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Exhibit 2.02
PURCHASE AGREEMENT
MIG REIT/MORGAN PLACE, INC.
AND
ASSOCIATED ESTATES REALTY CORPORATION
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TABLE OF CONTENTS
Page
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PURCHASE AGREEMENT.......................................................... 1
1. Agreement to Buy and Sell................................. 2
2. Liabilities............................................... 3
3. Consideration and Payment/Earnest Money................... 4
4. Representations and Warranties of Seller.................. 7
5. Representations and Warranties of Buyer................... 9
6. Seller's Covenants........................................ 11
7. Title and Possession of the Property...................... 13
8. Conditions to Closing..................................... 16
9. Deliveries................................................ 18
10. Due Diligence Period...................................... 20
11. Closing Date.............................................. 23
12. Prorations and Closing Costs.............................. 24
13. Fire or Other Casualty.................................... 27
14. Condemnation and Eminent Domain........................... 27
15. Indemnification........................................... 28
16. Miscellaneous............................................. 30
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EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT A-1 - PORTFOLIO PROPERTIES
EXHIBIT B - LIST OF PERSONAL PROPERTY
EXHIBIT C - ASSIGNMENT AND ASSUMPTION OF LEASES AND CLOSING
AGREEMENT
EXHIBIT D - CERTIFICATE OF SELLER REGARDING PROJECT CONTRACTS
AND PERSONAL PROPERTY LEASES
EXHIBIT E - LETTER REGARDING BOOKS AND RECORDS
EXHIBIT F - SELLER'S CERTIFICATE
EXHIBIT G - BUYER'S CERTIFICATE
EXHIBIT H - DESCRIPTION OF TRANSACTION
EXHIBIT I - INVESTMENT REPRESENTATION LETTER
EXHIBIT J - REGISTRATION RIGHTS AGREEMENT
EXHIBIT K - APPROVED DUE DILIGENCE MATERIALS
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") made as of the
_____ day of January, 1998, by and between MIG REIT/MORGAN PLACE, INC., a
Florida 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 186-unit apartment complex known as Morgan Place
located in Atlanta, Georgia; which real property is more fully described on
EXHIBIT A attached hereto and made a part hereof, together with all buildings,
fixtures and other improvements located thereon and therein and including all
appurtenant 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
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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 following (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 Project, 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
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(collectively, the "Deposits");
(g) all leases of equipment (if any), vehicles and other
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 "Morgan Place" or "Morgan Place
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
assets, 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.
3. CONSIDERATION AND PAYMENT/EARNEST MONEY. The total
consideration for
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the Property will be the following, payable by Buyer to Seller
as follows:
(a) Buyer shall deliver to Seller or Seller's designee a
number of common shares, without par value, of Buyer ("Common Shares") issued to
Seller (or its designee) computed as follows:
(i) if the Closing Share Price is greater than
or equal to 106% of the Average Share Price,
the number of Common Shares to be issued and
delivered shall be equal to ninety nine
percent (99%) of the Appraised Value of the
Property multiplied by 1.06 and divided by
the Closing Share Price;
(ii) if the Closing Share Price is less than or
equal to the Average Share Price, the number
of Common Shares to be issued and delivered
shall be equal to ninety nine percent (99%)
of the Appraised Value of the Property
divided by the Closing Share Price; or
(iii) if the Closing Share Price is
greater than the Average Share Price
but less than 106% of the Average
Share Price, the number of Common
Shares to be issued shall be equal
to ninety nine percent (99%) of the
Appraised Value of the Property
divided by the Average Share Price.
(b) One percent (1%) of the Appraised Value deposited in escrow by
Buyer on or before the Closing Date (defined below) in immediately available
funds (the "Cash Payment").
For purposes of this Agreement:
(A) Appraised Value shall mean an amount equal to Eleven Million Six
Hundred Thousand Dollars ($11,600,000).
(B) Average Share Price shall mean the average of the closing prices on
the New York Stock Exchange of the Common Shares for the twenty (20) Trading
Days immediately preceding the date hereof.
(C) Closing Share Price shall mean the average closing prices on the
New York Stock Exchange of the Common Shares for the twenty (20) Trading Days
immediately preceding the Closing Date.
(D) Trading Days shall mean each day that Common Shares are traded on
the New York
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Stock Exchange. No certificates for fractional Common Shares shall be issued or
delivered in connection with the transaction contemplated by this Agreement. To
the extent that a fractional Common Share would otherwise have been deliverable
under the formula set out in the preceding portion of this Section 3(a), Seller
shall be entitled to receive a cash payment therefor in an amount equal to the
value (determined with reference to the closing price of Common Shares as
reported on the New York Stock Exchange Composite Tape on the last full Trading
Day immediately prior to the Closing Date) of such fractional interest. Such
payment with respect to fractional shares is merely intended to provide a
mechanical rounding off of, and is not separately bargained for, consideration.
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 sum of One Hundred
Sixteen Thousand Dollars ($116,000) (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. In the event that the parties proceed to the Closing,
then the Earnest Money Deposit, together with all interest earned thereon, shall
be applied towards the Cash Payment. Except as otherwise expressly set forth in
Section 11 of this Agreement, upon the termination of this Agreement, the
Earnest Money Deposit, together with all interest earned thereon, shall be
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returned by the Title Company to Buyer. 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) Seller is, and will be at the Closing, a corporation duly
organized and validly existing under the laws of the State of Florida
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
the 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 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 obligations of Seller,
enforceable
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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 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 material agreement to which Seller is a party, subject to the
obtaining of any required consents or authorizations of, or notices to
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) The decision to enter into this Agreement has been
approved by the Board of Directors of Seller and by a vote of the
shareholders in accordance with applicable state law. Each such
shareholder has been advised that (A) as a result of MIGRA's entering
into the Merger Agreement (as defined in Section 11 hereof), the
business operations of MIGRA and Buyer or Buyer's parent will be
combined and
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such Merger Agreement contemplates 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 shareholder has
been provided the opportunity to ask questions and receive from MIGRA
information regarding the Property, the consideration to be paid
therefore, and MIGRA's interest in the transactions contemplated 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
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the Closing conditions under Section 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
Closing. 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
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pursuant hereto.
(d) Buyer has qualified to be taxed as a real estate
investment trust pursuant to Section 856 through 860 of the Internal
Revenue Code, for each of its taxable years ended December 31, 1993
through December 31, 1996, and the Buyer expects to so qualify for the
fiscal year ending December 31, 1997.
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.
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(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 Project 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 mortgage 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) to obtain all necessary consents and authorizations of third
parties to the performance by Seller of its obligations hereunder and
the consummation of the transactions contemplated hereby.
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(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) On or before the Closing Date, execute and deliver (or
cause its designees to execute and deliver) (i) the Investment
Representation Letter attached hereto and made a part hereof as EXHIBIT
I and (ii) the Registration Rights Agreement attached hereto and made a
part hereof as EXHIBIT J.
(k) 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.
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 require,
including, without limitation, owner's comprehensive, survey, access,
tax parcel, utilities and contiguity endorsements (provided
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that Buyer pay the costs of all such endorsements), in the amount of
the total consideration paid by Buyer to Seller for the Property (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; and
(iv) such easements, covenants, conditions,
reservations and restrictions of record disclosed in Schedule
B of Seller's existing Title Policy (the "Approved Title
Report") and other matters disclosed to and approved by Buyer,
in writing, unless otherwise waived or deemed waived by Buyer
as hereinafter provided.
(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 Policy (the "Title Commitment")
which updates the Approved Title Report with copies of all instruments
referred to as exceptions or conditions in the Title Commitment that
were not set forth in the Approved Title Report, 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
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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 which were not referenced in the Approved Title
Report. 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 the Due 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 or non-consensual monetary liens which do not exceed
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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 Appraised Value 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 not discovered a Material
Adverse Condition (as defined in Section 10 herein) or Buyer
shall be deemed to have so notified Seller;
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(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 Diligence 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);
(vi) 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 Portfolio Purchase
Agreements shall have closed simultaneously with, or
immediately preceding or immediately following the Closing of
this transaction; and
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(ix) Seller (or Seller's designees) shall have
executed and delivered the Investment Representation Letter
attached hereto as EXHIBIT I and the Registration Rights
Agreement attached hereto as EXHIBIT J.
(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 simultaneously
with, or immediately preceding or immediately following the
Closing of this transaction;
(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
(v) Buyer shall have executed and delivered the
Registration Rights Agreement attached hereto as EXHIBIT J.
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(c) Since the Portfolio Properties constitute substantially
all of the assets of MIG Residential REIT, Inc., a Maryland corporation
("MIG REIT"), through MIG REIT's ownership of all the shares of Seller
and the Other Owners, MIG REIT's Board of Directors has a fiduciary
obligation to the holders of MIG REIT stock to maximize the current and
long term value of their shares in MIG REIT. Accordingly, it is agreed
that, notwithstanding anything in this Agreement to the contrary,
Seller shall have the right (the "Fiduciary Out") to terminate this
Agreement and cancel the Earnest Money Escrow on the following terms
and conditions:
(i) During the period between the date hereof and the
Schedule Closing Date, MIG REIT shall be entitled to provide
financial information about the Portfolio Properties to third
parties who request such information and sign a
confidentiality agreement substantially similar to the one
signed by Buyer. The parties intend that this Section 8(c)
will provide MIG REIT with an opportunity to sell the
Portfolio Properties on the following basis. After the date
hereof, MIG REIT shall cease or cause to cease all active
marketing of the Portfolio Properties by MIG REIT (or others
acting on behalf of MIG REIT) through the use of brokers,
financial advisors, advertising or other forms of active
solicitation. MIG REIT shall, however, be entitled to respond
to inquiries from third parties ("Third Party Buyers") to whom
information has been supplied previously, or who may learn of
the transaction contemplated in this Agreement through public
disclosure thereof.
(ii) The Third Party Buyers shall be entitled to make
offers (the "Third Party Officers") to purchase all of the
Portfolio Properties.
(iii) If MIG REIT's Committee of Independent
Directors recommends that any Third Party Offer should be
presented to MIG REIT's Board of Directors, Seller shall
provide Buyer with a complete copy of any Third Party Offer(s)
so presented promptly after the Board of Directors has had an
opportunity to review same.
(iv) If, in the opinion of MIG REIT's Board of
Directors, the terms of a Third Party Offer are superior to
the transactions contemplated in this Agreement and the
Portfolio Purchase Agreements, in that MIG REIT's shareholders
would realize more value as a result of the acceptance of such
Third Party Offer and, as a result, in the opinion of MIG
REIT's legal counsel, MIG REIT's directors would have a
fiduciary duty to accept such Third Party Offer, Seller shall
have the right to send Buyer a written notice (the "Fiduciary
Out Notice") to such effect. Seller's
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sending the Fiduciary Out Notice to Buyer shall constitute an
election by Seller to terminate this Agreement and cancel the
Earnest Money Escrow, subject to subsection (v) below.
(v) If a Fiduciary Out Notice is sent to Buyer, Buyer
shall have the right to elect, by giving Seller written notice
thereof within ten (10) business days after such Fiduciary Out
Notice is sent to Buyer, to either: (A) do nothing, or (B)
propose terms and conditions for Buyer to purchase the
Property which are at least as advantageous to Seller as the
terms and conditions set forth in such
Fiduciary Out Notice, which proposed terms and conditions
shall include a total purchase price for all the Portfolio
Properties at least equal to the total purchase price proposed
by the Third Party Buyer named in such Fiduciary Out Notices,
plus $250,000. If Buyer elects to do nothing, Seller shall
have no obligation to sell the Property to Buyer, but Buyer
shall have the right to be paid the Break-Up Fee (as defined
below) on the same contingent basis specified in subsection
(vii)(B) below. If Buyer proposes such new terms and
conditions which are accepted by Seller, in Seller's role and
absolute discretion, the Break-Up Fee shall not be payable to
Buyer and the parties shall proceed with and complete the
purchase and sale of the Property in accordance therewith. If
Buyer elects to do nothing, or if Seller does not accept such
new terms and conditions proposed by Buyer, Seller shall give
written notice to Buyer and the Title Company that this
Agreement is terminated and the Earnest Money Escrow is
canceled (the "Termination Notice").
(vi) If Seller sends the Termination Notice, the
Title Company shall automatically and immediately without
further instruction from Seller to Buyer, release the Earnest
Money Deposit, plus accrued interest, to Buyer.
(vii) If Seller sends the Termination Notice, then
Seller shall be obligated to pay to Buyer an all-inclusive fee
(the "Break-Up Fee") for the purpose of compensating Buyer for
the loss of the opportunity to purchase the Property and
reimbursing Buyer for all out-of-pocket costs incurred by
Buyer in the course of its due diligence review. The Break-Up
Fee shall be three percent (3%) of the Appraised Value and
shall be paid to Buyer simultaneously with the delivery of the
Termination Notice, by wire transfer of immediately available
federal funds.
UPON THE SENDING OF THE TERMINATION NOTICE, THIS AGREEMENT
SHALL BE TERMINATED AND THE BREAK-UP FEE SHALL BE PAID TO
BUYER AS PROVIDED ABOVE AS LIQUIDATED DAMAGES. THE PARTIES
ACKNOWLEDGE THAT BUYER'S ACTUAL DAMAGES AS A RESULT OF A
TERMINATION OF THIS AGREEMENT PURSUANT TO THIS SECTION 8(c)
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.
THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES
ACKNOWLEDGE THAT THE BREAK-UP FEE HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF BUYER'S
DAMAGES AND AS BUYER'S EXCLUSIVE
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REMEDY AGAINST SELLER FOR TERMINATING THIS AGREEMENT UNDER
THIS SECTION 8(c).
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 interests, 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 and 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 and 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
jurisdiction in which the
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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
Property 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;
(ix) 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; and
(xiv) a copy of any affidavit required by the Title
Company to remove the standard printed exceptions from the
Title Policy.
(c) Buyer shall issue the Common Shares to or for the benefit
of Seller, or Seller's designees (provided that they make the
investment intent representations set forth in the Investment
Representation Letter) and deliver the Cash Payment through escrow on
the Closing Date and shall deliver the following documents to Seller on
or before the Closing:
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(i) Settlement statements agreed to by Seller and
executed by Buyer;
(ii) 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 and 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) Duly executed resolutions adopted by the Board of
Directors of Buyer authorizing the execution and delivery of
this Agreement by Buyer, the performance by Buyer of its
obligations hereunder and the consummation of the transactions
contemplated hereby; and
(vi) 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. Buyer acknowledges and agrees that
prior to the execution of this Agreement, Buyer has received from Seller or
Seller has made available to Buyer true and correct copies of all of the
information regarding the Property which is described on EXHIBIT K attached
hereto and made a part hereof (the "Approved Due Diligence Materials") and that
Buyer has approved the Approved Due Diligence Materials and all information
contained therein. For a period of thirty (30) days following execution of this
Agreement (the "Due Diligence Period"), Buyer shall be permitted to conduct its
own limited inspections of the Property for the sole purposes of updating the
Approved Due Diligence Materials, with respect to: (i) obtaining a so-called
"Phase I Environmental Assessment" of the Property, (ii) obtaining structural
and engineering assessments of the Property, (iii) obtaining the Title
Commitment referenced in Section
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7 hereof and (iv) updating or upgrading the survey referenced on EXHIBIT K (the
"Updated Due Diligence"). Seller shall grant reasonable access to Buyer and its
representatives to the Property for the purpose of conducting the Updated Due
Diligence. 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, claim, 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.
Without limiting the rights accorded to Buyer pursuant to
Section 8 hereof, at any time during or at the end of the Due Diligence Period,
Buyer, in the event that Buyer's Updated Due Diligence discloses any information
which is not contained in the Approved Due Diligence Materials and which could
reasonably be expected to have a material adverse impact on the value of the
Property ("A Material Adverse Condition"), then, Buyer, in Buyer's sole
discretion, may terminate this Agreement (by giving notice of such termination
to Seller, including Buyer's specific reasons therefor). Buyer shall notify
Seller in writing either during or at the end of the Due Diligence Period with
respect to whether or not Buyer has discovered any such Material Adverse
Condition. If Buyer's written notice to Seller indicates that the Updated Due
Diligence has not
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disclosed a Material Adverse Condition, 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 the Updated Due Diligence has
disclosed a Material Adverse Condition, then this Agreement shall terminate and
the Earnest Money Deposit (including all interest earned thereon) 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. Notwithstanding anything to the contrary
contained in this Section 10, if Buyer does not notify Seller by the end of the
Due Diligence Period with respect to whether or not the Updated Due Diligence
has disclosed a Material Adverse Condition, then Buyer shall be deemed to have
notified Seller that the Updated Due Diligence has not disclosed any Material
Adverse Condition.
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 (the
"Merger Agreement") by and among Buyer, MIG Realty Advisors, Inc. ("MIGRA") and
certain shareholders of MIGRA (the "Closing Date"), which Closing Date shall be
established through written notice given by Buyer to Seller and shall not be
later than ten (10) days after the end of the Due Diligence Period (the
"Scheduled Closing Date"). Notwithstanding the foregoing, in the event that
Buyer determines that the applicable rules of the New York Stock Exchange
require its shareholders approval of the transactions contemplated by the Merger
Agreement or this Agreement, then Buyer shall have the right at any time up
until the Scheduled Closing Date, upon written notice to Seller, to extend the
Scheduled Closing Date in order to permit Buyer to obtain such shareholder
approval, to a date which is no later than (i) ninety (90) days after the date
of this
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Agreement, if the Securities and Exchange Commission ("SEC") informs Buyer that
it will not provide comments to its proxy statement or (ii) one hundred thirty
five days (135) after the date of this Agreement, if the SEC provides comments
to its proxy statement. 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. THE
PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY
BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY
PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY
DEPOSIT (INCLUDING ALL INTEREST EARNED THEREON) HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE
EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER.
INITIALS: Seller_________ Buyer __________
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
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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 to 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
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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
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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) Seller shall pay in connection with this transaction the
following closing costs: (i) any state or local real or personal
property transfer taxes, documentary stamps, fees or other charges
relating to the transfer of the Property. Buyer shall pay in connection
with this transaction the following closing costs: (i) all recording
fees, (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 Appraised
Value 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
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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 taking, 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
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33
and against 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 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 obligation 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 attorneys' 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 or the Intangible Rights),
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)
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of Section 15(a) or 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) All 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:
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AS TO SELLER:
c/o MIG Residential REIT, Inc.
Attn: Mr. Robert H. Edelstein, Director
Fischer Center for Real Estate & Urban Economics
U.C. Berkeley
F602 Haas School of Business #6105
Berkeley, CA 94720
Phone (510) 643-6105
Fax (510) 643-7357
c/o MIG Residential REIT, Inc.
Attn: Mr. Jeffrey Fisher, Director
Indiana University School of Business
1309 East 10th Street, Suite 461
Bloomington, IN 47405
Phone (812) 336-9029
Fax (812) 855-9472
c/o MIG Residential REIT, Inc.
Attn: Ms. Susan M. Wachter, Director
Wharton Real Estate Center
256 South 37th Street
Lauder Fischer Hall
University of Pennsylvania
Phone (215) 898-6355
Fax (215) 573-4062
c/o MIG Residential REIT, Inc.
Attn: Larry E. Wright, President
MIG Realty Advisors
250 Australian Avenue, South, Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
WITH A COPY TO:
Cox, Castle & Nicholson, LLP
Attn: Samuel H. Gruenbaum, Esq.
2049 Centry Park East, 28th Floor
Los Angeles, CA 90067
Phone (310) 277-4222
Fax (310) 277-7889
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Mayer, Brown & Platt
Attn: Stuart P. Pergament, Esq.
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006
Phone (202) 778-0600
Fax (202) 861-0473
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) 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.
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(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 deliver
such further documents and instruments of conveyance, 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) This 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
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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 set 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.
(l) Buyer covenants that on or before the Closing Date, it
will execute and deliver
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the Registration Rights Agreement attached hereto and made a part
hereof as EXHIBIT J.
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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 fully executed.
SELLER:
MIG REIT/MORGAN PLACE, INC.
By: _______________________________
BUYER:
ASSOCIATED ESTATES REALTY
CORPORATION
By: _______________________________
Jeffrey I. Friedman, President
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EXHIBIT A-1
PORTFOLIO PROPERTIES
1. Annen Woods
2. Hampton Point
3. Morgan Place
4. Fleetwood
5. Peachtree
6. Twentieth and Campbell
7. Desert Oasis
8. Windsor Falls
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EXHIBIT C
ASSIGNMENT AND ASSUMPTION OF
LEASES AND CLOSING AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND CLOSING AGREEMENT
(this "Agreement"), made and entered into as of the _____ day of
________________, 19___, by and between _____________________________
("Assignor"), and ASSOCIATED ESTATES REALTY CORPORATION, an Ohio corporation
("Assignee"),
W I T N E S S E T H :
WHEREAS, pursuant to the provisions of that certain purchase
agreement between Assignor and Assignee dated ___________ (the "Purchase
Agreement"), Assignor has transferred an apartment project known as
______________________ located in ______________________ (the "Project"), to
Assignee; and
WHEREAS, in connection with such transfer of assets, the
parties have agreed to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the entering into of this
Agreement and for other good and valuable consideration received to the full
satisfaction of Assignor and Assignee, the parties hereto agree as follows:
1. Agreement and Assumption.
(a) Assignor hereby conveys, transfers and assigns unto
Assignee, its successors and assigns, all right, title and interest, as of the
date hereof, which Assignor has or may have in and to (i) all leases, written or
oral, and tenancies with tenants with respect to all or any portion of the
Project (the "Tenant Leases") and (ii) all assignable maintenance and service
contracts, supply contracts, insurance policies (to the extent that Assignee
elects to assume them) and other assignable agreements, contracts and contract
rights relating to the ownership or operation of the Project, or any part
thereof (the "Project Contracts") and (iii) all assignable leases of equipment,
vehicles and other tangible personal property leased by Assignor and used by
Assignor in connection with the ownership and operation of the Project (the
"Personal Property Leases").
(b) Assignee hereby accepts the foregoing assignment and
agrees to keep, perform and observe (i) all of the obligations, terms and
conditions of the Tenant Leases, the Project Contracts and the Personal Property
Leases, first arising from and after or relating to any period of time after the
date of this Agreement and (ii) all obligations and liabilities under the Tenant
Leases relating to the tenant deposits (including, without limitation, security
deposits) and prepaid rent.
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2. Conveyance of Other Property. Assignor hereby conveys, sells,
transfers, assigns and delivers to and vests in Assignee, its successors and
assigns all of Assignor's right, title and interest in and to the following
(collectively the "Personal Property"):
(a) all furnishings, furniture, equipment, supplies and other
personal property owned by Assignor, used or usable in connection with the
Project and located on or in the Project;
(b) 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 Assignor and related to the ownership of
the Project, to the extent transferable;
(c) all deposits and escrowed amounts with holder of any
indebtedness of Assignor which encumbers the Project, prepaid rentals under the
Tenant Leases, cash, accounts and notes receivable, and all other miscellaneous
deposits, receivables and prepaid expenses (including, without limitation,
prepaid insurance premiums) related to the ownership or operation of the
Project;
(d) all transferable guaranties, warranties and other
intangible rights pertaining to the Project, or any part thereof including,
without limitation, all transferable guaranties, and warranties relating to the
construction of the Project including all rights under architects and
construction contracts;
(e) all books of accounts, customer lists, files, papers and
records relating to the Project or Assignor's business with respect thereto; and
(f) the right to use the name "_____________________."
Assignor warrants to Assignee that it has good title to the
Personal Property (other than the right to use the name "__________________")
free and clear of all mortgages, pledges, liens, security interests,
encumbrances and restrictions.
3. Limitation on Assumption of Obligations. With the exception of the
liabilities and obligations set out in the Purchase Agreement or expressly
assumed by Assignee pursuant to Section 1 of this Agreement, Assignee shall not,
by execution and delivery of this Agreement, be deemed to have assumed or
otherwise become responsible for any liability or obligation of any nature of
Assignor, whether relating to Assignor's business or any of Assignor's assets,
operations, businesses or activities, or claims of such liability or obligation,
matured or unmatured, liquidated or unliquidated, fixed or contingent, or known
or unknown, whether arising out of occurrences prior to, at or after the date
hereof.
4. Power of Attorney. Assignor hereby constitutes and appoints
Assignee, its successors and assigns, the true and lawful attorney of Assignor,
with full power of substitution, having full right and authority, for the
benefit of Assignee, its successors and assigns:
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(i) to demand and receive any and all assets and
properties hereby conveyed, transferred, assigned and
delivered;
(ii) to give receipts, releases and acquittances for
or in respect of the same or any part thereof;
(iii) to collect, for the account of Assignee, all
receivables and other items of Assignor transferred to
Assignee as provided herein and to endorse in the name of
Assignor any checks received on account of any such
receivables or items;
(iv) to institute and prosecute against parties other
than Assignor, in the name of, at the expense of and for the
benefit of Assignee, any and all proceedings at law, in equity
or otherwise which Assignee, its successors and assigns may
deem proper with regard to the assets and properties hereby
conveyed, transferred, assigned and delivered;
(v) to collect, assert or enforce against parties
other than Assignor any claim, right, title, debt or account
hereby conveyed, transferred, assigned and delivered; and
(vi) to defend or compromise against parties other
than Assignor any and all actions, suits or proceedings in
respect of any of the assets and properties hereby conveyed,
transferred, assigned, delivered, as Assignee, its successors
or assigns, shall consider desirable.
Assignor hereby declares that the foregoing powers are coupled with an interest
and shall not be revocable by it in any manner or for any reason.
5. Miscellaneous.
(a) This Agreement shall be deemed to contain all of the terms
and conditions respecting the subject matter hereof, it being understood that
there are no outside representations or oral agreements on which either party is
relying.
(b) Neither the execution and delivery of this Agreement nor
the performance by either party of its obligations hereunder shall in any manner
affect or impair the representations and warranties of the parties contained in
the Purchase Agreement, all of which shall survive for the respective periods
set forth in the Purchase Agreement.
(c) This Agreement shall be effective as of the date hereof.
(d) Notice required or permitted to be given hereunder by the
parties shall be given as set forth in the Purchase Agreement.
(e) This Agreement shall be governed by and construed in
accordance with the
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laws of the State of ___________________.
(f) This 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.
(g) This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.
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IN WITNESS WHEREOF, Assignor and Assignee have hereunto
subscribed their names as of the date first above written.
Signed and acknowledged ASSIGNOR:
in the presence of:
________________________________
__________________________ By:____________________________
Print Name:_______________ Its:___________________________
__________________________
Print Name:_______________
ASSIGNEE:
__________________________ ASSOCIATED ESTATES REALTY
CORPORATION, an Ohio corporation
Print Name:_______________
__________________________ By:____________________________
Martin A. Fishman
Print Name:_______________ Vice President
STATE OF __________ )
) SS:
COUNTY OF _________ )
BEFORE ME, a Notary Public in and for said County and State,
personally appeared ___________________, who acknowledged that he did sign the
foregoing instrument as _________________ of _____________________, that the
same is his free act and deed of said corporation and his free act and deed
personally and as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal at ____________, ___________, this _____ day of ____________, 19___.
______________________________
Notary Public
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STATE OF __________ )
) SS:
COUNTY OF _________ )
BEFORE ME, a Notary Public in and for said County and State,
personally appeared ASSOCIATED ESTATES REALTY CORPORATION, an Ohio corporation,
by Martin A. Fishman, its Vice President, who acknowledged that he did sign the
foregoing instrument on behalf of said corporation and that the same is his free
act and deed individually and as such officer and the free act and deed of said
corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official
seal at _________, __________, this ____ day of ___________, 19___.
______________________________
Notary Public
This instrument prepared by:
Paul E. Bennett, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3485
(216) 621-0200
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EXHIBIT D
CERTIFICATE OF SELLER REGARDING PROJECT
CONTRACTS AND PERSONAL PROPERTY LEASES
The undersigned certifies that, to the undersigned's Actual
Knowledge (as defined in the Purchase Agreement pursuant to which this
certificate is delivered) the only Project Contracts and Personal Property
Leases as defined by the Purchase Agreement between the undersigned and
Associated Estates Realty Corporation dated ______________ existing as of the
Closing Date, are as follows:
1. _______________________________________
2. _______________________________________
3. _______________________________________
IN WITNESS WHEREOF, the undersigned have executed this
Certificate as of the _____ day of ______________, 19__.
______________________________
By:___________________________
Its: ________________________
49
EXHIBIT E
______________ __, 19___
Martin A. Fishman, Esq.
Associated Estates Realty Corporation
5024 Swetland Court
Richmond Heights, OH 44143
Dear Marty:
The undersigned (the "Seller") hereby certifies that to the
best of its Actual Knowledge (as that term is defined in the Purchase Agreement
pursuant to which this certificate is delivered), the financial books and
records (the "Books and Records") relating to the ______________ (the "Project")
are available at _____________________________. We have directed our agent who
is in possession of the Books and Records to make all of the Books and Records,
or true copies thereof and any backup documentation available for inspection and
copying by Associated Estates Realty Corporation ("AERC") and their auditors in
connection with AERC's reporting requirements on reasonable notice to the
undersigned.
______________________________
By:_____________________________
Its:____________________________
50
EXHIBIT F
SELLER'S CERTIFICATE
_______________________________ (the "Seller"), hereby
certifies, represents, and warrants to Associated Estates Realty Corporation
("AERC") pursuant to Section ______ of the Purchase Agreement by and between the
Seller and AERC dated as of ____________________________ (the "Agreement"), that
except as set forth on Attachment 1 attached hereto and made a part hereof, the
representations and warranties of Seller set forth in the Agreement were true
and correct when made and are true and correct as of the Closing Date. The
Seller acknowledges and agrees that the disclosure of the matters set forth on
Attachment 1 shall in no way affect the rights of Buyer to decline to proceed to
the Closing (as that term is defined in the Agreement) or any way modify or
amend the provisions of Section 8(a)(i) of the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate as
of the _____ day of ______________, 19___.
_______________________________
By:_____________________________
Its:____________________________
51
ATTACHMENT 1
52
EXHIBIT G
ASSOCIATED ESTATES REALTY CORPORATION
BUYER'S CERTIFICATE
Associated Estates Realty Corporation, an Ohio corporation
("AERC") certifies, represents, and warrants pursuant to Section _____ of the
Purchase Agreement dated as of ______________ by and between ________________
and AERC (the "Agreement"), that except as set forth on Attachment 1 attached
hereto and made a part hereof, the representations and warranties of AERC as
set forth in the Agreement were true and correct when made and are true and
correct as of the Closing Date. AERC acknowledges and agrees that the disclosure
of the matters set forth on Attachment 1 shall in no way affect the rights of
Seller (as defined in the Agreement) to decline to proceed to the Closing (as
defined in the Agreement) or any way modify or amend the provisions of
Section 8(b)(i) of the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the ______ day of ________________, 19___.
ASSOCIATED ESTATES REALTY
CORPORATION
By ___________________________________
Martin A. Fishman, Vice President
53
ATTACHMENT 1
54
EXHIBIT H
1. The closing of the Merger provided for in the Merger Agreement (as defined in
the Purchase Agreement of which this exhibit is a part).
2. The closing under that certain Contribution and Partnership Interest Purchase
Agreement whereby Buyer's or Buyer's affiliate will acquire a partnership
interest in (i) MIG/Orlando Development, Ltd., (ii) MIG/Hollywood Development,
Ltd., (iii) MIG/Pines Development, Ltd. and (iv) HP Advisors.
3. Associated Estates Realty Corporation's acquisition of any number of the
apartment properties listed on Exhibit A of the Merger Agreement, provided that
the aggregate independently appraised value of such apartment properties must be
greater than or equal to $184,000,000 (inclusive of the property that is the
subject of the Purchase Agreement of which this exhibit is a part).