TAX INDEMNIFICATION AND CONTEST AGREEMENT
BY AND AMONG
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
XYZ HOLDINGS LLC
AND THE OTHER PARTIES SIGNATORY HERETO
Dated as of December 3, 2001
TAX INDEMNIFICATION AND CONTEST AGREEMENT
This TAX INDEMNIFICATION AND TAX CONTEST AGREEMENT (this
"Agreement") is dated as of December 3, 2001, by and among XYZ Holdings LLC
("XYZ" or the "Lead Indemnitor"), The Casden Company ("TCC"), Casden
Investment Corp. ("CIC"), Alan I. Casden ("AIC"), and Cerberus Partners,
L.P. ("CP") (the "Additional Indemnitors" and, collectively with the Lead
Indemnitor, the "Indemnitors"), and Apartment Investment and Management
Company ("AIMCO") and National Partnership Investments Corp. ("NAPICO").
WHEREAS, AIMCO has entered into an Agreement and Plan of
Merger with each of Casden Properties, Inc. ("Casden REIT") and Casden Park
La Brea, Inc. ("CPLB REIT"), each dated as of the date hereof (the "Casden
Merger Agreement" and the "Park La Brea Merger Agreement," respectively
and, together, the "Merger Agreements"); and
WHEREAS, as a condition to entering into the Merger
Agreements, the Contribution Agreement, the Casden Contribution Agreement
and other agreements to be entered into in connection therewith
(collectively, the "Acquisition Agreements"), and as an inducement to do
so, the parties hereto are entering into this Agreement;
NOW, THEREFORE, in consideration of the promises and
mutual agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, the
following terms shall apply:
(a) "Acquired Asset" shall mean any asset acquired
directly or indirectly by AIMCO as a result of the transactions
contemplated by the Merger Agreements.
(b) "AIMCO Common Stock" shall mean shares of AIMCO's
Class A Common Stock, par value $.01 per share, issued pursuant to
the Acquisition Agreements and any other securities issuable in
respect thereof, whether as a dividend or distribution, in
connection with a stock split, merger, recapitalization or
(c) "AIMCO Common Stock Price" shall mean $47 per share.
(d) "AIMCO OP Units" shall mean partnership common units
of AIMCO OP issued pursuant to the Acquisition Agreements and any
other securities issuable in respect thereof, whether as a
distribution, in connection with a split of such common units,
merger, recapitalization or otherwise.
(e) "AIMCO Securities" shall mean AIMCO Common Stock or
AIMCO OP Units.
(f) "Casden" shall mean Casden Properties, Inc. and every
(g) "Casden Entities" shall mean AIC, TCC and CIC.
(h) "CPLB" shall mean CPLB REIT and every CPLB Subsidiary
(as defined in the Park La Brea Merger Agreement).
(i) "Final Determination" shall mean (i) a decision,
judgment, decree, or other order by any court of competent
jurisdiction, which decision judgment, decree, or other order has
become final after all allowable appeals by either party to the
action have been exhausted or the time for filing such appeal has
expired, (ii) a closing agreement entered into under Section 7121
of the Code, or any final settlement agreement entered in
connection with any administrative or judicial proceeding, or
(iii) the expiration of time for instituting a claim for refund,
or if such claim was filed, the expiration of time for instituting
a suit with respect thereto.
(j) "Indemnitee" shall mean each of AIMCO and NAPICO, as
the case may be.
(k) "Indemnity Amount" shall mean the amount payable by
Indemnitor to an Indemnitee pursuant to Section 2.
(l) "Pre-Closing Period" shall mean any taxable year or
period that ends on or before the Closing Date.
(m) "Scheduled Taxes" shall mean the items listed on
Schedule B hereto.
(n) "Section 6662 Tax Liabilities" shall mean any
penalties imposed by a Tax authority for fraud, willful misconduct
or under Section 6662(b)(2) of the Code (or similar provisions of
state, local or foreign law), and any interest and additions to
tax related thereto.
(o) "Straddle Period" shall mean, with respect to any
taxable year or period of an entity that begins on or before the
Closing Date but ends after the Closing Date, the portion of such
taxable year or period that (i) begins on the first day of such
taxable year or period, and (ii) ends on the Closing Date. For
purposes of this Agreement, the Tax liability of any entity with
respect to a Straddle Period shall be computed as follows: (i) in
the case of Taxes of an entity that are either (A) based upon or
related to income or receipts, or (B) imposed in connection with
any sale, transfer, assignment, or distribution of property
(whether real or personal, tangible or intangible) by such entity,
the Tax liability for the Straddle Period shall be deemed equal to
the amount that would be payable if the period for which such Tax
is assessed had ended on and included the Closing Date, not
including transactions occurring on the Closing Date after the
Closing, and not including transfer and similar taxes related to
the transactions contemplated by the Acquisition Agreements,
determined, to the extent permissible under applicable laws, in a
manner which is consistent with such entity's accounting practices
and business operations as in effect prior to the Closing Date;
and (ii) in the case of Taxes that are not described in clause (i)
above, the Tax liability for the Straddle Period shall be the
amount due and payable on or before the Closing Date.
(p) "Substantial Authority" shall mean substantial
authority within the meaning of Section 6662(d)(2)(B)(i) of the
Code and the Treasury Regulations promulgated thereunder.
(q) "Tax Law Change" shall mean modifications to, or
enactment, promulgation, release or adoption of any changes in the
Code or the Tax law of any state, local, or foreign jurisdiction.