Property (the "NPI7 Terms") were
not included in this Agreement); and (b) the applicable Seller shall elect (by
delivering written notice of such election to Buyer and Escrow Agent) to either
(i) extend the Closing for the Public Property owned by NPI7 until approval of
the Public Partnership Amendment is obtained (or, if elected by Buyer in its
sole and absolute discretion, until approval of a Public Partnership Amendment
is obtained which permits a Third Party Sale of the Property owned by NPI7)
(but, in any case, no later than June 30, 2006), in which case, at such extended
Closing, the NPI7 Terms (as modified for a Third Party Sale if elected by Buyer
hereunder) shall apply, or (ii) terminate the portions of this Agreement
constituting the NPI7 Terms (which provisions shall thereafter be of no further
force or effect, other than to the extent that such provisions expressly survive
the termination of this Agreement).
...... 6.3.5.4 As used herein, the term "Third Party Sale" shall
mean a transfer (a) in which the "Buyer" is California State Teachers'
Retirement System (or a designee that is not an affiliate of the Sellers), and
(b) at the closing of which, such Buyer engages the "Manager" (as hereinafter
defined), as the property manager for each Property being transferred in such
Third Party Sale, pursuant to a Management Agreement that is substantially
similar to the form of (and provides for the same management fee as) the
"Property Management Agreements" (as hereinafter defined) being executed
hereunder.
6.4 Failure of Sellers' Closing Conditions. Subject to the terms of Section
6.3.5 hereof, if any of the Sellers' Closing Conditions have not been fulfilled
within the applicable time periods, Sellers may:
6.4.1 waive the Sellers' Closing Condition and close Escrow in accordance with
this Agreement, without adjustment or abatement of the Purchase Price; or
6.4.2 terminate this Agreement by written notice to Buyer and Escrow Agent, in
which event (a) all documents, instruments and funds delivered into Escrow shall
be returned to the party that delivered the same into Escrow, (b) Buyer shall
pay for all of the cancellation charges of Title Company and Escrow Agent, if
any, and (c) to the extent that the failure of any applicable Sellers' Closing
Condition is caused by a Buyer default hereunder, Sellers shall be entitled to
pursue their rights and remedies pursuant to the terms of Section 12.1 hereof.
6.5 Loan Obligations. Buyer acknowledges that Buyer had the opportunity to
assume each Loan Obligation or to cause prepayment of each Loan Obligation at
the Closing (but in either event, Buyer would pay the Lender Fees and such
Lender Fees would be deducted from the Purchase Price). Buyer has elected to
cause all of the Loan Obligations 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 balances of the Loan Obligations together with all
interest accrued thereunder prior to the Closing Date, and Buyer shall pay all
Lender Fees (subject to reduction from the Purchase Price in accordance with the
terms of Section 2 hereof). Any existing reserves, impounds and other accounts
maintained in connection with any Loan Obligation shall be released in
immediately available funds to the applicable Seller unless credited by the
lender thereof against the amount due under such Loan Obligation.
7. CLOSING.
7.1 Closing Date. Subject to the provisions of this Agreement, the Closing shall
take place on the seventh (7th) Business Day after the later to occur of (a) the
first (1st) date on which the lenders of all of the Loan Obligations permit
prepayment and (b) the date on which Buyer receives the Survey Certifications,
or on such other date as the parties hereto may agree; provided, however, that
the Closing shall occur no later than the thirtieth (30th) day after the
Execution Date. Notwithstanding the foregoing, and in addition to any other
extension rights afforded to Sellers hereunder, Sellers shall have the right,
exercisable at any time in their sole and absolute discretion upon six (6)
Business Days' prior written notice to Buyer and Escrow Agent, to extend the
Closing Date set forth in the first sentence of this Section 7.1 to the earliest
Business Day in January 2006 on or before January 10, 2006 that is mutually
acceptable to the parties (provided that any such Closing shall remain subject
to the terms of Section 14.9 hereof). In the event that Sellers exercise such
extension right, Sellers shall continue to manage and operate the Properties
until the Closing, as extended, in accordance with their past practices. As used
herein, the following terms shall have the following meanings: (i) the "Closing"
shall mean the recordation of each Deed in the official records of the county in
which the Property being conveyed by such Deed is located (the "Official
Records"); and (ii) the "Closing Date" shall mean the date upon which the
Closing actually occurs.
7.2 Deliveries by Sellers. At least one (1) Business Day prior to the Closing
Date, Sellers, at their sole cost and expense, shall deliver or cause to be
delivered into Escrow the following documents and instruments, each dated as of
the Closing Date, in addition to all other items and payments required by this
Agreement to be delivered by Sellers at the Closing:
7.2.1 Deeds. The original executed and acknowledged Deeds conveying the Real
Property to Buyer;
7.2.2 Non-Foreign Affidavits. The original executed Non-Foreign Affidavits;
7.2.3 Assignments of Leases. Four (4) original executed counterparts of each
Assignment of Leases;
7.2.4 Bills of Sale and Assignment. Four (4) original executed counterparts
of each Bill of Sale and Assignment;
7.2.5 Guaranty. The original executed Guaranty.
7.2.6 Proof of Authority. Such proof of Sellers' authority and authorization to
enter into this Agreement and the transaction contemplated hereby, and such
proof of the power and authority of the individual(s) executing or delivering
any instruments, documents or certificates on behalf of Sellers to act for and
bind Sellers as may be reasonably required by Title Company or Buyer;
7.2.7 Owner's Affidavit. One (1) original executed owner's affidavit for
each Seller satisfactory to the Title Company; and
7.2.8 Other. Such other documents and instruments, signed and properly
acknowledged by the applicable Seller, if appropriate, as may be reasonably
required by Buyer, Title Company, Escrow Agent or otherwise in order to
effectuate the provisions of this Agreement and the Closing of the transaction
contemplated herein (including, without limitation, for any Property located in
Indiana, a counterpart of the State required Sales Disclosure Form).
7.3 Deliveries by Buyer. Except as otherwise expressly set forth herein, at
least one (1) Business Day prior to the Closing Date, Buyer, at its sole cost
and expense, shall deliver or cause to be delivered into Escrow the following
funds, documents and instruments, each dated as of the Closing Date, in addition
to all other items and payments required by this Agreement to be delivered by
Buyer at the Closing:
7.3.1 Purchase Price. On the Closing Date, cash in an amount equal to the sum of
(a) the Purchase Price, (b) all Lender Fees (subject to reduction from the
Purchase Price in accordance with the terms of Section 2 hereof), (c) all of the
Buyer's Closing Costs and (d) any other amounts necessary and sufficient to
close the transaction contemplated herein;
7.3.2 Assignments of Leases. Four (4) executed originals of each Assignment
of Leases executed by Buyer;
7.3.3 Bills of Sale and Assignment. Four (4) executed originals of each Bill
of Sale and Assignment executed by Buyer;
7.3.4 Post-Closing Acknowledgement. For each Property located in the State of
Indiana, four (4) executed originals of a post-closing acknowledgement in the
form of Exhibit "K" attached hereto.
7.3.5 Proof of Authority. Such proof of Buyer's authority and authorization to
enter into this Agreement and the transaction contemplated hereby, and such
proof of the power and authority of the individual(s) executing or delivering
any instruments, documents or certificates on behalf of Buyer to act for and
bind Buyer as may be reasonably required by Title Company or Sellers; and
7.3.6 Other. Such other documents and instruments, signed and properly
acknowledged by Buyer, if appropriate, as may reasonably be required by Sellers,
Title Company, Escrow Agent or otherwise in order to effectuate the provisions
of this Agreement and the Closing of the transaction contemplated herein
(including, without limitation, for any Property located in Indiana, a
counterpart of the State required Sales Disclosure Form).
7.4 Actions by Escrow Agent. Provided that Escrow Agent shall not have received
written notice from Buyer or any Seller of the failure of any condition to the
Closing or of the termination of the Escrow and this Agreement, when Buyer and
Sellers have deposited into Escrow the documents and funds required by this
Agreement and Title Company is irrevocably and unconditionally committed to
issue the Owner's Title Policies in accordance with the terms hereof, Escrow
Agent shall, in the order and manner herein below indicated, take the following
actions:
7.4.1 Recording. Cause the Deeds and any other documents which the parties
hereto may mutually direct to be recorded in the applicable Official Records and
obtain conformed copies thereof for distribution to Buyer and Sellers;
7.4.2 Funds. Disburse all funds as follows:
7.4.2.1 pursuant to each "Closing Statement" (as hereinafter defined), retain
for Escrow Agent's own account all escrow fees and costs, disburse to Title
Company the fees and expenses incurred in connection with the issuance of the
Owner's Title Policies and disburse to any other persons or entities entitled
thereto the amount of any other Closing Costs;
7.4.2.2 disburse to Sellers an amount equal to the Purchase Price, less or plus
the net debit or credit to Sellers by reason of the prorations and allocations
of Closing Costs provided for herein; and
7.4.2.3 disburse to the party who deposited the same any remaining funds in the
possession of Escrow Agent after payments pursuant to Sections 7.4.2.1 and
7.4.2.2 above have been completed.
7.4.3 Delivery of Documents. Deliver: (a) to Sellers (i) two originals of all
documents deposited into Escrow (other than the Deeds the Non-Foreign Affidavits
and the Guaranty), (ii) one copy of the Guaranty, (iii) one copy of each
Non-Foreign Affidavit, and (iv) one conformed copy of each document recorded
pursuant to the terms hereof; and (b) to Buyer, (i) two originals of all
documents deposited into Escrow (other than the Deeds, the Non-Foreign
Affidavits and the Guaranty), (ii) the original Guaranty, (iii) the original
Non-Foreign Affidavits, and (iv) one conformed copy of each document recorded
pursuant to the terms hereof.
7.4.4 Owner's Title Policies. Cause Title Company to issue to Buyer the
Owner's Title Policies.
7.4.5 Reporting Requirements. The Escrow Agent shall comply with all applicable
federal, state and local reporting and withholding requirements relating to the
close of the transactions contemplated herein. Without limiting the generality
of the foregoing, to the extent the transactions contemplated by this Agreement
involve a real estate transaction within the purview of Section 6045 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the
Escrow Agent shall have sole responsibility to comply with the requirements of
Section 6045 of the Internal Revenue Code (and any similar requirements imposed
by state or local law). For purposes hereof, Sellers' tax identification numbers
shall be set forth on the Non-Foreign Affidavits. Escrow Agent shall defend,
indemnify and hold Buyer, Sellers and their counsel free and harmless from and
against any and all liability, claims, demands, damages and costs, including
reasonable attorney's fees and other litigation expenses, arising or resulting
from the failure or refusal of the Escrow Agent to comply with such reporting
requirements.
7.5 Prorations. The prorations set forth in this Section 7.5 shall be on a
Property-by-Property basis and not among, or between, Properties.
7.5.1 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 Buyer)
and Buyer 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 for review and approval by Buyer
(each, a "Proration Schedule") of the adjustments described in this Section 7.5
prior to the Closing. Such adjustments shall be paid by Buyer to the applicable
Seller (if the prorations result in a net credit to such Seller) or by such
Seller to Buyer (if the prorations result in a net credit to Buyer for such
Property), by increasing or reducing the cash to be paid by Buyer at the Closing
for such Property.
7.5.2 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 the Closing
Date and Buyer shall pay all such expenses that accrue from and after the
Closing Date.
7.5.3 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.
7.5.4 Real Estate Taxes. All real estate ad valorem, personal property or
similar taxes for a Property for years prior to the year in which the Closing
occurs (regardless of the year in which such taxes are due and payable) and all
penalties and interest thereon shall be paid at Closing by the applicable Seller
from the cash portion of the Purchase Price. 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 the calendar
year of the Closing, shall be prorated to the date of the Closing, based upon
actual days involved. By way of illustration, and not limitation, for Properties
located in Indiana, if the Closing were to occur in November 2005, the 2004
calendar year real estate and personal property taxes payable in 2005 would be
paid in full, with the 2005 calendar year real estate and personal property
taxes payable in 2006 being prorated to the Closing Date. 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 the Closing are not available at the Closing Date, the
proration shall be made using the most recent ascertainable assessed values and
tax rates, which proration shall be adjusted by Buyer and any applicable Sellers
on or before the first (1st) anniversary of the Closing Date outside of Escrow
when the actual assessed values and tax rates are ascertained. The proration of
real property taxes or installments of assessments shall be final and not
subject to re-adjustment after the first (1st) anniversary of the Closing Date;
provided, however, that with respect to any Property for which the parties
hereto have not received a final tax bill within eleven (11) months after the
Closing Date, such deadline shall be extended until the thirtieth (30th) day
after the date of receipt of such tax bill.
7.5.4.1 Buyer acknowledges that Sellers have filed or caused to be filed the
appeals identified on the Seller Information Schedule (collectively, the
"Appeals" and each, individually, an "Appeal") with respect to real estate ad
valorem or other similar property taxes applicable to the corresponding
Properties (collectively, the "Property Taxes"). If any such Appeals relate to
any Tax Year (as hereinafter defined) prior to the Tax Year in which the Closing
occurs, the Seller that filed such Appeals or caused such Appeals to be filed
shall be entitled, in such Seller's sole and absolute discretion, to continue to
pursue such Appeals after the Closing Date, and, in the event that such Appeals
are successful in reducing the amount of Property Taxes payable with respect to
any such prior Tax Year, such Seller shall be entitled to the full amount of any
rebate, refund or reduction (collectively, a "Refund") resulting from such
Appeals (and if such Refund is received by Buyer, then Buyer shall not deposit
such Refund but shall, instead, forward such Refund directly to such Seller)
less any amount owing to any Tenant, if any, that has paid a portion of such
tax. Sellers shall not be obligated to continue to pursue any Appeals with
respect to the Properties, including, without limitation, any Appeals that
relates to a Tax Year during or after the Tax Year in which Closing occurs.
7.5.4.2 If such Appeals relate to the Tax Year in which the Closing occurs,
then, prior to the Closing, the Seller that filed such Appeals or caused such
Appeals to be filed shall notify Buyer whether such Seller desires to continue
to process such Appeals from and after the Closing Date. If such Seller fails to
notify Buyer of its election to continue such Appeals, such Seller will be
deemed to have elected not to continue such Appeals from and after the Closing
Date and the provisions of Section 7.5.4.2(ii) below shall apply.
(i) If any Seller elects to continue any Appeal filed by or on behalf of such
Seller, then, from and after the Closing Date, such Seller agrees that it
will continue, at such Seller's sole cost and expense, to reasonably
process such Appeal to conclusion with the applicable taxing authority
(including any further appeals which such Seller deems reasonable to
pursue). In the event that such Appeal is successful in reducing the amount
of Property Taxes payable with respect to the Tax Year in which Closing
occurs, then Buyer and the Seller that filed such Appeal or caused such
Appeal to be filed shall share any Refund applicable to such Appeal on a
pro rata basis (in accordance with the number of days in the Tax Year of
Closing that each held title to the applicable Property) after first
reimbursing such Seller for its actual, reasonable and documented
third-party costs and expenses (collectively, the "Third-Party Costs")
incurred in connection with such Appeal. If Third-Party Costs equal or
exceed the amount of the Refund applicable to such Appeal, then such Seller
shall be entitled to the full amount of such Refund (and if such Refund is
received by Buyer, then Buyer shall not deposit such Refund but shall,
instead, forward such Refund directly to such Seller).
(ii) If any Seller does not elect to continue any Appeal filed by or on behalf
of such Seller, then, from and after the Closing Date, Buyer may continue,
in Buyer's sole and absolute discretion and at Buyer's sole cost and
expense, to process such Appeal to conclusion with the applicable taxing
authority (including any further appeals which Buyer deems reasonable to
pursue). In the event that such Appeal is successful in reducing the
amount of Property Taxes payable with respect to the Tax Year in which
Closing occurs, then Buyer and the Seller that filed such Appeal or caused
such Appeal to be filed shall share any Refund applicable to such Appeal
on a pro rata basis (in accordance with the number of days in the Tax Year
of Closing that each held title to the Property) after first reimbursing
each of Buyer and such Seller for their respective Third-Party Costs
incurred in connection with such Appeal. If Third-Party Costs equal or
exceed the amount of the Refund applicable to such Appeal, then such
Refund shall be applied to such Third-Party Costs on a pro rata basis,
with each of Buyer and such Seller receiving a portion of such Refund
equal to the product of (i) a fraction, the numerator of which is the
respective party's Third-Party Costs, and the denominator of which is the
total of both parties' Third-Party Costs, and (ii) the amount of such
Refund.
For purposes of this Section 7.5.4, the term "Tax Year" shall mean each 12-month
period for which the applicable taxing authority assesses Property Taxes, which
may or may not be a calendar year.
7.5.5 Assumed Service Contracts. Buyer shall assume at the Closing the
obligations under the Assumed Service Contracts; provided, however, that
operating expenses shall be prorated under Section 7.5.2 hereof.
7.5.6 Leases.
7.5.6.1 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). Buyer 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 Buyer shall pay to such Seller such accrued Uncollected Rents
as and when collected by Buyer (after first deducting therefrom amounts
necessary to satisfy rental obligations owed to Buyer under the applicable Lease
and Buyer's reasonable costs of collection). Buyer agrees to bill Tenants of the
Properties for all Uncollected Rents and to take reasonable actions (without
suit) 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 so
long as such Tenant has vacated the Property, which right shall include, without
limitation, the right to continue or commence legal actions or proceedings
against any such Tenant and the delivery of the Assignments of Leases shall not
constitute a waiver by any Seller of such right. Such Uncollected Rent shall not
be prorated, but when paid to Buyer shall be delivered by Buyer to such Seller,
less the costs and expenses incurred by Buyer in collecting the same (provided
that all current rental obligations owed to Buyer have then been paid with
respect to such Leases). For a period of one (1) year after the Closing Date,
Buyer agrees to cooperate with each Seller in connection with all efforts by
such Seller to collect such Uncollected Rents and to take all steps as may be
necessary to carry out the intention of the foregoing, including, without
limitation, the delivery to each Seller, within seven (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 Buyer's obligation to
cooperate with each Seller pursuant to this sentence shall not obligate Buyer to
terminate any Tenant Lease with an existing Tenant or evict any existing Tenant
from a Property (and shall not result in any cost to Buyer to the extent not
attributable to rents allocable to the period from and after the Closing).
7.5.6.2 At the Closing, with respect to each Property, Buyer shall receive a
credit against the applicable portion of the Purchase Price in an amount equal
to the received and unapplied balance of all cash (or cash equivalent) Tenant
deposits, including, but not limited to, security, damage or other refundable
deposits 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 portion of the Purchase Price and shall not be
transferred by such Seller pursuant to this Agreement (or any of the documents
delivered at Closing), but the obligation with respect to the Tenant Security
Deposit Balance nonetheless shall be assumed by Buyer. 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.
7.5.6.3 With respect to operating expenses, taxes, utility charges, other
operating cost pass-throughs, retroactive rental escalations, sums or charges
payable by Tenants under the Leases for a Property, to the extent that the
applicable Seller has received as of the Closing payments allocable to periods
subsequent to the Closing, the same shall be properly prorated with an
adjustment in favor of Buyer, and Buyer shall receive a credit therefor at
Closing for such Property. With respect to any payments received by Buyer after
the Closing allocable to a Seller prior to Closing, Buyer shall promptly pay the
same to the applicable Seller.
7.5.7 Insurance. No proration shall be made in relation to insurance premiums
and insurance policies will not be assigned to Buyer.
7.5.8 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.
7.5.9 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) Buyer 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.
7.5.10 Leasing Commissions. Leasing commissions and locator's and finder's fees
relating to Leases and including commissions and locator's and finder's fees
payable with respect to renewals or extensions (if applicable) shall be paid by
Sellers with respect to the period prior to Closing and by Buyer with respect to
the period from and after Closing; provided, however, that Sellers shall
terminate as of the Closing Date any such agreements as Buyer requests.
7.5.11 Post Closing Adjustments. In general, and except as provided in this
Agreement 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 Buyer 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. Buyer or a Seller may request
that Buyer and such Seller undertake to re-adjust any item on the Proration
Schedule (or any item omitted therefrom) in accordance with the provisions of
this Section 7.5; provided, however, that except as set forth in Section
7.5.4.1, no party shall have any obligation to re-adjust any items for any
Property after the first (1st) anniversary of the Closing Date.
7.5.12 Closing Statement. At least six (6) Business Days prior to the Closing
Date, Escrow Agent shall deliver to each of the parties for their review and
approval a preliminary closing statement (each, a "Preliminary Closing
Statement") for each Property setting forth: (a) the proration amounts allocable
to each of the applicable parties pursuant to this Section 7.5 (as set forth in
the applicable agreed upon Proration Schedule); and (b) the Closing Costs
allocable to each of the applicable parties pursuant to Section 7.6 hereof.
Based on each of the party's comments, if any, regarding each Preliminary
Closing Statement, Escrow Agent shall revise each Preliminary Closing Statement
and deliver a final, signed version of a closing statement for each Property to
each of the applicable parties at the Closing (each, a "Closing Statement").
7.5.13 Survival. The provisions of this Section 7.5 shall survive the Closing
and delivery of the Deeds to Buyer.
7.6 Closing Costs. With respect to each Property, each party shall pay its own
costs and expenses arising in connection with the Closing (including, without
limitation, its own attorneys' and advisors' fees, charges and disbursements),
except the following costs (the "Closing Costs"), which shall be allocated
between the parties with respect to each Property as follows:
7.6.1 all documentary transfer, stamp, sales and other taxes related to the
transfer of a Property, which shall be paid (a) by the Buyer for each Property
located in Louisiana, and (b) by the applicable Seller for each Property located
in North Carolina, Indiana or Texas (provided that with respect to any Property
located in Virginia, all grantor's tax and any state and/or local recordation
tax shall be paid half by the applicable Seller and half by the Buyer);
7.6.2 Escrow Agent's escrow fees and costs for a Property, which shall be paid
(a) by the applicable Seller for each Property located in North Carolina or
Texas, and (b) half by the applicable Seller and half by the Buyer for each
Property located in Virginia, Louisiana or Indiana;
7.6.3 the cost of a Survey and its Survey Certification, which shall be paid (a)
by the Buyer for each Property located in Louisiana or Virginia, and (b) by the
applicable Seller for each Property located in North Carolina, Indiana or Texas;
7.6.4 the cost of the Owner's Title Policy for a Property (and all permitted
endorsements and amendments thereto), which shall be paid (a) by the Buyer for
each Property located in Louisiana, North Carolina or Virginia, and (b) by the
applicable Seller for each Property located in Indiana and Texas (provided that
all endorsements and amendments to any Owner's Title Policy for any Property
located in Indiana or Texas shall be paid by the Buyer unless, in the case of
any Property located in Indiana, the endorsement is issued as part of Sellers'
Response, in which case such endorsement shall be paid by the applicable
Seller);
7.6.5 all recording fees for a Property, which shall be paid by the Buyer of
such Property; and
7.6.6 all Lender Fees (subject to reduction from the Purchase Price in
accordance with the terms of Section 2 hereof), which shall be paid by Buyer.
7.7 Deliveries Outside of Escrow. Each Seller shall deliver possession of the
Property owned by such Seller, subject only to the applicable Leases and the
other applicable Permitted Exceptions, to Buyer by leaving such items at its
Property upon the Closing. Further, each Seller hereby covenants and agrees to
deliver to Buyer (and, to the extent stated below, Buyer hereby covenants and
agrees to deliver to Seller), on or prior to the Closing, the following items
relating to the Property owned by such Seller:
7.7.1 Intangible Property. The applicable Intangible Property, including,
without limitation, the applicable original Property Documents;
7.7.2 Personal Property. The applicable Personal Property, including,
without limitation, any and all keys, pass cards, remote controls, security
codes, unlicensed computer software and other devices relating to access to the
applicable Improvements; and
7.7.3 Notices.
7.7.3.1 Notice to Tenants. A letter for each Property (and for each Property
located in the State of Texas in the form attached hereto as Exhibit "J"), duly
executed by the Seller of such Property (and the Buyer for Properties located in
the State of Indiana and the State of Texas), dated as of the Closing Date and
addressed to all Tenants of such Property, informing such Tenants of the
transfer of such Property and the assignment of their Leases to (and assumption
of their Leases by) Buyer, together with an instruction to pay all amounts due
or to become due under such Leases to Buyer; and
7.7.3.2 Assumed Service Contracts Notice. A letter for each Property to all of
the vendors of the Assumed Service Contracts for such Property, duly executed by
the Seller of such Property, dated as of the Closing Date and addressed to the
Assumed Service Contract vendors of such Property, informing such vendors of the
assignment of their Assumed Service Contracts to Buyer.
7.8 Access to Records. Notwithstanding anything to the contrary contained
herein, Buyer agrees, for a period of not less than three (3) years after the
Closing (the "Records Hold Period"), to (a) provide and allow Sellers reasonable
access to Sellers' Property-Related Files and Records for purposes of inspection
and copying thereof, and (b) reasonably maintain and preserve Sellers'
Property-Related Files and Records. If at any time after the Records Hold
Period, Buyer desires to dispose of any Sellers' Property-Related Files and
Records, Buyer must first provide Sellers prior written notice (the "Records
Disposal Notice"). Sellers 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 Sellers'
Property-Related Files and Records that Sellers desire to retain. Buyer agrees
to (i) include the covenants of this Section 7.8 pertaining to Sellers'
Property-Related Files and Records in any management contract for any Property
(and to bind the manager thereunder to such covenants), and (ii) bind any future
purchaser of any Property to the covenants of this Section 7.8 pertaining to
Sellers' Property-Related Files and Records. The provisions of this Section 7.8
shall survive the Closing and delivery of the Deeds to Buyer.
8. SELLERS' REPRESENTATIONS AND WARRANTIES. Each Seller represents and warrants
to and agrees with Buyer, as of the Execution Date and as of the Closing Date,
as follows:
8.1 Due Organization. Such Seller is duly organized and existing in good
standing under the laws of the State of its formation.
8.2 Sellers' Authority; Validity of Agreements. Subject to (a) any consent that
may be required from any party in connection with the payoff of the Loan
Obligations as described in Section 6.5 hereof and (b) in the case of each
Seller which owns or controls a Public Property, the effectuation of the Public
Partnership Amendments related thereto, such Seller has full right, power and
authority to sell its Property to Buyer as provided in this Agreement and to
carry out its obligations hereunder. The individual(s) executing this Agreement
and the instruments referenced herein on behalf of such Seller have the legal
power, right and actual authority to bind such Seller to the terms hereof and
thereof. Subject to the effectuation of any applicable Public Partnership
Amendments, this Agreement is, and all other instruments, documents and
agreements to be executed and delivered by such Seller in connection with this
Agreement shall be, duly authorized, executed and delivered by such Seller and
shall be valid, binding and enforceable obligations of such Seller (except as
enforcement may be limited by bankruptcy, insolvency or similar laws) and do
not, and as of the Closing Date will not, violate any provisions of any
agreement or judicial order to which such Seller is a party or to which such
Seller or its Property is subject.
8.3 Leases. Subject to the terms of Section 10.2 hereof, the portion of the
schedule attached hereto as Exhibit "H" that relates to such Seller's Property
is in all material respects a true, correct and complete list of all of the
Leases in effect as of September 8, 2005 at such Property. Such Seller will
provide an updated rent roll at the Closing to be attached as Exhibit A to its
Assignment of Leases; and such Seller hereby represents and warrants to and
agrees with Buyer, as of the Closing Date, that such updated rent roll is (or
will be) in all material respects a true, correct and complete list of all of
the Leases in effect as of the Closing Date at such Seller's Property. Other
than such Leases (together with all amendments, modifications and guarantees
thereof), such Seller has not directly entered into any leases or subleases of
its Property. To such "Seller's Knowledge" (as hereinafter defined), there
exists no default or event which, with the giving of notice or passage of time,
or both, would constitute a default by such Seller or any of the Tenants of such
Seller's Property.
8.4 Contracts. Subject to the terms of Section 10.2 hereof, except as set forth
on the schedule attached hereto as Exhibit "D-2", neither such Seller nor any of
its agents has executed any service, maintenance, repair, management, supply or
other contracts (including, without limitation, any Service Contracts) affecting
such Seller's Property which would be binding on Buyer subsequent to the
Closing. Any existing property management agreement affecting such Seller's
Property will be terminated by such Seller at Closing at such Seller's sole cost
and expense. To such Seller's Knowledge, (a) such Seller is not in default under
any Service Contract affecting its Property, and (b) there exists no default or
event which, with the giving of notice or passage of time, or both, would
constitute a default by any of the other parties to the Service Contracts
affecting its Property.
8.5 Violations of Laws. Such Seller has not received any written notices of any
material violations of any laws, ordinances, orders or requirements of any
governmental authority, agency or officer having jurisdiction against or
affecting such Seller's Property, which have not previously been complied with.
8.6 Litigation. To such Seller's Knowledge, (a) there are no actions,
investigations, suits or proceedings (other than tax appeals or protests)
pending or threatened that have a material adverse effect on such Seller's
Property, or the ownership or operation thereof, and (b) there are no judgments,
orders, awards or decrees currently in effect against such Seller with respect
to the ownership or operation of its Property which have not been fully
discharged prior to the Execution Date.
8.7 Zoning and Condemnation. To such Seller's Knowledge, there are no pending
proceedings to alter or restrict the zoning or other use restrictions applicable
to such Seller's Property, or to condemn all or any portion of such Seller's
Property by eminent domain proceedings or otherwise.
8.8 Environmental. To such Seller's Knowledge, except as may be disclosed in the
reports identified on Exhibit "I" attached hereto that relate to such Seller's
Property, such Seller has no information regarding the presence of any of the
following substances at its Property: chemicals, pollutants, contaminants,
wastes, toxic substances or petroleum products defined in, governed under or
regulated pursuant to any applicable federal, state or local laws or regulations
relating to pollution, the protection of human health or the environment.
8.9 Employees. Such Seller has no employees at its Property.
8.10 Personal Property. Such Seller owns all of its Personal Property, free
and clear of any liens or encumbrances.
8.11 Property Documents. All books, records and other information prepared by
such Seller or its property manager and provided to or made available to Buyer
by such Seller were prepared by or for such Seller in the ordinary course of its
business and are the same books, records and other information used and relied
upon by such Seller in its operation of its Property. All of such Seller's
books, files and records related to its Property (other than proprietary
information) were delivered to or made available to Buyer for review.
8.12 Seller's Knowledge. As used herein, the term "Seller's Knowledge" or "such
Seller's Knowledge" shall mean the actual knowledge, without any investigation
or inquiry, of Lee Ryder and Tracey Logan.
8.13 Survival. All of the representations, warranties and agreements of each
Seller set forth in this Agreement shall be true upon the Execution Date, shall
be deemed to be repeated at and as of the Closing Date (subject to the
provisions of Section 10.2 hereof) and shall survive the delivery of the Deeds
and the Closing for a period of twelve (12) months ("Survival Period"), except
in the case of fraud or willful misrepresentation, in which case such
representations and warranties shall survive independent of this limitation;
provided, however, that for matters as to which Buyer has given Sellers written
notice within the Survival Period, the representation and warranties of Sellers
that are related to the matters in such written notice shall survive until all
liabilities arising out of the matters described in such written notice have
been satisfied. Each Seller shall be liable only for the breach of its own
representations and warranties set forth herein. Further, the liability for each
Seller for breach of its representations and warranties set forth herein shall
be limited to, and capped at, $500,000.00 for such Seller's Property for which a
breach of such Seller's representations and warranties occurred, on a
Property-by-Property basis if a Seller is selling more than one Property. Such
cap on liability shall apply for any individual breach or in the aggregate for
all breaches of such Seller's representations and warranties with respect to
each such Property.
9. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Sellers, as of the Execution Date
and as of the Closing Date, as follows:
9.1 Due Organization. Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
9.2 Buyer's Authority; Validity of Agreements. Subject to any consent that may
be required from any party in connection with the payoff of the Loan Obligations
as described in Section 6.5 hereof, Buyer has full right, power and authority to
purchase and acquire the Properties from each Seller as provided in this
Agreement and to carry out its obligations hereunder. The individual(s)
executing this Agreement and the instruments referenced herein on behalf of
Buyer have the legal power, right and actual authority to bind Buyer to the
terms hereof and thereof. This Agreement is, and all instruments, documents and
agreements to be executed and delivered by Buyer in connection with this
Agreement shall be, duly authorized, executed and delivered by Buyer and shall
be valid, binding and enforceable obligations of Buyer (except as enforcement
may be limited by bankruptcy, insolvency or similar laws) and do not, and as of
the Closing Date will not, violate any provision of any agreement or judicial
order to which Buyer is a party or to which Buyer is subject.
9.3 Prohibited Person. Buyer is not a "Prohibited Person" (as hereinafter
defined. To Buyer's knowledge, none of its investors, affiliates, brokers or
other agents (if any), acting or benefiting in any capacity in connection with
this Agreement is a Prohibited Person. The funds or other assets Buyer will
transfer to Sellers under to this Agreement are not the property of, and are not
beneficially owned, directly or indirectly by, a Prohibited Person. The funds or
other assets Buyer will transfer to Sellers under this Agreement are not the
proceeds of specified unlawful activity as defined by 18 U.S.C. ss. 1956(c)(7).
As used herein, the term "Prohibited Person" shall mean 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.
9.4 Survival. All of the representations, warranties and agreements of Buyer set
forth in this Agreement shall be true upon the Execution Date, shall be deemed
to be repeated at and as of the Closing Date (except as otherwise set forth in
writing to Sellers) and shall survive the delivery of the Deeds and the Closing
for the Survival Period, except in the case of fraud or willful
misrepresentation, in which case such representations and warranties shall
survive independent of this limitation; provided, however, that for matters as
to which any Seller has given Buyer written notice within the Survival Period,
the representation and warranties of Buyer that are related to the matters in
such written notice shall survive until all liabilities arising out of the
matters described in such written notice have been satisfied.
10. ADDITIONAL COVENANTS AND AGREEMENTS.
10.1 As-Is. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE AS FOLLOWS: (A) BUYER IS A
SOPHISTICATED PURCHASER WHO IS FAMILIAR WITH THESE TYPES OF PROPERTIES; (B)
EXCEPT AS MAY BE SPECIFICALLY SET FORTH IN THIS AGREEMENT, NEITHER ANY SELLER
NOR ANY OF ITS AGENTS, REPRESENTATIVES, BROKERS, OFFICERS, DIRECTORS,
SHAREHOLDERS, OR EMPLOYEES HAS MADE OR WILL MAKE ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED,
WITH RESPECT TO ITS PROPERTY; (C) THE PROPERTIES ARE BEING SOLD TO BUYER IN
THEIR PRESENT "AS IS, WHERE IS" CONDITION "WITH ALL FAULTS;" AND (D) NO SELLER
HAS MADE (AND BUYER EXPRESSLY WAIVES) ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PROPERTY. SUBJECT TO THE TERMS
HEREOF, BUYER WILL BE AFFORDED THE OPPORTUNITY TO MAKE ANY AND ALL INSPECTIONS
OF THE PROPERTIES AND SUCH RELATED MATTERS AS BUYER MAY REASONABLY DESIRE AND,
ACCORDINGLY, BUYER WILL RELY SOLELY ON ITS OWN DUE DILIGENCE AND INVESTIGATIONS
IN PURCHASING THE PROPERTIES.
10.2 Changes in Conditions. If, prior to the Closing, any Seller becomes aware
that any representation or warranty of such Seller set forth in this Agreement
which was true and correct on the Execution Date has become incorrect due to
changes in conditions outside of the control of such Seller or the discovery by
such Seller of information of which such Seller was unaware on the Execution
Date, the same shall not constitute a breach by such Seller of any of its
representations or warranties set forth herein or be deemed to be a default by
such Seller in its obligations under this Agreement, but such Seller shall
promptly notify Buyer thereof and the representations and warranties set forth
herein which are to be remade and reaffirmed by such Seller at the Closing shall
be supplemented by such new information. Buyer may, in its sole discretion,
elect within five (5) Business Days following receipt of any notification from
any Seller pursuant to this Section 10.2 of any material change in any of such
Seller's representations and warranties, to either (a) terminate this Agreement
(in which case Sellers shall pay any cancellation charges of Escrow Agent and
Title Company, if any, and no party shall thereafter have any rights or
obligations to any other hereunder, other than pursuant to any provision hereof
which expressly survives the termination of this Agreement), or (b) proceed to a
timely Closing whereupon such modified representations shall be deemed
acceptable to Buyer. In the event that Buyer fails to make such election on a
timely basis, then Buyer shall be deemed to have elected to terminate this
Agreement, in which case the provisions of clause (a) above shall apply.
10.3 Exclusive Negotiations. Each Seller shall (a) remove its Property from the
market, and (b) cease and refrain from any and all negotiations with any other
prospective optionees or purchasers of its Property.
10.4 Property Management. Any existing property management agreement affecting
any Property shall be terminated at Closing at Sellers' sole cost and expense.
Notwithstanding anything to the contrary contained in the partnership agreement
for SH Partners, L.P. ("Buyer's Partnership Agreement"), at the Closing, Buyer
shall enter into one or more new property management agreements with NHPMN
Management, LLC, a Delaware limited liability company or its affiliate (the
"Manager"), as property manager for the Properties, each in the form of Exhibit
J attached to Buyer's Partnership Agreement (the "Property Management
Agreements"); provided, however, that the Property Management Agreements shall
include a management fee of 3.65% and shall include any provisions necessary
under local law for the jurisdiction in which each Property is located. Buyer
hereby acknowledges and agrees that each of its partners have consented (or
hereby consent) to the terms of this Section 10.4.
11. RISK OF LOSS AND ONGOING OPERATIONS.
11.1 Condemnation. If, prior to the Closing, all or any "Material Portion" (as
hereinafter defined) of any Property is taken by condemnation or eminent domain
(or is the subject of a pending or contemplated taking which has not been
consummated), the Seller of such Property shall immediately notify Buyer of such
fact. In such event, Buyer shall have the option to terminate this Agreement
upon written notice to Sellers given not later than thirty (30) days after
receipt of such notice from such Seller. Upon such termination, the parties
shall equally share the cancellation charges of Escrow Agent and Title Company,
if any, and no party shall have any further rights or obligations hereunder,
other than pursuant to any provision hereof which expressly survives the
termination of this Agreement. Buyer shall have no right to terminate this
Agreement as a result of any taking of any portion of any Property that is not a
Material Portion. If Buyer does not elect or has no right to terminate this
Agreement, (a) the applicable Seller shall assign and turn over to Buyer, and
Buyer shall be entitled to receive and keep, all awards that have been or that
may thereafter be made for the taking by condemnation and any insurance proceeds
that may thereafter be made for such taking, (b) Buyer shall receive a credit
against the portion of the Purchase Price applicable to such Property for the
cost of any repair and/or restoration not covered by such awards and/or
insurance (whether by reason of deductible, co-insurance, uninsured casualty or
otherwise) and (c) Buyer shall be deemed to have accepted such Property subject
to the taking without any further reduction in the Purchase Price (other than
the credit described in clause (b) above). As used herein, the term "Material
Portion" shall mean, with respect to each Property, any portion of such Property
having a value in excess of $350,000.00.
11.2 Casualty. Prior to the Closing and notwithstanding the pendency of this
Agreement, the entire risk of loss or damage by earthquake, hurricane, tornado,
flood, landslide, fire or other casualty shall be borne and assumed by Sellers.
If, prior to the Closing, any "Material Damage" (as hereinafter defined) occurs
to any portion of any Property as a result of any earthquake, hurricane,
tornado, flood, landslide, fire or other casualty, the Seller of such Property
shall immediately notify Buyer of such fact. In such event, Buyer shall have the
option to terminate this Agreement in the same manner as provided in Section
11.1 above upon written notice to Sellers given not later than thirty (30) days
after receipt of any such notice from such Seller. Buyer shall have no right to
terminate this Agreement as a result of any damage or destruction of any portion
of any Property that does not constitute Material Damage. If Buyer does not
elect or has no right to terminate this Agreement, (a) the applicable Seller
shall assign and turn over, and Buyer shall be entitled to receive and keep, all
insurance proceeds that have been or that may thereafter be payable with respect
to such damage or destruction (which shall then be repaired or not by Buyer),
(b) Buyer shall receive a credit against the portion of the Purchase Price
applicable to such Property for the cost of any repair and/or restoration not
covered by such insurance (whether by reason of deductible, co-insurance,
uninsured casualty or otherwise), and (c) the parties shall proceed to the
Closing pursuant to the terms hereof without modification of the terms of this
Agreement. If Buyer does not elect or has no right to terminate this Agreement
by reason of any casualty, Buyer shall have the right to participate in any
adjustment of the insurance claim and Buyer shall be deemed to have accepted
such Property subject to the damage or destruction without reduction in the
Purchase Price. As used herein, the term "Material Damage" shall mean, with
respect to each Property, damage or destruction the cost of repair of which
exceeds $350,000.00.
11.3 Ongoing Operations. From the Execution Date until the Closing Date, each
Seller shall, at such Seller's sole cost and expense:
11.3.1 Carry on its business and activities relating to its Property, including
leasing, maintaining and operating such Property, in the same manner as it did
before the Execution Date;
11.3.2 Perform all of its obligations under the Leases and Service
Contracts applicable to its Property and other agreements that may affect its
Property;
11.3.3 Without the prior written consent of Buyer, which shall not be
unreasonably withheld, conditioned or delayed, not supplement or amend any
existing contract or enter into any new contract that will be an obligation
affecting its Property subsequent to the Closing, except (a) Leases entered into
in the ordinary course of business using such Seller's standard form lease and
at market rates, and (b) contracts entered into in the ordinary course of
business that are terminable without cause on 30-days' notice and without
penalty or cancellation fee;
11.3.4 Continue to maintain insurance as maintained by such Seller prior to such
date and in accordance with such Seller's current business practices;
11.3.5 Afford Buyer and its representatives reasonable access to the Property
owned by such Seller and to such Seller's books, records and files relating to
such Property (other than proprietary information), at reasonable times,
including but not limited to the Closing Date;
11.3.6 Not voluntarily grant or transfer or permit the grant or transfer of any
interest in the Property owned by such Seller, including any air rights;
11.3.7 Promptly advise Buyer of any litigation or governmental proceeding to
which such Seller becomes a party directly affecting its Property; and
11.3.8 Promptly forward to Buyer any written notice received by such Seller from
any governmental agency in connection with any actual or alleged violation of
any law or regulation applicable to its Property, which notice shall be given
within forty-eight (48) hours after the receipt thereof by such Seller, and in
all events, prior to the Closing.
12. REMEDIES.
12.1 Liquidated Damages. IN THE EVENT THAT THE ESCROW AND THIS TRANSACTION FAIL
TO CLOSE AS A RESULT OF THE DEFAULT OF BUYER IN THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT, BUYER AND SELLERS AGREE THAT SELLERS' ACTUAL
DAMAGES WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX. THE PARTIES
THEREFORE AGREE THAT IN THE EVENT THAT THE ESCROW AND THIS TRANSACTION FAIL TO
CLOSE AS A RESULT OF THE DEFAULT OF BUYER IN THE PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER, SELLERS, AS SELLERS' SOLE AND EXCLUSIVE REMEDY, ARE ENTITLED TO
LIQUIDATED DAMAGES IN THE AMOUNT OF $1,100,000. IN THE EVENT THAT THE ESCROW
FAILS TO CLOSE AS A RESULT OF BUYER'S DEFAULT, THEN (A) THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF BUYER AND SELLERS HEREUNDER AND THE ESCROW CREATED
HEREBY SHALL TERMINATE, (B) ESCROW AGENT SHALL, AND IS HEREBY AUTHORIZED AND
INSTRUCTED TO, RETURN PROMPTLY TO BUYER AND SELLERS ALL DOCUMENTS AND
INSTRUMENTS TO THE PARTIES WHO DEPOSITED THE SAME, (C) BUYER SHALL IMMEDIATELY
DELIVER SUCH AMOUNT TO SELLERS, AND THE SAME SHALL BE THE FULL, AGREED AND
LIQUIDATED DAMAGES, AND (D) ALL TITLE AND ESCROW CANCELLATION CHARGES, IF ANY,
SHALL BE CHARGED TO BUYER; PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT LIMIT
SELLERS' RIGHTS OR REMEDIES WITH RESPECT TO (1) THE OBLIGATIONS OF BUYER UNDER
SECTIONS 4.1.2, 13 AND 14.16 HEREOF AND (2) THOSE RIGHTS AND OBLIGATIONS THAT,
BY THEIR TERMS, SURVIVE THE TERMINATION OF THIS AGREEMENT.
SELLERS AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THIS SECTION 12, AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO
BE BOUND BY ITS TERMS.
__________ __________
Sellers' Buyer's Initials Initials 12.2 Default by Sellers. In the event that
the Closing fails to occur as a result of the default of any Seller in the
performance of its obligations under this Agreement, then, upon notice by Buyer
to Sellers and Escrow Agent to that effect, Buyer shall, as its sole remedy,
elect to either (i) terminate this Agreement, in which event Sellers shall
reimburse Buyer for its reasonable out-of-pocket expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements) incurred in
connection with the negotiation of this Agreement and Buyer's due diligence
efforts (provided that the amount of such reimbursement shall not exceed
$100,000.00 with respect to each Property) or (ii) seek the specific performance
of this Agreement. Notwithstanding anything to the contrary contained herein,
each Seller shall not be in default with respect to any of its obligations
hereunder unless and until (y) it receives written notice from Buyer specifying
such default and (z) it fails to cure such default within five (5) Business Days
after receipt of such notice. The foregoing shall not limit Buyer's rights or
remedies pursuant to Sections 13 and 14.16 hereof and those rights and
obligations that, by their terms, survive termination of this Agreement.
13. BROKERS.
Buyer and Sellers each hereby represent, warrant to and agree with
each other that it has not had, and shall not have, any dealings with any third
party to whom the payment of any broker's fee, finder's fee, commission or other
similar compensation shall or may become due or payable in connection with the
transaction contemplated hereby. Sellers shall indemnify, defend, protect and
hold Buyer harmless from and against any and all Claims incurred by Buyer by
reason of any breach or inaccuracy of the representation, warranty and agreement
of Sellers contained in this Section 13. Buyer shall indemnify, defend, protect
and hold each Seller harmless from and against any and all Claims incurred by
such Seller by reason of any breach or inaccuracy of the representation,
warranty and agreement of Buyer contained in this Section 13. The provisions of
this Section 13 shall survive the Closing or earlier termination of this
Agreement.
14. MISCELLANEOUS PROVISIONS.
14.1 Governing Law. Each portion of this Agreement relating to any Property (and
the legal relations between the parties hereto related to such Property) shall
be governed by and construed and enforced in accordance with the laws of the
State in which such Property is located, without regard to its principles of
conflicts of law. Any portion of this Agreement to the extent not specifically
relating to any Property shall be governed by and construed and enforced in
accordance with the laws of the State of Virginia, without regard to its
principles of conflicts of law.
14.2 Entire Agreement. This Agreement, including the exhibits and schedules
attached hereto, constitutes the entire agreement between Buyer and Sellers
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, letters of intent, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements, express or implied, made to any party by any other party in
connection with the subject matter hereof except as specifically set forth
herein or in the documents delivered pursuant hereto or in connection herewith.
14.3 Modification; Waiver. No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
14.4 Notices. All notices, consents, requests, reports, demands or other
communications hereunder (collectively, "Notices") shall be in writing and may
be given personally, by registered or certified mail, by telecopy or by Federal
Express (or other reputable overnight delivery service) as follows:
To Buyer: California State Teachers' Retirement System
c/o Heitman Capital Management LLC
......191 North Wacker Drive, Suite 2500
......Chicago, Illinois 60606
......Attention: Mr. Howard J. Edelman
......Telephone: (312) 855-6547
......Telecopy: (312) 541-6738
With A Copy To:...Cox, Castle & Nicholson LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: John Kuhl, Esq.
Telephone: (310) 284-2267
Telecopy: (310) 277-7889
To Sellers: c/o AIMCO Properties, L.P.
Stanford Place 3
4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado 80237
Attention: Mr. Randy Fein and Trent Johnson, Esq.
......Telephone: (303) 691-4460 and (303) 691- 4348
Telecopy: (720) 200-6881 and (303) 757-8735
With A Copy To: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Meryl K. Chae, Esq.
Telephone: (213) 687-5035
Telecopy: (213) 621-5035
To Escrow Agent: Stewart Title Guaranty Company
1980 Post Oak Boulevard, Suite 610
......Houston, Texas 77056
......Attention: Ms. Wendy Howell
......Telephone: (800) 729-1906
Telecopy: (713) 552-1703
or to such other address or such other person as the addressee party shall have
last designated by notice to the other parties. All Notices shall be deemed to
have been given when received. All Notices given by telecopy shall be followed
by the delivery of a hard copy of such Notice, provided that such Notice shall
be deemed to have been given when received by telecopy.
14.5 Expenses. Subject to the provision for payment of the Closing Costs in
accordance with the terms of Section 7.6 hereof and any other provision of this
Agreement, whether or not the transaction contemplated by this Agreement shall
be consummated, all fees and expenses incurred by any party hereto in connection
with this Agreement shall be borne by such party.
14.6 Assignment. Neither all nor any portion of any party's interest under this
Agreement may be sold, assigned, encumbered, conveyed, or otherwise transferred,
whether directly or indirectly, voluntarily or involuntarily, or by operation of
law or otherwise (including, without limitation, by a transfer of interests in
such party) (collectively, a "Transfer"), without the prior written consent of
the each other party hereto, which consent may be granted or denied in its sole
and absolute discretion. Any attempted Transfer without such consent shall be
null and void. Notwithstanding the foregoing, Buyer shall Transfer all or any
portion of this Agreement or its rights hereunder or to delegate any duties or
obligations arising under this Agreement, voluntarily, involuntarily or by
operation of law, without the need for Sellers' consent, to SH Partners, L.P. or
any subsidiary of (wholly-owned, directly or indirectly by) SH Partners, L.P. No
Transfer, whether with or without consent, shall operate to release the
transferring party from, or alter such party's primary liability to perform, its
obligations under this Agreement.
14.7 Severability. Any provision or part of this Agreement which is invalid or
unenforceable in any situation in any jurisdiction shall, as to such situation
and such jurisdiction, be ineffective only to the extent of such invalidity and
shall not affect the enforceability of the remaining provisions hereof or the
validity or enforceability of any such provision in any other situation or in
any other jurisdiction.
14.8 Successors and Assigns; Third Parties. Subject to and without waiver of the
provisions of Section 14.6 hereof, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors and assigns. Except as specifically
set forth or referred to herein, nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person or entity, other than
the parties hereto and their successors or permitted assigns, any rights or
remedies under or by reason of this Agreement.
14.9 Execution of Documents and Funding by Buyer. Sellers understand that for
administrative reasons, Buyer requires (a) up to three (3) business days to sign
any document after such document has been submitted to Buyer for signature and
an additional two (2) business days to deliver such document into escrow; and
(b) up to five (5) business days after all documents have been signed by all
parties and all other conditions to Closing have been satisfied to cause funds
to be transferred into escrow, which funds shall be deposited by Buyer into the
Escrow Agent's account at State Street Bank at the opening of business on the
Closing Date. All closing documents (other than notices to be delivered by
Buyer, including, without limitation, notices in connection with Buyer's due
diligence review of the Properties and any documents which shall be executed by
Buyer's advisor or Buyer's counsel and may be delivered by facsimile) to be
executed by Buyer shall be agreed to and prepared in final execution form
(facsimile transmission and/or counterparts shall not be execution form) and
received by Buyer to allow for compliance with the foregoing schedule. In the
event any of the foregoing conditions are not complied with in accordance with
the foregoing schedule, the Closing Date shall be automatically extended by the
number of days necessary to allow Buyer the time periods set forth above for the
execution and delivery of documents and the transfer of funds.
14.10 Headings. The Section headings of this Agreement are for convenience of
reference only and shall not be deemed to modify, explain, restrict, alter or
affect the meaning or interpretation of any provision hereof.
14.11 Time of Essence. Time shall be of the essence with respect to all matters
contemplated by this Agreement.
14.12 Further Assurances. In addition to the actions recited herein and
contemplated to be performed, executed, and/or delivered by Sellers and Buyer,
Sellers and Buyer agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered at the Closing or after the Closing any and
all such further acts, instruments, deeds and assurances as may be reasonably
required to consummate the transaction contemplated hereby.
14.13 Number and Gender. Whenever the singular number is used, and when required
by the context, the same includes the plural, and the masculine gender includes
the feminine and neuter genders.
14.14 Construction. This Agreement shall not be construed more strictly against
one party hereto than against any other party hereto merely by virtue of the
fact that it may have been prepared by counsel for one of the parties.
14.15 Exhibits and Schedules. All exhibits and schedules attached hereto are
hereby incorporated by reference as though set out in full herein.
14.16 Attorneys' Fees. In the event that any party hereto brings an action or
proceeding against any other party to enforce or interpret any of the covenants,
conditions, agreements or provisions of this Agreement, the prevailing party in
such action or proceeding shall be entitled to recover all costs and expenses of
such action or proceeding, including, without limitation, attorneys' fees,
charges, disbursements and the fees and costs of expert witnesses.
14.17 Business Days. As used herein, the term "Business Day" shall mean a day
that is not a Saturday, Sunday or legal holiday. In the event that the date for
the performance of any covenant or obligation under this Agreement shall fall on
a Saturday, Sunday or legal holiday, the date for performance thereof shall be
extended to the next Business Day.
14.18 Early Termination. In the event that this Agreement is terminated pursuant
to the terms hereof, this Agreement and all of the provisions hereof shall be of
no further force or effect and no party shall have any further rights or
obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement.
14.19 Waiver of Known Defaults. Notwithstanding anything to the contrary
contained herein, in the event that Buyer has actual knowledge of the default of
any Seller, or any Seller has actual knowledge of the default of Buyer,
hereunder (a "Known Default"), but nonetheless elects to consummate the
transaction contemplated hereby and proceeds to Closing, then the rights and
remedies of the non-defaulting party(ies) shall be waived with respect to any
such Known Default upon the Closing and the defaulting party(ies) shall have no
liability with respect thereto. For purposes of this Section 14.19, the actual
knowledge of a default of Buyer by AIMCO shall constitute a "Known Default" as
to all Sellers.
14.20 Section 1031 Exchange. Sellers and Buyer 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 Buyer 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 any 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 Agreement, (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
Agreement 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 Agreement, and may
assign its rights to receive any portion of the Purchase Price from Buyer, 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 Agreement; (iii) such Seller shall remain fully
liable for its obligations under this Agreement 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 Buyer;
and (v) the closing of the transfer of such Property to Buyer 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
Buyer or to exchange accommodation titleholder, as the case may be.
14.21 Counsel. In representing Buyer in connection with this Agreement, Cox,
Castle & Nicholson LLP ("CCN") is not, and shall not be deemed to, represent
AIMCO SH, L.P., AIMCO SH, L.L.C., AIMCO Properties, L.P., AIMCO-GP, Inc., or any
of their affiliates (individually and collectively, the "AIMCO Affiliates").
Specifically, no attorney/client relationship exists or will exist between CCN,
on one hand, and any of the AIMCO Affiliates, on the other hand, and CCN shall
have no duties to any of the AIMCO Affiliates. By executing this Agreement, the
AIMCO Affiliates agree that CCN did not undertake any duties to any of the AIMCO
Affiliates and that they will not seek to disqualify CCN from any matter related
to the Buyer, the Buyer's Partnership Agreement or documents executed in
connection therewith, on the ground that CCN undertook duties to any of the
AIMCO Affiliates in connection with this Agreement.
14.22 Multiple Buyers. Prior to Closing, Buyer may direct Sellers to deliver the
deeds and other closing documents to one or more entities specified by Buyer.
Sellers hereby agree to deliver such documents to such entities; provided,
however Buyer will not direct Sellers to deliver such documents to any entities
that are not affiliates of SH Partners, L.P. without the prior consent of
Sellers, which consent shall not be unreasonably withheld. In the event that a
Seller receives notice from Buyer or any entity being a Buyer Party hereunder,
the same shall be deemed to constitute notice from all entities constituting
Buyer and all entities being a Buyer Party hereunder. In the event that Buyer or
any entity being a Buyer Party hereunder takes any action, breaches any
obligation or otherwise acts pursuant to the terms of this Agreement, the same
shall be deemed to be the action of the other entity(ies) constituting Buyer and
all entities being a Buyer Party hereunder and the action of Buyer and "Buyer
Parties" under this Agreement. In the event that a Seller is required to give
notice or take action with respect to Buyer or any Buyer Party under this
Agreement, notice to Buyer or any entity being a Buyer Party hereunder or action
with respect to Buyer or any entity being a Buyer Party hereunder shall be a
notice or action to Buyer and all entities being a Buyer Party hereunder. In the
event that there is any agreement by a Seller to pay any amount pursuant to this
Agreement to Buyer or a Buyer Party under any circumstance, that amount shall be
deemed the maximum aggregate amount to be paid to Buyer and all parties being
Buyer Parties hereunder and not an amount that can be paid to each of Buyer and
each party being a Buyer Party hereunder. The foregoing provisions also shall
apply to any documents, including, without limitation, the Assignments of Leases
and Bills of Sale and Assignment, executed in connection with this Agreement and
the transaction contemplated hereby.
14.23 Sellers' Several Obligations. Buyer agrees that, notwithstanding any other
provision of this Agreement 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. Buyer agrees that it shall look solely to the applicable Seller for
any amount due hereunder or, obligation owed hereunder.
14.24 Obligation to Close on all Properties. Subject to the terms of Section
6.3.5 hereof, (a) Buyer's obligation to purchase the Properties is not severable
and Buyer must purchase all of the Properties and (b) Sellers' obligations to
sell the Properties are not severable and Sellers must sell all of the
Properties to Buyer.
14.25 AIMCO Marks. Notwithstanding anything to the contrary contained herein,
Buyer agrees that Sellers, the Property managers or AIMCO, or their respective
affiliates, are the sole owners of all right, title and interest in and to the
"AIMCO Marks," as hereinafter defined (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 Agreement. Buyer further agrees that Buyer will not use the
AIMCO Marks for any purpose. As used herein, the term "AIMCO Marks" shall mean
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 a Property manager or AIMCO).
14.26 ADA Disclosure. Buyer 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.
14.27 Lead-Based Paint Disclosure. The provisions of this Section 14.27 shall
survive the termination of this Agreement, and if not so terminated, the Closing
and delivery of the Deeds to Buyer. Sellers and Buyer hereby acknowledge
delivery of the following Lead Based Paint Disclosure:
"EVERY PURCHASER OF ANY INTEREST IN RESIDENTIAL REAL PROPERTY ON WHICH A
RESIDENTIAL DWELLING WAS BUILT PRIOR TO 1978 IS NOTIFIED THAT SUCH
PROPERTY MAY PRESENT EXPOSURE TO LEAD FROM LEAD-BASED PAINT THAT MAY PLACE
YOUNG CHILDREN AT RISK OF DEVELOPING LEAD POISONING. LEAD POISONING IN
YOUNG CHILDREN MAY PRODUCE PERMANENT NEUROLOGICAL DAMAGE, INCLUDING
LEARNING DISABILITIES, REDUCED INTELLIGENCE QUOTIENT, BEHAVIORAL PROBLEMS,
AND IMPAIRED MEMORY. LEAD POISONING ALSO POSES A PARTICULAR RISK TO
PREGNANT WOMEN. THE SELLER OF ANY INTEREST IN RESIDENTIAL REAL PROPERTY IS
REQUIRED TO PROVIDE THE PURCHASER WITH ANY INFORMATION ON LEAD-BASED PAINT
HAZARDS FROM RISK ASSESSMENTS OR INSPECTIONS IN THE SELLER'S POSSESSION,
IF ANY, AND NOTIFY THE PURCHASER OF ANY KNOWN LEAD-BASED PAINT HAZARDS. A
RISK ASSESSMENT OR INSPECTION FOR POSSIBLE LEAD-BASED PAINT HAZARDS IS
RECOMMENDED PRIOR TO PURCHASE."
14.27.1 Consent Agreement - Pre-1978 Certified. The provisions of this Section
14.27.1 apply to those Properties (if any) 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 "LBP
Consultant" identified on the Seller Information Schedule prepared the report
with respect to the Property identified therein. A copy of each report has been
provided to Buyer. Each report certifies the respective Property as lead based
paint free. By execution hereof, Buyer acknowledges receipt of a copy of the
reports, the Lead-Based Paint Disclosure Statement in Section 14.27 above, 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. Buyer acknowledges and agrees
that (a) after Closing, Buyer and the applicable Property shall be subject to
the Consent Agreement and the provisions contained herein related thereto and
(b) Buyer shall not be deemed to be a third party beneficiary to the Consent
Agreement.
14.27.2 Consent Agreement - Pre-1978-LBP, But No LBP Hazards. The provisions of
this Section 14.27.2 apply to those Properties (if any) 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 each such Property has been provided to
Buyer. 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,
Buyer acknowledges receipt of a copy of the report, the Lead-Based Paint
Disclosure Statement in Section 14.27 above, and the Consent Agreement. Because
the applicable Property has been certified as free of (i) lead based hazards,
(ii) dust lead hazards and (iii) 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. Buyer acknowledges and agrees
that (A) after Closing, Buyer and the applicable Property shall be subject to
the Consent Agreement and the provisions contained herein related thereto and
(B) Buyer shall not be deemed to be a third party beneficiary to the Consent
Agreement.
14.28 Waiver of Consumer Rights. WITH RESPECT TO ANY PROPERTY LOCATED IN TEXAS,
IT IS THE INTENT OF SELLERS AND BUYER THAT THE RIGHTS AND REMEDIES WITH RESPECT
TO THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT SHALL BE GOVERNED BY LEGAL
PRINCIPLES OTHER THAN THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION
ACT. ACCORDINGLY, TO THE MAXIMUM EXTENT APPLICABLE AND PERMITTED BY LAW (AND
WITHOUT ADMITTING SUCH APPLICABILITY), BUYER HEREBY WAIVES ITS RIGHTS UNDER THE
PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT,
SECTION 17.41 ET SEQ. (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), TEXAS
BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. FOR PURPOSES OF THE WAIVERS SET FORTH IN THIS AGREEMENT, BUYER
HEREBY WARRANTS AND REPRESENTS UNTO SELLERS THAT (A) BUYER HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE
MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT, (B) BUYER
IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH SELLERS REGARDING
THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT, (C) BUYER IS REPRESENTED BY
LEGAL COUNSEL OF ITS OWN SELECTION THAT IS SEPARATE AND INDEPENDENT OF SELLERS
AND SELLERS' LEGAL COUNSEL AND (D) BUYER HAS CONSULTED WITH BUYER'S LEGAL
COUNSEL REGARDING THIS AGREEMENT PRIOR TO BUYER'S EXECUTION OF THIS AGREEMENT
AND VOLUNTARILY CONSENTS TO THIS WAIVER.
14.29 Texas Real Estate License Act. With respect to any Property located in
Texas, the Texas Real Estate License Act requires written notice to Buyer, when
this Agreement is executed, from any licensed real estate broker or salesman who
is to receive a commission that Buyer should have an attorney of its own
selection examine an abstract of title to the property being acquired or that
Buyer should be furnished with or should obtain a title insurance policy. Notice
to that effect is, therefore, hereby given to Buyer on behalf of the broker(s)
identified in Section 13 of this Agreement, if any.
14.30 State of Louisiana Special Provisions. To the extent this Agreement
applies to a Property in the State of Louisiana, the following shall apply:
14.30.1 the terms "easement" and "easements" shall mean "servitude" and
"servitudes," respectively;
14.30.2 the term "deed" shall also mean "cash sale;"
14.30.3 the term "real property" shall mean "immovable property;"
14.30.4 the term "personal property" shall mean "movable property;"
14.30.5 the phrase "good and marketable fee simple interest" in Section
1 of this Agreement shall mean "merchantable title;"
14.30.6 the phrase "fee simple title" in Section 4.2.4 of this
Agreement shall mean "merchantable title;"
14.30.7 references to "improvements" will include other constructions;
and
14.30.8 in addition to Section 10.1 of this Agreement, the Properties being
acquired are hereby made and accepted on an "AS IS" and "WHERE IS" basis. Buyer
accepts the Properties in their condition as existing at the time of sale.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, SELLERS MAKE NO REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE CONDITION OF THE PROPERTIES,
THE FITNESS OF THE PROPERTIES FOR ANY PURPOSE OR INTENDED USE, THE PRESENCE OR
ABSENCE OF APPARENT OR HIDDEN DEFECTS, THE PRESENCE OR ABSENCE OF ENVIRONMENTAL
CONTAMINATION, OR THE COMPLIANCE OF THE PROPERTIES WITH ANY LAWS, RULES OR
REGULATIONS, ALL OF WHICH WARRANTIES ARE HEREBY WAIVED BY BUYER. Buyer fully and
completely waives any and all rights for the return of all or any part of the
purchase price by the reason of any such defects. Buyer acknowledges and
declares that except to the extent expressly set forth herein, neither Sellers
nor any party, whomsoever, acting or purporting to act in any capacity
whatsoever on behalf of any Seller, has made any direct, indirect, explicit or
implicit statement, representation or declaration, whether by written or oral
statement or otherwise, and upon which Buyer has relied, concerning the
existence or non-existence of any quality, characteristic or condition of the
Properties. Buyer expressly waives the warranty against eviction, warranty of
fitness and the warranty against redhibitory vices and defects, whether apparent
or latent, imposed by the Louisiana Civil Code, any other applicable state or
federal law, and the jurisprudence thereunder. Buyer also waives any rights it
may have in redhibition or to a reduction of purchase price pursuant to the
Louisiana Civil Code in connection with the Properties. By its signature, Buyer
expressly acknowledges all such waivers and its exercise of Buyer's right to
waive warranty pursuant to the Louisiana Civil Code. Buyer agrees that Buyer has
conducted its own evaluation and inspection and has made its own determination
as to any condition of the Properties, any defects therein, and the suitability
of the Property for Buyer's intended use(s). The waiver of warranty contained
herein shall survive the Closing.
14.31 State of Virginia Special Provisions. For each Property located in the
State of Virginia, in accordance with the terms of VA Code ss.ss. 59.1-69 et
seq., Buyer shall timely file in the county where the applicable Property is
located a certificate by any party conducting business under an assumed name
(e.g., the name of the Property). If any Seller has filed such a certificate,
effective on or after the Closing Date, such Seller may cancel such certificate.
14.32 State of Indiana Special Provisions. With respect to each Property located
in Indiana, the applicable Seller of such Property hereby represents that, to
such Seller's Knowledge, such Property is not "property" as defined in Indiana
Code 13-11-2-174, and that no disclosure statement under Indiana Code 13-25-3-1,
et. seq. (Indiana Responsible Property Transfer Law), is required for this
transaction.
14.33 Arbitration. 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 any of the provisions of Section 2.3 of this Agreement
that relate to the Work, including any claim based on contract, tort or statute,
shall be resolved at the written request of any party to this Agreement by the
dispute resolution mechanism set forth herein. In the event of such a dispute,
Buyer and the applicable Seller shall each appoint a consultant or other expert
(each, a "Consultant") familiar with the type of Work subject to such dispute,
and Buyer and such Seller agree that the two Consultants shall attempt to
negotiate a resolution to such dispute, which resolution shall be binding upon
Buyer and such Seller. In the event that the Consultants are unable to agree on
a resolution, the dispute shall be settled with binding arbitration. The
arbitration shall be administered in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association. Any matter to be
settled by arbitration shall be submitted to the American Arbitration
Association in the state in which the applicable Property is located. The
Consultants shall designate one arbitrator from the American Arbitration
Association. If they are unable to do so on or before the 30th day after written
demand therefor, then the American Arbitration Association shall designate an
arbitrator. The arbitration shall be final and binding, and enforceable in any
court of competent jurisdiction. The arbitrator shall award attorneys' fees
(including those of in-house counsel) and costs to the substantially prevailing
party and charge the cost of arbitration to the party which is not the
substantially prevailing party. Notwithstanding anything herein to the contrary,
this section shall not prevent Buyer or Sellers from seeking and obtaining
equitable relief on a temporary or permanent basis, including 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
applicable 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 Agreement 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 Section 2.3 of this Agreement that relate to the Work shall be determined
through final and binding arbitration in accordance with this section.
[Remainder of Page Left Blank Intentionally]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BUYER:
CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM,
a public entity
By: /s/Christopher J. Ailman
Christopher J. Ailman
Chief Investment Officer
(Print Name and Title)
[Signatures Continue On Next Page]
SELLERS:
WINDSOR HILLS I, L.P.,
a Delaware limited partnership
By: SHELTER I GP LIMITED PARTNERSHIP,
a Delaware limited partnership,
its general partner
By: SHELTER REALTY CORPORATION,
a South Carolina corporation,
its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
NATIONAL PROPERTY INVESTORS 6,
a California limited partnership
By: NPI EQUITY INVESTMENTS, INC.,
a Florida corporation,
its general partner
By: By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
NATIONAL PROPERTY INVESTORS 7,
a California limited partnership
By: NPI EQUITY INVESTMENTS, INC.,
a Florida corporation,
its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
[Signatures Continue On Next Page]
SELLERS (cont.):
TAHF II LIMITED PARTNERSHIP,
a Delaware limited partnership
By: TAHF FUNDING CORP.,
a Delaware corporation,
its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
COUCH-OXFORD ASSOCIATES LIMITED PARTNERSHIP,
a Maryland limited partnership
By: COUCH-OXFORD, L.L.C.,
a Maryland limited liability company,
its managing general partner
By: OXFORD REALTY FINANCIAL GROUP, INC.,
a Maryland corporation,
it's managing member
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
By: AIMCO PROPERTIES, L.P.,
a Delaware limited partnership,
its managing member
By: AIMCO-GP, INC.,
a Delaware corporation,
......its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
[Signatures Continue On Next Page]
SELLERS (cont.):
PEPPERMILL VILLAGE-OXFORD ASSOCIATES L.P.,
an Indiana limited partnership
By: OXFORD ASSOCIATES '80 LIMITED PARTNERSHIP,
an Indiana limited partnership,
its managing general partner
By: OAMCO II, L.L.C.,
a Delaware limited liability company,
its managing general partner
By: OXFORD REALTY FINANCIAL GROUP, INC.,
......a Maryland corporation,
......it's managing member
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
WILLIAMSBURG INVESTORS LIMITED PARTNERSHIP,
an Indiana limited partnership
By: AIMCO HOLDINGS, L.P.,
a Delaware limited partnership,
its general partner
By: AIMCO HOLDINGS QRS, INC.,
a Delaware corporation,
its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
[Signatures Continue On Next Page]
SELLERS (cont.):
MAYFAIR VILLAGE LIMITED PARTNERSHIP,
an Indiana limited partnership
By: AIMCO HOLDINGS, L.P.,
a Delaware limited partnership,
its general partner
By: AIMCO HOLDINGS QRS, INC.,
a Delaware corporation,
its general partner
By: /s/Harry Alcock
Name: Harry Alcock
Title: Executive Vice President
[Signatures Continue On Next Page]
ESCROW AGENT :
The undersigned Escrow Agent hereby accepts the foregoing Purchase and Sale
Agreement and Joint Escrow Instructions and agrees to act as Escrow Agent under
this Agreement in strict accordance with its terms.
STEWART TITLE GUARANTY COMPANY
By: /s/Wendy Howell
Name: Wendy Howell
Title: Assistance Vice President