Tax Indemnification and Contest Agreement (2001)Full Document 

Start of Preview
                 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").

                                 WITNESSETH

                  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
         otherwise.

                  (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
         Casden Subsidiary.

                  (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.

End of Preview