EXHIBIT 1.1
CLASS R CUMULATIVE PREFERRED SHARE
PURCHASE AGREEMENT
DATED AS OF APRIL 10, 2002
AMONG
NUVEEN REAL ESTATE INCOME FUND,
SECURITY CAPITAL U.S. REAL ESTATE SHARES
(A SERIES OF SECURITY CAPITAL REAL ESTATE MUTUAL FUNDS INCORPORATED),
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
SECURITY CAPITAL RESEARCH & MANAGEMENT INCORPORATED
AND
AIMCO PROPERTIES, L.P.
TABLE OF CONTENTS
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I. PURCHASE AND SALE OF SHARES.............................................................................1
1.1 Sale and Issuance of Class R Preferred Shares..................................................1
1.2 Closing........................................................................................2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................2
2.1 Registration Under the Securities Act..........................................................2
2.2 Exchange Act Compliance........................................................................2
2.3 Organization, Good Standing and Qualification..................................................3
2.4 Power, Authority and Enforceability............................................................4
2.5 Capitalization and Ownership of the Operating Partnership......................................4
2.6 Valid Issuance of Shares.......................................................................4
2.7 Compliance with Other Instruments..............................................................4
2.8 Governmental Consent...........................................................................5
2.9 No Material Adverse Changes....................................................................6
2.10 Independent Public Accountants.................................................................6
2.11 Financial Statements...........................................................................6
2.12 Legal Compliance...............................................................................7
2.13 Environmental Compliance.......................................................................7
2.14 Obligations; Title to Properties; Leasehold Interests..........................................8
2.15 Employees; ERISA...............................................................................9
2.16 Insurance......................................................................................9
2.17 No Other Distribution.........................................................................10
2.18 Permits.......................................................................................10
2.19 Taxes.........................................................................................10
2.20 Investment Company............................................................................11
2.21 Real Estate Investment Trust..................................................................11
2.22 Listing of the Class R Preferred Shares on the New York Stock Exchange........................11
2.23 Internal Accounting Controls..................................................................11
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS........................................................12
3.1 Power, Authority and Enforceability...........................................................12
3.2 Compliance with Other Instruments.............................................................12
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3.3 Ownership Limitations.........................................................................12
IV. REPRESENTATIONS AND WARRANTIES OF THE ADVISOR..........................................................13
4.1 Power and Authority...........................................................................13
V. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING....................................................13
5.1 Amendment to the Articles Supplementary.......................................................13
5.2 Representations and Warranties................................................................13
5.3 Performance...................................................................................13
5.4 No Material Adverse Change....................................................................13
5.5 Legal Opinions................................................................................13
5.6 Prospectus Supplement.........................................................................14
5.7 Amendment to Operating Partnership Agreement..................................................14
5.8 Officer's Certificates........................................................................14
5.9 NYSE Listing..................................................................................14
5.10 No Stop Order.................................................................................14
5.11 No Injunction.................................................................................14
VI. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.....................................................15
6.1 Representations and Warranties................................................................15
6.2 Performance...................................................................................15
6.3 No Injunction.................................................................................15
VII. COVENANTS..............................................................................................15
7.1 Registration of Class R Preferred Shares......................................................15
7.2 Listing of Class R Preferred Shares on the NYSE...............................................15
VIII. MISCELLANEOUS..........................................................................................16
8.1 Survival of Warranties and Covenants..........................................................16
8.2 Successors and Assigns........................................................................16
8.3 Governing Law.................................................................................16
8.4 Counterparts..................................................................................16
8.5 Titles and Subtitles..........................................................................16
8.6 Notices.......................................................................................16
8.7 Finder's Fees.................................................................................18
8.8 Expenses......................................................................................18
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TABLE OF CONTENTS
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8.9 Amendments and Waivers........................................................................18
8.10 Severability..................................................................................18
8.11 Entire Agreement..............................................................................18
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TABLE OF CONTENTS
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SCHEDULES
Schedule I Specified Subsidiaries
EXHIBITS
Exhibit A Amendment to the Articles Supplementary
Exhibit B-1 Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit B-2 Form of Tax Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit C Form of Opinion of Piper Rudnick LLP
Exhibit D Form of Opinion of Joel F. Bonder
</Table>
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CLASS R CUMULATIVE PREFERRED SHARE PURCHASE AGREEMENT
This CLASS R CUMULATIVE PREFERRED SHARE PURCHASE AGREEMENT
(this "Agreement") is made as of the 10th day of April, 2002 by and among
Apartment Investment and Management Company, a Maryland corporation (the
"Company"), AIMCO Properties, L.P., a Delaware limited partnership (the
"Operating Partnership"), Security Capital Research & Management Incorporated,
Nuveen Real Estate Income Fund, a Massachusetts business trust ("Nuveen"), and
Security Capital U.S. Real Estate Shares, a series of Security Capital Real
Estate Mutual Funds Incorporated, a Maryland corporation ("SC-RMF", and together
with Nuveen, the "Investors").
WITNESSETH
WHEREAS, the Company wishes to issue and sell to the Investors
an aggregate of 1,000,000 shares of Class R Cumulative Preferred Stock, $0.01
par value per share, of the Company (the "Class R Preferred Shares"), the
reclassification of which shall be made pursuant to an amendment to the articles
supplementary, as amended, in the form of Exhibit A (the "Amendment to the
Articles Supplementary") in accordance with and subject to the terms and
conditions set forth herein;
WHEREAS, each Investor wishes to purchase the number of Class
R Preferred Shares set forth below on the terms and subject to the conditions
set forth in this Agreement; and
WHEREAS, Security Capital Research & Management Incorporated,
a Maryland corporation (the "Advisor"), is an investment advisor to each of the
Investors and is authorized to enter into this Agreement on behalf of each of
the Investors.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants, agreements and warranties herein contained, the parties hereby
agree as follows:
I. PURCHASE AND SALE OF SHARES.
1.1 SALE AND ISSUANCE OF CLASS R PREFERRED SHARES.
(a) The Company shall adopt and file with the State Department
of Assessments and Taxation of Maryland (the "SDAT") on or before the Closing
Date (as defined below) the Amendment to the Articles Supplementary.
(b) Subject to the terms and conditions of this Agreement, the
Company agrees to issue and sell to Nuveen and SC-RMF, and each of Nuveen and
SC-RMF, severally and not jointly, agrees to purchase from the Company at the
Closing (as defined below), in the individual amounts set forth below, 1,000,000
Class R Preferred Shares at a per-share price of $25.34 (the "Per-Share Price"),
resulting in an aggregate purchase price of $25,340,000 (the "Purchase Price"):
Nuveen: 500,000 Shares ($12,670,000)
SC-RMF: 500,000 Shares ($12,670,000)
1.2 CLOSING.
The closing (the "Closing") of the purchase and sale of the
Class R Preferred Shares shall take place at the offices of Mayer, Brown, Rowe &
Maw, 190 South LaSalle Street, Chicago, Illinois 60603 at 9:00 a.m., Chicago
time on April 11, 2002, or at such other location, date and time as may be
agreed upon by the Company and the Advisor (such date and time being hereinafter
referred to as the "Closing Date"). At the Closing, the Company shall cause its
transfer agent to deliver the Class R Preferred Shares via the "DWAC" system to
the respective custodian for each of the Investors, and each Investor shall
cause its custodian to promptly thereafter wire transfer to an account
designated by the Company immediately available funds in the respective amount
of the applicable portion of the Purchase Price. In the event the Company does
not receive the applicable portion of the Purchase Price on the Closing Date
from an Investor, the Company may, in its sole discretion, deliver a notice to
such Investor (which notice shall be delivered no later than one business day
thereafter) declaring this Agreement null and void ab initio as to such Investor
only and, this Agreement shall immediately be null and void ab initio as to such
Investor only, and such Investor shall promptly cause the applicable Class R
Preferred Shares to be returned to the Company's transfer agent. The failure of
one Investor to pay its portion of the Purchase Price shall have no effect on
the Company's obligations to the other Investor or on the other Investor's
obligations to the Company.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Each of the Company and the Operating Partnership, jointly and
severally, represent and warrant, as of the date of this Agreement, that:
2.1 REGISTRATION UNDER THE SECURITIES ACT.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a "shelf" registration statement (the
"Registration Statement") on Form S-3 (File No. 333-71452). The Company and the
transactions contemplated by this Agreement meet the requirements for using Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"). The
Registration Statement has become effective; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for
such purpose are pending before or threatened by the Commission. The Company
will file with the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Class R Preferred Shares pursuant to
Rule 424 of the Securities Act.
2.2 EXCHANGE ACT COMPLIANCE.
Each document, if any, filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in the final prospectus and final Prospectus
Supplement (collectively, the "Prospectus") complied or will comply when so
filed in all material respects with the Exchange Act and the rules and
regulations of the Commission under the Exchange Act, (b) each part of the
Registration Statement, when such part became effective, did not contain, and
each such part, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(c) the
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Registration Statement and the Prospectus comply, and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the rules and regulations of the Commission under the
Securities Act, and (d) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or Prospectus
based upon information relating to the Investors furnished to the Company in
writing by the Investors expressly for use therein.
2.3 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Maryland, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. "Subsidiary" means a corporation or a
partnership a majority of the outstanding voting stock, partnership or
membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Company, the Operating Partnership or by one or
more other Subsidiaries of the Company or the Operating Partnership.
(b) Each Subsidiary is a corporation, limited partnership,
limited liability company or trust, as the case may be, duly organized or
formed, is validly existing in good standing under the laws of the jurisdiction
of its organization or formation, has the corporate, limited partnership,
limited liability company or trust power and authority, as the case may be, to
own its property and to conduct its business as described in the Prospectus and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be in good standing, to have such power and authority or to be so qualified
would not have a material adverse effect on the Company and the Subsidiaries,
taken as a whole; all of the issued shares of capital stock, partnership
interests, limited liability company membership interests or trust beneficial
interests, as the case may be, of each Subsidiary or created by agreements to
which such Subsidiaries are parties have been duly and validly authorized and
issued (and in the case of capital stock are fully paid and non-assessable); all
such shares of capital stock, partnership interests, limited liability company
membership interests and trust beneficial interests owned or held, directly or
indirectly, by the Company are held free and clear of any security interest,
lien, adverse claim, equity or other encumbrance (each of the foregoing, a
"Lien"), other than Liens described in the Registration Statement or the
Prospectus, except where the failure of such shares of capital stock,
partnership interests, limited liability company membership interests or trust
beneficial interests being duly and validly authorized or the existence of such
Liens would not, singly or in the aggregate, have a material adverse effect on
the Company and the Subsidiaries, taken as a whole.
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2.4 POWER, AUTHORITY AND ENFORCEABILITY.
This Agreement has been duly authorized, executed and
delivered by each of the Company and the Operating Partnership.
2.5 CAPITALIZATION AND OWNERSHIP OF THE OPERATING PARTNERSHIP.
(a) The Company has an authorized capitalization as set forth
in the Prospectus. All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the Class R Preferred Shares
to be purchased by the Investors from the Company have been duly authorized for
issuance and sale to the Investors and, when issued and delivered against the
payment of the consideration set forth in this Agreement, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights; and the capital stock of the Company conforms in all material respects
to the description thereof in the Registration Statement and the Prospectus. The
preferred units to be issued by the Operating Partnership in exchange for the
net proceeds from the sale of the Class R Preferred Shares (the "Preferred
Units") as set forth in Section 5.7 of this Agreement have been duly authorized
and, when issued to the Company, will be validly issued. Except as disclosed in
the Registration Statement and the Prospectus, and except for options or other
securities issued to employees, officers or directors of the Company, the
Operating Partnership or a Subsidiary pursuant to a stock-based plan of the
Company, the Operating Partnership or a Subsidiary, there are no outstanding
options, convertible or exchangeable securities, warrants or other rights
calling for the issuance of capital stock of the Company.
(b) As of the date hereof, the Company indirectly owns an
aggregate approximate 87% partnership interest in the Operating Partnership free
and clear of all Liens. A wholly-owned subsidiary of the Company is the sole
general partner of the Operating Partnership.
2.6 VALID ISSUANCE OF SHARES.
The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Class R Preferred Shares
as provided in this Agreement. The Operating Partnership has the power and
authority to enter into this Agreement and to issue and deliver the Preferred
Units to the Company as provided in Section 5.7 of this Agreement.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS.
Neither the Company nor any of the Subsidiaries listed on
Schedule I to this Agreement (collectively, the "Specified Subsidiaries") is in
violation of its certificate or articles of incorporation or by-laws or
certificates or agreements of limited partnership, limited liability company or
trust or other organizational documents. None of the Subsidiaries (other than
the Specified Subsidiaries) is in violation of its certificate or articles of
incorporation or by-laws or certificates or agreements of limited partnership,
limited liability company or trust or other organizational documents, except for
such violations which would not, singly or in the aggregate, have a material
adverse effect on the Company and the Subsidiaries, taken as a whole. Neither
the Company nor any of the Subsidiaries is (i) in violation of any law,
ordinance, administrative
4
or governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, or any of their
respective properties or (ii) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties is bound, except, with respect to clauses (i) and (ii) above, for any
defaults which would not, singly or in the aggregate, have a material adverse
effect on the Company and the Subsidiaries, taken as a whole.
2.8 GOVERNMENTAL CONSENT.
None of the issuance and sale of the Class R Preferred Shares
by the Company, the issuance of the Preferred Units by the Operating
Partnership, the execution, delivery or performance of this Agreement by the
Company and the Operating Partnership or the consummation by the Company and the
Operating Partnership of the transactions contemplated under this Agreement (i)
requires any consent, approval, authorization or other order of or registration
or filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for the
registration of the Class R Preferred Shares under the Securities Act and the
Exchange Act and compliance with the securities or Blue Sky or real estate
syndication laws of various jurisdictions, to the extent applicable, and the
filing of the Prospectus with the Commission pursuant to Rule 424(b) under the
Securities Act, all of which have been or will be effected in accordance with
this Agreement, and except for the filing of the Amendment to the Articles
Supplementary with the SDAT, which filing with the SDAT will be made on or prior
to the Closing Date), or (ii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws or certificates or agreements of limited partnership,
limited liability company or trust or other organizational documents of the
Company or any of the Specified Subsidiaries, (iii) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or bylaws or certificates or agreements
of limited partnership, limited liability company or trust or other
organizational documents of any of the Subsidiaries (other than the Specified
Subsidiaries), except, with respect to clause (iii), for such conflicts,
breaches or defaults which would not, singly or in the aggregate, have a
material adverse effect on the Company and the Subsidiaries, taken as a whole,
or (iv) conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the Subsidiaries
or any of their respective properties, or will result in the creation or
imposition of any Lien upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject, except, with respect to clause
(iv), for such conflicts, breaches, defaults, violations or Liens which would
not, singly or in the aggregate, have a material adverse effect on the Company
and the Subsidiaries, taken as a whole.
5
2.9 NO MATERIAL ADVERSE CHANGES.
Except as disclosed in the Registration Statement and the
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectus, there has
not occurred any material adverse change, or any development involving a
prospective material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and the Subsidiaries,
taken as a whole.
2.10 INDEPENDENT PUBLIC ACCOUNTANTS.
Ernst & Young LLP, which has certified the consolidated
financial statements of the Company included or incorporated by reference in the
Registration Statement and the Prospectus, are independent public accountants
with respect to the Company as required by the Securities Act.
2.11 FINANCIAL STATEMENTS.
(a) The financial statements, together with related schedules
and notes, of the Company included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and the Subsidiaries
on the basis stated in the Registration Statement at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and statistical information
and data included or incorporated by reference in the Registration Statement and
the Prospectus (or any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and the Subsidiaries.
(b) To the knowledge of the Company and the Operating
Partnership, the audited consolidated financial statements and unaudited interim
financial statements (the "Casden Financial Statements") listed in Section
4.4(a) of the Disclosure Letter (the "Casden Disclosure Letter") to the
Agreement and Plan of Merger, dated as of December 3, 2001, by and among the
Company, Casden Properties Inc. ("Casden") and XYZ Holdings LLC have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the notes thereto,
and except for the absence of notes in the case of unaudited statements) and
fairly present in all material respects the financial position of the applicable
entities (or consolidated group of entities) referenced therein as of the dates
thereof and the results of their operations and cash flows for the periods then
ended, subject to normal recurring audit and year-end adjustments, in the case
of the unaudited interim financial statements.
(c) To the knowledge of the Company and the Operating
Partnership, the schedules attached as Section 4.4(b) of the Casden Disclosure
Letter present fairly, in all material respects, on a pro forma basis the
financial position of Casden and its subsidiaries, on a
6
consolidated basis, as of December 31, 2000 and June 30, 2001, and the results
of operations on a pro forma basis of Casden and its subsidiaries, on a
consolidated basis, for the twelve months and six months then ended, in each
case after giving effect to the transactions and adjustments disclosed therein.
(d) The Company is not required to include in the Prospectus
or the Registration Statement any historical financial statements of Casden or
any pro forma financial statements reflecting the merger of Casden with and into
the Company or the related transactions described in the Merger Agreement
pursuant to Regulation S-X under the Securities Act. The Company is not
required, as a result of the merger of Casden with and into the Company or the
related transactions described in the Merger Agreement, to file a Current Report
on Form 8-K including any historical financial statements of Casden or any pro
forma financial statements reflecting the merger of Casden with and into the
Company or the related transactions described in the Merger Agreement pursuant
to Regulation S-X.
2.12 LEGAL COMPLIANCE.
(a) There are no legal or governmental proceedings pending or,
to the knowledge of the Company and the Operating Partnership, threatened
against the Company or any of the Subsidiaries or to which any of the properties
of the Company or any of the Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus that are not so
described. There are no statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or the Prospectus or
to be filed or incorporated by reference as exhibits to the Registration
Statement that are not described, filed or incorporated as required.
(b) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the Securities Act, complied when so filed
in all material respects with the Securities Act and the rules and regulations
of the Commission under the Securities Act.
2.13 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and each of the Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except with respect to (i),
(ii) and (iii) above, where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
the Subsidiaries, taken as a whole.
(b) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up,
7
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties or in connection with off-site disposal
of hazardous waste) which would, singly or in the aggregate, have a material
adverse effect on the Company and the Subsidiaries, taken as a whole.
2.14 OBLIGATIONS; TITLE TO PROPERTIES; LEASEHOLD INTERESTS.
(a) Except as disclosed in the Registration Statement and the
Prospectus, there are no unwaived contracts, agreements or understandings
between the Company or the Operating Partnership and any person granting such
person the right to require the Company or the Operating Partnership to include
any securities of the Company or the Operating Partnership with the securities
registered pursuant to the Registration Statement.
(b) Except as disclosed in the Registration Statement and the
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, nor entered into any transaction not in the
ordinary course of business, in either case, that is material to the Company and
the Subsidiaries, taken as a whole; (ii) the Company has not purchased any of
its outstanding capital stock, (iii) the Company has not declared, paid or
otherwise made any dividend or distribution of any kind on its capital stock
other than ordinary and customary dividends; and (iv) there has not been any
material change in the capital stock, short-term debt or long-term debt of the
Company and the Subsidiaries, taken as a whole.
(c) (i) The Company and the Subsidiaries have good and
marketable title in fee simple to all parcels of real property (except for those
easement parcels that are appurtenant to the real property owned in fee simple
by the Company and the Subsidiaries) and good and marketable title to all
personal property owned by them, in each case free and clear of all Liens,
except where the failure to have good and marketable title or such Liens would
not, singly or in the aggregate, have a material adverse effect on the Company
and the Subsidiaries taken as a whole, (ii) any real property and buildings held
under lease by the Company and the Subsidiaries are held under valid, subsisting
and enforceable leases, except where failure to hold such property and buildings
under valid, subsisting and enforceable leases would not, singly or in the
aggregate, have a material adverse effect on the Company and the Subsidiaries
taken as a whole, (iii) the construction, management or operation of the
buildings, fixtures and other improvements located on the apartment properties
owned or controlled by the Company or the Subsidiaries ("Owned Properties"), as
presently conducted or existing is not in violation of any applicable building
code, zoning ordinance or other law or regulation, except where any such
violation would not, singly or in the aggregate, have a material adverse effect
on the Company and the Subsidiaries, taken as a whole, (iv) neither the Company
nor any of the Subsidiaries has received notice of any proposed special
assessment or any proposed change in any property tax, zoning or land use laws
affecting all or any portion of the Owned Properties, except where any such
assessment or change would not, singly or in the aggregate, have a material
adverse effect on the Company and the Subsidiaries, taken as a whole, (v) there
do not exist any violations of any declaration of covenants, conditions and
restrictions with respect to any of the Owned Properties, nor is there any
existing state of facts or circumstances or condition or event which could, with
8
the giving of notice or passage of time, or both, constitute such a violation,
except where any such violation would not, singly or in the aggregate, have a
material adverse effect on the Company and the Subsidiaries, taken as a whole,
and (vi) the improvements comprising any portion of the Owned Properties (the
"Improvements") are free of any and all material physical, mechanical,
structural, design and construction defects and the mechanical, electrical and
utility systems servicing the Improvements (including, without limitation, all
water, electric, sewer, plumbing, heating, ventilation, gas and air
conditioning) are in good condition and proper working order and are free of
material defects, except for any such defects or failures to be in good
condition or proper working order which would not, singly or in the aggregate,
have a material adverse effect on the Company and the Subsidiaries, taken as a
whole.
2.15 EMPLOYEES; ERISA.
There is no strike or work stoppage existing or, to the
knowledge of the Company and the Operating Partnership, threatened against the
Company or any Specified Subsidiary. The Company does not have any knowledge as
to any intentions of any key employee or any group of employees to leave the
employ of the Company or any of the Subsidiaries where such departure would have
a material adverse effect on the Company and the Subsidiaries, taken as a whole.
Except as disclosed in the Registration Statement and the Prospectus, the
Company has not established, sponsored, maintained, made any contributions to or
been obligated by law to establish, maintain, sponsor or make any contributions
to any "employee pension benefit plan" or "employee welfare benefit plan" (as
such terms are defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), including, without limitation, any "multi-employer plan."
The Company is in compliance with all applicable laws relating to the employment
of labor, including provisions relating to wages, hours, equal opportunity,
collective bargaining and the payment of Social Security and other taxes, and
with ERISA, except where the failure to so comply would not have a material
adverse effect on the Company and the Subsidiaries, taken as a whole.
2.16 INSURANCE.
(a) The Subsidiaries have obtained Extended Coverage Owner's
Policies of Title Insurance, to the extent available in the pertinent
jurisdiction (other than in connection with real property located in Texas, with
respect to which the Company and its direct and indirect subsidiaries have
obtained Texas Form T-1 Policies of Title Insurance) from title insurers of
recognized financial responsibility on all of the Owned Properties and such
policies are in full force and effect, except where any such failure to obtain
title insurance or to have such policies in full force and effect would not,
singly or in the aggregate, have a material adverse effect on the Company and
the Subsidiaries, taken as a whole.
(b) The Company and the Subsidiaries self insure, or are
insured by insurers of recognized financial responsibility, against such losses
and risks and in such amounts as are customary in the businesses in which they
are engaged; and neither the Company nor any of the Subsidiaries has any reason
to believe that it will not be able to renew that coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a material
adverse effect on the Company and the Subsidiaries, taken as a whole.
9
2.17 NO OTHER DISTRIBUTION.
The Company has not distributed and, prior to the completion
of the distribution of the Class R Preferred Shares, will not distribute any
offering material in connection with the offering and sale of the Class R
Preferred Shares other than the Registration Statement and the Prospectus or
other materials, if any, permitted by the Securities Act.
2.18 PERMITS.
(i) The Company and each of the Subsidiaries have such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits") as are necessary to own their respective properties and
to conduct their respective businesses in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, (ii) the Company and each of the Subsidiaries have fulfilled and
performed all of their respective material obligations with respect to such
permits and to the Company's knowledge no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination thereof or
result in any other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth in the
Prospectus, and (iii) except as described in the Prospectus, none of such
permits contains any restriction that is materially burdensome to the Company or
any of the Subsidiaries, except, with respect to clauses (i), (ii) and (iii)
above, for any such failure to obtain permits or failure to fulfill or perform
obligations, or the occurrence of events, or such restrictions that would not,
singly or in the aggregate, have a material adverse effect on the Company and
the Subsidiaries, taken as a whole.
2.19 TAXES.
The Company and each of the Subsidiaries have filed or caused
to be filed all federal, state, local, foreign and other tax returns, reports,
information returns and statements (except for returns, reports, information
returns and statements the failure to file which will not have a material
adverse effect on the Company and the Subsidiaries taken as a whole) required to
be filed by them. The Company and each of the Subsidiaries have paid or caused
to be paid all taxes (including interest and penalties) that are shown as due
and payable on such returns or claimed in writing by any taxing authority to be
due and payable with respect to such returns, except those which are being
contested by them in good faith by appropriate proceedings and in respect of
which adequate reserves are being maintained on their books in accordance with
generally accepted accounting principles consistently applied or those which
would not, singly or in the aggregate, have a material adverse effect on the
Company and the Subsidiaries, taken as a whole. The Company and each of the
Subsidiaries do not have any material liabilities for taxes other than those
incurred in the ordinary course of business and in respect of which adequate
reserves are being maintained by it in accordance with generally accepted
accounting principles consistently applied or those which would not, singly or
in the aggregate, have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. Federal and state income tax returns for the
Company and each of the Subsidiaries have not been audited by the Internal
Revenue Service or state authorities; provided, however, (i) the 1997 Federal
income tax return of NHP Management Company was accepted by the Internal Revenue
Service as filed, (ii) an Internal Revenue Service audit of the Federal income
tax returns of Insignia Financial Group,
10
Inc. and its subsidiaries ("Insignia") for the tax periods ended December 31,
1996, December 31, 1997 and October 1, 1998 (i.e., the short tax year of
Insignia ending when Insignia was merged with and into the Company) was
concluded in 2001, (iii) various state income tax returns of the Company and/or
the Subsidiaries are currently under examination, and (iv) various partnership
affiliates are under examination by the Internal Revenue Service. No deficiency
assessment with respect to or proposed adjustment of the Company's or any of the
Subsidiaries' federal, state, local, foreign or other tax returns is pending or,
to the best of the Company's knowledge, threatened in writing. There is no tax
lien, whether imposed by any federal, state, local or other tax authority,
outstanding against the assets, properties or business of the Company other than
statutory liens in respect of taxes that are not delinquent. There are no
applicable taxes, fees or other governmental charges payable by the Company or
any of the Subsidiaries in connection with the execution and delivery of this
Agreement or the issuance by the Company of the Class R Preferred Shares.
2.20 INVESTMENT COMPANY.
Neither the Company nor the Operating Partnership is now, and
after the sale of the Class R Preferred Shares and application of the net
proceeds from such sale as described in the Prospectus under the caption "Use of
Proceeds," neither of them will be, an "investment company" (as such term is
defined in the Investment Company Act of 1940, as amended).
2.21 REAL ESTATE INVESTMENT TRUST.
The Company has since July 29, 1994 been organized and
qualified as a real estate investment trust (a "REIT") under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), has
elected to be taxed as a REIT under the Code for the taxable years ended
December 31, 1994 through December 31, 2001, and currently expects to continue
to be organized and to operate in a manner so as to qualify as a REIT in the
taxable year ending December 31, 2002 and succeeding taxable years.
2.22 LISTING OF THE CLASS R PREFERRED SHARES ON THE NEW YORK STOCK
EXCHANGE.
The Company intends to file a supplemental listing application
to apply to have the Class R Preferred Shares listed on the New York Stock
Exchange (the "NYSE").
2.23 INTERNAL ACCOUNTING CONTROLS.
The Company for itself and on behalf of each Specified
Subsidiary maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
11
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor, severally and not jointly, represents and
warrants, as of the date of this Agreement, that:
3.1 POWER, AUTHORITY AND ENFORCEABILITY.
(a) The Investor has the requisite power and authority, and
has taken all required action necessary, to execute, deliver and perform this
Agreement and to purchase the Class R Preferred Shares hereunder.
(b) The Advisor has the requisite authority to execute and
deliver this Agreement on behalf of the Investor.
(c) This Agreement has been duly executed and delivered by the
Advisor on behalf of the Investor and constitutes the legal, valid and binding
obligation of the Investor enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3.2 COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by
the Advisor on behalf of the Investor and the consummation by the Investor of
the transactions contemplated hereby do not (i) result in a violation of the
Investor's constituent documents or (ii) conflict with, or constitute a default
under (or an event which with notice or lapse of time or both would become a
default), or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Investor
is a party, or result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Investor or by which any property or asset
of the Investor is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not materially impair the Investor's ability to perform its obligations under
this Agreement).
3.3 OWNERSHIP LIMITATIONS.
The Investor has received a copy of the Company's Charter, as
amended to date (the "Charter"), and understands the restrictions on transfer
and ownership of the Company's capital stock included therein related to the
qualification by the Company as a real estate investment trust for federal
income tax purposes pursuant to Sections 856 through 860 of the Code.
12
IV. REPRESENTATIONS AND WARRANTIES OF THE ADVISOR.
The Advisor represents and warrants, as of the date of this
Agreement, that:
4.1 POWER AND AUTHORITY.
(a) The Advisor is a registered investment adviser under the
Investment Advisers Act of 1940, as amended.
(b) The Advisor has the requisite power and discretionary
authority, and has taken all required action necessary, to execute and deliver
this Agreement on behalf of the Investors.
V. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING.
Each Investor's obligations to effect the Closing under this
Agreement are subject to the satisfaction or waiver by the Investor on or before
the Closing of each of the following conditions:
5.1 AMENDMENT TO THE ARTICLES SUPPLEMENTARY.
The Amendment to the Articles Supplementary shall have been
filed with and accepted for recording by the SDAT.
5.2 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company and the
Operating Partnership contained in Article II shall be true on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date.
5.3 PERFORMANCE.
The Company and the Operating Partnership each shall have
performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing.
5.4 NO MATERIAL ADVERSE CHANGE.
After the date of this Agreement and through the Closing Date,
there shall not have been any material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the Company
and the Subsidiaries, taken as a whole.
5.5 LEGAL OPINIONS.
The Investors shall have received (i) from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel for the Company, opinions to the effect set
forth in Exhibits B-1 and B-2, (ii) from Piper Rudnick LLP, counsel for the
Company, an opinion to the effect set forth in Exhibit C and (iii) from Joel F.
Bonder, the Company's Executive Vice President of Legal and Regulatory Affairs,
an opinion to the effect set forth in Exhibit D.
13
5.6 PROSPECTUS SUPPLEMENT.
The Company shall have filed the Prospectus Supplement
relating to the Class R Preferred Shares pursuant to Section 7.1.
5.7 AMENDMENT TO OPERATING PARTNERSHIP AGREEMENT.
The limited partnership agreement of the Operating Partnership
shall have been amended to authorize the general partner of the Operating
Partnership to cause the Operating Partnership, without the approval of any
other partners of the Operating Partnership, to issue the Preferred Units with
economic attributes substantially identical to those of the Class R Preferred
Shares, and the general partner of the Operating Partnership shall have caused
the Preferred Units to have been issued to the Company or a direct or indirect
wholly owned subsidiary thereof.
5.8 OFFICER'S CERTIFICATES.
The Company and the Operating Partnership shall each have
delivered to the Investor on the Closing Date a certificate or certificates,
signed by an authorized officer of the Company or the Operating Partnership, as
the case may be, to the effect that the facts required to exist by Sections 5.2,
5.3, 5.4, 5.10 and, to the knowledge of the Company or the Operating
Partnership, as the case may be, Section 5.11 exist on the Closing Date.
5.9 NYSE LISTING.
The Company shall have filed a supplemental listing
application to apply to have the Class R Preferred Shares listed on the NYSE.
5.10 NO STOP ORDER.
No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or be pending or, to the knowledge of the Company or the
Operating Partnership, contemplated by the Commission.
5.11 NO INJUNCTION.
There shall not be in effect any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated hereby and there shall be no
actual or, to the knowledge of any party hereto, threatened action, suit,
arbitration, inquiry, proceedings or investigation by or before any governmental
authority, court or agency of competent jurisdiction, which would reasonably be
expected to materially impair the ability of the Company or the Investor to
consummate the transactions contemplated hereby or of the Company to issue the
Class R Preferred Shares.
14
VI. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to effect the Closing under
this Agreement are subject to the fulfillment on or before the Closing of each
of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Investors and the
Advisor contained in Articles III and IV shall be true on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date; provided, however, that the failure of the
representations and warranties of one Investor being true on and as of the
Closing Date shall not affect the Company's obligation to effect the closing
with the other Investor.
6.2 PERFORMANCE.
The Investors shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by them on or before the Closing;
provided, however, that the failure of one Investor to perform and comply with
its agreements, obligations and conditions shall not affect the Company's
obligation to effect the closing with the other Investor.
6.3 NO INJUNCTION.
There shall not be in effect any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated hereby and there shall be no
actual or, to the knowledge of any party hereto, threatened action, suit,
arbitration, inquiry, proceedings or investigation by or before any governmental
authority, court or agency of competent jurisdiction, which would reasonably be
expected to materially impair the ability of the Company or the Investors to
consummate the transactions contemplated hereby or of the Company to issue the
Class R Preferred Shares.
VII. COVENANTS.
7.1 REGISTRATION OF CLASS R PREFERRED SHARES.
Prior to Closing, the Company and the Operating Partnership
will file the Prospectus Supplement with the Commission in a form reasonably
acceptable to the Investors with respect to statements relating to the Investors
within the applicable time period prescribed for filing by Rule 424 under the
Securities Act.
7.2 LISTING OF CLASS R PREFERRED SHARES ON THE NYSE.
Prior to Closing, the Company shall file a supplemental
listing application to apply to have the Class R Preferred Shares listed on the
NYSE and shall use its best efforts to have the NYSE approve such application as
soon as practicable.
15
VIII. MISCELLANEOUS
8.1 SURVIVAL OF WARRANTIES AND COVENANTS.
The warranties and representations of the Company and the
Operating Partnership, the Investors and the Advisor contained in or made
pursuant to Articles II, III and IV of this Agreement shall survive the Closing
through and until the expiration of the statute of limitations applicable to
each such warranty or representation. The covenants contained in or made
pursuant to Article VII of this Agreement shall survive the Closing
indefinitely, except for any provisions which expire by their terms. All other
representations and warranties contained in or made in this Agreement shall
survive the Closing for a period of three years. The representations and
warranties contained in this Agreement shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Investors or the Company.
8.2 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.
Without limiting the foregoing, no rights set forth in or under this Agreement
may be transferred to any purchaser of Class R Preferred Shares or exercised by
or on behalf of any person other than the Investors (or by the Advisor on behalf
of the Investors).
8.3 GOVERNING LAW.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to the
conflict of law provisions thereof; provided, however, that matters relating to
the issuance of the Class R Preferred Shares and other internal corporate
matters related to the Company shall be governed by the laws of the State of
Maryland.
8.4 COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.5 TITLES AND SUBTITLES.
The title and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
8.6 NOTICES.
Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given (a) upon personal delivery to the party to be notified, (b) on the fifth
business day after deposit with the United States Post Office,
16
by registered or certified mail, postage prepaid, (c) on the next business day
after dispatch via nationally recognized overnight courier or (d) upon
confirmation by the party to be put on notice of receipt of transmission by
facsimile, all addressed to the party to be notified at the address indicated
for such party below, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties. Notices should be
provided in accordance with this Section at the following addresses:
If to the Investors, to:
Security Capital Research & Management Incorporated
11 South LaSalle Street
Chicago, Illinois 60603
Attention: David T. Novick and David E. Rosenbaum
Facsimile: (312) 345-5888
with a copy to:
Philip J. Niehoff, Esq.
Mayer, Brown, Rowe & Maw
190 South LaSalle
Chicago, IL 60603
Facsimile: (312) 701-7711
If to the Company, to:
Apartment Investment and Management Company
Colorado Center, Tower Two
2002 South Colorado Boulevard, Suite 2-1000
Denver, Colorado 80222
Facsimile: (303) 753-9538
Attn: Terry Considine, Paul McAuliffe and Joel Bonder
and
Apartment Investment and Management Company
18350 Mt. Langley Avenue, Suite 220
Fountain Valley, California 92708
Facsimile: (714) 593-1703
Attn: Peter Kompaniez
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Facsimile: (213) 687-5600
Attn: Jonathan Friedman, Esq.
17
8.7 FINDER'S FEES.
Each party represents that it neither is nor will be obligated
for any finders' fee or commission in connection with this transaction. Each
Investor agrees to indemnify and hold harmless the Company from any liability
for any commission or compensation in the nature of a finders' fee (and the
costs and expenses of defending against such liability or asserted liability)
for which such Investor or any of its officers, employees or representatives is
responsible. The Company agrees to indemnify and hold harmless the Investors
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.8 EXPENSES.
Each party shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement. The Investors shall pay all costs and expenses incurred by the
Advisor under this Agreement.
8.9 AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended, and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investors. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding, each future
holder of all such securities, and the Company.
8.10 SEVERABILITY.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
8.11 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein.
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NUVEEN REAL ESTATE INCOME FUND
By: Security Capital Research & Management
Incorporated
By: /s/ DAVID E. ROSENBAUM
---------------------------------------------------
Name: David E. Rosenbaum
-------------------------------------------------
Title: Senior Vice President
------------------------------------------------
SECURITY CAPITAL U.S. REAL ESTATE SHARES, A SERIES
OF SECURITY CAPITAL REAL ESTATE MUTUAL FUNDS
INCORPORATED
By: Security Capital Research & Management
Incorporated
By: /s/ DAVID E. ROSENBAUM
---------------------------------------------------
Name: David E. Rosenbaum
-------------------------------------------------
Title: Senior Vice President
------------------------------------------------
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ PAUL MCAULIFFE
---------------------------------------------------
Name: Paul McAuliffe
-------------------------------------------------
Title: Executive Vice President & CFO
------------------------------------------------
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, Inc., its General Partner
By: /s/ PAUL MCAULIFFE
---------------------------------------------------
Name: Paul McAuliffe
-------------------------------------------------
Title: Executive Vice President & CFO
------------------------------------------------
SOLELY WITH RESPECT TO ARTICLE IV:
SECURITY CAPITAL RESEARCH & MANAGEMENT INCORPORATED
By: /s/ DAVID E. ROSENBAUM
---------------------------------------------------
Name: David E. Rosenbaum
-------------------------------------------------
Title: Senior Vice President
------------------------------------------------
Schedule I
SPECIFIED SUBSIDIARIES
Delaware Corporations
1. AIMCO-GP, Inc.
2. AIMCO-LP, Inc.
3. AIMCO/Bethesda Holdings, Inc.
Delaware Limited Partnerships
1. AIMCO Properties, L.P.
2. Casden Properties Operating Partnership, L.P.
D.C. Corporations
1. NHP Management Company
EXHIBIT A
Class R Cumulative Preferred Stock
Articles Supplementary
[not attached]
EXHIBIT B-1
FORM OF OPINION OF SKADDEN, ARPS,
SLATE, MEAGHER & FLOM LLP
In an opinion delivered pursuant to Section 5.5(i) of this Agreement,
Skadden, Arps, Slate, Meagher & Flom LLP shall opine that:
(i) This Agreement has been duly authorized, executed and
delivered by the Operating Partnership.
(ii) The Operating Partnership has partnership power and
authority to enter into this Agreement and to issue and deliver to the
Company the Preferred Units to be issued and delivered by the Operating
Partnership as described in this Agreement.
(iii) None of the issuance and sale by the Company of the
Securities, the issuance of the Preferred Units by the Operating
Partnership, or the execution, delivery and performance by the Company
or the Operating Partnership of their respective obligations under this
Agreement will (i) conflict with or constitute a breach of, or default
under, the certificate of incorporation of AIMCO-GP, Inc. or AIMCO-LP,
Inc. or the certificate of limited partnership or limited partnership
agreement of the Operating Partnership, (ii) constitute a violation of,
or a breach or default under, the terms of any Applicable Contract or
(iii) violate or conflict with, or result in any contravention of, any
Applicable Order. Such counsel need not express any opinion, however as
to (a) whether the execution, delivery or performance by the Company or
the Operating Partnership of this Agreement will constitute a violation
of or a default under any covenant, restriction or provision with
respect to financial ratios or tests or any aspect of the financial
condition or results of operations of the Company or the Operating
Partnership or (b) the enforceability of any of the Applicable
Contracts. "Applicable Order" means those judgments, orders or decrees
identified in paragraph 11 to the Company Certificate. "Applicable
Contract" means those agreements or instruments identified in Annex B
to the Company Certificate.
(iv) No Governmental Approval which has not been obtained or
taken and is not in full force and effect, is required to authorize, or
is required in connection with the consummation of the transactions
contemplated by this Agreement, except such as may be required under
the Act or the 1934 Act. "Governmental Approval" means any consent,
approval, license, authorization or validation of, or filing,
qualification or registration with, any Governmental Authority required
to be made or obtained by the Company or the Operating Partnership
pursuant to Applicable Laws, other than any consent, approval, license,
authorization, validation, filing, qualification or registration which
may have become applicable as a result of the involvement of any other
party (other than the Company or the Operating Partnership) in the
transactions contemplated by this Agreement or because of such parties'
legal or regulatory status or because of any other facts specifically
pertaining to such parties.
(v) To such counsel's knowledge, no holder of any security of
the Company or the Operating Partnership has any right that has not
been waived under any of the Registration Rights Agreements listed on
Annex C to the Company Certificate attached to such counsel's opinion
to require registration of any security of the Company or the Operating
Partnership because of the filing of the Registration Statement or
consummation of the transactions contemplated by this Agreement.
(vi) The Registration Statement has become effective under the
1933 Act, and such counsel has been advised by the Commission that no
stop order suspending the effectiveness of the Registration Statement
has been issued and, to the best of such counsel's knowledge, no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission. The Prospectus has been filed with the
Commission pursuant to Rule 424(b) under the Securities Act.
(vii) Neither the Company nor the Operating Partnership is
and, after giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the Prospectus,
will be an "investment company."
(viii) Each of the documents incorporated by reference into
the Registration Statement and the Prospectus (the "Incorporated
Documents"), when it was filed, appeared on its face to be
appropriately responsive in all material respects with the requirements
of the 1934 Act and the 1934 Act Rules and Regulations of the
Commission thereunder, except that such counsel need not express any
opinion as to the financial statements, including pro forma financial
statements, and related notes and schedules and other financial or
statistical data included therein or omitted therefrom or the exhibits
thereto.
(ix) The Registration Statement, as of the date of the filing
of the Company's 2001 Annual Report on Form 10-K, and as of the pricing
date, and the Prospectus, as of the date of the Prospectus Supplement
appeared on their faces to be appropriately responsive in all material
respects to the requirements of the 1933 Act and the 1933 Act Rules and
Regulations, except that in each case such counsel need not express any
opinion as to the financial statements, including pro forma financial
statements, and schedules and other financial or statistical data
included or incorporated by reference therein or excluded therefrom, or
the exhibits thereto, and, except to the extent expressly stated in
such counsel's opinion relating to certain tax matters delivered
pursuant to Section 5(b)(ii) of this Agreement, such counsel need not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the
Prospectus.
In addition, such counsel has participated in conferences with officers
and other representatives of the Company, at which the contents of the
Registration Statement and the Prospectus (including the Incorporated Documents)
and related matters were discussed. Although except as set forth in such
counsel's opinion relating to certain tax matters delivered pursuant to Section
5(b)(ii) of this Agreement such counsel is not passing upon, and does not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (including the
Incorporated Documents), and
have made no independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's attention that have led such
counsel to believe that the Registration Statement (including the Incorporated
Documents), at the time it became effective and as of the date of this
Agreement, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (including the
Incorporated Documents), as of the date of the Prospectus Supplement and as of
the date hereof, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that such counsel need not express any opinion or belief
with respect to the financial statements, including pro forma financial
statements, the schedules and other financial and statistical data included or
incorporated by reference therein or excluded therefrom or the exhibits to the
Registration Statement.
EXHIBIT B-2
FORM OF TAX OPINION OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
In an opinion delivered pursuant to Section 5.5(i) of this Agreement,
Skadden, Arps, Slate, Meagher & Flom LLP shall opine that:
(i) Commencing with the Company's initial taxable year ended
December 31, 1994, the Company was organized in conformity with the
requirements for qualification as a REIT under the Code, and its actual
method of operation has enabled, and its proposed method of operation
will enable, the Company to meet the requirements for qualification and
taxation as a REIT. As noted in the Registration Statement, the
Company's qualification and taxation as a REIT depend upon its ability
to meet, through actual annual operating results, certain requirements,
including requirements relating to distribution levels and diversity of
stock ownership, and the various qualification tests imposed under the
Code, the results of which will not be reviewed by us. Accordingly, no
assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy the requirements for
taxation of a REIT under the Code.
(ii) Although the discussion set forth in the Registration
Statement under the caption "Certain Federal Income Taxation
Considerations" does not purport to discuss all possible United States
Federal income tax consequences of the purchase, ownership, and
disposition of the Securities, the discussion, although general in
nature, constitutes, in all material respects, a fair and accurate
summary under current law of certain material United States Federal
income tax consequences of the purchase, ownership and disposition of
the Securities by a holder who purchases such Securities, subject to
the qualifications set forth therein. The United States Federal income
tax consequences of an investment in the Securities by an investor will
depend upon that holder's particular situation, and we express no
opinion as to the completeness of the discussion set forth in "Federal
Income Taxation of AIMCO and AIMCO Stockholders" as applied to any
particular holder.
EXHIBIT C
FORM OF OPINION OF PIPER RUDNICK LLP
In an opinion delivered pursuant to Section 5.5(ii) of this Agreement,
Piper Rudnick shall opine that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Maryland.
(ii) The Company has the corporate power and authority to own,
lease, and operate its properties and to conduct its business as
described in its Charter (as defined in such counsel's opinion).
(iii) The Securities to be purchased by the Fund from the
Company have been duly authorized for issuance and sale to the Fund
and, when issued and delivered by the Company against payment of
consideration set forth in this Agreement, will be duly and validly
issued, fully paid, and non-assessable and free of any preemptive right
(or, to such counsel's knowledge, similar rights) that are contained in
the Company's Charter or arising under the Maryland General Corporation
Law that entitle or will entitle any person to acquire any of the
Securities upon issuance thereof by the Company.
(iv) The Company has corporate power and authority to enter
into this Agreement and to issue, sell and deliver to the Fund the
Securities to be issued and sold by the Company pursuant to this
Agreement.
(v) This Agreement has been duly authorized by all necessary
corporation action on the part of the Company and, assuming that they
have been executed and delivered by the Chairman of the Board of
Directors, the Vice Chairman of the Board of Directors or any Vice
President of the Company, have been duly executed and delivered by the
Company.
(vi) The authorized capital stock of the Company conforms in
all material respects to the description thereof contained in the
Registration Statement and the Prospectus under the captions
"Description of Preferred Stock", "Description of Class A Common
Stock," "Provisions of Maryland Law Applicable to Preferred Stock,
Equity Stock and Class A Common Stock," "Description of Outstanding
Classes of Preferred Stock" and "Description of Class R Preferred
Stock," in so far as such description relates to the Company's Charter
and By-Laws (as defined in such counsel's opinion) and the Maryland
General Corporation Law.
(vii) The form of certificates evidencing the Securities is in
due and proper form and complies in all material respects with the
requirements of the Maryland General Corporation Law.
(viii) Neither the issuance and sale of the Securities, the
execution, delivery or performance of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated
thereby (i) requires any consent, approval, authorization
or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body,
agency or official of the State of Maryland (other than the filing of
the Articles Supplementary relating to the Securities with the SDAT),
(ii) conflicts or will conflict with or constitutes or will constitute
a breach of, or a default under, the Charter or By-Laws of the Company,
or (iii) violates or will violate any statute, law, regulation, filing,
judgment, injunction, order or decree of the State of Maryland known to
us, applicable to the Company or any of its properties.
(ix) The statements under the caption "Description of Class R
Preferred Stock" in the Prospectus, insofar as such statements
constitute a summary of legal matters, documents, or proceedings
referred to therein, are accurate summaries and fairly and correctly
present the information called for with respect to such legal matters,
documents, or proceedings in all material respects.
(x) The statements in Item 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of Maryland
statutes or provisions of the Charter or By-Laws of the Company
referred to therein, are accurate in all material respects.
(xi) To such counsel's knowledge, the Company is not (i) in
violation of its Charter or By-Laws, or (ii) in breach of any
applicable statute, rule or regulation or any writ, order or decree of
any court or governmental agency or body of the State of Maryland
having jurisdiction over the Company or its properties.
(xii) To such counsel's knowledge, there are no material legal
or governmental proceedings pending or threatened in the State of
Maryland against the Company, or to which the Company or any of its
properties is subject.
EXHIBIT D
FORM OF OPINION OF
JOEL F. BONDER
In an opinion delivered pursuant to Section 5.5(iii) of this Agreement,
Joel F. Bonder shall opine that:
(i) Each of the Specified Subsidiaries listed on Schedule A
under the caption "Delaware corporation" (collectively, the "Delaware
Corporations") has been duly incorporated under the Delaware General
Corporation Law ("DGCL"). AIMCO Properties, L.P. has been duly
organized or formed as a limited partnership under the Delaware Revised
Uniform Limited Partnership Act ("DRULPA"). NHP Management Company has
been duly incorporated under the laws of the District of Columbia. Each
of the Specified Subsidiaries is a corporation or a limited
partnership, as the case may be, validly existing and in good standing
under the laws of its jurisdiction of organization or formation, and
has corporate or limited partnership power, as the case may be, to own,
lease and operate the properties that to such counsel's knowledge are
currently owned by it and to conduct its business as described in the
Registration Statement and the Prospectus.
(ii) This Agreement (as defined in such counsel's opinion) has
been duly executed and delivered by the Company, assuming the
authorization thereof by the Company.
(iii) All of the outstanding shares of capital stock of
AIMCO-GP, Inc. and AIMCO-LP, Inc. have been validly issued and, to the
best of such counsel's knowledge, are fully paid and non-assessable and
are owned of record by the Company. All of the outstanding units of
limited partnership interests issued by the Operating Partnership
subsequent to July 29, 1994, including, without limitation, the
Preferred Units, have been validly issued and, to the best of such
counsel's knowledge, are owned of record by the Company or one or more
subsidiaries of the Company, except, with respect to the Operating
Partnership, for units of limited partnership held by third parties.
All of the outstanding units of limited partnership interests issued by
Casden Properties Operating Partnership, L.P. have been validly issued
and, to the best of my knowledge, are owned of record by the Operating
Partnership or one or more subsidiaries of the Company. All of the
outstanding shares of capital stock of AIMCO/Bethesda Holdings, Inc.
and NHP Management Company have been validly issued and, to the best of
such counsel's knowledge, are fully paid and non-assessable and are
owned of record by the Operating Partnership except with respect to no
more than one percent of the outstanding shares of capital stock of
each of AIMCO/Bethesda Holdings, Inc. and NHP Management Company owned
of record by third parties.
(iv) To such counsel's knowledge, based solely upon
discussions with, and representations from, officers and other
representatives of the Company, and upon such counsel's review of the
Applicable Contracts, all of the shares of the corporation listed as
items 1, 2, 3 and 6 on Schedule A to such counsel's opinion, and all of
the limited
partnership interests of the limited partnerships listed as items 4 and
5 on Schedule A to such counsel's opinion, that are owned, directly or
indirectly, by the Company, are owned free and clear of any security
interests, liens, adverse claims, equities or other encumbrances,
except that (i) certain of the shares of Series A Preferred Stock of
AIMCO/Bethesda Holdings, Inc. are pledged pursuant to a Borrowers
Pledge Agreement, dated as of March 11, 2002, by and between the
Pledgors (the Operating Partnership, the Company, AIMCO/Bethesda
Holdings, Inc., AIMCO GP, Inc., AIMCO GP LA, L.P., AIMCO Investment
Services, Inc., AIMCO LA QRS, Inc., AIMCO LP LA, L.P., Casden
Properties Operating Partnership, L.P., AIC REIT Properties LLC and NHP
Management Company) and Bank of America N.A., as Administrative Agent
for and representative of the financial institutions party to the
Fourth Amended and Restated Credit Agreement, dated as of March 11,
2002, by and among the Company, the Operating Partnership, NHP
Management Company, AIMCO/Bethesda Holdings, Inc., Bank of America
N.A., Fleet National Bank, First Union National Bank, and the other
financial institutions party thereto, and (ii) certain of the shares of
Series A Preferred Stock of NHP Management Company are pledged pursuant
to a Borrowers Pledge Agreement, dated as of March 11, 2002, by and
between the Pledgors (the Operating Partnership, the Company,
AIMCO/Bethesda Holdings, Inc., AIMCO GP, Inc., AIMCO GP LA, L.P., AIMCO
Investment Services, Inc., AIMCO LA QRS, Inc., AIMCO LP LA, L.P.,
Casden Properties Operating Partnership, L.P., AIC REIT Properties LLC
and NHP Management Company) and Lehman Commercial Paper, Inc., as
Administrative Agent for and respective of the financial institutions
party to the Interim Credit Agreement, dated as of March 11, 2002, by
and among the Company, the Operating Partnership, NHP Management
Company, Lehman Commercial Paper, Inc., and the other financial
institutions party thereto.
(v) The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its direct and indirect subsidiaries, taken as a whole.
(vi) To such counsel's knowledge, the Company possesses the
Governmental Licenses and the Company is in compliance with the terms
and conditions of all such Governmental Licenses, except where the
failure to so comply would not, singly or in the aggregate, have a
material adverse effect on the Company and the Subsidiaries, taken as a
whole, and all of the Governmental Licenses are valid and in full force
and effect, except where the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and
effect would not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. "Governmental Licenses" means such
permits licenses, franchises or authorizations from governmental or
regulatory authorities as are necessary under Applicable Laws for the
Company and its direct and indirect subsidiaries to own their
respective properties and to conduct their respective businesses in the
manner described in the Prospectus.
(vii) None of the issuance and sale by the Company of the
Securities, the issuance of the Preferred Units by the Operating
Partnership, the execution, delivery and performance by the Company or
the Operating Partnership of their respective obligations under this
Agreement will violate or conflict with, or result in any contravention
of, any judgment, decree or order known to such counsel of any federal
or state governmental authority entered in any proceedings to which the
Company or any Specified Subsidiary is a party or by which its property
is bound.
(viii) Neither the issuance and sale by the Company of the
Securities nor the execution, delivery and performance by the Company
of its obligations under the Agreement will violate or conflict with,
or result in any contravention of, any judgment, decree or order known
to me of any federal or state governmental authority entered in any
proceedings to which the Company or any Specified Subsidiary is a party
or by which its property is bound.
(ix) The statements in "Item 3 - Legal Proceedings" of the
Company's most recent annual report on Form 10-K incorporated by
reference in the Prospectus insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the
matters referred to therein.
(x) After due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the Company
or any of the Specified Subsidiaries is a party or to which any of the
properties of the Company or any of the Specified Subsidiaries is
subject that are required to be described in the Registration Statement
or the Prospectus and are not so described or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed or incorporated by reference as exhibits to the Registration
Statement that are not described, filed or incorporated as required.
In addition, such counsel has participated in conferences with officers
and other representatives of the Company, at which the contents of the
Registration Statement and the Prospectus (including the Incorporated Documents)
and related matters were discussed and, although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (including the Incorporated Documents), and has made no independent
check or verification thereof, on the basis of the foregoing, no facts have come
to such counsel's attention that have led such counsel to believe that the
Registration Statement (including the Incorporated Documents), at the time it
became effective and as of the date of this Agreement, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (including the Incorporated Documents), as of the date of
the Prospectus and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that such counsel need not
express any opinion or belief with
respect to the financial statements, including pro forma financial statements,
the schedules and other financial and statistical data included or incorporated
by reference therein or excluded therefrom or the exhibits to the Registration
Statement.