PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") made as of
the 28th day of January, by and between MIG ATLANTA FALLS
CORP., a Michigan corporation ("Seller") and ASSOCIATED ESTATES
REALTY CORPORATION, an Ohio corporation ("Buyer"),
W I T N E S S E T H:
WHEREAS, Seller is the fee owner of that certain parcel
of real property on which a 520-unit apartment complex known as
The Falls located in Atlanta, Georgia; which real property is
more fully described on Exhibit A attached hereto and made a part
h e r eof, together with all buildings, fixtures and other
improvements located thereon and therein and including all
a p p u r tenant rights and easements relating thereto (the
"Project");
WHEREAS, Buyer desires to purchase from Seller, and
Seller desires to sell to Buyer, all of Seller's right, title and
interest in and to the Project and the other property of Seller
described herein, for the purchase price, on the terms and
subject to the conditions set forth herein;
WHEREAS, certain other persons, directly or indirectly
affiliated with Seller (collectively, "Other Owners") are the
respective owners of the apartment projects set forth on Exhibit
A-1 attached hereto and made a part hereof, which properties are
the subject of purchase agreements of even date herewith between
Buyer and the Other Owners, respectively (the "Portfolio Purchase
Agreements").
NOW, THEREFORE, for good and valuable consideration
received to the full satisfaction of each of them, the parties
agree as follows:
1. Agreement to Buy and Sell. Upon the terms and
subject to the conditions set forth herein, Seller agrees to sell
and convey to Buyer at the Closing (as hereinafter defined), and
Buyer agrees to buy and take from Seller at the Closing, all of
Seller's right, title, estate and interest in and to the
f o l l o wing (hereinafter collectively referred to as the
"Property"):
(a) the Project and all rights, privileges, easements
and appurtenances appertaining thereto, including, without
limitation, all mineral and water rights, rights of way,
easements, licenses or other arrangements with respect to
properties adjacent thereto;
(b) all appliances, fixtures, plumbing, incinerators,
lighting equipment, radiators, furnaces, boilers, hot water
heaters, water systems and air-conditioning equipment owned
by Seller and located on or in the Project or attached
thereto;
(c) all furnishings, furniture, equipment, supplies
and other personal property owned by Seller, used or usable
in connection with the Project and located on or in the
P r o ject, including, without limitation, the personal
property listed on Exhibit B attached hereto and made a part
hereof (the "Personal Property");
(d) all licenses, permits, consents, authorizations,
approvals and certificates of any regulatory, administrative
or other governmental agency or body, if any, issued to or
held by Seller and related to the ownership or operation of
the Project, to the extent transferable (the "Permits");
(e) all leases, written or oral, and tenancies with
tenants with respect to all or any portion of the Project
(the "Tenant Leases");
(f) prepaid rentals under Tenant Leases, if any, and
any other miscellaneous deposits and prepaid expenses
related to the ownership or operation of the Project
(collectively, the "Deposits");
(g) all leases of equipment (if any), vehicles and
o t h er tangible personal property used by Seller in
connection with the ownership and operation of the Project,
to the extent such leases are transferable (the "Personal
Property Leases");
(h) all maintenance and service contracts, supply
contracts (to the extent Buyer elects to assume them) and
other agreements, contracts and contract rights relating to
the ownership or operation of the Property, or any part
thereof to the extent such contracts, agreements and rights
are transferable (the "Project Contracts");
(i) all guaranties, warranties and other intangible
rights pertaining to the Property, or any part thereof
including, without limitation, all guaranties and warranties
relating to the construction of the Project including all
rights under architects and construction contracts (the
"Intangible Rights");
(j) all books of account, customer lists, files,
papers and records relating to the Project;
(k) the right to use the name "the Falls" or "the
Falls Apartments" and derivations thereof.
2. Liabilities. Buyer shall not, by execution and
delivery of this Agreement, its purchase of the Property or
otherwise, be deemed to have assumed or otherwise become
responsible for any liability or obligation of any nature of
Seller, whether relating to Seller's business or any of Seller's
a s s ets, operations, businesses or activities, matured or
unmatured, liquidated or unliquidated, fixed or contingent, or
known or unknown, and whether arising out of occurrences prior
to, at or after the Closing, except as provided hereinbelow or in
any of the Loan Assumption Documents (as hereafter defined).
3. Consideration and Payment/Earnest Money. The
purchase price for the Property shall be Twenty Seven Million
Dollars ($27,000,000) (the "Purchase Price") payable by Buyer to
Seller as follows:
(a) Two Hundred Seventy Thousand Dollars ($270,000) in
earnest money to be deposited by Buyer in escrow upon
execution of this Agreement in accordance with this Section
3 (the "Earnest Money Deposit");
(b) a sum payable in the form of the assumption
by Buyer of the outstanding balance at Closing of the underlying
indebtedness of the mortgage loan (the "Mortgage Loan") which
encumbers the Property (the "Mortgage Indebtedness") and is
identified on Exhibit A-2 attached hereto and made a part hereof;
and
(c) The balance of the Purchase Price shall be
deposited in escrow by Buyer on or before the Closing Date
(defined below) in immediately available funds.
Within five (5) business days following the execution
of this Agreement, Buyer shall open an escrow account (the
"Earnest Money Escrow") with First American Title Insurance
Company, Troy, Michigan Office, Commercial Advantage Division
(the "Title Company") and deposit the Earnest Money Deposit
therein. Buyer shall notify Seller of the opening, the deposit,
the number of the escrow, and the employee or employees of the
Title Company in charge of the escrow. Each party shall execute
such documentation governing the Earnest Money Escrow that
reflects the relevant provisions of this Agreement and as may
otherwise be required by the escrow agent, including reasonable
standard form escrow conditions. The Earnest Money Deposit shall
be deposited in an interest bearing account as instructed by
Buyer and any interest earned shall be added to the Earnest Money
Deposit. Seller acknowledges that it has disclosed to Buyer any
legal conditions or requirements, imposed by law or contract upon
its interest in such Earnest Money Escrow by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or
relevant state law, and Seller assumes all responsibility for
ensuring the written provisions of the agreement governing such
Earnest Money Escrow complies with any such requirements as they
apply to Seller; provided, that Buyer (or its nominee) shall
comply with any requirements identified to Buyer by Seller in
writing, so long as identified prior to Buyer's establishing said
Earnest Money Escrow.
4. Representations and Warranties of Seller. Seller
represents and warrants to Buyer that:
(a) S e ller is, and will be at the Closing, a
corporation duly organized and validly existing under the
laws of the State of Michigan with the power and authority
to execute this Agreement and sell the Property on the terms
herein set forth. Seller, is duly authorized to so act, and
all requisite action has been taken by Seller to authorize
t h e execution and delivery of this Agreement, the
performance by Seller of its obligations hereunder and the
consummation of the transactions contemplated hereby.
(b) Seller has all necessary power and authority to
enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby, without the consent or authorization of, or notice
to, any third party, except for (i) the Mortgage Lender and
( i i ) those third parties to whom such consents or
authorizations have been or will be obtained, or to whom
notices have been or will be given, prior to the Closing.
This Agreement constitutes, and the other documents and
instruments to be delivered by Seller pursuant hereto when
delivered will constitute, the legal, valid and binding
o b ligations of Seller, enforceable against Seller in
accordance with their respective terms.
(c) To Seller's Knowledge, there is no litigation,
proceeding or action pending against Seller or the Property
which questions the validity of this Agreement or any action
taken or to be taken by Seller pursuant hereto.
(d) To Seller's Knowledge, neither the execution of
this Agreement nor the consummation of the transactions
c o n t emplated hereby will, in any material respect,
constitute a violation of or be in conflict with or
constitute a default under any term or provision of any
material agreement to which Seller is a party, subject to
the obtaining of any required consents or authorizations of,
or notices to (i) the Mortgage Lender or (ii) third parties
from whom such consents or authorizations will be obtained
or to whom notices will be given prior to Closing.
(e) Seller has no Actual Knowledge of any material
unresolved litigation adversely affecting the Property or
any notice, document or writing threatening or disclosing
material litigation, material zoning or building code
violations or material environmental law violations at the
Property which have not been disclosed to Buyer.
(f) To Seller's Knowledge: there has been no material
adverse financial change from that shown in Seller's most
recent financial statements delivered or made available to
Buyer by Seller pursuant to Section 10 hereof.
(g) If Seller is an entity which is deemed to hold
"plan assets" of an employee benefit plan with the meaning
of 29 CFR SS 2510.3-101 (or would be deemed to hold plan
assets if governmental plans were subject to such rules),
then: (i) the decision to cause the Seller to enter into
this Agreement has been made by investors in the Seller who
are independent of MIGRA (as defined in Section 11 of this
Agreement) and neither MIGRA nor any of its officers,
d i rectors, employees or affiliates has exercised any
fiduciary authority or control or rendered any investment
advise within the meaning of Section 3(21) of ERISA with
respect thereto; and (ii) each such investor has been
advised that (A) as a result of MIGRA's entering into the
M e rger Agreement (as defined in Section 11 of this
Agreement) the business operations of MIGRA and Buyer or
Buyer's parent will be combined and such Merger Agreement
c o n templates the sale of property pursuant to this
Agreement; and (B) said Merger Agreement, if consummated,
would cause MIGRA's shareholders to become substantial
shareholders in Buyer or Buyer's parent and its affiliated
entities, and cause certain officers and directors of MIGRA
to become officers and directors of Buyer or Buyer's parent
and its affiliates. Each such investor has been provided
the opportunity to ask questions and receive from MIGRA
information regarding the Property, the consideration to be
paid therefor, and MIGRA's interest in the transactions
c o n templated by this Agreement, to the extent such
information is in the possession of MIGRA or may be obtained
without unreasonable expense.
Notwithstanding any due diligence, investigation or
analysis performed by Buyer, the representations and warranties
made in this Agreement by Seller shall have the same force and
effect as if Buyer undertook no due diligence, investigation or
analysis and Seller hereby acknowledges and agrees that the
representations and warranties made in this Agreement by Seller
shall be unaffected by any such due diligence, investigation or
analysis; provided, however, that Buyer shall not be entitled to
recover on any representation or warranty set forth in this
Agreement if Buyer's due diligence made Buyer actually aware,
prior to Closing, of any condition of, concerning or relating to
the Property which is contrary to those representations and
warranties, but no such knowledge shall affect the rights of
Buyer to decline to close hereunder if any of the Closing
conditions under Section 8(a) hereof are not satisfied.
Except to the extent of any matters disclosed by Seller
on the attachment to Exhibit F hereof that will be delivered by
Seller to Buyer at Closing, and subject to the provisions of the
preceding paragraph (without affecting the rights of Buyer to
decline to close hereunder if any of the Closing conditions under
S e c t i o n 8(a) hereof are not satisfied), all of the
representations and warranties set forth in this Section 4 shall
be deemed renewed by Seller on the Closing Date as if made at
such time and shall survive the Closing of the transactions
contemplated hereby for a period of one (1) year; provided, that
the representations and warranties contained in Subsection 4(g)
shall survive the Closing of the transactions contemplated hereby
for a period of six (6) years.
5. Representations and Warranties of Buyer. Buyer
represents and warrants to Seller that:
(a) Buyer has all necessary power and authority to
enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby, without the consent or authorization of, or notice
to, any third party, except those third parties to whom such
consents or authorizations have been or will be obtained, or
to whom notices have been or will be given, prior to the
C l osing. This Agreement constitutes, and the other
documents and instruments to be delivered by Buyer pursuant
hereto when delivered will constitute, the legal, valid and
binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms.
(b) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will,
in any material respect, constitute a violation of or be in
conflict with or constitute a default under any term or
provision of any agreement, instrument or lease to which
Buyer is a party.
(c) To the best of Buyer's knowledge, there is no
litigation, proceeding or action pending or threatened
against or relating to Buyer which might materially and
adversely affect the ability of Buyer to consummate the
transactions contemplated hereby or which questions the
validity of this Agreement or any action taken or to be
taken by Buyer pursuant hereto.
All of the representations and warranties set forth in
this Section 5 shall be deemed renewed by Buyer on the Closing
Date as if made at such time and shall survive the closing of the
transactions contemplated hereby for a period of one (1) year.
6. Seller's Covenants. On and after the date hereof
through the Closing, except as otherwise consented to or approved
by Buyer in writing or required by this Agreement, Seller shall:
(a) Operate the Property and conduct or cause to be
conducted its business in the regular and ordinary course,
including the renewal and extension of Tenant Leases,
consistent with past practices, and exercise reasonable
efforts to preserve intact the operation of the Property.
(b) Maintain and keep the Property in good condition
and repair and in substantially the same condition as on the
date hereof, with the exception of ordinary wear and tear
and damage as a result of a casualty.
(c) Except in the ordinary course of business and with
respect to items of personal property that are no longer
useful and have been replaced with items of equivalent
value, not remove, sell, mortgage, pledge or otherwise
encumber or dispose of any item of property, without the
prior written consent of Buyer, which consent will not
unreasonably withheld, delayed or conditioned.
(d) Continue to maintain all insurance on the Property
covering the risks and in the amounts of coverage in effect
on the date hereof.
(e) Duly observe and perform all material terms,
conditions and requirements of the Tenant Leases, the
P r oject Contracts, the Personal Property Leases, not
knowingly do any act or omit to do any act, which will, upon
the occurrence thereof or with the passage of time, cause a
material breach or material default by Seller under any
Tenant Lease, Project Contract or Personal Property Lease
and continue to seek judicial and other appropriate relief
with respect to any tenant breaches under the Tenant Leases,
in accordance with Seller's past practices.
(f) Not, without the Buyer's prior written consent
which shall not be unreasonably withheld, delayed or
conditioned (A) renew, amend or extend any Project Contract
or Personal Property Lease or enter into or renew any
contract or agreement pertaining to any item of Property
unless such contract or agreement can be terminated at will
without obligation after the Closing or (B) incur any
m o r tgage indebtedness or other material indebtedness
relating to the Property.
(g) Not take, agree to take or affirmatively consent
to the taking of any action in the conduct of the business
of Seller, or otherwise, which would be contrary to or in
breach of any of the terms or provisions of this Agreement
or which would cause any representation of Seller contained
herein to be or become materially untrue.
(h) Use its reasonable efforts (but without expending
any substantial funds or exposing itself to any liability or
obligation or risk, other than the payment to the Mortgage
Lender of any fees or charges relating to the assumption by
Buyer of the Mortgage Indebtedness) to obtain all necessary
c o nsents and authorizations of third parties to the
performance by Seller of its obligations hereunder and the
consummation of the transactions contemplated hereby.
(i) On or before the Closing Date, cause to be
terminated any management contract relating to the Property
which is not assumed by Buyer consistent with the terms and
conditions of the transaction described on Exhibit H
attached hereto and made a part hereof.
(j) If Seller is an "employee benefit plan" within the
meaning of Section (3)(3) of ERISA, whether or not Seller
qualifies as a "governmental plan" within Section 3(32) of
ERISA, or an entity which holds plan assets within the
meaning of 29 CFR SS 2510.3-101, then Seller covenants that
all discretionary actions of Seller under this Agreement
shall be conducted by a fiduciary of Seller which is
independent of MIGRA or, in the case of an entity which
holds plan assets, pursuant to directions of the investors
in such entity who are independent of MIGRA.
(k) Cooperate with Buyer in Buyer's efforts to secure
the consent of the Lender to the assumption of the loan to
be assumed hereunder by Buyer and execute and deliver all
documentation as may reasonably be required to accomplish
the assumption of the Mortgage Indebtedness by Buyer and, to
the extent that Buyer pays Seller equivalent consideration,
convey to Buyer all of Seller's right, title and interest in
and to all funds held by the Mortgage Lender in any reserve
or escrow accounts, except that nothing contained herein
shall be construed as relieving Seller of its obligation to
pay its pro rata share of real estate taxes pursuant to
Section 13(b) hereof.
7. Title and Possession of the Property.
(a) It shall be a condition to Buyer's obligation to
close hereunder that the Title Company deliver at Closing to
Buyer an ALTA owner's policy of title insurance, 1970 Form
B, (rev. 10-17-70 and 10-17-84), or other rated form
acceptable to Buyer (acting reasonably), with the standard
general exceptions deleted (or, with Buyer's reasonable
approval, insured over), subject to rights under the Tenant
Leases, and with such endorsements as Buyer may reasonably
r e q u i re, including, without limitation, owner's
comprehensive, survey, access, tax parcel, utilities and
contiguity endorsements (provided that Buyer pay the costs
of all such endorsements), in the full amount of the
Purchase Price (the "Title Policy") issued by the Title
Company, as assurance that upon Closing, the Buyer holds and
will hold good, valid and insurable title in fee simple
absolute to the Property including all rights, privileges
and easements appurtenant to the Property free and clear of
all encumbrances whatsoever, except the following
(collectively, the "Permitted Exceptions"):
(i) zoning ordinances and regulations; provided
the same do not interfere with the use of the Property
as an apartment complex;
(ii) general real estate taxes, which are a lien
but are not yet past due or delinquent at the Closing
Date;
(iii) rights of tenants under Tenant Leases;
(iv) such easements, covenants, conditions,
reservations and restrictions of record and other
matters disclosed to and approved by Buyer, in writing,
unless otherwise waived or deemed waived by Buyer as
hereinafter provided; and
(v) the Mortgage Indebtedness.
(b) Seller represents, warrants and covenants to Buyer
that upon the Closing Date Buyer will have complete
possession of the Property, subject only to the interests of
the tenants under the Tenant Leases and the other Permitted
Exceptions.
(c) Buyer shall obtain, as promptly as reasonably
practicable after the execution of this Agreement a current
commitment issued by the Title Company to issue the Title
P o l icy (the "Title Commitment") with copies of all
instruments referred to as exceptions or conditions in the
Title Commitment, setting forth all real estate taxes and
special assessments, the state of record title to the
Property and all exceptions to, or encumbrances upon, title
to the Property which would appear in the Title Policy.
Buyer shall have until the end of the Due Diligence Period
(as defined in Section 10 of this Agreement) to review such
items and to give notice to Seller of such objections as
Buyer may have to any matters set forth in the Title
Commitment or survey. Seller understands and agrees that
prior to the expiration of the Due Diligence Period, Buyer
may deliver to Seller an objection letter or objection
letters at any time during the Due Diligence Period and
Seller agrees that any such delivery or deliveries shall not
be construed in any way to limit or restrict Buyer's right
to deliver additional objections to Seller at any time
during Due Diligence Period. If Buyer timely (i.e during
t h e D ue Diligence Period) objects to any special
assessments, defects or encumbrances, Seller shall have
until the end of the Due Diligence Period to have such
exceptions cured, either by the removal of such exceptions
or by the procurement of title insurance endorsements or
other resolution satisfactory to Buyer providing coverage
against loss or damage as a result of such exceptions. If
Seller shall not cure such defects or encumbrances to
Buyer's satisfaction by the end of the Due Diligence Period,
Buyer, at its option, may (i) terminate this Agreement upon
written notice of termination to Seller in accordance with
Section 10 of this Agreement, in which event neither party
shall thereafter have any liability to the other (except as
to matters which, under any other provision of this
Agreement are expressly stated to survive a termination of
this Agreement), and all funds previously paid or deposited
by Buyer, including all accrued interest, shall be returned
to Buyer, or (ii) waive its objection to the defects or
encumbrances and proceed to the Closing in which event all
such waived defects or encumbrances shall be deemed to be
Permitted Exceptions hereunder. Notwithstanding the above,
any defects in the nature of consensual liens affirmatively
granted by Seller (other than the Mortgage Indebtedness) or
non-consensual liens which do not exceed Twenty Five
Thousand Dollars ($25,000) in the aggregate that can be
released by payment of the underlying obligation shall be
removed, bonded or title insured over by Seller and if not
so removed, bonded or title insured over by the Closing then
the Purchase Price shall be reduced by an amount sufficient
to satisfy such obligations. Buyer shall conclusively be
deemed to have waived all objections to any title or survey
defect, encumbrance or exception reflected or referenced in
the Title Commitment or survey as to which Buyer fails to
deliver to Seller a written objection by the end of the Due
Diligence Period, and all such matters shall thereafter be
deemed to be Permitted Exceptions for purposes of this
Agreement.
8. Conditions to Closing.
(a) Subject to the provisions of Sections 13 and 14
and unless expressly waived by Buyer through written notice
to Seller, Buyer's obligations under this Agreement are
expressly conditioned upon the satisfaction or occurrence of
the following conditions:
(i) The representations and warranties of Seller
set forth in Section 4 shall have been true and correct
in all material respects when made and shall be true
and correct in all material respects, as of the Closing
and Seller shall have complied with all covenants as
set forth in Section 6 herein, and shall have otherwise
performed all of its obligations hereunder, in all
material respects;
(ii) All consents to or authorization of the
performance by Seller of its obligations hereunder and
the consummation of the transaction contemplated hereby
shall have been obtained;
(iii) Seller shall have delivered the items
required to be delivered to Buyer pursuant to Section 9
and delivered or made available all other items and
information required by this Agreement in accordance
with the terms of this Agreement;
(iv) Buyer shall have notified Seller pursuant to
Section 10 herein that Buyer has elected to proceed
with the transactions contemplated by this Agreement;
(v) The physical condition of the Property shall
not have changed in any material respect from the
condition in existence on the last day of the Due
D i ligence Period (as hereafter defined) and the
financial condition of the Property shall not have
changed in any material and adverse respect from the
condition reflected in the then most current financial
statements and other relevant financial materials
delivered by Seller to Buyer during the Due Diligence
Period (as hereinafter defined);
( v i) Unless otherwise expressly instructed
through written notice from Buyer to Seller, Seller
shall have arranged without any cost or liability to
Buyer for the termination effective as of or prior to
the Closing, of any management contract of any property
manager relating to the Property and shall provide
Buyer with written confirmation of such termination on
or prior to Closing;
(vii) The Title Company shall be ready, willing
and able to issue the Title Policy to Buyer in
accordance with the provisions of Section 7 hereof;
(viii) The transactions described on Exhibit H
and the closing of the Merger (as defined in the Merger
Agreement) and the transactions contemplated by the
P o r tfolio Purchase Agreements shall have closed
s i multaneously with, or immediately preceding or
immediately following the Closing of this transaction;
(ix) Seller shall have paid on or prior to Closing
all fees and expenses of the holder of the Mortgage
Indebtedness, if any, relating to the assumption of the
Mortgage Indebtedness;
(x) The Mortgage Lender and all other requisite
third parties, if any, shall have formally approved the
assumption by Buyer of the loan to be assumed hereunder
without any additional conditions not presently in such
loan documents and shall have undertaken all necessary
action required to facilitate such assumption by Buyer
provided, however, that all loan documents evidencing
the approval of such assumption shall be acceptable
(acting reasonably) in form and substance to Buyer (the
"Loan Assumption Documents"), Buyer hereby agreeing
that it will notify Seller and the Mortgage Lender of
any objections it has to the Loan Assumption Documents
proffered by Lender as promptly as is reasonably
practicable after Buyer's receipt thereof; and
(b) Subject to the provisions of Sections 13 and 14
and unless expressly waived by Seller through written notice
to Buyer, Seller's obligations under this Agreement are
expressly conditioned upon the occurrence of the following
events:
(i) The representations and warranties of Buyer
set forth in Section 5 and 16 of this Agreement shall
have been true and correct in all material respects
when made and shall be true and correct in all material
respects, as of the Closing and Buyer shall have
otherwise performed all of its obligations hereunder,
in all material respects;
(ii) Buyer shall have delivered the items
required to be delivered to Seller pursuant to Section
9(c);
(iii) the closing of the Merger (as defined in the
Merger Agreement) and the transactions contemplated by
the Portfolio Purchase Agreements shall have closed
s i multaneously with, or immediately preceding or
immediately following the Closing of this transaction;
and
(iv) All consents to or authorization of the
performance by Buyer of its obligations hereunder and
the consummation of the transaction contemplated hereby
shall have been obtained and Seller shall have received
from the holder or holders of the Mortgage Indebtedness
written instruments, reasonably satisfactory to Seller
and Buyer, releasing Seller from any post Closing
liability with respect thereto or other appropriate
alternative indemnifications acceptable to Seller and
Buyer with respect to such post Closing liabilities.
9. Deliveries.
(a) Seller shall execute and deliver to Buyer through
an escrow with the Title Company as escrowee, at Closing, a
good and sufficient special or limited warranty deed, in
customary form acceptable to Buyer (the "Deed"), conveying
good and insurable fee simple title to the Project to Buyer,
free and clear of all mortgages, pledges, liens, security
i n t erests, encumbrances and restrictions, except the
Permitted Exceptions. The Permitted Exceptions shall be
specifically, and not categorically, set forth in the Deed
as exceptions to title.
(b) In addition, Seller shall deliver the following to
Buyer at or prior to the Closing:
(i) Duly executed resolutions adopted by the
Board of Directors of Seller authorizing the execution
a n d delivery of this Agreement by Seller, the
performance by Seller of its obligations hereunder and
the consummation of the transactions contemplated
hereby, in such form as Buyer deems necessary or
desirable, in its discretion reasonably exercised;
(ii) Documents and instruments, in form and
substance acceptable to Buyer (acting reasonably),
sufficient to convey, transfer and assign to Buyer the
Property (other than the Property conveyed by the
Deed), including, without limitation, the Assignment
a n d Assumption of Leases and Closing Agreement
substantially in the form of Exhibit C attached hereto
and made a part hereof and the Certificate Regarding
Projects and Personal Property Leases substantially in
the form of Exhibit D attached hereto and made a part
hereof;
(iii) Customary confirmation of authorization,
organization, valid existence, including legal
opinions, as Buyer may reasonably request;
(iv) All books, records and files relating to the
Property and the Seller's operation of the Property
(but Seller may retain copies of all of the foregoing),
all of which may alternatively be delivered to Buyer at
the Property at or prior to Closing together with a
Letter Regarding Books and Records substantially in the
form of Exhibit E attached hereto and made a part
hereof;
(v) To the extent customarily issued in the
j u r isdiction in which the Property is located,
originals of all certificates of occupancy (or the
jurisdictional equivalent of a certificate of
occupancy) for all apartment units on the Property, if
available, and if not available, true and correct
copies thereof;
(vi) The originals of all Tenant Leases, Personal
P r o perty Leases, Project Contracts and Permits,
together with all amendments and any attachments and
supplements thereof, all of which may alternatively be
delivered to Buyer at the Property upon or prior to
Closing (but Seller may retain copies of all of the
foregoing);
(vii) A FIRPTA Affidavit duly executed by Seller
confirming that Seller is a not a "foreign person"
under Section 1445 of the Internal Revenue Code;
(viii) Settlement statements agreed to by Buyer
and executed by Seller;
( i x ) Signed escrow instructions, reasonably
satisfactory to the Title Company and Buyer, in form
and substance sufficient to carry out the Closing;
(x) A certificate of Seller in the form of Exhibit
F attached hereto and made a part hereof;
(xi) Unless otherwise expressly instructed through
written notice from Buyer to Seller, documentation
reasonably acceptable to Buyer confirming the
termination of any management agreement relating to the
Property;
(xii) A rent roll that is certified as true and
correct by Seller, to its Actual Knowledge, on the
Closing Date, dated as of a date not earlier than three
(3) days before the Closing Date;
(xiii) Such other documents and instruments as may
be required by any other provision of this Agreement or
as may reasonably be required to give effect to the
terms and intent of this Agreement;
(xiv) Any Loan Assumption Documents that require
Seller's signature; and
(xv) a copy of any affidavit required by the Title
Company to remove the standard printed exceptions from
the Title Policy.
(c) Buyer shall deliver the balance of the Purchase
Price to or for the benefit of Seller through escrow on the
Closing Date and shall deliver the following documents to
Seller on or before the Closing:
(i) Settlement statements agreed to by Seller and
executed by Buyer;
( i i ) Signed escrow instructions, reasonably
satisfactory to the Title Company and Seller, in form
and substance sufficient to carry out the Closing;
(iii) A certificate of Buyer in the form of
Exhibit G attached hereto and made a part hereof;
(iv) Documents and instruments, in form and
substance acceptable to Buyer and Seller, pursuant to
which Buyer accepts and assumes certain post Closing
liabilities and obligations of Assignor concerning the
Property, including, without limitation, the Assignment
a n d Assumption of Leases and Closing Agreement
substantially in the form of Exhibit C attached hereto
and made a part hereof and the Certificate Regarding
Projects and Personal Property Leases substantially in
the form of Exhibit D attached hereto and made a part
hereof;
(v) The Loan Assumption Documents;
(vi) Duly executed resolutions adopted by the
Board of Directors of Buyer authorizing the execution
a n d delivery of this Agreement by Buyer, the
performance by Buyer of its obligations hereunder and
the consummation of the transactions contemplated
hereby; and
(vii) Such other documents and instruments as may
be required by any other provision of this Agreement or
as may reasonably be required to give effect to the
terms and intent of this Agreement.
10. Due Diligence Period. For a period of thirty (30)
days following execution of this Agreement (the "Due Diligence
Period"), Buyer shall be permitted to conduct a complete physical
inspection of the Property, complete due diligence on the
Property and review all materials to be provided by Seller to
Buyer hereunder or otherwise reasonably requested. Without
limiting the foregoing, Buyer or its representative shall have
the right to conduct an audit of the financial records relating
to the Property for the last three (3) years. Seller shall grant
reasonable access to Buyer and its representatives to the
Property for the purpose of examining, inspecting or determining
the condition of any part or all of the Property or records or
i n f o rmation relating thereto (excluding internal reports
expressing opinions concerning the value of the Property).
Seller shall have the right to coordinate and accompany Buyer on
any of such inspections. Any and all inspections, examinations,
analyses and audits deemed necessary by Buyer shall be performed
at Buyer's expense and shall not physically damage the Property.
Buyer shall promptly and completely repair and restore any and
all damage to the Property that may be caused by, or may occur in
connection with or as a result of, any inspection, investigation,
audit, test or visit to the Property by Buyer, its employees, and
authorized agents and consultants. Buyer shall indemnify,
protect, defend and hold Seller and its agents, employees and
representatives harmless from and against any and all loss, cost,
c l a i m, liability, damage or expense (including, without
limitation, attorneys' fees and expenses) arising out of physical
damages or injuries to persons or property caused by Buyer's
inspections, investigations, audits, tests or visits to the
Property. Buyer's restoration and indemnification obligations set
forth in this Section shall survive the Closing or termination of
this Agreement. At Buyer's request, Seller shall promptly after
the execution of this Agreement, deliver to Buyer or make
available for inspection and copying to Buyer the following, if
in Seller's possession or control:
(a) a copy of the most recent "Phase I Environmental
Assessment" of the Property (if any), and any other written
information concerning the environmental condition of the
Property, including wetlands delineations, as Buyer may
r e a sonably request and any authorizations reasonably
necessary for Buyer, at Buyer's expense, to update such
assessment or information, or reasonably necessary for
Buyer, at Buyer's expense, or its agents to independently
assess the environmental condition of the Property;
(b) a copy of Seller's most recent complete boundary
survey of the Property (Buyer shall be entitled to receive
and approve as set forth herein an updated and upgraded
survey as reasonably required by Buyer);
(c) a copy of any appraisals of the Property obtained
by Seller and completed within the last five (5) years;
(d) true and correct copies of Seller's financial
books and records for the Property (but excluding income tax
returns that do not relate to the Property) for the current
period and the last three (3) full years, tenant leases,
contracts and any other document, instrument or other
w r i ting relating to the Property (but not internal
e x pressions or opinions concerning the value of the
Property) or the operation thereof as Buyer may reasonably
request;
(e) a listing of all individuals, if any, who work
either on a full or part time basis at the Property and all
such individuals' positions and salaries regardless of who
such individuals are employed by; and
(f) true and correct copies of all documents and
instruments relating to the Mortgage Indebtedness.
Without limiting the rights accorded to Buyer pursuant
to Section 8 hereof, at any time during or at the end of the Due
D i ligence Period, Buyer, in Buyer's sole discretion, may
terminate this Agreement (by giving notice of such termination to
Seller). Buyer shall notify Seller in writing either during or
at the end of the Due Diligence Period with respect to whether or
not Buyer elects to proceed with the transactions contemplated by
this Agreement. If Buyer's written notice to Seller indicates
t h at Buyer has elected to proceed with the transactions
contemplated by this Agreement then the parties shall, subject to
the satisfaction of the conditions set forth herein, proceed to
the Closing. If Buyer's written notice to Seller indicates that
B u y er has elected not to proceed with the transactions
c o ntemplated by this Agreement then this Agreement shall
terminate and the Earnest Money Deposit shall be returned to
Buyer. Upon termination of this Agreement by Buyer pursuant to
this Section 10, neither party shall thereafter be under any
further liability to the other, except as to matters which this
Agreement expressly states are to survive a termination of this
Agreement.
11. Closing Date. Unless the parties otherwise agree
in writing, the transactions contemplated hereby shall be closed
through escrow (the "Closing") on the date that is concurrent
with the closing of the transactions contemplated by that certain
Agreement and Plan of Merger dated November 5, 1997 (the
"Merger") by and among Buyer, MIG Realty Advisors, Inc. ("MIGRA")
and the stockholders of MIGRA (the "Closing Date"), which Closing
Date shall not be later than January 31, 1998. Buyer shall
establish the Closing Date through written notice to Seller.
After the expiration of the Due Diligence Period, Buyer shall not
have the right to terminate this Agreement except pursuant to the
provisions of Sections 8(a), 13 or 14 of this Agreement. If
Buyer shall default in its obligations to acquire the Property,
then Seller shall receive the Earnest Money Deposit (including
all interest earned thereon) as liquidated damages and neither
party shall thereafter be under any further liability to the
other, except as expressly otherwise provided in this Agreement
with respect to the provisions that expressly survive the
termination of this Agreement.
12. Prorations and Closing Costs. All prorations,
adjustments and final readings shall be made as of 11:59 pm of
the day preceding the Closing Date, unless otherwise mutually
agreed to by the parties (the "Adjustment Date"), by the Title
Company based on information provided by the parties, as follows:
(a) Payments under any Project Contracts or Personal
Property Leases and fees for any transferable licenses and
permits which are assigned to Buyer, shall be prorated.
(b) General real estate taxes shall be prorated,
using for such purpose the rate and valuation shown on the
last available tax duplicate, but subject to further
adjustment as provided below. If any real estate taxes
prorated at Closing or assessments paid by Seller (as set
forth below) are later increased for any reason whatsoever,
including, without limitation, the real estate taxes and
assessments shown on the later issued actual tax duplicate
being greater than those shown on the tax duplicate
available at Closing or because of any additions or
corrections to the tax duplicate assessed by reason of
Buyer's acquisition of the Property, then Seller shall
promptly pay all such increases allocable to the period
prior to the Closing and Seller shall protect, indemnify,
defend, and hold Buyer harmless from and against all such
real estate tax and assessment increases, which obligations
on the part of the Seller shall survive the Closing. If any
real estate taxes prorated at Closing or assessments paid by
Seller (as set forth below) are later decreased for any
reason whatsoever, including, without limitation, the real
estate taxes and assessments shown on the later issued
actual tax duplicate being less than those shown on the tax
duplicate available at Closing or because of any corrections
t o the tax duplicate assessed by reason of Buyer's
acquisition of the Property or because of any post-Closing
reduction in, or refund or rebate of, any taxes relating
wholly or in part to a period before the Closing, then Buyer
shall promptly pay to Seller the savings allocable to the
period prior to the Closing (less any costs incurred by
Buyer to any unaffiliated third parties in connection with
obtaining the reduction of such tax bill), which obligation
shall survive the Closing. Any special assessments that are
a lien on the Property as of the date of this Agreement
shall be paid by Seller without proration. Any special
assessments that become a lien on the Property after the
date of this Agreement shall be paid as follows: Seller
shall pay all installments that are due and payable prior to
the Closing Date and Buyer shall pay all installments that
become due and payable on or after the Closing Date.
(c) Collected rents shall be prorated based upon the
total rent roll payable for the month in which Closing
occurs. In the event that Buyer receives current rent from
any tenants for the month in which the Closing occurs, then
Buyer shall deliver to Seller (outside of escrow) the
portion of such current rents attributable to periods prior
to the Adjustment Date. Additionally, in the event that any
tenant, who as of the Closing is delinquent in the rental
payments due Seller, delivers to Buyer a rent check in an
amount in excess of the rent due Buyer for the month for
which such check is delivered, Buyer shall allocate such
excess first to pay reasonable outside collection costs, if
any, paid to unaffiliated third parties, then to pay rents
which become due after Closing, then pay remaining funds to
Seller for any rents delinquent prior to Closing and were
due as of the date such payment was received; provided,
however, in no event shall Buyer be obligated to collect
delinquent rents on Seller's behalf.
(d) Final readings and final billings for utilities
shall be made as of the Adjustment Date. Seller shall pay
all outstanding amounts due as of such time, or such amounts
shall be credited to Buyer at Closing. If final readings
and billings cannot be obtained prior to Closing, the final
bills, when received, shall be prorated as of the Adjustment
Date and the Title Company shall hold in escrow an amount
equal to 125% of the reasonably anticipated amount of such
billings, based upon the most recent available billings for
similar periods until the Title Company shall have received
notice of payment of such bills, at which time any remaining
amount being withheld for such purpose shall be distributed
to the Seller.
(e) Buyer shall receive a credit at Closing for all
deposits, including security deposits, under the Tenant
Leases which are not delivered or assigned to Buyer at
Closing.
(f) S e l l er shall pay in connection with this
transaction the following closing costs: (i) all costs in
the nature of the Mortgage Lender's assumption fees and
charges related to Buyer's assumption of the Mortgage
Indebtedness, consisting of all loan assumption fees and
lender attorney fees and costs, (ii) any state or local real
or personal property transfer taxes, documentary stamps,
fees or other charges relating to the transfer of the
Property or the assumption of the Mortgage Indebtedness and
(iii) the real estate brokerage commission of Marcus &
Millichap. Buyer shall pay in connection with this
transaction the following closing costs: (i) all recording
f e e s, (ii) the costs of the Title Policy and all
endorsements thereto and (iii) all escrow charges. Each
party shall pay its own attorneys' fees. All closing costs
allocable to Seller, including, without limitation, any
prorations to which Buyer may be entitled by reason of the
foregoing shall be credited against the balance of the
Purchase Price to be paid at Closing.
13. Fire or Other Casualty. Seller agrees to promptly
advise Buyer in writing of any material damage to the Property.
If all or any substantial portion of the Property (i.e. 10% or
more of the value) shall, prior to the Closing, be damaged or
destroyed by fire or any other cause, and such damage shall not
have been repaired or reconstructed prior to the Closing in a
good and workmanlike manner to the reasonable satisfaction of
Buyer, Buyer may, at Buyer's option: (a) remain obligated to
perform this Agreement and receive all insurance proceeds
received by or payable to Seller as a result of such damage or
destruction plus an amount equal to any insurance policy
deductible; or (b) by written notice of termination given to
Seller not later than thirty (30) days after Seller provides
Buyer with written notice of such damage or destruction,
terminate this Agreement and receive any documents, instruments
and funds previously deposited or paid including the Earnest
Money Deposit (together with all interest earned thereon). If an
unsubstantial portion of the Property (i.e. 10% or less of the
value) shall, prior to the Closing, be damaged or destroyed by
fire or any other cause and such damage shall not have been
repaired or reconstructed prior to the Closing in a good and
workmanlike manner to the reasonable satisfaction of Buyer, then
Buyer shall be obligated to proceed to close the transaction
contemplated hereby, but shall receive from Seller, on the
Closing Date, an assignment of proceeds of the insurance payable
under Seller's insurance policy plus an amount equal to any
insurance policy deductible. Upon termination of this Agreement
by Buyer pursuant to this Section 13, neither party shall
thereafter be under any further liability to the other, except as
otherwise expressly set forth in this Agreement.
14. Condemnation and Eminent Domain. If, prior to the
Closing, all or any portion of the Property shall be subjected to
a t a king, either total or partial, by eminent domain,
condemnation, or for any public or quasi-public use, Buyer shall
have the right to either (a) terminate this Agreement by giving
written notice of termination to Seller, in which event all funds
and documents deposited by Buyer and Seller shall be refunded or
returned to the depositing party and neither party shall
thereafter be under any further liability to the other and Buyer
shall receive the Earnest Money Deposit, or (b) proceed to close
this transaction in which case Seller shall assign to Buyer at
Closing all of the proceeds and/or awards from such condemnation
action. Seller and Buyer each agree to forward promptly to the
other any notice of intent received pertaining to a taking of all
or a portion of the Property by way of condemnation, eminent
domain or similar procedure for a taking of the Property in
connection with any public or quasi-public use.
15. Indemnification.
(a) Subject to Section 15(c) of this Agreement, Buyer
shall fully indemnify, protect, defend and hold Seller and
its representatives, successors and assigns harmless from
a n d a gainst any and all claims, demands, losses,
liabilities, damages, awards, judgements, penalties, costs
and expenses (including reasonable attorneys' fees and
expenses) arising out of or in connection with (i) the
Property or the ownership thereof or arising under, relating
to or concerning any of the Tenant Leases, Permits,
Deposits, Personal Property Leases, Project Contracts,
Intangible Rights or Mortgage Loans if such claims, demands,
losses, liabilities, damages or expenses first arise, accrue
or exist or relate to any period of time from or after the
Closing (except to the extent that such indemnification
o b ligation would arise directly as a result of the
inaccuracy of any representation or warranty made by Seller
hereunder), or (ii) the inaccuracy or any representation or
warranty made by Buyer hereunder.
(b) Subject to Section 15(c) of this Agreement, Seller
shall fully indemnify, protect, defend and hold Buyer, its
successors and assigns harmless from and against any and all
claims, demands, losses, liabilities, damages, awards,
judgements, penalties, and expenses (including reasonable
a t torneys' fees and expenses) arising out of or in
connection with (i) the inaccuracy of any representation or
warranty made by Seller hereunder, or (ii) the ownership of
the Property prior to the Closing (including, without
limitation, any claim, demand, loss, liability, damage,
award, judgement, penalty or expense arising under, relating
to or concerning any of the Tenant Leases, Permits,
Deposits, Personal Property Leases, Project Contracts,
Intangible Rights or the Mortgage Indebtedness), but only if
such claims, demands, losses, liabilities, damages or
expenses first arose, accrued, existed or related to any
period of time before the Closing (except to the extent that
such indemnification obligation would arise directly as a
result of the inaccuracy of any representation made by Buyer
hereunder).
(c) Notwithstanding anything in the preceding Sections
15(a) and 15(b) or elsewhere in this Agreement to the
contrary, any claim for indemnification under clause (ii) of
Section 15(a) or under Section 15(b) must be asserted in
writing and with specificity by the date (the "Claim
Expiration Date") which for the matters referenced in
Section 4(g) of this Agreement is six (6) years after the
Closing Date and with respect to the other provisions of
this Agreement is three hundred sixty five (365) days after
the Closing Date, and any and all claims not so asserted by
the applicable Claim Expiration Date shall automatically
expire and be deemed to have been forever waived, released
and of no force or effect and (B) the total amounts
recoverable by Buyer against Seller or by Seller against
Buyer with respect to such matters, shall not exceed, in the
aggregate, Five Hundred Thousand Dollars ($500,000) plus
attorneys' fees and expenses incurred in enforcing the
indemnification provisions of this Section 15 after the
detailed written claim described above was delivered to the
indemnifying party and such party refused to pay or satisfy
such claim. Nothing in this Section 15(c) shall limit claims
for the specific enforcement of this Agreement.
16. Miscellaneous.
(a) This Agreement, including the Exhibits attached
hereto, shall be deemed to contain all of the terms and
conditions agreed upon with respect to the subject matter
hereof, it being understood that there are no outside
representations or oral agreements.
(b) A l l notices, demands and the communications
hereunder shall be in writing. Unless otherwise expressly
required or permitted by the terms of this Agreement, any
notice required or permitted to be given hereunder by the
parties shall be delivered by facsimile, personally, by a
reputable overnight delivery service or by certified or
registered mail to the parties at the facsimile number or
addresses set forth below (as the case may be), unless
different addressees or facsimile numbers are given by one
party to the other:
As to Seller:
MIG ATLANTA FALLS CORP.
With a copy to:
MIG REALTY ADVISORS, INC.
Attn: Louis E. Vogt, Senior Vice President
250 Australian Avenue, South, Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
As to Buyer:
ASSOCIATED ESTATES REALTY CORPORATION
Attn: Mr. Martin A. Fishman, Vice President
5025 Swetland Court
Richmond Heights, Ohio 44143-1467
Phone (216) 473-8780
Fax (216) 473-8105
With a copy to:
BAKER & HOSTETLER LLP
Attn: Paul E. Bennett, Esq.
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3485
Phone (216) 861-7484
Fax (216) 696-0740
(c) Other than Marcus & Millichap (whose commission
shall be paid by Seller in accordance with Section 11
hereof), Seller and Buyer each represents and warrants to
the other that such party has had no dealing with any real
estate broker or agent so as to entitle such broker or agent
to any commission in connection with the sale of the
Property to Buyer, which representations and warranties
shall survive the closing of the transactions contemplated
hereby. If for any reason any such commission shall become
due, the party who retained such broker shall pay any such
commission and agrees to indemnify and save the other party
harmless from any and all claims for any such commission and
from any attorneys' fees and litigation or other expenses
relating to any such claim.
(d) This Agreement and the rights and duties hereunder
may not be assigned by Seller without the prior written
consent of Buyer. This Agreement and the rights and duties
hereunder may not be assigned by Buyer without the written
consent of Seller; provided, that Buyer shall have the
right, without the consent of Seller, to designate a nominee
to take title to the Property on the Closing Date. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
permitted assigns.
(e) After the Closing, the parties shall execute and
d e l i v er such further documents and instruments of
c o nveyance, sale, assignment, transfer, assumption or
otherwise, and shall take or cause to be taken such other or
further action, as either party shall reasonably request at
any time or from time to time within the one hundred twenty
(120) days immediately following the Closing Date in order
to effectuate the terms and provisions of this Agreement.
(f) This Agreement shall be governed by and construed
in accordance with the laws of the State in which the
Property is situated.
(g) T h is Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but
all of which taken together shall constitute one and the
same instrument.
(h) If the date for performance of any act under
this Agreement falls on a Saturday, Sunday or federal
holiday, the date for such performance shall automatically
be extended to the first succeeding business which is not a
federal holiday.
(i) Whenever in this Agreement reference is made to
"Seller's Knowledge", "to the best of Seller's Knowledge",
"Seller's Actual Knowledge", "Actual Knowledge of Seller" or
"the Knowledge or Seller", or any similar term or reference,
it shall mean and be limited to the actual conscious
knowledge of Seller, without any investigation or inquiry.
(j) Buyer agrees to keep confidential any information
that it has or will obtain relating to the Property or
Seller with respect to the Property and will not knowingly
disclose that information to any person or entity, other
than (i) its employees, attorneys, accountants, consultants
and contractors performing under this Agreement whom it
directs to treat such information confidentially or (ii) in
connection with the disclosures that it will be making in
connection with the filing of the Registration Rights
Agreement or any other matters that it is required to
disclose in connection with its legal reporting requirements
or as otherwise required in accordance with applicable law
based upon the advise of its legal counsel, without the
prior express written consent of Seller; provided, however,
that this provision shall not apply to data that is in the
public domain or is clearly not confidential in nature. The
provisions of this Section 17(j) shall survive the Closing
or any termination of this Agreement. Buyer's undertakings
s e t out in this Section 17(j) are of extraordinary
importance to Seller and damages for Buyer's breach hereof
are not readily ascertainable. Accordingly, Seller may
obtain injunctive and other equitable relief to enforce its
rights under this Section 17(j). Buyer agrees that upon any
final adjudication by a court of competent jurisdiction
rendered in favor of Seller with respect to Buyer's breach
under this Section 17(j), Buyer will reimburse Seller, on
demand, for all costs and expenses (including attorneys'
fees and expenses) paid or incurred by Seller in enforcing
the provisions of this Section 17(j).
(k) Buyer and Seller acknowledge and agree that neither
of them shall cause this Agreement, or any memorandum
thereof, to be recorded.
IN WITNESS WHEREOF, the parties hereto have signed four
counterparts of this Agreement, each of which shall be deemed to
be an original document, as of the date set forth above, which
shall be the date on which this Agreement is executed by Buyer.
SELLER:
MIG ATLANTA FALLS CORP.
By: /s/Larry E. Wright, President
BUYER:
ASSOCIATED ESTATES REALTY
CORPORATION
By: /s/ Jeffrey I. Friedman
Jeffrey I. Friedman, President
MTF3722:35295:97018:falls:mtf-01.agt