EXIHBIT 2.1
PURCHASE AGREEMENT
(BRE/MAAC Associates, L.L.C.)
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
August 18, 2003 (the "Effective Date"), by and between BRE/MID-AMERICA L.L.C., a
Delaware limited liability company ("Seller"), and MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership ("Buyer").
R E C I T A L S
A. Each of Seller and Buyer is a member in BRE/MAAC Associates, L.L.C., a
Delaware limited liability company (the "Operating Company"), which is
currently governed by that certain agreement, captioned "LIMITED LIABILITY
COMPANY AGREEMENT OF BRE/MAAC ASSOCIATES L.L.C.", dated as of March 30,
1999, by and between Seller and Buyer, as amended pursuant to that certain
first amendment, captioned "FIRST AMENDMENT TO LIMITED LIABILITY COMPANY
AGREEMENT OF BRE/MAAC ASSOCIATES L.L.C", dated as of August 4, 1999
(collectively, as amended, the "Operating Company Agreement"). Unless
otherwise defined herein, all capitalized terms used in this Agreement
shall have the meanings given thereto in the Operating Company Agreement.
B. The Operating Company owns, directly or indirectly, all of the equity
ownership interests in the entities listed in Exhibit "A" attached hereto
(each a "Subsidiary Entity" and, collectively, the "Subsidiary Entities").
C. The Subsidiary Entities own those certain (10) multifamily apartment
projects, commonly known by the names, and located at the locations, as
indicated on Exhibit "B" attached hereto and made a part hereof (each a
"Property" and, collectively, the "Properties").
D. Buyer desires to purchase, and Seller desires to sell, all of Seller's
membership interest (the "Subject Membership Interest") in the Operating
Company on the terms and conditions hereinafter set forth, provided,
however, that the Subject Membership Interest does not include the rights
of Seller under this Agreement.
NOW, THEREFORE, in consideration of the mutual undertakings of the parties
hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE.
1.1 Agreement. Seller shall sell to Buyer, and Buyer shall purchase from
Seller, the Subject Membership Interest, on the terms and conditions
hereinafter set forth.
2. PURCHASE PRICE. The purchase price (the "Purchase Price") for the Subject
Membership Interest shall be equal to the product of (a) two-thirds (2/3),
multiplied by (b) (i) $117,000,000 less (ii) the "Debt Principal Balance"
(as defined below). The Purchase Price shall be further adjusted by the
prorations provided in Section 5.4 below. "Debt Principal Balance" means
the aggregate sum of the outstanding principal balances (excluding accrued
interest and other indebtedness) under the "Subject Loans" (as defined
below) as of the "Closing Date" (as defined below). "Subject Loans" means,
collectively, each of the loans obtained by the Operating Company or any of
the Subsidiary Entities and listed in Exhibit "C" attached hereto. The Debt
Principal Balance of each of the Subject Loans as of the Effective Date is
set forth in Exhibit "C" hereto.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price, as adjusted by the
prorations provided in Section 5.4 below, shall be paid to Seller by wire
transfer of immediately available federal funds on the Closing Date. The
aggregate amount to be paid under this Section 3 as of the Closing Date is
herein referred to as the "Closing Payment".
4. CONDITIONS PRECEDENT.
4.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (compliance with which or the occurrence of which may be waived
in whole or in part by Buyer):
4.1.1Accuracy of Representations and Warranties. The representations and
warranties of Seller contained herein shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
4.1.2Performance of Agreements. Seller shall have performed in all material
respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement to
be performed or complied with by it on or prior to the Closing Date.
4.1.3Compliance Certificate of Seller. Seller shall have furnished Buyer with a
certificate, dated as of the Closing Date, to the effect that (i) the
representations and warranties of Seller contained herein are true and
correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date, and
(ii) that Seller has performed or complied in all material respects with
all of the covenants, agreements and conditions to be performed or complied
with by Seller at or before the Closing Date (the "Seller Compliance
Certificate").
4.1.4Consents and Approvals. All consents and approvals of any third parties
required in connection with the execution and delivery of this Agreement
and the consummation of the purchase and sale of the Subject Membership
Interest shall have been obtained and delivered to Buyer, including the
consents and approvals listed on Exhibit "H" hereto.
4.1.5Other Deliveries. Seller shall have delivered the documents and
instruments required to be delivered by it under Section 5.2.1 of this
Agreement.
4.1.6Absence of Material Litigation. As of the Closing Date, there shall be no
action, suit, proceeding or investigation pending or threatened against the
parties hereto or the Subsidiary Entities in any court or by or before any
other governmental board, agency, commission, office or authority of any
nature whatsoever or any other governmental unit (federal, state, county,
district, municipal, city or otherwise) which would materially and
adversely affect the ability of the parties hereto to carry out the
transactions contemplated by this Agreement.
4.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (compliance with which or the occurrence of which may be waived
in whole or in part by Seller):
4.2.1Accuracy of Representations and Warranties. The representations and
warranties of Buyer contained herein shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
4.2.2Performance of Agreements. Buyer shall have performed in all material
respects all obligations and agreements and complied in all material
respects, with all covenants and conditions contained in this Agreement to
be performed or complied with by it on or prior to the Closing Date.
4.2.3Compliance Certificate of Buyer. Buyer shall have furnished Seller with a
certificate, dated as of the Closing Date, to the effect that (i) the
representations and warranties of Buyer contained herein are true and
correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date, and
(ii) that Buyer has performed or complied in all material respects with all
of the covenants, agreements and conditions to be performed or complied
with by Buyer at or before the Closing Date (the "Buyer Compliance
Certificate").
4.2.4Consents and Approvals. All consents and approvals of any third parties
required in connection with the execution and delivery of this Agreement
and the consummation of the purchase and sale of the Subject Membership
Interest shall have been obtained and delivered to Seller, including the
consents and approvals listed on Exhibit "H" hereto.
4.2.5Releases. Seller shall have received releases, reasonably satisfactory in
form and substance to Seller and its counsel, from all liabilities and
obligations under the agreements and obligations listed in Exhibit "D".
4.2.6Other Deliveries. Buyer shall have delivered the documents and instruments
required to be delivered by it under Section 5.2.2 of this Agreement.
4.2.7Absence of Material Litigation. As of the Closing Date, there shall be no
action, suit, proceeding or investigation pending or threatened against the
parties hereto or the Subsidiary Entities in any court or by or before any
other governmental board, agency, commission, office or authority of any
nature whatsoever or any other governmental unit (federal, state, county,
district, municipal, city or otherwise) which would materially and
adversely affect the ability of the parties hereto to carry out the
transactions contemplated by this Agreement.
5. CLOSING PROCEDURE. Subject to the terms and conditions set forth in this
Agreement, the sale and purchase herein provided shall be consummated (the
"Closing") at a closing conference ("Closing Conference"), which shall be
held on the Closing Date at the offices of Seller or its counsel, or
through the mails, or otherwise as the parties may agree. As used herein,
"Closing Date" means September 15, 2003, or such earlier date as may be
agreed upon by Seller and Buyer.
5.1 Delivery of Closing Payment. On or before 1:00 p.m. (EST) on the Closing
Date, Buyer shall deliver to Seller the Closing Payment by wire of
immediately available federal funds pursuant to written wiring instructions
to be delivered to Buyer by Seller prior to the Closing Date.
5.2 Delivery to the Parties. At the Closing Conference (or by other means of
effecting the Closing as agreed by the parties pursuant to Section 5), the
following items shall be delivered:
5.2.1Seller Deliveries. Seller shall deliver, or cause to be delivered, to
Buyer the following:
(a) A duly executed Assignment of Membership Interest and Assumption
Agreement ("Assignment and Assumption Agreement") in the form of
Exhibit "E";
(b) Evidence reasonably satisfactory to Buyer respecting the due
organization of Seller and the due authorization and execution by
Seller of this Agreement and the documents required to be delivered by
it hereunder;
(c) A duly executed Release in the form of Exhibit "F";
(d) A duly executed original certificate of "non-foreign" status in the
form of Exhibit "I" and any required state certificate that is
sufficient to exempt Seller from any state withholding requirement
with respect to the sale contemplated by this Agreement;
(e) any and all original books and records of the Operating Company or any
Subsidiary Entity that are in the possession of Seller;
(f) A duly executed Seller Compliance Certificate; and
(g) Such additional documents as may be reasonably required by Buyer and
(only if and to the extent required by any lender) customary legal
opinions in order to consummate the transactions hereunder, provided
the same do not materially increase the costs to, or liability or
obligations of, Seller in a manner not otherwise provided for herein.
5.2.2Buyer Deliveries. Buyer shall deliver, or cause to be delivered to Seller
the following:
(a) A duly executed and acknowledged Assignment and Assumption Agreement;
(b) Evidence reasonably satisfactory to Seller respecting the due
organization of Buyer and the due authorization and execution of this
Agreement and the documents required to be delivered by it hereunder;
(c) A Release, duly executed by the Operating Company and Buyer in the
form of Exhibit "G";
(d) A duly executed Buyer Compliance Certificate; and
(e) Such additional documents as may be reasonably required by Seller and
(only if and to the extent required by any lender) customary legal
opinions in order to consummate the transactions hereunder, provided
the same do not materially increase the costs to, or liability or
obligations of, Buyer in a manner not otherwise provided for herein..
5.3 Closing Costs. Buyer and Seller shall cause the Company (a) to pay at
Closing all sales, transfer and use taxes, if any, payable in connection
with the transfers contemplated in this Agreement, (b) to reimburse at
Closing all expenditures, costs and charges, including all fees and costs
of any attorneys, accountants and other third party representatives,
incurred by Buyer or Seller in connection with the preparation of this
Agreement and the negotiation and consummation of the transactions
contemplated hereby, and (c) all fees and costs of lender's attorneys with
respect to the Subject Loans in connection with obtaining such lender's
approval of the transaction contemplated hereby. All amounts described in
the prior sentence shall be included among the "Current Liabilities" on the
"Estimated Closing Balance Sheet" (as such terms are defined in Section
5.4.1 below). Buyer shall be solely responsible for (and shall indemnify
and hold Seller and the Company harmless from and against) all costs and
expenses of obtaining the consent or approval of this Agreement or the
transactions contemplated hereby from any lender with respect to the
Subject Loans (except with respect to legal fees and costs described in
clause (c) above) and all loan assumption or similar fees or costs charged
by any such lender.
5.4 Prorations. The Purchase Price shall be subject to proration and adjustment
as follows:
5.4.1Estimated Amounts. At least five (5) business days prior to the Closing
Date, Buyer will cause to be prepared and delivered to Seller for Seller's
approval an estimated balance sheet (the "Estimated Closing Balance Sheet")
for the Operating Company substantially in the format attached hereto as
Exhibit "J" (the "Sample Balance Sheet"). The Estimated Closing Balance
Sheet shall set forth an estimate of the "Current Assets" (the categories
of which are identified on the Sample Balance Sheet) and an estimate of the
"Current Liabilities" (the categories of which are identified on the Sample
Balance Sheet), in each case as of the close of business on the date
immediately preceding the Closing Date (the "Proration Date") and otherwise
be prepared in accordance with generally accepted accounting principles and
the Operating Company's standard practice. The calculation of Current
Assets and Current Liabilities as of the Proration Date shall be subject to
Section 5.4.3 below. To the extent Current Assets exceed Current
Liabilities, the Purchase Price shall be increased by two-thirds (2/3) of
such excess, and to the extent such Current Liabilities exceed such Current
Assets, the Purchase Price shall be decreased by two-third (2/3) of such
excess (the adjustment required pursuant to this sentence being referred to
as the "Estimated Closing Adjustment"). Seller and Buyer shall reasonably
and in good faith cooperate to agree on and approve in writing an Estimated
Closing Balance Sheet prior to the Closing.
5.4.2Post-Closing Prorations Adjustments. Within 120 days after the Closing, a
final determination of the prorations adjustment pursuant to Section 5.4.1
above (the "Final Closing Adjustment") shall be completed by Buyer based on
the actual financial results of the Operating Company through the Proration
Date, and Buyer shall deliver the results thereof to Seller promptly
following such completion. During this 120-day period, Seller shall have
the right to audit and review the Company's books and records (at its sole
cost and expense) and Buyer shall make available, at no expense to Seller,
all information reasonably requested by Seller or its agents to perform
such audit. In the event the Final Closing Adjustment differs from the
Estimated Closing Adjustment, Buyer or Seller, as the case may be, shall
pay to the other party the amount required to reconcile the amount payable
by Buyer to Seller, or Seller to Buyer, as appropriate within five (5)
business days after such determination.
5.4.3Current Assets and Current Liabilities. Current Assets shall include,
without limitation, cash and other reserves of the Operating Company and
the Subsidiary Entities and including reserves and impounds held by any
lender with respect to the Subject Loans; provided, however, that reserves
and impounds that represent escrows of proceeds held for property
improvements from the right-of-way condemnation settlement in connection
with the Woodstream Property and deferred finance costs shall not be
considered Current Assets. Current Liabilities shall include, without
limitation, current liabilities of the Operating Company and the Subsidiary
Entities (including accounts payable, accrued liabilities, expenses and
other customary operating expenses incurred by the Operating Company and
Subsidiary Entities through the Closing Date).
6. REPRESENTATIONS AND WARRANTIES.
6.1 Representations and Warranties of Seller.
6.1.1General Disclaimer. Except as specifically set forth in Section 6.1.2
below, the sale of the Subject Membership Interest hereunder is and will be
made on an "as is" basis, without representations and warranties of any
kind or nature, express, implied or otherwise, including any representation
or warranty concerning the Operating Company, the Subsidiary Entities or
their respective assets. Buyer acknowledges that it is a member in the
Operating Company, that its affiliate is the property manager of the
Properties, and that Buyer is therefore familiar with the Operating
Company, the Subsidiary Entities and their respective assets. Except as to
matters specifically set forth in Section 6.1.2 below, Buyer will proceed
with the Closing contemplated hereby solely on the basis of its own
physical, financial and other examinations, reviews and inspections.
6.1.2Limited Representations and Warranties of Seller. Subject to the
provisions of Section 6.1.1 above, Seller hereby represents and warrants to
Buyer as follows:
(a) Organization. Etc. Seller is a limited liability company duly formed
and validly existing under the laws of the State of Delaware and has
all requisite limited liability company power and limited liability
company authority to own and lease its properties and to carry on its
business as presently conducted.
(b) Authorization. Seller has all requisite limited liability company
power and limited liability company authority to execute and deliver
this Agreement and the other agreements and instruments to be executed
and delivered by it hereunder and to consummate the transactions
contemplated hereby and thereby.
(c) Validity and Enforceability. This Agreement has been duly authorized,
executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered hereunder by
Seller, when executed and delivered by Seller, will have been duly
authorized, executed and delivered and will constitute, legal, valid
and binding obligations of Seller enforceable against Seller in
accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the enforcement of creditors'
rights generally or by general equitable principles.
(d) No Conflict. Neither the execution and delivery of this Agreement by
Seller nor the execution and delivery by Seller of the other
agreements and instruments to be executed and delivered by it
hereunder, nor the consummation of the transactions contemplated
hereunder or thereunder, will (i) conflict with or result in a breach
or violation of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon, any of the
properties or assets of Seller, or to the actual knowledge of Seller,
the Operating Company, pursuant to the organizational documents of
Seller, or (subject to receipt of the consents of parties listed on
Exhibit "H" hereto) any indenture, mortgage, lease, loan agreement or
other agreement or instrument to which Seller, or to the actual
knowledge of Seller, the Operating Company, is a party or by which it
is bound or to which any of its properties or assets is subject or
(ii) violate any law, statute, rule, regulation, judgment or decree
applicable to Seller or to the actual knowledge of Seller, the
Operating Company. Except as set forth in Exhibit "H", no third party
consents are required by the terms of any indenture, mortgage, lease,
loan agreement or other agreement or instrument to which Seller, or to
the actual knowledge of Seller, the Operating Company, is a party or
by which it is bound or to which any of its properties or assets is
subject for the execution and delivery of this Agreement or any other
agreement or instrument to be executed and delivered by Seller
hereunder or the consummation of the transactions provided for herein
or therein.
(e) No Governmental Consent or Approval Required. No consent, approval or
authorization of, or declaration to or filing with, any governmental
or regulatory authority is required for the valid execution and
delivery by Seller of this Agreement or any other agreement or
instrument to be executed and delivered by Seller hereunder or the
consummation of the transactions provided for herein or therein.
(f) Subject Membership Interest. Seller is the legal and beneficial owner
of, and has good title to, the Subject Membership Interest free and
clear of all mortgages, pledges, claims, liens, charges, encumbrances
or other matters adversely affecting title, and any rights of third
parties whatsoever applicable or affecting title to the Subject
Membership Interest (each and all of the foregoing items being herein
referred to as "Encumbrances"), except for (i) the assignment and
security interest provided for in Article VII of the Operating Company
Agreement and (ii) the rights in favor of Buyer created by this
Agreement. Seller shall transfer such good title to the Membership
Interest to Buyer on the Closing Date free and clear of all
Encumbrances (except for the rights and interests described in the
foregoing clauses (i) and (ii)). There are no options, warrants,
calls, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character that will be
binding on Buyer (or affect Buyer's title in and to the Subject
Membership Interest) with respect to the Subject Membership Interest
other than those (x) provided for in the Operating Company Agreement,
(y) specifically set forth in this Agreement, or (z) created by,
through or under Buyer or its Affiliates.
(g) Litigation. To Seller's actual knowledge, there are no claims,
actions, suits, arbitrations or proceedings before any federal, state,
municipal, foreign or other court or governmental, administrative or
self-regulatory body or agency, or any private arbitration tribunal,
pending or threatened against the Operating Company or the Subsidiary
Entities or the transactions contemplated by this Agreement that would
have a material adverse effect on the Operating Company or the
Subsidiary Entities, their respective business or assets or the
transactions contemplated by this Agreement.
(h) Principal Place of Business. Seller's principal place of business is
the address of Seller set forth in Section 10.9 below for the delivery
of notices to Seller.
6.2 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:
6.2.1Organization, Etc. Buyer is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Tennessee and
has all requisite limited partnership power and limited partnership
authority to own and lease its properties and to carry on its business as
presently conducted.
6.2.2Authorization. Buyer has all requisite limited partnership power and
limited partnership authority to execute and deliver this Agreement and the
other agreements and instruments to be executed and delivered by it
hereunder and to consummate the transactions contemplated hereby and
thereby.
6.2.3Validity and Enforceability. This Agreement has been duly authorized,
executed and delivered by Buyer and constitutes, and the other agreements
and instruments to be executed and delivered hereunder by Buyer, when
executed and delivered by Buyer, will have been duly authorized, executed
and delivered and will constitute, legal, valid and binding obligations of
Buyer enforceable against Buyer in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally or by general equitable
principles.
6.2.4No Conflict. Neither the execution and delivery of this Agreement by Buyer
nor the execution and delivery by Buyer of the other agreements and
instruments to be executed and delivered by it hereunder, nor the
consummation of the transactions contemplated hereunder or thereunder, will
(i) conflict with or result in a breach or violation of, or constitute a
default under, or result in the creation of any lien, charge or encumbrance
upon, any of the properties or assets of Buyer, or to the actual knowledge
of Buyer, the Operating Company, pursuant to the organizational documents
of Buyer, or (subject to receipt of the consents of parties listed on
Exhibit "H" hereto) any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which Buyer, or to the actual knowledge of
Buyer, the Operating Company, is a party or by which it is bound or to
which any of its properties or assets is subject or (ii) violate any law,
statute, rule, regulation, judgment or decree applicable to Buyer or to the
actual knowledge of Buyer, the Operating Company. Except as set forth in
Exhibit "H", no third party consents are required by the terms of any
indenture, mortgage, lease, loan agreement or other agreement or instrument
to which Buyer, or to the actual knowledge of Buyer, the Operating Company,
is a party or by which any of them is bound or to which any of their
respective properties or assets is subject for the execution and delivery
of this Agreement or any other agreement or instrument to be executed and
delivered by Buyer hereunder or the consummation of the transactions
provided for herein or therein.
6.2.5No Governmental Consent or Approval Required. No consent, approval or
authorization of, or declaration to or filing with, any governmental or
regulatory authority is required for the valid execution and delivery by
Buyer of this Agreement or any other agreement or instrument to be executed
and delivered by Buyer hereunder or the consummation of the transactions
provided for herein or therein.
6.2.6Investment Intent, Etc. Buyer (i) is acquiring the Subject Membership
Interest for its own account for investment, not as nominee or agent, and
not with a view to or for sale in connection with any distribution of any
part thereof, and (ii) has no present intention of selling, granting
participations in, or otherwise distributing the same. Buyer understands
that the Subject Membership Interest has not been registered under the
Securities Act of 1933, as amended (the "Securities Act") by reason of the
reliance by Seller on exemptions from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or under any "Blue Sky" law
of any state by reason of the reliance by Seller on exemptions thereunder,
and that Seller's reliance is predicated in part on Buyer's representations
set forth herein. By reason of its business and financial experience and
the facts described in the second sentence of Section 6.1.1. above, Buyer
has the capacity to protect its own interest in connection with the
transactions contemplated hereby and is able to bear the economic risk
thereof. Buyer understands that the Subject Membership Interest may not be
sold, transferred, or otherwise disposed of without registration under the
Securities Act and applicable state "Blue Sky" laws or exemptions
therefrom, and that in the absence of an effective registration statement
covering the same or available exemptions from registration under the
Securities Act, the Subject Membership Interest must be held indefinitely.
6.3 Knowledge Defined.
6.3.1Seller's Knowledge. As used in this Agreement, "Seller's actual
knowledge", "Seller's knowledge", "actually known to Seller" or any similar
phrase shall mean the present actual knowledge, without taking into account
any constructive or imputed knowledge, of Mr. William (Bill) Stein, but
such individual shall not have any liability in connection herewith. Seller
shall have no liability for, and Buyer shall make no claim against Seller
for (and Buyer shall be deemed to have waived any failure of a condition
hereunder by reason of), a breach of any representation or warranty of
Seller under Section 6.1.2 above (a) if the breach in question constitutes
or results from a condition, state of facts or other matter that was
actually known to Buyer on or before the date hereof, or (b) if the breach
in question constitutes or results from a condition, state of facts or
other matter that was actually known to Buyer prior to Closing, and Buyer
proceeds with the Closing.
6.3.2Buyer's Knowledge. As used in this Agreement, "Buyer's actual knowledge",
"Buyer's knowledge", "actually known to Buyer" or any similar phrase shall
mean the present actual knowledge, without taking into account any
constructive or imputed knowledge, of Mr. Simon Wadsworth, but such
individual shall not have any liability in connection herewith. Buyer shall
have no liability for, and Seller shall make no claim against Buyer for
(and Seller shall be deemed to have waived any failure of a condition
hereunder by reason of), a breach of any representation or warranty of
Buyer under Section 6.2 above (a) if the breach in question constitutes or
results from a condition, state of facts or other matter that was actually
known to Buyer on or before the date hereof, or (b) if the breach in
question constitutes or results from a condition, state of facts or other
matter that was actually known to Seller prior to Closing, and Seller
proceeds with the Closing.
7. COVENANTS.
7.1 Interim Covenants of Seller. Until the Closing Date or the sooner
termination of this Agreement:
7.1.1Representations. Seller covenants and agrees that it will not take any
action or enter into any transaction which would cause any representation
contained in Section 6.1.2 of this Agreement to be inaccurate in any
material respect if remade immediately after the occurrence of such action
or transaction.
7.1.2No Disposition of Subject Membership Interest. Seller will not sell,
transfer, encumber or otherwise dispose of the Subject Membership Interest.
7.1.3Additional Actions. Seller will use commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including obtaining all third party
consents listed in Exhibit "H"; provided that, the foregoing shall not
require Seller to institute or threaten to institute legal proceedings, to
declare any party in default, to expend any material monies, or to incur
any material costs or liability.
7.1.4Exclusive Dealing. Prior to the Closing Date, Seller shall not, and shall
not cause the Operating Company, any Subsidiary Entity or any employee,
representative or agent of Seller, the Operating Company or any Subsidiary
Entity to, directly or indirectly in any manner make, solicit or entertain
offers from or negotiate with any other person or entity relating to the
acquisition of the Operating Company, the Subsidiary Entities, or their
respective assets or businesses (including the Properties) in whole or in
part, whether through direct purchase, merger, consolidation or other
business combination or transaction of any kind.
7.1.5Conduct of Business. Prior to the Closing Date, without first obtaining
Buyer's written consent, which consent (notwithstanding anything herein to
the contrary, but subject to the Operating Company Agreement) may be
withheld in Buyer's sole and absolute discretion, Seller shall not cause or
permit Operating Company or any Subsidiary Entity to engage in any
practice, take any action or enter into any transaction materially
inconsistent with the ordinary course of business and past practices and
procedures.
7.2 Interim Covenants of Buyer. Until the Closing Date or the sooner
termination of this Agreement:
7.2.1Representations. Buyer covenants and agrees that it will not take any
action or enter into any transaction which would cause any representation
contained in Section 6.2 of this Agreement to be inaccurate in any material
respect if remade immediately after the occurrence of such action or
transaction.
7.2.2Additional Actions. Buyer will use commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including obtaining all third party
consents listed in Exhibit "H" and releases of Seller under all agreements
and obligations listed in Exhibit "D"; provided that, the foregoing shall
not require Buyer to institute or threaten to institute legal proceedings,
to declare any party in default, to expend any material monies, or to incur
any material costs or liability.
7.2.3Exclusive Dealing. Prior to the Closing Date, Buyer shall not, and shall
not cause the Operating Company, any Subsidiary Entity or any employee,
representative or agent of Buyer, the Operating Company or any Subsidiary
Entity to, directly or indirectly in any manner make, solicit or entertain
offers from or negotiate with any other person or entity relating to the
acquisition of the Operating Company, the Subsidiary Entities, or their
respective assets or businesses (including the Properties) in whole or in
part, whether through direct purchase, merger, consolidation or other
business combination or transaction of any kind.
7.2.4Conduct of Business. Without first obtaining Seller's written consent,
which consent (notwithstanding anything herein to the contrary, but subject
to the Operating Company Agreement) may be withheld in Seller's sole and
absolute discretion, Buyer shall not cause or permit Operating Company or
any Subsidiary Entity to (a) engage in any practice, take any action or
enter into any transaction materially inconsistent with the ordinary course
of business and past practices and procedures, or (b) initiate any
material, new capital projects other than those for which purchase orders
have already been appropriately issued and which cannot reasonably be
terminated or postponed without causing material additional cost, liability
or risk to the Company , or the applicable Subsidiary Entity or Property.
7.3 No Cedar Mill Adjustment. Buyer and Seller acknowledge and agree that the
Purchase Price shall be determined without reference to any adjustment to
distributions pursuant to Section 4.1B of the Operating Company Agreement
and, accordingly, there shall be no adjustment to the Purchase Price by
reason of the balance, if any, of the "Cedar Mill Deficit Account" or
"Cedar Mill Surplus Account" (as such terms are used in the Operating
Company Agreement). Both parties hereby waive any "Claim" (as defined
below) related to the operation of Section 4.1B of the Operating Company
Agreement.
8. INDEMNIFICATION.
8.1 Indemnification of Seller. If the Closing occurs, then Buyer shall protect,
defend, indemnify and hold Seller harmless from and against: (a) any
"Claim" (as hereinafter defined) in any way related to the Operating
Company, the Operating Company Agreement, the Subsidiary Entities, the
underlying limited liability company or partnership agreements and other
organizational documents relating to the Subsidiary Entities, the
Properties, the "Contribution Agreement" (as defined in the Operating
Company Agreement), the "Collateral Agreements" and the "Loans" (as such
terms are defined in the Contribution Agreement), whether arising or
accruing on or prior to or after the Closing Date; and (b) any claim in any
way related to any agreement or other obligation listed in Exhibit "D".
"Claim" means any obligation, liability, claim (including any claim for
damage to property or injury to or death of any persons), lien or
encumbrance, loss, damage, cost or expense (including any judgment, award,
settlement, reasonable attorneys' fees and other costs and expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim [including appellate proceedings], and any collection
costs or enforcement costs). Notwithstanding the foregoing, Buyer shall
have no obligation to indemnify Seller from and against any Claim by Buyer
against Seller to the extent resulting from a breach by Seller of this
Agreement and nothing in this Section 8.1 shall limit Buyer's rights under
this Agreement.
8.2 Survival and Indemnification.
8.2.1Survival; Remedy for Breach. The representations and warranties and
indemnity obligations of Seller and Buyer contained in this Agreement shall
survive the Closing. No claim for indemnification with respect to any
alleged misrepresentation or breach of warranty or covenant may be made
after six (6) months following the Closing (the "Survival Period"). Any
matter to which indemnification pertains and with respect to which a claim
has been asserted in writing following the Closing within the time period
specified above shall continue to be subject to the indemnification under
this Agreement until finally terminated, settled, resolved or adjudicated.
8.2.2Indemnification by Seller. Seller agrees to and shall defend, indemnify
and hold harmless Buyer, its successors and assigns, and their respective
partners, officers, directors, employees and agents from and against any
and all Claims resulting from or arising out of the breach, untruth or
inaccuracy of any representation, warranty or covenant of Seller set forth
in this Agreement.
8.2.3Indemnification by Buyer. Without limitation of Section 8.1 above, Buyer
agrees to and shall defend, indemnify and hold harmless Seller, its
successors and assigns, and their respective members, partners, officers,
directors, employees and agents from and against any and all Claims
resulting from or arising out of the breach, untruth or inaccuracy of any
representation, warranty or covenant of Buyer set forth in this Agreement.
8.3 General Provisions. The indemnification obligations under this Agreement
shall be subject to the following provisions:
8.3.1Procedure. The party seeking indemnification ("Indemnitee") shall notify
the other party ("Indemnitor") of any Claim against Indemnitee within
fifteen (15) days after it has notice of such Claim, but failure to notify
Indemnitor shall in no case prejudice the rights of Indemnitee under this
Agreement unless Indemnitor shall be prejudiced by such failure and then
only to the extent of such prejudice. Should Indemnitor fail to discharge
or undertake to defend Indemnitee against such liability (with counsel
approved by Indemnitee), within ten (10) days after Indemnitee gives
Indemnitor written notice of the same, then Indemnitee may settle such
Claim, and Indemnitor's liability to Indemnitee shall be conclusively
established by such settlement, the amount of such liability to include
both the settlement consideration and the reasonable costs and expenses,
including attorneys' fees, incurred by Indemnitee in effecting such
settlement. Indemnitee shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at the
expense of Indemnitee unless: (a) the employment of such counsel shall have
been authorized in writing by Indemnitor in connection with the defense of
such action, (b) Indemnitor shall not have employed counsel to direct the
defense of such action, or (c) Indemnitee shall have reasonably concluded
that there may be defenses available to it which are different from or
additional to those available to Indemnitor (in which case Indemnitor shall
not have the right to direct the defense of such action or of Indemnitee),
in any of which events such fees and expenses shall be borne by Indemnitor.
8.3.2Beneficiaries. The indemnification obligations under this Agreement shall
also extend to any present or future advisor, trustee, director, officer,
partner, member, employee, beneficiary, shareholder, participant or agent
of or in Indemnitee or any entity now or hereafter having a direct or
indirect ownership interest in Indemnitee.
8.4 Additional Seller Covenants. Seller agrees that, until the expiration of
the Survival Period, Seller shall (a) not initiate or commence any
proceeding for the dissolution or winding-up of the business of Seller, and
(b) retain (and not distribute to its constituent members or principals)
cash or other liquid assets of not less than $250,000.
9. REMEDIES. No remedy conferred upon a party in this Agreement is intended to
be exclusive of any other remedy herein or by law provided or permitted,
but each shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law, in equity or by
statute (except as otherwise expressly herein provided).
10. MISCELLANEOUS.
10.1 Brokers. Seller represents and warrants to Buyer, and Buyer represents and
warrants to Seller that no broker or finder has been engaged by it,
respectively, in connection with any of the transactions contemplated by
this Agreement or to its knowledge is in any way connected with any of such
transactions. In the event of a claim for broker's or finder's fee or
commissions in connection herewith, then Seller shall indemnify and defend
Buyer from the same if it shall be based upon any statement or agreement
alleged to have been made by Seller; and Buyer shall defend and indemnify
Seller from the same if it shall be based upon any statement or agreement
alleged to have been made by Buyer. The indemnification obligations under
this Section 10.1 shall survive the closing of the transactions hereunder
or the earlier termination of this Agreement.
10.2 Limitation of Liability. No direct or indirect constituent member or
partner in or agent or manager of Seller, nor any advisor, trustee,
director, officer, employee, beneficiary, shareholder, partner, member,
manager, participant, representative or agent of any partnership, limited
liability company, corporation or trust that is or becomes a direct or
indirect constituent member or partner or manager in Seller shall have any
personal liability, directly or indirectly, under or in connection with
this Agreement or any agreement made or entered into under or pursuant to
the provisions of this Agreement, or any amendment or amendments to any of
the foregoing made at any time or times, heretofore or hereafter, and Buyer
and its successors and assigns and, without limitation, all other persons
and entities, shall look solely to Seller's assets for the payment of any
claim or for any performance, and Buyer, on behalf of itself and its
successors and assigns, hereby waives any and all such personal liability;
provided that, nothing contained in this Section 10.2 shall release or
waive the personal liability of any person or entity to the extent such
personal liability is permitted under Section 18-607 or Section 18-804 of
the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101 et
seq. Notwithstanding anything to the contrary contained in this Agreement,
neither the negative capital account of any constituent member or partner
in Seller (or in any other constituent member or partner of Seller), nor
any obligation of any constituent member or partner in Seller (or in any
other constituent member of Seller) to restore a negative capital account
or to contribute capital to Seller (or to any other constituent member or
partner of Seller), shall at any time be deemed to be the property or an
asset of Seller or any such other constituent member or partner (and
neither Buyer nor any of its successors or assigns shall have any right to
collect, enforce or proceed against or with respect to any such negative
capital account of a member's or partner's obligation to restore or
contribute).
10.3 Modification. This Agreement may not be modified or amended except by
written agreement signed by all parties.
10.4 Matters of Construction.
10.4.1 Incorporation of Exhibits. All exhibits attached and referred to in this
Agreement are hereby incorporated herein as fully set forth in (and shall
be deemed to be a part of) this Agreement.
10.4.2 Entire Agreement. This Agreement contains the entire agreement between
the parties respecting the matters herein set forth and supersedes all
prior agreements between the parties hereto respecting such matters.
10.4.3 Time of the Essence. Subject to Section 10.4.4 below, time is of the
essence of this Agreement.
10.4.4 Non-Business Days. Whenever action must be taken (including the giving of
notice or the delivery of documents) under this Agreement during a certain
period of time (or by a particular date) that ends (or occurs) on a
non-business day, then such period (or date) shall be extended until the
immediately following business day. As used herein, "business day" means
any day other than a Saturday, Sunday or federal or New York or Tennessee
state holiday.
10.4.5 Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each such term and provision of this Agreement shall
be valid and be enforced to the fullest extent permitted by law.
10.4.6 Interpretation. Words used in the singular shall include the plural, and
vice-versa, and any gender shall be deemed to include the other. Whenever
the words "including", "include" or "includes" are used in this Agreement,
they should be interpreted in a non-exclusive manner. The captions and
headings of the Sections of this Agreement are for convenience of reference
only, and shall not be deemed to define or limit the provisions hereof.
Except as otherwise indicated, all Exhibit and Section references in this
Agreement shall be deemed to refer to the Exhibits and Sections in this
Agreement. Each party acknowledges and agrees that this Agreement (a) has
been reviewed by it and its counsel; (b) is the product of negotiations
between the parties; and (c) shall not be deemed prepared or drafted by any
one party. In the event of any dispute between the parties concerning this
Agreement, the parties agree that any ambiguity in the language of the
Agreement is to not to be resolved against Seller or Buyer, but shall be
given a reasonable interpretation in accordance with the plain meaning of
the terms of this Agreement and the intent of the parties as manifested
hereby.
10.4.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO CONFLICTS OF LAW).
10.4.8 Third Party Beneficiaries. Except as provided in Section 8.2.2, Section
8.2.3 and Section 8.3.2 and Section 10.2, Seller and Buyer do not intend by
any provision of this Agreement to confer any right, remedy or benefit upon
any third party, and no third party shall be entitled to enforce or
otherwise shall acquire any right, remedy or benefit by reason of any
provision of this Agreement.
10.5 Effectiveness of Agreement. In no event shall any draft of this Agreement
create any obligations or liabilities, it being intended that only a fully
executed and delivered copy of this Agreement will bind the parties hereto.
10.6 Post-Closing Access. For a period of five years subsequent to the "Tax
Termination" (as hereinafter defined) each Seller and its respective
employees, agents and representatives shall be entitled to access during
normal business hours to all documents, books and records given to Buyer by
Seller upon reasonable prior notice to Buyer, and shall have the right to
make copies of such documents, books and records at such Seller's expense.
10.7 Tax Matters.
10.7.1 Preparation of Tax Returns. Pursuant to Section 708(b)(1)(B) of the
Internal Revenue Code, the sale of the Subject Membership Interest
contemplated by this Agreement will cause the Operating Company to
terminate on the Closing Date and the taxable year of the Operating Company
to end. Buyer shall cause to be prepared all federal and state income and
franchise tax returns of the Operating Company for its taxable year ending
on the Closing Date (the "Pre-Closing Tax Returns"). The costs of preparing
the Pre-Closing Tax Returns shall be borne by the Operating Company,
considered Current Liabilities, and allocated pursuant to Section 5.4.
Buyer shall prepare or cause to be prepared, all federal and state income
and franchise tax returns of the Operating Company for all taxable years of
the Operating Company ending after the Closing Date (the "Post-Closing Tax
Returns"). The costs of preparing the Post-Closing Tax Returns shall be
borne by the Operating Company (but such costs shall not be included among
the Current Liabilities).
10.7.2 Decisions as to Pre-Closing Tax Returns. Seller shall be the Tax Matters
Partner with respect to Operating Company tax matters for all taxable years
of the Operating Company ending on or prior to the Closing Date. Without
limitation on the foregoing, Seller shall retain the right to make all
decisions as to accounting matters and tax elections required or permitted
to be made by Seller for all taxable years of the Operating Company ending
on or prior to the Closing Date.
10.7.3 Cooperation. Buyer shall cause the Operating Company (as constituted
after the Closing) and each of the Subsidiary Entities to cooperate fully
and to the extent reasonably requested by Seller in connection with the
preparation of any Pre-Closing Tax Return and any audit, litigation or
other proceeding with respect to the Operating Company and the Subsidiary
Entities for all taxable years ending on or prior to the Closing Date. Such
cooperation shall include the retention and revision of the records of the
Operating Company and the Subsidiary Entities and other information which
is reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Such cooperation shall also include such matters as may relate to the
balance sheets and related issues described in Section 5.4.
10.8 Successors and Assigns. Buyer may not assign or transfer its rights or
obligations under this Agreement without the prior written consent of
Seller (in which event such transferee shall assume in writing all of the
transferor's obligations hereunder, but such transferor shall not be
released from its obligations hereunder); provided, however, that, upon
delivery of an Assumption Agreement satisfactory to Seller, Seller will not
withhold its consent to the assignment by Buyer to a limited partnership in
which Buyer is the managing general partner and has not less than a 51%
interest in capital and profits in such limited partnership. No consent
given by Seller to any transfer or assignment of Buyer's rights or
obligations hereunder shall be construed as a consent to any other transfer
or assignment of Buyer's rights or obligations hereunder. No transfer or
assignment in violation of the provisions hereof shall be valid or
enforceable. Subject to the foregoing, this Agreement and the terms and
provisions hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
10.9 Notices. Any notice which a party is required or may desire to give the
other shall be in writing and shall be sent by personal delivery or by mail
(either [i] by United States registered or certified mail, return receipt
requested, postage prepaid, or [ii] by Federal Express or similar generally
recognized overnight carrier regularly providing proof of delivery),
addressed as follows (subject to the right of a party to designate a
different address for itself by notice similarly given):
TO BUYER:
c/o Mid America Apartments, L.P.
6584 Poplar Avenue, Suite 340
Memphis, Tennessee 38138
Attention: Mr. Simon R.C. Wadsworth
Telephone: (901) 682-6600
Telecopier: (901) 682-6667
With Copy To:
Bass Berry & Sims PLC
100 Peabody Place, Suite 900
Memphis, Tennessee 38103-3672
Attention: Robert J. DelPriore, Esq.
Telephone: (901) 543-5904
Telecopier: (901) 543-5999
TO SELLER:
c/o Blackstone Real Estate Advisors
345 Park Avenue, 32nd Floor
New York, New York 10154
Attention: Mr. William J. Stein
Telephone: (212) 583-5849
Telecopier: (212) 583-5726
With Copy To:
Pircher, Nichols & Meeks
1925 Century Park East, Suite 1700
Los Angeles, California 90067
Attention: Real Estate Notices (JHI/SAC)
Telephone: (310) 201-8900
Telecopier: (310) 201-8922
Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery, as the case may be. Any
such notice not so given shall be deemed given upon receipt of the same by the
party to whom the same is to be given.
10.10Legal Costs. If any party hereto brings any suit or other proceeding with
respect to the subject matter or the enforcement of this Agreement, the
prevailing party or parties (as determined by the court, agency or other
authority before which such suit or proceeding is commenced), in addition
to such other relief as may be awarded, shall be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation actually
incurred from the non-prevailing party or parties. The foregoing includes
attorneys' fees, expenses and costs of investigation (including those
incurred in appellate proceedings), costs incurred in establishing the
right to indemnification, or in any action or participation in, or in
connection with, any case or proceeding under Chapter 7, 11 or 13 of the
Bankruptcy Code (11 United States Code Sections 101 et seq.), or any
successor statutes.
10.11Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.12Disclosure. Except to the extent required by law or (with respect to
Buyer) to the extent that Buyer reasonably believes necessary to meet its
responsibilities as a NYSE-listed public company, neither Buyer nor Seller
nor either of its respective affiliates, nor any of their respective
employees, representatives or agents may, without the prior written consent
of the other, directly or indirectly make any public comment, statement or
communication with respect to, or otherwise publicly disclose or permit the
disclosure of the existence of, or any of the terms, conditions or other
aspects of, this Agreement or the transaction contemplated herein.
[Signatures commence on following page.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
BRE/MID-AMERICA L.L.C,
a Delaware limited liability company
By: /s/William J. Stein
Name: William J. Stein
Title: ______________________________
BUYER:
MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership
By: Mid-America Apartment Communities, Inc.,
a Tennessee corporation
Its Sole General Partner
By: /s/Simon R.C. Wadsworth
Name: Simon R.C. Wadsworth
Title: Exec. VP and CFO