THIS CONTRIBUTION
AGREEMENT (this “ Agreement ”) is made as
of the 21 st
day of August, 2006 (the “
Effective Date ”), by and between VMS
NATIONAL PROPERTIES JOINT VENTURE , an Illinois general
partnership (“ Contributor ”), AIMCO
PROPERTIES, L.P. , a Delaware limited partnership (“
Parent ”) and AIMCO PROPERTIES, LLC , a
Delaware limited partnership (“ Contributee
”).
In consideration
of the covenants and provisions contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows:
1.
Agreement to Contribute . Contributor agrees to contribute
(the “ Contribution ”) to Contributee,
and Contributee agrees to receive from Contributor, subject to all
of the terms and conditions of this Agreement, all of
Contributor’s right, title and interest in and to those
certain residential apartment projects commonly known as (i)
“Buena Vista Apartments,” located in Pasadena, Los
Angeles County, California, (ii) “Casa de Monterey,”
located in Norwalk, Los Angeles County, California, (iii)
“Crosswood Park Apartments,” located in Citrus Heights,
Sacramento County, California, (iv) “MountainView
Apartments,” located in San Dimas, Los Angeles County,
California, (v) “Pathfinder Village Apartments,”
located in Fremont, Alameda County, California, (vi)
“Scotchollow Apartments,” located in San Mateo, San
Mateo County, California and (vii) “Towers of Westchester
Park Apartments,” located in College Park, Prince
George’s County, Maryland, consisting of the
following:
(a)
Real Property . Those certain tracts of land more fully
described on Exhibit A-1 through Exhibit A-7
attached to this Agreement and incorporated herein by this
reference, together with all improvements now or hereafter located
thereon and all appurtenances thereto (including, without
limitation, all easements, rights-of-way, water rights, mineral and
timber rights, development rights, privileges, licenses, and other
rights and benefits belonging to, running with the owner of, or in
any way relating to the aforesaid tract of land and all trees,
shrubbery and plants), together with all right, title and interest
of Contributor in and to any land lying in the bed of any street,
opened or proposed, abutting such tract of land, and all right,
title and interest of Contributor in and to any unpaid award for
the taking by eminent domain of any part of the aforesaid tract of
land or for damage to such tract of land by reason of a change of
grade of any street (collectively, the “ Real
Property ”); and
(b)
Personal Property . All fixtures, furniture, equipment,
elevators, and other personal property owned by Contributor and
attached or appurtenant to, or located in or on, or used in
connection with the Real Property, together with all intangible
personal property used in the ownership, operation or maintenance
of the Real Property, with the exception, however, of any
replacement reserves, escrow accounts, residual receipts accounts,
cash or other funds (whether in petty cash or house
“banks” or on deposit or in transit for deposit),
utility or similar deposits, receivables, refunds, rebates or other
claims, or any interest thereon, for the period or events occurring
through the Closing Date, and insurance and other prepaid items
(collectively,
the “
Personal Property ” and, together with the Real
Property, the “ Property ”). Each parcel
of the Real Property described on Exhibit A-1 through
Exhibit A-7 , together with the Personal Property
associated therewith, is sometimes individually referred to herein
as a “ Site .” The Property is to be
conveyed in its entirety, and individual Sites may not be excluded
by Contributee or Contributor. Any termination of this Agreement as
provided herein shall be effective as to the entire
Property.
(c)
Consideration . Subject to Section 1(d) and 1(e) below, the
consideration for the Contribution (the “
Consideration ”) of the Property, subject to
adjustments as provided in this Agreement, shall be Two Hundred
Twenty Four Million Two Hundred Twenty Eight Thousand, Two Hundred
Sixty and No/100 Dollars ($224,228,260.00) and shall be paid at
“Closing” (as defined in Section 4(a) ) in
cash or by certified, cashier’s or treasurer’s check,
or by wire transfer of immediately available funds.
(d)
Alternative Payment . (i) In connection with the
Contribution, the Contributor shall give each limited partner of
the Contributor’s general partners (each, a “
Limited Partner ”) an opportunity to waive its
right to receive any or all of the Consideration otherwise
ultimately distributable to it in cash and elect to receive such
waived portion of the Consideration directly from Parent in the
form of Partnership Common Units of Parent (“ OP
Units ”). Contributor and Parent agree to provide
each Limited Partner with documentation sufficient to indicate any
such waiver and election. Contributor further agrees to, and hereby
does, waive its right to receive any Consideration that would be
distributable to any Limited Partner that has waived its right to
receive such Consideration in cash and elected to receive it
directly from Parent in the form of OP Units (any such Limited
Partner, an “ Electing Limited Partner
”). Parent hereby agrees to issue and deliver directly to
each Electing Limited Partner that number of OP Units equal to
(A) the amount of cash Consideration the receipt of which was
waived in such Electing Limited Partner’s waiver and election
documentation divided by (B) the Average Daily Closing Price;
provided that such issuance and delivery does not violate any state
securities laws, in which event all parties hereto shall be
entitled to disregard such waiver and election and proceed with the
Contribution and resulting cash distributions as if such waiver and
election had not been delivered by such Electing Limited Partner.
Any certificate evidencing OP Units issued to an Electing Limited
Partner shall contain such legends and restrictions as may be
required by federal or state securities laws or the governing
documents of Parent. “Average Daily Closing Price”
means the average of the closing prices per share of the
Class A Common Stock of Apartment and Investment Management
Company, a Maryland corporation, on the New York Stock Exchange as
reported by the Wall Street Journal (or, if not reported thereby,
any other authoritative source as the parties shall agree in
writing) for the twenty (20) consecutive full trading days in
which such shares are traded on the New York Stock Exchange ending
on the second trading day, prior to, but not including, the Closing
Date.
(ii) Contributor
hereby covenants and agrees to use commercially reasonable efforts
to qualify the offering and issuance of OP Units under the state
securities laws of each state in which a Limited Partner is a
resident.
(e) Contributee
holds certain rights to receive payments from residual proceeds
remaining following the disposition of the Real Property and the
payment of other specified claims (such rights, the “MF-VMS
Interest”). In connection with the Contribution,
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Contributor and
Contributee hereby agree as follows with respect to the treatment
of the MF-VMS Interest: (i) at the Closing, Contributee shall
assume and shall become responsible for the payment, performance
and satisfaction of all obligations arising with respect to the
MF-VMS Interest with respect to the Real Property and (ii) the
Consideration payable to Contributor shall be reduced by an amount
equal to the obligation assumed pursuant to this
Section 1(e).
(a)
Contributee Default .
If
Contributee, without the right to do so and in default of its
obligations under this Agreement, fails to complete Closing,
Contributor shall be entitled to terminate this Agreement by
written notice to Contributee, whereupon neither party hereto shall
have any further rights or obligations hereunder except for those
that expressly survive termination of this Agreement.
(b)
Contributor Default . If Contributor, without the right to
do so and in default of its obligations under this Agreement, fails
to complete Closing, Contributee shall have the right either to
terminate this Agreement by written notice to Contributor,
whereupon neither party hereto shall have any further rights or
obligations hereunder except for those that expressly survive
termination of this Agreement or to seek specific performance of
Contributor’s obligations under this Agreement; Contributee
waives any right to any and all other remedies for
Contributor’s breach of this Agreement permitted by law or in
equity against Contributor or any of Contributor’s
Affiliates, including any right to damages.
(a)
Place of Closing . The closing and settlement of the
transaction contemplated by this Agreement (“
Closing ”) shall take place by escrow closing
with the Title Company (as defined in Section 5(a) )
wherein neither Contributee nor Contributor need be physically
present.
(b)
Closing Date . Closing shall occur on such date as is
selected by Contributor and Contributee (the “ Closing
Date ”); provided, however, that the Closing Date
shall not occur any later than December 31, 2007.
(a)
Title to Real Property . Title to the Real Property and
Contributor’s interest therein shall be good and marketable,
and free and clear of all liens, restrictions, easements,
encumbrances, leases, tenancies and other title objections, except
for the “Permitted Encumbrances” (as hereinafter
defined), and shall be insurable as such and as provided in this
Agreement at ordinary rates by Stewart Title Guaranty Company, 1980
Post Oak Boulevard, Suite 610, Houston, Texas 77056,
Attention: Ms. Wendy Howell, Facsimile No.: 713-552-1703 (the
“ Title Company ” or “ Escrow
Agent ”) pursuant to an ALTA Owner’s Policy of
Title Insurance. The term “ Permitted
Encumbrances ” shall mean the items set forth on
Exhibit B to this Agreement and any and all written
tenant leases for apartment units at the Property (the “
Tenant Leases ”).
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(b)
Title to Personal Property . Title to the Personal Property
shall be good and marketable, and free and clear of all liens,
security interests and other encumbrances.
(c)
Inability to Convey . If, at Closing, Contributor is unable
to convey title to the Real Property to Contributee in accordance
with the requirements of this Agreement, Contributee shall have the
option of: (i) terminating Contributee’s obligations
under this Agreement, in which event this Agreement shall be
terminated and neither party shall have any obligations hereunder,
(ii) proceeding to Close, or (iii) adjourning Closing for
a period of up to thirty (30) days in order to permit
Contributor the opportunity to correct such defects, encumbrances
and other title objections (except for Permitted Encumbrances), and
if by such date, Contributor has failed to do so, then Contributee
shall again have the options set forth in Section 5(c)(i)
and (ii) above .
5.
Delivery of Possession . At the Closing, Contributor shall
deliver actual physical possession of the Property free of any
leases, claims to or rights of possession other than the Tenant
Leases.
6.
Service Agreements . Attached to this Agreement as
Exhibit C are those “Service Agreements”
(as such term is hereinafter defined) which Contributee desires to
terminate at the Closing (the “ Terminated
Contracts ”); provided that (a) the effective
date of such termination after Closing shall be subject to the
express terms of such Terminated Contracts (and, to the extent that
the effective date of termination of any Terminated Contract is
after the Closing Date, Contributee shall be deemed to have assumed
all of Contributor’s obligations under such Terminated
Contract as of the Closing Date), (b) if any such Service
Agreement cannot by its terms be terminated, it shall be assumed by
Contributee and not be a Terminated Contract, and (c) to the extent
that any such Terminated Contract requires payment of a penalty or
premium for cancellation, Contributee shall be solely responsible
for the payment of any such cancellation fees or penalties. To the
extent that any Service Agreement to be assumed by Contributee
(including any Service Agreements that, because of advance notice
requirements, will be temporarily assumed by Contributee pending
the effective date of termination after the Closing Date) is
assignable but requires the applicable vendor to consent to the
assignment or assumption of the Service Agreement by Contributor to
Contributee, then, prior to the Closing, Contributee shall be
responsible for obtaining from each applicable vendor a consent to
the assignment of the Service Agreement by Contributor to
Contributee (and the assumption by Contributee of all obligations
under such Service Agreement). For purposes of this Agreement,
“ Service Agreements ” shall mean all
contracts, agreements, equipment leases, purchase orders,
maintenance, service, or utility contracts and similar contracts,
excluding Tenant Leases, which relate to the ownership,
maintenance, construction or repair and/or operation of the
Property, but only to the extent assignable by their terms or
applicable law (including any contracts that are assignable with
the consent of the applicable vendor).
(a)
General . All normal and customarily proratable items,
including, without limitation, collected rents, operating expenses,
personal property taxes, other operating expenses and fees, shall
be prorated through the Closing Date, Contributor being charged or
credited, as appropriate, for all of the same attributable to the
period through the Closing Date (and credited
4
for any amounts
paid by Contributor attributable to the period after the Closing
Date, if assumed by Contributee) and Contributee being responsible
for, and credited or charged, as the case may be, for all of the
same attributable to the period after the Closing Date.
(b)
Operating Expenses . All of the operating, maintenance,
taxes (other than real estate taxes, such as rental taxes), and
other expenses incurred in operating the Property that Contributor
customarily pays, and any other costs incurred in the ordinary
course of business for the management and operation of the
Property, shall be prorated on an accrual basis. Contributor shall
pay all such expenses that accrue through the Closing Date and
Contributee shall pay all such expenses that accrue after the
Closing Date.
(c)
Utilities . The final readings and final billings for
utilities will be made if possible as of the Closing Date, in which
case Contributor shall pay all such bills as of the Closing Date
and no proration shall be made at the Closing with respect to
utility bills. Otherwise, a proration shall be made based upon the
parties’ reasonable good faith estimate and a readjustment
made within 30 days after the Closing, if necessary.
Contributor shall be entitled to the return of any deposit(s)
posted by it with any utility company, and Contributor shall notify
each utility company serving the Property to terminate
Contributor’s account, effective as of noon on the Closing
Date.
(d)
Real Estate Taxes . Any real estate ad valorem or similar
taxes for the Property, or any installment of assessments payable
in installments which installment is payable in the calendar year
of Closing, shall be prorated through the date of Closing, based
upon actual days involved. The proration of real property taxes or
installments of assessments shall be based upon the assessed
valuation and tax rate figures (assuming payment at the earliest
time to allow for the maximum possible discount) for the year in
which the Closing occurs to the extent the same are available;
provided, however, that in the event that actual figures (whether
for the assessed value of the Property or for the tax rate) for the
year of Closing are not available at the Closing Date, the
proration shall be made using figures from the preceding year
(assuming payment at the earliest time to allow for the maximum
possible discount). The proration of real property taxes or
installments of assessments shall be final and not subject to
re-adjustment after Closing.
(i) All
collected rent (whether fixed monthly rentals, additional rentals,
escalation rentals, retroactive rentals, operating cost
pass-throughs or other sums and charges payable by tenants under
the Leases), income and expenses from any portion of the Property
shall be prorated through the Closing Date (prorated for any
partial month). Contributee shall receive all collected rent and
income attributable to dates after the Closing Date. Contributor
shall receive all collected rent and income attributable to dates
through the Closing Date. Notwithstanding the foregoing, no
prorations shall be made in relation to either
(A) non-delinquent rents which have not been collected as of
the Closing Date, or (B) delinquent rents existing, if any, as
of the Closing Date (the foregoing (A) and (B) referred
to herein as the “ Uncollected Rents ”).
In adjusting for Uncollected Rents, no adjustments shall be made in
Contributor’s favor for rents which have accrued and are
unpaid as of the Closing, but Contributee shall pay Contributor
such accrued Uncollected Rents as and when collected by
5
Contributee.
Contributee agrees to bill tenants of the Property for all
Uncollected Rents and to take reasonable actions to collect
Uncollected Rents. After the Closing, Contributor shall continue to
have the right, but not the obligation, in its own name, to demand
payment of and to collect Uncollected Rents owed to Contributor by
any tenant, which right shall include, without limitation, the
right to continue or commence legal actions or proceedings against
any tenant. Contributee agrees to cooperate with Contributor in
connection with all efforts by Contributor to collect such
Uncollected Rents and to take all steps, whether before or after
the Closing Date, as may be necessary to carry out the intention of
the foregoing; provided, however, that Contributee’s
obligation to cooperate with Contributor pursuant to this sentence
shall not obligate Contributee to terminate any tenant lease with
an existing tenant or evict any existing tenant from the
Property.
(ii) At
Closing, Contributee shall receive a credit against the
Consideration in an amount equal to the received and unapplied
balance of all cash (or cash equivalent) tenant deposits,
including, but not limited to, security, damage or other refundable
deposits or required to be paid by any of the tenants to secure
their respective obligations under the leases, together, in all
cases, with any interest payable to the tenants thereunder as may
be required by their respective tenant lease or state law (the
“ Tenant Security Deposit Balance ”). Any
cash (or cash equivalents) held by Contributor which constitutes
the Tenant Security Deposit Balance shall be retained by
Contributor in exchange for the foregoing credit against the
Consideration and shall not be transferred by Contributor pursuant
to this Agreement (or any of the documents delivered at Closing),
but the obligation with respect to the Tenant Security Deposit
Balance nonetheless shall be assumed by Contributee. The Tenant
Security Deposit Balance shall not include any non-refundable
deposits or fees paid by tenants to Contributor, either pursuant to
the leases or otherwise.
(iii) With
respect to operating expenses, taxes, utility charges, other
operating cost pass-throughs, retroactive rental escalations, sums
or charges payable by tenants under the tenant leases, to the
extent that Contributor has received as of the Closing payments
allocable to periods subsequent to Closing, the same shall be
properly prorated with an adjustment in favor of Contributee, and
Contributee shall receive a credit therefor at Closing. With
respect to any payments received by Contributee after the Closing
allocable to Contributor prior to Closing, Contributee shall
promptly pay the same to Contributor.
(f)
Insurance . No proration shall be made in relation to
insurance premiums and insurance policies will not be assigned to
Contributee.
(g)
Post Closing Adjustments . In general, and except as
provided in this Agreement or the Closing Documents, Contributor
shall be entitled to all income, and shall pay all expenses,
relating to the operation of the Property for the period through
the Closing Date and Contributee shall be entitled to all income,
and shall pay all expenses, relating to the operation of the
Property for the period commencing after the Closing Date.
Contributee or Contributor may request that Contributee and
Contributor undertake to re-adjust any item in accordance with the
provisions of this Section 8(h) .
6
(h)
Transfer Taxes . Contributee shall pay at Closing all
recordation and documentary fees, stamps and taxes imposed on the
Deed or the financing transaction contemplated by this
Agreement.
(i)
Closing Costs/Escrow Charges . Contributee shall pay any
premiums or fees with respect to its title insurance policy for the
Property (the “ Title Policy ”) in excess
of the base premium for the Title Policy, and one-half of the
customary closing costs of the Escrow Agent. Contributor shall pay
the base premium for the Title Policy, and one-half of the
customary closing costs of the Escrow Agent.
The provisions
of this Section 8 shall survive the Closing.
8.
Representations and Warranties .
(a) Contributor,
to induce Contributee to enter into this Agreement and to complete
Closing, makes the following representations and warranties to
Contributee as of the date of this Agreement and as of the Closing
Date (collectively, the “ Contributor
Representations ”):
(i) Other
than the Tenant Leases, the Property is not subject to any written
lease executed by Contributor or, to Contributor’s knowledge,
any other possessory interests of any person.
(ii) Contributor
is not a “foreign person” as that term is used and
defined in Section 1445 of the Internal Revenue Code of 1986,
as amended.
(iii) To
Contributor’s knowledge, there are no actions, proceedings,
litigation or governmental investigations or condemnation actions
either pending or threatened against the Property.
(iv) To
Contributor’s knowledge, Contributor has not received any
written notice of any material default by Contributor under any
Service Agreements (but not the Terminated Contracts).
(v) To
Contributor’s knowledge, on or prior to the Closing Date,
Contributor shall have delivered or made available to Contributee
all the following materials related to the Property within its
actual possession and located at the Property (collectively, the
“ Materials ”): plans and specifications,
engineering reports, feasibility studies, Tenant Leases, Service
Agreements, governmental permits and approvals, surveys and title
information.
(vi) To
Contributor’s knowledge, Contributor has not received written
notice, which remains outstanding, of any violation of any
applicable law, ordinance, code, rule, order, regulation or
requirement of any governmental authority.
(vii) To
Contributor’s knowledge, Contributor has not received any
written notice of any pending or threatened condemnation or eminent
domain proceeding (“ Taking ”) in
connection with the Property.
7
(viii) Except
for the requirement to obtain the Consents, the execution and
delivery of this Agreement and the performance by Contributor of
its obligations hereunder have been duly authorized by all
requisite partnership action, will not conflict with or result in a
breach of any of the terms, conditions or provisions of
Contributor’s partnership agreement, and will not conflict
with or result in a breach of any law, regulation or order, or any
agreement or instrument to which Contributor is a party or by which
Contributor is bound or the Property is subject. This Agreement and
the documents to be delivered by Contributor pursuant to this
Agreement each will constitute the legal, valid, and binding
obligations of Contributor, enforceable in accordance with their
respective terms, covenants, and conditions.
As used in this
Section 9(a) , “ Contributor’s
knowledge ” means the actual knowledge of the
“Designated Representative” (as hereinafter defined) of
the Contributor and shall not be construed to refer to the
knowledge of any other partner, officer, director, agent, employee
or representative of the Contributor, or any affiliate of the
Contributor, or to impose upon the Designated Representative any
duty to investigate the matter to which such actual knowledge or
the absence thereof pertains, or to impose upon the Designated
Representative any individual personal liability. For purposes of
this Agreement, “ Designated Representative
” shall mean (i) for Buena Vista Apartments: Doug Oyler;
(ii) for Casa de Monterey Apts: Brooke Wilson; (iii) for
Crosswood Park Apartments: Douglas MacArthur; (iv) for
Mountain View Apartments: Doug Oyler; (v) for Pathfinder
Village Apartments: Douglas MacArthur; (vi) for Scotch Hollow
Apts: Douglas MacArthur; and (vii) for Towers of Westchester
Park: Susan Ridgeway, who are the Regional Property Managers of
Contributor handling each of the Sites.
(b) Contributee,
to induce Contributor to enter into this Agreement and to complete
Closing, makes the following representations and warranties to
Contributor as of the date of this Agreement and as of the Closing
Date (collectively, the “ Contributee
Representations ”):
(i) The
execution and delivery of this Agreement and the performance by
Contributee of its obligations hereunder have been duly authorized
by all requisite partnership action, and will not conflict with or
result in a breach of any of the terms, conditions or provisions of
the Contributee, and will not conflict with or result in a breach
of Contributee’s partnership agreement, any law, regulation
or order, or any agreement or instrument to which Contributee is a
party or by which Contributee is bound.
(ii) This
Agreement and the documents to be delivered by Contributee pursuant
to this Agreement, will each constitute the legal, valid, and
binding obligations of Contributee, enforceable in accordance with
their respective terms, covenants, and conditions.
(a)
Survival of Contributor Representations, Warranties and
Obligations . The Contributor Representations shall remain in
effect for a period of six (6) months following the Closing
Date. Contributor shall have no liability after such 6-month period
with respect to the Contributor Representations except to the
extent that Contributee has requested arbitration against
Contributor during such 6-month period for breach of any
Contributor Representations. Under no circumstances shall
Contributor be liable to Contributee for more than $250,000.00
in
8
any individual
instance or in the aggregate for all breaches of Contributor
Representations, nor shall Contributee be entitled to bring any
claim for a breach of Contributor’s Representations unless
the claim for damage (either in the aggregate or as to any
individual claim) by Contributee exceeds $50,000.00. In the event
that Contributor breaches any of the Contributor Representations,
and Contributee had knowledge of such breach prior to the Closing
Date, Contributee shall be deemed to have waived any right of
recovery and, with respect to such breach, Contributor shall have
no liability in connection therewith.
(b)
Survival of Contributee Representations, Warranties and
Obligations . All of the Contributee Representations and all of
the obligations of Contributee hereunder shall survive Closing and
delivery of the Deed for a period of six (6) months following
the Closing Date.
10.
Operations Prior to Closing . Between the date of the
execution of this Agreement and Closing:
(a)
Repairs, Maintenance, Operations and Management .
Contributor shall manage, operate, maintain and repair the Property
in the same manner as the Property has been managed, operated,
maintained and repaired prior to the date of this
Agreement.
(b)
Contributee’s Access . Contributor shall continue to
make available to Contributee and Contributee’s attorneys,
architects, engineers and other representatives, reasonable access
to the Property and all records and files relating thereto.
Contributee hereby acknowledges that, prior to the date hereof, it
and its attorneys, architects, engineers and other representatives,
have been afforded access to the Property and to all records and
files relating thereto for the purposes of inspections, preparation
of plans, taking of measurements, making of surveys, making of
appraisals, and generally for the ascertainment of the condition of
the Property. Contributee further acknowledges that the Materials
have been delivered or made available to Contributee prior to the
date hereof.
(c)
AS-IS . Contributee agrees that, except for
Contributor’s Representations, neither Contributor nor any
agent or representative of Contributor has made any representation
regarding the Property and Contributee is purchasing the Property
“AS-IS, WITH ALL FAULTS.” Contributee agrees that
Contributor shall not be responsible or liable to Contributee for
any defects, errors or omissions, or on account of any
cond
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