AGREEMENT AND PLAN OF MERGER
BY AND AMONG
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
CASDEN PROPERTIES INC.
AND
XYZ HOLDINGS LLC
Dated as of December 3, 2001
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER ................................................5
Section 1.1 THE MERGER.......................................5
Section 1.2 EFFECTS OF THE MERGER............................5
Section 1.3 EFFECTIVE TIME OF THE MERGER.....................6
ARTICLE II TREATMENT OF SHARES.............................................6
Section 2.1 CERTAIN DEFINITIONS..............................6
Section 2.2 EFFECT OF THE MERGER ON SHARES..................13
Section 2.3 PAYMENT OF MERGER CONSIDERATION.................17
Section 2.4 APPRAISAL RIGHTS................................20
ARTICLE III THE CLOSING...................................................20
Section 3.1 CLOSING.........................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CASDEN.......................20
Section 4.1 ORGANIZATION AND QUALIFICATION; ASSETS..........20
Section 4.2 CAPITALIZATION..................................23
Section 4.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY
APPROVALS; COMPLIANCE...........................24
Section 4.4 CASDEN FINANCIAL STATEMENTS.....................26
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS............26
Section 4.6 LITIGATION......................................27
Section 4.7 TAX MATTERS.....................................27
Section 4.8 EMPLOYEE MATTERS; ERISA.........................30
Section 4.9 ENVIRONMENTAL PROTECTION........................34
Section 4.10 VOTE REQUIRED...................................36
Section 4.11 HUD .......................................36
Section 4.12 ABSENCE OF INDUCEMENT...........................37
Section 4.13 REAL PROPERTIES.................................37
Section 4.14 BOOKS AND RECORDS...............................40
Section 4.15 NO UNDISCLOSED LIABILITIES......................40
Section 4.16 INSURANCE.......................................40
Section 4.17 CONTRACTS.......................................41
Section 4.18 PROPRIETY OF PAST PAYMENTS......................41
Section 4.19 BANK ACCOUNTS...................................42
Section 4.20 DEFICIT RESTORATION OBLIGATIONS, ADJUSTED
CAPITAL ACCOUNT DEFICITS AND CAPITAL
CONTRIBUTION OBLIGATIONS........................42
Section 4.21 COMPLIANCE WITH LAWS............................42
Section 4.22 RELATIONSHIPS WITH RELATED PERSONS..............42
Section 4.23 MARYLAND TAKEOVER LAWS..........................42
Section 4.24 OFFICERS AND DIRECTORS..........................43
Section 4.25 NO CASDEN MATERIAL MISSTATEMENTS................43
Section 4.26 TAX QUESTIONNAIRES..............................43
Section 4.27 CLOSING PAYOFF AMOUNTS..........................43
Section 4.28 CASDEN BOARD OF DIRECTORS APPROVAL..............43
ARTICLE V REPRESENTATIONS AND WARRANTIES OF AIMCO.........................43
Section 5.1 ORGANIZATION AND QUALIFICATION..................43
Section 5.2 AIMCO SUBSIDIARIES..............................43
Section 5.3 CAPITALIZATION..................................44
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY
APPROVALS; COMPLIANCE...........................44
Section 5.5 REPORTS AND FINANCIAL STATEMENTS................46
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS............46
Section 5.7 LITIGATION......................................46
Section 5.8 REGISTRATION STATEMENT..........................46
Section 5.9 TAX MATTERS.....................................47
Section 5.10 EMPLOYEE MATTERS; ERISA.........................48
Section 5.11 ENVIRONMENTAL PROTECTION........................49
Section 5.12 HUD ..........................................50
Section 5.13 ABSENCE OF INDUCEMENT...........................51
Section 5.14 NO AIMCO MATERIAL MISSTATEMENTS.................51
Section 5.15 MARYLAND TAKEOVER LAWS..........................51
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER.........................51
Section 6.1 COVENANTS OF CASDEN.............................51
Section 6.2 COVENANTS OF AIMCO..............................56
ARTICLE VII ADDITIONAL AGREEMENTS.........................................56
Section 7.1 ACCESS TO INFORMATION...........................56
Section 7.2 REGISTRATION RIGHTS AGREEMENT...................57
Section 7.3 LETTERS OF ACCOUNTANTS..........................57
Section 7.4 REGULATORY MATTERS..............................58
Section 7.5 APPROVAL OF CASDEN STOCKHOLDERS.................58
Section 7.6 PUBLIC ANNOUNCEMENTS............................58
Section 7.7 NO SOLICITATION.................................59
Section 7.8 EXPENSES........................................59
Section 7.9 FURTHER ASSURANCES..............................59
Section 7.10 REIT STATUS.....................................60
Section 7.11 EMPLOYEES; EMPLOYEE PLANS.......................60
Section 7.12 RECORD DATES AND DIVIDEND PAYMENT DATES.........61
Section 7.13 INSURANCE.......................................61
Section 7.14 BREACHES 61
Section 7.15 TRANSFER TAXES..................................61
Section 7.16 NAMES AND TRADEMARKS............................62
Section 7.17 PREPARATION OF TAX RETURNS......................62
Section 7.18 DEPOSIT BY AIMCO................................62
Section 7.19 TAX FREE REORGANIZATION.........................63
Section 7.20 MEZZANINE LOAN..................................63
Section 7.21 PLEDGE AND GUARANTY AGREEMENTS..................63
Section 7.22 RELEASE 63
Section 7.23 QUESTIONNAIRES..................................63
Section 7.24 CPLB DISTRIBUTION...............................64
Section 7.25 COMMERCIAL PROPERTIES...........................64
Section 7.26 LEGAL MATTERS...................................64
Section 7.27 RESERVATION OF AIMCO STOCK......................64
Section 7.28 CASDEN WARRANTS.................................64
Section 7.29 MATERIAL ADVERSE EFFECTS; KNOWLEDGE OF
BREACHES........................................64
Section 7.30 LITIGATION......................................64
Section 7.31 LISTING OF SHARES...............................65
Section 7.32 NAPICO SYNDICATED PROPERTIES....................65
Section 7.33 COMPLIANCE WITH THE MGCL........................65
Section 7.34 CASDEN CHARTER..................................65
Section 7.35 NAPICO PROPERTY CONSENTS........................65
Section 7.36 CLOSING PAYOFF AMOUNTS..........................65
ARTICLE VIII CONDITIONS...................................................66
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER...............................66
Section 8.2 CONDITIONS TO OBLIGATION OF AIMCO TO EFFECT
THE MERGER......................................66
Section 8.3 CONDITIONS TO OBLIGATION OF CASDEN TO EFFECT
THE MERGER......................................68
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..............................70
Section 9.1 TERMINATION.....................................70
Section 9.2 EFFECT OF TERMINATION...........................71
Section 9.3 TERMINATION FEES................................71
Section 9.4 AMENDMENT.......................................72
Section 9.5 WAIVER..........................................72
Section 9.6 DAMAGES.........................................72
ARTICLE X GENERAL PROVISIONS..............................................72
Section 10.1 BROKERS.........................................72
Section 10.2 NOTICES.........................................73
Section 10.3 MISCELLANEOUS...................................74
Section 10.4 INTERPRETATION..................................75
Section 10.5 COUNTERPARTS; EFFECT............................75
Section 10.6 PARTIES' INTEREST...............................75
Section 10.7 ENFORCEMENT.....................................75
Section 10.8 SEVERABILITY....................................76
EXHIBITS TO AGREEMENT
Exhibit A Form of OP Contribution Agreement
Exhibit B-1 Form of Casden Contribution Agreement
Exhibit B-2 Form of Commercial Purchase Agreement
Exhibit C-1 Form of Tri-Party Agreement
Exhibit C-2 Form of WW Letter Agreement
Exhibit C-3 Form of Villa Azure Letter Agreement
Exhibit D Form of CPLB Merger Agreement
Exhibit E-1 Form of Development LLC Agreement
Exhibit E-2 Form of Ross Purchase Agreement
Exhibit E-3 Form of Development LLC Purchase Agreement
Exhibit F Form of Consent and Voting Agreement
Exhibit G Form of Tax Indemnification and Tax Contest Agreement
Exhibit H Form of Master Indemnification Agreement
Exhibit I Form of Amended and Restated Limited Liability Company
Operating
Agreement of Casden Park La Brea A LLC
Exhibit J Form of Amended and Restated Limited Liability Company
Operating
Agreement of Casden Park La Brea B LLC
Exhibit K Form of Amended and Restated Limited Liability Company
Operating
Agreement of Casden Park La Brea C LLC
Exhibit L Form of Amended and Restated Limited Liability Company
Operating
Agreement of Casden Glendon LLC
Exhibit M Form of Registration Rights Agreement (Stock)
Exhibit N Form of Consulting Agreement
Exhibit O List of Core Properties
Exhibit P-1 Form of Tax Questionnaires - Subsidiaries
Exhibit P-2 Form of General Questionnaires
Exhibit P-3 Form of Tax Questionnaires - NAPICO
Exhibit Q-1 Form of Non-Foreign Status (1)
Exhibit Q-2 Form of Non-Foreign Status (2)
Exhibit R Form of Casden Comfort Letter
Exhibit S Form of AIMCO Comfort Letter
Exhibit T Form of Investor Representation Letter
Exhibit U Form of Escrow Agreement
Exhibit V Form of Mezzanine Loan Documents
Exhibit W-1 Form of Pledge Agreement
Exhibit W-2 Form of Guaranty Agreement
Exhibit X-1 Form of Release (Casden)
Exhibit X-2 Form of Release (Blackacre)
Exhibit Y CPLB Instrument of Assignment
Exhibit 8.2(c)-1 Form of Opinion of Casden's Maryland Counsel(1)
Exhibit 8.2(c)-2 Form of Opinion of Casden's Maryland Counsel(2)
Exhibit 8.2(d) Form of Opinion of Casden Special Counsel
Exhibit 8.2(f) Form of Casden REIT Opinion
Exhibit 8.3(c) Form of Opinion of AIMCO's Maryland Counsel
Exhibit 8.3(d)(i) Form of Merger Opinion of Casden's Counsel
Exhibit 8.3(d)(ii)Form of AIMCO Officer's Certificate re: REIT
Exhibit 8.3(e) Form of Opinion of AIMCO's Counsel
SCHEDULES TO AGREEMENT
Schedule 2.1(a) Closing Payoff Amounts
Schedule 2.1(b) Casden Mortgage Debt
TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
Acquisition Proposal .............................................Section 2.1.....................................6
Additional Tax Liabilities .......................................Section 2.1.....................................6
Affected Employees ...............................................Section 7.11(a)................................60
Affiliate ........................................................Section 2.1.....................................6
Aggregate Consideration ..........................................Section 2.1.....................................6
Agreement ........................................................Preamble........................................1
AIC...............................................................Recitals........................................1
AIC Common Per Share Consideration................................Section 2.1.....................................6
AIC Common Stock..................................................Section 2.1.....................................6
AIMCO ............................................................Preamble........................................1
AIMCO Benefit Plans ..............................................Section 5.10(a)................................48
AIMCO Charter ....................................................Section 1.2.....................................5
AIMCO Common Stock ...............................................Section 2.1.....................................6
AIMCO Common Stock Price .........................................Section 2.1.....................................7
AIMCO CPLB Merger Sub ............................................Recitals........................................2
AIMCO Disclosure Letter ..........................................Article V......................................43
AIMCO Financial Statements .......................................Section 5.5....................................46
AIMCO Material Adverse Effect ....................................Section 2.1.....................................7
AIMCO OP .........................................................Recitals........................................1
AIMCO Required Statutory Approvals ...............................Section 5.4(c).................................45
AIMCO SEC Reports ................................................Section 2.1.....................................7
AIMCO Subsidiary .................................................Section 2.1.....................................7
ARP...............................................................Recitals........................................1
Articles of Merger ...............................................Recitals........................................1
Asset Purchase....................................................Recitals........................................3
Blackacre.........................................................Section 8.2(d).................................67
Blackacre Parties.................................................Section 8.2(d).................................67
Canceled Shares ..................................................Section 2.3(b)(i)..............................17
Casden ...........................................................Preamble........................................1
Casden Benefit Plans .............................................Section 4.8(a).................................30
Casden Capital Stock .............................................Section 2.1.....................................7
Casden Charter ...................................................Section 4.1(a).................................20
Casden Class A Preferred Stock ...................................Section 2.1.....................................7
Casden Common Stock ..............................................Section 2.1.....................................7
Casden Contribution Agreement.....................................Recitals........................................1
Casden Contribution Consideration.................................Section 2.1.....................................6
Casden Disclosure Letter .........................................Article IV.....................................20
Casden Financial Statements ......................................Section 2.1.....................................7
Casden Junior Preferred Stock ....................................Section 2.1.....................................7
Casden Material Adverse Effect ...................................Section 2.1.....................................8
Casden Meeting ...................................................Section 7.5(a).................................58
Casden OP ........................................................Recitals........................................1
Casden Option.....................................................Section 2.2(c).................................15
Casden OPUs ......................................................Recitals........................................1
Casden Pro Forma Financial Information............................Section 4.4(b).................................26
Casden Property Consents..........................................Section 4.3(b).................................24
Casden Properties ................................................Section 4.13(a)................................37
Casden Required Consents..........................................Section 7.35...................................24
Casden Required Statutory Approvals ..............................Section 4.3(c).................................25
Casden Reverse Stock Split .......................................Recitals........................................1
Casden Stock Plan ................................................Section 2.1.....................................8
Casden Stockholders' Approval ....................................Section 4.10...................................36
Casden Subsidiary ................................................Section 2.1.....................................8
Casden Transfer Tax Amount........................................Section 2.1.....................................8
Casden I Warrants ................................................Section 2.1.....................................8
Casden II Warrants ...............................................Section 2.1.....................................8
Cerberus Partners.................................................Recitals........................................3
Certificate ......................................................Section 2.3(b)(i)..............................17
Certificates .....................................................Section 2.3(b)(i)..............................17
CIC...............................................................Recitals........................................1
Closing ..........................................................Section 3.1....................................20
Closing Agreement ................................................Section 2.1.....................................8
Closing Date .....................................................Section 3.1....................................20
Code .............................................................Recitals........................................5
CommercialCo .....................................................Recitals........................................2
Commercial Debt ..................................................Recitals........................................2
Commercial Properties ............................................Recitals........................................2
Commercial Sale ..................................................Recitals........................................2
Common Per Share Value............................................Section 2.2(d).................................15
Confidentiality Agreement ........................................Section 7.1....................................56
Consulting Agreement ............................................Recitals........................................4
Contract .........................................................Section 2.1.....................................8
Contribution Effective Date.......................................Section 2.1.....................................8
Core Properties ..................................................Section 2.1.....................................9
Core Properties Earnout Amount ...................................Section 2.1.....................................9
CPLB .............................................................Recitals........................................1
CPLB LLC..........................................................Recitals........................................3
CPLB Merger ......................................................Recitals........................................2
CPLB Merger Agreement ............................................Recitals........................................2
CPLB Merger Consideration.........................................Section 2.1.....................................9
CPLB Reverse Stock Split .........................................Recitals........................................1
Deferred Consideration............................................Section 2.1.....................................9
Development LLC ..................................................Recitals........................................2
Development LLC Agreement ........................................Recitals........................................2
Development LLC Assets ...........................................Recitals........................................2
Development LLC Purchase Agreement ...............................Recitals........................................3
Development Properties ...........................................Recitals........................................2
Dissenting Shares ................................................Section 2.1.....................................9
Effective Time ...................................................Section 1.3.....................................6
Environmental Claim ..............................................Section 2.1.....................................9
Environmental Laws ...............................................Section 2.1.....................................9
Environmental Permits ............................................Section 4.9(b).................................35
Environmental Release.............................................Section 2.1.....................................9
Equity Consideration..............................................Section 2.2(d).................................15
ERISA ............................................................Section 4.8(a).................................30
ERISA Affiliate ..................................................Section 4.8(a).................................30
Escrow Agent .....................................................Section 7.18...................................62
Escrow Agreement..................................................Section 7.18...................................62
Escrow Amount ....................................................Section 7.18...................................62
Exchange Act .....................................................Section 2.1....................................10
Exchange Fund ....................................................Section 2.3(a).................................17
GAAP .............................................................Section 4.4(a).................................26
General Questionnaires............................................Section 2.1....................................10
Governmental Authority ...........................................Section 4.3(c).................................25
Ground Lease .....................................................Section 4.13(b)................................38
Hazardous Materials ..............................................Section 2.1....................................10
Holder ...........................................................Section 2.1....................................10
HSR Act ..........................................................Section 4.3(c).................................25
HUD ..............................................................Section 4.3(c).................................25
HUD Approval .....................................................Section 7.4(a).................................58
IRS ..............................................................Section 4.8(a).................................31
Joint Venture ....................................................Recitals........................................2
Junior Preferred Liquidation Amount ..............................Section 2.1....................................10
knowledge ........................................................Section 2.1....................................10
Latest Casden Financial Statements................................Section 2.1....................................10
Latest Casden Pro Forma Financial Information.....................Section 2.1....................................11
Laws .............................................................Section 4.13(a)................................38
Leased Properties ................................................Section 4.13(a)(ii)...........................37
Leased Properties Lessees ........................................Section 4.13(a)(ii)............................37
Liens ............................................................Section 4.1(b).................................21
Liquidated Damages ...............................................Section 9.3(a).................................71
Master Indemnification Agreement .................................Recitals........................................3
Merger ...........................................................Recitals........................................1
Mezzanine Loan ...................................................Section 7.20...................................63
Mezzanine Loan Documents .........................................Section 7.20...................................63
Mortgage Debt Amortization........................................Section 2.1....................................11
MGCL .............................................................Section 1.2.....................................5
MSDAT ............................................................Section 1.3.....................................6
NAPICO ...........................................................Section 4.1(e).................................22
NAPICO Entities ..................................................Section 4.1(e).................................22
NAPICO Properties ................................................Section 4.13(a)(iii)..........................37
NAPICO Property Consents .........................................Section 7.35...................................65
NAPICO Property Owners ...........................................Section 4.13(a)(iii)...........................37
NAPICO Syndicated Properties .....................................Section 7.32..................................65
New Merger Sub....................................................Section 2.2(f).................................66
Non-Equity Consideration..........................................Section 2.2(d).................................15
Non-Equity Ratio..................................................Section 2.2(d).................................15
NYSE .............................................................Section 2.1....................................11
OP Contribution ..................................................Recitals........................................1
OP Contribution Agreement ........................................Recitals........................................1
OP Contribution Consideration.....................................Section 2.1....................................11
Option Settlement Amount..........................................Section 2.2(c).................................15
Other Common Per Share Consideration..............................Section 2.1....................................11
Other Common Stock................................................Section 2.1...................................11
Owned Properties .................................................Section 4.13(a)(i)............................37
Owner Property Owners.............................................Section 2.1...................................11
PBGC .............................................................Section 4.8(d)................................31
Per Share Casden Jenior Preferred Liquidation Amount .............Section 4.13(a)(i).............................37
Permitted Encumbrances ...........................................Section 4.13(a)................................38
Person ...........................................................Section 2.1....................................11
PLB ..............................................................Recitals........................................2
Proposed Transferred Employees....................................Section 4.8(s).................................34
Qualified REIT Subsidiary.........................................Section 4.1(c).................................21
Questionnaires....................................................Section 2.1....................................10
Registration Rights Agreement (Stock).............................Recitals........................................4
Registration Rights Agreement (Units).............................Recitals........................................4
Registration Statement ...........................................Section 2.1....................................11
REIT .............................................................Recitals........................................5
REIT Cash Consideration...........................................Section 2.1....................................11
REIT Common Consideration ........................................Section 2.1....................................12
REIT Common Deferred Consideration................................Section 2.1....................................12
REIT Merger Consideration.........................................Section 2.1....................................12
REIT Preferred Consideration......................................Section 2.1....................................12
Related Transaction Documents ....................................Section 2.1....................................12
Related Transactions .............................................Section 2.1....................................12
Release ..........................................................Section 7.22...................................63
Representatives ..................................................Section 7.1...................................56
Ross Purchase Agreement...........................................Recitals........................................3
Ross Retail LLC ..................................................Recitals........................................3
Ross Store Sale...................................................Recitals........................................3
SEC ..............................................................Section 2.1....................................12
Securities Act ...................................................Section 2.1....................................12
Spin-Off..........................................................Recitals........................................2
Status Requirements ..............................................Section 4.7(f).................................28
Subsidiary .......................................................Section 2.1....................................12
Surviving Corporation ............................................Section 1.1.....................................5
Tax Indemnity Agreement ..........................................Recitals........................................3
Tax Questionnaires-NAPICO.........................................Section 2.1....................................10
Tax Questionnaires-Subsidiaries...................................Section 2.1....................................10
Tax Return .......................................................Section 2.1....................................13
Tax Ruling .......................................................Section 2.1....................................13
Taxable Election..................................................Section 2.2(f).................................16
Taxable REIT Subsidiary...........................................Section 4.1(c).................................21
Taxes ............................................................Section 2.1....................................13
Termination Date .................................................Section 9.1(c).................................70
Test Date.........................................................Section 2.2(f).................................16
Total Consideration...............................................Section 2.2(d).................................15
Trademarks .......................................................Section 7.16(a)................................62
Transaction Documents ............................................Section 2.1....................................13
Transactions .....................................................Section 2.1....................................13
Transfer Taxes ...................................................Section 7.15...................................61
Transferred Employees.............................................Section 7.11(a)................................60
Transition Period ................................................Section 7.16(c)................................62
Tri-Party Agreement ..............................................Recitals........................................2
Villa Azure Earnout Amount .......................................Section 2.1....................................13
Villa Azure Letter Agreement......................................Recitals........................................2
Villa Azure Property .............................................Section 2.1....................................13
Violation ........................................................Section 4.3(b).................................24
Voting Agreement .................................................Recitals........................................3
Voting Debt ......................................................Section 4.2(a).................................23
WARN Act .........................................................Section 2.1....................................13
Westwood..........................................................Recitals........................................2
WW Letter Agreement...............................................Recitals........................................2
XYZ ..............................................................Preamble........................................1
XYZ Agreement.....................................................Section 2.1....................................13
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of December 3, 2001, by and between Apartment Investment
and Management Company, a Maryland corporation ("AIMCO"), Casden Properties
Inc., a Maryland corporation ("Casden"), and XYZ Holdings LLC, a Delaware
limited liability company ("XYZ").
WHEREAS, the respective boards of directors of AIMCO and Casden
deem it advisable and in the best interests of their respective
stockholders that AIMCO acquire Casden in a merger (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, pursuant to this Agreement, AIMCO shall acquire Casden
REIT, and pursuant to the OP Unit Contribution Agreement (as defined
herein), the CPLB Merger Agreement (as defined herein) and the Casden
Contribution Agreement (as defined herein), AIMCO shall acquire certain
affiliated entities, all in exchange for the Aggregate Consideration;
WHEREAS, immediately prior to the Closing Date (as defined in
Section 3.1), Casden shall effect a reverse stock split with respect to the
Casden Common Stock, whereby every 100 shares of Casden Common Stock will
represent one share of Casden Common Stock after giving effect thereto (the
"Casden Reverse Stock Split");
WHEREAS, immediately prior to the Closing Date, Casden Park La
Brea, Inc., a Maryland corporation ("CPLB"), shall effect a reverse stock
split with respect to its common stock, whereby every 10 shares of CPLB
common stock will represent one share of CPLB common stock after giving
effect thereto (the "CPLB Reverse Stock Split");
WHEREAS, upon the terms and subject to the conditions set forth
herein, AIMCO and Casden shall execute Articles of Merger ("Articles of
Merger") and shall file such Articles of Merger in accordance with Maryland
law to effectuate the Merger;
WHEREAS, Casden and AIMCO desire that, on or prior to the
Contribution Effective Date, holders of limited partnership interests in
Casden Properties Operating Partnership, L.P., a Delaware limited
partnership ("Casden OP"), will exchange such limited partnership interests
("Casden OPUs") for cash and limited partnership interests in AIMCO
Properties, L.P., a Delaware limited partnership ("AIMCO OP"), on the terms
and subject to the conditions of an OP Unit Contribution Agreement, dated
as of December 3, 2001 and attached hereto as Exhibit A (the "OP
Contribution Agreement"), by and among the holders of Casden OPUs, Casden,
Casden OP and AIMCO OP (the "OP Contribution");
WHEREAS, Casden and AIMCO desire that, on or prior to the
Contribution Effective Date, (i) Alan I. Casden ("AIC") will contribute all
of his interests in AIC REIT Properties LLC, a Delaware limited liability
company ("ARP"), and (ii) Casden Investment Corp., a California corporation
("CIC"), will contribute all of its interests in NAPICO (as defined in
Section 4.1(e)) to AIMCO OP in exchange for cash and/or limited partnership
interests in AIMCO OP, on the terms and subject to the conditions of a
Contribution Agreement, dated as of the date hereof and attached hereto as
Exhibit B-1 (the "Casden Contribution Agreement"), by and among ARP, AIC,
CIC and AIMCO OP;
WHEREAS, Casden and AIMCO desire that, on or prior to the
Contribution Effective Date, certain commercial real estate properties of
Casden (the "Commercial Properties") either (i) shall be sold to, and
certain indebtedness of Casden relating to such Commercial Properties (the
"Commercial Debt") shall be assumed by, one or more entities pursuant to an
asset purchase agreement substantially in the form attached hereto as
Exhibit B-2 or (ii) any Commercial Debt and the interests in the limited
liability companies that own the Commercial Properties shall be distributed
by Casden to its stockholders in a spin-off transaction (the "Spin-Off")
(collectively, such entity or entities referred to herein as "CommercialCo"
and such transaction(s), including the Spin-Off, referred to herein as the
"Commercial Sale");
WHEREAS, Casden and AIMCO desire that, on the Closing Date, AIMCO
acquire 100% of the ownership interest in certain real estate properties
currently under development and commonly referred to as the "PLB" and
"Westwood" developments (the "Development Properties"), subject to
compliance with the terms and conditions of the Tri-Party and Construction
Completion Agreement, by and among XYZ, AIMCO, Development LLC, AIMCO OP,
Casden Park La Brea A LLC, Casden Park La Brea B LLC, Casden Park La Brea C
LLC, Casden Glendon, LLC and the agent for the construction lenders named
therein, substantially in the form attached hereto as Exhibit C-1 (the
"Tri-Party Agreement"), subject to Section 7.9, providing for, among other
things, the financing, development and completion of the construction of
the Development Properties;
WHEREAS, XYZ and AIMCO desire that, concurrently with the
execution of the Tri-Party Agreement, AIMCO and XYZ shall execute and
deliver a letter agreement relating to the "Westwood" Development Property,
substantially in the form attached hereto as Exhibit C-2 (the "WW Letter
Agreement");
WHEREAS, Casden and AIMCO desire that on the Closing Date, AIMCO
shall execute and deliver, and Casden shall cause The Casden Company to
execute and deliver, a letter agreement relating to the Villa Azure
Property (as defined herein), substantially in the form attached hereto as
Exhibit C-3 (the "Villa Azure Letter Agreement");
WHEREAS, on or prior to the date of the OP Contribution, Casden
shall cause Casden OP to distribute to Casden its entire interest in CPLB;
WHEREAS, immediately after the Effective Time (as defined in
Section 1.3), a wholly-owned subsidiary of AIMCO ("AIMCO CPLB Merger Sub")
will be merged with and into CPLB (the "CPLB Merger"), pursuant to an
Agreement and Plan of Merger, dated as of December 3, 2001 (the "CPLB
Merger Agreement"), by and among AIMCO, CPLB, AIMCO CPLB Merger Sub and XYZ
and attached hereto as Exhibit D;
WHEREAS, AIMCO and certain Casden stockholders desire to enter
into a joint venture with respect to the development of real estate
properties (the "Joint Venture"), and for such purpose AIMCO and certain
Casden stockholders shall contribute cash and certain other assets (the
"Development LLC Assets") to a newly formed limited liability company
("Development LLC"), on the terms and subject to the conditions of a
limited liability company agreement substantially in the form attached
hereto as Exhibit E-1 (the "Development LLC Agreement");
WHEREAS, Casden and AIMCO desire that, on or prior to the
Contribution Effective Date, either (i) Casden Park La Brea LLC, a Delaware
limited liability company ("CPLB LLC"), shall sell all of the issued and
outstanding ownership interests of Casden Park La Brea Retail LLC, a
Delaware limited liability company ("Ross Retail LLC"), to Development LLC,
on the terms and subject to the conditions of a purchase agreement (the
"Ross Purchase Agreement"), substantially in the form attached hereto as
Exhibit E-2 or (ii) the limited liability company interests in Ross Retail
LLC shall be distributed to the stockholders of CPLB in a spin-off
transaction (the transactions described in clauses (i) and (ii) above being
referred to herein, collectively, as the "Ross Store Sale");
WHEREAS, Casden and AIMCO desire that, on or prior to the
Contribution Effective Date, Casden shall sell certain assets it owns,
together with all development rights that it acquires after the date
hereof, to Development LLC (the "Asset Purchase"), on the terms and subject
to the conditions of an asset purchase agreement (the "Development LLC
Purchase Agreement") substantially in the form attached hereto as Exhibit
E-3;
WHEREAS, concurrently with the execution of this Agreement and as
an inducement to AIMCO and Casden to enter into this Agreement, the
following parties have entered into the following agreements (each of even
date herewith):
(i) certain of the holders of Casden OPUs, Casden, Casden
OP and AIMCO OP have entered into the OP Contribution Agreement;
(ii) ARP, AIC, CIC and AIMCO OP have entered into the
Casden Contribution Agreement;
(iii) AIMCO, AIMCO CPLB Merger Sub, CPLB and XYZ have
entered into the CPLB Merger Agreement;
(iv) the holders of at least two-thirds (2/3) of the
Casden Common Stock and at least 55% of the Casden Class A
Preferred Stock (each term as defined in Section 2.1) have entered
into a Consent and Voting Agreement substantially in the form
attached as Exhibit F hereto (the "Voting Agreement"), pursuant to
which (a) such holders of Casden Class A Preferred Stock have
delivered their consent to the approval of the Merger and the
approval of this Agreement and (b) such holders of Casden Common
Stock have agreed to vote their shares of Casden Capital Stock in
favor of the approval of this Agreement and in favor of the Merger
and the Casden Reverse Stock Split, subject to the terms of the
Voting Agreement;
(v) AIMCO, AIC, Cerberus Partners, L.P., a Delaware
limited partnership ("Cerberus Partners"), XYZ, CIC, The Casden
Company, CPLB and NAPICO have entered into a Tax Indemnification
and Tax Contest Agreement (the "Tax Indemnity Agreement")
substantially in the form attached hereto as Exhibit G providing
for certain Tax indemnification rights and obligations of the
parties thereto;
(vi) AIMCO, AIMCO OP, AIC, Cerberus Partners, XYZ, CIC
and The Casden Company have entered into a Master Indemnification
Agreement (the "Master Indemnification Agreement") substantially
in the form attached hereto as Exhibit H, providing for certain
indemnification rights and obligations of the parties thereto;
(vii) AIMCO and the Persons named therein have entered
into the registration rights agreement (the "Registration Rights
Agreement (Units)") attached as an exhibit to the OP Contribution
Agreement, providing for, among other things, AIMCO's registration
of the AIMCO Common Stock issued in exchange for AIMCO OP Units
received pursuant to the OP Contribution Agreement that are
surrendered for redemption;
WHEREAS, on or prior to the Closing Date, the following additional
agreements shall have been entered into and the following actions shall
have occurred:
(i) AIMCO and certain Casden stockholders have entered
into the Development LLC Agreement;
(ii) Casden Park La Brea LLC and an appropriate Casden
entity shall have executed and delivered amended and restated
limited liability company agreements for the following entities:
(A) Casden Park La Brea A LLC, substantially in the form attached
hereto as Exhibit I, (B) Casden Park La Brea B LLC, substantially
in the form attached hereto as Exhibit J, and (C) Casden Park La
Brea C LLC, substantially in the form attached hereto as Exhibit
K;
(iii) Casden Glendon LLC and an appropriate Casden entity
shall have executed and delivered an amended and restated limited
liability company agreement for Casden Glendon LLC, substantially
in the form attached hereto as Exhibit L;
(iv) AIMCO and the Persons named therein shall have
executed and delivered the registration rights agreement (the
"Registration Rights Agreement (Stock)") substantially in the form
attached hereto as Exhibit M providing for, among other things,
AIMCO's registration of the AIMCO Common Stock issued in the
Merger;
(v) Development LLC and AIMCO shall have executed and
delivered the consulting agreement (the "Consulting Agreement")
substantially in the form attached hereto as Exhibit N;
(vi) Casden, CommercialCo and the other parties named
therein shall have executed and delivered the Commercial Sale
Agreement;
(vii) AIMCO and The Casden Company shall have executed
and delivered the Villa Azure Letter Agreement;
(viii) CPLB LLC and Development LLC shall have executed
and delivered the Ross Purchase Agreement;
(ix) Casden and Development LLC shall have executed and
delivered the Development LLC Purchase Agreement; and
(x) each of the other Transaction Documents not
previously executed and delivered by the parties thereto;
WHEREAS, on or after the Closing, AIMCO, AIMCO OP, XYZ,
Development LLC, Casden Park La Brea A LLC, Casden Park La Brea B LLC,
Casden Park La Brea C LLC, Casden Glendon LLC and the agent for the
construction lenders named therein shall execute and deliver the Tri-Party
Agreement (and AIMCO and XYZ shall execute and deliver the WW Letter
Agreement), subject to the terms of Section 7.9 hereof;
WHEREAS, on or after the Closing, AIMCO will cause one or more
mezzanine loans to be made to XYZ pursuant to the Mezzanine Loan Documents;
WHEREAS, for Federal income tax purposes it is intended that the
Merger will qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
unless the Taxable Election (as defined in Section 2.2(f) is made);
WHEREAS, AIMCO intends that, following the Merger, it shall
continue to be subject to taxation as a real estate investment trust (a
"REIT") within the meaning of Section 856 of the Code; and
WHEREAS, AIMCO and Casden desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section
1.3), Casden shall be merged with and into AIMCO in accordance with the
laws of the State of Maryland. AIMCO shall be the surviving corporation in
the Merger and shall continue its corporate existence under the laws of the
State of Maryland. AIMCO after the Effective Time is sometimes referred to
herein as the "Surviving Corporation." The effects and the consequences of
the Merger shall be as set forth in Section 1.2.
Section 1.2 EFFECTS OF THE MERGER. At the Effective Time,
(i) the charter of AIMCO, as in effect immediately prior to the Effective
Time (the "AIMCO Charter"), shall be the charter of the Surviving
Corporation until thereafter amended as provided by law and the AIMCO
Charter, (ii) the bylaws of AIMCO, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by law, the AIMCO Charter and such bylaws,
and (iii) the directors and officers of AIMCO immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their respective successors are duly elected
and qualified. Subject to the foregoing, the additional effects of the
Merger shall be as provided in the applicable provisions of the Maryland
General Corporation Law ("MGCL").
Section 1.3 EFFECTIVE TIME OF THE MERGER. On the Closing
Date, the Articles of Merger shall be executed and filed by AIMCO and
Casden with the Maryland State Department of Assessments and Taxation (the
"MSDAT") pursuant to the MGCL. The Merger shall become effective upon the
acceptance by the MSDAT of the Articles of Merger or at such other time as
is provided in the Articles of Merger (the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
Section 2.1 CERTAIN DEFINITIONS. As used in this Agreement,
the following terms have the following meanings:
"Acquisition Proposal" means a proposal or offer (other
than by AIMCO or an Affiliate of AIMCO) to acquire at least 10% of the
outstanding equity securities of Casden or Casden OP, or a merger,
consolidation, share exchange, or other business combination or spin off or
similar distribution involving Casden or Casden OP or any proposal to
acquire in any manner all or substantially all of the assets of Casden or
Casden OP.
"Additional Tax Liabilities" shall mean the aggregate of
(i) the $949,927 plus interest and penalties payable in connection with the
Closing Agreement executed by Casden on September 21, 2001, as described in
Section 4.7(b) of the Casden Disclosure Letter and (ii) all taxes, costs
and expenses incurred as a result of the transactions undertaken, whether
incurred by Casden or CPLB, in connection with the Commercial Sale, the
Ross Store Sale and the Asset Purchase.
"Affiliate" means, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or
is controlled by, such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
"Aggregate Consideration" means the REIT Merger
Consideration, the OP Contribution Consideration, the CPLB Merger
Consideration and the Casden Contribution Consideration.
"AIC Common Per Share Consideration" means 97.77% of the
REIT Common Consideration, divided by the aggregate number of shares of AIC
Common Stock outstanding as of the Effective Time, divided by the AIMCO
Common Stock Price.
"AIC Common Stock" means shares of Casden Common Stock
held by any of AIC, CIC or TCC.
"AIMCO Common Stock" means the Class A Common Stock, par
value $0.01 per share, of AIMCO.
"AIMCO Common Stock Price" means $47 per share, as such
price may be appropriately adjusted pursuant to any reclassification,
recapitalization, split-up, combination, stock dividend or exchange of
AIMCO Common Stock.
"AIMCO Material Adverse Effect" means the existence of
any fact or condition which has had or will have a material adverse effect
on the business, assets, financial condition or results of operations of
AIMCO and the AIMCO Subsidiaries taken as a whole; provided, however, that
adverse effects on the business, assets, financial condition or results of
operations of AIMCO or the AIMCO Subsidiaries due to general economic
conditions, loss of employees, unsolicited third party offers for limited
partnership interests of AIMCO Subsidiaries and AIMCO's response thereto,
unsolicited offers to acquire one or more assets of any AIMCO Subsidiary
and AIMCO's or any AIMCO Subsidiary's sale in response thereto and
conditions affecting generally the multi-family apartment property market
or any of the markets in which AIMCO or any AIMCO Subsidiary operates shall
not be deemed to be an AIMCO Material Adverse Effect and shall not be taken
into account in determining the existence of an AIMCO Material Adverse
Effect.
"AIMCO SEC Reports" means each Quarterly Report on Form
10-Q, Annual Report on Form 10-K, Current Report on Form 8-K and definitive
proxy statement filed with the SEC by AIMCO pursuant to the requirements of
the Exchange Act since December 31, 1998, as such documents have been
amended since the time of their filing.
"AIMCO Subsidiary" means any "significant subsidiary"
(within the meaning of Rule 1-02 of SEC Regulation S-X) of AIMCO.
"Casden Capital Stock" means, collectively, the Casden
Common Stock, the Casden Class A Preferred Stock and the Casden Junior
Preferred Stock.
"Casden Class A Preferred Stock" means the Class A
Cumulative Preferred Stock, par value $0.01 per share, of Casden.
"Casden Common Stock" means the common stock, par value
$0.01 per share, of Casden.
"Casden Contribution Consideration" is (a) a number of
Partnership Common Units of AIMCO OP equal to (i) $17,592,000, as reduced
by the applicable pro rata share of the shortfall of the Villa Azure
Earnout Amount and the shortfall of the Core Properties Earnout Amount and
increased by the applicable pro rata share of the Mortgage Debt
Amortization, divided by (ii) the AIMCO Common Stock Price, and (b) 8.56%
of the Deferred Consideration (consisting of 4.47% of the Deferred
Consideration attributable to PLB and 18.24% of the Deferred Consideration
attributable to Westwood).
"Casden Financial Statements" means the financial
statements listed in Section 4.4(a) of the Casden Disclosure Letter.
"Casden Junior Preferred Stock" means the Junior
Cumulative Preferred Stock, par value $0.01 per share, of Casden.
"Casden Material Adverse Effect" means the existence of
any fact or condition which has had or will have a material adverse effect
on the business, assets, financial condition or results of operations of
Casden and the Casden Subsidiaries taken as a whole; provided, however,
that adverse effects on the business, assets, financial condition or
results of operations of Casden or the Casden Subsidiaries due to general
economic conditions, loss of employees, unsolicited third party offers for
limited partnership interests of Casden Subsidiaries and Casden
Subsidiaries' responses thereto, unsolicited offers to acquire one or more
assets of any Casden Subsidiary and Casden's or any Casden Subsidiary's
sale in response thereto, and conditions affecting generally the
multi-family apartment property market or any of the markets in which
Casden or any Casden Subsidiary operates shall not be deemed to be a Casden
Material Adverse Effect and shall not be taken into account in determining
the existence of a Casden Material Adverse Effect.
"Casden Stock Plan" means the Casden Properties Inc. 1998
Stock Option Plan.
"Casden Subsidiary" means (a) NAPICO, (b) Casden
Properties Sub LLC, a Delaware limited liability company, (c) Casden
Properties GP I LLC, a Delaware limited liability company, (d) Casden
Properties GP I L.P., a Delaware limited partnership, (e) any limited
liability company in which Casden or any Casden Subsidiary is a direct or
indirect (including through attribution under the Code) manager or managing
member, (f) any partnership of which Casden or any Casden Subsidiary is a
direct or indirect (including through attribution under the Code) general
partner and (g) any other Person with respect to which a majority of the
voting power to elect directors or similar members of the governing body of
such Person is directly or indirectly (including through attribution under
the Code) held by Casden or a Casden Subsidiary, in each case with respect
to clauses (b) through (g) above, other than the NAPICO Entities.
"Casden Transfer Tax Amount" means $600,000.
"Casden I Warrants" means warrants issued by Casden
providing the holders thereof the right to purchase up to an aggregate of
14,298,997 shares of Casden Common Stock at an exercise price of $18.00 per
share.
"Casden II Warrants" means warrants issued by Casden
providing the holders thereof the right to purchase up to an aggregate of
500,000 shares of Casden Common Stock at an exercise price of $19.80 per
share.
"Closing Agreement" means a written and legally binding
agreement with a taxing authority relating to Taxes.
"Contract" means any written contract, agreement, lease,
obligation, note, bond, indenture, license, sublicense, promise or other
instrument or undertaking that is legally binding.
"Contribution Effective Date" shall have the meaning set
forth in the OP Contribution Agreement.
"Core Properties" means, collectively, all of the
properties identified on Exhibit O attached hereto.
"Core Properties Earnout Amount" means an amount, not to
exceed $26,000,000, equal to the quotient of (a) the positive difference,
if any, between (i) the actual gross revenue attributable (in accordance
with generally accepted accounting principles of accrual) to the Core
Properties for the year 2001, minus (ii) $61,179,170, divided by (b) 0.085.
"CPLB Merger Consideration" means (a) $1,000, and (b)
39.15% of the Deferred Consideration (consisting of 55.69% of the Deferred
Consideration attributable to PLB).
"Deferred Consideration" has the meaning set forth in the
Tri-Party Agreement, provided that references in this Agreement to Deferred
Consideration shall be deemed to refer to the net amount of Deferred
Consideration payable to XYZ under the Tri-Party Agreement.
"Dissenting Shares" means each share of Casden Capital
Stock that is issued and outstanding immediately prior to the Effective
Time and that is held by a stockholder who has properly exercised and
perfected appraisal rights under Sections 3-203 through 3-213 of the MGCL.
"Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person (including any Governmental
Authority) alleging potential liability (including potential responsibility
for or liability for enforcement, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from (A) the presence, Environmental
Release or threatened Environmental Release into the environment of any
Hazardous Materials at any location, whether or not owned, operated, leased
or managed by Casden or any of the Casden Subsidiaries (for purposes of
Section 4.9); or (B) circumstances forming the basis of any violation or
alleged violation of any Environmental Law; or (C) any and all claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
Environmental Release of any Hazardous Materials.
"Environmental Laws" means all federal, state and local
laws, rules and regulations relating to pollution, the environment
(including ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it relates to the
environment, including laws and regulations relating to Environmental
Releases or threatened Environmental Releases of Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
"Environmental Release" means any release, spill,
emission, leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface water, groundwater
or property.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any equivalent successor law, including the rules and
regulations promulgated thereunder or under such successor law.
"Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls; (B) any chemicals, materials or substances which are now defined
as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of
similar import under any Environmental Law and (C) any other chemical,
material, substance or waste, exposure to which is now prohibited, limited
or regulated under any Environmental Law in a jurisdiction in which Casden
or any of the Casden Subsidiaries operates.
"Holder" means a holder of one or more of (i) shares of
Casden Capital Stock, (ii) options to acquire Casden Common Stock or (iii)
the Casden I Warrants or Casden II Warrants.
"Junior Preferred Liquidation Amount" means $10,015,250
plus accumulated and unpaid dividends to the Effective Time.
"knowledge" of Casden, any Casden Subsidiary or any ERISA
Affiliate of Casden or any Casden Subsidiary shall mean the actual
knowledge of Alan I. Casden and Andrew J. Starrels or either of them, based
on their actual knowledge of the day-to-day business and operations of
Casden and the Casden Subsidiaries (other than NAPICO and the NAPICO
Entities) and after (i) reviewing the responses to the questionnaires in
the form attached hereto as Exhibit P-1 (the "Tax Questionnaires -
Subsidiaries") sent to each manager and assistant manager of the Owned
Properties and the Leased Properties and each regional supervisor employed
by Casden and the Casden Subsidiaries (other than the NAPICO Entities)
prior to the date hereof and (ii) conducting additional inquiries
consisting solely of submitting questionnaires in the form attached hereto
as Exhibit P-2 (the "General Questionnaires") and reviewing the responses
to such General Questionnaires. With respect to NAPICO and the NAPICO
Entities, the "knowledge" of Casden or any Casden Subsidiary or any ERISA
Affiliate of Casden or any Casden Subsidiary shall mean the actual
knowledge of Charles Boxenbaum and Bruce Nelson, or either of them, after
(i) reviewing the responses to the questionnaires in the form attached
hereto as Exhibit P-3 (the "Tax Questionnaires - NAPICO" and, together with
the General Questionnaires and the Tax Questionnaires - Subsidiaries, the
"Questionnaires") sent to the asset manager or property manager of each
NAPICO Property and (ii) conducting additional inquiries consisting solely
of submitting the General Questionnaires to the asset manager or property
manager of each NAPICO Property and reviewing the responses to such General
Questionnaires. The "knowledge" of AIMCO or any AIMCO Subsidiary shall mean
the actual knowledge of Terry Considine and Peter Kompaniez, or either of
them, except that with respect to property-related matters only, the
"knowledge" of AIMCO shall mean the actual knowledge of Messrs. Considine
and Kompaniez and Harry Alcock, or any of them.
"Latest Casden Financial Statements" means, as of any
date, the Casden Financial Statements or, if Casden has delivered to AIMCO,
pursuant to Section 7.1, any financial statements in respect of a fiscal
quarter subsequent to June 30, 2001, the financial statements so delivered
that relate to the most recently completed fiscal quarter of Casden and its
subsidiaries.
"Latest Casden Pro Forma Financial Information" means, as
of any date, the Casden Pro Forma Financial Information or, if Casden has
delivered to AIMCO, pursuant to Section 7.1, any financial statements in
respect of a fiscal quarter subsequent to June 30, 2001, pro forma
schedules that present fairly, in all material respects, the financial
position of Casden and its subsidiaries, on a consolidated basis, as of the
last day of such fiscal quarter, and the results of operations of Casden
and its subsidiaries, on a consolidated basis, for the interim period then
ended, in each case, after giving effect to the Commercial Sale, the Ross
Store Sale, the Asset Purchase and the other transactions and adjustments
disclosed in the Casden Pro Forma Financial Information.
"Mortgage Debt Amortization" means the amount of normal
amortization of Casden mortgage debt set forth on Schedule 2.1(b) hereto
through the Effective Time, the exact amount of which Casden shall provide
AIMCO written notice at least five (5) business days prior to the Effective
Time.
"NYSE" means the New York Stock Exchange, Inc.
"OP Contribution Consideration" means (a) a number of
Partnership Common Units of AIMCO OP equal to (i) $27,148,000, as reduced
by the applicable pro rata share of the shortfall of the Villa Azure
Earnout Amount and the shortfall of the Core Properties Earnout Amount and
increased by the applicable pro rata share of the Mortgage Debt
Amortization, divided by the AIMCO Common Stock Price, and (b) 11.92% of
the Deferred Consideration (as further allocated in the OP Contribution
Agreement).
"Other Common Per Share Consideration" means 2.23% of the
REIT Common Consideration divided by the AIMCO Common Stock Price divided
by the number of shares of Other Common Stock outstanding as of the
Effective Time.
"Other Common Stock" means shares of Casden Common Stock
other than the shares of AIC Common Stock.
"Per Share Casden Junior Preferred Liquidation Amount"
means the Junior Preferred Liquidation Amount divided by the number of
shares of Casden Junior Preferred Stock outstanding as of the Effective
Time.
"Person" means any natural person, corporation, general
or limited partnership, limited liability company, joint venture, trust,
association or entity of any kind.
"Registration Statement" means the Registration Statement
on Form S-3 to be filed by AIMCO with respect to the AIMCO Common Stock
issued in the Merger.
"REIT Cash Consideration" means $205,418,000, minus (a)
the aggregate Option Settlement Amount (as defined in Section 2.2(c)
hereof), minus (b) the Casden Transfer Tax Amount, minus (c) the Additional
Tax Liabilities, and minus (d) the amounts set forth on Schedule 2.1(a).
"REIT Common Consideration" means $108,049,000, as
reduced by the applicable pro rata share of the shortfall of the Villa
Azure Earnout Amount and the shortfall of the Core Properties Earnout
Amount and increased by the applicable pro rata share of the Mortgage Debt
Amortization.
"REIT Common Deferred Consideration" means 0.58% of the
Deferred Consideration (consisting of 0.48% of the Deferred Consideration
attributable to PLB and 0.81% of the Deferred Consideration attributable to
Westwood), provided that pursuant to the XYZ Agreement, the recipients of
REIT Common Deferred Consideration will have no indemnification obligations
to XYZ or AIMCO under the XYZ Agreement or the Master Indemnification
Agreement, unlike AIC and holders of Casden Class A Preferred Stock.
"REIT Merger Consideration" means the REIT Common
Consideration, the REIT Common Deferred Consideration and the REIT
Preferred Consideration.
"REIT Preferred Consideration" means (a) a number of
shares of AIMCO Common Stock equal to $60,630,000, divided by the AIMCO
Common Stock Price, (b) cash in an amount equal to the REIT Cash
Consideration, and (c) 39.79% of the Deferred Consideration (consisting of
32.45% of the Deferred Consideration attributable to PLB and 57.16% of the
Deferred Consideration attributable to Westwood), and, with respect to
clauses (a) and (b) above, as reduced by the applicable pro rata share of
the shortfall of the Villa Azure Earnout Amount and the shortfall of the
Core Properties Earnout Amount and increased by the applicable pro rata
share of the Mortgage Debt Amortization.
"Related Transaction Documents" means all the documents
listed as Exhibits hereto, and all exhibits and schedules attached thereto.
"Related Transactions" means, collectively, the OP
Contribution, the Casden Contribution, the Commercial Sale, the CPLB
Merger, the Joint Venture, the Mezzanine Loan, the Ross Store Sale, the
Asset Purchase, the payments contemplated by the Villa Azure Letter
Agreement and the other transactions contemplated by the Related
Transaction Documents.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, or any equivalent successor law, including the rules and
regulations promulgated thereunder or under such successor law.
"Subsidiary" of a Person (other than Casden or AIMCO)
means (a) any limited liability company in which such Person or any
Subsidiary of such Person is a direct or indirect (including through
attribution under the Code) manager or managing member, (b) any partnership
in which such Person or any Subsidiary of such Person is a direct or
indirect general partner and (c) any other Person with respect to which a
majority of the voting power represented by the outstanding shares of
capital stock or other voting securities or interests (including general
partner interests) having voting power under ordinary circumstances to
elect directors or similar members of the governing body of such
corporation or entity shall at the time be held, directly or indirectly, by
such Person or any Subsidiary of such Person.
"Taxes" means any federal, state, county, local or
foreign taxes, charges, fees, levies or other assessments, including all
net income, gross income, sales and use, ad valorem, transfer, gains,
profits, excise, franchise, real and personal property, gross receipt,
capital stock, share, production, business and occupation, disability,
employment, payroll, license, estimated, stamp, custom duties, severance or
withholding taxes or charges imposed by any governmental entity, and
includes any interest and penalties (civil or criminal) on or additions to
any such Taxes.
"Tax Return" means a report, return or other information
required to be supplied to a governmental entity with respect to Taxes,
including, where permitted or required, combined or consolidated returns
for any group of entities that includes Casden or any Casden Subsidiary, or
AIMCO or any AIMCO Subsidiary, as the case may be.
"Tax Ruling" means a written ruling of a taxing authority
relating to Taxes.
"Transaction Documents" means, collectively, this
Agreement and the Related Transaction Documents.
"Transactions" means, collectively, the Merger and the
Related Transactions.
"Villa Azure Earnout Amount" means an amount, not to
exceed $10,000,000, equal to the quotient of (a) the positive difference,
if any, between (i) the product of the revenue reflected on the rent roll
for the Villa Azure Property as of January 1, 2002 (including any amounts
actually paid pursuant to the terms of the Villa Azure Letter Agreement),
multiplied by twelve, minus (ii) $12,595,787, divided by (b) 0.085.
"Villa Azure Property" means that certain real property
located at 5700 W. Centinela Avenue, Los Angeles, California, and commonly
known as "Villa Azure."
"WARN Act" means the Workers Adjustment and Retraining
Notification Act of 1988, 29 U.S.C. ss. 2101 et seq.
"XYZ Agreement" means the limited liability company
agreement of XYZ, as such agreement may be amended from time to time.
Section 2.2 EFFECT OF THE MERGER ON SHARES.
(a) CONVERSION OF CAPITAL STOCK OF CASDEN. Subject to
Section 2.3, as of the Effective Time, by virtue of the Merger and without
any action on the part of any person or the holder of any shares of Casden
Capital Stock, each issued and outstanding share of Casden Capital Stock,
other than shares of Casden Capital Stock (i) to be cancelled pursuant to
Section 2.2(b)(ii) or (ii) as to which appraisal rights are perfected under
Sections 3-203 through 3-213 of the MGCL, shall be converted as follows:
(i) with respect to each share of Casden Common
Stock and subject to Section 2.2(d):
(A) for each such share of AIC Common
Stock the right to receive that number of fully paid and non-assessable
shares of AIMCO Common Stock equal to the AIC Common Per Share
Consideration.
(B) for each share of Other Common
Stock the right to receive (1) the number of fully paid and non-assessable
shares of AIMCO Common Stock equal to the Other Per Share Common
Consideration and (2) the REIT Common Deferred Consideration divided by the
number of shares of Other Common Stock outstanding as of the Effective
Time.
(ii) with respect to each share of Casden Class
A Preferred Stock, the right to receive the REIT Preferred Consideration,
divided by the number of shares of Casden Class A Preferred Stock
outstanding as of the Effective Time, provided, that cash payable pursuant
to Section 2.2(a)(ii) shall be paid in shares of AIMCO Common Stock to the
extent required under Section 2.2(d);
(iii) with respect to each share of Casden
Junior Preferred Stock, the right to receive the Per Share Casden Junior
Preferred Liquidation Amount;
(iv) notwithstanding Section 2.2(a)(i), with
respect to each share of Casden Common Stock held by a Person that AIMCO
reasonably believes may not be an accredited investor (as defined in Rule
501(a) of the Securities Act), the right to receive cash in an amount equal
to the Other Common Per Share Consideration; and
(v) it shall be a condition to the receipt of
any Deferred Consideration pursuant to the Merger that the holder of a
share of Casden Capital Stock shall have agreed (A) to be bound by the XYZ
Agreement, (B) to contribute such interest in Deferred Consideration to XYZ
in accordance with the terms of the XYZ Agreement and (C) that any Deferred
Consideration shall be paid to a holder of Casden Capital Stock solely
pursuant to and in accordance with the provisions of the XYZ Agreement.
(b) CANCELLATION OF CASDEN CAPITAL STOCK.
(i) As of the Effective Time, all such shares of
Casden Capital Stock (other than shares to be cancelled pursuant to Section
2.2(b)(ii)) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
Certificate (as defined in Section 2.3(b)) formerly representing any such
shares shall cease to have any rights with respect to such shares, except
the right to receive the REIT Merger Consideration in accordance with
Section 2.2(a), and cash in lieu of fractional shares and dividends and
other distributions in accordance with Section 2.3(c) and Section 2.3(d).
(ii) As of the Effective Time, by virtue of the
Merger and without any action on the part of any person or any holder of
any Casden Capital Stock, all shares of Casden Capital Stock that are (x)
beneficially owned by Casden or any wholly-owned Subsidiary of Casden or
(y) owned by AIMCO or any wholly owned subsidiary of AIMCO shall be
canceled and retired and shall cease to exist and no REIT Merger
Consideration or other consideration shall be issued or delivered in
exchange therefor.
(c) STOCK OPTIONS. Section 2.2(c) of the Casden
Disclosure Letter sets forth the options granted under the Casden Stock
Plan, the dates on which options under the plan were granted, name of the
optionee for each such grant, the number of options granted on each such
date, the exercise price thereof, and the vesting schedule thereof.
Pursuant to Section 10 of the Casden Stock Plan, upon notice from the Board
(as defined in the Casden Stock Plan) of the pendency of the Merger, each
unexpired and unexercised option to purchase a share of Casden Common Stock
granted under the Casden Stock Plan (each, a "Casden Option") will become
exercisable in full for a period of thirty (30) days following the delivery
of such notice. AIC shall exercise his Casden Options prior to the
Effective Time on a net exercise basis. Immediately prior to the expiration
of such thirty (30) day period, each holder of an unexercised Casden Option
shall be entitled to receive from Casden in cancellation thereof a payment
(subject to applicable withholding taxes) in an amount equal to (i) the
excess, if any, of $21.66, over the per share exercise price of such Casden
Option, multiplied by the number of unexercised shares of Casden Common
Stock subject to such Casden Option (the "Option Settlement Amount"). The
aggregate Option Settlement Amount in respect of each Casden Option shall
be paid by AIMCO in cash to such option holder concurrently with the
Closing. The surrender of a Casden Option shall be deemed a release of any
and all rights the holder had or may have in respect of such option.
(d) ADJUSTMENT TO CONSIDERATION. Subject to Section
2.2(f) below, if the Non-Equity Ratio is equal to or greater than 60%,
first, cash payable pursuant to Section 2.2(a)(ii) shall be converted (on a
pro rata basis among all holders of Casden Class A Preferred Stock) into
the right to receive shares of AIMCO Common Stock at a value equal to the
Common Per Share Value in lieu of cash, second, the Deferred Consideration
payable in cash pursuant to Section 2.2(a)(i)(B)(2) shall be converted (on
a pro rata basis among all holders of Other Common Stock) into the right to
receive shares of AIMCO Common Stock at a value equal to the Common Per
Share Value in lieu of cash, third, the Deferred Consideration payable in
cash pursuant to Section 2.2(a)(ii) shall be converted (on a pro rata basis
among all holders of Casden Class A Preferred Stock) into the right to
receive the shares of AIMCO Common Stock at a value equal to the Common Per
Share Value in lieu of cash, and fourth, any other amounts payable in cash
to the holders of Casden Capital Stock pursuant to this Agreement shall be
converted into the right to receive shares of AIMCO Common Stock at a value
equal to the Common Per Share Value in lieu of cash, in amounts sufficient
to cause the Non-Equity Ratio to be less than 60%; provided, that, the
aggregate consideration payable pursuant to this Agreement shall not be
increased or decreased as a result of any such adjustment. The "Non-Equity
Ratio" shall equal the Non-Equity Consideration divided by the Total
Consideration. The "Non-Equity Consideration" shall equal the aggregate of
(A) the aggregate amount of cash payable pursuant to Section 2.2(a)(ii)
(other than Deferred Consideration), (B) the aggregate amount of cash
payable pursuant to Section 2.2(a)(iii), (C) the maximum amount of the
portion of the Deferred Consideration payable in cash pursuant to the
Tri-Party Agreement into which Casden Capital Stock was converted into the
right to receive pursuant to Section 2.2(a), (D) the aggregate amount
payable pursuant to Section 2.3(d) in lieu of fractional shares, (E) the
aggregate amount payable in respect of Dissenting Shares, (F) the aggregate
amount of cash paid pursuant to the Casden Reverse Stock Split, (G) the
aggregate amount of cash payable pursuant to Section 2.2(a)(iv), and (H)
any amount described in Treasury Reg. Section 1.368-1(e)(ii). The "Total
Consideration" shall equal the aggregate of the Non-Equity Consideration
and the Equity Consideration. The "Equity Consideration" shall equal the
aggregate of the product of (x) the Common Per Share Value of AIMCO Common
Stock and (y) the number of shares of AIMCO Common Stock to be issued
pursuant to Section 2.2(a). The "Common Per Share Value" shall equal the
lower of (i) the mean between the highest and lowest quoted selling prices
on the NYSE of a share of AIMCO Common Stock on the Closing Date and (ii)
the price at which the last trade was made on the Closing Date.
(e) CASDEN I AND II WARRANTS. At the Effective Time, each
then outstanding, unexercised Casden I Warrant and Casden II Warrant which
has been amended pursuant to Section 7.28 shall, in accordance with its
terms, as amended, and by virtue of this Agreement and without any further
action of Casden, AIMCO or the holder of such warrant, terminate.
(f) TAXABLE ELECTION. In the event that on the third
NYSE trading day prior to the anticipated Closing Date (the "Test Date")
the Common Per Share Value of AIMCO Common Stock is such that if the
Closing were to occur on the Test Date the provisions of Section 2.2(d)
would require an adjustment to the consideration otherwise payable under
Section 2.2(a), then Casden shall have the right to elect, in its sole
discretion (or, alternatively, AIC in his sole discretion), to restructure
the Merger as a reverse subsidiary merger. In the event Casden or AIC
notifies AIMCO in writing, not later than the day following the Test Date,
that it or he has determined to make the election permitted by this Section
2.2(f) (a "Taxable Election"), AIMCO shall form a new, wholly-owned
subsidiary corporation ("New Merger Sub") solely for the purpose of merging
into Casden, and the following provisions will apply: (i) the Merger will
be effected by the merger of New Merger Sub with and into Casden in
accordance with the laws of the State of Maryland, with Casden as the
surviving corporation; (ii) all references to the term "Merger" shall be
deemed references to the merger contemplated by this Section 2.2(f); (iii)
all references to the term "Surviving Corporation" shall be deemed
references to Casden; (iv) at the Effective Time, the charter and bylaws of
New Merger Sub, as in effect immediately prior to the Effective Time, shall
be the Charter and bylaws, respectively, of the surviving corporation and
the directors and officers of New Merger Sub shall be the directors and
officers of the surviving corporation; (v) the provisions of Section 2.2(d)
shall have no further force and effect, and in the Merger each holder of
Casden Capital Stock will receive the consideration such holder would have
received pursuant to Section 2.2 without application of Section 2.2(d);
(vi) the covenants set forth in Section 7.19 and the condition set forth in
Section 8.3(d) shall thereafter cease to apply; and (vii) except as
expressly provided in this Section 2.2(f), all terms, conditions and
provisions of this Agreement shall remain in full force and effect;
provided, however, that in the event the Common Per Share Value is less
than $36 on the Test Date, a Taxable Election shall automatically, and
without any action of any party hereto, be deemed to have been made. The
parties shall cooperate to implement such reverse subsidiary merger
structure in the event a Taxable Election is made (or is deemed to have
been made pursuant to the immediately preceding sentence). If a Taxable
Election is made pursuant to this Section 2.2(f), the parties hereto
covenant and agree that the transaction effected pursuant to this Agreement
shall be treated by the parties as a sale of the shares of Casden acquired
by AIMCO hereunder for all income tax purposes and that the parties shall
treat such transaction consistent therewith on all income tax returns and
filings. No election provided under Section 338 of the Code shall be made
with respect to this transaction without the prior written consent of all
the shareholders of Casden prior to the Merger.
(g) CONSIDERATION ALLOCATION. Notwithstanding any
provision in this Agreement or in any Related Transaction Documents to the
contrary, at any time prior to the Effective Time, Casden may modify the
allocation of the Aggregate Consideration among the REIT Common
Consideration, the REIT Common Deferred Consideration, the REIT Preferred
Consideration, the OP Contribution Consideration, the CPLB Merger
Consideration and the Casden Contribution Consideration, and may reallocate
the REIT Merger Consideration among and with respect to all recipients
thereof, and may in connection therewith adjust the deemed $21.66 in
Section 2.2(c), by giving written notice of such revised allocation(s) to
AIMCO without the consent or approval of any Casden stockholder or any
other party hereto, provided however that (i) neither the Aggregate
Consideration nor the aggregate amount of Deferred Consideration may be
increased, (ii) Casden may not modify the allocation of the Aggregate
Consideration in any way that increases the aggregate number of shares of
AIMCO Common Stock and AIMCO OP Units to be issued in the Transactions
without the prior written consent of AIMCO and (iii) Casden may not modify
the Aggregate Consideration without appropriate approval of the board of
directors and independent directors of Casden. At least three (3) business
days before the Effective Time, Casden shall provide AIMCO with written
notice of its determination of its allocation in respect of the Villa Azure
Earnout Amount, Core Properties Earnout Amount and Mortgage Debt
Amortization.
Section 2.3 PAYMENT OF MERGER CONSIDERATION.
(a) EXCHANGE FUND. As promptly as practicable after the
Effective Time, AIMCO shall hold, in trust for the benefit of holders of
Certificates, cash in an amount sufficient to pay the aggregate cash
portion of the REIT Merger Consideration plus the option payout and warrant
payout amounts and (ii) the cash payable in respect of fractional shares
pursuant to Section 2.3(d) (collectively, the "Exchange Fund"). The
Exchange Fund shall not be used for any other purpose.
(b) PAYMENT PROCEDURES.
(i) Prior to the Effective Time, AIMCO (or any
agent or agents appointed by AIMCO) shall deliver to each holder of record
(identified on Schedule 4.2(c) of the Casden Disclosure Letter) of a
certificate or certificates (a "Certificate" or the "Certificates") which
immediately prior to the Effective Time will represent outstanding shares
of Casden Capital Stock (the "Canceled Shares") that will be canceled and
become instead a portion of the Closing Merger Consideration pursuant to
Section 2.2(a): (w) an investor representation letter in the form attached
hereto as Exhibit T, (x) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to AIMCO), and
(y) instructions for use in effecting the surrender of the Certificates in
exchange for that portion of the REIT Merger Consideration payable with
respect to such shares. Casden hereby acknowledges that AIMCO shall rely
solely on Section 4.2(c) of the Casden Disclosure Letter as to the holders
of record to whom the foregoing should be delivered.
(ii) Upon surrender of a Certificate to AIMCO
for cancellation (or to such agent or agents as may be appointed by AIMCO),
together with a duly executed letter of transmittal and a duly executed
certificate of non-foreign status in the form attached hereto as Exhibit
Q-1 or Exhibit Q-2, the holder of such Certificate shall be entitled to
receive with respect to the shares of Casden Capital Stock formerly
represented thereby (in addition to any Deferred Consideration to which
such holder may be entitled under the Tri-Party Agreement, if applicable),
(A) a certificate or certificates representing that number of whole shares
of AIMCO Common Stock into which such holder's Casden Capital Stock was
converted pursuant to the provisions of Section 2.2, (B) the amount of cash
which such holder is entitled to receive pursuant to Section 2.2 and (C)
cash in lieu of fractional shares which such holder is entitled to receive
pursuant to Section 2.3(d).
(iii) In the event of a transfer of ownership of
Canceled Shares which is not registered in the transfer records of Casden,
that portion of the REIT Merger Consideration into which such holder's
Casden Capital Stock was converted in the Merger may be issued to a
transferee if the Certificate representing such Canceled Shares is
surrendered to AIMCO, accompanied by all documents required to evidence and
effect such transfer and by evidence satisfactory to AIMCO that any
applicable share transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.3(b) or as otherwise provided in Section
2.3(e), each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender a portion
of the REIT Merger Consideration.
(iv) Notwithstanding the foregoing, with respect
to any holder of a Certificate who presents any Certificate to AIMCO on or
prior to the Closing Date, together with a duly executed letter of
transmittal and such other documents as AIMCO shall reasonably require,
AIMCO shall deliver to such holder, on the Closing Date, all of that
portion of the REIT Merger Consideration to which such holder is entitled
with respect to such Certificate.
(c) DISTRIBUTIONS WITH RESPECT TO SHARES. Notwithstanding
any other provision of this Agreement, all dividends or other distributions
declared or made after the Effective Time with respect to shares of AIMCO
Common Stock with a record date after the Effective Time shall be paid into
an escrow account for the benefit of the holder of any unsurrendered
Certificate with respect to the shares of AIMCO Common Stock represented
thereby, and no cash amount or cash payment in lieu of fractional shares
shall be paid to any such holder until the holder of such Certificate shall
surrender such Certificate, at which time all proceeds in escrow for the
benefit of such surrendering holder shall be released to such surrendering
holder as though such shares of AIMCO Common Stock had been issued and
outstanding at the Effective Time. Subject to the effect of unclaimed
property, escheat and other applicable laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of AIMCO Common Stock issued in consideration
therefor, without interest, (i) at the time of such surrender, the
applicable cash amount payable pursuant to Section 2.2(a), any cash payable
in lieu of fractional shares to which such holder is entitled pursuant to
Section 2.3(d) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid into escrow with
respect to such whole shares of AIMCO Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole
shares of AIMCO Common Stock.
(d) NO FRACTIONAL SHARES. No scrip representing
fractional shares of AIMCO Common Stock shall be issued in the Merger and
no dividend or other distribution, stock split or interest shall relate to
any such fractional share, and such fractional share shall not entitle the
owner thereof to any voting or other rights of a stockholder of AIMCO. In
lieu of any fractional share of AIMCO Common Stock to which a holder of
Casden Capital Stock would otherwise be entitled, upon surrender of a
Certificate representing Casden Capital Stock as described in this Section,
such holder shall be paid an amount in cash (without interest) equal to the
product of (i) the AIMCO Common Stock Price multiplied by (ii) the fraction
of a share of AIMCO Common Stock to which such holder would otherwise be
entitled. AIMCO shall make available to AIMCO the amount of cash necessary
to make such payments without regard to any other cash being provided to
AIMCO.
(e) BOOK ENTRY. Notwithstanding any other provision of
this Agreement, the letter of transmittal referred to in Section 2.3(b)
may, at the option of AIMCO, provide for the right of a holder of one or
more Certificates to elect that any shares of AIMCO Common Stock into which
such holder's AIMCO Common Stock was converted in the Merger be in
uncertificated form.
(f) CLOSING OF TRANSFER BOOKS; ETC. From and after the
Effective Time, the Casden stock transfer books shall be closed and no
registration of any transfer of any capital stock of Casden shall
thereafter be made on the Casden stock transfer books. If Certificates are
presented to AIMCO after the Effective Time they shall be canceled and
exchanged for (i) certificates representing the appropriate number of
shares of AIMCO Common Stock, (ii) the applicable cash amount payable
pursuant to Section 2.2(a), and (iii) cash in lieu of fractional shares and
dividends and other distributions, as provided in Sections 2.3(c) and
2.3(d). Shares of AIMCO Common Stock into which Canceled Shares are
converted in the Merger shall be outstanding as of the Effective Time.
AIMCO shall cause all such shares of AIMCO Common Stock to be duly
authorized, validly issued, fully paid and non-assessable and not subject
to preemptive rights. In the event any Certificate(s) shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate(s) to be lost, stolen or destroyed and, if
reasonably required by AIMCO, upon the provision by such Person of an
unsecured indemnity against any claim that may be made against AIMCO with
respect to such Certificate(s), AIMCO will deliver in respect of such lost,
stolen or destroyed Certificate(s), a certificate representing the AIMCO
Common Stock into which the shares of Casden Common Stock represented by
such lost, stolen or destroyed Certificate(s) were converted in the Merger
and the applicable cash amount payable pursuant to Section 2.2(a) and cash
in lieu of fractional shares in accordance with Section 2.3(d) and such
Person shall be entitled to the voting, dividend and other distribution
rights provided herein with respect thereto.
(g) TERMINATION OF EXCHANGE FUND. All unclaimed cash in
the Exchange Fund on the first anniversary of the Effective Time shall be
retained by AIMCO, and thereafter, any holder of unsurrendered Certificates
shall look only to AIMCO for payment of such funds and the delivery of
certificates representing shares of AIMCO Common Stock to which such holder
may be due, subject to applicable law as described in the following
sentence. AIMCO shall not be liable to any Person for such shares or funds
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 2.4 APPRAISAL RIGHTS. Notwithstanding anything to
the contrary in this Agreement, Dissenting Shares shall not be converted
into or exchangeable for the right to receive any portion of the REIT
Merger Consideration, but shall be entitled to receive cash consideration
as shall be determined pursuant to Sections 3-203 through 3-213 of the
MGCL; provided, however, that if a holder of Casden Common Stock or Casden
Class A Preferred Stock fails to perfect or effectively withdraws or loses
the right to appraisal and payment under the MGCL, each share of such
Casden Capital Stock of such holder shall thereupon be deemed to have been
converted into and become exchangeable for, as of the Effective Time, the
right to receive any portion of the REIT Merger Consideration, assuming
that such shares were shares of Other Common Stock, and such shares shall
no longer be Dissenting Shares. Casden shall give prompt notice to AIMCO of
any written demands received by Casden for appraisal of Casden Common Stock
or Casden Class A Preferred Stock and any objections to the Merger received
prior to the Merger and AIMCO shall have the right to participate in all
negotiations with respect to such demands or objections.
ARTICLE III
THE CLOSING
Section 3.1 CLOSING. The closing of the Merger (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, California
90071 at 10:00 A.M., local time, on January 31, 2002 or earlier following
the third NYSE trading day immediately following the date on which the last
of the conditions set forth in Article VIII hereof is fulfilled or has been
waived or at such other time, date and place as AIMCO and Casden shall
mutually agree (the "Closing Date"); provided, however, that in the event
the Closing does not occur on or before December 31, 2001, AIMCO and Casden
shall determine a mutually agreeable Closing Date that would not adversely
affect Casden's REIT status for the taxable year ending on the Closing
Date. The parties shall use commercially reasonable efforts to close on or
prior to January 31, 2002.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CASDEN
Casden makes the following representations and warranties to
AIMCO. Except as set forth in the disclosure letter from Casden to AIMCO
dated the date hereof (the "Casden Disclosure Letter"):
Section 4.1 ORGANIZATION AND QUALIFICATION; ASSETS.
(a) CASDEN. Casden is a corporation duly formed, validly
existing and in good standing under the laws of the State of Maryland.
Casden is duly qualified and in good standing as a foreign corporation
under the laws of each jurisdiction where such qualification is required,
other than in such jurisdictions where the failure to so qualify would not
reasonably be expected to have a Casden Material Adverse Effect, has all
requisite corporate power and authority, and has been duly authorized by
all necessary approvals and orders to own, lease and operate its assets and
properties to the extent owned, leased and operated and to carry on its
business as it is now being conducted. Each outstanding share of capital
stock of Casden has been validly issued free of preemptive rights, and is
fully paid and non-assessable. Casden has furnished to AIMCO true and
complete copies of Casden's charter (the "Casden Charter") and Casden's
bylaws, each as currently in effect.
(b) CASDEN OP. Casden OP is a limited partnership duly
formed, validly existing and in good standing under the laws of the State
of Delaware. As of the date hereof, the sole general partner of Casden OP
is Casden, and the limited partners of Casden OP are set forth in Section
4.1(b)(i) of the Casden Disclosure Letter. Other than as set forth in
Section 4.1(b)(ii) of the Casden Disclosure Letter, Casden OP is not the
record owner of more than 10% of any class of voting securities of any
Person other than a Casden Subsidiary. Casden OP is duly qualified and in
good standing as a foreign entity under the laws of each jurisdiction where
such qualification is required, other than in such jurisdictions where the
failure to so qualify would not reasonably be expected to have a Casden
Material Adverse Effect. Casden OP has all requisite partnership power and
authority, and has been duly authorized by all necessary approvals and
orders to own, lease and operate its assets and properties to the extent
owned, leased and operated and to carry on its business as it is now being
conducted. Except as set forth in Section 4.1(b)(iii) of the Casden
Disclosure Letter and in the Amended and Restated Agreement of Limited
Partnership of Casden OP, each partnership interest in Casden OP has been
validly issued free of preemptive rights, and is fully paid and
non-assessable, and each partnership interest in Casden OP owned by Casden
or any Casden Subsidiary is owned free and clear of any pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"). Casden has furnished to AIMCO true and
complete copies of the Amended and Restated Agreement of Limited
Partnership of Casden OP (a copy of which is attached in Section 4.1(b) of
the Casden Disclosure Letter) which is the partnership agreement of Casden
OP in effect on the date of this Agreement.
(c) CASDEN SUBSIDIARIES. Section 4.1(c)(i) of the Casden
Disclosure Letter sets forth (i) each Casden Subsidiary, (ii) the ownership
interest therein of Casden or a Casden Subsidiary, (iii) if not
wholly-owned by Casden or a Casden Subsidiary, to the extent known by
Casden, the identity and ownership interest of each of the other owners of
such Casden Subsidiary and (iv) the Federal Tax status of each Casden
Subsidiary as a corporation, "Taxable REIT Subsidiary" of Casden (within
the meaning of Section 856(l) of the Code), "Qualified REIT Subsidiary" of
Casden (within the meaning of Section 856(i)(2) of the Code), partnership,
or disregarded entity. Section 4.1(c)(ii) of the Casden Disclosure Letter
contains a complete and accurate organizational chart of Casden and the
Casden Subsidiaries.
(d) OWNERSHIP OF CASDEN SUBSIDIARIES. Except as set forth
in Section 4.1(d) of the Casden Disclosure Letter, (i) all outstanding
shares of capital stock of each Casden Subsidiary that is a corporation
have been validly issued and are (A) fully paid and non-assessable, (B)
owned by Casden or by a Casden Subsidiary and (C) in the case of any
capital stock owned by Casden or a Casden Subsidiary, owned free and clear
of all Liens and (ii) all equity interests in each Casden Subsidiary that
is a partnership, joint venture, limited liability company or trust have
been validly issued and all equity interests in each Casden Subsidiary
which are owned by Casden or a Casden Subsidiary are owned free and clear
of all Liens. Each Casden Subsidiary that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry
on its business as now being conducted, and each Casden Subsidiary that is
a partnership, limited liability company or trust is duly organized and
validly existing under the laws of its jurisdiction of organization and has
the requisite power and authority to carry on its business as now being
conducted. Each Casden Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not reasonably be expected to have a Casden Material
Adverse Effect. Copies of the charter and bylaws or similar organizational
and governing documents and copies of the partnership, joint venture and
operating agreements of each Casden Subsidiary, each as amended to the date
of this Agreement, previously have been delivered or made available to
AIMCO.
(e) NAPICO ENTITIES. Section 4.1(e) of the Casden
Disclosure Letter sets forth, as of November 1, 2001, the name and state of
organization of, and ownership interest in, each Person of which National
Partnership Investments Corp. ("NAPICO") or one of its Subsidiaries is a
direct or indirect general partner (other than any Person (i) in which
NAPICO is an administrative general partner and does not control the
day-to-day operations of such Person, (ii) which does not operate, has not
operated, and will not operate prior to the Closing Date, a "lodging
facility" or "health care facility" within the meaning of Section
856(1)(4)(A) and 856(1)(4)(B) of the Code, respectively, and (iii) that
does not license, has not licensed, and will not license prior to the
Closing Date, rights to any brand name under which any such lodging
facility or health care facility is operated), each wholly-owned corporate
subsidiary of NAPICO or one of its Subsidiaries and each limited liability
company in which NAPICO or one of its Subsidiaries is the direct or
indirect managing member (collectively, the "NAPICO Entities"). The
ownership interests of NAPICO and its Subsidiaries in each NAPICO Entity
are owned by NAPICO or its Subsidiaries free and clear of all Liens (other
than Liens described in Section 4.1(b) of the Casden Disclosure Letter).
Each of the NAPICO Entities is an entity validly existing and in good
standing under the laws of the jurisdiction of its organization and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed, individually or in the aggregate, would not reasonably be
expected to have a Casden Material Adverse Effect. To Casden's knowledge,
all outstanding ownership interests in the NAPICO Entities and each Person
in which the NAPICO Entities hold an ownership interest have been validly
issued. Copies of the organizational and governing documents of each NAPICO
Entity, as amended to the date of this Agreement, have been previously
delivered or made available to AIMCO.
(f) COMMERCIAL PROPERTIES. The Commercial Properties and
the Commercial Debt to be assumed by CommercialCo, in the Commercial Sale
are not used in and do not relate to the multi-family apartment business of
Casden or any Casden Subsidiary (except to the extent such Commercial
Properties are used by Casden or any Casden Subsidiary pursuant to a
commercial lease for all or a portion of such Commercial Property), and
such assets and liabilities will not be assets or liabilities of Casden or
any Casden Subsidiary at the Effective Time, nor will title to such
Commercial Properties directly or indirectly pass to AIMCO or any Affiliate
of AIMCO in connection with the Merger.
(g) RESIDENTIAL PROPERTIES. As a result of the Merger,
and assuming the receipt of all AIMCO Statutory Approvals and Casden
Statutory Approvals, AIMCO will succeed to all of the assets of Casden
relating to the multifamily apartment business of Casden and the Casden
Subsidiaries, other than the Development LLC Assets and the Commercial
Properties.
Section 4.2 CAPITALIZATION.
(a) CASDEN. The authorized shares of Casden Capital Stock
consist of (i) 150,000,000 shares of Casden Common Stock; (ii) 15,000,000
shares of Casden Class A Preferred Stock; (iii) 424,000 shares of Casden
Junior Preferred Stock and (iv) 84,576,000 shares of Preferred Stock, par
value $0.01 per share. As of the date hereof, (A) 5,397,197 shares of
Casden Common Stock were issued and outstanding, of which no shares of
Casden Common Stock were held by Casden's wholly-owned Subsidiaries; (B)
2,000,000 shares of Casden Common Stock were reserved for issuance under
the Casden Stock Plan, under which options to acquire 1,642,800 shares of
Casden Common Stock have been granted and are outstanding; (C) 14,298,997
shares of Casden Common Stock were reserved for issuance upon exercise of
the Casden I Warrants; (D) 500,000 shares of Casden Common Stock were
reserved for issuance upon exercise of the Casden II Warrants; (E)
10,295,272 shares of Casden Class A Preferred Stock were issued and
outstanding; (F) 400,610 shares of Casden Junior Preferred Stock were
issued and outstanding; and (G) no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities
having the right to vote) on any matters on which stockholders may vote
("Voting Debt"), were issued or outstanding. Except as set forth in the
preceding sentence above, in Section 4.2(b) below, in Section 4.2 of the
Casden Disclosure Letter or pursuant to this Agreement, there are no
securities, options, warrants, calls, rights, commitments or agreements of
any character to which Casden or any Casden Subsidiary is a party or by
which any of them are bound obligating Casden or any Casden Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of Casden or any Voting Debt of Casden
or any Casden Subsidiary or obligating Casden or any Casden Subsidiary to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement.
(b) CASDEN OP. The issued and outstanding Casden OPUs
consist of (i) 10,295,272 Class A limited partnership units; (ii) 1,110,183
Class B restricted limited partnership units; (iii) 577,886 Junior limited
partnership units; and (iv) 7,657,223 common limited partnership units and
no other Casden OPUs are issued and outstanding. Except as set forth in
Section 4.2(b) of the Casden Disclosure Letter, there are no securities,
outstanding subscriptions, calls, options, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement to which Casden OP is a
party or by which it is bound obligating Casden OP to issue, deliver or
sell, or cause to be issued, delivered or sold, additional partnership
units or Voting Debt of Casden OP or obligating Casden OP to grant, extend
or enter into any such option, warrant, call, right, commitment or
agreement, other than rights to receive further vesting of up to 48,264
Class B restricted limited partnership units pursuant to the award
agreements set forth in Section 4.2(b) of the Casden Disclosure Letter.
(c) Section 4.2(c) of the Casden Disclosure Letter sets
forth a complete and accurate list of all of the holders of record of the
Casden Capital Stock and the number of shares held by each such holder (i)
as of the date hereof and (ii) after giving effect to the Casden Reverse
Stock Split.
(d) Section 4.2(d) of the Casden Disclosure Letter sets
forth a complete and accurate list of all of the holders of record of
Casden OPUs and the number of units held by each such holder.
Section 4.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. Casden has all requisite corporate power
and authority to execute and deliver this Agreement and, subject to the
receipt of the applicable Casden Stockholders' Approval (as defined in
Section 4.10) and the applicable Casden Required Statutory Approvals (as
defined in Section 4.3(c)), to consummate the Transactions. The execution
and delivery of this Agreement and the consummation by Casden of the
Transactions have been duly authorized by all necessary corporate action on
the part of Casden, subject to obtaining the applicable Casden
Stockholders' Approval. This Agreement has been duly and validly executed
and delivered by Casden and, assuming the due authorization, execution and
delivery hereof by AIMCO, constitutes the valid and binding obligation of
Casden enforceable against Casden in accordance with the terms of this
Agreement, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
(b) NON-CONTRAVENTION. Except as set forth in Section
4.3(b) of the Casden Disclosure Letter, the execution and delivery of this
Agreement by Casden does not, and the consummation of the Transactions will
not, violate, conflict with, result in a breach of any provision of,
constitute a default (with or without notice or lapse of time or both)
under, or result in the termination or modification of, or accelerate the
performance required by, or result in a right of termination, cancellation
or acceleration of any obligation or the loss of a benefit under, or result
in the creation of any Lien upon any of the properties or assets of Casden
or any of the Casden Subsidiaries (each of the foregoing, a "Violation"
with respect to Casden and such term when used in Article V has correlative
meanings with respect to AIMCO) pursuant to any provisions of (i) the
charter and bylaws, any declaration of trust or similar organizational or
governing documents of Casden or any Casden Subsidiary, (ii) any Contract
with any third party to which Casden or any of the Casden Subsidiaries is a
party or (iii) subject to obtaining the Casden Required Statutory Approvals
and the Casden Stockholders' Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority (as defined in Section 4.3(c))applicable to
Casden or any of its properties or assets, except in the case of the
foregoing clauses (ii) and (iii) for any such Violation which would not
reasonably be expected to have a Casden Material Adverse Effect. Section
4.3(b) of the Casden Disclosure Letter sets forth, (x) each construction
lender under any construction loan encumbering any of the Casden Properties
(other than the NAPICO Properties) and (y) each lender or housing agency in
connection with any tax exempt bond financing affecting any of the Casden
Properties (other than the NAPICO Properties), in either case, the consent
or approval of which is necessary to prevent or avoid a Violation by Casden
or any of the Casden Subsidiaries as a result of the execution and delivery
of this Agreement or any of the Related Transaction Documents or the
consummation or performance of any of the Transactions (any and all such
consents and approvals, the "Casden Property Consents").
(c) STATUTORY APPROVALS. No declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any court, federal, state, local or foreign governmental or regulatory body
or authority (including the United States Department of Housing and Urban
Development, and/or applicable state housing agencies (collectively,
"HUD"), a stock exchange or other self-regulatory body (each of the
foregoing entities, bodies or authorities, including HUD, a "Governmental
Authority") is necessary for the execution and delivery of this Agreement
by Casden or the consummation of the Transactions by Casden, except (i)
acceptance of the Articles of Merger by the Maryland Department of
Assessments and Taxation, (ii) the filing of an amended Articles
Supplementary relating to the Casden Junior Preferred Stock with the MSDAT
(if desired by Casden under Section 6.1(d)), (iii) as described in Section
4.3(c) of the Casden Disclosure Letter or (iv) declarations, filings,
registrations, notices, authorizations, consents or approvals, the failure
of which to make, give or obtain would not result in a Casden Material
Adverse Effect (all of the foregoing, the "Casden Required Statutory
Approvals," it being understood that references in this Agreement to
"obtaining" such Casden Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and observing such waiting periods
as are necessary to avoid a violation of law). For purposes of determining
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), Casden confirms that the conduct of its
business consists primarily of investing in, owning, developing and
operating real estate for the benefit of its stockholders.
(d) COMPLIANCE. Except as set forth in Section 4.6,
Section 4.7, Section 4.8, Section 4.9 or Section 4.11 of the Casden
Disclosure Letter, neither Casden nor any of the Casden Subsidiaries (i) is
in violation of or has been given notice or been charged with any violation
of, or (ii) to the knowledge of Casden, is under investigation with respect
to any violation of, any law, statute, order, rule, regulation, ordinance,
writ, injunction, decree or judgment (including any applicable
Environmental Laws) of any Governmental Authority, except for violations
which would not reasonably be expected to have a Casden Material Adverse
Effect. Except as set forth in Section 4.9 or Section 4.11 of the Casden
Disclosure Letter, Casden and the Casden Subsidiaries have all permits,
licenses (including licenses required to operate as a property manager),
franchises and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted, except where
the failure to obtain such permits, licenses (including licenses required
to operate as a property manager), franchises and other authorizations,
consents and approvals would not reasonably be expected to have a Casden
Material Adverse Effect. Except as set forth in Section 4.3(d), Section 4.6
or Section 4.8 of the Casden Disclosure Letter, neither Casden nor any
Casden Subsidiary is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party, could result
in a default by Casden or any Casden Subsidiary under (i) their respective
organizational documents or (ii) any Contract (other than any
organizational documents or loan agreements, notes and mortgages with
respect to non-residential properties) to which Casden or any Casden
Subsidiary is a party or by which it is bound or to which its property is
subject, except for possible Violations which individually or in the
aggregate would not reasonably be expected to have a Casden Material
Adverse Effect.
Section 4.4 CASDEN FINANCIAL STATEMENTS.
(a) The Casden Financial Statements have been provided by
Casden to AIMCO prior to the date hereof. The audited consolidated
financial statements and unaudited interim financial statements included in
the Casden Financial Statements have been prepared in accordance with
United States generally accepted accounting principles ("GAAP") 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.
(b) The schedules attached as Section 4.4(b) of the
Casden Disclosure Letter (collectively, the "Casden Pro Forma Financial
Information") present fairly, in all material respects, the financial
position of Casden and its subsidiaries, on a consolidated basis, as of
December 31, 2000 and June 30, 2001, and the results of operations 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
Commercial Sale, the Ross Store Sale, the Asset Purchase and certain other
transactions and adjustments disclosed therein.
(c) Casden has delivered, or caused to be delivered, to
AIMCO (i) a report of Deloitte & Touche LLP relating to its review, in
accordance with standards promulgated by the American Institute of
Certified Public Accountants, of the Casden Financial Statements as of June
30, 2001 and for the six months then ended, and (ii) a letter of Deloitte &
Touche LLP, addressed to AIMCO, with respect to the Casden Financial
Statements and the Casden Pro Forma Financial Information, and customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with acquisition transactions in which there is
an exchange of stock.
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth in Section 4.5 of the Casden Disclosure Letter or as otherwise
expressly permitted in Section 6.1 of this Agreement or required under
Article VII of this Agreement, since December 31, 2000, (i) Casden and each
of the Casden Subsidiaries have conducted their business only in the
ordinary course of business consistent with past practice (it being
understood that acquisitions and dispositions of multi-family apartment
properties and interests therein by the NAPICO Entities are ordinary course
business activities and are consistent with past practice), (ii) neither
Casden nor any Casden Subsidiary (other than any NAPICO Entity) has
transferred any material assets other than to or among Casden, Casden OP
and any wholly owned Subsidiary of Casden and (iii) there has not been any
event or condition that would reasonably be expected to result in a Casden
Material Adverse Effect.
Section 4.6 LITIGATION.
Except as set forth in Section 4.6(i), Section 4.6(ii),
Section 4.7, Section 4.8, Section 4.9 or Section 4.11 of the Casden
Disclosure Letter, (i) there are no claims, suits, actions or proceedings
by or against Casden or any of the Casden Subsidiaries or any of their
respective properties (other than unlawful detainer actions by Casden
against its tenants or counterclaims resulting therefrom) pending or, to
the knowledge of Casden or a Casden Subsidiary, threatened in which damages
in excess of $10,000 are asserted or alleged, (ii) there are no claims,
suits, actions or proceedings by or against Casden or any of the Casden
Subsidiaries or any of their respective properties pending or to the
knowledge of Casden or any Casden Subsidiary threatened that could
reasonably be expected to affect all or any portion of any of Casden's
properties or any of Casden Subsidiary's properties or Casden's or any
Casden Subsidiary's ownership, rights, use, development or maintenance of
their respective properties, including, without limitation, tax reduction
proceedings; (iii) there are no claims, suits, actions or proceedings by
any Governmental Authority or third party pending nor, to the knowledge of
Casden, threatened, nor are there, to the knowledge of Casden, any
investigations or reviews by any Governmental Authority pending or
threatened against, relating to or affecting Casden or any of the Casden
Subsidiaries, (iv) there have not been any significant adverse developments
since December 31, 2000 with respect to such disclosed claims, suits,
actions, proceedings, investigations or reviews and (v) there are no
judgments, decrees, injunctions, or orders of any Governmental Authority
specifically applicable to Casden or any Casden Subsidiary which would, if
fully enforced, result in payments or losses in excess of $10,000
individually. Section 4.6(i) of the Casden Disclosure Letter sets forth the
claims, litigation, disputes and matters existing on the Closing Date over
which AIMCO shall maintain responsibility and control following the
Effective Time, subject to the limitations set forth in the Master
Indemnification Agreement. XYZ shall maintain responsibility and control
following the Effective Time over any and all claims, litigation, disputes
or matters, based on facts or circumstances existing or arising prior to
the Effective Time, not set forth specifically in Section 4.6(i) of the
Casden Disclosure Letter, including, without limitation, those set forth in
Section 4.6(ii) of the Casden Disclosure Letter.
Section 4.7 TAX MATTERS. Except as set forth in Section 4.7
of the Casden Disclosure Letter:
(a) TIMELY FILING OF TAX RETURNS. Casden and each of the
Casden Subsidiaries have filed (or there have been filed on such Persons'
behalf) all federal and all material foreign, state and local Tax Returns
required to be filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, complete and correct
and filed on a timely basis (after giving effect to any filing extension
properly granted by a Governmental Authority having the authority to do
so).
(b) PAYMENT OF TAXES. Casden and each of the Casden
Subsidiaries have paid all material Taxes that are currently due and
payable for all periods through and including the Closing Date within the
time and in the manner prescribed by law, except for those Taxes contested
in good faith and for which adequate reserves have been provided on their
books and records and except for the tax under Section 857(b)(5) of the
Code on Casden's federal income tax return for the year 2000 for which a
cash reserve in the amount of such liability has been established.
(c) TAX RESERVES. Casden and the Casden Subsidiaries have
established on their books and records reserves adequate to pay all
material Taxes and reserves for deferred income Taxes in accordance with
GAAP.
(d) TAX LIENS. There are no Tax liens upon the material
assets of Casden or any of the Casden Subsidiaries, except liens for Taxes
not yet delinquent.
(e) WITHHOLDING TAXES. Casden and each of the Casden
Subsidiaries have complied in all material respects with the provisions of
the Code relating to the withholding of Taxes, as well as similar
provisions under any other laws, and have withheld and paid over to the
proper Governmental Authorities all amounts required within the time and in
the manner prescribed by law.
(f) REIT CLASSIFICATION. At all times since December 30,
1998, Casden has been organized and operated in conformity with the
requirements necessary to qualify as a REIT pursuant to Section 856 of the
Code (the "Status Requirements"), and the execution or delivery by Casden
of this Agreement and the consummation by Casden of the Transactions or
compliance with or fulfillment of the terms and provisions hereof by
Casden, will not adversely affect the qualification of Casden as a REIT for
each taxable year ending on or before the Closing Date.
(g) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No
audits or other administrative or court proceedings are presently pending
with regard to any material Taxes or Tax Returns of Casden or any of the
Casden Subsidiaries.
(h) TAX RULINGS. Except for the rulings previously
delivered by Casden to AIMCO and the Closing Agreement with the IRS
executed on September 21, 2001, neither Casden nor any of the Casden
Subsidiaries has applied for, received, or has pending a Tax Ruling or
commenced negotiations or entered into a Closing Agreement with any taxing
authority.
(i) TAX SHARING AGREEMENTS. Neither Casden nor any Casden
Subsidiary is a party to any agreement relating to allocating or sharing
Taxes.
(j) BUILT IN GAIN. None of Casden or any of the Casden
Subsidiaries (excluding, for purposes of this provision, NAPICO and the
NAPICO Entities) has been or will be subject to tax (i) under the
principles of Section 1374, as described in IRS Notice 88-19 and Temporary
Treasury Reg. Section 1.337(d)-5T, or (ii) under paragraphs (4), (5), (6)
or (7) of Section 857(b) of the Code.
(k) PAST DISTRIBUTIONS. With respect to the taxable year
ending on the Closing Date, Casden will have distributed to its
stockholders, in distributions qualifying for the dividends paid deduction
pursuant to Section 857(b)(2)(B) of the Code, an amount equal to 100% of
its real estate investment trust taxable income as described in Section
857(b) of the Code.
(l) ADDITIONAL DISTRIBUTIONS. If the Merger were not to
occur, neither Casden nor CPLB would be required to make a distribution to
stockholders pursuant to Section 858 or Section 860 of the Code in order to
maintain their status as a REIT.
(m) TAXABLE REIT SUBSIDIARIES. Each entity
identified as a "Taxable REIT Subsidiary" of Casden (within the meaning of
Section 856(l) of the Code) on Section 4.1(c) of the Casden Disclosure
Letter at all times since January 1, 2001 has satisfied every requirement
imposed by Section 856(1) of the Code. None of such entities (i) operates
or manages, has operated or managed, or will operate or manage prior to the
Closing Date a "lodging facility" or "health care facility" within the
meaning of Section 856(1)(4)(A) and 856(1)(4)(B) of the Code, respectively,
or (ii) licenses, has licensed, or will license prior to the Closing Date,
rights to any brand name under which any such lodging facility or health
care facility is operated.
(n) LIABILITY FOR OTHERS. Neither Casden nor any of
the Casden Subsidiaries has any material liability for Taxes of any Person
other than Casden and the Casden Subsidiaries (i) under Treasury Reg.
Section 1.1502-6 (or any similar provision of state, local or foreign law),
(ii) by Contract, or (iii) otherwise.
(o) SECTION 341(f). Neither Casden nor any of the
Casden Subsidiaries has, with regard to any assets or property held or
acquired by any of them, filed a consent to the application of Section
341(f)(2) of the Code, or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by Casden or any of the
Casden Subsidiaries.
(p) DEFICIENCIES. No deficiencies for any Taxes have
been proposed, asserted or assessed against Casden, or any Casden
Subsidiary, and there is no outstanding waiver of the statute of
limitations with respect to any Taxes or Tax Returns of Casden or any
Casden Subsidiary.
(q) TEN PERCENT VOTING INTEREST. At the Closing
Date, other than a corporation that is a "Qualified REIT Subsidiary" of
Casden within the meaning of Section 856(i)(2) of the Code or a "Taxable
REIT Subsidiary" of Casden within the meaning of Section 856(l) of the
Code, neither Casden nor any Casden Subsidiary (excluding, for purposes of
this provision, NAPICO and the NAPICO Entities) will own (as determined for
purposes of Section 856 of the Code and the Regulations promulgated
thereunder, including Treasury Reg. Section 1.856-3(g) and with the same
meaning as when used in the Investment Company Act of 1940, as amended),
directly or indirectly (i) securities (other than "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code) possessing more
than 10% of the total voting power of any issuer or (ii) securities (other
than "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Code) having a value of more than 10% of the total value of the outstanding
securities of any issuer, other than securities satisfying the straight
debt safe harbor of Section 856(c)(7) of the Code.
(r) SERVICES. At no time on or prior to the Closing
Date, has Casden or any of the Casden Subsidiaries provided services to
tenants other than services that (i) do not give rise to "impermissible
tenant service income" as defined in Section 856(d)(7) of the Code or (ii)
give rise to impermissible tenant service income with respect to any
property for any taxable year in an amount not in excess of one percent of
all amounts received or accrued by Casden and the Casden Subsidiaries
(excluding, for purposes of this provision, NAPICO) with respect to such
property during such year.
(s) OWNERSHIP OF CORPORATIONS. Neither Casden nor
any Casden Subsidiary owns or has owned, directly or indirectly (including
through attribution under the Code), an interest in a corporation other
than interests in (i) "Qualified REIT Subsidiaries" within the meaning of
Section 856(i)(2) of the Code, (ii) "Taxable REIT Subsidiaries" within the
meaning of Section 856(l) of the Code, (iii) NAPICO, prior to its election
to be treated as a "Taxable REIT Subsidiary" of Casden within the meaning
of Section 856(l) of the Code, and (iv) REITs.
(t) OWNERSHIP OF TRANSPARENT ENTITIES. Neither
Casden nor any Casden Subsidiary other than NAPICO owns or has owned,
directly or indirectly (including through attribution under the Code),
other than through its ownership of NAPICO or a NAPICO Entity, an interest
in a partnership or limited liability company in which Casden was not the
direct or indirect (including through attribution under the Code) managing
member or general partner.
Section 4.8 EMPLOYEE MATTERS; ERISA. As of the date hereof,
except as set forth in Section 4.8 of the Casden Disclosure Letter and as
contemplated under Section 6.1(h) of the Casden Disclosure Letter:
(a) BENEFIT PLANS. Section 4.8(a) of the Casden
Disclosure Letter contains a true and complete list of each written or oral
material employment agreement, arrangement, commitment, severance agreement
or plan, change in control, or retention agreement, bonus plan, incentive
compensation or deferred compensation plan, stock option plan or agreement,
stock-based incentive plan, profit sharing plan, restricted stock plan or
agreement, welfare plan, employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), policy, program, agreement or arrangement and any
related trust covering any current or former officer, director, agent,
consultant or employee of Casden, any Casden Subsidiary or any trade or
business, whether or not incorporated, that together with Casden or any
Casden Subsidiary would be deemed a "single employer" within the meaning of
Section 4001(b)(1) of ERISA (each, an "ERISA Affiliate") or their
respective beneficiaries with respect to which AIMCO will have financial
obligations following the Merger (collectively, the "Casden Benefit
Plans"). Since December 31, 2000, except as set forth in Section 4.8(a) of
the Casden Disclosure Letter, there have been no new plans, policies,
agreements or arrangements adopted or changes, additions or modification to
any existing Casden Benefit Plan that would reasonably be expected to
materially increase the cost or liability under any Casden Benefit Plan.
Neither Casden nor any Casden Subsidiary nor any of their ERISA Affiliates
has any obligation to provide any former or present employee, director,
officer, partner, agent or consultant any profit sharing, springing or
existing equity or profit interest or participation, any paid sabbatical,
or the right to purchase any asset or property including, without
limitation, any apartment. With respect to the Casden Benefit Plans, a copy
of (i) the last two annual reports (IRS Form 5500 Series, together with all
required schedules and accountant's reports or opinions) prepared in
connection with any such Casden Benefit Plan, as applicable (ii) the latest
determination letter from the Internal Revenue Service (the "IRS") for any
Casden Benefit Plan which is intended to be qualified under Section 401 of
the Code, (iii) the most recent summary plan description, if any, and (iv)
a copy of the material documents and instruments establishing and governing
each Casden Benefit Plan (including all amendments thereto) previously have
been made available to AIMCO.
(b) CONTRIBUTIONS. All contributions and other
payments required to be made by Casden or any of the Casden Subsidiaries or
any of their ERISA Affiliates to any Casden Benefit Plan (or to any person
pursuant to the terms thereof) have been made or the amount of such payment
or contribution obligations has been reflected in the Casden Financial
Statements to the extent required by GAAP.
(c) QUALIFICATION; COMPLIANCE. Except where the
failure to so comply with each of the following representations would not
individually or in the aggregate reasonably be expected to result in a
Casden Material Adverse Effect, and with respect to any "multiemployer
plan" (as defined in Section 3(37) of ERISA) the representations in this
Section 4.8(c) are limited to the knowledge of Casden or any Casden
Subsidiary, (i) each of the Casden Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by the
IRS to be so qualified, and, to the knowledge of Casden, the Casden
Subsidiaries and their ERISA Affiliates, no circumstances exist that are
reasonably expected by Casden, any Casden Subsidiary or any of their ERISA
Affiliates to result in the revocation of any such determination; (ii)
Casden, the Casden Subsidiaries and their ERISA Affiliates are in
compliance with, and each of the Casden Benefit Plans is and has been
operated in compliance with, all applicable laws, rules and regulations
governing such plan, including, ERISA and the Code; (iii) each Casden
Benefit Plan intended to provide for the deferral of income, the reduction
of salary or other compensation, or to afford other income tax benefits,
complies with the requirements of the applicable provisions of the Code or
other laws, rules and regulations required to provide such income tax
benefits; and (iv) no "prohibited transactions" (as defined in Section 406
or 407 of ERISA or Section 4975 of the Code) have occurred for which a
statutory or administrative exemption is not available with respect to any
Casden Benefit Plan and which could give rise to liability on the part of
Casden, any Casden Subsidiary, any of their ERISA Affiliates, any Casden
Benefit Plan, or any fiduciary, party in interest or disqualified Person
with respect to any Casden Benefit Plan.
(d) LIABILITIES. With respect to the Casden Benefit
Plans, no event has occurred, and, to the knowledge of Casden, the Casden
Subsidiaries and their ERISA Affiliates, there does not now exist any
condition or set of circumstances that could reasonably be expected to
subject Casden, any of the Casden Subsidiaries or any of their ERISA
Affiliates to any material liability arising under the Code, ERISA or any
other applicable law (including any liability to any such plan or the
Pension Benefit Guaranty Corporation (the "PBGC")), excluding liabilities
for benefit claims and funding obligations payable in the ordinary course.
No liability under Title IV of ERISA has been incurred by Casden, any of
the Casden Subsidiaries or any of their ERISA Affiliates during the last
six (6) years that has not been satisfied in full, and no condition exists
that presents a risk to Casden, any of the Casden Subsidiaries or any of
their ERISA Affiliates of incurring any liability under such Title, other
than liability for premiums due the PBGC, which payments have been or will
be made when due except as would not reasonably be expected to have a
Casden Material Adverse Effect.
(e) WELFARE PLANS. None of the Casden Benefit Plans
that are "welfare plans," within the meaning of Section 3(1) of ERISA,
provide for any material benefits with respect to current or former
employees for periods extending beyond their retirement or other
termination of service, other than continuation coverage required to be
provided under Section 4980B of the Code or Part 6 of Title I of ERISA.
(f) PENALTIES. To Casden or any Casden Subsidiary's
knowledge, none of any Casden Benefit Plan, any trust created thereunder,
nor any trustee or administrator of any Casden Benefit Plan taken any
action or failed to take any action which could reasonably be expected to
subject Casden, any Casden Subsidiary or any of their ERISA Affiliates to
any material liability for either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975(a)
or (b) or 4976 or 4980B of the Code.
(g) PAYMENTS RESULTING FROM THE TRANSACTIONS. Other
than with respect to the option awards referred to in Section 7.11(a), or
with respect to the employment agreements or arrangements set forth in
Section 4.8(a) of the Casden Disclosure Letter, the consummation or
announcement of any of the Transactions will not (either alone or upon the
occurrence of any additional or further acts or events, including the
termination of employment of any officers, directors, employees, agents or
directors of Casden or any Casden Subsidiary on or prior to the Closing),
result in any (i) payment (whether of severance pay or otherwise) becoming
due from Casden or any of the Casden Subsidiaries to any Affected Employee
(as defined in Section 7.11(a)) or to the trustee under any "rabbi trust"
or similar arrangement, (ii) benefit of any Affected Employee under any
Casden Benefit Plan becoming accelerated, vested or payable or (iii) "mass
layoff" or "plant closing" as defined in the WARN Act requiring notice or
pay in lieu of notice.
(h) MULTIEMPLOYER PLAN. With respect to any Casden
Benefit Plan that is a "multiemployer plan," as such term is defined in
Section 3(37) of ERISA, (i) neither Casden, any Casden Subsidiary nor any
ERISA Affiliate has, since September 26, 1980, made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively
defined in Sections 4203 and 4205 of ERISA, (ii) no event has occurred that
presents a material risk of a complete or partial withdrawal, (iii) neither
Casden, any Casden Subsidiary nor any ERISA Affiliate has any contingent
liability under Section 4204 of ERISA, (iv) to the knowledge of Casden or
any Casden Subsidiary, no circumstances exist that present a material risk
that any such multi-employer plan will go into reorganization, and (v) to
the knowledge of Casden or any Casden Subsidiary, the aggregate withdrawal
liability of Casden, each Casden Subsidiary and the ERISA Affiliates,
computed as if a complete withdrawal by Casden, each Casden Subsidiary and
all of its ERISA Affiliates had occurred under each such multiemployer plan
on the date hereof, would be zero.
(i) TITLE IV PLANS. Except with respect to any
multiemployer plans, no Casden Employee Plan is subject to Title IV of
ERISA and neither Casden, any ERISA Affiliate, nor any Casden Subsidiary
has ever sponsored, maintained, contributed to, or incurred an obligation
to contribute to, any plan that is subject to Title IV of ERISA.
(j) DEDUCTIBILITY OF PAYMENTS. Except as disclosed
in Section 4.8(j) of the Casden Disclosure Letter, there is no Casden
Benefit Plan or any other contract, agreement or arrangement with respect
to any "disqualified individual" within the meaning of Section 1.280G-1 of
the Proposed Regulations of Casden that could, individually or
collectively, give rise to the payment of any amount by Casden or any
Casden Subsidiary as a result of the consummation of the Transactions that
would not be deductible pursuant to the terms of Section 280G of the Code.
(k) LABOR MATTERS. Except as set forth in Section
4.8(k) of the Casden Disclosure Letter:
(i) there is no labor strike, slowdown, work
stoppage or lockout in effect, or, to the knowledge of Casden, threatened
against or otherwise affecting Casden or any Casden Subsidiary, nor has
Casden or any Casden Subsidiary experienced any such labor controversy
since December 31, 1996;
(ii) there is no unfair labor practice charge or
complaint pending or, to the knowledge of Casden, threatened against or
otherwise affecting Casden or any Casden Subsidiary before the National
Labor Relations Board or any similar state or foreign agency;
(iii) no grievance or arbitration proceeding
before any Governmental Authority relating to any of the employees or
former employees of Casden or any Casden Subsidiary, any labor organization
or other representative of the employees or arising out of any collective
bargaining agreement is pending or, to the knowledge of Casden, threatened
against or otherwise affecting Casden or any Casden Subsidiary, which, if
adversely decided, would reasonably be expected to have a Casden Material
Adverse Effect; and
(iv) no collective bargaining agreement exists
that is binding on Casden or any Casden Subsidiary, and no petition has
been filed or proceedings instituted by an employee or group of employees
of Casden or any Casden Subsidiary with any labor relations board seeking
recognition of a bargaining representative, and, to the knowledge of
Casden, no organizational effort is currently being made or has been made
since December 31, 1996, on behalf of any labor union to organize any
employees of Casden or any Casden Subsidiary.
(l) CONSENT DECREES OR SETTLEMENTS. Except as set
forth on Section 4.8(l) of the Casden Disclosure Letter, Casden is not a
party to, or otherwise bound by, any consent decree or settlement agreement
with, or citation by, any Government Authority relating to employees or the
employment practices of Casden.
(m) COMPLIANCE WITH LAW. To the knowledge of Casden,
Casden is in material compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment,
immigration, wages, hours of work, independent contractor classification,
income tax withholding and occupational safety and health.
(n) PENDING OR THREATENED PROCEEDINGS. There are no
proceedings pending or, to the knowledge of Casden, threatened in writing
against or otherwise affecting Casden before any Governmental Authority
brought by or on behalf of any of Casden's employees, prospective employees
or former employees alleging breach of any express or implied contract of
employment or any law or regulation governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection
with the employment relationship, which, if adversely decided, would
reasonably be expected to have a Material Adverse Effect on Casden.
(o) EMPLOYMENT TERMINATIONS. To the knowledge of
Casden, and other than the Transferred Employees, no officer or other key
employee of Casden intends to terminate his or her employment with Casden
in connection with the Merger.
(p) WARN EVENTS. In the past five years, (i) Casden
has not effectuated a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of Casden's business, (ii)
there has not occurred a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of Casden's business, (iii)
Casden has not engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state, local or foreign law or
regulation, (iv) Casden has not caused any of its employees at its
corporate headquarters in Beverly Hills, California to suffer an
"employment loss" (as defined in the WARN Act) during the 90 day period
prior to the date hereof and (v) no other single site of employment of
Casden (other than its corporate headquarters in Beverly Hills, California)
has 50 or more employees.
(q) EMPLOYEE POLICIES. Section 4.8(q) of the Casden
Disclosure Letter sets forth a complete and accurate list of all written
personnel policies, rules or procedures applicable to Casden's employees.
(r) CASDEN EMPLOYEES. Section 4.8(r) of the Casden
Disclosure Letter sets forth a complete and accurate list of all of the
employees of Casden and the Casden Subsidiaries as of October 31, 2001,
other than the Proposed Transferred Employees (as defined in Section 4.8(s)
below), including each such individual's name, rate of compensation and
whether such individual is a full-time or part-time employee or is on
leave.
(s) PROPOSED TRANSFERRED EMPLOYEES. Section 4.8(s)
of the Casden Disclosure Letter sets forth (i) a preliminary list of the
proposed employees of Casden or any subsidiary of Casden that will be given
offers of employment by either CommercialCo or the Development LLC (the
"Proposed Transferred Employees") immediately following the Effective Time
and (ii) the entity that will offer such employment.
Section 4.9 ENVIRONMENTAL PROTECTION. Except as set forth in
Section 4.9 of the Casden Disclosure Letter:
(a) COMPLIANCE. Casden and each of the Casden
Subsidiaries is in compliance with all applicable Environmental Laws,
except as in the aggregate would not result in a Casden Material Adverse
Effect. Neither Casden nor any of the Casden Subsidiaries has received any
written communication from any Governmental Authority that alleges that
Casden or any of the Casden Subsidiaries is not in compliance with
applicable Environmental Laws, except as in the aggregate would not result
in a Casden Material Adverse Effect. Compliance with all applicable
Environmental Laws will not require Casden or any Casden Subsidiary to
incur costs that would be reasonably likely to result in a Casden Material
Adverse Effect.
(b) ENVIRONMENTAL PERMITS. Casden and each of the
Casden Subsidiaries has obtained or has applied for all environmental,
health and safety permits and governmental authorizations (collectively,
the "Environmental Permits") necessary for the construction of their
facilities or the conduct of their operations, and all such Environmental
Permits are in good standing or, where applicable, a renewal application
has been timely filed and is pending agency approval, and Casden and the
Casden Subsidiaries are in compliance with all terms and conditions of the
Environmental Permits, except for Environmental Permits which in the
aggregate would not result in a Casden Material Adverse Effect.
(c) ENVIRONMENTAL CLAIMS. There is no Environmental
Claim pending or, to the knowledge of Casden, threatened in writing (i)
against Casden or any of the Casden Subsidiaries, (ii) against any Person
whose liability for any Environmental Claim Casden or any of the Casden
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, or (iii) against any real or personal property or
operations which Casden or any of the Casden Subsidiaries owns, leases or
manages, in whole or in part, except, in each case, for Environmental
Claims which in the aggregate would not result in a Casden Material Adverse
Effect. To the knowledge of Casden, no circumstances, events or conditions
exist that would reasonably be expected to form the basis of any
Environmental Claim against Casden or the Casden Subsidiaries, except as in
the aggregate would not result in a Casden Material Adverse Effect.
(d) HAZARDOUS MATERIALS. To the knowledge of Casden,
no Hazardous Materials are located on any Casden Property, except in
compliance with all Environmental Laws or except as in the aggregate would
not reasonably be expected to result in a Casden Material Adverse Effect.
(e) USTs. To the knowledge of Casden, no underground
storage tank is located on any Casden Property, except in compliance with
all Environmental Laws or except as in the aggregate would not reasonably
be expected to result in a Casden Material Adverse Effect.
(f) PREDECESSORS. To the knowledge of Casden, there
is no pending or threatened Environmental Claim with respect to any
predecessor of Casden or any of the Casden Subsidiaries which would have a
Casden Material Adverse Effect, or any Environmental Release of Hazardous
Materials that would be reasonably likely to form the basis of any
Environmental Claim, except for Environmental Claims which in the aggregate
would not result in a Casden Material Adverse Effect.
(g) REPORTS. Casden has delivered to AIMCO copies of
all environmental assessments, audits and reports in its possession
relating to the Casden Properties.
(h) GOVERNMENTAL APPROVAL. The Transactions do not
require governmental approval under Environmental Laws.
(i) MOLD. To the knowledge of Casden, no colonies or
growths of toxin-producing molds or fungi are located in any habitable
structures on any Casden Property, except as in the aggregate would not
result in a Casden Material Adverse Effect. There are no claims pending or,
to the knowledge of Casden, threatened, against Casden or any of the Casden
Subsidiaries or with respect to any real or personal property or operations
which Casden or any of the Casden Subsidiaries owns, leases or manages, in
whole or in part, alleging the presence of any such molds or fungi, except
as in the aggregate would not result in a Casden Material Adverse Effect.
Section 4.10 VOTE REQUIRED. The affirmative vote of (a) the
holders of at least a majority of the shares of Casden Common Stock
outstanding on the record date for the Casden Meeting (as defined in
Section 7.5(a)) voting as a class, and (b) the holders of at least 55% of
the shares of Casden Class A Preferred Stock outstanding as of the date
hereof, voting as a class (collectively, the "Casden Stockholders'
Approval"), are the only votes of the holders of any class or series of the
shares of Casden or any of the Casden Subsidiaries that is required to
approve the Merger and this Agreement. The affirmative vote of (i) the
holders of at least 2/3 of the shares of Casden Common Stock and (ii) the
holders of at least 90% of the shares of CPLB common stock subject to the
CPLB Reverse Stock Split outstanding on the record date for determining the
holders entitled to vote thereon are the only votes of the holders of any
class or series of Casden Capital Stock that are required to approve (a)
the Casden Reverse Stock Split and the amendment to the Casden Charter
contemplated by Section 7.34 and (b) the CPLB Reverse Stock Split,
respectively. The shares subject to the Voting Agreement will represent at
least a majority of the shares of Casden Common Stock outstanding on the
record date for the Casden Meeting and at least 55% of the shares of Casden
Class A Preferred Stock as of the date hereof. The Stockholders of Casden
set forth on Section 4.10 of the Casden Disclosure Letter, each of which is
a party to the Voting Agreement are, in the aggregate, the record and
beneficial owners of a sufficient number of shares of Casden Common Stock,
Casden Junior Preferred Stock and Casden Class A Preferred Stock sufficient
to constitute the Casden Stockholder Approval. The Stockholders of PLB that
are parties to the Voting Agreement are, in the aggregate, the record and
beneficial owners of a number of shares of PLB Common Stock sufficient to
constitute 90% of the voting power of PLB Common Stock.
Section 4.11 HUD. Other than as set forth on Section 4.11 of
the Casden Disclosure Letter and except where the failure to obtain, or the
presence of which, would not reasonably be expected to result in a Casden
Material Adverse Effect, each of Casden and the Casden Subsidiaries as of
the date hereof: (a) has all necessary consents and approvals of HUD to act
as a general partner of and/or management agent for, as the case may be,
each partnership which is an owner of a HUD-insured or HUD-assisted
property for which Casden or any Casden Subsidiary acts as a general
partner and/or management agent; (b) with respect to each HUD-insured or
HUD-assisted property for which Casden or any Casden Subsidiary acts as a
general partner and/or management agent, has not received any current
physical inspection reviews with a REAC score of less than 60 for which an
MIO plan which is satisfactory to HUD has not been developed (or disclosing
any exigent health and safety matters which have not been resolved) or any
management agent's performance reviews that are graded as less than
"Satisfactory" or, as to state housing agencies, any physical inspection or
management agent reviews with an equivalent or otherwise substandard
rating; (c) has no "flags" or limited denials of participation, suspensions
or debarments currently in effect under the HUD 2530 Previous Participation
Clearance Procedures or any other applicable HUD regulations; (d) has not
been notified by HUD of any matters currently pending before the HUD
Departmental Enforcement Center; (e) has not received any notice from HUD
with respect to any audited financial statement for any year prior to 2000
that remains unresolved to HUD's satisfaction; and (f) has filed all annual
audited financial statements in the timeframe required by HUD for the
calendar year 2000.
Section 4.12 ABSENCE OF INDUCEMENT. In entering into the
Transaction Documents, Casden has not been induced by, or relied upon, any
representations, warranties or statements by AIMCO not set forth or
referred to in the Transaction Documents, the Schedules thereto or the
other documents required to be delivered thereby, whether or not such
representations, warranties or statements have actually been made, and
Casden acknowledges that, in entering into the Transaction Documents, AIMCO
has been induced by and relied upon the representations and warranties of
Casden herein set forth, the information set forth in the Casden Financial
Statements and the representations and warranties of the parties to the
Transaction Documents, the Schedules thereto and the other documents
required to be delivered thereby. Casden has made its own investigation of
AIMCO prior to the execution of this Agreement and has not been induced by
or relied upon any representations, warranties, statements or documents as
to the advisability of entering into this Agreement other than as described
above in the first sentence of this Section 4.12.
Section 4.13 REAL PROPERTIES.
(a) OWNERSHIP. Section 4.13(a) of the Casden
Disclosure Letter sets forth a list of each of the following properties
(collectively, but excluding the NAPICO Syndicated Properties (as defined
in Section 7.32 below), the "Casden Properties"), together with the
approximate number of apartment units located on each such property and the
location of each such property:
(i) each real property owned in whole or in part
by Casden or a Casden Subsidiary other than the NAPICO Properties
(collectively, the "Owned Properties"), together with the name of
the entity or entities which own each such Owned Property (the
"Owned Property Owners") and the percentage interests and
organizational structure pursuant to which each such Owned
Property is owned;
(ii) each real property leased in whole or in
part by Casden or a Casden Subsidiary as a tenant (collectively,
the "Leased Properties"), together with the name of the entity or
entities which lease each such Leased Property (the "Leased
Property Lessees") and the percentage interests and organizational
structure pursuant to which each such Leased Property is leased;
and
(iii) each real property owned by a NAPICO
Entity as of November 1, 2001 (collectively, the "NAPICO
Properties"), together with the name of the entity or entities
which own each such NAPICO Property (the "NAPICO Property
Owners"), the name of the NAPICO Entity that controls such owner
and the percentage interest and organizational structure pursuant
to which such NAPICO Entity controls such owner.
Each Owned Property Owner holds good, valid, marketable and indefeasible
fee simple title to the Owned Property, or the applicable portion thereof,
that Section 4.13(a) of the Casden Disclosure Letter indicates as being
owned by such Owned Property Owner, free and clear of all Liens, rights of
way, easements and any other matters affecting title, other than
encumbrances which do not materially adversely affect the value of such
property or the use thereof, which are described in Section 4.13(a) of the
Casden Disclosure Letter or which are shown on the title insurance policy
or title report with respect thereto ("Permitted Encumbrances"), with full
right to convey the same. To Casden's knowledge, each Leased Property
Lessee holds a good, valid, marketable and indefeasible leasehold interest
in and to the Leased Property that Section 4.13(a) of the Casden Disclosure
Letter indicates as being leased by such Leased Property Lessee, free and
clear of all Liens, rights of way, easements and any other matters
affecting title, other than Permitted Encumbrances, with full right to
convey the same, subject to obtaining the consents specified on Section
4.13(a) of the Casden Disclosure Letter. Each NAPICO Property Owner holds
good, valid, marketable and indefeasible fee simple title to the NAPICO
Property, or the applicable portion thereof, that Section 4.13(a) of the
Casden Disclosure Letter indicates as being owned by such NAPICO Property
Owner, free and clear of all Liens, rights of way, easements and any other
matters affecting title, other than Permitted Encumbrances, with full right
to convey the same. Except as may be set forth in Section 4.13(a) of the
Casden Disclosure Letter, neither Casden nor any Casden Subsidiary nor, to
Casden's knowledge, any owner or lessee of any Casden Property has granted
any option, right of first refusal, rights of first offer or comparable
right to any third party to purchase or otherwise acquire a direct or
indirect interest in any of the Casden Properties; provided, however, that
in certain jurisdictions, tenants may have rights of first refusal or
rights of first offer pursuant to applicable laws, ordinances, statutes,
rules and regulations governing the transfer, ownership, use, operation,
management and occupation of residential real estate and rental properties
(collectively, "Laws"). The Casden Properties include all real properties
used by Casden and the Casden Subsidiaries in the conduct of their
respective businesses. The NAPICO Properties include all real properties
used by the NAPICO Entities in the conduct of their respective businesses.
(b) GROUND LEASES. A true, accurate and complete
copy of each lease pursuant to which each Leased Property Lessee leases a
Leased Property (each, a "Ground Lease") has heretofore been delivered to
AIMCO. To Casden's knowledge, each Ground Lease is valid, binding and
enforceable in accordance with its terms and is in full force and effect.
There are no existing material defaults by any Leased Property Lessee under
any of the Ground Leases.
(c) NOTICES TO REPAIR. Except as set forth in
Section 4.13(c) of the Casden Disclosure Letter, neither Casden nor any
owner or lessee of any of the Casden Properties has received any written
notice of any requirements by any insurance company that has issued a
policy covering any Casden Property or by any board of fire underwriters or
other body of competent jurisdiction of any repairs or work to be done on
any part of any Casden Property, which repair or work has not been
completed.
(d) APPROVALS. Except as set forth in Section
4.13(d) of the Casden Disclosure Letter, to Casden's knowledge, Casden (or
the applicable owner or lessee of the Casden Properties) has obtained all
appropriate material certificates of occupancy, licenses, easements and
rights of way, including proofs of dedication, required to use and operate
the Casden Properties in the manner in which the Casden Properties are
currently being used and operated. True, accurate and complete copies of
all such certificates, permits and licenses have heretofore been furnished
to AIMCO. Except as set forth in Section 4.13(d) of the Casden Disclosure
Letter, to Casden's knowledge, Casden and each owner (or lessee in the case
of Leased Properties) of each Casden Property has all material approvals,
permits and licenses necessary to own or operate the Casden Properties as
currently owned and operated, and no such material approvals, permits or
licenses will be required to be issued after the date hereof as a result of
the Transactions in order to permit AIMCO and its Subsidiaries to continue
to own or operate the Casden Properties following the Closing in the same
manner as heretofore owned or operated, other than any such approvals,
permits and licenses that are ministerial in nature and are normally issued
in due course upon application therefor without further action by the
applicant or the failure of which to obtain would not, in the aggregate,
result in a Casden Material Adverse Effect.
(e) COMPLIANCE WITH LAWS. Except as set forth in
Section 4.13(e) of the Casden Disclosure Letter, to Casden's knowledge,
each Casden Property is in material compliance with all material Laws,
including, all material Laws with respect to zoning, building, fire and
health codes, and sanitation and pollution control.
(f) CONDEMNATION; SPECIAL ASSESSMENTS. Except as set
forth in Section 4.13(f) of the Casden Disclosure Letter, Casden has no
knowledge of any pending or threatened condemnation, eminent domain or
similar proceeding or special assessment which would materially and
adversely affect any of the Casden Properties.
(g) PERSONAL PROPERTY. Except as set forth in
Section 4.13(g) of the Casden Disclosure Letter and except for personal
property of which any owner or lessee of any Casden Property is a lessee,
all of the personal property owned by Casden and the Casden Subsidiaries is
owned by each such entity free and clear of all Liens, other than Permitted
Encumbrances and, in the case of personal property located on a Leased
Property, other than any applicable landlord's Lien, and each such entity
has good and marketable title to its respective personal property.
(h) MORTGAGES; ENCUMBRANCES. Section 4.13(h) of the
Casden Disclosure Letter sets forth a list of each and every outstanding
mortgage or deed of trust encumbering any Owned Property or interest in
Casden Property, or Casden's interest in any other Casden Property
(together with the name of the Owned Property encumbered thereby), and
there are no other mortgages or deeds of trust (other than Permitted
Encumbrances) encumbering the Owned Properties, or Casden's interest in any
other Casden Property. Except as set forth in Section 4.13(h) of the Casden
Disclosure Letter, Casden has not received any written notice of any
proceedings, claims, disputes or conditions affecting any Casden Property
that might materially curtail or interfere with the use of the Casden
Properties. Except as set forth in Section 4.13(h) of the Casden Disclosure
Letter, neither Casden nor any owner (or lessee in the case of Leased
Property) of any of the Casden Properties is a party to any commercial
lease or similar arrangement under which Casden or such owner (or lessee in
the case of Leased Property) is a lessor or otherwise makes available for
use by any third party for any commercial purpose any portion of any Casden
Property, in each case where such commercial lease or similar arrangement
or permitted use is material to the income derived from, or the value of,
such Casden Property.
(i) PROPERTY LEVEL RESERVES. Except as set forth in
Section 4.13(i) of the Casden Disclosure Letter, to the knowledge of
Casden, all Owned Properties (other than the "conventional" and the "80-20"
properties) have property level reserves, and such property level reserves
are sufficient for the reasonably anticipated immediate capital
requirements of the respective Owned Properties for the 12-month period
following the Effective Time, provided, however, that no representation or
warranty is herein made as to (i) the needs or available funds related to
such conventional and 80-20 properties or (ii) any future exercise by HUD
or any state affordable housing agency of its discretion to (A) allow or
disallow use of such reserves or (B) require additional reserves or
additional repairs or capital improvements.
Section 4.14 BOOKS AND RECORDS. The books of account, minute
books, stock record books and other records of Casden and the Casden
Subsidiaries, all of which have been made available to AIMCO, are complete
and correct in all material respects and have been maintained in accordance
with sound business practices, including an adequate system of internal
controls. The minute books of Casden contain accurate and complete records
of all meetings held of, and corporate action taken by, the Casden
stockholders, the Casden Board of Directors and committees of the Casden
Board of Directors, and no meeting of any of such Casden stockholders, the
Casden Board of Directors or such committees has been held for which
minutes have not been prepared and are not contained in such minute books.
All of such books and records are in the possession of Casden or the Casden
Subsidiary to which they relate.
Section 4.15 NO UNDISCLOSED LIABILITIES. Except (a) as
disclosed in the Casden Financial Statements, (b) pursuant to the terms and
conditions of any Contracts listed in Section 4.17 of the Casden Disclosure
Letter and (c) for liabilities and obligations incurred in the ordinary
course of business and consistent with past practice since December 31,
2000, neither Casden nor any Casden Subsidiary has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
material to Casden and the Casden Subsidiaries, taken as a whole. The
reserves reflected in the Casden Financial Statements are adequate,
appropriate and reasonable and have been calculated in a consistent manner.
Section 4.16 INSURANCE. Section 4.16 of the Casden Disclosure
Letter contains a complete and accurate description of all fire, liability,
workmen's compensation and other insurance policies owned or held by Casden
and each Casden Subsidiary, including insurance policies covering material
litigation against Casden or any Casden Subsidiary. Copies of all such
insurance policies have been made available to AIMCO. All such policies are
in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been, or will be, paid
within the time specified in such policies, and no notice of cancellation
or termination has been received with respect to any such policy. Such
policies are sufficient for compliance with all requirements of law and all
Contracts to which Casden or any Casden Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage
for the assets and operations of Casden and each Casden Subsidiary; will
remain in full force and effect through the respective dates set forth in
the Casden Disclosure Letter without the payment of additional premiums;
and will not in any way be affected by, or terminate or lapse by reason of,
the Transactions. The Casden Disclosure Letter identifies all risks which
Casden, its Board of Directors or officers have designated as being self
insured. Neither Casden nor any Casden Subsidiary has been refused any
insurance with respect to its assets or operations, nor has its coverage
been limited, by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance since December 31, 1998.
Section 4.17 CONTRACTS. Section 4.17 of the Casden Disclosure
Letter contains a complete and accurate list, and each of Casden and the
Casden Subsidiaries has delivered to AIMCO, true and complete copies,
including any amendments, supplements and modifications thereto, of:
(a) each Contract (other than Contracts between Casden or
any of its wholly owned Subsidiaries, on the one hand, and Casden or any of
its wholly owned Subsidiaries, on the other hand) that involves performance
of services or delivery of goods or materials by or to Casden or any of the
Casden Subsidiaries of an amount or value in excess of $100,000 per year;
(b) each collective bargaining agreement and other
Contract to or with any labor union or other employee representative of a
group of employees that is binding on Casden or any Casden Subsidiary;
(c) each Contract (other than employment contracts) with
any officer, director, employee or Affiliate of Casden or any of the Casden
Subsidiaries, or any of such Person's family members or Affiliates calling
for payments in excess of $100,000 per year;
(d) each written warranty, guaranty, or other similar
undertaking with respect to contractual performance extended by Casden or
any of the Casden Subsidiaries, other than in the ordinary course of
business; and
(e) each other Contract that is material to Casden and
the Casden Subsidiaries, taken as a whole.
Section 4.18 PROPRIETY OF PAST PAYMENTS. To Casden's knowledge,
(a) no unrecorded fund or asset of Casden or any Casden Subsidiary has been
established for any purpose, (b) no accumulation or use of corporate funds
of Casden or any Casden Subsidiary has been made without being properly
accounted for in the books and records of Casden or such Casden Subsidiary
and (c) none of Casden, any Casden Subsidiary, or any director, officer,
employee or agent of Casden or any Casden Subsidiary has, directly or
indirectly, made any illegal contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other illegal payment to any Person, private
or public, regardless of form, whether in money, property or services, (i)
to obtain favorable treatment for any Casden stockholder, Casden, any
Casden Subsidiary or any Affiliate of Casden in securing business, (ii) to
pay for favorable treatment for business secured for any Casden
stockholder, Casden, any Casden Subsidiary or any Affiliate of Casden,
(iii) to obtain special concessions, or for special concessions already
obtained, for or in respect of any Casden stockholder, Casden, any Casden
Subsidiary or any Affiliate of Casden or (iv) otherwise for the benefit of
any Holder, Casden, any Casden Subsidiary or any Affiliate of Casden in
violation of any federal, state, local, municipal, foreign, international,
multinational or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty (including existing
site plan approvals, zoning or subdivision regulations or urban
redevelopment plans relating to real property) known to Casden. Neither
Casden nor any Casden Subsidiary, nor, to Casden's knowledge, any current
director, officer, agent, employee or other authorized Person acting on
behalf of Casden or any Casden Subsidiary, has accepted or received any
unlawful contribution, payment, gift, kickback, expenditure or other item
of value.
Section 4.19 BANK ACCOUNTS. Section 4.19 of the Casden Disclosure
Letter sets forth the names of all banks, trust companies, savings and loan
associations and other financial institutions at which Casden or any Casden
Subsidiary maintains safe deposit boxes, checking accounts or other
accounts of any nature, as well as the account numbers or other identifying
information regarding each such safe deposit box or account.
Section 4.20 DEFICIT RESTORATION OBLIGATIONS, ADJUSTED CAPITAL
ACCOUNT DEFICITS AND CAPITAL CONTRIBUTION OBLIGATIONS. Section 4.20 of the
Casden Disclosure Letter sets forth (i) the amount of each obligation to
restore a deficit balance in an adjusted capital account of Casden or any
Casden Subsidiary that owns an equity interest in any non-corporate entity
(including a partnership, limited partnership, limited liability company or
joint venture), calculated through December 31, 2000, (ii) the amount of
each deficit balance in any capital account of Casden or any Casden
Subsidiary that owns an equity interest in any non-corporate entity
(including a partnership, limited partnership, limited liability company or
joint venture), calculated as of December 31, 2000, and (iii) each capital
contribution required to be made by Casden or any Casden Subsidiary (other
than to a Casden Subsidiary that is wholly owned by Casden) that owns an
equity interest in any non-corporate entity (including a partnership,
limited partnership, limited liability company or joint venture).
Section 4.21 COMPLIANCE WITH LAWS. To Casden's knowledge, Casden
and each of the Casden Subsidiaries have complied in a timely manner and in
all respects with all laws, rules and regulations, ordinances, judgments,
decrees, orders, writs and injunctions of all United States federal, state,
local, foreign governments and agencies thereof that affect the business,
properties or assets of Casden or any Casden Subsidiary, except where the
failure to comply would not reasonably be expected to result in a Casden
Material Adverse Effect, and no written notice, claim or action has been
received by Casden or any Casden Subsidiary or has been filed, commenced
or, to Casden's knowledge, threatened against Casden or any Casden
Subsidiary alleging any material violation of any of the foregoing.
Section 4.22 RELATIONSHIPS WITH RELATED PERSONS. To Casden's
knowledge, since December 31, 1998, there have been no transactions,
agreements, arrangements or understandings between Casden or any of the
Casden Subsidiaries, on the one hand, and Casden's Affiliates (other than
wholly-owned Subsidiaries of Casden) or other Persons, on the other hand,
pertaining to or affecting Casden, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act if Casden were
the registrant.
Section 4.23 MARYLAND TAKEOVER LAWS. The board of directors of
Casden has authorized and approved the Merger and this Agreement (prior to
the execution of this Agreement by Casden) in accordance with Section
3-603(c)(1)(ii) of the MGCL such that Section 3-602 shall not apply to this
Agreement or the transactions contemplated hereby (including the Casden
Reverse Stock Split). The board of directors of Casden has taken all such
action required to be taken by them to provide that this Agreement and the
transactions contemplated hereby, including without limitation, the direct
or indirect ownership of any Casden Common Stock by AIMCO, and the Casden
Reverse Stock Split shall be exempt from the requirements of any
"moratorium," "control share," "fair price" or other anti-takeover laws or
regulations of the State of Maryland, including without limitation Subtitle
7 of the Title 3 of the MGCL.
Section 4.24 OFFICERS AND DIRECTORS. Section 4.24 of the Casden
Disclosure Letter sets forth a complete and accurate list of all officers
and directors of Casden.
Section 4.25 NO CASDEN MATERIAL MISSTATEMENTS. To Casden's
knowledge, no representation or warranty of Casden contained in the
Transaction Documents contains or will contain any untrue statement of
material fact or omit to state any material fact necessary, in light of the
circumstances and taking into account the express limitations set forth in
each such representation and warranty, in order to make the representations
and warranties made by Casden herein or therein not misleading.
Section 4.26 TAX QUESTIONNAIRES. Casden and the Casden
Subsidiaries (other than NAPICO and the NAPICO Entities) have sent to each
manager and assistant manager of the Owned Properties and the Leased
Properties and each regional supervisor employed by Casden and the Casden
Subsidiaries (other than the NAPICO Entities) prior to the date hereof.
Section 4.27 CLOSING PAYOFF AMOUNTS. After AIMCO pays the
amounts set forth in Schedule 2.1(a) at the Effective Time, the loans and
other obligations set forth on Schedule 7.36 shall be paid in full and
there shall be no further obligations thereunder.
Section 4.28 CASDEN BOARD OF DIRECTORS APPROVAL. The
independent directors of Casden and the Board of Directors of Casden have
approved the treatment of shares of Casden Capital Stock set forth in
Article II and the fairness of the allocation of consideration among the
holders of Casden Capital Stock set forth therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AIMCO makes the following representations and warranties to Casden
and XYZ. Except as set forth in the AIMCO SEC Reports or the disclosure
letter from AIMCO to Casden dated the date hereof (the "AIMCO Disclosure
Letter"):
Section 5.1 ORGANIZATION AND QUALIFICATION. AIMCO and each
AIMCO Subsidiary is a corporation or other entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority, and
has been duly authorized by all necessary approvals and orders to own,
lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its business as it is now being conducted and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its assets
and properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not reasonably be
expected to have an AIMCO Material Adverse Effect.
Section 5.2 AIMCO SUBSIDIARIES. All of the issued and
outstanding shares of capital stock and all other equity interests owned in
each AIMCO Subsidiary are, in the case of capital stock, validly issued,
fully paid, non-assessable and free of preemptive rights, and, in the case
of capital stock and all other equity interests in any entity, are owned,
directly or indirectly, by AIMCO free and clear of any Liens and there are
no outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or agreement, obligating by AIMCO or any
AIMCO Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of its capital stock or other equity
interests or obligating it to grant, extend or enter into any such
agreement or commitment.
Section 5.3 CAPITALIZATION. As of the date hereof, the
authorized capital stock of AIMCO consists of (i) 510,587,500 shares of
capital stock, of which 456,962,738 shares are classified as Class A Common
Stock and the remainder are classified as Preferred Stock and (ii) no
Voting Debt was issued or outstanding. All outstanding shares of AIMCO
Common Stock and AIMCO Preferred Stock have been validly issued free of
preemptive rights, and are fully paid and non-assessable. Upon consummation
of the Merger and the concurrent automatic conversion of the Casden Capital
Stock into AIMCO Common Stock in accordance with Section 2.2(a), all such
shares will be validly issued, fully paid and non-assessable and will not
be subject to preemptive rights. As of the date hereof, except as set forth
in Section 5.3 of the AIMCO Disclosure Letter or pursuant to this Agreement
and the AIMCO Benefit Plans, there are no securities, outstanding
subscriptions, calls, options, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement to which AIMCO or any
AIMCO Subsidiary is a party or by which any of them are bound obligating
AIMCO or any AIMCO Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or any Voting
Debt of AIMCO or any AIMCO Subsidiary or obligating AIMCO or any AIMCO
Subsidiary to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement.
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. AIMCO has all requisite power and
authority to execute and deliver this Agreement and, subject to the receipt
of the applicable AIMCO Required Statutory Approvals (as defined in Section
5.4(c)), to consummate the Transactions. The execution and delivery of this
Agreement and the consummation by AIMCO of the Transactions have been duly
authorized by all necessary corporate action on the part of AIMCO. This
Agreement has been duly and validly executed and delivered by AIMCO and,
assuming the due authorization, execution and delivery hereof by Casden,
constitutes the valid and binding obligation of AIMCO enforceable against
AIMCO in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
and general principles of equity. No approval of AIMCO's stockholders is
required to execute and deliver this Agreement or to consummate the
Transactions, including the issuance and listing on the NYSE of the AIMCO
Common Stock to be issued in the Merger and the assumption of all
obligations of Casden and the performance of all actions required by the
documents governing such obligations.
(b) NON-CONTRAVENTION. Except as set forth in
Section 5.4(b) of the AIMCO Disclosure Letter, the execution and delivery
of this Agreement by AIMCO does not, and the consummation of the
Transactions will not, result in a Violation with respect to AIMCO or any
of the AIMCO Subsidiaries pursuant to any provisions of (i) the AIMCO
Charter, bylaws or similar organizational or governing documents of AIMCO
or any of the AIMCO Subsidiaries, (ii) subject to obtaining the AIMCO
Required Statutory Approvals, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority applicable to AIMCO or any of the AIMCO
Subsidiaries or any of their respective properties or assets or (iii)
subject to obtaining the third-party consents set forth in Section 5.4(b)
of the AIMCO Disclosure Letter, any Contract to which AIMCO or any of the
AIMCO Subsidiaries is a party or to which such Persons or any of their
respective properties or assets are subject, except in the case of the
foregoing clause (ii) or (iii) for any such Violation which would not
reasonably be expected to have an AIMCO Material Adverse Effect.
(c) STATUTORY APPROVALS. No declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any Governmental Authority is necessary for the execution and delivery of
this Agreement by AIMCO or the consummation by AIMCO of the Transactions,
except (i) acceptance of the Articles of Merger by the MSDAT, (ii) as
described in Section 5.4(c) of the AIMCO Disclosure Letter or (iii)
declarations, filings, registrations, notices, authorizations, consents or
approvals, the failure of which to make, give or obtain would not result in
an AIMCO Material Adverse Effect (the "AIMCO Required Statutory Approvals,"
it being understood that references in this Agreement to "obtaining" such
AIMCO Required Statutory Approvals shall mean making such declarations,
filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and observing such waiting periods
as are necessary to avoid a violation of law). For purposes of determining
compliance with the HSR Act, AIMCO confirms that the conduct of its
business consists primarily of investing in, owning, developing and
operating real estate for the benefit of its stockholders.
(d) COMPLIANCE. Except as set forth in Section
5.4(d) of the AIMCO Disclosure Letter, neither AIMCO nor any of the AIMCO
Subsidiaries (i) is in violation of or has been given notice or been
charged with any violation of or (ii) to the knowledge of AIMCO, is under
investigation with respect to any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including any applicable
Environmental Laws) of any Governmental Authority. AIMCO and the AIMCO
Subsidiaries have all permits, licenses (including licenses to operate as a
property manager), franchises and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted, except where the failure to obtain such permits, licenses
(including licenses required as a property manager), franchises and other
authorizations, consents and approvals would not reasonably be expected to
have an AIMCO Material Adverse Effect. Neither AIMCO nor any AIMCO
Subsidiary is in breach or violation of, or in default in the performance
or observance of, any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result in a
default by AIMCO or any AIMCO Subsidiary under (i) AIMCO's or AIMCO OP's
organizational or governing documents or (ii) any Contract to which AIMCO
or any AIMCO Subsidiary is a party or by which it is bound or to which its
property is subject, except for possible Violations which individually or
in the aggregate would not reasonably be expected to have an AIMCO Material
Adverse Effect.
Section 5.5 REPORTS AND FINANCIAL STATEMENTS. The AIMCO SEC
Reports have been filed with the SEC, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, and such items complied,
as of their respective dates, in all material respects with all applicable
requirements of the appropriate statutes and the rules and regulations
thereunder, except for such filings the failure of which to have been made
or to so comply would not result in an AIMCO Material Adverse Effect. As of
their respective dates, the AIMCO SEC Reports did 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, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of AIMCO included in the AIMCO SEC Reports (collectively, the
"AIMCO Financial Statements") have been prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted
by Form 10-Q of the SEC) and fairly present in all material respects the
financial position of AIMCO as of the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal, recurring and
year-end audit adjustments. True, accurate and complete copies of the AIMCO
Charter and the AIMCO bylaws, each as amended to date and in effect on the
date hereof, have been provided to Casden.
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
otherwise expressly permitted in Section 6.2 of this Agreement or required
by Article VII of this Agreement, since December 31, 2000, AIMCO and each
of the AIMCO Subsidiaries have conducted their business only in the
ordinary course of business (except for acquisitions and dispositions)
consistent with past practice and there has not been any event or condition
which would reasonably be expected to result in an AIMCO Material Adverse
Effect.
Section 5.7 LITIGATION. Except as disclosed in Section 5.7
of the AIMCO Disclosure Letter, (a) there are no claims, suits, actions or
proceedings against AIMCO or any AIMCO Subsidiary or any of their
respective properties which would reasonably be expected to have an AIMCO
Material Adverse Effect, (b) there are no claims, suits, actions or
proceedings by any Governmental Authority or third party, pending or, to
the knowledge of AIMCO, threatened, nor are there, any investigations or
reviews by any Governmental Authority pending or threatened against,
relating to or affecting AIMCO or any of the AIMCO Subsidiaries which would
reasonably be expected to have an AIMCO Material Adverse Effect, (c) there
have not been any significant adverse developments since December 31, 2000
with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews and (d) there are no judgments, decrees,
injunctions or orders of any Governmental Authority specifically applicable
to AIMCO or any AIMCO Subsidiary which would reasonably be expected to have
an AIMCO Material Adverse Effect.
Section 5.8 REGISTRATION STATEMENT. None of the information
supplied or to be supplied by or on behalf of AIMCO for inclusion or
incorporation by reference in any Registration Statement will, at the time
such Registration Statement is filed by AIMCO with the SEC and at the time
it becomes effective under the Securities Act or the Exchange Act, as the
case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. Each Registration Statement will
comply as to form in all material respects with the provisions of the
Securities Act or the Exchange Act, as applicable.
Section 5.9 TAX MATTERS. Except as set forth in Section 5.9
of the AIMCO Disclosure Letter:
(a) FILING OF TIMELY TAX RETURNS. AIMCO and each of
the AIMCO Subsidiaries have filed (or there have been filed on such
Persons' behalf) all Tax Returns required to be filed by each of them under
applicable law. All such Tax Returns were and are in all material respects
true, complete and correct and filed on a timely basis.
(b) PAYMENT OF TAXES. AIMCO and each of the AIMCO
Subsidiaries have paid all Taxes that are currently due and payable for all
periods through and including the Closing Date within the time and in the
manner prescribed by law, except for those Taxes contested in good faith
and for which adequate reserves have been provided on their books and
records.
(c) TAX RESERVES. AIMCO and each of the AIMCO
Subsidiaries have established on their books and records reserves adequate
to pay all material Taxes and reserves for deferred income Taxes in
accordance with GAAP.
(d) TAX LIENS. There are no Tax liens upon the
material assets of AIMCO or any of the AIMCO Subsidiaries except liens for
Taxes not yet delinquent.
(e) WITHHOLDING TAXES. AIMCO and each of the AIMCO
Subsidiaries have complied in all material respects with the provisions of
the Code relating to the withholding of Taxes, as well as similar
provisions under any other laws, and have, within the time and in the
manner prescribed by law, withheld and paid over to the proper governmental
authorities all amounts required.
(f) REIT CLASSIFICATION. At all times since the
initial public offering of AIMCO, AIMCO has been organized and operated in
conformity with the Status Requirements, and its proposed method of
operation after the Merger will enable it to continue to meet the Status
Requirements and otherwise qualify as a REIT.
(g) CONTINUATION AS REIT. The execution or delivery
by AIMCO of this Agreement and the consummation by AIMCO of the
Transactions or compliance with or fulfillment of the terms and provisions
hereof by AIMCO, will not adversely affect the qualification of AIMCO as a
REIT for each taxable year ending on or after the Closing Date.
(h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No
audits or other administrative proceedings or court proceedings are
presently pending with regard to any material Taxes or Tax Returns of AIMCO
or any of the AIMCO Subsidiaries.
(i) TAX RULINGS. Neither AIMCO nor any of the AIMCO
Subsidiaries has received or has pending a Tax Ruling or entered into a
Closing Agreement with any taxing authority.
(j) TAX SHARING AGREEMENTS. Except as between
affiliates of AIMCO as set forth in Section 5.9 of the AIMCO Disclosure
Letter, neither AIMCO nor any AIMCO Subsidiary is a party to any agreement
relating to allocating or sharing Taxes.
(k) LIABILITY FOR OTHERS. Neither AIMCO nor any of
the Subsidiaries of AIMCO has any liability for material Taxes of any
person other than AIMCO and the AIMCO Subsidiaries (i) under Treasury Reg.
Section 1.1502-6 (or any similar provision of state, local or foreign law),
(ii) by Contract, or (iii) otherwise.
(l) SECTION 341(f). Neither AIMCO nor any of the
AIMCO Subsidiaries has, with regard to any assets or property held or
acquired by any of them, filed a consent to the application of Section
341(f)(2) of the Code, or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is defined
in Section 341(f)(4) of the Code) owned by AIMCO or any of the AIMCO
Subsidiaries.
(m) DEFICIENCIES. No deficiencies for any Taxes have
been proposed, asserted or assessed against AIMCO and there is no
outstanding waiver of the statute of limitations with respect to any Taxes
or Tax Returns of AIMCO.
(n) DOMESTIC CONTROL. AIMCO believes that it is a
"domestically controlled" REIT within the meaning of Section 897(h)(4)(B)
of the Code.
Section 5.10 EMPLOYEE MATTERS; ERISA. Except as set forth in
Section 5.10 of the AIMCO Disclosure Letter:
(a) BENEFIT PLANS. As of the date hereof, AIMCO has
made available to Casden a copy of each written or oral material employment
agreement, arrangement, commitment, severance or retention agreement or
policy, employee benefit plan, policy or agreement covering employees,
former employees or directors of AIMCO and each of the AIMCO Subsidiaries
or their beneficiaries, or providing benefits to such Persons in respect of
services provided to any such entity, including any material employee
benefit plans within the meaning of Section 3(3) of ERISA and any material
severance or change in control agreement (collectively, the "AIMCO Benefit
Plans"). Since December 31, 1996, there have been no new plans adopted nor
changes, additions or modification to any existing AIMCO Benefit Plans that
could reasonably be expected to materially increase the cost of such AIMCO
Benefit Plan.
(b) CONTRIBUTIONS. All material contributions and
other material payments required to be made by AIMCO or any of the AIMCO
Subsidiaries to any AIMCO Benefit Plan (or to any Person pursuant to the
terms thereof) have been made or the amount of such payment or contribution
obligations has been reflected in the AIMCO Financial Statements to the
extent required by GAAP.
(c) QUALIFICATION; COMPLIANCE. Except where the
failure to so comply with each of the following representations would not
individually or in the aggregate be expected to result in an AIMCO Material
Adverse Effect: (i) each of the AIMCO Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified, and, to the knowledge of AIMCO,
no circumstances exist that are reasonably expected by AIMCO to result in
the revocation of any such determination; (ii) AIMCO is in compliance with,
and each of the AIMCO Benefit Plans is and has been operated in compliance
with, all applicable laws, rules and regulations governing such plan,
including, without limitation, ERISA and the Code; (iii) each AIMCO Benefit
Plan intended to provide for the deferral of income, the reduction of
salary or other compensation, or to afford other income tax benefits,
complies with the requirements of the applicable provisions of the Code or
other laws, rules and regulations required to provide such income tax
benefits; and (iv) no "prohibited transactions" (as defined in Section 406
or 407 of ERISA or Section 4975 of the Code) have occurred for which a
statutory or administrative exemption is not available with respect to any
AIMCO Benefit Plan, and which could give rise to liability on the part of
AIMCO, any AIMCO Benefit Plan, or any fiduciary, party in interest or
disqualified Person.
(d) LIABILITIES. With respect to the AIMCO Benefit
Plans and except for liabilities that individually or in the aggregate
would not reasonably be expected to result in an AIMCO Material Adverse
Effect, no event has occurred, and, to the knowledge of AIMCO, there does
not now exist any condition or set of circumstances that could reasonably
be expected to subject AIMCO or any of the AIMCO Subsidiaries to any
material liability arising under the Code, ERISA or any other applicable
law (including any liability to any such plan or the PBGC), excluding
liabilities for benefit claims and funding obligations payable in the
ordinary course.
(e) WELFARE PLANS. None of the AIMCO Benefit Plans
that are "welfare plans," within the meaning of Section 3(1) of ERISA,
provide for any material benefits with respect to current or former
employees for periods extending beyond their retirement or other
termination of service, other than continuation coverage required to be
provided under Section 4980B of the Code or Part 6 of Title I of ERISA.
(f) PAYMENTS RESULTING FROM THE MERGER. The
consummation or announcement of any of the Transactions will not (either
alone or upon the occurrence of any additional or further acts or events
relating solely to the Transactions, including the termination of
employment of any officers, directors, employees or agents of AIMCO or any
of the AIMCO Subsidiaries) result in any (i) payment (whether of severance
pay or otherwise) becoming due from AIMCO or any of the AIMCO Subsidiaries
to any officer, employee, former employee or director thereof or to the
trustee under any "rabbi trust" or similar arrangement, or (ii) benefit
under any AIMCO Benefit Plan becoming accelerated, vested or payable.
Section 5.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 5.11 of the AIMCO
Disclosure Letter, to the knowledge of AIMCO:
(i) COMPLIANCE. AIMCO and each of the AIMCO
Subsidiaries is in compliance with all applicable Environmental Laws
except, in either case, in the aggregate would not reasonably be expected
to result in an AIMCO Material Adverse Effect and neither AIMCO nor any of
the AIMCO Subsidiaries has received any written communication from any
Governmental Authority that alleges that AIMCO or any of the AIMCO
Subsidiaries is not in compliance with applicable Environmental Laws,
except, in either case, in the aggregate would not reasonably be expected
to result in an AIMCO Material Adverse Effect. Compliance with all
applicable Environmental Laws will not require AIMCO or any AIMCO
Subsidiary to incur costs that would be reasonably likely to result in an
AIMCO Material Adverse Effect.
(ii) ENVIRONMENTAL PERMITS. AIMCO and each of
the AIMCO Subsidiaries have obtained or have applied for all Environmental
Permits necessary for the construction of their facilities or the conduct
of their operations, and all such Environmental Permits are in good
standing or, where applicable, a renewal application has been timely filed
and is pending agency approval, and AIMCO and the AIMCO Subsidiaries are in
compliance with all terms and conditions of the Environmental Permits,
except for Environmental Permits which in the aggregate would not
reasonably be expected to result in an AIMCO Material Adverse Effect.
(iii) ENVIRONMENTAL CLAIMS. There is no
Environmental Claim pending (A) against AIMCO or any of the AIMCO
Subsidiaries, (B) against any Person whose liability for any Environmental
Claim AIMCO or any of the AIMCO Subsidiaries has or may have retained or
assumed either contractually or by operation of law, or (C) against any
real or personal property or operations which AIMCO or any of the AIMCO
Subsidiaries owns, leases or manages, in whole or in part, except, in each
case, for Environmental Claims which in the aggregate would not reasonably
be expected to result in an AIMCO Material Adverse Effect.
(iv) ENVIRONMENTAL RELEASES. There has been no
Environmental Release of any Hazardous Material that would be reasonably
likely to form the basis of any Environmental Claim against AIMCO or any of
the AIMCO Subsidiaries or against any Person whose liability for any
Environmental Claim AIMCO or any of the AIMCO Subsidiaries has or may have
retained or assumed either contractually or by operation of law, except for
Environmental Releases which in the aggregate would not reasonably be
expected to result in an AIMCO Material Adverse Effect.
(v) PREDECESSORS. There is no pending or
threatened Environmental Claim with respect to any predecessor of AIMCO or
any of the AIMCO Subsidiaries which would have a AIMCO Material Adverse
Effect, or any Environmental Release of Hazardous Materials that would be
reasonably likely to form the basis of any Environmental Claim, except for
Environmental Claims which in the aggregate would not reasonably be
expected to result in an AIMCO Material Adverse Effect.
Section 5.12 HUD. Other than as set forth on Section 5.12 of
the AIMCO Disclosure Letter and except where the failure to obtain, or the
presence of which, would not reasonably be expected to result in an AIMCO
Material Adverse Effect, each of AIMCO and the AIMCO Subsidiaries as of the
date hereof: (a) has all necessary consents and approvals of HUD to act as
a general partner of and/or management agent for, as the case may be, each
partnership which is an owner of a HUD-insured or HUD-assisted property for
which AIMCO or any AIMCO Subsidiary acts as a general partner and/or
management agent; (b) with respect to each HUD-insured or HUD-assisted
property for which AIMCO or any AIMCO Subsidiary acts as a general partner
and/or management agent, has not received any current physical inspection
reviews with a REAC score of less than 60 for which an MIO plan is
satisfactory to HUD has not been developed (or disclosing any exigent
health and safety matters which have not been resolved), or any management
agent's performance reviews that are graded as less than "Satisfactory" or,
as to state housing agencies, any physical inspection or management agent
reviews with an equivalent or otherwise substandard rating; (c) has no
"flags" or limited denials of participation, suspensions or debarments
currently in effect under the HUD 2530 Previous Participation Clearance
Procedures or any other applicable HUD regulations; (d) has not been
notified by HUD of any matters currently pending before the HUD
Departmental Enforcement Center; (e) has not received any notice from HUD
with respect to any audited financial statement for any year prior to 2000
that remains unresolved to HUD's satisfaction; and (f) has filed all annual
audited financial statements in the timeframe required by HUD for the
calendar year 2000.
Section 5.13 ABSENCE OF INDUCEMENT. In entering into the
Transaction Documents to which it is a party, AIMCO has not been induced
by, or relied upon, any representations, warranties or statements by Casden
not set forth or referred to in the Transaction Documents, the Schedules
thereto or the other documents required to be delivered thereby, whether or
not such representations, warranties or statements have actually been made
and AIMCO acknowledges that, in entering into the Transaction Documents to
which it is a party, Casden has been induced by and relied upon the
representations and warranties of AIMCO herein set forth, the information
set forth in the AIMCO Financial Statements and AIMCO SEC Reports and the
representations and warranties of the parties to the Transaction Documents,
the Schedules thereto or the other documents required to be delivered
thereby. AIMCO has made its own investigation of Casden prior to the
execution of this Agreement and has not been induced by or relied upon any
representations, warranties or statements as to the advisability of
entering into this Agreement other than as described above in the first
sentence of this Section 5.13.
Section 5.14 NO AIMCO MATERIAL MISSTATEMENTS. To AIMCO's
knowledge, no representation or warranty of AIMCO contained in the
Transaction Documents contains or will contain any untrue statement of
material fact or omit to state any material fact necessary, in light of the
circumstances and taking into account the express limitations set forth in
each such representation and warranty, in order to make the representations
and warranties made by AIMCO herein or therein not misleading.
Section 5.15 MARYLAND TAKEOVER LAWS. Section 3-602 of the MGCL
does not apply to AIMCO in connection with the transactions contemplated by
this Agreement or the Transactions.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 COVENANTS OF CASDEN. Casden agrees, as to Casden
and as to each of the Casden Subsidiaries, that after the date hereof and
prior to the Effective Time or earlier termination of this Agreement
pursuant to Section 9.1, (i) except as expressly contemplated in this
Agreement or the Related Transaction Documents, (ii) except as AIMCO may
otherwise agree in writing (which decision shall be made as soon as
reasonably practicable), (iii) except with respect to the Commercial
Properties, the Commercial Debt, the Commercial Sale, CommercialCo and
Development LLC and (iv) except where a Casden Subsidiary (A) is a general
partner of, or (B) controls a general partner or member of a Casden
Subsidiary which is a partnership or a limited liability company and such
Casden Subsidiary or general partner or member is acting in a manner
required by its fiduciary duty as a general partner or member under
applicable law:
(a) ORDINARY COURSE OF BUSINESS. Except with respect
to the transfer of assets or securities constituting (i) the Commercial
Properties or (ii) the Development LLC Assets or pursuant to the Ross Store
Sale, the Asset Purchase, the Spin-Off or the Transaction Documents, Casden
shall, and shall cause the Casden Subsidiaries to, (A) carry on their
respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use all
commercially reasonable efforts to preserve intact their present business
organizations, (B) duly and timely file all reports, Tax Returns and other
documents required to be filed with federal, state, local and other
authorities, (C) subject to prudent management of work force needs and
ongoing programs currently in force, use commercially reasonable efforts to
keep available the services of the Affected Employees (as defined in
Section 7.11(a)), and (D) take no action which would reasonably be expected
to jeopardize the goodwill or relationships with customers, suppliers or
others having business dealings with them except actions taken in
connection with Casden's or any Casden Subsidiary's good faith disputes in
the exercise of Casden's business judgment, relating to less than $100,000
in the aggregate; provided, however, nothing in this Section 6.1(a) shall
prohibit Casden or any of the Casden Subsidiaries from transferring
operations to Casden, any of its wholly-owned Subsidiaries, or Casden OP or
from engaging in real estate development activities. Notwithstanding the
foregoing, Casden shall not, nor shall Casden permit any Casden Subsidiary
to, enter into a new line of business, defined as business activities that
are substantially different from those currently conducted by Casden or any
Casden Subsidiary or that are not reasonably related to the business of
owning, operating and managing multi-family residential apartment complexes
or communities or other residential real estate properties.
(b) DISTRIBUTIONS. Except (i) to the extent
permitted by Section 2.2(c) or Section 7.10 , (ii) the Casden Reverse Stock
Split, (iii) the CPLB Reverse Stock Split, (iv) the redemption of the
Casden Junior Preferred Stock in connection with the Merger, (v) in
connection with scheduled dividends (including scheduled dividends in
arrears) paid in cash or paid-in-kind with respect to the Casden Class A
Preferred Stock and the Casden Common Stock, (vi) the distribution of the
proceeds from the Commercial Sale or interests in CommercialCo, the Ross
Store Sale or the Asset Purchase, or (vii) as otherwise set forth in
Section 6.1(b) of the Casden Disclosure Letter, Casden shall not, nor shall
Casden permit any Casden Subsidiary to, split, combine or reclassify any of
their shares or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, their shares,
or redeem, repurchase or otherwise acquire any shares, nor shall Casden
declare or pay any distributions, nor permit any Casden Subsidiary to
declare or pay any distributions in respect of any of their shares or
partnership units or other equity interests other than, in the case of
Casden or Casden OP, regular quarterly dividends or distributions not to
exceed $0.27 per share or $0.27 per partnership unit, as the case may be.
(c) ISSUANCE OF SECURITIES. Casden shall not, and
shall not permit any Casden Subsidiary to, issue, agree to issue, deliver,
sell, award, pledge, dispose of or otherwise encumber or authorize or
propose the issuance, delivery, sale, award, pledge, disposal or other
encumbrance of, any shares of any class or any securities convertible into
or exchangeable for, or any rights, warrants or options to acquire, any
such shares or convertible or exchangeable securities, other than (i)
issuances of shares upon exercise or conversion of outstanding stock
options, warrants or convertible securities described in Section 4.2 hereof
(ii) issuances of partnership units of the NAPICO Entities to the limited
partners of such NAPICO Entities in accordance with the ordinary course of
business consistent with past practice and (iii) distributions of limited
liability interests in connection with the Spin-Off. The parties shall
promptly furnish to each other such information as may be reasonably
requested including financial information and take such action as may be
reasonably necessary and otherwise fully cooperate with each other in the
preparation of any registration statement under the Securities Act and
other documents necessary in connection with the issuance of securities as
contemplated by this Section 6.1(c), subject to obtaining customary
indemnities.
(d) CHARTER DOCUMENTS. Casden shall not, and shall
not permit any of the Casden Subsidiaries to, amend or propose to amend its
charter, bylaws or similar organizational or governing documents, other
than amendments (i) to Casden's bylaws to opt out of Maryland's Control
Share Act, (ii) to the Casden Charter required by Section 7.34 or (iii) to
Sections 8.5(c) and 12.1(b)(iii) of the limited partnership agreement of
Casden OP to shorten the notice requirement in Section 8.5(c) and to
eliminate the legal opinion delivery requirement in Section 12.1(b)(iii),
in each case, in connection with the Transactions.
(e) ACQUISITIONS. Casden shall not, nor shall Casden
permit any of the Casden Subsidiaries (other than NAPICO and the NAPICO
Entities) to, (i) acquire, or publicly propose to acquire, or agree to
acquire an equity interest in or the assets of, any business or any
corporation, partnership, association or other business organization or
division thereof (whether by merger or consolidation with, or by purchase
or otherwise) (ii) acquire or agree to acquire any operating multifamily
apartment complexes or communities or (iii) acquire or agree to acquire any
assets, if such acquisition would adversely affect the tax-free treatment
of the Merger under Section 368(a) of the Code or the treatment of AIMCO as
a REIT following the Merger or Casden as a REIT prior to the Merger.
(f) NO DISPOSITIONS. Casden shall not, nor shall
Casden permit any of the Casden Subsidiaries (other than NAPICO and the
NAPICO Entities) to, sell or dispose of any of their assets other than (i)
dispositions of assets set forth on Section 6.1(f) of the Casden Disclosure
Letter or (ii) the Commercial Sale, the Ross Store Sale or the Asset
Purchase.
(g) INDEBTEDNESS. Casden covenants and agrees that
neither it nor any of the Casden Subsidiaries (other than NAPICO and the
NAPICO Entities) shall incur any indebtedness other than under lines of
credit existing on the date hereof and such indebtedness shall not exceed
$9,000,000.
(h) COMPENSATION; BENEFITS. Except as may be
required by applicable law or applicable collective bargaining agreements
or as contemplated by or permitted in this Agreement or as disclosed in
Section 6.1(h) of the Casden Disclosure Letter, or as requested by AIMCO,
Casden shall not, nor shall Casden permit any of the Casden Subsidiaries
to, with respect to Affected Employees:
(i) enter into, adopt or amend or increase the
amount or accelerate the payment or vesting of any benefit or amount
payable under, any Casden Benefit Plan or increase, or enter into any
Contract to increase in any manner, the compensation or fringe benefits, or
otherwise to extend, expand or enhance the engagement, employment or any
related rights, other than increases in connection with periodic reviews on
an employee-by-employee basis in the ordinary course of business consistent
with past practice; provided, however, that Casden shall be permitted to
amend the terms of any stock option to allow for the net exercise of such
option;
(ii) enter into or amend (A) any employment,
severance or special pay arrangement with respect to the termination of
employment or other similar Contract, other than with respect to employees
whose aggregate compensation is equal to or less than $75,000 per year, or
(B) any change in control agreement or arrangement (in each case other than
any severance or stay bonus arrangement referred to in Section 2(g) of the
Master Indemnification Agreement); or
(iii) deposit into any trust (including any
"rabbi trust") amounts in respect of any obligations to Affected Employees;
provided, however, that transfers into any trust, other than a rabbi or
other trust with respect to any non-qualified deferred compensation, may be
made in the ordinary course of business consistent with past practice.
(i) ACCOUNTING. Casden shall not, nor shall
Casden permit any of the Casden Subsidiaries to, make any changes in their
accounting methods, except as expressly required by law, rule, regulation
or GAAP.
(j) AFFILIATE TRANSACTIONS. Except (i) as
contemplated under the Related Transaction Documents or in connection with
the Spin-Off or (ii) as set forth on Section 6.1(j) of the Casden
Disclosure Letter, neither Casden (nor any of the Casden Subsidiaries)
shall become a party to any Contract (other than partnership agreements
which are set forth in Section 4.17 of the Casden Disclosure Letter) or
engage in any transaction with any Affiliate of Casden or any Casden
Subsidiary or any Person that beneficially owns 10% or more of any class of
equity securities of Casden, or any Casden Subsidiary.
(k) COOPERATION, NOTIFICATION. Casden shall (i)
confer on a regular basis with one or more representatives of AIMCO to
discuss, subject to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly notify AIMCO of any
significant changes in its business, properties, assets, condition
(financial or other), results of operations or prospects, and (iii)
promptly provide AIMCO with copies of all filings made by Casden or any
Casden Subsidiary with any state or federal court, administrative agency,
commission or other Governmental Authority in connection with this
Agreement and the Transactions.
(l) NO BREACH, ETC. Casden shall not, nor shall
Casden permit any of the Casden Subsidiaries to, willfully take any action
that would result in (i) a breach of any provision of this Agreement or
(ii) any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
(m) CONTRACTS. Except as set forth on Section 6.1(m)
of the Casden Disclosure Letter, or for modifications or amendments made in
the ordinary course of business consistent with past practice, Casden shall
not, nor shall Casden permit any Casden Subsidiary to, modify, amend,
terminate, or fail to use reasonable business efforts to renew, as the case
may be, any Contract material to Casden and the Casden Subsidiaries taken
as a whole or waive, release or assign any material rights or claims.
(n) INSURANCE. Casden shall maintain insurance with
financially responsible insurance companies with respect to Casden and the
Casden Subsidiaries in such amounts and against such risks and losses as
are customary for entities engaged in the multi-family apartment business.
(o) PERMITS. Casden shall, and shall cause the
Casden Subsidiaries to, use reasonable efforts to maintain in effect all
existing governmental permits which are material to the operations of
Casden and the Casden Subsidiaries taken as a whole.
(p) TAX MATTERS. Casden shall not, nor shall Casden
permit any Casden Subsidiary to, (i) make or rescind any election relating
to Taxes if such action would adversely affect the status of Casden or
AIMCO as a REIT or the status of any Casden Subsidiary that is currently a
partnership as a partnership for federal income tax purposes, (ii) without
the written consent of AIMCO, which consent will not be unreasonably
withheld, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes unless such settlement or compromise results in a change
in taxable income or Tax liability that will reverse in future periods and
is therefore, by its nature, a timing difference or (iii) change in any
material respect any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax return for the taxable year ending December 31, 1998,
except as may be required by applicable law or except for such changes that
would reduce consolidated federal taxable income or alternative minimum
taxable income. Notwithstanding any other provision of this Agreement, in
the event that, after the date hereof, Casden or any Casden Subsidiary
seeks a "Closing Agreement" from the IRS or a definitive settlement
agreement from the IRS or any state, local or foreign taxing authority on a
matter that is subject to a representation, warranty or covenant set forth
in this Agreement or any of the Related Transaction Documents, then: (A)
Casden shall, or shall cause such Casden Subsidiary to, keep AIMCO informed
as to the status of such agreement and any discussions, negotiations or
arrangements related thereto, and (B) Casden shall not, and shall cause any
such Casden Subsidiary not to, file or submit any document to any taxing
authority in connection with any such agreement without first providing
AIMCO with (1) copies of any such document and (2) an opportunity to review
and comment on any such document prior to such filing or submission.
(q) PARACHUTE PAYMENTS. Prior to the Effective Time,
any agreements or arrangements that provide for benefits or payments that
could constitute "parachute payments" within the meaning of Code Section
280G to "disqualified individuals" of Casden or any Casden Subsidiary shall
have been approved by such number of shareholders of Casden as is required
by the terms of Code Section 280G(b)(5)(B) and shall be obtained in a
manner which satisfies all applicable requirements of such Code Section
280(G)(b)(5)(B) and the proposed Treasury Regulations thereunder, including
(without limitation) Q-7 of Section 1.280G-1 of such proposed regulations.
(r) RESIGNATIONS. Casden shall obtain the
resignations of all of the individuals listed in Section 4.24 of the Casden
Disclosure Letter.
(s) INVESTMENT REPRESENTATION LETTERS. Casden shall
use its best efforts to obtain prior to the Closing Date investment
representation letters, in substantially the form attached hereto as
Exhibit T, from each holder receiving AIMCO Common Stock pursuant to
Section 2.2 hereof (other than such Persons who are party to the Voting
Agreement).
Section 6.2 COVENANTS OF AIMCO. AIMCO agrees, as to itself
and to each of its Subsidiaries, that after the date hereof and prior to
the Effective Time or earlier termination of this Agreement:
(a) COOPERATION, NOTIFICATION. AIMCO shall (i)
confer on a regular basis with one or more representatives of Casden to
discuss, subject to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly notify Casden of
any significant changes in its business, properties, assets, condition
(financial or other), results of operations or prospects, or of any
complaints, investigations or hearings (or communications indicating the
same may be contemplated) of or by any Governmental Authority and (iii)
promptly provide Casden with copies of all filings made by AIMCO or any of
its Subsidiaries with any state or federal court, administrative agency,
commission or other Governmental Authority in connection with this
Agreement and the Transactions.
(b) ORDINARY COURSE, NO BREACH, ETC. AIMCO shall,
and shall cause the AIMCO Subsidiaries to, (i) use their reasonable efforts
to preserve intact their respective business organizations and goodwill and
keep available the services of their respective officers and employees and
(ii) not willfully take any action that would result in (A) a material
breach of any provision of this Agreement or (B) any of AIMCO's material
representations and warranties set forth in this Agreement being untrue on
and as of the Closing Date; provided, however, that AIMCO and the AIMCO
Subsidiaries may issue securities, acquire securities or assets and
otherwise act in the ordinary course of their respective businesses.
(c) ACCOUNTING. AIMCO shall not, nor shall AIMCO
permit any AIMCO Subsidiary to, make any changes in their accounting
methods, except as required by law, rule, regulation, the SEC or GAAP, and
shall maintain its status as a REIT under the Code.
(d) STATE SECURITIES LAWS. AIMCO shall use
commercially reasonable efforts to obtain all necessary consents or
approvals required pursuant to applicable state securities laws.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS TO INFORMATION. Upon reasonable notice,
each party shall, and shall cause its Subsidiaries to, afford to the
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of the other party
(collectively, "Representatives") reasonable access, during normal business
hours throughout the period prior to and following the Effective Time, to
all of its properties, books, contracts, commitments and records
(including, but not limited to, Tax Returns) and, during such period, each
party shall, and shall cause its Subsidiaries to, furnish promptly to the
other party and its Representatives (i) access to each report, schedule and
other document filed or received by it or any of its Subsidiaries pursuant
to the requirements of federal or state securities laws or filed with or
sent to the SEC or any other federal or state regulatory agency or
commission in connection with the Transactions and (ii) access to all
information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably requested by
the other party in connection with any filings, applications or approvals
required or contemplated by this Agreement or the Related Transaction
Documents or for any other reason related to the Transactions. Without
limiting the foregoing, Casden shall deliver to AIMCO, as soon as available
but in any event within 90 days after the end of each fiscal quarter, a
consolidated balance sheet as of the end of such quarter and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal quarter then ended and the period from the end of the
latest fiscal year end through the end of such fiscal quarter, including,
in each case, the notes thereto and, if available, any report thereon by
Casden's independent accountants, in each case, prepared in accordance with
GAAP, applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and which fairly present in all material respects the
financial position of Casden and its subsidiaries, on a consolidated basis,
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 any unaudited interim financial statements.
Nothing in this Section 7.1 shall require Casden or AIMCO to take any
action or furnish any access or information which would cause or would
reasonably be expected to cause the waiver of any applicable attorney
client privilege or the violation of any applicable law. In addition,
nothing herein shall require Casden or AIMCO to provide information other
than with respect to itself and its Subsidiaries, or the conduct of their
businesses. Each party and its Representatives shall hold all information
obtained by it pursuant to this Agreement or the Related Transaction
Documents in accordance with the terms and provisions of the
confidentiality agreement dated December 19, 2000 (the "Confidentiality
Agreement"), which shall continue in full force and effect following
execution of this Agreement.
Section 7.2 REGISTRATION RIGHTS AGREEMENT. Prior to the
Effective Time, AIMCO shall execute and deliver to Casden the Registration
Rights Agreement (Stock) in the form attached hereto providing for, among
other things, AIMCO's registration of the AIMCO Common Stock issued in the
Merger.
Section 7.3 LETTERS OF ACCOUNTANTS.
(a) CASDEN. Casden shall use its reasonable best
efforts to cause to be delivered to AIMCO (i) a report of Deloitte & Touche
LLP relating to its review, in accordance with standards promulgated by the
American Institute of Certified Public Accountants, of the Latest Casden
Financial Statements, and (ii) a letter (or letters) of Deloitte & Touche
LLP, substantially in the form attached hereto as Exhibit R, in form and
substance reasonably satisfactory to AIMCO with respect to the Latest
Casden Financial Statements and the Latest Casden Pro Forma Financial
Information, and customary in scope and substance for letters delivered by
independent public accountants in connection with acquisition transactions
in which there is an exchange of stock.
(b) AIMCO. AIMCO shall use its reasonable best
efforts to cause to be delivered to Casden and XYZ a letter of Ernst &
Young LLP, a form of which is attached hereto as Exhibit S, dated a date
within two business days before the Closing Date, in form and substance
reasonably satisfactory to Casden and customary in scope and substance for
letters delivered by independent public accountants in connection with
acquisition transactions in which there is an exchange of stock.
(c) COSTS. Each party shall bear its own costs for
the letters described in this Section 7.3.
Section 7.4 REGULATORY MATTERS.
(a) HUD APPROVAL. AIMCO shall, after consultation
with Casden, file or cause to be filed with HUD any documents required to
be filed under any applicable law or the rules and regulations of HUD, with
respect to HUD approval of the Merger and the Related Transactions ("HUD
Approval"). AIMCO will use all commercially reasonable efforts to make such
filings in a timely manner and Casden shall make reasonable efforts to
assist AIMCO, upon request, in obtaining HUD Approval. AIMCO and Casden
will respond on a timely basis to any requests for additional information
made by HUD.
(b) OTHER REGULATORY APPROVALS. Each party hereto
shall cooperate and use its reasonable best efforts to promptly prepare and
file all necessary documentation, to effect all necessary applications,
notices, petitions, filings and other documents, and to use all
commercially reasonable efforts to obtain all necessary permits, consents,
approvals and authorizations of all Governmental Authorities necessary or
advisable to obtain the Casden Required Statutory Approvals and the AIMCO
Required Statutory Approvals.
Section 7.5 APPROVAL OF CASDEN STOCKHOLDERS.
(a) CASDEN MEETING. As soon as reasonably practical,
Casden shall (i) take all steps necessary to duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose of securing
the vote of such stockholders as is required to obtain the Casden
Stockholders' Approval (together with any adjournments thereof, the "Casden
Meeting"), (ii) distribute a notice of the Casden Meeting in accordance
with applicable federal and state law and with the Casden Charter and
Casden bylaws to the stockholders entitled to notice of and to vote at the
Casden Meeting, (iii) recommend the approval of the Merger, the charter
amendment effecting the Casden Reverse Stock Split and the amendment to the
Casden Charter contemplated by Section 7.34 to its stockholders, and (iv)
cooperate and consult with AIMCO with respect to each of the foregoing
matters.
(b) MEETING DATE. Casden agrees to use commercially
reasonable efforts to hold the Casden Meeting not later than such date as
Casden and AIMCO shall mutually determine.
Section 7.6 PUBLIC ANNOUNCEMENTS. Subject to each party's
disclosure obligations imposed by law and the rules of the NYSE, Casden and
AIMCO will cooperate and consult with each other in the development and
distribution of all news releases and other public information disclosures
with respect to this Agreement or any of the Transactions and shall not
issue any public announcement or statement with respect hereto or thereto
without the consent of the other party (which consent shall not be
unreasonably delayed or withheld). The initial press releases with respect
to the announcement of this Agreement and the Related Transaction Documents
shall be in a form mutually agreed upon by the parties hereto and shall be
issued on the date hereof. All press releases issued following the initial
press releases will characterize the transaction in a manner consistent
with the initial press releases.
Section 7.7 NO SOLICITATION. From and after the date hereof,
Casden will not, and will not authorize or permit any of its Affiliates or
Representatives to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) or take any other action to
facilitate knowingly any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an Acquisition
Proposal from any Person, or engage in any discussion or negotiations
relating thereto or accept any Acquisition Proposal. Casden shall
immediately cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any parties
conducted heretofore by Casden, its Affiliates or its Representatives with
respect to the foregoing.
Section 7.8 EXPENSES. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this
Agreement, the other Transaction Documents and the Transactions shall be
paid by the party incurring such expenses, it being understood that any
fees or expenses of CSFB, Monga LLC, Gibson, Dunn & Crutcher LLP, Deloitte
& Touche LLP, Katten Muchin Zavis and Schulte, Roth & Zabel LLP (for
services rendered to and at the request of Casden or any of the Casden
Subsidiaries) related to the Transactions shall be paid by Casden and
Casden shall provide AIMCO written notice, at least three business days
prior to the Closing Date of the aggregate amount of such fees and
expenses.
Section 7.9 FURTHER ASSURANCES. Each party will, and will
cause its Subsidiaries to, use their respective reasonable best efforts to
consummate the Transactions, including executing such further documents and
instruments and taking such further actions, including applying for any
necessary regulatory approvals or exemptions or any third party consents.
Casden shall be primarily responsible for, and AIMCO shall cooperate with
Casden in obtaining, the consents set forth on Section 4.3(b) of the Casden
Disclosure Letter. If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of Casden or the Casden
Subsidiaries acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of Casden and each of the
Casden Subsidiaries or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in such names and on such
behalves or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this
Agreement. Each party acknowledges and agrees that they will cooperate with
each other and use their respective commercially reasonable best efforts in
obtaining the execution of the Tri-Party Agreement by the construction
lenders and/or their agent (as such terms are defined in the Tri-Party
Agreement). In addition, each party acknowledges and agrees to make all
amendments to the Transaction Documents as may be commercially reasonably
requested by the Construction lenders (including, without limitation,
separating the Tri-Party Agreement into four separate agreements to the
extent required by the construction lenders named therein and/or their
agent), provided that such amendments do not substantively alter the
economic terms of the Tri-Party Agreement or substantially increase the
parties obligations thereunder.
Section 7.10 REIT STATUS. Notwithstanding anything to the
contrary set forth in this Agreement or any Related Transaction Document,
nothing in this Agreement or any such related Transaction Document shall
prohibit Casden from taking, and Casden hereby agrees to take, any action
at any time or from time to time that in the reasonable judgment of Casden
or AIMCO is legally necessary for Casden to maintain its qualification as a
REIT within the meaning of Sections 856-860 of the Code for any period or
portion thereof ending on or prior to the Effective Time, including,
without limitation, making distribution payments to Casden stockholders,
which distributions shall not require the consent of AIMCO under Section
6.1(b) of this Agreement or otherwise.
Section 7.11 EMPLOYEES; EMPLOYEE PLANS.
(a) AFFECTED EMPLOYEES. At least thirty (30) days
prior to the Effective Time, Casden shall deliver to AIMCO a final list of
the employees of Casden or any Casden Subsidiary that will be given offers
of employment by either CommercialCo or the Development LLC (the
"Transferred Employees") indicating the entity which will offer employment
to each such employee. Casden acknowledges and agrees that immediately
following the Effective Time, pursuant to the Tri-Party Agreement,
Development LLC will offer, or cause CommercialCo to offer, employment to
the Transferred Employees. From and after the Effective Time, AIMCO shall,
or shall cause the Surviving Corporation to, assume and honor the
obligations of Casden and the Casden Subsidiaries with respect to their
respective employees other than the Transferred Employees (the "Affected
Employees"). From and after the Effective Time, AIMCO shall be the employer
of the Affected Employees and shall have all rights accruing to an employer
with respect to the Affected Employees.
(b) VACATION AND RELATED BENEFITS. AIMCO shall, or
shall cause the Surviving Corporation to, honor all unused vacation,
holiday, sick and personal days accrued but unused for each Affected
Employee under the policies and practices of Casden and the Casden
Subsidiaries.
(c) SERVICE CREDIT. In the event of any change in
the welfare benefits provided to an Affected Employee under any Casden
Benefit Plan, AIMCO shall, or shall cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Affected Employee under such new or changed plan (except to the
extent that such conditions, exclusions or waiting periods would apply
under any Casden Benefit Plan) and (ii) provide each Affected Employee with
credit for any co-payments and deductibles paid prior to any such change in
coverage in satisfying any applicable deductible or out-of-pocket
requirements under such new or changed plan to the extent not previously
reimbursed under any Casden Benefit Plan. AIMCO shall, or shall cause the
Surviving Corporation to, provide each Affected Employee with credit for
all service with Casden and its Affiliates under each employee benefit
plan, policy, program or arrangement in which such Affected Employee is
eligible to participate, except to the extent the relevant benefits are
provided under any similar Casden Benefit Plan in which such Affected
Employee is entitled to participate, and except where such credit would
result in a duplication of benefits with respect to the same period of
service.
(d) WAIVER OF CONDITIONS. On and after the Closing
Date, AIMCO shall cause each AIMCO welfare plan to waive any pre-existing
condition exclusions and waiting periods (except to the extent that such
exclusions would have then applied or such waiting periods were not
satisfied under the Casden welfare plans) with respect to the Affected
Employees (and their beneficiaries).
(e) ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENTS.
On the Closing Date, AIMCO agrees to assume and adopt the collective
bargaining agreements of Casden and the Casden Subsidiaries identified in
Section 4.17(b) of the Casden Disclosure Letter and to offer employment to
all employees of Casden and the Casden Subsidiaries covered by those
collective bargaining agreements.
Section 7.12 RECORD DATES AND DIVIDEND PAYMENT DATES. AIMCO
covenants and agrees that from the date hereof until the Effective Time,
AIMCO shall (i) set record dates for the declaration of dividends on all
its classes of equity securities and (ii) set payment dates for the payment
of dividends on all its classes of equity securities, each consistent with
past practice.
Section 7.13 INSURANCE. AIMCO agrees to maintain in full
force and effect directors' and officers' insurance and general partner
liability insurance for a period of not less than six years following the
Closing Date for each person covered by such insurance by Casden
immediately prior to the Effective Time, each of whom is listed on Section
7.13 of the Casden Disclosure Letter; provided, however, that AIMCO shall
be entitled to substitute existing policies with equivalent policies from
reputable and financially sound insurers with the same or better coverage
and amounts and containing terms and conditions no less favorable to such
directors, officers and general partners, provided that no gap in coverage
results from any such change or substitution.
Section 7.14 BREACHES. Each party hereto agrees it shall
promptly notify the other parties hereto in writing prior to the Closing if
such party is aware of or has knowledge of another party's breach of any
representation, warranty or covenant hereunder. Each such notice shall
specify in reasonable detail the nature and grounds for the alleged breach,
the representation, warranty or covenant to which such alleged breach
relates and a good faith estimate of the estimates, damages or losses which
are reasonably likely to result from such alleged breach if no curative
measures are taken.
Section 7.15 TRANSFER TAXES. The parties will cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding the real property transfer or
gains, sales, use, transfer, value added, stock transfer and stamp taxes,
and any transfer, recording, registration and other fees or similar Taxes
("Transfer Taxes") which become payable in connection with the Transactions
that are required to be filed on or before the Closing Date and AIMCO shall
pay 100% of Transfer Taxes which become payable in connection with the
Transactions.
Section 7.16 NAMES AND TRADEMARKS.
(a) AIMCO acknowledges and agrees that from and
after the Effective Time Development LLC shall retain all right, title, and
interest in and to, and shall be free to use, the Casden name and
trademarks set forth in Section 7.16 of the Casden Disclosure Letter and
any other names and trademarks to which Casden or any Casden Subsidiary has
a legal right or claim (collectively, the "Trademarks") without
restriction, including the ability to compete with AIMCO in any and all
markets. From and after the Effective Time, AIMCO admits the validity of,
and agrees not to challenge any, Trademark. AIMCO also agrees that any and
all rights that may be acquired by the use of the Trademarks by AIMCO
during the Transition Period (as defined in Section 7.16(c) below) shall
inure to the sole benefit of Development LLC. From and after the Effective
Time, AIMCO shall not use the Trademarks as part of its corporate name nor
use any mark or name confusingly similar to the Trademarks.
(b) From and after the Effective Time, AIMCO agrees
not to register in the United States of America any name or mark resembling
or confusingly similar to the Trademarks. From and after the Effective
Time, AIMCO further agrees not to register any domain name or trademark
resembling or confusingly similar to the Trademarks with Network Systems,
Inc. or any other registration agency. If any application for registration
is, or has been, filed with the United States Patent and Trademark Office
by AIMCO which is deemed by the United States Patent and Trademark Office
to be confusingly similar, deceptive or misleading with respect to any
Trademark, AIMCO shall abandon any such application or registration or,
from and after the Effective Time, assign it to Development LLC. AIMCO
shall reimburse Development LLC, for all the costs and expenses of any
oppositions, cancellation or related legal proceedings, including
attorney's fees, instigated by Development LLC, from and after the
Effective Time, in connection with any such registration or application.
(c) AIMCO and Casden acknowledge and agree that
pursuant to a separate agreement, Development LLC will agree that for a
period of 90 days from the Effective Time (the "Transition Period"),
Development LLC will not sue AIMCO for trademark infringement for use of
the Trademarks, and further provided that the Trademarks shall only be used
by AIMCO in the same manner in which they are currently used by Casden or
any Casden Subsidiary. AIMCO and Casden (or Development LLC, from and after
the Effective Time) may, by mutual written consent, agree to extend the
Transition Period for an additional period of time. However, any use of the
Trademarks beyond the Transition Period, shall constitute a material breach
of this Agreement and be actionable by Development LLC.
Section 7.17 PREPARATION OF TAX RETURNS. Tax Returns will be
prepared in accordance with the Tax Indemnity Agreement.
Section 7.18 DEPOSIT BY AIMCO. No later than the business day
after the date hereof, AIMCO, Casden and Citibank, N.A. (the "Escrow
Agent") shall enter into an Escrow Agreement in the form attached as
Exhibit U to this Agreement (the "Escrow Agreement"), pursuant to which
AIMCO shall deposit with the Escrow Agent pursuant to the terms of the
Escrow Agreement the sum of $7,000,000 in immediately available funds (the
"Escrow Amount"). The Escrow Amount shall be (a) delivered to Casden upon
termination of this Agreement in the event of a termination of this
Agreement pursuant to which Casden is entitled to Liquidated Damages or (b)
delivered to AIMCO to be used as part of the REIT Merger Consideration on
the Closing Date.
Section 7.19 TAX FREE REORGANIZATION. Unless a Taxable
Election is made pursuant to Section 2.2(f), each of AIMCO and Casden shall
use their reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and to
obtain the tax opinion described in Section 8.3(d), including by executing
and delivering the certificates and representation letters referred to
therein. AIMCO shall not take any action after the Effective Time that, in
the opinion of counsel to AIMCO, would prevent the Merger from qualifying
as a reorganization under Section 368(a) of the Code.
Section 7.20 MEZZANINE LOAN. At or after Closing, AIMCO will
cause one or more mezzanine loans to be made to XYZ (the "Mezzanine Loan")
on the terms and subject to the conditions set forth in the documents
included in Exhibit V attached hereto (collectively, the "Mezzanine Loan
Documents").
Section 7.21 PLEDGE AND GUARANTY AGREEMENTS. At or after
Closing: (a) all of the members of XYZ that are affiliates of Casden or
Cerberus Partners shall execute and deliver a pledge agreement
substantially in the form attached hereto as Exhibit W-1 and (b)
Development LLC shall execute and deliver a guaranty agreement
substantially in the form attached hereto as Exhibit W-2.
Section 7.22 RELEASE. Casden and each of the Casden
Subsidiaries shall obtain a release (the "Release") in favor of the
Surviving Corporation and its Subsidiaries substantially in the form
attached as (a) Exhibit X-1 hereto from each of its directors (other than
its independent directors but including any director of Casden who is
affiliated with BA Casden Investors, LLC) and executive officers listed in
Section 4.24 of the Casden Disclosure Letter and (b) Exhibit X-2 hereto
from each of BA Casden Investors, LLC, Blackacre Park La Brea LLC,
Blackacre Casden Investment, LLC, Blackacre Investment Warrant, LLC, BA
Warrant Investors, LLC and each other Person who owns or has ever owned
Casden Class A Preferred Stock, Casden I Warrants or Casden II Warrants.
Section 7.23 QUESTIONNAIRES. Within 10 days of the date
hereof, Casden shall submit the General Questionnaire to each manager and
assistant manager of the Owned Properties and the Leased Properties and
each regional supervisor employed by Casden, the Casden Subsidiaries (other
than NAPICO and the NAPICO Entities). Casden shall submit the General
Questionnaire to the asset manager or property manager of each NAPICO
Property. Casden shall request that each of the persons receiving a
Questionnaire, complete such General Questionnaire as accurately and
completely as possible and use its best efforts to obtain the completed
General Questionnaire as soon as possible, and shall provide complete and
correct copies of the responses to the General Questionnaire promptly upon
the receipt of each such response but in no event later than 20 days prior
to the Effective Time.
Section 7.24 CPLB DISTRIBUTION. On or prior to the date of
the OP Contribution, Casden shall cause Casden OP to distribute to Casden
100% of Casden OP's interest in CPLB, pursuant to the form of such
instrument of assignment attached hereto as Exhibit Y.
Section 7.25 COMMERCIAL PROPERTIES. On or prior to the date
of the OP Contribution, Casden shall cause either the Spin-Off to occur or
the Commercial Properties to be sold to and the Commercial Debt to be
assumed by CommercialCo.
Section 7.26 LEGAL MATTERS. Within ten business days prior to
the Closing Date, Casden shall provide, or shall cause to be provided, to
AIMCO: (i) the name, telephone number and address of the person or persons
who shall be responsible following the Effective Time for supervising,
controlling and making ultimate decisions with respect to the actions set
forth in Section 4.6(ii); (ii) the names, addresses, and telephone numbers
of all counsel of record in each of those lawsuits, identifying each
counsel's respective client(s); (iii) the most recent offers/demands in
those lawsuits, including both monetary and nonmonetary aspects of such
demands and offers; and (iv) the procedural status of each of those
lawsuits.
Section 7.27 RESERVATION OF AIMCO STOCK. AIMCO covenants and
agrees that prior to the Effective Time it will take all necessary actions
to reserve for issuance a sufficient amount of shares of AIMCO Common Stock
to be issued in the Merger.
Section 7.28 CASDEN WARRANTS. Casden covenants and agrees
that prior to the Closing Date, Casden will amend each Casden I Warrant and
each Casden II Warrant such that at the Effective Time, (i) each then
outstanding unexercised Casden I Warrant shall terminate and (ii) each then
outstanding unexercised Casden II Warrant shall terminate.
Section 7.29 MATERIAL ADVERSE EFFECTS; KNOWLEDGE OF BREACHES.
(a) Casden shall promptly notify AIMCO of any event
or condition (i) of which Casden obtains knowledge which individually or in
the aggregate would reasonably be expected to constitute a Casden Material
Adverse Effect, (ii) which, if known as of the date hereof, would have been
required to be disclosed to AIMCO or (iii) of which Casden obtains
knowledge which individually or in the aggregate would reasonably be
expected to give rise to Casden's right to terminate this Agreement
pursuant to Article 9 hereof.
(b) AIMCO shall promptly notify Casden of any event
or condition (i) of which AIMCO obtains knowledge which individually or in
the aggregate would reasonably be expected to constitute an AIMCO Material
Adverse Effect, (ii) which, if known as of the date hereof, would have been
required to be disclosed to Casden or (iii) of which AIMCO obtains
knowledge which individually or in the aggregate would reasonably be
expected to give rise to AIMCO's right to terminate this Agreement pursuant
to Article 9 hereof.
Section 7.30 LITIGATION. AIMCO shall have monitoring rights on any
action set forth on Section 4.6(ii) of the Casden Disclosure Letter and any
Proceeding assumed by the Casden Indemnitors (as defined in the Master
Indemnification Agreement) pursuant to the Master Indemnification
Agreement. After the Closing Date, as often as AIMCO may reasonably
request, but in no event more often than every six months, XYZ shall
provide an amended Section 4.6(ii) of the Casden Disclosure Letter,
updating the information previously provided. AIMCO shall have the right to
reasonably request further information or any documents with respect to any
or all litigation on Section 4.6(ii) of the Casden Disclosure Letter, which
XYZ shall provide within twenty (20) days of receipt of AIMCO's request.
Section 7.31 LISTING OF SHARES. AIMCO shall cause the shares of
AIMCO Common Stock issuable in connection with the Merger to be approved
for listing on the NYSE upon official notice of issuance prior to the
Effective Time.
Section 7.32 NAPICO SYNDICATED PROPERTIES. Within ten
business days prior to the Closing Date, Casden shall provide, or cause to
be provided, to AIMCO, the name and state of organization, of and ownership
interest in, each Person in which the NAPICO Entities holds an ownership
interest and each real property (except for the NAPICO Properties) in which
any fund sponsored by NAPICO has a limited partnership ownership interest
(the "NAPICO Syndicated Properties").
Section 7.33 COMPLIANCE WITH THE MGCL. Each of the parties
agrees to use their respective best efforts and take all reasonable steps
to ensure that the Transactions contemplated by this Agreement and the
Alternative Merger (as defined in the OP Unit Contribution Agreement), if
consummated, complies with all applicable provisions of the MGCL.
Section 7.34 CASDEN CHARTER. Prior to the Effective Time,
Casden shall amend the Casden Charter to (i) effect the Casden Reverse
Stock Split, (ii) provide that the consideration to be received by the
holders of Casden Common Stock in the Merger may vary among the holders of
Casden Common Stock and (iii) provide that, upon effectiveness the Merger,
AIMCO may deliver to any holder of Casden Common Stock that AIMCO
reasonably believes may not be an accredited investor (as defined in Rule
501(a) of the Securities Act), in lieu of any shares of AIMCO Common Stock
otherwise deliverable to such holder upon the effectiveness of the Merger,
cash in amount equal to the number of shares of Casden Common Stock held by
such holder, multiplied by the Per Share Common Consideration.
Section 7.35 NAPICO PROPERTY CONSENTS. Within 20 days after
the date hereof, Casden shall deliver to AIMCO a schedule setting forth (x)
each construction lender under any construction loan encumbering any of the
NAPICO Properties and (y) each lender or housing agency in connection with
any tax exempt bond financing affecting any of the NAPICO Properties, in
either case, the consent or approval of which is necessary to prevent or
avoid a Violation by Casden or any of the Casden Subsidiaries as a result
of the execution and delivery of this Agreement or any of the Related
Transaction Documents or the consummation or performance of any of the
Transactions (any and all such consents and approvals, the "NAPICO Property
Consents" and, together with the Casden Property Consents, the "Casden
Required Consents").
Section 7.36 CLOSING PAYOFF AMOUNTS. At the Effective Time,
AIMCO shall pay, or cause to be paid, the amounts set forth in Schedule
2.1(a).
ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions, except, to the extent permitted by applicable law,
that such conditions may be waived in writing pursuant to Section 9.5 by
the joint action of the parties hereto:
(a) CASDEN STOCKHOLDERS' APPROVAL. The Casden Stockholders'
Approval shall have been obtained.
(b) NO INJUNCTION. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state
court preventing consummation of the Merger or the Related Transactions
shall have been issued and be continuing in effect.
(c) NO CHANGE IN LAW. The Transactions shall not
have been prohibited under any applicable federal or state law or
regulation adopted or amended after the date hereof.
(d) STATE SECURITIES LAWS. All necessary consents or
approvals required pursuant to applicable state securities laws shall have
been obtained.
(e) RELATED TRANSACTIONS. Except as expressly set
forth in the Related Transaction Documents, each of the Related
Transactions shall be completed prior to or concurrently with the
Contribution Effective Date or the Effective Time, as applicable.
(f) HUD. Approval of the Transactions by HUD shall
have been obtained.
Section 8.2 CONDITIONS TO OBLIGATION OF AIMCO TO EFFECT THE
MERGER. The obligation of AIMCO to effect the Merger shall be subject to
the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by AIMCO in writing pursuant to Section
9.5:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Casden set forth in this Agreement shall
be true and correct (i) on and as of the date hereof and (ii) 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 (except for
representations and warranties that expressly speak only as of a specific
date or time which need only be true and correct as of such date or time)
and Casden and each Casden Subsidiary shall have performed in all material
respects each of their respective obligations required to be performed
prior to the Effective Time pursuant to this Agreement; provided, however,
that this condition to the obligation of AIMCO to consummate the Merger
shall be deemed satisfied if the aggregate loss, cost, damage or expense to
AIMCO, if the Transactions were consummated, as a result of breaches of
such representations and warranties (without giving effect to any
materiality qualification or standard contained in any such representations
and warranties) when aggregated with failures to comply with covenants by
Casden would not reasonably be expected to exceed $100 million.
(b) CLOSING CERTIFICATE. AIMCO shall have received a
certificate, signed by the chief executive officer of Casden, dated the
Closing Date, to the effect that, to the best of such officer's knowledge,
the condition set forth in Section 8.2(a) with respect to Casden has been
satisfied.
(c) OPINION OF CASDEN'S MARYLAND COUNSEL. Casden
shall have caused to be delivered to AIMCO the opinion of Ballard Spahr
Andrews & Ingersoll, LLP (or another nationally recognized law firm
acceptable to AIMCO) to the effect that this Agreement and the Articles of
Merger are enforceable under Maryland law, that all requisite approvals
have been obtained, at the Effective Time all shares of Casden Capital
Stock exchanged in connection with the Merger are validly issued, fully
paid and non-assessable and not subject to preemptive rights, and as to
such other matters as are customary in a transaction such as the Merger.
AIMCO agrees that the forms of opinion attached hereto as Exhibit 8.2(c)-1
and Exhibit 8.2(c)-2 shall be acceptable to AIMCO and that the failure of
Casden to deliver either such opinion shall constitute a breach of Section
7.9 by Casden unless such failure shall be due solely to a change in law
(statutory or case law) or regulation occurring after the date hereof.
(d) OPINION OF CASDEN'S SPECIAL COUNSEL. Casden
shall have caused to be delivered to AIMCO (i) the opinion of Gibson, Dunn
& Crutcher LLP or such other counsel reasonably acceptable to AIMCO to the
effect that each of the Transaction Documents constitutes the valid and
binding obligation of Casden, XYZ and/or the other parties thereto (other
than AIMCO), as applicable, and that such agreements are enforceable
against Casden, XYZ and/or the other parties thereto (other than AIMCO), as
applicable, in accordance with their terms (with customary exceptions,
assumptions and qualifications and based on customary representations);
(ii) the opinion of Delaware counsel reasonably acceptable to AIMCO to the
effect that, with respect to matters of Delaware law, each of the Related
Transaction Documents are enforceable against Casden, XYZ and/or the
parties thereto (other than AIMCO), as applicable, in accordance with their
terms (with customary exceptions, assumptions and qualifications and based
on customary representations); and (iii) the opinion of counsel reasonably
acceptable to AIMCO to the effect that (A) each of Cerberus Partners, LP,
BA Casden Investors LLC, Blackacre Park La Brea LLC, Blackacre Capital
Management LLC ("Blackacre") and the Blackacre entity which will be a
signatory to the Development LLC Agreement (collectively, the "Blackacre
Parties") is duly organized, validly existing and in good standing in the
jurisdiction of its formation, and (B) each of the Related Transaction
Documents is duly authorized by, and constitutes the valid and binding
obligation of, the Blackacre Parties which are parties thereto, as
applicable, and that such agreements are enforceable against the Blackacre
Parties which are parties thereto, as applicable, in accordance with their
terms (with customary exceptions, assumptions and qualifications and based
on customary representations). AIMCO agrees that the form of opinion
attached hereto as Exhibit 8.2(d) shall be acceptable to AIMCO with respect
to Casden's obligation pursuant to clause (i) hereof and that the failure
of Casden to deliver any opinion required by this Section 8.2(d) shall
constitute a breach of Section 7.9 by Casden unless such failure shall be
due solely to a change in law (statutory or case law) or regulation
occurring after the date hereof.
(e) CASDEN REQUIRED STATUTORY APPROVALS. Casden
shall have obtained each of the Casden Required Statutory Approvals and
delivered copies thereof to AIMCO.
(f) CASDEN REIT OPINION. Casden shall have caused to
be delivered to AIMCO the opinion of Gibson, Dunn & Crutcher LLP, dated as
of the Effective Time, reasonably satisfactory to AIMCO that, for each
taxable year since formation ending on or before the Effective Time
(including the short taxable year ending immediately prior to the Effective
Time), Casden was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code (with customary
exceptions, assumptions and qualifications), substantially in the form
attached hereto as Exhibit 8.2(f). Such opinion shall also be addressed to
BA Casden Investors, LLC and may rely upon an officer's certificate of
Casden and an officer's certificate of BA Casden Investors, LLC. The
failure of Casden to deliver such opinion to AIMCO shall constitute a
breach of Section 7.9 by Casden unless such failure shall be due solely to
a change in law (statutory or case law) or regulation occurring after the
date hereof.
(g) LETTER OF CASDEN'S ACCOUNTANTS. AIMCO shall have
received letters from Deloitte & Touche LLP, addressed to AIMCO and dated
within two business days prior to the Closing Date, in form and substance
reasonably satisfactory to AIMCO with respect to the most recent Casden
Financial Statements.
(h) RELEASES. AIMCO shall have received duly
executed Releases from: (i) each director of Casden (other than the
independent directors but including any director of Casden who is
affiliated with BA Casden Investors, LLC) and each executive officer of
Casden listed in Section 4.24 of the Casden Disclosure Letter and (ii) BA
Casden Investors, LLC, a Delaware limited liability company, Blackacre Park
La Brea LLC, a Delaware limited liability company, Blackacre Casden
Investment, LLC, Blackacre Investment Warrant, LLC, BA Warrant Investors,
LLC and each other Person who owns or has ever owned Casden Class A
Preferred Stock, Casden I Warrants or Casden II Warrants.
(i) CONSENTS. Casden shall have obtained each of the
Casden Required Consents, each of which shall be in full force and effect,
and delivered copies thereof to AIMCO.
(j) RESIGNATIONS. Casden shall have obtained the
resignations of all of the individuals listed in Section 4.24 of the Casden
Disclosure Letter and delivered copies thereof to AIMCO.
(k) LITIGATION INFORMATION. Casden shall have
provided the information specified in Section 7.26 to AIMCO.
(l) NAPICO DISCLOSURE. Casden shall have provided
the information specified in Section 7.32 to AIMCO.
Section 8.3 CONDITIONS TO OBLIGATION OF CASDEN TO EFFECT THE
MERGER. The obligation of Casden to effect the Merger shall be subject to
the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by Casden in writing pursuant to
Section 9.5.
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of AIMCO set forth in this Agreement shall
be true and correct (i) on and as of the date hereof and (ii) 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 (except for
representations and warranties that expressly speak only as of a specific
date or time which need only be true and correct as of such date or time)
and AIMCO and each AIMCO Subsidiary shall have performed in all material
respects each of their respective obligations required to be performed
prior to the Effective Time pursuant to this Agreement; provided, however,
that this condition to the obligation of Casden to consummate the Merger
shall be deemed satisfied if the aggregate loss, cost, damage or expense to
Casden, if the Transactions were consummated, as a result of breaches of
such representations and warranties (without giving effect to any
materiality qualification or standard contained in any such representations
and warranties) when aggregated with failures to comply with covenants by
AIMCO would not reasonably be expected to exceed $100 million.
(b) CLOSING CERTIFICATE. Casden shall have received
a certificate signed by an executive officer of AIMCO, dated the Closing
Date, to the effect that, to the best of such officer's knowledge, the
condition set forth in Section 8.3(a) has been satisfied.
(c) OPINION OF AIMCO'S MARYLAND COUNSEL. AIMCO shall
have caused to be delivered to Casden and XYZ the opinion of Piper Marbury
Rudnick & Wolfe LLP (or another nationally recognized law firm acceptable
to Casden) to the effect that this Agreement and the Articles of Merger are
enforceable under Maryland law, that all requisite approvals have been
obtained, and at the Effective Time upon issuance thereof in accordance
with the terms of this Agreement, such shares of AIMCO Common Stock issued
in connection with the Merger will be validly issued, fully paid and
non-assessable and not subject to preemptive rights, and as to such other
matters as are customary in a transaction such as the Merger. Casden agrees
that the form of opinion attached hereto as Exhibit 8.3(c) shall be
acceptable to Casden and that the failure of AIMCO to deliver such opinion
shall constitute a breach of Section 7.9 by AIMCO unless such failure shall
be due solely to a change in law (statutory or case law) or regulation
occurring after the date hereof.
(d) MERGER OPINION. Unless a Taxable Election is
made pursuant to Section 2.2(f), Casden shall have received an opinion of
Gibson, Dunn & Crutcher LLP (or another nationally recognized law firm
acceptable to Casden) that, based upon certificates and letters acceptable
to Gibson, Dunn & Crutcher LLP (or another nationally recognized law firm
acceptable to Casden) dated as of the Closing Date, the Merger will qualify
as a "reorganization" within the meaning of Section 368 of the Code (with
customary exceptions, assumptions and qualifications and based on customary
representations). Such opinion shall also be addressed to BA Casden
Investors, LLC, AIC, TCC and CIC. Casden agrees that an opinion
substantially in the form attached as Exhibit 8.3(d)(i) hereto shall be
acceptable to Casden and that the failure of Casden to obtain delivery of
such opinion shall constitute a breach of Section 7.9 by Casden unless such
failure shall be due solely to (i) a change in the law (statutory or case
law) or regulation occurring after the date hereof or (ii) the failure of
AIMCO to deliver to such counsel an officers' certificate in substantially
the form attached hereto as Exhibit 8.3(d)(ii), in which case such failure
of AIMCO shall constitute a breach by AIMCO of Section 7.9 and shall not be
considered a breach by Casden of Section 7.9.
(e) OPINION OF AIMCO'S COUNSEL. AIMCO shall have
caused to be delivered to Casden and XYZ the opinion of Skadden, Arps,
Slate, Meagher & Flom LLP (or another nationally known law firm acceptable
to Casden) to the effect that each of the Transaction Documents to which
AIMCO is a party constitutes the valid and binding obligation of AIMCO and
AIMCO OP, and that such agreements are enforceable against AIMCO and AIMCO
OP, in accordance with their terms (with customary exceptions, assumptions
and qualifications and based on customary representations). Casden agrees
that an opinion substantially in the form attached as Exhibit 8.3(e) hereto
shall be acceptable to Casden and that the failure of AIMCO to deliver such
opinion shall constitute a breach of Section 7.9 by AIMCO unless such
failure shall be due solely to a change in law (statutory or case law) or
regulation occurring after the date hereof.
(f) TRADING OF AIMCO COMMON STOCK. AIMCO Common
Stock shall be listed and admitted for trading on the NYSE and there shall
have occurred trading of AIMCO Common Stock on each of the five (5) trading
days immediately prior to the Closing Date.
(g) LISTING OF SHARES. The shares of AIMCO Common
Stock issuable in connection with the Merger shall have been approved for
listing on the NYSE upon official notice of issuance. The parties
acknowledge and agree that if Casden elects to waive this condition in the
event it is not satisfied, such waiver will not constitute a waiver of (or
absolve AIMCO from liability for) the breach of the covenant in Section
7.31.
(h) AIMCO REQUIRED STATUTORY APPROVALS. Each of the AIMCO
Required Statutory Approvals shall have been obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date, whether before or after obtaining the
Casden Stockholders' Approval, only:
(a) by mutual written consent of the respective Boards of
Directors of Casden and AIMCO;
(b) (i) by either AIMCO or Casden if there has been
any breach by the other party of any representation or warranty set forth
in this Agreement, or failure by the other party to comply with any of its
covenants or obligations set forth in this Agreement and which breach or
failure individually or together with the other breaches or failures by
such other party that have not been cured would result in losses, costs,
damages or expenses to the terminating party, if the Transactions were
consummated that would reasonably be expected to exceed $100 million, and
which breach or failure has not been cured within 30 days following receipt
by the breaching or failing party of notice of such breach or failure or
adequate assurance of such cure shall not have been given by or on behalf
of the breaching or failing party within such 30 day period or (ii) by
AIMCO or Casden, if any state or federal law, order, rule or regulation is
adopted or issued after the date hereof, which has the effect, as supported
by the written opinion of outside counsel for such party, of prohibiting
any of the Transactions, or if any court of competent jurisdiction in the
United States or any state shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting any of the
Transactions, and such order, judgment or decree shall have become final
and non-appealable; provided, however, that the party seeking to terminate
this Agreement as a result of any such injunction or prohibition shall have
used all reasonable efforts to remove such injunction or overturn such
prohibition;
(c) by either AIMCO or Casden, by written notice to
the other party, if the Effective Time shall not have occurred on or before
the six month anniversary of the date hereof (the "Termination Date")
subject to AIMCO's and Casden's right to postpone the Closing pursuant to
the proviso in Section 3.1; provided, however, that in the event the
parties have not obtained approval of the Transactions by HUD by the
Termination Date, such date may be extended at the election of AIMCO or
Casden for one-month periods (up to an additional six months) pending such
approval; provided, further, that the right to terminate this Agreement
under this Section 9.1(c) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the
Termination Date; or
(d) by Casden if (i) all of AIMCO's conditions to
closing set forth in Section 8.1 and Section 8.2 have been satisfied, (ii)
within 10 days of receiving notice of Casden's intent to terminate pursuant
to this Section 9.1(d), AIMCO has failed to close and (iii) at such time
AIMCO is not entitled to terminate this Agreement pursuant to Article IX.
Section 9.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 9.1 by either Casden or
AIMCO, except as expressly provided in Section 9.3(a) below, no party
hereto shall have any liability to any other party with respect to this
Agreement or the transactions contemplated hereby and this Agreement shall
be of no further force or effect; provided, however that notwithstanding
the foregoing, Sections 9.1, 9.2, 9.3, 9.4, 9.6, 10.1, 10.2, 10.3, 10.4,
10.5, 10.6, 10.7 and 10.8 shall survive the termination indefinitely
(unless otherwise specifically provided therein).
Section 9.3 TERMINATION FEES.
(a) CASDEN LIQUIDATED DAMAGES. If the Merger is not
consummated and Casden terminates this Agreement pursuant to Sections
9.1(b) or 9.1(d) above, (i) Casden shall be entitled to receive the Escrow
Amount from the Escrow Agent and (ii) AIMCO shall pay to Casden in cash
liquidated damages in the amount of $50 million (the amounts received by
Casden pursuant to the foregoing clauses (i) and (ii), collectively, the
"Liquidated Damages"); provided, however, that Casden shall not be entitled
to receive the Liquidated Damages if AIMCO is entitled to terminate this
Agreement pursuant to Section 9.1 above. The payment of the Liquidated
Damages shall be compensation and liquidated damages for the loss suffered
by Casden as the result of the failure to consummate the Merger and the
Related Transactions and to avoid the difficulty of determining damages
under the circumstances, and AIMCO and AIMCO OP shall not have any
liability to Casden, other than the payment of the Liquidated Damages if
the Merger is not consummated.
(b) NO PENALTY. The parties agree that the
agreements contained in this Section 9.3 are an integral part of the
transactions contemplated by this Agreement and constitute liquidated
damages and not a penalty.
Section 9.4 AMENDMENT. This Agreement may be amended by the
parties hereto (or by Casden pursuant to Section 2.2(g)) at any time before
or after the Casden Stockholders' Approval and prior to the Effective Time,
subject to the requirements of the MGCL. Other than pursuant to Section
2.2(g), this Agreement may not be amended except by a written instrument
signed on behalf of each of the parties hereto.
Section 9.5 WAIVER. At any time prior to the Effective Time,
a party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions of the other party
contained herein, to the extent permitted by applicable law. Any agreement
on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such
party.
Section 9.6 DAMAGES. Notwithstanding any other provision
herein, the parties agree that if the Merger is consummated, the sole
remedy of any such party for any other party's breach of representations or
warranties or failure to comply with covenants, and any failure to satisfy
any condition, shall be the right to collect damages for any breach of
representations or warranties or failure to comply with covenants or to
satisfy any condition, to the extent provided in the Master Indemnification
Agreement (or, with respect to Tax matters, the Tax Indemnity Agreement).
The representations and warranties of the parties contained herein shall
survive the Effective Time in accordance with the terms of the Master
Indemnification Agreement. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or agreement, will not affect the right to
indemnification or other remedy based on such representations, warranties,
covenants and agreements; provided, however, that if either party has
knowledge prior to the Closing Date of any breach of any covenant or any
inaccuracy of any representation or warranty contained in this Agreement
prior to the Closing Date and such party did not comply with its
Pre-Closing Notice (as defined in the Master Indemnification Agreement)
obligation pursuant to the Master Indemnification Agreement, such party
shall not be entitled to indemnification under the Master Indemnification
Agreement for such breach or inaccuracy, except as pursuant to the Tax
Indemnity Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 BROKERS. Casden represents and warrants that,
except for CSFB and Monga LLC whose fees have been disclosed to AIMCO prior
to the date hereof, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Casden. AIMCO
represents and warrants that no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of AIMCO.
Section 10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when delivered
personally, (b) when sent by reputable overnight courier service, or (c)
when telecopied (which is confirmed by copy sent within one business day by
a reputable overnight courier service) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(i) If to Casden (or XYZ,
after the Effective Time), to: Casden Properties Inc.
(or XYZ, after the Effective Time)
9090 Wilshire Boulevard
Beverly Hills, CA 90211
Attn: Andrew J. Starrels
Telecopy: (310) 273-8418
Telephone: (310) 385-3057
with copies (which shall
not constitute notice) to: Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attn: Jesse Sharf, Esq.
and Scott Calfas, Esq.
Telecopy: (213) 229-6638
Telephone: (213) 229-7638
Blackacre Capital Management, LLC
450 Park Avenue, 28th Floor
New York, NY 10022
Attn: Mark Neporent/Ronald J. Kravit
Telecopy: (212) 891-2104
Telephone: (212) 891-1540
Katten Muchin Zavis
525 West Monroe Street, Suite 1600
Chicago, IL 60661-3696
Attn: Nina Matis, Esq.
Telecopy: (312) 902-5560
Telephone: (312) 902-1061
and Schulte, Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn: Alan Waldenberg, Esq.
Telecopy: (212) 756-2501
Telephone: (212) 593-5955
(ii) If to AIMCO, to: Apartment Investment and
Management Company
18350 Mt. Langley Avenue, Suite 220
Fountain Valley, CA 92708
Attn: Peter K. Kompaniez
Telecopy: (714) 593-1703
Telephone: (714) 593-1733
and Apartment Investment and
Management Company
2000 South Colorado Boulevard
Tower Two, Suite 2-1000
Denver, CO 80222
Attn: Terry Considine and
Harry Alcock
Telecopy: (303) 753-9538
Telephone: (303) 691-4330
and Apartment Investment and
Management Company
Tower Two
2000 South Colorado Boulevard
Suite 2-1000
Denver, CO 80222
Attn: Terry Considine and Harry Alcock
Telecopy: (303) 691-5662
Telephone: (303) 691-4344
with copies (which shall not
constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036
Attn: Joseph A. Coco, Esq.
Telecopy: (212) 735-2000
Telephone: (212) 735-3000
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, CA 90071
Attn: Jonathan L. Friedman, Esq.
Telecopy: (213) 687-5600
Telephone: (213) 687-5000
Section 10.3 MISCELLANEOUS. This Agreement, the Related
Transaction Documents, the Confidentiality Agreement and the documents and
instruments referred to herein and therein constitute the entire agreement
and supersede all other prior or contemporaneous oral or written agreements
and understandings among the parties, or any of them, with respect to the
subject matter hereof and thereof. This Agreement shall not be assigned by
any party and shall be governed by and construed in accordance with the
laws of the State of New York, including Sections 5-1401 and 5-1402 of the
New York General Obligations Law and New York Civil Practice Laws and Rules
327(b), except to the extent the provisions of this Agreement (including
the documents or instruments referred to herein) are expressly governed by
or derive their authority from the MGCL.
Section 10.4 INTERPRETATION. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 10.5 COUNTERPARTS; EFFECT. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.
Section 10.6 PARTIES' INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to confer upon
any other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement, except that the directors, officers and
general partners covered by the insurance referred to in Section 7.13 shall
have the right to enforce such provisions.
Section 10.7 ENFORCEMENT.
(a) The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached until the consummation of the Merger. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any court of the United States located
in the State of New York or in New York state court, this being in addition
to any other remedy to which they are entitled pursuant to this Agreement,
the Master Indemnification Agreement or the Tax Indemnity Agreement;
provided, however, that following the consummation of the Merger, specific
performance of the terms of this Agreement (other than under Section 7.30)
shall no longer be available.
(b) In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of New York or any New York state court in the event
any dispute arises out of this Agreement or any of the Transactions, (ii)
agrees that it will not attempt to deny such personal jurisdiction by
motion or other request for leave from any such court and (iii) agrees that
it will not bring any action relating to this Agreement, the Related
Transaction Documents or any of the Transactions in any court other than a
federal or state court sitting in the State of New York.
Section 10.8 SEVERABILITY. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any Person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
Persons, entities or circumstances shall not be affected by such invalidity
or unenforceability, nor shall such invalidity or unenforceability affect
the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
[signature page follows]
IN WITNESS WHEREOF, AIMCO, Casden and XYZ have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By: /s/ Peter Kompaniez
---------------------------------------
Name: Peter Kompaniez
Title: President
CASDEN PROPERTIES INC.
By: /s/ Alan I. Casden
---------------------------------------
Name: Alan I. Casden
Title: Chairman
XYZ HOLDINGS LLC
By: CASDEN INVESTMENT CORP.
---------------------------------------
its Managing Member
By: /s/ Alan I. Casden
------------------------------------
Name: Alan I. Casden
Title: Chairman