FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1997 Commission file number 0-15747
Brown-Flournoy Equity Income Fund Limited Partnership
(Exact Name of Registrant as Specified in its Charter)
Delaware 58-1688140
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
225 East Redwood Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 727-4083
N/A
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Statements of Partners' Capital 3
Statements of Cash Flows 4
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information
Item 1. through Item 6. 9
Signatures 10
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
Assets
<S> <C> <C>
Investment in real estate $ 13,669,417 $ 14,355,212
Cash and cash equivalents 1,589,304 1,467,365
Other assets
Accounts receivable 28,671 19,744
Prepaid expenses 12,994 70,500
Loan fees, less accumulated amortization
of $269,023 and $73,434, respectively - 93,761
Total other assets 41,665 184,005
Total assets $ 15,300,386 $ 16,006,582
Liabilities and Partners' Capital
Accounts payable and accrued expenses including
$31,745 and $28,941 due to affiliates, respectively $ 631,116 $ 417,042
Tenant security deposits 101,431 110,890
Mortgage loans payable 20,400,000 20,400,000
Total liabilities 21,132,547 20,927,932
Partners' Capital
General Partners (271,185) (252,969)
Limited Partners
Class A - $1,000 stated value per unit;
27,000 units outstanding (5,561,076) (4,668,481)
Class B 100 100
Total partners' capital (5,832,161) (4,921,350)
Total liabilities and partners' capital $ 15,300,386 $ 16,006,582
</TABLE>
See accompanying notes to financial statements
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<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
Revenues
<S> <C> <C> <C> <C>
Rental income $ 1,199,481 $ 1,242,376 $ 3,484,336 $ 3,585,281
Interest income 16,872 16,019 47,655 44,308
1,216,353 1,258,395 3,531,991 3,629,589
Expenses
Compensation and related benefits 154,812 128,949 453,550 380,193
Utilities 76,588 75,295 213,315 213,089
Property taxes 93,006 90,084 279,019 273,580
Insurance 19,308 17,897 57,908 53,745
Advertising 27,495 19,885 83,482 81,154
Maintenance and repairs 66,917 120,271 223,536 336,579
Property management fee 59,974 62,119 174,217 179,264
Other 7,439 9,099 22,251 25,788
Administrative and professional fees 25,011 18,531 72,737 57,828
Interest expense 495,267 483,783 1,457,750 1,451,548
Depreciation of property and equipment 269,062 260,514 796,183 782,551
Amortization of loan fees 60,992 33,936 195,589 71,030
1,355,871 1,320,363 4,029,537 3,906,349
Net loss $ (139,518) $ (61,968) $ (497,546) $ (276,760)
Net loss per unit of Class A limited
partnership interest $ (5.06) $ (2.25) $ (18.06) $ (10.05)
</TABLE>
See accompanying notes to financial statements
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<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Statements of Partners' Capital
For the nine months ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
Class A Class B
General Limited Limited
Partners Partner Partners Total
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ (252,969)$ (4,668,481)$ 100 $ (4,921,350)
Net loss (9,951) (487,595) - (497,546)
Distributions to partners (8,265) (405,000) - (413,265)
Balance at September 30, 1997 $ (271,185)$ (5,561,076)$ 100 $ (5,832,161)
Balance at December 31, 1995 $ (234,522)$ (3,764,559)$ 100 $ (3,998,981)
Net loss (5,535) (271,225) - (276,760)
Distributions to partners (8,265) (405,000) - (413,265)
Balance at September 30, 1996 $ (248,322)$ (4,440,784)$ 100 $ (4,689,006)
</TABLE>
See accompanying notes to financial statements
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<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Statements of Cash Flows For the nine months ended Septmber 30, (Unaudited)
<TABLE> <CAPTION>
1997 1996
Cash flow from operating activities
<S> <C> <C>
Net loss $ (497,546) $ (276,760)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation of property and equipment 796,183 782,551
Amortization of loan fees 195,589 71,030
Changes in assets and liabilities
Increase in accounts receivable (8,927) (639)
Decrease in prepaid expenses 57,506 53,214
Increase in accounts payable and accrued expenses 214,195 182,671
Decrease in tenant security deposits (9,459) (6,470)
Net cash provided by operating activities 747,541 805,597
Cash flows from investing activities-
additions to investment in real estate (110,388) (96,970)
Cash flows from financing activities
Decrease in mortgage loans payable - (90,080)
Proceeds from mortgage loan refinancing - 20,400,000
Repayment of mortgage loans - (20,110,870)
Financing costs (101,828) (111,679)
Distributions to investors (413,265) (413,265)
Net cash used in financing activities (515,093) (325,894)
Net increase in cash and cash equivalents 122,060 382,733
Cash and cash equivalents
Beginning of period 1,467,365 1,447,679
End of period $ 1,589,425 $ 1,830,412
</TABLE>
See accompanying notes to financial statements
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<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Notes to Financial Statements
September 30, 1997
(Unaudited)
(1) The Fund and Basis of Preparation
The accompanying financial statements of Brown-Flournoy Equity Income
Fund Limited Partnership (the "Fund") do not include all of the
information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles. The unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All such
adjustments are of a normal recurring nature. The unaudited interim
financial information should be read in conjunction with the financial
statements contained in the 1996 Annual Report.
(2) Investment in Real Estate
Investment in real estate is stated at the lower of fair value or cost,
net of accumulated depreciation, and is summarized as follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
<S> <C> <C>
Land $ 1,205,950 $ 1,205,950
Buildings 20,417,743 20,417,743
Furniture, fixtures and equipment 2,514,054 2,403,666
24,137,747 24,027,359
Less: accumulated depreciation 10,468,330 9,672,147
Total $13,669,417 $14,355,212
</TABLE>
(3) Cash and Cash Equivalents
The Fund considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. Cash and cash
equivalents consist of the following, stated at cost, which approximates
market value.
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
<S> <C> <C>
Cash and money market $ 618,252 $ 532,655
Certificates of deposit with interest rates
ranging from 5.16 to 5.2% in 1997 and
5.0% to 5.6% in 1996 971,052 934,710
$1,589,304 $1,467,365
</TABLE>
(4) Related Party Transactions
Brown Equity Income Properties, Inc., the Administrative General
Partner, billed the Fund $11,443 and $9,964 in the quarters ended
September 30, 1997 and 1996, respectively, for reimbursement of the cost
of administrative services and expenses made on behalf of the Fund.
Flournoy Properties, Inc., an affiliate of the Development General
Partner, is the managing agent for the properties and earned a
management fee of $59,974 and $62,119 representing 5% of gross monthly
operating revenues from the properties during the quarters ended
September 30, 1997 and 1996, respectively.
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<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Notes to Financial Statements
September 30, 1997
(Unaudited)
(5) Mortgage Loans Payable
The Fund's General Partners secured first mortgage loans aggregating
$20.8 million on August 30, 1989 which were secured by the land,
apartment units and all other improvements to the four apartment
properties. These loans were for an original term of 7 years with
interest only payments at 9.6%. Interest only was payable monthly
through September 1994, and thereafter monthly payments were based on a
30- year amortization schedule with a balloon payment due at the end of
the 7 year term.
The mortgage loans matured on September 1, 1996. The Fund refinanced
these loans with Columbus Bank & Trust. The terms of the new loans
provide for interest only payments of prime plus 1% in monthly
installments for one year. The new loans total $20,400,000 and provided
proceeds sufficient to satisfy the repayment of the old mortgage loans,
and all costs of the refinancing. The Fund is required to pay a
commitment fee of one point payable in advance in quarterly
installments. Columbus Bank & Trust has agreed to extend these loans to
December 31, 1997 at no additional cost to the Fund. The Fund intends to
repay these balances with proceeds from mortgage refinancing or other
capital transactions.
(6) Subsequent Event
The General Partners of the Fund have executed a Purchase and Sale
Agreement dated October 14, 1997 with Mid-America Apartments L.P. to
sell each of the Fund's four apartment communities ("Properties") for
approximately $30 million. A Definitive Proxy Statement has been filed
with the Securities and Exchange Commission and the Consent Form and
Consent Solicitation Statement have been distributed to holders of
record of Class A Limited Partnership interests ("Unitholders"). The
sale of the properties is contingent on the consent of a majority of the
Unitholders. Upon consummation of the sale, the Fund will receive
approximately $9,625,000 in cash consideration (sales price less assumed
debt of $20.4 million), that along with any other remaining Fund assets
will be available for distribution to Unitholders. The General Partners
estimate that each Unitholder will receive approximately $385 per Unit
(prior to any state or local withholding requirements) and be allocated
taxable gain of approximately $588 per unit.
(7) Net Loss per Unit of Class A Limited Partnership Interest
Net loss per Class A Limited Partnership interest is disclosed on the
Statements of Operations and is based upon 27,000 units outstanding.
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<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1997, the Fund had a working capital position of
unrestricted cash and cash equivalents of $1,487,873 and accounts payable and
accrued expenses of $631,116. Restricted cash represents amounts retained from
tenants for security deposits and totaled $101,431 at September 30, 1997. The
working capital balance represents reserves for future contingencies that were
established from mortgage loan proceeds and are deemed sufficient to meet the
Fund's liquidity requirements even under very pessimistic operating scenarios.
Reserves may be distributed as the General Partners deem appropriate.
Cash and cash equivalents increased $111,687 during the third quarter
of 1997. This increase represents the net effect of $292,657 in cash provided by
operating activities, $43,215 utilized for capital expenditures and
distributions to investors of $137,755.
In November 1997 the Fund made a cash distribution to its investors of
$137,755. This distribution was derived from unrestricted cash available at the
end of the third quarter.
On August 27, 1996, the Fund closed on interim one year loans that
matured in September 1997. Columbus Bank and Trust, the lender, has agreed to
extend these loans to December 31, 1997. These loans will serve the financial
needs of the Fund until it selects a permanent financial solution for the
repayment of its debt. The terms of the interim financing provide for interest
only payments of prime (8.50% at September 30, 1997) plus 1% in monthly
installments. The new loans totaled $20,400,000 and provided proceeds sufficient
to satisfy the repayment of the existing mortgage loans, as well as all costs of
the refinancing.
Results of Operations
Rental revenues during the third quarter and first nine months of 1997
declined 3% when compared to the same periods in 1996. These decreases in rental
revenues are largely attributable to the operations at the High Ridge property.
During the first nine months of 1997, rental revenue at High Ridge declined 9%
as compared to the same period in 1996. This decline in rental revenue is due
primarily to lower occupancy levels at High Ridge during the first half of 1997.
Improved occupancy levels at High Ridge during the third quarter, reduced the
decline in rental revenues during the period to 1% when compared to the third
quarter of 1996.
Total expenses during the third quarter and first nine months of 1997
increased 3% as compared to the same periods in 1996. These increases were
largely due to additional compensation, advertising and administrative
expenditures. The increase in compensation expense relates to the hiring of
additional leasing personnel at certain properties. Compensation expenses also
increased due to management's decision to perform certain landscaping functions
internally at the Park Place property, which had previously been contracted out.
Increased advertising expenses were largely attributable to increased
expenditures at the High Ridge property.
Occupancy for the Fund's properties during the third quarter of 1997
remained consistent with the same period of 1996, averaging 93%. For the first
nine months of 1997, occupancy at the Fund's properties averaged 90%, a decline
of 1% from 1996.
The Park Place property, located in Spartanburg, South Carolina,
attained an average occupancy of 92% for third quarter of 1997, a 1% drop from
the same period of 1996. For the first nine months of 1997 total revenues remain
consistent with the same period in 1996. Competition from recently completed
apartment communities has minimized management's ability to implement
substantive rental rate increases during the past 12 months. While management
has been unable to dramatically increase base rental rates, it has worked hard
to secure corporate rental income. During the first nine months of 1997,
corporate rental income increased approximately $10,000 from 1996.
Occupancy at the Hidden Lake property averaged 95% during the third
quarter of 1997, a modest decline from 1996. Rental revenues during the third
quarter and first nine months of 1997, remained essentially unchanged from the
same periods in 1996.
-7-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
During the third quarter of 1997 the High Ridge property, located in
Athens, Georgia, achieved an average occupancy of 94%, a 2% increase from the
same period in 1996. The 94% occupancy attained during the third quarter of 1997
is a dramatic increase from the 80% that was recorded during the first six
months of 1997. Management has been faced with certain leasing challenges
brought about by the recent construction of new apartment communities. Total
revenues declined approximately 9% during the first nine months of 1997 as
compared to the same period in 1996. This decline is largely due to lower
occupancy levels during the first half of 1997. During the third quarter of
1997, total revenues declined 1% from the previous year. Management is keenly
aware of the challenges brought about by the newly constructed apartment
communities, and continues to work hard to restore the High Ridge property to
its historically strong operational levels.
The Southland Station property, located in Warner Robins Georgia,
attained an average occupancy of 92%, during the third quarter and first nine
months of 1997. This level of occupancy represents increases of 1% and 5% from
the third quarter and first nine months of 1996, respectively. In spite of the
increased occupancy, total rental revenue declined approximately 2% during the
first nine months of 1997, as compared to 1996. Management continues to face
operational challenges brought about by recently constructed apartment
communities, as well as the migration of would- be renters to purchase or build
houses. In an effort to deal with these challenges, management has adjusted
rents to be more competitive with the surrounding properties.
All four properties remain in excellent condition.
Sale of Properties
The General Partners of the Fund have executed a Purchase and Sale
Agreement dated October 14, 1997 with Mid-America Apartments L.P. to sell each
of the Fund's four apartment communities ("Properties") for approximately $30
million. A Definitive Proxy Statement has been filed with the Securities and
Exchange Commission and the Consent Form and Consent Solicitation Statement have
been distributed to holders of record of Class A Limited Partnership interests
("Unitholders"). The sale of the properties is contingent on the consent of a
majority of the Unitholders. Upon consummation of the sale, the Fund will
receive approximately $9,625,000 in cash consideration (sales price less assumed
debt of $20.4 million), that along with any other remaining Fund assets will be
available for distribution to Unitholders. The General Partners estimate that
each Unitholder will receive approximately $385 per Unit (prior to any state or
local withholding requirements) and be allocated taxable gain of approximately
$588 per unit.
-8-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities
Inapplicable
Item 3. Defaults upon Senior Securities
Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable
Item 5. Other Information
The General Partners of the Fund have executed a Purchase and
Sale Agreement dated October 14, 1997 with Mid-America Apartments
L.P. to sell each of the Fund's four apartment communities
("Properties") for approximately $30 million. A Definitive Proxy
Statement has been filed with the Securities and Exchange Commission
and the Consent Form and Consent Solicitation Statement have been
distributed to holders of record of Class A Limited Partnership
interests ("Unitholders"). The sale of the properties is contingent
on the consent of a majority of the Unitholders.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
(10) Purchase and Sale Agreement dated October 14, 1997.
b) Reports on Form 8-K: None.
-9-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BROWN-FLOURNOY EQUITY INCOME FUND
LIMITED PARTNERSHIP
DATE: 11/10/97 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown Equity Income Properties, Inc.
Administrative General Partner
DATE: 11/10/97 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Brown Equity Income Properties, Inc.
Administrative General Partner
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered into as of this
14th day of October, 1997, by and between BROWN-FLOURNOY EQUITY INCOME FUND
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Seller"), and
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (the "Purchaser").
W I T N E S S E T H, That:
WHEREAS, the Purchaser, Mid-America Apartment Communities, Inc., a
Tennessee corporation and the sole general partner of the Purchaser ("MAAC"),
and Flournoy Development Company, a Georgia corporation ("FDC"), entered into
that certain Agreement and Plan of Reorganization, dated September 17, 1997 (the
"Reorganization Agreement") providing for the acquisition of certain assets by
the Purchaser and MAAC through a merger of FDC into MAAC and through a series of
merger, exchange and purchase transactions involving the owners of certain
apartment projects;
WHEREAS, John F. Flournoy, a general partner of the Seller, is a
principal of FDC;
WHEREAS, as provided in the Reorganization Agreement, FDC has agreed to
use its reasonable best efforts to cause the Seller to convey the Properties (as
hereinafter defined) to the Purchaser upon the closing of the transactions
described in the Reorganization Agreement, provided FDC obtains the consent and
agreement of the Seller;
WHEREAS, the Seller has consented to the sale of the Properties and
agreed to sell the Properties to the Purchaser, subject to the terms and
conditions of this Agreement; and
WHEREAS, the parties desire to provide for said purchase and sale on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants and agreements set forth herein, and other good and valuable
consideration, all of which each party respectively agrees constitutes
sufficient consideration received at or before the execution hereof, the parties
hereto do hereby agree as follows:
1. DEFINITIONS AND MEANINGS. In addition to any other terms whose
definitions are fixed and defined by this Agreement, each of the following
defined terms, when used in this Agreement with an initial capital letter or
letters, shall have the meaning ascribed thereto by this Paragraph 1:
1.1. "Agreement" means this Purchase and Sale Agreement,
together with all exhibits attached hereto.
<PAGE>
1.2. "Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person.
1.3. "Allocation Schedule" means the schedule allocating the
Purchase Price among the Properties attached hereto as Exhibit A.
1.4. "Business Day" means any day of the year other than
Saturday, Sunday or any other day on which banks located in New York, New York
are not required or authorized to close for business.
1.5. "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq.
1.6. "Claim" means any action, cause of action, suit, debt,
dues, account, reckoning, bond, bill, covenant, contract, controversy, promise,
trespass, damage, judgment, execution, penalty, fine, claim, liability and
demand whatsoever, in law or equity.
1.7. "Closing" means the consummation of the purchase and sale
contemplated by this Agreement by the deliveries required under Paragraph 9
hereof.
1.8. "Closing Date" means the time and date, established under
Paragraph 9 hereof, when the purchase and sale contemplated by this Agreement is
to be consummated, as such date may be extended by mutual agreement of the
parties or pursuant to the provisions of this Agreement.
1.9. "Code" means the Internal Revenue Code of 1986, as amended,
and any successor legislation thereto, including all of the rules and
regulations promulgated thereunder.
1.10. "Contracts" means all contracts to which the Seller is a
party or to which the Seller is obligated which are or have been entered into in
the Ordinary Course of Business and provide for the provision or receipt of
services or the use of any asset, including, without limitation, service
agreements, maintenance contracts, repair contracts, equipment leases,
agreements to purchase equipment, agreements to purchase or sell utility
services, sanitation contracts, pest control contracts, security contracts and
advertising contracts.
1.11. "Date of this Agreement" means the last date on which
this Agreement is duly executed by the Seller and Purchaser, and said date shall
be inserted in the first paragraph on page 1 hereof.
1.12. "Defective Property Basket" means Excluded Properties
and Other Excluded Properties containing up to one thousand (1,000) apartment
units which may be excluded from the purchase and sale transactions described
herein and/or the Reorganization described in the Reorganization Agreement,
pursuant to the provisions of Sections 4.5, 4.6, 4.7, and 4.8 hereof and the
applicable provisions of the Reorganization Agreement.
1.13. "Environmental Claim" means any Claim, investigation or
notice (written or oral) by any Person alleging potential liability (including
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or fatalities, or penalties) arising out of, based on or resulting from (i) a
Hazardous Material Activity, or (ii) activities or conditions forming the basis
of any violation, or alleged violation of, or liability or alleged liability
under, any Environmental Law.
- 2 -
<PAGE>
1.14. "Environmental Laws" means federal, state, local,
provincial, municipal and foreign laws, ordinances, principles of common law,
rules, by-laws, orders, governmental policies, statutes, regulations,
agreements, treaties, customary law, and international principles relating to
the pollution or protection of the environment or of flora or fauna or their
habitat or of human health and safety, or to the cleanup or restoration of the
environment, including, without limitation, any law or regulation relating to
(i) generation, treatment, storage, disposal or transportation of Materials of
Environmental Concern, emissions or discharges or protection of the environment
from the same, (ii) exposure of Persons to, or Release or threat of Release of,
Materials of Environmental Concern, and (iii) noise.
1.15. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor legislation thereto.
1.16. "Excluded Property" means any Property excluded from the
purchase and sale transactions described herein and included within the
Defective Property Basket pursuant to the provisions of Sections 4.5, 4.6, 4.7
and 4.8 hereof; collectively, the "Excluded Properties".
1.17. "Existing Debt" means the debt described on Exhibit B
which encumbers the respective Properties described therein.
1.18. "Government Entity" means any court, arbitrator,
department, commission, board, bureau, agency, authority, instrumentality or
other governmental body, whether federal, state, municipal, foreign or other.
1.19. "Hazardous Material Activity" means any activity, event,
or occurrence at or prior to the Closing involving any Materials of
Environmental Concern, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation, handling
or corrective or response action to any Materials of Environmental Concern.
1.20. "Intangible Property" means all intangible property
(except as expressly excluded elsewhere herein) now or on the Closing Date owned
by the Seller and used in connection with the Properties, including, without
limitation, all of its right, title and interest in and to all: goodwill, going
concern value, workforce in place, computer systems, proprietary rights,
business methods, licenses; approvals; applications and permits issued or
approved by any Government Entity and relating to the use, operation, ownership,
occupancy and/or maintenance of the Properties; the intangible value in the
various Contracts; utility arrangements; claims against third parties; plans;
drawings; specifications; surveys; maps; engineering reports and other technical
descriptions; books and records; insurance proceeds and condemnation awards; and
all other intangible rights used in connection with or relating to the
Properties, including rights, if any, to current and past names of any Property.
1.21. "Law" means any statute, law, ordinance, rule,
regulation or judicial decision of any Government Entity.
1.22. "Leases" means, as to each Property, all resident or
tenant leases, including, without limitation, all resident or tenant leases
which are made by the Seller after the date hereof and before the Closing as
permitted by this Agreement.
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<PAGE>
1.23. "Liability" means any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or contingent, known or unknown, asserted or
unasserted, liquidated or unliquidated, secured or unsecured. The term
"Liabilities" means the aggregate of Liabilities.
1.24. "Lien" means a lien (statutory or otherwise), security
interest, mortgage, deed of trust, deed to secure debt, claim, charge, pledge,
license, equity, option, conditional sales contract, easement, assessment, levy,
covenant, condition, right of way, reservation, restriction, exception,
limitation, charge or encumbrance of any nature whatsoever.
1.25. "Material Adverse Effect" means, as the context
requires, (i) with respect to a Property, a material adverse effect on the
financial condition, value, marketability, ability to finance, results of
operations, business or prospects of such Property, and (ii) with respect to the
Seller, a material adverse effect on the Seller's Properties or assets or the
financial condition, results of operations, business or prospects of the Seller
taken as a whole.
1.26. "Materials of Environmental Concern" means all
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or any
fraction thereof, petroleum products and hazardous substances (as defined in
Section 101(14) of CERCLA), or solid or hazardous wastes as now defined and
regulated under any Environmental Law.
1.27. "Order" means any order, writ, injunction, judgment,
plan or decree of any Government Entity.
1.28. "Ordinary Course of Business" means the ordinary course
of business of the Seller consistent with past practices.
1.29. "Other Excluded Property" means any property, other than
an Excluded Property, excluded from the Reorganization and included within the
Defective Property Basket pursuant to the applicable provisions of the
Reorganization Agreement.
1.30. "Permitted Exceptions" means:
(a) Liens (other than Liens imposed under ERISA or any
Environmental Law or in connection with any Environmental Claim) for
Taxes or other assessments that are not yet delinquent;
(b) except as disclosed on the Rent Roll, rights of residents or
tenants, as residents or tenants only, under the Leases;
(c) those existing title matters affecting the Properties
described on Exhibit C;
(d) those matters shown on the Surveys of the Properties
described on Exhibit C);
(e) easements, rights-of-way, covenants and restrictions which
are customary and typical for properties similar to the Properties and
which do not (i) interfere with the ordinary conduct of any Property or
the business of the Seller, as applicable, as a whole or (ii) have a
Material Adverse Effect on the Properties to which they apply;
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(f) the Existing Debt, provided the Existing Debt shall be paid
off and satisfied by the Purchaser in connection with the Closing;
(g) any other matter not objected to by the Purchaser in
accordance with Section 4.5 or for which the Purchaser elects to close
notwithstanding such matters in accordance with Section 4.5; and
(h) any other matter that is not a Title Defect.
1.31. "Person" means an individual or a corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, other form of business or legal entity or Government Entity.
1.32. "Personal Property" means all tangible property owned or
leased by the Seller now or on the Closing Date and used in conjunction with the
Seller's business or the operation, maintenance, ownership and/or occupancy of
any Property, including without limitation: furniture; furnishings; art work;
sculptures; paintings; office equipment and supplies; landscaping; plants; lawn
equipment; and whether stored on or off the Real Property, tools and supplies,
construction equipment, maintenance equipment, materials and supplies, shelving
and partitions, and any construction and finish materials and supplies not
incorporated into any Real Property as improvements, fixtures, or otherwise, and
held for repairs and replacements thereto or development thereof, wherever
located.
1.33. "Property" means, for each of the four (4) properties
described on Exhibit D, the Real Property, Leases, Personal Property and
Intangible Property related to it, and the "Properties" means all of the
Properties.
1.34. "Purchase Price" means the amount which the Purchaser shall
pay to the Seller to consummate the purchase and sale of the Properties as
provided in Paragraph 3 of this Agreement.
1.35. "Real Property" means, as to each Property, the real
property comprising such Property, together with all rights, privileges,
hereditaments and interests appurtenant thereto including, without limitation:
any water and mineral rights, development rights, air rights, easements, and any
and all rights of the Seller in and to any streets, alleys, passages and other
rights of way; and all buildings, structures and other improvements located on
or affixed to such real property and all replacements and additions thereto.
1.36. "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Materials of Environmental
Concern at or prior to the Closing Date.
1.37. "Rent Roll" means for each Property the rent roll delivered
by the Seller to the Purchaser prior to the Date of this Agreement, to be
updated at the Closing as defined in Section 9.2.1(i) hereof.
1.38. "Reorganization" means the series of transactions
contemplated by the Reorganization Agreement.
1.39. "Reorganization Agreement" means that certain Agreement and
Plan of Reorganization, dated September 17, 1997 by and among the Purchaser,
MAAC, and FDC providing for the Reorganization,
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a copy of which has been filed by MAAC as part of a Form 8-K filing made with
the Securities and Exchange Commission on September 17, 1997.
1.40. "Required Title Insurance" means the title insurance
policies or endorsements listed on Exhibit E.
1.41. "Survey" means each survey described in Exhibit C, and
"Survey means all such surveys.
1.42. "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not. The term "Tax" also
includes any amounts payable pursuant to any tax sharing agreement to which any
relevant entity is liable as a successor or pursuant to contract.
1.43. "Title Defect" means any matter, other than a Permitted
Exception described in subparagraphs (a) through (g) under the definition of
"Permitted Exceptions," which would have a Material Adverse Effect on the
subject Property.
2. SALE AND PURCHASE. The Seller agrees to sell the Properties to the
Purchaser on the terms and conditions contained in this Agreement, and the
Purchaser agrees to purchase the Properties from the Seller on the terms and
conditions contained in this Agreement.
3. PURCHASE PRICE. The Purchaser agrees to purchase the Property
subject to the Existing Debt, which shall be paid off and satisfied by the
Purchaser at the Closing, and the amount required of the Purchaser to pay off
and satisfy the Existing Debt shall not reduce or affect the Purchase Price
payable to the Seller as hereinafter provided, except for the proration of
interest described in Section 9.4.5 hereof; provided, however, the Seller shall
not cause or permit any increase in the principal balance of the Existing Debt
as provided in Section 4.1 hereof. The Purchase Price for the Properties payable
to the Seller at the Closing (which is net of the Existing Debt) shall be Nine
Million Six Hundred Twenty-Five Thousand Four Hundred Eighty-Eight and no/100
Dollars ($9,625,488.00). The Purchase Price is for all Properties and has been
allocated among the Properties as provided in the Allocation Schedule. The
Purchase Price, as adjusted to reflect the prorations provided for herein, shall
be paid by the Purchaser to the Seller at the Closing by federal funds wire
transfer.
4. COVENANTS.
4.1. Preservation of Business. From the Date of this Agreement
until the Closing Date, the Seller (i) shall operate the Properties only in the
Ordinary Course of Business, and shall not, without Purchaser's prior written
consent, engage in any transaction outside the Ordinary Course of Business
except as otherwise permitted herein, (ii) shall not, without Purchaser's prior
written consent, sell or list for sale any of the Properties, (iii) shall use
its reasonable best efforts to preserve the Properties, including the goodwill,
going concern value, and advantageous relationships of the Seller with
residents, customers, suppliers, independent contractors, employees and other
Persons material to the operation of the Properties, (iv) shall perform its
material obligations under the Leases and other material agreements affecting
the Properties, (v) shall perform its material obligations under all Contracts,
and (vi) shall not take or permit any action or omission which would cause any
of its representations or warranties contained herein to become inaccurate in
any material
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respect or any of the covenants made by it to be breached in any material
respect. Without limiting the foregoing, without the Purchaser's prior written
consent, the Seller will not cause or permit any default to occur under the
Existing Debt or cause or permit any increase in the outstanding aggregate
principal balance thereof from the Date of this Agreement until the Closing. The
Seller shall continue to maintain all insurance policies in full force and
effect up to and including the Closing Date. If the Seller contemplates entering
into any transaction or agreement or taking any other action requiring the
Purchaser's prior written consent under this Agreement, then the Seller shall
give the Purchaser notice of such proposed transaction or agreement a reasonable
time in advance of the proposed effective date thereof, and the Purchaser shall
have three (3) Business Days in which to respond in writing either affirmatively
or negatively. If the Purchaser shall fail to so respond, then Purchaser's
consent will be irrebuttably presumed. In no event shall Purchaser's consent to
any such transaction, agreement or other action be unreasonably withheld.
4.2. Exclusivity. Unless and until this Agreement is terminated
pursuant to its terms, the Seller shall not, directly or indirectly, through any
officer, director, partner, agent or otherwise, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiry or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any Person in furtherance of any such inquiry or
with a view toward soliciting or consummating a Competing Transaction, or agree
to or endorse any Competing Transaction, or authorize or knowingly permit any of
the officers, directors, partners or employees of such party or any of its
Affiliates or any investment banker, financial advisor, attorney, accountant or
other representative retained by such party or any of such party's Affiliates to
take any such action. The Seller shall notify the Purchaser orally (within one
Business Day after the Seller obtains knowledge of same) and in writing (as
promptly as practicable) of all of the relevant details relating to all
inquiries and proposals which the Seller or any officer, director, partner,
agent, or other Person may receive relating to any of such matters. A "Competing
Transaction" means the sale or other transfer by the Seller of all or any
portion of any Property, whether through direct sale, merger, consolidation,
asset sale, exchange, recapitalization, other business combination, liquidation,
or other action out of the Ordinary Course of Business.
4.3. Access to Information; Environmental Audits. At all times
before the Closing, the Seller shall provide the Purchaser, its agents,
employees, consultants, and representatives, with continuing and reasonable
access to all files, books, records and other materials in the Seller's
possession or control relating to the Properties and the right to examine,
inspect and make copies of such materials as appropriate (including for the
purpose of reviewing or preparing pro forma financial statements required
pursuant to Article 11 of Regulation S-X of the SEC). During such period, the
Seller shall also provide for such parties to have reasonable physical access to
the Properties for the purpose of conducting surveys, architectural,
engineering, geotechnical and environmental inspections and tests (including
sampling and invasive testing for the presence of Materials of Environmental
Concern performed in connection with Phase I and Phase II environmental audits),
feasibility studies and any other inspections, studies or tests reasonably
required by them, provided, however, that the Purchaser shall obtain the
Seller's prior approval (which shall not be unreasonably withheld) for any
invasive testing. With reasonable advance notice to the Seller, the Purchaser
may conduct a "walk- through" of resident units upon appropriate notice to
residents and subject to the rights of residents. In the course of its
investigations, the Purchaser may make inquiries to third parties, including,
without limitation, contractors, property managers, lenders, residents and
Government Entities. The Purchaser shall keep the Properties free of any Liens
claimed by the Purchaser's contractors or consultants in connection with such
entry and will indemnify, defend and hold the Seller harmless from all Claims
and Liabilities caused by the Purchaser, its contractors or consultants that are
asserted against or incurred by the Seller as a result of such entry and
investigation. Any Liability or loss and expense related to a condition of any
Property discovered
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or disclosed by the Purchaser or any consultant or contractor of the Purchaser
in connection with such investigation is not a Liability that is covered by this
indemnity. No investigation made by the Purchaser shall limit, qualify or modify
any representation, warranty, covenant or agreement made by the Purchaser
hereunder, notwithstanding the knowledge and information obtained as a result of
any such investigation, but if the Purchaser discovers as a result of any
investigation made by it prior to the Closing that any representation or
warranty made herein by the Seller is materially inaccurate, it shall promptly
notify and advise the Seller.
4.4. Monthly Updates of Rent Rolls and Operating Statements. The
Seller will promptly provide the Purchaser, upon reasonable request, with
monthly updates of the Rent Roll and operating statements for the Properties.
4.5. Title Matters; Title Defects. The Purchaser has approved the
Permitted Exceptions as of the Date of this Agreement. In the event that either
the Purchaser or the Seller shall discover prior to the Closing any matter
affecting title to any Property that would be a Title Defect as defined herein,
the Purchaser shall give the Seller written notice no later than three (3)
Business Days after first discovering or receiving notice from the Seller of
same, as the case may be, of its objection to such matter. If the Purchaser
shall not object in writing within such time period, then such matter shall
become a Permitted Exception. If the Purchaser shall object in writing within
such time, then such matter shall be a Title Defect. The Seller shall notify the
Purchaser in writing within ten (10) days of receipt of the Purchaser's notice
if Seller intends to cure any Title Defect. If the Seller elects not to cure
such Title Defect, the Purchaser shall have ten (10) days after receipt of the
Seller's notice to elect to (i) waive such Title Defect and proceed to close the
purchase of the Properties, subject to such Title Defect, (ii) designate the
affected Property an Excluded Property pursuant to Section 4.8 hereof, provided
the Defective Property Basket is not exceeded, or (iii) if the designation of
such affected Property as an Excluded Property would cause the Defective
Property Basket to be exceeded, terminate this Agreement. If the Purchaser fails
to respond within said ten (10) day period, the Purchaser shall be deemed to
have waived such Title Defect as provided in (i) above. If the Seller elects to
cure such Title Defect, the Seller shall use diligent efforts to cure the Title
Defect by the Closing Date (as it may be extended as provided below), which may
include insuring over or bonding off such Title Defect at the Seller's expense,
but the Seller shall not be required to spend any money or bring any legal
action to cure any such Title Defect (other than the payment of any amount
necessary to satisfy, insure or bond over a monetary Lien). The Seller shall
have at least thirty (30) days to cure any Title Defect, and, if the Closing
Date shall fall within such period during which the Seller may cure such Title
Defect, then the Closing Date shall be postponed for a period up to thirty (30)
days (but not beyond December 31, 1997) in order to give sufficient time to
satisfy, release, cure or remove such Lien or exception. Upon the cure, removal,
insurance over or bonding off of any such Title Defect, the Closing Date shall
be scheduled upon ten (10) days prior written notice to the Seller, but in no
event earlier than the original Closing Date, notwithstanding such Title Defect.
If the Seller is unable to cure, remove, bond off or otherwise dispose of any
such Title Defect on or before the Closing, as the Closing may be extended as
provided above, then the Purchaser shall have the right to choose among the
options described in (i)-(iii) above in this Section 4.5.
4.6. Damage. The Seller shall promptly give the Purchaser written
notice of any damage to any Property, describing such damage and whether such
damage is covered by insurance and the estimated cost of repairing such damage.
(a) If such damage does not render untenantable more than thirty
percent (30%) of the apartment units within an affected Property, (i)
the Seller shall, to the extent possible, begin repairs prior to the
Closing, (ii) at the Closing, the Purchaser shall receive all insurance
proceeds not applied to the repair of any such Property prior to the
Closing (including rent loss insurance applicable to any
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period from and after the Closing) due to the Seller for the damage,
together with an assignment of any unsettled insurance claim, and (iii)
after the Closing, the Purchaser shall assume the responsibility for
the repair after the Closing. The Purchaser shall be entitled to any
excess of the proceeds of insurance over and above the actual cost of
repair and restoration. No modification to the Purchase Price or the
Allocation Schedule shall result from such event.
(b) If such damage renders untenantable more than thirty percent
(30%) of the apartment units within a Property, the Purchaser may elect
by notice to the Seller given within twenty (20) Business Days after
the Purchaser is notified of such damage (and the Closing shall be
extended, if necessary, to give the Purchaser such twenty (20) Business
Day period to respond to such notice) to (i) proceed in the same manner
as in the case of damage described in subparagraph (a) above, or (ii)
designate the affected Property an Excluded Property pursuant to
Section 4.8 hereof, provided the Defective Property Basket is not
exceeded, or (iii) if the designation of such affected Property as an
Excluded Property would cause the Defective Property Basket to be
exceeded, terminate this Agreement. Any waiver of the matters addressed
in this Section 4.6 pursuant to clause (i) above shall be deemed an
election by the Purchaser to follow the procedures described in
subparagraph (a) of this Section 4.6.
4.7. Condemnation. The Seller shall give the Purchaser prompt
written notice of the institution or threat of any exercise of the power of
eminent domain on any Property or portion thereof. If the exercise of such power
of eminent domain would result in a taking of more than thirty percent (30%) of
the apartment units at such Property, the Purchaser may elect by notice to the
Seller given within twenty (20) Business Days after the Purchaser shall have
received the notice of such institution or threat (and the Closing shall be
extended, if necessary, to give the Purchaser such twenty (20) Business Day
period to respond to such notice) to (i) proceed with the Closing and receive
any condemnation award or proceeds from any such proceeding, without
modification to the Purchase Price or the Allocation Schedule, or (ii) designate
the affected Property an Excluded Property pursuant to Section 4.8 hereof,
provided the Defective Property Basket is not exceeded, or (iii) if the
designation of such affected Property as an Excluded Property would cause the
Defective Property Basket to be exceeded, terminate this Agreement.
4.8. Defective Property Basket. A Property may be designated an
Excluded Property under this Agreement pursuant to the provisions of Sections
4.5, 4.6, and 4.7 hereof. In addition, a Property may be designated an Excluded
Property pursuant to the applicable provisions of the Reorganization Agreement
as a result of the following: (i) the breach of a representation or warranty set
forth in Article 7 of the Reorganization Agreement with respect to such Excluded
Property which has a Material Adverse Effect or (ii) the failure of a condition
precedent set forth in Article 10 of the Reorganization Agreement which relates
to the affected Excluded Property, and in such events any such Property so
designated an Excluded Property under the Reorganization Agreement shall be
deemed an Excluded Property hereunder. In the event that the number of apartment
units within (i) all of the Excluded Properties designated pursuant to Sections
4.5, 4.6, 4.7, and this 4.8 and (ii) all of the Other Excluded Properties
designated pursuant to the applicable provisions of the Reorganization Agreement
is less than one thousand (1,000) units, then the Seller and Purchaser will
remain obligated to consummate the transactions described herein (as modified to
exclude the Excluded Properties) notwithstanding such matters, assuming
satisfaction in full of each other condition set forth in this Agreement or
waiver by the appropriate party of any such condition. In such event, (i) the
Excluded Properties shall no longer be deemed part of the Properties hereunder,
(ii) the Excluded Properties shall not be sold by the Seller to the Purchaser
hereunder, and (iii) the Allocation Schedule shall be amended to delete the
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Excluded Properties, and the portion of the Purchase Price relating thereto as
reflected on the Allocation Schedule shall be subtracted from the Purchase Price
hereunder.
5. SELLER'S REPRESENTATIONS. The Seller warrants and represents to, and
covenants with, the Purchaser, as follows; provided, however, such
representations and warranties shall not survive the Closing:
5.1. Status. The Seller is a limited partnership duly organized,
validly existing and in good standing under the Laws of the State of Delaware,
with all requisite power and authority to own, lease, operate and sell its
assets and to carry on its businesses as it is now being conducted. The Seller
is in good standing as a foreign entity authorized to do business in each
jurisdiction where it engages in business.
5.2. Authority. The Seller has full power and authority (subject
to receipt of the consents referred to in Section 8.4), to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Seller of this Agreement have been, and the
documents to be executed and delivered by it pursuant to this Agreement shall
be, duly and validly approved by the Seller and no other proceeding on the part
of the Seller is necessary to authorize this Agreement and the transactions
contemplated hereby, other than obtaining the consents described in Section 8.4.
5.3. Consents. Section 8.4 describes each and every consent to be
obtained by the Seller in respect of the transactions contemplated hereby.
Except for obtaining the consents described in Section 8.4, no consents,
waivers, exemptions or approvals of, or filings or registrations by the Seller
with, any Government Entity or any other Person not a party to this Agreement
are necessary in connection with the execution, delivery and performance by the
Seller of this Agreement or the consummation of the transactions contemplated
hereby.
5.4. No Violations. Upon obtaining those consents described in
Section 8.4, the execution, delivery and performance by the Seller of this
Agreement and the documents to be executed, delivered and performed by the
Seller pursuant hereto, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (i) violate any Order applicable to or
binding on the Seller or any of the Properties; (ii) violate any Law; (iii)
violate or conflict with, result in a breach of, constitute a default (or an
event which with the passage of time or the giving of notice, or both, would
constitute a default) under, permit cancellation of, or result in the creation
of any Lien upon any of the Properties or any Contract to which the Seller or
any Property is bound; (iv) permit the acceleration of the maturity of any
indebtedness of the Seller or any indebtedness secured by any Property; or (v)
violate or conflict with any provision of the partnership agreement or other
governance documents of the Seller.
5.5. Title. The Seller has good and marketable title to each
Property, in fee simple, free and clear of all Liens and encroachments, and free
and clear of all tenancies and adverse or other rights of possession, subject
only to the Permitted Exceptions. To the Seller's knowledge, each Property
constitutes a separate and legally subdivided parcel and a separate tax parcel.
6. PURCHASER'S REPRESENTATIONS. The Purchaser warrants and represents
to, and covenants with, the Seller, as follows:
6.1. Status. The Purchaser is a limited partnership duly organized, validly
existing and in good standing under the Laws of the State of Tennessee, with all
requisite power and authority to own, lease, operate
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and sell its assets and to carry on its business as it is now being conducted.
The Purchaser is in good standing as a foreign entity authorized to do business
in each jurisdiction where it engages in business.
6.2. Authority. The Purchaser has full power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Purchaser of this
Agreement have been, and the documents to be executed and delivered by it
pursuant to this Agreement shall be, duly and validly approved by the Purchaser,
and no other proceeding on the part of the Purchaser is necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Purchaser.
6.3. Consents. No consents, waivers exemptions or approvals of,
or filings or registrations by the Purchaser with, any Government Entity or any
other Person not a party to this Agreement are necessary in connection with the
execution, delivery and performance by the Purchaser of this Agreement or the
consummation of the transactions contemplated hereby.
6.4. No Violations. The execution, delivery and performance by
the Purchaser of this Agreement and the documents to be executed, delivered and
performed by the Purchaser pursuant hereto, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) violate
any Order applicable to or binding on the Purchaser or its assets; (ii) violate
any Law; (iii) violate or conflict with, result in a breach of, constitute a
default (or an event which with the passage of time or the giving of notice, or
both, would constitute a default) under, permit cancellation of, accelerate the
performance required by, or result in the creation of any Lien upon any of the
Purchaser's assets under, any contract or other arrangement of any kind or
character to which the Purchaser is a party or by which the Purchaser or any of
its assets are bound; (iv) permit the acceleration of the maturity of any
indebtedness of the Purchaser, or any indebtedness secured by any of the
Purchaser's assets; or (v) violate or conflict with any provision of the
Purchaser's partnership agreement or other governance documents of the
Purchaser.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligation of the
Purchaser to consummate the Closing is subject to the fulfillment, at or prior
to the Closing, of each of the following conditions precedent, and the failure
to satisfy any such condition precedent shall excuse and discharge all
obligations of the Purchaser to carry out the provisions of this Agreement
unless such failure is waived in writing by the Purchaser; provided, however,
that to the extent that the failure of any condition shall relate to (i) a
matter described in Sections 4.5, 4.6, or 4.7 and the affected Property is
deemed an Excluded Property pursuant to said provisions or (ii) any other matter
relating to a Property, then the affected Property shall be designated as an
Excluded Property pursuant to Section 4.8 hereof, provided the Defective
Property Basket is not exceeded, and such matter shall not constitute a failure
to satisfy any condition precedent relating thereto.
7.1. Representations and Warranties. The representations and
warranties made by the Seller in Section 5, and the statements and information
contained in any certificate, instrument, schedule, document or exhibit
delivered by or on behalf of the Seller in connection with the Closing pursuant
to this Agreement, shall be true, correct and complete in all material respects
on and as of the Date of this Agreement and the date thereof, and shall be true,
correct and complete in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties were made on and
as of the Closing Date; provided, however, that if any representation or
warranty is already qualified in any respect by materiality or as to Material
Adverse Effect, the materiality qualification immediately before this proviso
shall not apply. The Seller shall have delivered to the Purchaser a certificate
signed by a general partner of the Seller in form and substance reasonably
satisfactory to the Purchaser dated as of the Closing Date to such effect.
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7.2. Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Seller to be performed and complied with on or
before the Closing Date shall have been duly performed and complied with in all
respects; and the Seller shall have delivered to the Purchaser a certificate
signed by a general partner of the Seller in form and substance reasonably
satisfactory to the Purchaser as of the Closing Date to such effect.
7.3. No Injunction. There shall not be in effect any Order
(unless caused by any action taken by the Purchaser) which enjoins or prohibits
consummation of the transactions contemplated hereby.
7.4. Title. The Purchaser shall have obtained the Required Title
Insurance as of the date and time of the Closing.
7.5. Payoff Letters. Payoff letters shall have been received from
each lender with respect to the Existing Debt acknowledging the amount necessary
to pay in full and satisfy the Existing Debt.
7.6. Consents. The Seller shall have obtained the consents
described in Section 8.4.
7.7. Reorganization Agreement. All of the conditions to the
obligations of the Purchaser and MAAC to close the Reorganization, as set forth
in the Reorganization Agreement, shall have been satisfied or waived by the
Purchaser or MAAC, as the case may be, as of the Closing as described in Article
10 of the Reorganization Agreement, including (i) the truthfulness of the
representations and warranties described therein, (ii) the compliance by the
parties with the provisions of the Reorganization Agreement, (iii) the absence
of any material adverse changes, (iv) the absence of any injunction prohibiting
the closing, (v) the issuance of certain required title insurance, (vi) the
receipt of estoppel letters and payoff letters, as applicable, with respect to
the debt, and (vii) the receipt of necessary consents.
7.8. Simultaneous Closings. The closing of the Reorganization
pursuant to the Reorganization Agreement shall occur simultaneously with the
Closing hereunder.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation of the
Seller to consummate the Closing is subject to the fulfillment, at or prior to
the Closing, of each of the following conditions precedent, and the failure to
satisfy any such condition precedent shall excuse and discharge all obligations
of the Seller to carry out the provisions of this Agreement unless such failure
is waived in writing by the Seller.
8.1. Representations and Warranties. The representations and
warranties made by the Purchaser in Section 6 and the statements and information
contained in any certificate, instrument, schedule, document or exhibit
delivered by or on behalf of the Purchaser in connection with the Closing
pursuant to this Agreement, shall be true, correct and complete in all material
respects as of the Closing Date with the same effect as though such
representations and warranties were made on and as of the Closing Date;
provided, however, that if any representation and warranty is already qualified
in any respect by materially or as to Material Adverse Effect, the materiality
qualification immediately before this proviso shall not apply. The Purchaser
shall have delivered to the Seller a certificate signed by the general partner
of the Purchaser in form and substance reasonably satisfactory to the Seller
dated as of the Closing Date to such effect.
8.2. Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Purchaser to be performed and complied with on
or before the Closing Date shall have been duly
- 12 -
<PAGE>
performed and complied with in all respects; and the Purchaser shall have
delivered to the Seller a certificate signed by the general partner of the
Purchaser in form and substance reasonably satisfactory to the Seller dated as
of the Closing Date to such effect.
8.3. No Injunction. There shall not be in effect any Order
(unless caused by any action taken by the Seller) which enjoins or prohibits
consummation of the transactions contemplated hereby.
8.4. Consents. The Seller shall have obtained the consent and
approval of the general partners of the Seller and a majority-in-interest of the
"Class A Limited Partners" of the Seller to this Agreement and to the sale of
the Properties to the Purchaser pursuant hereto.
9. THE CLOSING.
9.1. Closing. The Closing shall take place simultaneously with
the closing of the Reorganization pursuant to the Reorganization Agreement at
the time and place established under the Reorganization Agreement, provided the
Purchaser shall notify the Seller of such date for the Closing. The parties
shall use all reasonable efforts to close on or before November 17, 1997 (or as
soon thereafter as practicable); provided, however, that if the Closing has not
previously occurred, the Closing shall occur on December 31, 1997
(notwithstanding any extensions otherwise provided herein). The Closing shall
take place at 10:00 a.m. EST on the Closing Date at the offices of King &
Spalding, 191 Peachtree Street, N.E., Suite 4900, Atlanta, Georgia.
9.2. Deliveries at the Closing. At the Closing, in addition to
any other document or agreement required under any other provision of this
Agreement, the following deliveries shall be made by the parties, in each event
where execution of a document shall be required, duly executed by the Persons
required to execute same.
9.2.1. Deliveries by Seller.
(a) Partner Consents. Consents to the
transactions described herein as described in Section
8.4 hereof duly executed by the requisite interests of
limited and general partners of the Seller.
(b) Seller's Officers' Certificates.
The certificates described in Sections 7.1 and 7.2.
(c) FIRPTA. A Foreign Investment in Real
Property Tax Act affidavit executed by the Seller in
accordance with said Act. If the Seller fails to
provide the necessary affidavit and/or documentation of
exemption on the Closing Date, the Purchaser may
proceed in accordance with the withholding provisions
as provided in such Act.
(d) Affidavits. Owner's affidavits to the
extent reasonably and customarily required by the title
company to issue the Required Title Insurance, subject
only to the Permitted Exceptions.
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<PAGE>
(e) Permits and Approvals. To the extent
possessed by the Seller, the material licenses,
permits, approvals, zoning exceptions and approvals,
consents and Orders of Government Entities relating to
the ownership, operation and use of the Properties,
including, without limitation, certificates of
occupancy for such Property.
(f) Authority. Evidence of the existence,
organization and authority of the Seller and the
authority of the Persons executing documents on behalf
of the Seller reasonably satisfactory to the Purchaser.
(g) Possession. Possession of the
Properties, subject only to Permitted Exceptions.
(h) Books and Records. Delivery to the
offices of the Purchaser of the original Leases and
Contracts (or copies if the originals cannot be
located) and to the extent now or subsequently coming
into the Seller's possession or control: copies of
originals (including information stored electronically)
of all books and records of account; contracts; copies
of correspondence with tenants and suppliers; receipts
for deposits; unpaid bills and other papers or
documents which pertain to the Properties; all
advertising materials, booklets, keys and other items,
if any, used in the operation of the Properties; all
books and records of the Seller; (including Tax
records); and, if in such entity's possession or
control, the original "as-built" plans and
specifications and all other available plans and
specifications with respect to any Property.
(i) Updated Rent Rolls. Rent Rolls for the Properties, updated to the
Closing Date and certified by a general partner of the Seller.
(j) Transfer Documents. The deeds,
assignments and other transfer documents which are
listed on Exhibit F transferring title to the
Properties to the Purchaser free of any claims, except
for Permitted Exceptions.
9.2.2. Deliveries by Purchaser.
(a) Purchaser's Officers' Certificates.
The certificates described in
Sections 8.1 and 8.2.
(b) Authority. Evidence of existence,
organization and authority of the Purchaser and the
authority of the Person executing documents on behalf
of the Purchaser reasonably satisfactory to Seller.
(c) Transaction Documents. The
assignments and other transfer documents described
in Exhibit F.
9.3. Closing Costs. At the Closing, the Purchaser shall pay all
costs and expenses incurred in connection with the Closing hereunder, including,
without limitation, those expenses set forth in Exhibit G hereof.
9.4. Prorations. The following items shall be prorated between the Seller
and the Purchaser as of 11:59 p.m. of the day immediately preceding the Closing
Date; such prorations favoring the Purchaser - 14 -
<PAGE>
shall reduce the Purchase Price payable by the Purchaser at the Closing, and
such prorations favoring the Seller shall increase the Purchase Price payable by
the Purchaser at Closing:
9.4.1. Rents. Rents, additional rents, charges for
taxes and insurance premiums or for escalations thereof, if any,
property operating expense contributions, revenues from vending
machines and washers and dryers, swimming pool fees and other income of
the Property (other than any unapplied security and other deposits)
collected by the Seller from each tenant under a Lease. Any rent and
other income collected by either the Seller or the Purchaser during the
month of the Closing shall be applied first against the rent and other
income due for such month under the respective Lease. The Seller may,
at the Seller's sole cost and expense, pursue any claims under any of
the Leases and file lawsuits for past due rent or other charges, but
the Seller may not exercise any rights or remedies to terminate any
Lease or to dispossess any tenant thereunder. The Purchaser agrees,
however, that if (i) any tenant is in arrears on the Closing Date in
the payment of rent or other charges under its Lease as shown on the
updated Rent Roll delivered at the Closing and (ii) at the time of the
Purchaser's receipt of any rental or other payment from such tenant
after the end of the month in which the Closing occurs, such tenant is,
or after application of a portion of such payment will be, current
under its Lease in the payment of all accrued rental and other charges
that do not become due and payable until the month after the Closing
Date or thereafter and in the payment of any other obligations of such
tenant to the Purchaser, then the Purchaser shall refund to the Seller,
out of and to the extent of the portion of such payment remaining after
the Purchaser deducts therefrom any and all sums due and owing to it
from such tenant from and after the Closing Date, an amount up to the
full amount of any arrearage existing on the Closing Date.
9.4.2. Property Taxes. City, state, and county ad
valorem Taxes based on the ad valorem tax bills or other current tax
information for the Properties for the year of Closing, if then
available, or if not, then on the basis of the ad valorem tax bills for
the Properties for the year immediately preceding the year in which the
Closing occurs and all assessments of any kind on the Properties which
are due and payable in installments. Should such proration be based on
such ad valorem tax bills for the immediately preceding year and should
such proration prove to be inaccurate on receipt of the ad valorem tax
bills for any Property for the year of Closing, either the Seller or
the Purchaser may demand at any time after Closing a payment from the
other correcting such malapportionment and the other party shall be
required to make such payment within fifteen (15) days after such
demand.
9.4.3. Sewer Taxes and Utility Charges. Sanitary
sewer taxes and utility charges, including, without limitation, water,
sewer, electric, gas, telephone, cable television, and trash removal.
9.4.4. Contracts. Charges under the Contracts which survive the Closing and
are assigned to and assumed by the Purchaser.
9.4.5. Existing Debt. Interest accruing under the Existing Debt.
9.5. Security and Other Deposits. The Seller shall pay over to
and assign and transfer to the Purchaser at Closing a sum equal to the aggregate
of the tenants' unapplied security, cleaning, damage, pet and other deposits
under the Leases, to the extent such items have been received by the Seller and
have not previously been applied by the Seller towards repairs or for other
purposes for which such deposits were being held.
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<PAGE>
9.6. Utility Deposits. The Purchaser shall pay over to the
Seller at Closing a sum equal to the aggregate of the unapplied and unreimbursed
deposits held by any utility company, which shall be transferred and assigned by
the Seller to the Purchaser at the Closing.
9.7. Loan Deposits. The Purchaser shall pay over to the Seller
at Closing a sum equal to the aggregate of the unapplied and unreimbursed
deposits or escrow balances held by or for any lender under the Existing Debt,
which shall be transferred and assigned by the Seller to the Purchaser at the
Closing.
10. TERMINATION AND REMEDIES.
10.1. Termination. This Agreement may be terminated:
10.1.1. Mutual Consent. At any time prior to the Closing Date,
with the written consent of the Seller and the Purchaser;
10.1.2. Termination by Purchaser. At any time prior
to the Closing Date, by the Purchaser (provided the Purchaser is not in
breach of any of its material obligations hereunder), if there shall
have been a material breach of any covenant, representation or warranty
of the Seller hereunder, or failure of any condition to the Purchaser's
obligation to close, and such breach or failure shall not have been
remedied within 10 Business Days after receipt by the Seller of a
notice in writing from the Purchaser specifying the breach or failure
and requesting such be remedied (and the Closing Date shall be extended
to provide for such cure period), provided such termination right shall
be subject to the provisions of Section 10.3 hereof;
10.1.3. Termination by Seller. At any time prior to
the Closing Date, by the Seller (provided the Seller is not in breach
of any of its material obligations hereunder), if there shall have been
a material breach of any covenant, representation or warranty of the
Purchaser hereunder, or any failure of any condition of the Purchaser's
obligation to close, and such breach or failure shall not have been
remedied within 10 Business Days after receipt by the Purchaser of a
notice in writing from the Seller specifying the breach or failure and
requesting such be remedied (and the Closing Date shall be extended to
provide for such cure period), provided such termination right shall be
subject to the provisions of Section 10.3 hereof; or
10.1.4. Failure to Close by Closing Date. If the
Closing has not taken place by December 31, 1997 (notwithstanding any
extensions otherwise provided herein), at any time thereafter by the
Seller or the Purchaser, upon delivery of written notice of termination
to the other; provided, however, that the right to terminate this
Agreement under this Section 10.1.4 shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been
the cause of or has resulted in the failure of the Closing to occur on
or before such date.
10.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, all obligations of the parties hereunder shall
terminate, except for the obligations that expressly survive the termination of
this Agreement. No such termination shall relieve any party from liability
pursuant to Section 10.3 below.
- 16 -
<PAGE>
10.3. Remedies. In the event that a party shall fail to perform
such party's obligation to consummate the transactions as described herein (a
"Default"), all conditions precedent to such party's obligation to perform
having been met, the sole and exclusive remedy of the non-defaulting party shall
be as follows:
10.3.1. Specific Performance Against Seller. The sole
and exclusive remedy of the Purchaser in the event of a Default by the
Seller hereunder shall be (i) to terminate this Agreement as provided
in Section 10.1.2., without any claim for and waving any right to
collect damages, or (ii) to pursue legal action to obtain specific
performance of the Seller's obligations hereunder. The Seller
acknowledges and agrees that the Purchaser shall have the right to seek
specific performance of this Agreement against the Seller in the event
of a Default by the Seller hereunder.
10.3.2. Remedy upon Purchaser's Default. The sole and
exclusive remedy of the Seller in the event of a Default by the
Purchaser hereunder shall be to terminate this Agreement, and the
Purchaser shall pay to the Seller within five (5) Business Days after
such termination, as liquidated damages for such Default, the cash
amount of One Thousand Dollars ($1,000). The parties agree that in the
event of a Default by the Purchaser, the damages from such Default
would be difficult to determine, and that the foregoing liquidated
damages amount is a reasonable estimate of the actual, out-of-pocket
costs that would be incurred by the Seller if the transactions were not
consummated. The Seller agrees not to bring an action before any
Government Entity against the Purchaser seeking specific performance
against the Seller or damages on account of the Default, it being
agreed that the liquidated damages amount stated herein shall be the
sole remedy to the Seller.
11. MISCELLANEOUS
11.1. Headings. The headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof.
11.2. Pronouns and Plurals. Whenever required by the context,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
11.3. Time. Time is of the essence for this Agreement.
11.4. Survival. The provisions set forth in Sections 1, 6, 9,
10, and 11 shall survive the Closing and shall not be deemed to be merged into
or waived by the instruments of such Closing. Except as provided in the
foregoing sentence, no other provisions, representations, warranties or other
covenants or agreements contained in this Agreement (including, without
limitation, the representations and warranties set forth in Section 5 hereof)
shall survive the Closing.
11.5. Additional Actions and Documents. Each party hereto hereby
agrees to take or cause to be taken such further actions, to execute, deliver
and file or cause to be executed, delivered and filed such further documents,
and to obtain such consents, as may be necessary or as may be reasonably
requested on or after the Closing Date in order to fully effectuate the
purposes, terms and conditions of this Agreement.
11.6. Entire Agreement; Amendment and Modification. This Agreement,
including the schedules, exhibits, and other documents referred to herein or
furnished pursuant hereto, constitutes the entire
- 17 -
<PAGE>
understanding and agreement among the parties hereto with respect to the
transactions contemplated herein, and supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters provided
for herein. No amendment, modification or discharge of, or supplement to, this
Agreement shall be valid or binding unless set forth in writing and duly
executed and delivered by the party against whom enforcement of the amendment,
modification, or discharge is sought.
11.7. Notices. All notices, demands, requests, and other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be hand delivered, sent by overnight courier or mailed by first-class,
registered or certified U.S. mail, return receipt requested and postage prepaid,
or transmitted by facsimile, telegram, telecopy or telex, addressed as follows:
(i) If to Seller: John F. Flournoy
900 Brookstone Center Parkway
Columbus, GA 31904
Telephone: (706) 324-4000
Facsimile: (706) 596-2492
Mr. Terry Hall
Alex. Brown Realty, Inc.
225 East Redwood Street
Baltimore, Maryland 21202
Telephone: (410) 727-4083
Facsimile: (410) 625-2694
and
Mr. John B. Watkins
Wilmer, Cutler & Pickering
Suite 1300
100 Light Street
Baltimore, Maryland 21202-1036
Telephone: (410) 986-2800
Facsimile: (410) 986-2828
copies to: William B. Fryer, Esq.
King & Spalding
191 Peachtree Street, NE, Suite 4800
Atlanta, GA 30303
Telephone: (404) 572-4911
Facsimile: (404) 572-5148
Richard A. Fishman, Esq.
Cashin, Morton & Mullins
1360 Peachtree Street, N.E.
Atlanta, GA 30309
Telephone: (404) 870-1500
Facsimile: (404) 870-1529
- 18 -
<PAGE>
(ii) If to Purchaser: Mid-America Apartments, L.P.
6584 Poplar Avenue, Suite 340
Memphis, TN 38138
Attention: George E. Cates
Telephone: (901) 682-6600
Facsimile: (901) 682-6667
copy to: John A. Good, Esq.
Baker, Donelson, Bearman & Caldwell
First Tennessee Building, Suite 2000
165 Madison Avenue
Memphis, TN 38103
Telephone: (901) 526-2000
Facsimile: (901) 527-2303
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this Section
11.7, such communication shall be deemed delivered the next Business Day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this Section 11.7, such communication shall be
deemed delivered upon receipt; and if sent by U.S. mail pursuant to this Section
11.7, such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Any party to this Agreement may change its address for the purposes of
this Agreement by giving notice thereof in accordance with this Section 11.7.
11.8. Waivers. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or under
any other documents furnished in connection with or pursuant to this Agreement
shall impair any such right, power or privilege to be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
11.9. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10. Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claim or disputes relating thereto, shall be
governed by and construed and enforced in accordance with the Laws and judicial
decisions of the State of Tennessee, without regard to conflict of Law
principles (excluding the choice of Law rules thereof), except for actions
affecting title to real property, in which case the Laws of the State in which
the real property is located shall apply.
11.11. Assignment; Parties in Interest.
11.11.1. No party hereto shall assign its rights
and/or obligations under this Agreement, in whole or in part, whether
by operation of Law or otherwise, without the prior written consent of
the other parties hereto; provided, however, the Purchaser may assign
all or any portion of its interest and rights hereunder to any
Affiliate of the Purchaser without the consent of the Seller.
- 19 -
<PAGE>
11.11.2. Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective administrators, successors, legal representatives and
permitted assigns of the parties hereto. Nothing contained herein shall
be deemed to confer upon any other Person any right or remedy under or
by reason of this Agreement.
11.12. Severability. Every provision of this
Agreement is intended to be severable.
If any provision or term of this Agreement, or the application of a provision or
term to any Person or circumstance, shall be held invalid, illegal or
unenforceable, the validity, legality or enforceability of the other provisions
and terms hereof, or the application of such provision or term to Persons or
circumstances other than those to which it is held invalid, illegal or
enforceable, shall not be affected thereby, and there shall be deemed
substituted for the provision or term at issue a valid, legal and enforceable
provision as similar as possible to the provision or term at issue.
11.13. Limitation of Liability. Any obligation or
liability whatsoever of any party
which may arise at any time under this Agreement or any obligation or liability
which may be incurred by such party pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be satisfied, if at all,
out of such party's assets, as appropriate, only. No such obligation or
liability shall be personally binding upon, nor shall resort for the enforcement
thereof be had to, the property of any of such party's shareholders, trustees,
officers, employees or agents, regardless of whether such obligation or
liability is in the nature of contract, tort or otherwise.
[SIGNATURES ON NEXT PAGE]
- 20 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf as of the date first above written.
PURCHASER:
MID-AMERICA APARTMENTS, L.P.
BY: Mid-America Apartment Communities, Inc., sole General
Partner
By: /s/ George E. Cates
George E. Cates, Chairman and Chief Executive
Officer
SELLER:
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED
PARTNERSHIP
By: Brown Equity Income Properties, Inc., the
"Administrative General Partner"
By: /s/ Peter E. Bancroft
Name: Peter E. Bancroft
Title: Vice President
By: /s/ John F. Flournoy
John F. Flournoy, the "Development General Partner"
[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]
- 21 -
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(Replace this text with legend, if applicable)
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<CIK> 0000796333
<NAME> Brown Flournoy Equity
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,589,304
<SECURITIES> 0
<RECEIVABLES> 28,671
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,630,969
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,300,386
<CURRENT-LIABILITIES> 631,116
<BONDS> 20,400,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,300,386
<SALES> 0
<TOTAL-REVENUES> 3,531,991
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,571,787
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,457,750
<INCOME-PRETAX> (497,546)
<INCOME-TAX> 0
<INCOME-CONTINUING> (497,546)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (497,546)
<EPS-PRIMARY> 0.000
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