<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 29, 1998
---------------------------------
(Date of earliest event reported)
ASSOCIATED ESTATES REALTY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
OHIO 1-12486 34-1747603
------------------------ ------------------------ ---------------------------------
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
5025 Swetland Court, Richmond Heights, Ohio 44143-1467
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(Address of Principal Executive Officer) (Zip Code)
(216) 261-5000
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(Registrant's telephone number, including Area Code)
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Item 5. This Form 8-K is being filed to file certain material contracts with
the Securities and Exchange Commission.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
EXHIBITS
10.1 Form of Purchase Agreement between Associated Estates Realty
Corporation and the MIG Residential REIT, Inc. subsidiaries
10.2 Contribution and Partnership Invest Purchase Agreement between
Associated Estates Realty Corporation and Ed Wayman, Larry
Wright, James Cote, James, Elwood, Lanny Kalik, Louis Vogt,
William T. Hughes, Jr., Gregory L. Golz, PF Funds, Inc. and
MIG Development Company
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 29, 1998 Associated Estates Realty Corporation
/s/ Dennis W. Bikun
-------------------
Dennis W. Bikun
Chief Financial Officer & Treasurer
Chief Accounting Officer
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Exhibit 10.1
Attached is a form of Purchase Agreement for eight separate
substantially identical Purchase Agreements entered into by the Company and
eight different subsidiaries of MIG Residential REIT, Inc.
The differences in the agreements are the identity of the
Seller, the property and the appraised value on which the purchase price is
calculated, each of which is listed below:
<TABLE>
<CAPTION>
SELLER PROPERTY APPRAISED VALUE
<S> <C> <C> <C>
1. MIG REIT Falls, L.L.C. Windsor Falls $17,600,000
2. MIG 20th & Campbell Corporation 20th & Campbell Apartments $13,000,000
3. MIG Properties Corporation Peachtree Apartments $ 9,700,000
4. MIG REIT Morgan Place, Inc. Morgan Place $11,000,000
5. MIG Hampton Corporation Hampton Point $20,900,000
6. MIG REIT Annen Woods, Inc. Annen /Woods $ 9,100,000
7. MIG Desert Oasis Corporation Desert Oasis Apartments $13,000,000
8. MIG Fleetwood, Ltd. Fleetwood Apartments $ 6,750,000
</TABLE>
Eight separate Exhibit As and eight separate Exhibits Bs are
attached to the form of Purchase Agreement, each have a legal description for
one of the above-referenced properties and a list of personal property to be
conveyed with each property, respectively. The remaining exhibits to the various
Purchase Agreements are identical.
-1-
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PURCHASE AGREEMENT
MIG REIT [SUBSIDIARY]
AND
ASSOCIATED ESTATES REALTY CORPORATION
<PAGE> 3
TABLE OF CONTENTS
-----------------
PAGE
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PURCHASE AGREEMENT.......................................................... 3
1. Agreement to Buy and Sell................................. 3
2. Liabilities............................................... 5
3. Consideration and Payment/Earnest Money................... 5
4. Representations and Warranties of Seller.................. 7
5. Representations and Warranties of Buyer................... 9
6. Seller's Covenants........................................ 10
7. Title and Possession of the Property...................... 12
8. Conditions to Closing..................................... 15
9. Deliveries................................................ 18
10. Due Diligence Period...................................... 20
11. Closing Date.............................................. 22
12. Prorations and Closing Costs.............................. 23
13. Fire or Other Casualty.................................... 25
14. Condemnation and Eminent Domain........................... 26
15. Indemnification........................................... 26
16. Miscellaneous............................................. 28
-i-
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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
-ii-
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PURCHASE AGREEMENT
------------------
THIS PURCHASE AGREEMENT (this "Agreement") made as of the
_____ day of January, 1998, by and between MIG REIT [SUBSIDIARY],
a(n)_______________ 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 ____-unit apartment complex known as
___________________ located in __________, __________; 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 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
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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 (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
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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 "____________" or "____________
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 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
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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 ________________
Dollars ($___________).
(B) Average Share Price shall mean the average of the closing prices on
the New York Stock Exchange of the Common Shares for the twenty (20) Trading
Days immediately preceding the date hereof.
(C) Closing Share Price shall mean the average closing prices on the
New York Stock Exchange of the Common Shares for the twenty (20) Trading Days
immediately preceding the Closing Date.
(D) Trading Days shall mean each day that Common Shares are traded on
the New York Stock Exchange. No certificates for fractional Common Shares shall
be issued or delivered in connection with the transaction contemplated by this
Agreement. To the extent that a fractional Common Share would otherwise have
been deliverable under the formula set out in the preceding portion of this
Section 3(a), Seller shall be entitled to receive a cash payment therefor in an
amount equal to the value (determined with reference to the closing price of
Common Shares as reported on the New York Stock Exchange Composite Tape on the
last full Trading Day immediately prior to the Closing Date) of such fractional
interest. Such payment with respect to fractional shares is merely intended to
provide a mechanical rounding off of, and is not separately bargained for,
consideration
Within five (5) business days following the execution of this
Agreement, Buyer shall open an escrow account (the "Earnest Money Escrow") with
First American Title Insurance Company, Troy, Michigan Office, Commercial
Advantage Division (the "Title Company") and deposit the sum of
___________________ Dollars ($__________) (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
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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
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 Maryland
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
<PAGE> 10
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 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 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
<PAGE> 11
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 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:
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(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
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:
<PAGE> 13
(a) Operate the Property and conduct or cause to be conducted
its business in the regular and ordinary course, including the renewal
and extension of Tenant Leases, consistent with past practices, and
exercise reasonable efforts to preserve intact the operation of the
Property.
(b) Maintain and keep the Property in good condition and
repair and in substantially the same condition as on the date hereof,
with the exception of ordinary wear and tear and damage as a result of
a casualty.
(c) Except in the ordinary course of business and with respect
to items of personal property that are no longer useful and have been
replaced with items of equivalent value, not remove, sell, mortgage,
pledge or otherwise encumber or dispose of any item of property,
without the prior written consent of Buyer, which consent will not
unreasonably withheld, delayed or conditioned.
(d) Continue to maintain all insurance on the Property
covering the risks and in the amounts of coverage in effect on the date
hereof.
(e) Duly observe and perform all material terms, conditions
and requirements of the Tenant Leases, the 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
<PAGE> 14
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.
(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
<PAGE> 15
contiguity endorsements (provided 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
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
<PAGE> 16
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 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
<PAGE> 17
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;
(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;
<PAGE> 18
(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 that term is 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
(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 that term is
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.
(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
<PAGE> 19
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 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").
<PAGE> 20
(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 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
<PAGE> 21
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 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.
<PAGE> 22
(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:
(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
<PAGE> 23
Section 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 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
<PAGE> 24
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 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
<PAGE> 25
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 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
<PAGE> 26
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 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
<PAGE> 27
obtained prior to Closing, the final bills, when received, shall be
prorated as of the Adjustment Date and the Title Company shall hold in
escrow an amount equal to 125% of the reasonably anticipated amount of
such billings, based upon the most recent available billings for
similar periods until the Title Company shall have received notice of
payment of such bills, at which time any remaining amount being
withheld for such purpose shall be distributed to the Seller.
(e) Buyer shall receive a credit at Closing for all deposits,
including security deposits, under the Tenant Leases which are not
delivered or assigned to Buyer at Closing.
(f) 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 and (ii) one-half of any
escrow charges. 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) one-half of any
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 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
<PAGE> 28
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 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
<PAGE> 29
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) 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.
<PAGE> 30
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:
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
<PAGE> 31
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
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
<PAGE> 32
indemnify and save the other party harmless from any and all claims for
any such commission and from any attorneys' fees and litigation or
other expenses relating to any such claim.
(d) This Agreement and the rights and duties hereunder may not
be assigned by Seller without the prior written consent of Buyer. This
Agreement and the rights and duties hereunder may not be assigned by
Buyer without the written consent of Seller; provided, that Buyer shall
have the right, without the consent of Seller, to designate a nominee
to take title to the Property on the Closing Date. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(e) After the Closing, the parties shall execute and 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 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
<PAGE> 33
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 the Registration Rights Agreement attached
hereto and made a part hereof as EXHIBIT J.
<PAGE> 34
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 [SUBSIDIARY]
By:
--------------------------------------
BUYER:
ASSOCIATED ESTATES REALTY
CORPORATION
By:
--------------------------------------
Jeffrey I. Friedman, President
<PAGE> 35
EXHIBIT A - WINDSOR FALLS
LEGAL DESCRIPTION
LYING AND BEING in the County of Wake, State of North Carolina and being more
particularly described as:
BEGINNING at a drill hole in concrete lying in the intersection of the westerly
margin of the 60 foot right-of-way of Old Wake Forest Road and the northerly
margin of the 60 foot right of way of Pacific Drive, said drill hole having
North Carolina grid coordinates of N. 762416.06, E. 2115642.74, NAD 27 and being
located an Azimuth of 25-8-59, 607.17 feet (ground), 606.62 feet (grid) from
N.C.G.S. monument "BISHOP" (with North Carolina grid coordinates of N.
761866.95, E. 2115384.94 NAD 27, combined grid factor .99909000) and running
thence from said point and place of BEGINNING with the northerly margin of the
60 foot right-of-way of Pacific Drive the following two (2) courses and
distances: (1) N. 81-53-27 W. 486.95 feet to an iron pipe set; and (2) with the
arc of a circular curve to the left having a radius of 318.75 feet, being
subtended by a chord bearing S. 86-08-31 W., a chord distance of 132.33 feet and
an arc distance of 133.30 feet to an iron pipe set; thence with the intersection
of the northerly margin of the 60 foot right-of-way of Pacific Drive and the
easterly margin of the 60 foot right-of-way of Memory Road with the arc of a
circular curve to the right having a radius of 30.00 feet, being subtended by a
chord bearing N. 65-47-28 W., a chord distance of 38.61 feet and an arc distance
of 41.94 feet to an iron pipe set lying in the easterly margin of the 60 foot
right-of-way of Memory Road; thence with the easterly margin of the 60 foot
right-of-way of Memory Road the following three (3) courses and distances; (1)
N. 25-44-39 W. 59.88 feet to an iron pipe set; (2) with the arc of a circular
curve to the right having a radius of 364.50 feet, being subtended by a chord
bearing N. 12-27-15 W., a chord distance of 167.58 feet and an arc distance of
169.09 feet to an iron pipe set; and (3) N. 00-50-08 E. 516.04 feet to an iron
pipe set marking the southwesterly corner of the property conveyed to John R.
Adams by deed recorded in Deed Book 3166, Page 32 of the Wake County Public
Registry; thence with the southerly and easterly boundaries of the Adams
property (now or formerly) the following two (2) courses and distances: (1) S.
88-28-33 E. 127.22 feet to an iron pipe set; and (2) N. 01-42-42 E. 228.40 feet
to an existing iron pipe marking the common northeasterly corner of the John R.
Adams property (now or formerly), the southeasterly corner of the land conveyed
to Jon Ruffty by deed recorded in Deed Book 4191, Page 485 of the Wake County
Public Registry, and the southwesterlymost corner of the land conveyed to the
Wake County Board of Education by deed recorded in Deed Book 2046, Page 289 of
the Wake County Public Registry; thence with the southerly boundary of the Wake
County Board of Education property (now or formerly) the following three (3)
courses and distances: (1) N. 89-34-54 E. __.93 feet to an existing iron pipe;
(2) S. 17-49-10 _. 39.98 feet to an existing iron pipe; and (3) S. 88-10-43 E.
426.30 feet to an existing iron pipe marking the southeasterly corner of the
Wake County Board of Education property (now or formerly) and lying in the
westerly boundary of the property conveyed to Jack Norwood by deed recorded in
Deed Book 2593, page 409 of the Wake County Public Registry; thence with the
westerly and southerly boundaries of the Norwood property (now or formerly) the
following three (3) courses and distances: (1) S. 00-42-38 W. 191.09 feet to a
found, bent and replaced iron pipe; (2) S. 00-35-20 E. 563.38 feet to an iron
pipe set marking the southwesterly corner of the Norwood property (now or
formerly); and (3) S. 82-01-34 E. 152.87 feet to an iron pipe set lying in the
easterly margin of the 60 foot right-of-way of Old Wake Forest Road; thence with
the easterly margin of the 60 foot right-of-way of Old Wake Forest Road the
following two (2) courses and distances: 91) S. 26-32-54 W. 236.77 feet to an
iron pipe set; and (2) S. 25-20-14 W. 3.41 feet to the point and place of
BEGINNING, containing 14,286 acres (or 622,293 square feet), more or less.
SAVE AND EXCEPT the following tract:
LYING AND BEING in the County of Wake, State of North Carolina and being more
particularly described in follows:
BEGINNING at an iron pipe set marking the northeasterly corner of the Bob Taylor
(Lot 3) property (now or formerly), said iron pipe also being N. 82-02-21 W.
99.83 feet from an iron pipe set marking the southwesterly corner of the Jack
Norwood property (now or formerly) and running thence with the easterly boundary
of the Bob Taylor
<PAGE> 36
(Lot 3) property (now or formerly) S. 04-28-06 E. 199.10 feet to an iron pipe
set marking the southeasterly corner of the Bob Taylor (Lot 3) property (now or
formerly) and lying in the northerly margin of an existing 30 foot easement;
thence with the northerly margin of the 30 foot easement S. 82-02-21 E. 84.65
feet to an iron pipe set; thence S. 00-08-19 E. 3.30 feet to an iron pipe set;
thence N. 82-16-08 W. 473.80 feet to an existing iron pipe; thence with the
western terminus of the existing 30 foot easement and the westerly boundary of
the Bob Taylor (Lot 1) property (now or formerly) N. 00-55-39 E. 228.26 feet to
a concrete monument found at the northwesterly corner of the Bob Taylor (Lot 1)
property (now or formerly) and running thence with the northerly boundary of the
Bob Taylor (Lot 1) property (nor or formerly) S. 81-59-58 E. 120.15 feet to a
concrete monument found at the northeasterly corner of the Bob Taylor (Lot 1)
property (now or formerly) and the northwesterly corner of the Cecil Hatcher
property (now or formerly); thence with the northerly boundary of the Cecil
Hatcher property (now or formerly) S. 81-58-38 _. 120.83 feet to a concrete
monument found at the northeasterly corner of the Cecil Hatcher property (now or
formerly) and the northwesterly corner of the Bob Taylor (Lot 3) property (now
or formerly) thence with the northerly boundary of the Bob Taylor (Lot 3)
property (now or formerly) S. 82-02-21 E. 129.00 feet to the point and place of
BEGINNING, containing 2.031 acres (88,456 square feet), more or less.
The net tract to be conveyed contains 12.255 acres or 533,837 square feet, more
or less and is the same property conveyed to CT Falls Limited Partnership by
deeds recorded in Book 5655, page 576, book 5655, Page 595, Book 5655, page 592,
Book 5655, page 590, Book 5655, page 578, Book 5655, page 582 and Book 5655,
Page 586 in the Wake Public Registry
<PAGE> 37
EXHIBIT A - 20TH AND CAMPBELL APARTMENTS
Exhibit A
DESCRIPTION OF LAND
The land referred to is located in Maricopa County, Arizona, and is described
as:
Lot 1, of TWENTIETH AND CAMPBELL, according to the plat of record in the office
of the County Recorder of Maricopa County, Arizona, recorded in Book 332 of
Maps, Page 38.
<PAGE> 38
EXHIBIT A - PEACHTREE APARTMENTS
EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
A tract of land being part of U.S. Survey 415, Township 45 North, Range 4 east
of the 5th Principal meridian, City of Chesterfield, St. Louis County, Missouri
and being more particularly described as follows:
All of Peachtree, a Subdivision in St. Louis County, Missouri, as per plat
thereof recorded in Plat Book 274 page 7 of the St. Louis County Records.
And being also described as:
Beginning at a point on the Southerly right of way line of Olive Street (60 foot
wide) Road said point also being the Northwesterly corner of a tract of land
conveyed to Eric M. and Barbara e. Bly as recorded in Book 7616 page 1261 of the
St. Louis County Records; thence South 32 degrees 18 minutes 06 seconds East a
distance of 430.45 feet; thence North 57 degrees 26 minutes 23 seconds east a
distance of 125.62 feet; thence South 32 degrees 16 minutes 30 seconds East a
distance of 750.65 feet; thence South 57 degrees 25 minutes 43 seconds West a
distance of 797.22 feet; thence North 33 degrees 15 minutes 15 seconds West a
distance of 150.00 feet; thence North 57 degrees 22 minutes 21 seconds East a
distance of 185.04 feet; thence North 33 degrees 00 minutes 27 seconds West a
distance of 200.03 feet; thence North 57 degrees 32 minutes 41 seconds East a
distance of 75.39 feet; thence North 33 degrees 01 minutes 25 seconds West a
distance of 243.14 feet; thence South 57 degrees 19 minutes 47 seconds West a
distance of 134.47 feet; thence North 32 degrees 43 minutes 28 seconds West a
distance of 157.83 feet; thence North 57 degrees 26 minutes 23 seconds East a
distance of 363.25 feet; thence North 32 degrees 14 minutes 26 seconds West, a
distance of 428.28 feet to the Southerly right of way line of Olive Street (60
foot wide) Road and the beginning of a non-tangent curve to the right having a
radius of 4,538.66 feet with a chord bearing North 56 degrees 33 minutes 29
seconds East; thence Northeasterly along said curve and Southerly right of way
line a distance of 139.66 feet; thence North 57 degrees 26 minutes 23 seconds
East along said Southerly right of way line a distance of 51.82 feet to the
point of beginning, containing 564,712 square feet or 12.964 acres, more or
less, all situated in St. Louis County, Missouri.
This description described all that property described in a commitment for Title
Insurance issued by First American Title Insurance Company dated June 16, 1995
and numbered 307932-18S-61-0671, and all that property described in warranty
deed recorded in Book 9046 Page 2152.
<PAGE> 39
EXHIBIT A - MORGAN PLACE
ALL THAT TRACT or parcel of land lying and being in Land Lot 154 of the 18th
District of DeKalb County, Georgia, and being more particularly described as
follows:
BEGIN at an iron pin set at the intersection of the southeastern margin of the
right-of-way of Chantilly Drive (right-of-way width varies) with the western
margin of the right-of-way of Chantilly Drive (50-foot right-of-way); thence
running southerly along the western margin of the right-of-way of Chantilly
Drive (50-foot right-of-way) South 06(degree)27'27" West, a distance of 209.04
feet to an iron pin set; thence leaving the western margin of the right-of-way
of Chantilly Drive (50-foot right-of-way), and running westerly South
81(degree)03'25" West, a distance of 514.84 feet to an iron pin set; thence
running South 00(degree)11"7""West, a distance of 292.00 feet to a 3/4-inch
crimp top pipe found; thence running North 72(degree)36"1""West, a distance of
181.72 feet to a 1/2-inch re-rod found; thence running South
61(degree)27"2""West, a distance of 204.04 feet to a 1/2-inch open top pipe
found; thence running South 13(degree)34'51" West, a distance of 177.99 feet to
a 1/2-inch re-rod found; thence running South 88(degree)08'43" West, a distance
of 157.54 feet to a 1/2-inch re-rod found; thence running North 06(degree)31'31"
West, a distance of 262.00 feet to an iron pin set; thence running North
47(degree)02'10" West, a distance of 107.19 feet to a concrete right-of-way
monument located on the southeastern margin of the right-of-way of Chantilly
Drive (right-of-way width varies); thence running along the southeastern margin
of the right-of-way of Chantilly Drive (right-of-way width varies), North
58(degree)56'51" East, a distance of 312.48 feet ot a point; thence continuing
along said margin North 59(degree)42'31" east, a distance of 157.15 feet to a
point; thence continuing along said margin North 69(degree)41'03" East, a
distance of 275.29 feet to a concrete right-of-way monument; thence continuing
along said margin North 76(degree)05'31" east, a distance of 547.64 feet to an
iron pin set, which is the POINT OF BEGINNING, said property containing 7.377
acres, as shown on that certain As-Built Survey for MIG REIT/Morgan Place, Inc.,
a Florida corporation, and Old Republic National Title Insurance Company,
containing 2 pages, dated March 20, 1989, last revised March 1, 1995, prepared
by Crusselle, Rakestraw & Associates, and bearing the seal of W. Carlton
Rakestraw, Jr., GRLS No. 2236.
EXHIBIT A
<PAGE> 40
EXHIBIT A - HAMPTON POINT
EXHIBIT A
---------
LEGAL DESCRIPTION OF THE LAND
Parcel "C" in the subdivision known as Knightsbridge as per the plat recorded in
Plat Book 120 at Plat No. 14134, among the land records of Montgomery County,
Maryland.
<PAGE> 41
EXHIBIT A - ANNEN WOODS
Description
7.5423 Acre Parcel of the Land Known as
Section 11 and 12 of "The Village" Located on
The Southeast Side of Hooks Lane,
Northeast of Reisterstown Road,
Third Election District, Baltimore County, Maryland
Beginning for the same on the southeast side of Hooks Lane, sixty feet
wide, and at the northwest corner of the land shown on the plat entitled "The
Village, Sections 9, 10, 11, and 12" and recorded among the Land Records of
Baltimore County in Plat Book E.H.K., Jr. 52, page 120, thence running with and
binding on the southeast side of Hooks Lane, referring all courses of this
description to the Baltimore County Grid Meridian, (1) North 55 degrees 26
minutes 23 seconds East 448.46 feet to a point on the southwest side of Granary
Drive (also designated Parcel D) shown on said plat, thence binding on the
southwest and southeast sides of said Granary Drive seven courses: (2) South 34
degrees 33 minutes 37 seconds East 234.33 feet, thence (3) North 55 degrees 26
minutes 23 seconds east 8.00 feet, thence (4) south 34 degrees 33 minutes 37
seconds East 452.71 feet, thence (5) Southeasterly by a curve to the left with
the radius of 99.00 feet, the arc distance of 150.81 feet, the chord of said arc
being South 78 degrees 12 minutes 04 seconds East 136.65 feet, thence (6) North
58 degrees 09 minutes 28 seconds east 227.25 feet, thence (7) Northeasterly by a
curve to the right with the radius of 153.00 feet, the arc distance of 41.95
feet, the chord of said arc being North 66 degrees 00 minutes 43 seconds East
41.82 feet, and thence (8) North 73 degrees 51 minutes 58 seconds East 110.36
feet to intersect the northeast outline of the land shown on said plat, thence
binding on a part of said outline (9) South 16 degrees 08 minutes 02 seconds
East 10.00 feet to a point located on the northwest right-of-way line of the
Baltimore Beltway, as shown on State
<PAGE> 42
Roads Commission of Maryland Plat No. 24949, thence binding on said northwest
right-of-way line, three courses: (10) South 73 degrees 51 minutes 58 seconds
West 130.10 feet, thence (11) South 58 degrees 09 minutes 28 seconds West 511.59
feet, and thence (12) South 48 degrees 18 minutes 48 seconds West 190.90 feet,
thence leaving said right-of-way line and binding on the southwest outline of
the land shown on the plat herein referred to (13) North 41 degrees 22 minutes
57 seconds West 812.80 feet to the point of beginning; containing 7.5423 acres
of land, more or less.
Being all of Sections 11 and 12 of "The Village, Sections 9, 10, 11 and
12" and recorded among the Land Records of Baltimore County in Plat Book E.H.K.,
Jr. 52, Page 120.
Being also all of the land described as Exhibit "A" which by deed dated
July 2, 1985, and recorded among the Land Records of Baltimore County in Liber
E.H.K., Jr. 6956, Folio 213, was conveyed by Four Villages Limited Partnership
unto Maple Limited Partnership.
Project No. 81057.S3 (L81057S3)
March 31, 1995
<PAGE> 43
EXHIBIT A - DESERT OASIS
EXHIBIT "A"
THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE CITY OF PALM DESERT,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
PARCEL 1 OF PARCEL MAP NO. 15031, AS SHOWN BY MAP ON FILE IN BOOK 82 PAGES 33
AND 34 OF PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA;
EXCEPTING THEREFROM THOSE PORTIONS THEREOF INCLUDED WITHIN TRACT NO. 15588-1, AS
SHOWN BY MAP ON FILE IN BOOK 116 PAGES 37 AND 38 OF MAPS, AND TRACT NO. 15588-2,
AS SHOWN BY MAP ON FILE IN BOOK 116 PAGES 29 AND 40 OF MAPS, BOTH OF RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA;
ALSO EXCEPTING AN UNDIVIDED ONE-HALF INTEREST IN ALL MINERALS, GAS, OIL,
PETROLEUM, NAPHTHA AND OTHER HYDROCARBON SUBSTANCES AS RESERVED BY BEN T. LAFLIN
AND LUCY T. LAFLIN, HUSBAND AND WIFE, IN DEED RECORDED MAY 4, 1955 IN BOOK 1732
PAGE 316 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
ALSO EXCEPTING THE REMAINING ONE-HALF INTEREST IN ALL MINERALS, GAS, OIL,
PETROLEUM, NAPHTHA AND OTHER HYDROCARBON SUBSTANCES, LYING BELOW A DEPTH OF
500.00 FEET FROM EXISTING SURFACE, IN THE NORTHEAST QUARTER OF SAID SECTION 12
(EXCEPT THE NORTH HALF OF SAID NORTHEAST QUARTER) AS CONVEYED TO LOIS E. BRYSON,
AN UNMARRIED WOMAN, BY DEED RECORDED FEBRUARY 7, 1969 AS INSTRUMENT NO. 12521 OF
OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, WHICH SAID DEED RESERVES ALL
RIGHTS OF ENTRY UPON SAID LAND ABOVE SAID DEPTH OF 500.00 FEET, EXCEPT FOR THE
RIGHT TO EXPLORE FOR AND/OR RECOVER SAID MINERALS AND SUBSTANCES FROM THE WEST
100.00 FEET OF THE SOUTH 150.00 FEET OF SAID NORTHEAST QUARTER.
<PAGE> 44
EXHIBIT A - FLEETWOOD APARTMENTS
EXHIBIT A
---------
REAL PROPERTY
-------------
A tract of land containing 4.499 acres, more or less, situated in the Joel
Wheaton Survey, Abstract Number 80, in the City of Houston, Harris County, Texas
and being all of FLEETWOOD VILLAGE APARTMENTS SUBDIVISION, according to the map
or plat thereof, recorded at Film Code No. 355118 of the Map Records of Harris
County, Texas, and also containing 3045 square feet of land out of the Reserve
"C", FLEETWOOD, SECTION FOUR, as shown on Plat recorded in Volume 237, Page 54
of the Map Records of Harris County, Texas, and being more particularly
described as follows:
Fleetwood Village Apartments
4.499 Acres
Joel Wheaton Survey, A-80
City of Houston
Harris County, Texas
FIELD NOTE DESCRIPTION to a tract of land containing 4.499 acres, more or less,
situated in the Joel Wheaton Survey, Abstract Number 80, in the City of Houston,
Harris County, Texas and being all of Fleetwood Village Apartments Subdivision
according to the map or plat thereof recorded by Film Code Number 355118 in the
Harris County Map Records and also 3045 square feet of land out of Reserve "C"
in Fleetwood Section Four Subdivision according to the map or plat thereof
recorded in Volume 237, Page 54 of the Harris County Map Records, said 4.499
acres being more particularly described by metes and bounds as follows:
BEGINNING at a found 5/8 inch iron rod marking the intersection of the south
right-of-way line of Memorial Drive (100' ROW) with the east right-of-way line
of Fleetwood Place Drive (60' ROW), same being on the east end of a 15 foot
cutback;
THENCE, S 87(degree) 23' 00" E, along the south right-of-way line of said
Memorial Drive a distance of 328.8 feet to a found 5/8 inch iron rod marking the
point of curvature of a curve to the left;
THENCE, in an easterly direction continuing along the south right-of-way line of
said Memorial Drive and along the arc of said curve to the left having a radius
of 1960.08 feet and subtending a central angle of 01(degree) 08' 40" a length of
39.15 feet and having a chord of S 87(degree) 57' 20" E, a distance of 39.15
feet to a found 5/8 inch iron rod for the northeast corner of the tract herein
described, same being on the west right-of-way line of a 20 foot alley as
dedicated by the recorded plat of Fleetwood Section Three Replat according to
the map or plat thereof recorded in Volume 224, Page 91 of the Harris County Map
Records;
THENCE, S 03(degree) 16' 07" E, along the west right-of-way line of said alley a
distance of 426.87 feet to a found 5/8 inch iron rod marking the point of
curvature of a curve to the right;
THENCE, in a southerly direction, continuing along the west right-of-way line of
said alley and along the arc of said curve to the right having a radius of
578.00 feet and subtending a central angle of 05(degree) 32' 32" a length of
55.91 feet and having a chord of S 00(degree) 29' 51" E, a distance of 55.89
feet to a found 5/8 inch iron rod for the southeast corner of the tract herein
described;
<PAGE> 45
THENCE, N 87(degree) 23' 00" W, along the north line of Fleetwood West Section
One as recorded in Volume 266, Page 52 of the Harris County Map Records a
distance of 431.80 feet to a found 5/8 inch iron rod on the east right-of-way
line of the aforementioned Fleetwood Place Drive for the southwest corner of the
tract herein described;
THENCE, N 02(degree) 54' 40" E, along the east right-of-way line of said
Fleetwood Place Drive a distance of 465.04 feet to a found 5/8 inch iron rod on
the south end of a 15 foot cutback for the most southerly northwest corner of
the tract herein described;
THENCE, N 47(degree) 45' 50" E, along said 15 foot cutback a distance of 21.27
feet to the POINT OF BEGINNING and containing 4.499 acres of land, more or less.
<PAGE> 46
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
<PAGE> 47
EXHIBIT B - WINDSOR FALLS
Windsor Falls Model Inventory
1. 2 Barstools
2. 16 cubic ft. refrig. Hotpoint
3. Hotpoint Oven
4. GE Range Hood
5. Hotpoint Dishwasher
6. GE Garbage Disposal
7. Wood Burning Fireplace
8. Dining Room Table & 4 Chairs & Centerpiece
9. Couch
10. Corner Entertainment Center
11. 5 Window Treatments
12. Coffee Table
13. Sitting Chair in LR--Also called Armchair
14. Deck Table with 2 Chairs
15. Assorted Fake Plants & Decorations
16. 2 Beds--Fullsize--with Matching Sheets & Pillows
17. 2 Dressers with Mirrors
18. Sitting thing at head of bed
19. Nightstand with lamp 1st bedroom and 2nd bedroom
20. Sitting chair in back bedroom
21. Fourteen Assorted pictures & mirrors
<PAGE> 48
Office
3 computers
2 printers
3 horizontal file cabinets
8 conference chairs
2 desk chairs
2 conference tables
1 copier
2 servers
1 display case
1 vertical file cabinet
1 sofa
2 club chairs
1 coffee table
2 end tables
3 lamps
4 decorative Ficus trees
1 oriental rug
2 upholstered benches
1 wooden bench
2 rocking chairs (outside office)
1 kitchen table with 2 chairs
various mirrors and pictures, etc.
nine window treatments
4 office phones
1 vacuum for office
3 white boards
One set of gas logs
One water cooler
One Otis Spunk oven
One coffee maker
One timeclock
<PAGE> 49
Pool Supplies
45 chaise lounges
4 round tables with umbrellas and weights
20 pool chairs
3 ashtrays
4 gas grills
Fitness Center
1 Diamondback Recumbent Bike/electric
1 Diamondback Upright Bike/electric
1 Landice Treadmill/electric
1 California Apollo Weight Training Center
1 Diamondback Stairstepper/electric
1 NexStep Stairstepper
3 framed posters
1 water fountain
1 doctors scale
1 TV with built-in VCR
2 ceiling fans
Laundry Room
1 TV
<PAGE> 50
EXHIBIT B - 20TH AND CAMPBELL APARTMENTS
PERSONAL PROPERTY
Washing Machines 206
Dryers 206
Stoves 204
Refrigerators 204
Microwave Ovens 60
Exercise Equipment
Weight Machine 1
Treadmill 1
Stairstepper 1
EFX Machine 1
Office Equipment
Desks 3
Credenza 1
Filing Cabinets 3
Computers 2
Printer 1
Couch 1
Table with 6 chairs 1
Copier 1
<PAGE> 51
EXHIBIT B - PEACHTREE APARTMENTS
PEACHTREE APARTMENTS PERSONAL PROPERTY
APARTMENTS
- ----------
Each apartment (156 total) contains a full appliance package consisting of GE
electric stove, frost free refrigerator w/icemaker, dishwasher, microwave
oven/range hood, full sized washer and dryer. Individual gas furnaces are
typically Trane as are electric central air conditioning units.
CLUBHOUSE
- ---------
The Clubhouse and Leasing Center contains the following items:
Fitness Center ---- Hoist Fitness Center
Various hand weights
TDS Weight Bench
Bio Dyne Vertical Press
Diamondback HRT 1000R Recumbent Bicycle
True 700 Treadmill
True 980 Treadmill
GE 25" color TV
Leasing Center/Clubroom -- Konica 1015 Copier
Sharp UX 175 fax machine
GE Refrigerator, stove, dishwasher and
microwave oven
CompuDyne Computer w/color monitor and
keyboard
Panasonic printer KX-P1150
Computer hutch/desk
Writing Table
2 side chairs, 1 desk chair
Dark wood credenza
Sofa table w/2 upholstered benches
2 end tables
1 coffee table
6 piece sectional sofa
RCA Color TV
Toshiba VCR
Dining table and 4 chairs
Various accessories
Manager's Office --- 2 side chairs
1 desk chair
1 desk w/return
Hutch
File cabinet
Credenza
HP DeskJet 540
HyTech computer w/DataSys color monitor, and keyboard
<PAGE> 52
MODEL APARTMENT (929 PEACH HILL LANE #903)
- ------------------------------------------
Sofa 2 wicker chairs w/small desk
Coffee table Dining table w/4 chairs
Chair Sofa Table
Armoire Double bed w/wicker headboard
Wicker nightstand Wicker dresser w/mirror
POOL COURTYARD
- --------------
Pool furniture
Outdoor electric Jacuzzi w/cover
2 Ducane gas bbq grills
2 wood picnic tables
MAINTENANCE SHOP
- ----------------
Golf Cart and battery charger for same
Turbo torch set
WC-15 Freon Recovery unit
Weed Eater
Craftsman Blower-Vac
Weed Eater Blower
Kwikset Titan Lock keying kit
Dolly
Clean Machine Power Washer
2 Nitrogen Tanks
32' Ladder
Wet Vac
1 set Walkie talkies
<PAGE> 53
EXHIBIT B - MORGAN PLACE
PERSONAL PROPERTY
Leasing Office
Sofa 1
Chairs 2
Coffee Table 1
Scotsman Refrigerator 1
Scotsman Icemaker 1
Microwave Oven 1
Coffee Maker 1
Pedestal Table 1
Plant Stand 1
Manager's Office
Desk 1
Credenza 1
File cabinet 2 drawer 1
File cabinet 4 drawer 4
Large desk chair 1
Small desk chair 1
Wing Chairs 2
Picture 1
Computer (Compudyne) 1
Monitor (Compaq) 1
HP Deskjet Printer 1
Freezer 1
Leasing Office
Desk 1
Credenza 1
Bookshelf 1
Desk Chair 1
Wing Chairs 2
Computer 1
Monitor 1
Deskjet Printer 1
Dot Matrix Printer 1
Copier 1
Model
Sofa 1
Bookshelf 1
Glass coffee table 1
Dining room table 1
Chairs 2
Queen size bed 1
Double Dresser 1
<PAGE> 54
EXHIBIT B - HAMPTON POINT
Phase 1
21 chaise lounge
14 patio chairs
6 42" round acrylic tables
7 28" round acrylic tables
1 18" round acrylic tables
4 Vinyl umbrellas
1 42' 2 seat picnic table
5 umbrella bases
4 trash receptacles
2 clay planters
1 recycling container
12 various pictures
2 cordless phones
Phase 2
18 chaise lounge
14 patio chairs
4 42" round acrylic tables
3 18" round acrylic tables
3 vinyl umbrellas
3 umbrella bases
4 trash receptacles
1 clay planters
1 barrell planter
Maintenance Shop
2 snow blowers
1 10" table saw
2 sump pump
3 hand clamps
1 10" deck saw
3 hurricane fans
1 K-50
1 3' ladder
1 8' ladder
1 50" retractable extension cord
1 vice
1 electric wire wheel grinder
2 augers
1 spanner wrench
1 25 gallon wet vac w/wand
1 work mate bench
1 sledge hammer
8 shovels
1 a/c recovery unit
2 dolleys
2 golf cars
2 cordless drills
<PAGE> 55
1 sawzall
1 belt sander
1 sewer snake 350
1 fire cabinet
1 glue gun
Manager's Office
1 filing cabinet
1 desk phone
1 HyTech computer
1 Comp AOC color monitor
1 Hewlett Packard 650 bubble jet printer
1 bulletin board
1 trash can
1 calculator
Leasing Office
3 Meridian Norstar phones
3 trash cans
1 Canon NP 2120 Copier
1 Sharp UV100 Fax machine
2 Comp AOC Spectrum monitor
2 HY Tech Computer
1 HP Laser Jet 4 Plus
1 typewriter IBM Selectric
4 calculators
3 desklamps
6 Two-way radios
1 Panasonic KX P1150 Dot Matrix printer
Clubhouse
2 Barstools
1 set of fireplace tools
1 toaster
1 microwave
Maintenance Shop
Phase 1
1 desk
2 filing cabinets
1 desk phone
1 key cutting machine
<PAGE> 56
EXHIBIT B - ANNEN WOODS
OFFICE INVENTORY
----------------
OFFICES FITNESS CENTER
- ------- --------------
2 Computers 1 Electric Treadmill
3 Printers 1 Man Powered Treadmill
1 Copier 1 Stair Climber
1 Shredder 1 Nordic Rider
1 Fax Machine 1 Recumbent Bicycle
4 Filing Cabinets 1 Nordic Track Glider
2 Phones
2 Office Desks KITCHEN
3 Office Chairs -------
3 Misc. Chairs Microwave
1 Typewriter
CLUBHOUSE
- ---------
1 White Couch
1 Flowered Chair
1 Wo
1 Gla
2 Bla
1 Ent
2 Boc
1 TV
1 Ster
1 VCR
1 CD
2 Ster
<PAGE> 57
EXHIBIT B - FLEETWOOD APARTMENTS
FLEETWOOD INVENTORY
CLUBROOM
Entertainment Center
27" Zenith TV
Zenith VCR
4 8' silk trees
2 wicker chairs
1 green and red chair
1 green couch
1 glass coffee table
1 disk hutch
Leasing table and 2 chairs
1 marble table with pedestal
3 silk plants
3 bird cages
OFFICE KITCHEN
20" Electric range
18' compact undercounter dishwasher
Microwave
Refrigerator
OFFICE
Sharp copier
Technics stereo receiver
Compact disc player
2 drawer file cabinet
Desk chair
2 polaroid cameras
11 wall pictures through out office and clubroom
MANAGER'S OFFICE
2 2-drawer file cabinets
1 small
2-drawer file cabinet
Computer desk with credenza
3 desk plants Desk lamp
HyTech computer
Compudyne monitor
HP 540 printer
Desk chair 2 side chairs
<PAGE> 58
ASSISTANT MANAGER OFFICE
Secretary desk Desk chair
4 office chairs
Brothers typewriter
2 desk plants
MAINTENANCE
K-23 Brazing kit (Uni-weld) and stand
Acetylene tank
Oxygen tank
Promar 3305 recovery unit
Vacuum pump
Manifold gauges with hoses
Appliance dolly
Small sink machine
Shampoo machine
Key machine (ILCO.008 mini mite)
Key machine (ILCO.025 manual machine)
Wet Vac
32' extension ladder
2 6' step ladders
Carpet rake
3' step ladder
1 washing machine used for parts
1 dryer used for parts
Titan paint machine (model #400)
3 Motorola PVO radio's
8' party table
Shovel, spade.
Treadmill (Broken)
POOL FURNITURE
16 lounge chairs
8 table chairs
4 low seat chairs
2 tables with umbrella's
2 trash cans
4 ash trays
6 plant pots
FITNESS CENTER
Stairmaster
2 treadmills
2 exercise bikes
6' silk plant
19" color TV
<PAGE> 59
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.
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;
<PAGE> 60
(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:
(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;
C-2
<PAGE> 61
(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 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.
C-3
<PAGE> 62
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
C-4
<PAGE> 63
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
C-5
<PAGE> 64
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:
------------------------------------
<PAGE> 65
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:
------------------------------
<PAGE> 66
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:
--------------------------------
<PAGE> 67
ATTACHMENT 1
<PAGE> 68
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
By:
-----------------------------------------
Martin A. Fishman, Vice President
<PAGE> 69
ATTACHMENT 1
<PAGE> 70
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).
<PAGE> 71
EXHIBIT I
INVESTMENT REPRESENTATION LETTER
This Investment Representation Letter (this "Letter") is
delivered in connection with the Purchase Agreement dated __________ , 1998 (the
"Purchase Agreement") between __________ ("Seller") and Associated Estates
Realty Corp., an Ohio corporation ("AERC"), which, among other things, provides
for the issuance to Seller of __________ (______) shares of AERC's common stock
(the "Shares"). In connection with the investment in the Shares, Seller hereby
represents and warrants to AERC as follows:
1. AUTHORITY. Seller has the full power, right and authority to execute
and deliver this Letter. All authorizations and consents necessary for the
execution and delivery of this Letter have been given and all authorizations and
approvals required by law or contract with respect to Seller's right and power
to make the representations and warranties set forth herein have been obtained.
2. ACQUIRED ENTIRELY FOR OWN ACCOUNT. Seller (a) is acquiring the
Shares for Seller's own account for investment only, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof; (b) has
no present intention of selling, granting any participation in, or otherwise
distributing the Shares; and (c) does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Shares, in each case except to the extent registration of the Shares is
contemplated by the Purchase Agreement and, in the case the Seller is a group
trust or corporation, in dissolution thereof and otherwise in distribution to
the beneficial owners or shareholders thereof, as applicable.
3. INVESTMENT EXPERIENCE, AUTHORITY AND ADVICE. Seller has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of investments generally, and of Seller's
investment in the Shares in particular. The Shares are securities of the type
permitted to be acquired by Seller as an investment. Seller is able to bear (a)
the economic risk of an investment in the Shares and (b) any lack of liquidity
inherent in holding the Shares, with the full understanding that Seller can lose
its entire investment. Seller acknowledges that the loss of its entire
investment in the Shares will not have a material adverse effect on its business
operations. Seller has been advised by AERC to seek expert legal, tax, and
accounting advice in connection with its investment decision.
4. 1934 ACT REPORTED MATERIALS. AERC has furnished to Seller copies of
all such forms, reports and documents filed by AERC with the Securities and
Exchange Commission (the "SEC") since January 1, 1994. Seller has read and is
familiar with all such reports, including without limitation, AERC's latest
annual report to the SEC on Form 10-K, AERC's latest quarterly report to the SEC
on Form 10-Q, and any current reports of AERC since the date of the latter to
the SEC on Form 8-K, and has read and is familiar with the audited financial
statements and unaudited monthly or quarterly, as the case may be, financial
statements of AERC (such reports and financial statements, collectively, the
"Evaluation Material"), access to which was afforded by AERC to Seller prior to
the execution of this Letter and the investment by Seller in the Shares.
5. ARTICLES OF INCORPORATION. Seller acknowledges that the Articles of
Incorporation of AERC, as amended, as of the date hereof contain restrictions on
the ownership and transfer of the Shares.
6. AVAILABILITY OF INFORMATION. In order to evaluate the merits and the
risks inherent in acquiring and holding the Shares, AERC has made available to
Seller, during the course of this transaction and prior to the investment in the
Shares, the opportunity to ask questions of, and receive
<PAGE> 72
answers from, AERC and those persons acting on AERC's behalf, concerning the
terms and conditions of this Letter and this transaction, as well as the
information contained in the Evaluation Material. Seller has had all such
questions answered to its satisfaction and has been supplied all additional
information deemed necessary by Seller to verify the accuracy of the information
provided to it by AERC to the extent that AERC possesses such information or can
acquire it without unreasonable effort or expense. Seller has had a full and
complete opportunity to examine all documents relating to AERC that have been
made available by AERC and is familiar with the contents thereof and, in
particular, with all risk factors associated with any investment in AERC. Seller
has had access to such information as it deems material in making the investment
decision called for.
7. RESTRICTED SECURITIES. Except to the extent registration of the
Shares is contemplated by the Purchase Agreement, Seller acknowledges that
neither the Shares nor the sale thereof to Seller has been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities laws. Seller understands that the Shares are "restricted securities"
under the Securities Act and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act, or unless an exemption from
such registration is available, including SEC Rule 144, as may be in effect from
time to time ("Rule 144"); that Seller may not resell or otherwise dispose of
all or any part of the Shares, except as permitted by law, including, without
limitation, any and all applicable provisions of the Purchase Agreement or any
regulations under the Securities Act or any state securities laws; and that AERC
will restrict the transfer of the Shares in accordance with the representations
contained in this paragraph. Seller represents that it is generally familiar
with Rule 144, and that Seller understands the resale limitations imposed
thereby and by the Securities Act.
8. FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, Seller further agrees not to make any
disposition of all or any portion of the Shares unless:
a. There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such Registration
Statement; or
b. (i) Seller has notified AERC of the proposed disposition
and has furnished AERC with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii)
Seller has furnished AERC with an opinion of counsel,
reasonably satisfactory to AERC, that such disposition will
not require registration of such shares under the Act; or
c. Such disposition is made pursuant to Rule 144.
9. LEGENDS. It is understood that the Shares may bear one or all of the
following legends:
a. "These securities have not been registered under the
Securities Act of 1933, as amended (the "Act"). They may not
be sold, offered for sale, pledged, hypothecated or otherwise
transferred in the absence of a registration statement in
effect with respect to the securities under such Act or an
opinion of counsel satisfactory to AERC that such registration
is not required or unless sold pursuant to Rule 144 of such
Act."
b. "The Common Shares represented by this certificate are
subject to restrictions on transfer for the purpose of
preserving the Corporation's status as a Real Estate
Investment Trust under the Internal Revenue Code of 1986, as
amended. Subject to certain provisions of the Corporation's
Amended and Restated Articles of Incorporation, no Person may
Beneficially Own Common Shares in excess of 4.0% of the
outstanding
<PAGE> 73
Common Shares of the Corporation (unless such Person is an
Existing Holder) and no Person (other than an Existing Holder
who Constructively Owns in excess of 9.8% of the Common Shares
immediately following the consummation of the Initial Public
Offering) may Constructively Own Common Shares in excess of
9.8% of the outstanding Common Shares of the Corporation. Any
Person who attempts to Beneficially Own or Constructively Own
Common Shares in excess of the above limitations must
immediately notify the Corporation. All capitalized terms in
this legend have the meanings defined in the Corporation's
Amended and Restated Articles of Incorporation, a copy of
which, including the restrictions on transfer, will be sent
without charge to each shareholder who so requests. If the
restrictions on transfer are violated, certain of the Common
Shares represented may be subject to repurchase by the
Corporation on the terms and conditions set forth in the
Corporation's Amended and Restated Articles of Incorporation."
(The Company's Amended and Restated Articles of Incorporation,
as amended, are attached hereto as Exhibit A.)
c. Any legend required by any applicable state laws.
IN WITNESS WHEREOF, Seller has executed this Investment
Representation Letter effective as of __________ , 1998.
SELLER
By:
----------------------------------
Its:
----------------------------------
<PAGE> 74
EXHIBIT J
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is
entered into as of _____________, 1998, by and between ASSOCIATED ESTATES REALTY
CORPORATION, an Ohio corporation (the "Company"), and each of the persons who
are signatories hereto (each, a "Holder").
WHEREAS, each Holder has entered into a purchase agreement for
the sale of real property by Holder to the Company (the "Purchase Agreement")
and a portion of the consideration paid by the Company for such real property is
a number of common shares, without par value, of the Company specified in the
Purchase Agreement; and
WHEREAS, the Company has agreed to provide the Holders with
certain registration rights with respect to the shares received by those
Holders, subject to the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises and agreements set forth herein, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"PERMITTED TRANSFEREE" shall mean, in the case of a Holder
that is a group trust or corporation, any Person that is a beneficial owner or
shareholder, respectively, therein.
"PERSON" shall mean an individual, partnership, corporation,
trust, or unincorporated organization, or a government or agency or political
subdivision thereof.
"PROSPECTUS" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Shares covered by such Registration
Statement, and by all other amendments and supplements to such prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.
"REGISTRABLE SHARES" shall mean (i) the Shares received in
consideration for real property pursuant to the Purchase Agreements (excluding
(a) Shares for which a Registration Statement relating to the sale thereof shall
have become effective under the Securities Act and which have been disposed of
under such Registration Statement, and (b) Shares sold pursuant to Rule 144
under the Securities Act, and (ii) any securities of the Company that may be
issued or distributed with respect to, in exchange or substitution for, or upon
conversion of such Registrable Shares, or on account of such Registrable Shares
<PAGE> 75
as a result of any stock dividend, stock split, reverse split or other
distribution, merger, combination, consolidation, recapitalization or
reclassification or otherwise. All references in this Agreement to Rule 144 and
subsections thereof shall refer to corresponding provisions of future law.
Registrable Shares includes Shares held by other holders pursuant to other real
estate purchase agreements by and between such holders and the Company, as
contemplated by that certain Agreement and Plan of Merger, dated November 5,
1997, among the Company, MIG Realty Advisors, Inc. ("MIGRA") and certain
stockholders of MIGRA.
"REGISTRATION EXPENSES" shall mean all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all out-of-pocket expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Shares on any securities exchange or exchanges; and (v) the fees and
disbursements of counsel for the Company (other than its internal counsel) and
of the independent public accountants of the Company, including the expenses of
any special audit or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions relating to the sale or disposition of
Registrable Shares by the Holder, the fees and disbursements of counsel
representing the Holder, and transfer taxes, if any, relating to the sale or
disposition of Registrable Shares by the Holder, all of which shall be borne by
the Holder in all cases.
"REGISTRATION STATEMENT" shall mean any registration statement
of the Company and any other entity required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities Act
which covers any of the Registrable Shares on an appropriate form, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES" shall mean common shares, without par value, of the
Company.
2. REGISTRATION.
(a) As soon as reasonably practicable, but no later
than sixty days after the Closing Date (as defined in the Purchase Agreement),
the Company at its sole cost and expense, will prepare and file with the SEC a
Registration Statement on Form S-3 under Rule 415 promulgated under the
Securities Act relating to the Registrable Shares (the "Initial Registration
Statement").
(b) The Company will use all reasonable efforts to
have the Initial Registration Statement declared effective by the SEC as
promptly as practicable (which effective date may or may not occur before the
Closing Date as defined in the Purchase Agreement) and to keep the Registration
Statement continuously effective for a period ending on the date that is one (1)
year following the date the Initial Registration Statement is declared effective
by the SEC or until such earlier date on which the Holders no longer hold any
Registrable Shares covered by the Initial Registration
<PAGE> 76
Statement. Holder acknowledges and agrees that the Company's exercise of
"reasonable efforts" under this Section 2(b) in connection with keeping the
Initial Registration Statement continuously effective, shall not require the
Company to alter or otherwise revise its disclosure practices nor shall the
Company's obligation to use such "reasonable efforts" require the Company to
accelerate any discussions or take any other actions in an effort to reduce the
Black-Out Periods (as defined in Section 8). However, the Company will not
invoke Black-Out Periods in excess of an aggregate of 180 days. In addition, if,
in the aggregate, the Black-Out Periods exceed 120 days, then the Company's
obligation to maintain the effectiveness of the Initial Registration Statement
pursuant to this Section 2(b) will be extended by that number of days in excess
of 120.
(c) If, at any time while the Registrable Shares are
outstanding (without any obligation to do so) the Company proposes to file
another Registration Statement under the Securities Act with respect to an
offering of Shares which covers sales of Shares by holders of demand
registration rights granted by the Company, the Company shall give prompt
written notice of such proposed filing to the Holders. The notice referred to in
the preceding sentence shall offer each of the Holders the opportunity to
register such amount of Registrable Shares as they may request (a "PIGGYBACK
REGISTRATION"). Subject to the provisions of Section 3 below, the Company shall
include in such Piggyback Registration and in the registration and qualification
for sale under the blue sky or securities laws of the various states, all
Registrable Shares for which the Company has received a written request for
inclusion therein within ten (10) calendar days after the notice referred to
above has been given by the Company to the Holders. Each Holder shall be
permitted to withdraw all or part of his Registrable Shares from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration.
(d) During the period beginning one year after the
date of issuance of the Registrable Shares and ending two years after the date
of such issuance, if the Company proposes to file a Registration Statement under
the Securities Act with respect to an underwritten offering by the Company, for
its own account, of any class of equity security (or any options, warrants or
other securities convertible into, or exchangeable or exercisable for, equity
securities) to be offered for cash (other than in connection with the
registration of securities issuable pursuant to an employee stock option, stock
purchase or similar plan or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the Securities Act) (a
"Company Registration"), then the Company will give written notice of the
proposed filing to the Holders at least 20 days before the filing date, and the
notice will offer the Holders the opportunity to register such number of
Registrable Shares as each Holder may request. If such offer is accepted by
written notice to the Company within 10 days of the giving of the written notice
provided for in the preceding sentence, the Company will use its best efforts to
cause the managing underwriter or underwriters thereof to permit, the Holders of
Registrable Shares requested to be included in the Company Registration for such
offering to include such Registrable Shares in such offering on the same terms
and conditions as the corresponding securities of the Company included therein.
The number of Registrable Shares to be offered for the account of Holders will
be 20% of the number of Shares to be offered by the Company (for example, if the
Company proposes to offer 100,000 Shares, the number of Registrable Shares to be
offered will be 20,000 for an aggregate offering of 120,000 Shares). If the
Company receives acceptances from Holders to register Registrable Shares in
excess of 20% of the number of Shares to be offered by the Company, then the
amount of securities to be offered for the accounts of Holders of Registrable
Shares shall be reduced PRO RATA to the extent necessary to reduce the total
amount of Registrable Shares to be included in such offering to 20% of the
number of Shares to be offered by the Company. If, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the Registration Statement filed in connection with such
Company Registration, the Company determines for any reason not to proceed with
the proposed Company Registration, the Company may, at its election, give
written notice of such determination to each Holder of Registrable Shares
requested to be included in such registration and thereupon will be relieved of
its obligation to register any Registrable Shares in connection with such
registration.
<PAGE> 77
The Company will only be obligated to include Registrable
Shares in one Company Registration as determined by the Company in consultation
with the managing underwriters. The Company will have no obligation to include
Registrable Shares in a spot or "rapidly offered common" offering. Upon
completion of a Company Registration in which notice to Holders pursuant to this
Section 2(d) was provided and the Registrable Shares of the applicable Holders
were sold, the Holders will have no further right to include Registrable Shares
in a Company Registration.
All Holders requesting to have Registrable Shares included in
the Company Registration must sell their Registrable Shares to the underwriters
who shall have been selected by the Company on the same terms and conditions as
apply to the Company, with such differences, including any with respect to
indemnification and contribution, as may be customary or appropriate in combined
primary and secondary offerings.
Any Holder who elects to participate in a Company Registration
must agree to enter into a contractual agreement with the managing underwriter
or underwriters of the offering to refrain from sale or distribution of
Registrable Shares (other than those Registrable Shares included in the Company
Registration) during the 90-day period beginning on the effective date of the
Registration Statement filed in connection with the Company Registration.
(e) The Company shall notify each Holder of the
effectiveness of each Registration Statement which covers Registrable Shares and
shall furnish to each Holder the number of copies of the Registration Statement
(including any amendments, supplements and exhibits), the Prospectus contained
therein (including each preliminary prospectus and all related amendments and
supplements) and any documents incorporated by reference in the Registration
Statement or such other documents as each Holder may reasonably request in order
to facilitate his sale of the Registrable Shares in the manner described in the
Registration Statement.
(f) The Company shall prepare and file with the SEC
from time to time such amendments and supplements to the Initial Registration
Statement and Prospectus used in connection therewith (the "Initial Prospectus")
as may be necessary to keep the Initial Registration Statement effective and to
comply with the provisions of the Securities Act with respect to the disposition
of all the Registrable Shares until the earlier of (i) such time as all of the
Registrable Shares have been disposed of in accordance with the intended methods
of disposition by the Holders as set forth in the Initial Registration Statement
or (ii) the date on which the Initial Registration Statement ceases to be
effective in accordance with the terms of this Section 2. The Company shall file
any necessary listing applications or amendments to the existing applications to
cause the Registrable Shares registered under any Registration Statement to be
then listed or quoted on the primary exchange or quotation system on which the
Registrable Shares are then listed or quoted and use its reasonable efforts to
have the Registrable Shares so listed.
(g) The Company shall promptly notify the Holders of,
and confirm in writing, any request by the SEC for amendments or supplements to
any Registration Statement or the Prospectus related thereto or for additional
information. In addition, the Company shall promptly notify the Holders of, and
confirm in writing, the filing of any Registration Statement or any Prospectus,
amendment or supplement related thereto or any post-effective amendment to the
Registration Statement and the effectiveness of any post-effective amendment.
(h) At any time when a Prospectus relating to a
Registration Statement is required to be delivered under the Securities Act, the
Company shall immediately notify the Holders of the happening of any event as a
result of which the Prospectus included in the Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to
<PAGE> 78
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In such event, the
Company shall promptly prepare and furnish to each Holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be necessary
so that, as thereafter delivered to the purchasers of Registrable Shares, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Company will, if necessary, amend the Registration Statement of
which such Prospectus is a part to reflect such amendment or supplement.
(i) The Company shall use its reasonable efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earning statement
covering the period of at least twelve months, beginning with the first fiscal
quarter beginning after the effective date of the Registration Statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(j) The Company shall use its reasonable efforts
(including, without limitation, calling for a meeting to obtain, through the use
of reasonable efforts, the approval of the Company's shareholders as required by
the New York Stock Exchange or its rules) to cause any Shares issued to Holders
to be approved for listing on the New York Stock Exchange, subject to official
notice of issuance.
3. STATE SECURITIES LAWS. Subject to the conditions set forth
in this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary under
the securities or "Blue Sky" laws of such states as a Holder may reasonably
request and otherwise use its reasonable efforts to have the Registrable Shares
registered, qualified or otherwise eligible for sale.
4. EXPENSES. The Company will bear all Registration Expenses
incurred in connection with Registration Statements filed pursuant to Section
2(a). In all cases, the Holders shall be responsible for any brokerage or
underwriting commissions and taxes of any kind (including, without limitation,
transfer taxes) with respect to any disposition, sale or transfer of Registrable
Shares sold by it and for any legal, accounting and other expenses incurred by
it. The Holders shall also bear their pro rata shares of any Registration
Expenses incurred in connection with any Piggyback Registration.
5. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Holder and its directors, officers, employees,
agents, trustees, and partners and each Person, if any, who controls such Holder
(within the meaning of the Securities Act or Exchange Act) against all losses,
claims, damages, actions, liabilities, costs and expenses (including without
limitation reasonable fees, expenses and disbursements of attorneys and other
professionals), joint or several, arising out of or based upon (a) any violation
or alleged violation by the Company of any rule or regulation promulgated under
the Securities Act or the Exchange Act or any state securities and, in each
case, any rule or regulations promulgated thereunder, applicable to the Company
and relating to action or inaction required of the Company in connection with
any Registration Statement or Prospectus, or (b) upon any untrue or alleged
untrue statement of material fact contained in the Registration Statement or any
Prospectus, (including, in each case, any amendments or supplements thereto) or
(c) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided that the
Company shall not be liable to a Holder in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon (x) an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, any such preliminary prospectus, final prospectus, summary
prospectus,
<PAGE> 79
amendment or supplement in reliance upon and in conformity with information
regarding a Holder or his plan of distribution or ownership interests which was
furnished to the Company for use in connection with the Registration Statement
or the Prospectus contained therein by the Holder or the Holder's
representatives or (y) such Holder's failure to send or give a copy of the final
prospectus furnished to it by the Company through no fault of the Company at or
prior to the time such action is required by the Securities Act to the Person
claiming an untrue statement or alleged untrue statement or omission or alleged
omission if such statement or omission was corrected in such final prospectus.
The Company will reimburse such Holder and its directors, officers, employees,
agents, trustees and partners, and any Person who controls such Holder, for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, cost,
expense or action.
6. COVENANTS OF THE HOLDER. Each Holder hereby severally
agrees (a) to cooperate with the Company and to furnish to the Company all such
information concerning its plan of distribution and ownership interests with
respect to its Registrable Shares in connection with the preparation of the
Registration Statement and any filings with any state securities commissions as
the Company may reasonably request, (b) to deliver or cause delivery of the
Prospectus contained in the Registration Statement to any purchaser of the
shares covered by the Registration Statement from the Holder, and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each Person, if any, who controls the
Company within the meaning of the Securities Act, and each other Person, if any,
subject to liability because of his connection with the Company, against all
losses, claims, damages, actions, liabilities, costs and expenses arising out of
or based upon (i) any untrue statement or alleged untrue statement of material
fact contained in either a Registration Statement or the Prospectus contained
therein, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, if and
solely to the extent that such statement or omission occurs from reliance upon
and in conformity with written information regarding such Holder, its plan of
distribution or ownership interests, which was furnished to the Company by such
Holder or the Holder's representatives expressly for use therein or (ii) the
failure by such Holder to deliver or cause to be delivered the Prospectus
contained in the Registration Statement (as amended or supplemented, if
applicable) furnished by the Company to such Holder to any purchaser of the
Registrable Shares covered by the Registration Statement from such Holder
through no fault of the Company. The obligation of a Holder to provide
indemnification under this Section 6 shall be limited to the proceeds (net of
underwriting commissions and discounts) received by such Holder from the sale of
Registrable Shares under the Registration Statement which gives rise to such
obligation.
7. SUSPENSION OF REGISTRATION REQUIREMENT.
(a) The Company shall promptly notify each Holder of,
and confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any such Registration
Statement at the earliest possible moment.
(b) Notwithstanding anything to the contrary set
forth in this Agreement, the Company's obligation under this Agreement to use
all reasonable efforts to cause a Registration Statement and any filings with
any state securities commission to become or remain effective or to amend or
supplement a Registration Statement shall be suspended in the event and during
such period as circumstances exist (including without limitation (i) pending
negotiations relating to, or consummation of, a transaction or the occurrence of
an event that would require additional disclosure of material information by the
Company in the Registration Statement, as to which the Company has a bona fide
business purpose for preserving confidentiality or which renders the Company
unable to comply with the
<PAGE> 80
Securities Act and the rules and regulations promulgated by the SEC thereunder);
and (ii) in the case of a Company Registration, if, and to the extent that, the
Company is advised by the underwriters that sale of Registrable Shares (except
for those Registrable Shares included in the Company Registration) would have a
material adverse effect on the offering (such circumstances being hereinafter
referred to as a "SUSPENSION EVENT")) that would make it impractical or
inadvisable to cause the Registration Statement or such filings to become
effective or to amend or supplement the Registration Statement, but such
suspension shall continue only for so long as such event or its effect is
continuing. The Company shall notify each Holder of the existence and, in the
case of circumstances referred to in clause (i) of this Section 7(b), nature of
any Suspension Event.
8. BLACK-OUT PERIOD. Following the effectiveness of any
Registration Statement and the filings with any state securities commissions,
each Holder agrees that he will not effect any sales of the Registrable Shares
pursuant to the Registration Statement or any such filings at any time after he
has received notice from the Company to suspend sales as a result of the
occurrence or existence of any Suspension Event with respect to such
Registration Statement or so that the Company may correct or update such
Registration Statement or such filing (a "Black-Out Period"). Each Holder may
recommence effecting sales of the Registrable Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than
three (3) days after the conclusion of any such Suspension Event.
9. RULE 144. For a period of two (2) years following the
Closing Date (as defined in the Purchase Agreement), the Company covenants that
it will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
Holder, make publicly available other information so long as necessary to permit
sales under Rule 144 of the Securities Act ("Rule 144")) and it will take such
further action as Holder may reasonably request, all to the extent required from
time to time to enable Holder to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
as may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of Holder, the Company will
deliver to Seller a written statement as to whether it has complied with such
requirements.
10. ADDITIONAL SHARES. The Company, at its option, may
register, under any Registration Statement (other than the Initial Registration
Statement) and any filings with any state securities commissions filed pursuant
to this Agreement (other than in connection with the Initial Registration
Statement), any number of unissued Shares of the Company or any Shares of the
Company owned by any other shareholder or shareholders of the Company.
11. REGISTRATION PROCEDURES.
(a) The Company shall provide a transfer agent and
registrar for the Registrable Shares not later than the effective date of such
Registration Statement and thereafter maintain such a transfer agent and
registrar; and otherwise cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold and not bearing any restrictive legends, other than as provided in the
Company's Articles of Incorporation;
(b) The Company shall provide such information and
make available appropriate management personnel as may reasonably be requested
by the Holders in connection with any "road show" or related selling activity.
(c) The Company shall deliver to each Holder, at
least thirty (30) days prior to the filing of a Registration Statement, a notice
which sets forth the name and number of shares
<PAGE> 81
proposed to be shown in the Registration Statement with respect to such Holder,
to the extent such Holder is to be listed in the Registration Statement as a
selling stockholder; PROVIDED THAT, if such Holder provides corrected
information for inclusion in the Registration Statement within fifteen (15) days
after the date the notice is delivered, the Company shall instead include such
corrected information with respect to such Holder.
12. CONTRIBUTION. If the indemnification provided for in
Sections 5 and 6 is unavailable to an indemnified party with respect to any
losses, claims, damages, actions, liabilities, costs or expenses referred to
therein or is insufficient to hold the indemnified party harmless as
contemplated therein, then the Company or the Holder, whichever is the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, actions, liabilities, costs or expenses in such
proportion as is appropriate to reflect the relative fault of the Company, on
the one hand, and the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages, actions,
liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holder, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
PROVIDED, HOWEVER, that in no event shall the obligation of the Company or the
Holder, as indemnifying party, to contribute under this Section 10 exceed the
amount that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections 5 or 6 hereof
had been available under the circumstances.
The Company and each Holder agree that it would not
be just and equitable if contribution pursuant to this Section 10 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph.
Notwithstanding the provisions of this Section 12, no
Holder shall be required to contribute any amount in excess of the amount by
which the proceeds (net of underwriting commissions and discounts) to such
Holder from the sale of such Holder's Registrable Shares sold pursuant to the
Registration Statement which give to such obligation to contribute (less the
aggregate amount of any damages which such Holder has otherwise been required to
pay in respect of such loss, claim, damage, liability, cost or expense arising
from the sale of the Registrable Shares) exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
13. NOTICE; RIGHT TO DEFEND. Promptly after receipt by an
indemnified party under this Agreement of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Agreement, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, if the indemnifying party agrees in writing that it will be
responsible for any costs, expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual
<PAGE> 82
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Agreement only if and to the
extent that such failure is prejudicial to its ability to defend such action,
and the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party other than
under this Agreement.
14. SURVIVAL OF INDEMNITY AND CONTRIBUTION. The
indemnification and contribution provided by this Agreement shall be a
continuing right to indemnification and contribution and shall survive the
registration and sale of any securities by any Person entitled to
indemnification or contribution hereunder and the expiration or termination of
this Agreement.
15. NO OTHER OBLIGATION TO REGISTER. Except as otherwise
expressly provided in this Agreement, the Company shall have no obligation to
any Holder to register the Registrable Shares under the Securities Act.
16. AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified, or supplemented or waived without the prior
written consent of (a) the Company and (b) Holders who, at the time of such
amendment, own a majority of the Registrable Shares then covered by this
Agreement.
17. NOTICES. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to the Company: Associated Estates Realty Corporation
5025 Swetland Court
Richmond Heights, Ohio 44143
Attn: Martin A. Fishman
Telephone: (216) 473-8780
Facsimile: (216) 473-8105
with a copy to: Albert T. Adams
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
Telephone: (216) 861-7499
Facsimile: (216) 696-0740
If to the Holder: At the address set forth below that Holder's
signature.
In addition to the manner of notice permitted above,
notices given by the Company pursuant to Sections 2, 7 and 8 hereof may be
effected telephonically and confirmed in writing thereafter in the manner
described above.
<PAGE> 83
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and permitted assigns
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may be assigned by a Holder solely to a
Permitted Transferee and may not be otherwise assigned and any attempted
assignment hereof by a Holder in violation of the foregoing will be void and of
no effect and shall terminate all obligations of the Company hereunder to such
Holder; PROVIDED THAT a Holder may assign his rights hereunder in connection
with any of the following types of dispositions of Registrable Shares:
(a) a disposition by the Holder pursuant to a pledge,
grant of security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated pledgee;
(b) a disposition to another Holder; and
(c) at the sole discretion of the Company, a
disposition to a "qualified institutional buyer" (as that term is defined in
Rule 144A promulgated under the Securities Act) or an "accredited investor" (as
that term is defined in Rule 501 of Regulation D under the Securities Act)
PROVIDED, FURTHER, however, that any such assignment shall be effective only if,
the disposition is permitted under applicable federal or state securities laws.
In the event a Holder assigns its rights hereunder,
the Registrable Shares shall remain subject to this Agreement and, as a
condition of the validity of such assignment, the transferee shall be required
to execute and deliver a counterpart of this Agreement (except that a pledgee
shall not be required to execute and deliver a counterpart of this Agreement
until it forecloses upon such Shares). Thereafter, such transferee (including,
without limitation, a Permitted Transferee) shall be deemed to be a Holder for
purposes of this Agreement.
19. AUTHORIZATION; NO CONFLICTS. The execution and delivery of
this Agreement by the Company and the performance by the Company of its
covenants and agreements under this Agreement have been, or at the time of such
performance will have been, duly authorized by all necessary corporate action on
the part of the Company, and all required consents to the transactions
contemplated hereby have been obtained by the Company, or at the time of such
performance will have been received by the Company. The execution, delivery and
performance by the Company of this Agreement, the fulfillment of and compliance
with the respective terms and provisions hereof and thereof, and the
consummation by the Company of the transactions contemplated hereby and thereby,
do not and will not: (a) conflict with, or violate any provisions of, the
Articles of Incorporation or Code of Regulations of the Company; (b) conflict
with, or violate any provision of, any statute, law, ordinance, regulation,
rule, order, writ or injunction having applicability to the Company or any of
its assets; (c) result in a breach or acceleration of the maturity of any loan
or credit agreement to which the Company is a party or by which any of its
assets may be affected; or (d) conflict with, result in any breach of, or
constitute a default under any agreement to which the Company is a party or by
which it or any of its assets are bound; except (in the case of clauses (b), (c)
and (d) above) for such conflicts, violations, breaches or defaults (i) as will
not have a material adverse effect on the business or financial condition of the
Company or the transactions contemplated herein, or (ii) with respect to which
consents or waivers shall be obtained prior to the Company's performance of its
obligations hereunder.
20. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
the obligations undertaken by them hereunder are unique and that there would not
be adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to (a)
compel specific performance of the obligations, covenants and agreements of any
other party under the Agreement in
<PAGE> 84
accordance with the terms and conditions of this Agreement and (b) obtain
preliminary injunctive relief to secure specific performance and to prevent a
breach or contemplated breach of this Agreement in any court of the Unites
States or any State thereof having jurisdiction (each party waives the
requirement of the posting of any bond or security in connection with any
proceedings or any injunction issued in connection with this Section 20).
21. TIME OF THE ESSENCE. Time is of the essence in the
performance of this Agreement.
22. ATTORNEYS' FEES. Should either party employ attorneys to
enforce any of the provisions of this Agreement, the party against whom any
final judgement is entered agrees to pay the prevailing party all reasonable
costs, charges and expenses, including reasonable attorneys' fees, expended or
incurred by the prevailing party in connection therewith.
23. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
24. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio applicable to
contracts made and to be performed wholly within said State.
25. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
26. ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be the complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
ASSOCIATED ESTATES REALTY CORPORATION
HOLDERS:
-----------------------------------
Address:
---------------------------
-----------------------------------
-----------------------------------
No. of Shares:
--------------------------
<PAGE> 86
MIG Residential REIT
Comprehensive Property Due Diligence Checklist
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
20TH & ANNEN DESERT HAMPTON MORGAN WINDSOR
ITEM # ITEM CAMPELL WOODS OASIS FLEETWOOD POINT PLACE PEACHTREE FALLS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Phase I Environmental Report X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
2 Survey X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
3 Appraisals X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
4 List of property employees and salaries X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
5 Form lease and all addendums X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
6 Maintenance, service, and supply
contracts X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
7 Plans and specifications of the
project X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
8 Personal property leases n/a n/a n/a N/a n/a X n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
9 List of all personal property X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
10 Current rent roll X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
11 Annual operating statements for the
past three years X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
12 Tax returns for the past three years X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
13 List of addresses for each X X X X X X X X
building/site
- -------------------------------------------------------------------------------------------------------------------------------
14 Pending purchase orders for work to
be performed X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
15 All correspondence relating to any
pending eminent domain or other n/a n/a n/a N/a n/a n/a n/a n/a
similar action
- -------------------------------------------------------------------------------------------------------------------------------
16 Real estate tax bills for the past X X X X X X X X
two years
- -------------------------------------------------------------------------------------------------------------------------------
17 Owner's Title Insurance Policy X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
18 Three years insurance loss history
for the property X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
19 Certificates of occupancy X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
20 List of utility meters servicing the X X X X X X X X
property
- -------------------------------------------------------------------------------------------------------------------------------
21 List of current vendors X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
22 Two years capital improvement history X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
23 Three year history of fire or other
casualty damage X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
24 Pool permit X n/a X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
25 Legal description X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
26 Site plan X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
27 1998 Operating Budgets including capital X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
28 Zoning compliance information
- -------------------------------------------------------------------------------------------------------------------------------
29 Engineering Reports X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
30 1997 Operating Statements X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
31 Pending Litigation Information X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
Exhibit 10.2
- --------------------------------------------------------------------------------
CONTRIBUTION AND PARTNERSHIP INTEREST
PURCHASE AGREEMENT
dated as of April 23, 1998
between
ASSOCIATED ESTATES REALTY CORPORATION
("AERC")
and
ED WAYMAN
LARRY WRIGHT
JAMES A COTE
JAMES ELWOOD
LANNY KALIK
LOUIS E. VOGT
WILLIAM T. HUGHES, JR.
GREGORY L. GOLZ
PF FUNDS, INC.
MIG DEVELOPMENT COMPANY
- --------------------------------------------------------------------------------
-1-
<PAGE> 2
|| TABLE OF CONTENTS
1. BACKGROUND...............................................................1
2. INITIAL CONTRIBUTIONS (HOLLYWOOD AND KIRKMAN)............................4
2.01 AERC'S INITIAL CONTRIBUTION.....................................4
2.02 WAYMAN'S INITIAL CONTRIBUTION...................................5
2.03 WRIGHT'S INITIAL CONTRIBUTION...................................6
2.04 COTE'S INITIAL CONTRIBUTION.....................................6
2.05 ELWOOD'S INITIAL CONTRIBUTION...................................6
2.06 KALIK'S INITIAL CONTRIBUTION....................................7
2.07 VOGT'S INITIAL CONTRIBUTION.....................................7
2.08 GUTIN'S INITIAL CONTRIBUTION....................................7
2.09 HUGHES' INITIAL CONTRIBUTION....................................8
2.10 GOLZ'S INITIAL CONTRIBUTION.....................................9
2.11 PF FUNDS' CONTRIBUTION..........................................9
2.12 MIG'S CONTRIBUTION AND SALE OF THE GENERAL PARTNER'S
INTERESTS IN KIRKMAN AND HOLLYWOOD..............................9
2.13 VALUATION OF INITIAL UNITS RELATING TO HOLLYWOOD
PARTNERSHIP INTERESTS...........................................9
2.14 VALUATION OF INITIAL UNITS RELATING TO KIRKMAN
PARTNERSHIP INTERESTS..........................................10
2.15 VALUATION OF AERC UNITS........................................10
2.16 [INTENTIONALLY OMITTED.].......................................10
2.17 ELECTION TO SUBSTITUTE CASH....................................10
2.18 DELIVERY OF CERTAIN "E UNITS"..................................10
2.19 FAILURE OF HOLLYWOOD CLOSING...................................10
3. SECOND CONTRIBUTION (PINES).............................................11
3.01 AERC'S SECOND CONTRIBUTION.....................................11
3.02 WAYMAN'S SECOND CONTRIBUTION...................................11
3.03 WRIGHT'S SECOND CONTRIBUTION...................................12
3.04 COTE'S SECOND CONTRIBUTION.....................................12
3.05 ELWOOD'S SECOND CONTRIBUTION...................................12
3.06 KALIK'S SECOND CONTRIBUTION....................................12
3.07 VOGT'S SECOND CONTRIBUTION.....................................12
3.08 SECOND CLOSING MATTERS RELATING TO GUTIN'S INTEREST............13
3.09 HUGHES' SECOND CONTRIBUTION....................................13
3.10 GOLZ'S SECOND CONTRIBUTION.....................................13
3.15 MIG'S CONTRIBUTION AND SALE OF GENERAL PARTNER'S
INTEREST IN PINES..............................................14
3.16 [INTENTIONALLY OMITTED.].......................................14
3.17 ELECTION TO SUBSTITUTE CASH....................................14
-i-
<PAGE> 3
4. CHANGE OF NAME, CONVERSION INTO LIMITED PARTNERSHIP AND
CONVERSION OF EXISTING GENERAL PARTNERS' INTERESTS......................14
5. INITIAL CLOSING DOCUMENTS...............................................15
5.01 AERC'S INITIAL CLOSING DOCUMENTS...............................15
5.02 WAYMAN'S INITIAL CLOSING DOCUMENTS.............................15
5.03 WRIGHT'S INITIAL CLOSING DOCUMENTS.............................16
5.04 COTE'S INITIAL CLOSING DOCUMENTS...............................16
5.05 ELWOOD'S INITIAL CLOSING DOCUMENTS.............................17
5.06 KALIK'S INITIAL CLOSING DOCUMENTS..............................17
5.07 VOGT'S INITIAL CLOSING DOCUMENTS...............................18
5.08 [INTENTIONALLY OMITTED.].......................................18
5.09 HUGHES' INITIAL CLOSING DOCUMENTS..............................18
5.10 GOLZ'S INITIAL CLOSING DOCUMENTS...............................18
5.11 PF FUNDS' INITIAL CLOSING DOCUMENTS............................19
5.12 EXISTING GENERAL PARTNERS' INITIAL CLOSING DOCUMENTS. .........19
6. SECOND CLOSING DOCUMENTS................................................19
6.01 SECOND CLOSING.................................................19
6.02 AERC'S SECOND CLOSING DOCUMENTS................................20
6.03 WAYMAN'S SECOND CLOSING DOCUMENTS..............................20
6.04 WRIGHT'S SECOND CLOSING DOCUMENTS..............................21
6.05 COTE'S SECOND CLOSING DOCUMENTS. ..............................21
6.06 ELWOOD'S SECOND CLOSING DOCUMENTS..............................22
6.07 KALIK'S SECOND CLOSING DOCUMENTS...............................22
7. CONDUCT OF BUSINESS PRIOR TO INITIAL CLOSING............................22
7.01 AERC'S COVENANTS...............................................22
7.02 EXISTING LIMITED PARTNER COVENANTS.............................23
7.03 EXISTING GENERAL PARTNER COVENANTS.............................23
7.04 MIG COVENANTS WITH RESPECT TO ITS GENERAL PARTNER
INTERESTS......................................................24
8. CONDUCT OF BUSINESS PRIOR TO SECOND CLOSING.............................25
8.01 AERC'S COVENANTS...............................................25
8.02 EXISTING H/P LIMITED PARTNER COVENANTS.........................25
8.03 MIG COVENANTS WITH RESPECT TO GENERAL PARTNER'S
INTEREST IN PINES PARTNERSHIP..................................26
9. REPRESENTATIONS AND WARRANTIES..........................................26
9.01 AERC'S REPRESENTATIONS AND WARRANTIES..........................26
9.02 EXISTING LIMITED PARTNERS' REPRESENTATIONS AND
WARRANTIES.....................................................28
-ii-
<PAGE> 4
9.03 EXISTING GENERAL PARTNERS' REPRESENTATIONS AND
WARRANTIES.....................................................30
9.04 MIG REPRESENTATIONS AND WARRANTIES.............................32
10. COSTS AND EXPENSES......................................................32
11. CONDITIONS TO INITIAL CLOSING...........................................33
11.01 AERC'S CONDITIONS TO INITIAL CLOSING...........................33
11.02 EXISTING LIMITED PARTNERS' AND EXISTING GENERAL
PARTNERS' CONDITIONS TO INITIAL CLOSING........................33
11.03 RIGHTS UPON A FAILURE OF A CONDITION...........................34
12. INITIAL CLOSING.........................................................34
13. CONDITIONS TO SECOND CLOSING............................................34
13.01 AERC'S CONDITIONS TO SECOND CLOSING............................34
13.02 EXISTING H/P LIMITED PARTNERS' CONDITIONS TO THE SECOND
CLOSING........................................................35
13.03 RIGHTS UPON A FAILURE OF A CONDITION...........................35
14. SECOND CLOSING..........................................................36
15. ASSIGNMENT..............................................................36
16. INDEMNIFICATION.........................................................37
16.01 INDEMNIFICATION OF AERC BY EXISTING LIMITED PARTNERS...........37
16.02 INDEMNIFICATION OF AERC BY EXISTING GENERAL PARTNERS...........37
16.03 INDEMNIFICATION OF EXISTING GENERAL PARTNERS AND
EXISTING LIMITED PARTNERS BY AERC..............................37
16.04 CLAIMS FOR INDEMNIFICATION.....................................37
16.05 LIMITATIONS ON INDEMNIFICATION.................................39
16.06 NO POST-CLOSING CLAIMS.........................................40
16.07 SATISFACTION OF CERTAIN INDEMNIFICATION OBLIGATIONS............40
17. DEFAULT/REMEDIES........................................................40
17.01 REMEDIES UPON DEFAULT OF AERC..................................40
17.02 [INTENTIONALLY OMITTED.].......................................40
17.03 REMEDIES UPON DEFAULT OF EXISTING LIMITED PARTNERS AND
EXISTING GENERAL PARTNERS.....................................40
17.04 PAYMENT OF LITIGATION EXPENSES.................................41
17.05 SUIT FOR SPECIFIC PERFORMANCE..................................41
18. NOTICES.................................................................41
-iii-
<PAGE> 5
19. MISCELLANEOUS...........................................................42
19.01 ASSIGNMENT BY DEVELOPMENT PARTNERSHIPS OF CERTAIN
ASSETS.........................................................42
19.02 SUCCESSORS.....................................................43
19.03 MODIFICATIONS/WAIVERS..........................................43
19.04 [INTENTIONALLY OMITTED.].......................................43
19.05 ENTIRE AGREEMENT...............................................43
19.06 COUNTERPARTS...................................................43
19.07 CAPTIONS.......................................................43
19.08 BACKGROUND/EXHIBITS INCORPORATED...............................43
19.09 GOVERNING LAW..................................................43
19.10 EXCLUSIVE JURISDICTION AND VENUE...............................43
19.11 SEVERABILITY...................................................44
19.12 DATE FOR PERFORMANCE...........................................44
19.13 FURTHER ACTION.................................................44
19.14 PRONOUNS.......................................................44
-iv-
<PAGE> 6
CONTRIBUTION AND PARTNERSHIP INTEREST PURCHASE AGREEMENT
--------------------------------------------------------
THIS AGREEMENT (this "AGREEMENT"), is made and entered into as of April
__, 1998, by and between the following persons (each of whom, individually, is
referred to herein as a "PARTY", and all of whom are referred to collectively as
the "PARTIES"): Associated Estates Realty Corporation, an Ohio corporation
("AERC"), Ed Wayman ("WAYMAN"), Larry Wright ("WRIGHT"), James A. Cote ("COTE"),
James Elwood ("ELWOOD"), Lanny Kalik ("KALIK"), Louis E. Vogt ("VOGT"), William
T. Hughes, Jr. ("HUGHES"), Gregory L. Golz ("GOLZ"), PF Funds, Inc. ("PF FUNDS")
and MIG Development Company, a Florida corporation ("MIG"). (References to the
"EXISTING H/P LIMITED PARTNERS" refer, collectively, to Wayman, Wright, Cote,
Elwood and Kalik; references to the "EXISTING LIMITED PARTNERS" refer,
collectively, to the Existing H/P Limited Partners and Vogt, Gutin, Hughes, Golz
and PF Funds; and references to the "EXISTING GENERAL PARTNERS" refer,
collectively, to Vogt, Hughes, Cote, Golz and Kathleen L. Gutin ("GUTIN").)
The Parties hereby agree as follows:
1. BACKGROUND.
1.01 The Existing General Partners are both (i) all of the partners of HP
Advisors, a Florida general partnership (the "PARTNERSHIP"), pursuant to the
partnership agreement (the "CURRENT PARTNERSHIP AGREEMENT") attached hereto as
EXHIBIT C, and (ii) shareholders in MIG Realty Advisors, Inc. ("MIGRA").
1.02 MIG is the sole general partner in each of the Development Partnerships
(defined below).
1.03 MIGRA, AERC and certain shareholders of MIGRA have entered into that
certain Second Amended and Restated Agreement and Plan of Merger dated as of
March 30, 1998 (the "MERGER AGREEMENT") pursuant to which MIGRA will, subject to
the satisfaction of certain conditions, merge into AERC (the "MERGER"). The
Merger Agreement refers to this Agreement or to the transactions provided for in
this Agreement.
1.04 The Parties desire, all as more fully set forth herein, to do the
following: (i) change the name of the Partnership to AERC HP Advisors LP; (ii)
convert the Partnership into a Florida limited partnership; (iii) admit some or
all of the Existing Limited Partners as limited partners of the Partnership;
(iv) admit AERC as a general partner of the Partnership; (v) convert the
Existing General Partners' partnership interests in the Partnership to limited
partnership interests; (vi) amend and restate the partnership agreement of the
Partnership to reflect the foregoing and related matters pursuant to the Amended
and Restated Limited Partnership Agreement of AERC HP Advisors LP set forth on
EXHIBIT A attached hereto and made a part hereof (the "RESTATED PARTNERSHIP
AGREEMENT"); and (vii) provide for the Partnership to acquire all of the limited
partnership interests
1
<PAGE> 7
in the Development Partnerships and for AERC or its nominees to acquire from MIG
all of the general partnership interests in each Development Partnership.
1.05 The Existing H/P Limited Partners own all of the limited partnership
interests in each of MIG/Pines Development, Ltd., a Florida limited partnership
(the "PINES PARTNERSHIP"), and MIG/Hollywood Development, Ltd., a Florida
limited partnership (the "HOLLYWOOD PARTNERSHIP"). The Existing Limited Partners
own all of the limited partnership interests in MIG/Orlando Development, Ltd., a
Florida limited partnership (the "KIRKMAN PARTNERSHIP"). The Kirkman
Partnership, the Pines Partnership and the Hollywood Partnership are
collectively referred to herein as the "Development Partnerships" or singularly
as a "DEVELOPMENT PARTNERSHIP").
1.06 Wayman's ownership interest in each Development Partnership is set forth
on EXHIBIT B attached hereto and made a part hereof (respectively, "WAYMAN'S
LIMITED PARTNERSHIP INTERESTS IN KIRKMAN", "WAYMAN'S LIMITED PARTNERSHIP
INTERESTS IN PINES" and "WAYMAN'S LIMITED PARTNERSHIP INTERESTS IN HOLLYWOOD",
and collectively, "WAYMAN'S DEVELOPMENT LIMITED PARTNERSHIP INTERESTS").
1.07 Wright's ownership interest in each Development Partnership is set forth
on EXHIBIT B attached hereto and made a part hereof (respectively, "WRIGHT'S
LIMITED PARTNERSHIP INTERESTS IN KIRKMAN", "WRIGHT'S LIMITED PARTNERSHIP
INTERESTS IN PINES" and "WRIGHT'S LIMITED PARTNERSHIP INTERESTS IN HOLLYWOOD",
and collectively, "WRIGHT'S DEVELOPMENT LIMITED PARTNERSHIP INTERESTS").
1.08 Cote's ownership interest in each Development Partnership is set forth on
EXHIBIT B attached hereto and made a part hereof (respectively, "COTE'S LIMITED
PARTNERSHIP INTERESTS IN KIRKMAN", "COTE'S LIMITED PARTNERSHIP INTERESTS IN
PINES" and "COTE'S LIMITED PARTNERSHIP INTERESTS IN HOLLYWOOD", and
collectively, "COTE'S DEVELOPMENT LIMITED PARTNERSHIP INTERESTS").
1.09 Elwood's ownership interest in each Development Partnership is set forth
on EXHIBIT B attached hereto and made a part hereof (respectively, "ELWOOD'S
LIMITED PARTNERSHIP INTERESTS IN KIRKMAN", "ELWOOD'S LIMITED PARTNERSHIP
INTERESTS IN PINES" and "ELWOOD'S LIMITED PARTNERSHIP INTERESTS IN HOLLYWOOD",
and collectively, "ELWOOD'S DEVELOPMENT LIMITED PARTNERSHIP INTERESTS").
1.10 Kalik's ownership interest in each Development Partnership is set forth
on EXHIBIT B attached hereto and made a part hereof (respectively, "KALIK'S
LIMITED PARTNERSHIP INTERESTS IN KIRKMAN", "KALIK'S LIMITED PARTNERSHIP
INTERESTS IN PINES" and "KALIK'S LIMITED PARTNERSHIP INTERESTS IN HOLLYWOOD",
and collectively, "KALIK'S DEVELOPMENT LIMITED PARTNERSHIP INTERESTS").
1.11 Vogt's ownership interest in the Kirkman Partnership is set forth on
EXHIBIT B attached hereto and made a part hereof ("VOGT'S LIMITED PARTNERSHIP
INTEREST").
2
<PAGE> 8
1.12 Gutin's ownership interest in the Kirkman Partnership is set forth on
EXHIBIT B attached hereto and made a part hereof ("GUTIN'S LIMITED PARTNERSHIP
INTEREST"). Wright expects to acquire, at or before the Initial Closing, Gutin's
Limited Partnership Interest and Gutin's interest as a general partner in the
Partnership ("GUTIN'S GENERAL PARTNER INTEREST" which, together with Gutin's
Limited Partnership Interest, is referred to collectively herein as "GUTIN'S
INTERESTS").
1.13 Hughes' ownership interest in the Kirkman Partnership is set forth on
EXHIBIT B attached hereto and made a part hereof ("HUGHES' LIMITED PARTNERSHIP
INTEREST").
1.14 Golz's ownership interest in the Kirkman Partnership is set forth on
EXHIBIT B attached hereto and made a part hereof ("GOLZ'S LIMITED PARTNERSHIP
INTEREST").
1.15 PF Funds' ownership interest in the Kirkman Partnership is set forth on
EXHIBIT B attached hereto and made a part hereof ("P.F.'S LIMITED PARTNERSHIP
INTEREST").
1.16 [INTENTIONALLY OMITTED.]
1.17 MIG's general partner interest in each Development Partnership is set
forth on EXHIBIT B attached hereto and made a part hereof. (MIG's general
partner interest in each Development Partnership, which constitutes all of the
general partner interests therein, is herein referred to singularly as a
"DEVELOPMENT GENERAL PARTNER INTEREST", and all of them collectively are
referred to as the "DEVELOPMENT GENERAL PARTNER INTERESTS". Wayman's
Development Limited Partnership Interests, Wright's Development Limited
Partnership Interests, Cote's Development Limited Partnership Interests,
Elwood's Development Limited Partnership Interests, Kalik's Development
Limited Partnership Interests, Vogt's Limited Partnership Interest, Gutin's
Limited Partnership Interest, Hughes' Limited Partnership Interest, P.F.'s
Limited Partnership Interest and Golz' Limited Partnership Interest are herein
collectively referred to as the "DEVELOPMENT LIMITED PARTNERS' INTERESTS" or
singularly as a "DEVELOPMENT LIMITED PARTNER INTEREST").
1.18 In exchange for cash or Units (as hereafter defined) in the Partnership,
the Existing Limited Partners respectively desire to contribute to the
Partnership all of their respective right, title and interest in and to their
respective Development Limited Partners' Interests. (Whenever the word "cash" is
used in this Agreement, it shall be deemed to mean a commercial bank's cashiers
check or certified check or confirmed wire transfer of funds to a bank account
designated by the intended recipient.)
1.19 In exchange for the general partner's interest in the Partnership, AERC
desires to contribute to the Partnership AERC's Initial Contribution (as
hereafter defined) and AERC's Second Contribution (as hereafter defined).
1.20 MIG shall transfer its Development General Partner Interests to AERC or
its wholly-owned nominee(s) for cash pursuant to the provisions of the
respective
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agreements in the respective forms of EXHIBITS H-1, H-2 and H-3 attached hereto
which have been or will be entered into by MIG and AERC (collectively, the
"GENERAL PARTNER INTEREST PURCHASE AGREEMENTS").
2. INITIAL CONTRIBUTIONS (HOLLYWOOD AND KIRKMAN).
2.01 AERC'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, AERC agrees to contribute to the Partnership
cash in an amount ("AERC'S INITIAL CONTRIBUTION") equal to the sum of the
amounts needed to (i) satisfy the Hollywood and Kirkman Construction Loans,
and (ii) pay the closing costs associated with the Initial Closing that any
provision of this Agreement obligates it to pay, as well as all closing costs
and expenses of MIG that AERC is required to pay under the terms and
conditions of Section 11 of the General Partner Interest Purchase Agreements
relating, respectively, to Kirkman and Hollywood (collectively, the "AERC/MIG
INITIAL CLOSING COSTS"). (For all purposes of this Agreement: "HOLLYWOOD
CONSTRUCTION LOAN" means, collectively, the two construction loans presently
encumbering the property owned by the Hollywood Partnership that evidence loan
advances made solely for the purpose of funding the Hollywood Partnership's
costs of acquisition, development, construction and leasing of (and other,
similar costs relating to) the apartment complex known as Hollywood Windsor
Apartments in Hollywood, Florida, which loans are held, respectively, by
Nationsbank of Florida, N.A. and The Board of Trustees of the Policemen and
Firemen Retirement System of the City of Detroit (the "DETROIT POLICE/FIRE
TRUSTEES") and, in the aggregate, have a maximum principal loan amount
permitted by the loan documents of approximately $26,850,000.00; "KIRKMAN
CONSTRUCTION LOAN" means, collectively, the two construction loans presently
encumbering the property owned by the Kirkman Partnership that evidence loan
advances made solely for the purpose of funding the Kirkman Partnership's
costs of acquisition, development, construction and leasing of (and other,
similar costs relating to) the apartment complex known as Windsor at Kirkman
in Orlando, Florida, which loans are held, respectively, by SunTrust Bank,
Central Florida, National Association and the Board of Trustees of the General
Retirement System of the City of Detroit and have a maximum principal loan
amount permitted by the loan documents of approximately $31,250,000.00; and
"HOLLYWOOD AND KIRKMAN CONSTRUCTION LOANS" means, collectively, the Hollywood
Construction Loan and the Kirkman Construction Loan.) AERC agrees to cause the
Partnership to use the funds it so contributes to (i) pay and satisfy in full
the Hollywood and Kirkman Construction Loans at the time of the Initial
Closing and (ii) pay in full, as and when the same respectively become due and
payable, all of the costs and expenses as described in clause (ii) of the
preceding sentence. In exchange for AERC's Initial Contribution, AERC shall
receive all of the general partner's interest in the Partnership and a capital
account balance equal to AERC's Initial Contribution ("AERC'S CAPITAL
ACCOUNT") which translate into that number of general partner's units in the
Partnership that results from the application of the formula set out in
EXHIBIT I-2 attached hereto (the "AERC UNITS") in the Partnership. AERC's
Initial Contribution shall be payable by AERC as follows: (i) $875,000.00 in
earnest money will be deposited by AERC in escrow upon execution of this
Agreement (the "EARNEST MONEY DEPOSIT"); and (ii) subject to the conditions
set forth in Paragraph 11 hereof, the balance of AERC's Initial Contribution
shall be deposited in escrow by AERC on or before the Initial Closing Date
(defined below) in immediately available funds. Within five (5) business days
following the execution of this Agreement, AERC
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shall open an escrow account with First American Title Insurance Company,
Troy, Michigan Office (the "ESCROW AGENT") pursuant to a form of joint order
escrow agreement acceptable to AERC and MIG (the "ESCROW AGREEMENT") signed by
AERC, MIG and Escrow Agent as the initial parties thereto, and shall deposit
the Earnest Money Deposit therein. AERC shall notify the Parties of the
opening of the escrow, the deposit therein of the Earnest Money Deposit, the
number of the escrow, and the employee or employees of the Escrow Agent in
charge of the escrow. Each Party shall execute such documentation as may
reasonably be required by the Escrow Agent, including the Escrow Agreement if
in reasonable standard form. The Earnest Money Deposit shall be deposited in
an interest-bearing account as instructed by AERC and any net interest earned
thereon (after payment therefrom of all escrow charges and fees) shall be
added to the Earnest Money Deposit.
2.02 WAYMAN'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Wayman agrees to contribute to the Partnership
all of Wayman's right, title and interest in and to Wayman's Limited
Partnership Interests in Kirkman and Wayman's Limited Partnership Interests in
Hollywood and he will simultaneously receive a limited partnership interest in
the Partnership with an initial capital account balance ("WAYMAN'S CAPITAL
ACCOUNT") in an amount equal to the sum of the Wayman Kirkman Amount and the
Wayman Hollywood Amount. For all purposes of this Agreement: "WAYMAN KIRKMAN
AMOUNT" means the product of multiplying the Kirkman Net Exchange Amount by
0.1695920; "KIRKMAN NET EXCHANGE AMOUNT" means the amount that results from
subtracting from the Kirkman Variable Exchange Amount the amount of cash
("AERC'S INITIAL KIRKMAN CONTRIBUTION") AERC contributes to the Partnership at
the Initial Closing for and on account of that portion of the AERC/MIG Initial
Closing Costs allocable to the Kirkman Partnership and the General Partner
Interest Purchase Agreement relating to Kirkman which are paid by AERC on
behalf of MIG thereunder and also subtracting the amounts due under Article
8.02(d) of the August 6, 1997 loan commitment from the Board of Trustees of
the General Retirement System of the City of Detroit; "KIRKMAN VARIABLE
EXCHANGE AMOUNT" means the amount that is equal to the sum of $4,700,000.00
plus the Kirkman Price Adjustment Component; "KIRKMAN PRICE ADJUSTMENT
COMPONENT" means the result of multiplying the Kirkman Daily Price Adjustment
Component by the number of days between February 17, 1998 and the Initial
Closing date (counting as a "day" for these purposes the first but not the
last of those dates); and, "KIRKMAN DAILY PRICE ADJUSTMENT COMPONENT" means
the product of multiplying $4,700,000 by 0.0003628; "WAYMAN HOLLYWOOD AMOUNT"
means the product of multiplying the Hollywood Net Exchange Amount by
0.1953744; "HOLLYWOOD NET EXCHANGE AMOUNT" means the amount that results from
subtracting from the Hollywood Variable Exchange Amount the amount of cash
("AERC'S INITIAL HOLLYWOOD CONTRIBUTION") AERC contributes to the Partnership
at the Initial Closing for and on account of the Hollywood Construction Loan
and Initial Closing Costs allocable to the Hollywood Partnership and the
General Partner Interest Purchase Agreement relating to Hollywood which are
paid by AERC on behalf of MIG thereunder; "HOLLYWOOD VARIABLE EXCHANGE AMOUNT"
means the amount that is equal to the sum of $36,472,000 plus the Hollywood
Price Adjustment Component; "HOLLYWOOD PRICE ADJUSTMENT COMPONENT" means the
result of multiplying the Hollywood Daily Price Adjustment Component by the
number of days between March 14, 1998 and the Initial Closing date (counting
as a "day" for these purposes the first but not the last of those dates); and,
"HOLLYWOOD DAILY PRICE
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ADJUSTMENT COMPONENT" means the product of multiplying $36,472,000 by
0.0000553. At the Initial Closing, Wayman will receive limited partnership
units (collectively "INITIAL UNITS") in the Partnership as follows: that
number of Class A limited partnership units in the Partnership ("A UNITS")
equal to the sum of (i) the Wayman Kirkman Amount divided by the A Unit Value
as of the Initial Closing Date determined in accordance with the formula
therefor set out on EXHIBIT I-1 attached hereto plus (ii) the Wayman Hollywood
Amount divided by the A Unit Value as of the Initial Closing Date determined
in accordance with the formula therefor set out on EXHIBIT I attached hereto.
2.03 WRIGHT'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Wright agrees to do the following: (i)
contribute to the Partnership all of Wright's right, title and interest in and
to Wright's Limited Partnership Interests in Kirkman and Wright's Limited
Partnership Interests in Hollywood; and (ii) permit his interest as a general
partner in the Partnership to be converted into a limited partner's interest as
provided in this Agreement. Simultaneously with the foregoing, he will receive a
limited partnership interest in the Partnership with an initial capital account
balance ("WRIGHT'S CAPITAL ACCOUNT") in an amount equal to the sum of the Wright
Kirkman Amount plus $2,406,000.00. For all purposes of this Agreement: "WRIGHT
KIRKMAN AMOUNT" means the product of multiplying the Kirkman Net Exchange Amount
by 0.1439900. At the Initial Closing, Wright will receive the following Initial
Units: the number of Class B limited partnership units in the Partnership ("B
UNITS") equal to the result of dividing the Wright Kirkman Amount by the B Unit
Value as of the Initial Closing Date determined in accordance with the formula
therefor set out in EXHIBIT I-1 attached hereto; and, 101,820 of Class C limited
partnership units in the Partnership ("C UNITS").
2.04 COTE'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Cote agrees to do the following: (i) contribute
to the Partnership all of Cote's right, title and interest in and to Cote's
Limited Partnership Interests in Kirkman and Cote's Limited Partnership
Interests in Hollywood; and (ii) permit his interest as a general partner in the
Partnership to be converted into a limited partner's interest as provided in
this Agreement. Simultaneously with the foregoing, he will receive a limited
partnership interest in the Partnership with an initial capital account balance
("COTE'S CAPITAL ACCOUNT") in an amount equal to the sum of the Cote Kirkman
Amount plus the Cote Hollywood Amount plus $1,266,000.00. For all purposes of
this Agreement: "COTE KIRKMAN AMOUNT" means the product of multiplying the
Kirkman Net Exchange Amount by 0.0514250; and "COTE HOLLYWOOD AMOUNT" means the
product of multiplying the Hollywood Net Exchange Amount by 0.1035938. At the
Initial Closing, Cote will receive the following Initial Units: that number of B
Units equal to the sum of (A) the result of dividing the Cote Kirkman Amount by
the B Unit Value as of the Initial Closing Date determined in accordance with
the formula therefor set out in EXHIBIT I-1 attached hereto and (B) the result
of dividing the Cote Hollywood Amount by the B Unit Value as of the Initial
Closing Date determined in accordance with the formula therefor set out in
EXHIBIT I attached hereto; and, 53,576 C Units.
2.05 ELWOOD'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Elwood agrees to contribute to the Partnership
all of Elwood's right,
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title and interest in and to Elwood's Limited Partnership Interests in Kirkman
and Elwood's Limited Partnership Interests in Hollywood and he will
simultaneously receive a limited partnership interest in the Partnership with
an initial capital account balance ("ELWOOD'S CAPITAL ACCOUNT") in an amount
equal to the sum of the Elwood Kirkman Amount and the Elwood Hollywood Amount.
For all purposes of this Agreement: "ELWOOD KIRKMAN AMOUNT" means the product
of multiplying the Kirkman Net Exchange Amount by 0.247550; and "ELWOOD
HOLLYWOOD AMOUNT" means the product of multiplying the Hollywood Net Exchange
Amount by 0.2678205. At the Initial Closing, Elwood will receive the following
Initial Units: that number A Units equal to the sum of (A) the result of
dividing the Elwood Kirkman Amount by the A Unit Value as of the Initial
Closing Date determined in accordance with the formula therefor set out in
EXHIBIT I-1 attached hereto and (B) the result of dividing the Elwood
Hollywood Amount by the A Unit Value as of the Initial Closing Date determined
in accordance with the formula therefor set out in EXHIBIT I attached hereto.
2.06 KALIK'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Kalik agrees to contribute to the Partnership
all of Kalik's right, title and interest in and to Kalik's Limited Partnership
Interests in Kirkman and Kalik's Limited Partnership Interests in Hollywood and
he will simultaneously receive a limited partnership interest in the Partnership
with an initial capital account balance ("KALIK'S CAPITAL ACCOUNT") in an amount
equal to the sum of the Kalik Kirkman Amount and the Kalik Hollywood Amount. For
all purposes of this Agreement: "KALIK KIRKMAN AMOUNT" means the product of
multiplying the Kirkman Net Exchange Amount by 0.247550; and "KALIK HOLLYWOOD
AMOUNT" means the product of multiplying the Hollywood Net Exchange Amount by
0.2678205. At the Initial Closing, Kalik will receive the following Initial
Units: that number A Units equal to the sum of (A) the result of dividing the
Kalik Kirkman Amount by the A Unit Value as of the Initial Closing Date
determined in accordance with the formula therefor set out in EXHIBIT I-1
attached hereto and (B) the result of dividing the Kalik Hollywood Amount by the
A Unit Value as of the Initial Closing Date determined in accordance with the
formula therefor set out in EXHIBIT I attached hereto.
2.07 VOGT'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Vogt agrees to do the following: (i)
contribute to the Partnership all of Vogt's right, title and interest in and
to Vogt's Limited Partnership Interests in Kirkman; and (ii) permit his
interest as a general partner in the Partnership to be converted into a
limited partner's interest as provided in this Agreement. Simultaneously with
the foregoing, he will receive a limited partnership interest in the
Partnership with an initial capital account balance ("VOGT'S CAPITAL ACCOUNT")
in an amount equal to the sum of the Vogt Kirkman Amount plus the Vogt
Hollywood Amount plus $678,000.00. For all purposes of this Agreement: "VOGT
KIRKMAN AMOUNT" means the product of multiplying the Kirkman Net Exchange
Amount by 0.0253465; and "VOGT HOLLYWOOD AMOUNT" means the product of
multiplying the Hollywood Net Exchange Amount by 0.0388477. At the Initial
Closing, Vogt will receive the following Initial Units: that number of B Units
equal to the sum of (A) the result of dividing the Vogt Kirkman Amount by the
B Unit Value as of the Initial Closing Date determined in accordance with the
formula therefor set out in EXHIBIT I-1 attached hereto and (B) the result of
dividing the Vogt Hollywood Amount by the B Unit Value as
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of the Initial Closing Date determined in accordance with the formula therefor
set out in EXHIBIT I attached hereto; and, 28,692 C Units.
2.08 GUTIN'S INITIAL CONTRIBUTION.
(a) Wright agrees that he will use his best efforts to
acquire, at or before the Initial Closing, all of Gutin's Interests on
terms and conditions reasonably acceptable to him. If he acquires
Gutin's Interests at or before the Initial Closing, the following will
occur at the Initial Closing with respect to Gutin's Interests: (i)
Wright will permit Gutin's General Partner Interest to be converted
into a limited partner's interest as provided in this Agreement; (ii)
subject to the conditions set forth in Paragraph 11 of this Agreement,
Wright will contribute to the Partnership all of Gutin's right, title
and interest in and to Gutin's Limited Partnership Interest; and (iii)
simultaneously with the foregoing, Wright will receive a limited
partnership interest in the Partnership with an initial capital account
balance ("GUTIN'S CAPITAL ACCOUNT") in an amount equal to the sum of
the Gutin Kirkman Amount plus the Gutin Hollywood Amount plus
$678,000.00. For all purposes of this Agreement: "GUTIN KIRKMAN AMOUNT"
means the product of multiplying the Kirkman Net Exchange Amount by
0.0253465; and "GUTIN HOLLYWOOD AMOUNT" means the product of
multiplying the Hollywood Net Exchange Amount by 0.0388477. At the
Initial Closing, Wright, as the holder of Gutin's Limited Partnership
Interest, will receive the following Initial Units: that number of B
Units equal to the sum of (A) the result of dividing the Gutin Kirkman
Amount by the B Unit Value as of the Initial Closing Date determined in
accordance with the formula therefor set out in EXHIBIT I-1 attached
hereto and (B) the result of dividing the Gutin Hollywood Amount by the
B Unit Value as of the Initial Closing Date determined in accordance
with the formula therefor set out in EXHIBIT I attached hereto; and,
28,692 C Units.
(b) If Wright has not acquired Gutin's Interests by the
Initial Closing, then: (i) at the Initial Closing, Gutin will continue
to hold Gutin's Limited Partnership Interest as it is in effect on the
date of this Agreement, with no conversion thereof or change therein;
(ii) all of the Parties will cause this Agreement to be amended,
modified and restated so as to effectuate and accomplish all of the
transfers and transactions contemplated herein, on the same timetable
and on and subject to all of the terms and conditions set out herein,
but through the use of a newly-created partnership rather than the
Partnership; and (iii) notwithstanding the provisions of the preceding
clause (ii), AERC may terminate this Agreement without liability to any
Party by giving notice of such termination to all the other Parties at
the Initial Closing.
2.09 HUGHES' INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Hughes agrees to do the following: (i)
contribute to the Partnership all of Hughes' right, title and interest in and to
Hughes' Limited Partnership Interests in Kirkman; and (ii) permit his interest
as a general partner in the Partnership to be converted into a limited partner's
interest as provided in this Agreement. Simultaneously with the foregoing, he
will receive a limited partnership interest in the Partnership with an initial
capital account balance ("HUGHES'
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<PAGE> 14
CAPITAL ACCOUNT") in an amount equal to the sum of the Hughes Kirkman Amount
plus the Hughes Hollywood Amount plus $486,000.00. For all purposes of this
Agreement: "HUGHES KIRKMAN AMOUNT" means the product of multiplying the
Kirkman Net Exchange Amount by 0.0021; and "HUGHES HOLLYWOOD AMOUNT" means the
product of multiplying the Hollywood Net Exchange Amount by 0.0388477. At the
Initial Closing, Hughes will receive the following Initial Units: that number
of B Units equal to the sum of (A) the result of dividing the Hughes Kirkman
Amount by the B Unit Value as of the Initial Closing Date determined in
accordance with the formula therefor set out in EXHIBIT I-1 attached hereto
and (B) the result of dividing the Hughes Hollywood Amount by the B Unit Value
as of the Initial Closing Date determined in accordance with the formula
therefor set out in EXHIBIT I attached hereto; and, 20,567 C Units.
2.10 GOLZ'S INITIAL CONTRIBUTION. Subject to the conditions set forth in
Paragraph 11 of this Agreement, Golz agrees to do the following: (i) contribute
to the Partnership all of Golz's right, title and interest in and to Golz's
Limited Partnership Interests in Kirkman; and (ii) permit his interest as a
general partner in the Partnership to be converted into a limited partner's
interest as provided in this Agreement. Simultaneously with the foregoing, he
will receive a limited partnership interest in the Partnership with an initial
capital account balance ("GOLZ'S CAPITAL ACCOUNT") in an amount equal to the sum
of the Golz Kirkman Amount plus the Golz Hollywood Amount plus $486,000.00. For
all purposes of this Agreement: "GOLZ KIRKMAN AMOUNT" means the product of
multiplying the Kirkman Net Exchange Amount by 0.0021; and "GOLZ HOLLYWOOD
AMOUNT" means the product of multiplying the Hollywood Net Exchange Amount by
0.0388477. At the Initial Closing, Golz will receive the following Initial
Units: that number of B Units equal to the sum of (A) the result of dividing the
Golz Kirkman Amount by the B Unit Value as of the Initial Closing Date
determined in accordance with the formula therefor set out in EXHIBIT I-1
attached hereto and (B) the result of dividing the Golz Hollywood Amount by the
B Unit Value as of the Initial Closing Date determined in accordance with the
formula therefor set out in EXHIBIT I attached hereto; and, 20,567 C Units.
2.11 PF FUNDS' CONTRIBUTION. Subject to the conditions set forth in Paragraph
11 of this Agreement, PF Funds agrees to contribute to the Partnership all of
PF Funds' right, title and interest in and to PF Funds' Limited Partnership
Interests in Kirkman in exchange for the payment to PF Funds of cash equal to
the PF Funds Kirkman Amount. For all purposes of this agreement: "PF Funds
Kirkman Amount" means the product of multiplying the Kirkman Net Exchange
Amount by 0.075.
2.12 MIG'S CONTRIBUTION AND SALE OF THE GENERAL PARTNER'S INTERESTS IN KIRKMAN
AND HOLLYWOOD. Substantially simultaneously with the Initial Closing (and on
the condition that the Initial Closing occurs), MIG will transfer and assign
to AERC (or its affiliate, designee or nominee) for cash, and AERC will
purchase and accept, MIG's general partner's interests in the Hollywood
Partnership and the Kirkman Partnership pursuant to and more fully set forth
in the respective General Partner Interest Purchase Agreements relating to the
Hollywood Partnership and the Kirkman Partnership, respectively, which
transfers shall be consummated at the Initial Closing and shall be evidenced
in the Restated Partnership Agreement.
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<PAGE> 15
2.13 VALUATION OF INITIAL UNITS RELATING TO HOLLYWOOD PARTNERSHIP INTERESTS.
With the exception of PF Funds and any other of Elwood, Kalik or Wayman electing
to receive cash pursuant to Paragraph 2.17 hereof, each Existing Limited
Partner's respective capital account balance and number of A Units, B Units and
C Units (if and to the extent applicable to such Party) relating to the
Hollywood Partnership was determined by using the formula relating to Hollywood
set forth on EXHIBIT I attached hereto and made a part hereof.
2.14 VALUATION OF INITIAL UNITS RELATING TO KIRKMAN PARTNERSHIP INTERESTS.
With the exception of PF Funds and any other of Elwood, Kalik or Wayman
electing to receive cash pursuant to Paragraph 2.17 hereof, each Existing
Limited Partner's respective capital account balance and number of A Units, B
Units and C Units (if and to the extent applicable to such Party) relating to
the Kirkman Partnership was determined by using the formula relating to
Kirkman set forth on EXHIBIT I-1 attached hereto and made a part hereof.
2.15 VALUATION OF AERC UNITS. The number of AERC Units relating to AERC's
Initial Contribution was determined by using the formula relating to AERC Units
(AERC's Initial Contribution) set forth on EXHIBIT I-2.
2.16 [INTENTIONALLY OMITTED.]
2.17 ELECTION TO SUBSTITUTE CASH. Notwithstanding the preceding provisions of
this Article 2, at any time up until ten business days prior to the Initial
Closing (as hereafter defined), each of Elwood, Kalik and Wayman,
individually, shall have the right, upon written notice to AERC, to elect to
receive a cash payment (the specific amount of cash each such person elects to
receive in cash will be specified in its notice of election) in lieu of any or
all of the Initial Units otherwise deliverable to it for its partnership
interest or interests in the Hollywood Partnership and the Kirkman
Partnership. The maximum amount of cash to be delivered to each of Elwood,
Kalik and Wayman in place of each of the Initial Units pursuant to the
provisions of the preceding sentence is equal to the Elwood Kirkman Amount
plus the Elwood Hollywood Amount, the Kalik Kirkman Amount plus the Kalik
Hollywood Amount, and the Wayman Kirkman Amount plus the Wayman Hollywood
Amount, respectively. AERC's Capital Account and AERC Units shall be
increased, and the respective capital accounts of any of Elwood, Kalik and
Wayman who receives such cash in lieu of fewer than all of the Initial Units
otherwise deliverable to him shall be decreased, in each such case by an
amount equal to such cash payment, with the number of additional AERC Units to
be determined pursuant to EXHIBIT I-2.
2.18 DELIVERY OF CERTAIN "E UNITS". At the Initial Closing, AERC will cause
the Partnership to deliver to Cote, Wright, Vogt, Gutin, Hughes and Golz,
respectively, the number of Class E limited partnership units in the
Partnership ("E UNITS") that is set out opposite each such person's name on
EXHIBIT Q attached hereto, and in connection therewith the capital account of
each of such persons will be adjusted as indicated on such EXHIBIT Q.
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2.19 FAILURE OF HOLLYWOOD CLOSING. The provisions of this Section 2.19 shall
govern and control over any other inconsistent provisions of this Agreement. If,
not later than May 15, 1998, AERC delivers to MIG and all of the Existing
Limited Partners a written notice (a "HOLLYWOOD NO-CLOSE NOTICE") stating that
it has elected not to close on or with respect to the Hollywood Partnership
under this Agreement and the General Partner Interest Purchase Agreement
relating to Hollywood, then the following provisions shall apply: (i) None of
the Parties will have any obligation to, or will, tender or deliver to AERC any
partnership interest (general or limited) in the Hollywood Partnership; (ii)
AERC will not have any obligation to, and will not, accept or purchase any
partnership interest (general or limited) in the Hollywood Partnership; (iii) no
deliveries relating to, or on account of, the Hollywood Partnership will be made
at the Initial Closing; (iv) all representations, warranties and covenants of
the Parties relating to the Hollywood Partnership or any of its property will be
deemed void ab initio and of no effect; (v) the General Partner Interest
Purchase Agreement relating to Hollywood will automatically be terminated
without liability or obligation of any kind thereunder or in respect thereof by
or of any party thereto; (vi) the Pines Net Exchange Amount will be increased by
$1,164,000 over the amount it would have been if the Hollywood Partnership
interests had been transferred at the Initial Closing; and (vii) the C Units to
be delivered to Wright, Cote, Vogt, Gutin, Hughes, and Golz pursuant to this
Article 2 will be reclassified to an equal number of Units allocated, in the
aggregate, as follows: 33.33% into A Units, 45.34% into C Units, and 21.33% into
E Units, as shown on EXHIBIT T hereto.
3. SECOND CONTRIBUTION (PINES).
3.01 AERC'S SECOND CONTRIBUTION. When the construction of the Pines project
has been completed and that project has been eighty percent (80%) leased and
occupied, as required by the terms of the General Partner Interest Purchase
Agreement relating to Pines, and subject to the conditions set forth in
Paragraph 13 of this Agreement, AERC agrees to contribute to the Partnership
an additional amount ("AERC'S SECOND CONTRIBUTION") sufficient to, and which
AERC will cause the Partnership to be used to, do the following: (i) satisfy
the two loans (collectively, the "PINES CONSTRUCTION LOAN") held,
respectively, by First Union National Bank of Florida and the Detroit
Police/Fire Trustees which have, in the aggregate, a maximum principal loan
amount permitted by the loan documents of approximately $26,000,000.00 and
which encumber the project owned by the Pines Partnership and evidence loan
advances made solely for the purpose of funding the Pines Partnership's costs
of acquisition, development, construction and leasing of (and other, similar
costs relating to) the apartment complex known as Windsor Pines Apartments in
Pembroke Pines, Florida, and (ii) pay the closing costs associated with the
Second Closing that any provision of this Agreement obligates it to pay, as
well as all closing costs and expenses of MIG that AERC is required to pay
under the terms and conditions of Section 11 of the General Partner Interest
Purchase Agreement relating to Pines. In exchange for AERC's Second
Contribution, AERC's Capital Account shall be increased by the amount of
AERC's Second Contribution and the Partnership shall issue additional AERC
Units in the Partnership based upon the formula relating to AERC Units (AERC's
Second Contribution) set forth on EXHIBIT J-1 attached hereto and made a part
hereof.
3.02 WAYMAN'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, Wayman agrees to contribute to the Partnership
all of Wayman's
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right, title and interest in and to Wayman's Limited Partnership Interest in
Pines and he will simultaneously receive an increase in Wayman's Capital
Account balance in an amount equal to the Wayman Pines Amount. For all
purposes of this Agreement: "WAYMAN PINES AMOUNT" means the product of
multiplying the Pines Net Exchange Amount by 0.1953744; "PINES NET EXCHANGE
AMOUNT" means the amount that results from subtracting from $33,028,000.00 the
amount of cash AERC contributes to the Partnership at the Second Closing for
and on account of the Pines Construction Loan and that portion of the closing
costs associated with the Second Closing that are paid by AERC on behalf of
MIG hereunder. At the Second Closing, Wayman will receive limited partnership
units (collectively "NEW UNITS", and the Initial Units and the New Units are
referred to collectively as "UNITS") in the Partnership as follows: that
number of Class A limited partnership units in the Partnership ("A UNITS")
equal to the Wayman Pines Amount divided by the A Unit Value as of the Initial
Closing Date determined in accordance with the formula therefor set out on
EXHIBIT J attached hereto.
3.03 WRIGHT'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, Wright agrees to contribute to the Partnership
all of Wright's right, title and interest in and to Wright's Limited Partnership
Interests in Pines, as part of the consideration for what he received at the
Initial Closing.
3.04 COTE'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, Cote agrees to contribute to the Partnership all
of Cote's right, title and interest in and to Cote's Limited Partnership
Interests in Pines, and simultaneously therewith (and partly in consideration of
his permitting his general partner's interest in the Partnership to be converted
into a limited partner's interest), Cote's Capital Account Balance will be
increased in an amount equal to the Cote Pines Amount. For all purposes of this
Agreement: "COTE PINES AMOUNT" means the product of multiplying the Pines Net
Exchange Amount by 0.1035938. At the Second Closing, Cote will receive the
following New Units: that number of Class D limited partnership units in the
Partnership ("D UNITS") equal to the result of dividing the Cote Pines Amount by
the D Unit Value as of the Second Closing Date determined in accordance with the
formula therefor set out in EXHIBIT J attached hereto.
3.05 ELWOOD'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, Elwood agrees to contribute to the Partnership
all of Elwood's right, title and interest in and to Elwood's Limited Partnership
Interests in Pines in exchange for an increase in Elwood's Capital Account
Balance in an amount equal to the Elwood Pines Amount. For all purposes of this
Agreement: "ELWOOD PINES AMOUNT" means the product of multiplying the Pines Net
Exchange Amount by 0.2678205. At the Second Closing, Elwood will receive the
following New Units: that number A Units equal to the result of dividing the
Elwood Pines Amount by the A Unit Value as of the Second Closing Date determined
in accordance with the formula therefor set out in EXHIBIT J attached hereto.
3.06 KALIK'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, Kalik agrees to contribute to the Partnership
all of Kalik's right, title
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and interest in and to Kalik's Limited Partnership Interests in Pines in
exchange for an increase in Kalik's Capital Account Balance in an amount equal
to the Kalik Pines Amount. For all purposes of this Agreement: "KALIK PINES
AMOUNT" means the product of multiplying the Pines Net Exchange Amount by
0.2678205. At the Second Closing, Kalik will receive the following New Units:
that number A Units equal to the result of dividing the Kalik Pines Amount by
the A Unit Value as of the Second Closing Date determined in accordance with
the formula therefor set out in EXHIBIT J attached hereto.
3.07 VOGT'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, and partly in consideration of his permitting
his general partner's interest in the Partnership to be converted into a limited
partner's interest, Vogt's Capital Account Balance will be increased in an
amount equal to the Vogt Pines Amount. For all purposes of this Agreement: "VOGT
PINES AMOUNT" means the product of multiplying the Pines Net Exchange Amount by
0.0388477. At the Second Closing, Vogt will receive the following New Units:
that number D Units equal to the result of dividing the Vogt Pines Amount by the
D Unit Value as of the Second Closing Date determined in accordance with the
formula therefor set out in EXHIBIT J attached hereto.
3.08 SECOND CLOSING MATTERS RELATING TO GUTIN'S INTEREST. If Wright acquires
Gutin's Interest at or before the Initial Closing, then at the Second Closing,
subject to the conditions set forth in Paragraph 13 of this Agreement, Wright's
Capital Account Balance will be increased by an amount equal to the Gutin Pines
Amount, and he will receive the following New Units: that number D Units equal
to the result of dividing the Gutin Pines Amount by the D Unit Value as of the
Second Closing Date determined in accordance with the formula therefor set out
in EXHIBIT J attached hereto. For all purposes of this Agreement: "GUTIN PINES
AMOUNT" means the product of multiplying the Pines Net Exchange Amount by
0.0388477. If Wright does not acquire Gutin's Interest by the Initial Closing,
there will be no changes or deliveries relating to the Gutin Pines Amount.
3.09 HUGHES' SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, and partly in consideration of his permitting
his general partner's interest in the Partnership to be converted to a limited
partner's interest, Hughes' Capital Account Balance will be increased in an
amount equal to the Hughes Pines Amount. For all purposes of this Agreement:
"HUGHES PINES AMOUNT" means the product of multiplying the Pines Net
Exchange Amount by 0.0388477. At the Second Closing, Hughes will receive the
following New Units: that number D Units equal to the result of dividing the
Hughes Pines Amount by the D Unit Value as of the Second Closing Date determined
in accordance with the formula therefor set out in EXHIBIT J attached hereto.
3.10 GOLZ'S SECOND CONTRIBUTION. Subject to the conditions set forth in
Paragraph 13 of this Agreement, and partly in consideration of his permitting
his general partner's interest in the Partnership to be converted to a limited
partner's interest, Golz's Capital Account Balance will be increased in an
amount equal to the Golz Pines Amount. For all purposes of this
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<PAGE> 19
Agreement: "GOLZ PINES AMOUNT" means the product of multiplying the Pines Net
Exchange Amount by 0.0388477. At the Second Closing, Golz will receive the
following New Units: that number D Units equal to the result of dividing the
Golz Pines Amount by the D Unit Value as of the Second Closing Date determined
in accordance with the formula therefor set out in EXHIBIT J attached hereto.
3.11 ADJUSTMENTS. Notwithstanding the foregoing, the respective numbers of
Units and the amounts set out in Paragraphs 3.02 through 3.10 hereof are
subject to adjustment as between the persons named in those paragraphs so as
to effectuate the provisions of Paragraph 6.2(ii) of the Limited Partnership
Agreement of MIG/Pines Development, Ltd.
3.12 [INTENTIONALLY OMITTED.]
3.13 [INTENTIONALLY OMITTED.]
3.14 [INTENTIONALLY OMITTED.]
3.15 MIG'S CONTRIBUTION AND SALE OF GENERAL PARTNER'S INTEREST IN PINES.
Substantially simultaneously with the Second Closing (and on the condition that
the Second Closing occurs), MIG will transfer and assign to AERC (or its
wholly-owned affiliate, designee or nominee), and AERC will purchase and accept,
MIG's general partner interest in the Pines Partnership pursuant to and as more
fully set forth in the General Partner Interest Purchase Agreement relating to
Pines, which transfer shall be consummated at the Second Closing and evidenced
by an amendment to the Restated Partnership Agreement.
3.16 [INTENTIONALLY OMITTED.]
3.17 ELECTION TO SUBSTITUTE CASH. At any time up until ten business days prior
to the Second Closing (as hereafter defined), each of Elwood, Kalik and
Wayman, individually, shall have the right, upon written notice to AERC, to
elect to receive a cash payment (the specific amount of cash each such person
elects to receive in cash will be specified in its notice of election) in lieu
of any or all of the New Units otherwise deliverable to it for its partnership
interest in the Pines Partnership. The maximum amount of cash to be delivered
to each of Elwood, Kalik and Wayman in place of each of the New Units pursuant
to the provisions of the preceding sentence is equal to the Elwood Pines
Amount, the Kalik Pines Amount, and the Wayman Pines Amount, respectively.
AERC's Capital Account and AERC Units shall be increased, and the respective
capital accounts of any of Elwood, Kalik and Wayman who receives such cash and
who theretofore was, is or then becomes a limited partner in the Partnership
shall be decreased, by an amount equal to such cash payment based upon the
formula set forth on EXHIBIT J-1.
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4. CHANGE OF NAME, CONVERSION INTO LIMITED PARTNERSHIP AND CONVERSION OF
EXISTING GENERAL PARTNERS' INTERESTS.
4.01 At the Initial Closing, by the execution and delivery of the Restated
Partnership Agreement, (i) the name of the Partnership shall be changed to
become "AERC HP ADVISORS LP", (ii) the Partnership shall be converted from a
Florida general partnership into a Florida limited partnership, (iii) the
Existing General Partners' respective general partners' interests in the
Partnership shall be converted into limited partners' interests, all as more
fully set forth in the Restated Partnership Agreement, (iv) AERC or its
wholly-owned nominee will be admitted as the sole general partner of the
Partnership, and (v) the transactions contemplated by the terms and provisions
of the General Partner Interest Purchase Agreements relating, respectively, to
Kirkman and (unless a Hollywood No-Close Notice has been timely given and no
transfer of interests in the Hollywood Partnership occurs at the Initial
Closing) Hollywood will be consummated. At the Initial Closing, the Restated
Partnership Agreement will be executed and delivered by all of the parties
thereto, a Certificate of Limited Partnership (the "PARTNERSHIP CERTIFICATE")
shall be executed and delivered by all of the partners of the Partnership, and
all of the Initial Closing Documents hereinafter described shall be delivered.
5. INITIAL CLOSING DOCUMENTS
5.01 AERC'S INITIAL CLOSING DOCUMENTS. On or prior to the Initial Closing Date
(as hereafter defined), AERC shall execute and deliver (or cause to be
executed and delivered) the Restated Partnership Agreement and a limited
partnership certificate and shall deliver the following fully executed
documents to Escrow Agent:
(i) The balance of AERC's Initial Contribution, in
immediately available funds;
(ii) Closing statements executed by AERC and approved by all
of the other Parties;
(iii) Such reasonable confirmation of authorization,
organization and valid existence as MIG may reasonably request;
(iv) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement;
(v) Any and all documents required pursuant to the terms of
the General Partner Interest Purchase Agreements relating,
respectively, to Kirkman and (unless a Hollywood No-Close Notice has
been timely given and no transfer of interests in the Hollywood
Partnership occurs at the Initial Closing) Hollywood; and
(vi) An opinion of Baker & Hostetler LLP substantially similar
in form and content to the opinion furnished by Baker & Hostetler LLP
in connection with the Merger, addressed to the Existing Limited
Partners and the Existing General Partners and upon which
15
<PAGE> 21
the Existing Limited Partners and Existing General Partners are
expressly permitted to rely, to the effect that AERC has qualified to
be taxed as a real estate investment trust pursuant to Sections 856
through 860 of the Internal Revenue Code and currently qualifies to
be taxed as such.
AERC will also deliver (or cause to be delivered) through the Escrow at the
Initial Closing, to each other Party who is to receive cash for some or all of
its interests in either or both of the Kirkman or Hollywood Partnerships as
provided in this Agreement, the cash such Party is to receive therefor.
5.02 WAYMAN'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing
Date, Wayman shall execute and deliver the Restated Partnership Agreement and
(if required by applicable law) a limited partnership certificate and shall
deliver the following fully executed documents to Escrow Agent:
(i) Two forms of Assignment and Assumption of Partnership
Interest, in the respective forms attached hereto as EXHIBITS K-1 and
K-2, conveying, selling, transferring, assigning and delivering to the
Partnership all of his right, title and interest in and to Wayman's
Limited Partnership Interests in Hollywood and Wayman's Limited
Partnership Interests in Kirkman free and clear of all pledges, liens,
security interests, encumbrances and restrictions of any nature
whatsoever;
(ii) Closing statements executed by Wayman and approved by
all of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.03 WRIGHT'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing
Date, Wright shall execute and deliver the Restated Partnership Agreement and
(if required by applicable law) a limited partnership certificate and shall
deliver the following fully executed documents to Escrow Agent:
(i) Two forms of Assignment and Assumption of Partnership
Interest, in the respective forms attached hereto as EXHIBITS L-1 and
L-2, conveying, selling, transferring, assigning and delivering to the
Partnership (i) all of his right, title and interest in and to
Wright's Limited Partnership Interests in Hollywood and Wright's
Limited Partnership Interests in Kirkman and (ii) if he has then
acquired them, all of his right, title and interest in and to Gutin's
Limited Partnership Interest (but if Wright is unable to cause Gutin's
Limited Partnership Interest so to be transferred to AERC, AERC may
terminate this Agreement without liability to or of any Party by giving
notice of such termination to all of the other Parties at the Initial
Closing), in both such cases free and clear of all pledges, liens,
security interests, encumbrances and restrictions of any nature
whatsoever;
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(ii) Closing statements executed by Wright and approved by
all of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.04 COTE'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing Date,
Cote shall execute and deliver the Restated Partnership Agreement and (if
required by applicable law) a limited partnership certificate and shall deliver
the following fully executed documents to Escrow Agent:
(i) Two forms of Assignment and Assumption of Partnership
Interest, in the respective forms attached hereto as EXHIBITS M-1 and
M-2, conveying, selling, transferring, assigning and delivering to the
Partnership all of his right, title and interest in and to Cote's
Limited Partnership Interests in Hollywood and Cote's Limited
Partnership Interests in Kirkman free and clear of all pledges, liens,
security interests, encumbrances and restrictions of any nature
whatsoever;
(ii) Closing statements executed by Cote and approved by all
of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.05 ELWOOD'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing
Date, Elwood shall execute and deliver the Restated Partnership Agreement and
(if required by applicable law) a limited partnership certificate and shall
deliver the following fully executed documents to Escrow Agent:
(i) Two forms of Assignment and Assumption of Partnership
Interest, in the respective forms attached hereto as EXHIBITS N-1 and
N-2, conveying, selling, transferring, assigning and delivering to the
Partnership all of his right, title and interest in and to Elwood's
Limited Partnership Interests in Hollywood and Elwood's Limited
Partnership Interests in Kirkman free and clear of all pledges, liens,
security interests, encumbrances and restrictions of any nature
whatsoever;
(ii) Closing statements executed by Elwood and approved by
all of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.06 KALIK'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing Date,
Kalik shall execute and deliver the Restated Partnership Agreement and (if
required by
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applicable law) a limited partnership certificate and shall deliver the
following fully executed documents to Escrow Agent:
(i) Two forms of Assignment and Assumption of Partnership
Interest, in the respective forms attached hereto as EXHIBITS O-1 and
O-2, conveying, selling, transferring, assigning and delivering to the
Partnership all of his right, title and interest in and to Kalik's
Limited Partnership Interests in Hollywood and Kalik's Limited
Partnership Interests in Kirkman free and clear of all pledges, liens,
security interests, encumbrances and restrictions of any nature
whatsoever;
(ii) Closing statements executed by Kalik and approved by
all of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.07 VOGT'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing Date,
Vogt shall execute and deliver the Restated Partnership Agreement and (if
required by applicable law) a limited partnership certificate and shall deliver
the following fully executed documents to Escrow Agent:
(i) One form of Assignment and Assumption of Partnership
Interest, in the form attached hereto as EXHIBIT P, conveying, selling,
transferring, assigning and delivering to the Partnership all of Vogt's
right, title and interest in and to Vogt's Limited Partnership Interest
free and clear of all pledges, liens, security interests, encumbrances
and restrictions of any nature whatsoever;
(ii) Closing statements executed by Vogt and approved by all
of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.08 [INTENTIONALLY OMITTED.]
5.09 HUGHES' INITIAL CLOSING DOCUMENTS. On or before the Initial Closing Date,
Hughes shall execute and deliver the Restated Partnership Agreement and (if
required by applicable law) a limited partnership certificate and shall deliver
the following fully executed documents to Escrow Agent:
(i) One form of Assignment and Assumption of Partnership
Interest, in the form attached hereto as EXHIBIT R, conveying, selling,
transferring, assigning and delivering to the Partnership all of
Hughes' right, title and interest in and to Hughes' Limited Partnership
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<PAGE> 24
Interest free and clear of all pledges, liens, security interests,
encum brances and restrictions of any nature whatsoever;
(ii) Closing statements executed by Hughes and approved by
all of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.10 GOLZ'S INITIAL CLOSING DOCUMENTS. On or before the Initial Closing Date,
Golz shall execute and deliver the Restated Partnership Agreement and (if
required by applicable law) a limited partnership certificate and shall deliver
the following fully executed documents to Escrow Agent:
(i) One form of Assignment and Assumption of Partnership
Interest, in the form attached hereto as EXHIBIT RR, conveying,
selling, transferring, assigning and delivering to the Partnership all
of Golz's right, title and interest in and to Golz's Limited
Partnership Interest free and clear of all pledges, liens, security
interests, encumbrances and restrictions of any nature whatsoever;
(ii) Closing statements executed by Golz and approved by all
of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.11 PF FUNDS' INITIAL CLOSING DOCUMENTS. On or before the Initial Closing
Date, PF Funds shall deliver the following fully executed documents to Escrow
Agent:
(i) One form of Assignment and Assumption of Partnership
Interest, in the form attached hereto as EXHIBIT S, conveying, selling,
transferring, assigning and delivering to the Partnership all of PF
Fund's right, title and interest in and to P.F.'s Limited Partnership
Interest free and clear of all pledges, liens, security interests,
encumbrances and restrictions of any nature whatsoever;
(ii) Closing statements executed by PF Funds and approved by
all of the other Parties; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
5.12 EXISTING GENERAL PARTNERS' INITIAL CLOSING DOCUMENTS. On or before the
Initial Closing Date, the Existing General Partners shall execute and deliver
the
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<PAGE> 25
Restated Partnership Agreement and (if required by applicable law) a limited
partnership certificate and shall deliver the following fully executed
documents to Escrow Agent:
(i) Such confirmation of authorization from Parties other
than individuals as AERC may reasonably request; and
(ii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement and confirm the
terms and conditions set forth herein.
6. SECOND CLOSING DOCUMENTS
6.01 SECOND CLOSING. At the Second Closing, by the execution and delivery of
an amendment to the Restated Partnership Agreement (the "SECOND CLOSING
RESTATED PARTNERSHIP AGREEMENT"), the Restated Partnership Agreement shall be
amended to reflect (i) the AERC Second Contribution, (ii) the creation and
issuance of the New Units, (iii) the acquisition by the Partnership of all of
the Development Limited Partnership Interests in the Pines Partnership, and
(iv) the adjustments referred to in Section 3.08. At the Second Closing, the
transactions contemplated by the terms and provisions of the General Partner
Interest Purchase Agreement relating to Pines shall be consummated, and the
Partnership's limited partnership certificate shall be amended (the "SECOND
CLOSING AMENDED PARTNERSHIP CERTIFICATE") to reflect the amendments to the
Restated Partnership Agreement accomplished by the Second Closing Partnership
Amendment.
6.02 AERC'S SECOND CLOSING DOCUMENTS. On or prior to the Second Closing Date
(as hereafter defined), AERC or its wholly-owned nominee(s) shall execute and
deliver the Second Closing Partnership Amendment and the Second Closing
Amended Partnership Certificate and shall deliver the following to Escrow
Agent:
(i) AERC's Second Contribution, in immediately available
funds;
(ii) Closing statements executed by AERC and approved by all
of the other Parties who are required to deliver any documents in
connection with the Second Closing;
(iii) Such confirmation of authorization, organization and
valid existence as MIG may reasonably request;
(iv) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement;
(v) Any and all documents required pursuant to the terms of
the General Partner Interest Purchase Agreement relating to Pines; and
(vi) An opinion of Baker & Hostetler LLP substantially similar
in form and content to the opinion furnished by Baker & Hostetler LLP
in connection with the Merger, addressed to the Existing Limited
Partners and the Existing General Partners and upon which
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<PAGE> 26
the Existing Limited Partners and Existing General Partners are
expressly permitted to rely, to the effect that AERC has qualified to
be taxed as a real estate investment trust pursuant to Sections 856
through 860 of the Internal Revenue Code and currently qualifies to
be taxed as such.
AERC will also deliver (or cause to be delivered) through the Escrow at the
Second Closing, to each other Party who is to receive cash for some or all of
its interests in the Pines Partnership as provided in this Agreement, the cash
such Party is to receive therefor.
6.03 WAYMAN'S SECOND CLOSING DOCUMENTS. On or before the Second Closing Date,
Wayman shall execute and deliver the Second Closing Partnership Amendment and
(if required by law) the Second Closing Amended Partnership Certificate and
shall deliver the following fully executed documents to Escrow Agent:
(i) An Assignment and Assumption of Partnership Interest, in
the form attached hereto as EXHIBIT K-3, conveying, selling,
transferring, assigning and delivering to the Partnership all of his
right, title and interest in and to Wayman's Limited Partnership
Interests in the Pines Partnership free and clear of all pledges,
liens, security interests, encumbrances and restrictions of any nature
whatsoever;
(ii) Closing statements executed by Wayman and approved by all
of the other Parties who are required to deliver any documents in
connection with the Second Closing; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
6.04 WRIGHT'S SECOND CLOSING DOCUMENTS. On or before the Second Closing Date,
Wright shall execute and deliver the Second Closing Partnership Amendment and
(if required by applicable law) the Second Closing Amended Partnership
Certificate and shall deliver the following fully executed documents to Escrow
Agent:
(i) An Assignment and Assumption of Partnership Interest, in
the form attached hereto as EXHIBIT L-3, conveying, selling,
transferring, assigning and delivering to the Partnership all of his
right, title and interest in and to Wright's Limited Partnership
Interests in the Pines Partnership free and clear of all pledges,
liens, security interests, encumbrances and restrictions of any
nature whatsoever;
(ii) Closing statements executed by Wright and approved by all
of the other Parties who are required to deliver any documents in
connection with the Second Closing; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
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6.05 COTE'S SECOND CLOSING DOCUMENTS. On or before the Second Closing Date,
Cote shall execute and deliver the Second Closing Partnership Amendment and
(if required by applicable law) the Second Closing Amended Partnership
Certificate and shall deliver the following fully executed documents to Escrow
Agent:
(i) An Assignment and Assumption of Partnership Interest, in
the form attached hereto as EXHIBIT M-3, conveying, selling,
transferring, assigning and delivering to the Partnership all of his
right, title and interest in and to Cote's Limited Partnership
Interests in the Pines Partnership free and clear of all pledges,
liens, security interests, encumbrances and restrictions of any nature
whatsoever;
(ii) Closing statements executed by Cote and approved by all
of the other Parties who are required to deliver any documents in
connection with the Second Closing; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
6.06 ELWOOD'S SECOND CLOSING DOCUMENTS. On or before the Second Closing Date,
Elwood shall execute and deliver the Second Closing Partnership Amendment and
(if required by applicable law) the Second Closing Amended Partnership
Certificate and shall deliver the following fully executed documents to Escrow
Agent:
(i) An Assignment and Assumption of Partnership Interest, in
the form attached hereto as EXHIBIT N-3, conveying, selling,
transferring, assigning and delivering to the Partnership all of his
right, title and interest and to Elwood's Limited Partnership Interests
in the Pines Partnership free and clear of all pledges, liens, security
interests, encumbrances and restrictions of any nature whatsoever;
(ii) Closing statements executed by Elwood and approved by
all of the other Parties who are required to deliver any documents in
connection with the Second Closing; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
6.07 KALIK'S SECOND CLOSING DOCUMENTS. On or before the Second Closing Date,
Kalik shall execute and deliver the Second Closing Partnership Amendment and (if
required by applicable law) the Second Closing Amended Partnership Certificate
and shall deliver the following fully executed documents to Escrow Agent:
(i) An Assignment and Assumption of Partnership Interest, in
the form attached hereto as EXHIBIT O-3, conveying, selling,
transferring, assigning and delivering to the Partnership all of his
right, title and interest in and to Kalik's Limited Partnership
Interests
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in the Pines Partnership free and clear of all pledges, liens, security
interests, encumbrances and restrictions of any nature whatsoever;
(ii) Closing statements executed by Kalik and approved by all
of the other Parties who are required to deliver any documents in
connection with the Second Closing; and
(iii) Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
7. CONDUCT OF BUSINESS PRIOR TO INITIAL CLOSING
7.01 AERC'S COVENANTS. Until the Initial Closing, AERC shall:
(i) not take or agree to take any action or do anything in the
conduct of the business of AERC, or otherwise, which would be in breach
of any of its material obligations under the terms or provisions of
this Agreement or which would cause any representation and warranty of
AERC contained herein to be or become untrue in any material respect;
(ii) use diligent efforts to obtain all necessary consents and
authorizations of third parties to the performance by AERC of its
obligations hereunder and the consummation of the transactions
contemplated hereby;
(iii) comply in all material respects with the terms and
conditions of the General Partner Interest Purchase Agreements; and
(iv) use its best efforts to continue to be taxed as a REIT
pursuant to Section 856 through 860 of the Code until the Board of
Directors of AERC decide that AERC should not be taxed a REIT.
7.02 EXISTING LIMITED PARTNER COVENANTS. Until the Initial Closing, each
Existing Limited Partner who is a Party agrees that such Existing Limited
Partner shall:
(i) not transfer, pledge, encumber, convey, devise or sell its
respective Development Limited Partnership Interests (other than
transfers to another Party who is, or agrees to be, subject to the
provisions of this Agreement with respect to any interests so
acquired);
(ii) not take or agree to take any action or do anything in
the conduct of the business of such Existing Limited Partner, or
otherwise, which would be in breach of any of its or his material
obligations under the terms or provisions of this Agreement or which
would cause any representation and warranty of such Existing Limited
Partner contained herein to be or become untrue in any material
respect;
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(iii) use its reasonable efforts to obtain all necessary
consents and authorizations (if any) of third parties to the
performance by such Existing Limited Partner of its respective
obligations hereunder and the consummation of the transactions
contemplated hereby; and
(iv) not consent to any action of any Development Partnership
which (A) materially adversely affects the Partnership's ability to
acquire its or his partnership interests therein as contemplated
hereby, (B) would result in a sale or refinancing of the project owned
by any Development Partnership in which it or he is a limited partner,
(C) would cause or permit the transfer of any interest in any
Development Partnership in which it or he is a limited partner (other
than transfers to another Party who is, or agrees to be, subject to the
provisions of this Agreement with respect to any interests so
acquired), or (D) would cause or permit any Development Partnership in
which it or he is a limited partner to take any action outside of the
ordinary course of its business.
7.03 EXISTING GENERAL PARTNER COVENANTS. Until the Initial Closing, each
Existing General Partner who is a Party agrees that such Existing General
Partner shall:
(i) not transfer, pledge, encumber, convey, devise or sell its
or his general partnership interest in the Partnership (other than
transfers to another Party who is, or agrees to be, subject to the
provisions of this Agreement with respect to any interests so
acquired);
(ii) not take or agree to take any action or do anything in
the conduct of the business of such Existing General Partner, or
otherwise, which would be in breach of any of its or his material
obligations under the terms or provisions of this Agreement or which
would cause any representation and warranty of such Existing General
Partner contained herein to be or become untrue in any material
respect;
(iii) use its reasonable efforts to obtain all necessary
consents and authorizations (if any) of third parties to the
performance by such Existing General Partner of its or his obligations
hereunder and the consummation of the transactions contemplated hereby;
and
(iv) not consent to any action of the Partnership which would
(A) prevent the Partnership from acquiring the various partnership
interests as contemplated hereby, (B) result in a sale or refinancing
of any debt of the Partnership, (C) cause or permit the transfer of any
interest in the Partnership (other than transfers to another Party who
is, or agrees to be, subject to the provisions of this Agreement with
respect to any interests so acquired), or (D) cause or permit the
Partnership to take any action outside of the ordinary course of its
business.
In addition, Wright agrees that he will use his best efforts to obtain from
Gutin, at or before the Initial Closing, either (i) Gutin's Interests or (ii)
Gutin's written consent, in form and substance reasonably satisfactory to AERC,
the Partnership, the Existing General Partners and MIG, to this Agreement and
the consummation of the transfers and transactions provided for herein.
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7.04 MIG COVENANTS WITH RESPECT TO ITS GENERAL PARTNER INTERESTS. Until the
Initial Closing, MIG shall
(i) not transfer, pledge, encumber, convey, devise or sell its
general partner interests in the Development Partnerships, and it will
otherwise comply in all material respects with the terms and conditions
of the General Partner Interest Purchase Agreements;
(ii) not take or agree to take any action or do anything in
the conduct of the business of MIG, or otherwise, which would be in
breach of any of its material obligations under the terms or provisions
of this Agreement or which would cause any representation and warranty
of MIG contained herein to be or become untrue in any material respect;
(iii) use its reasonable efforts to obtain all necessary
consents and authorizations (if any) of third parties to the
performance by MIG of its obligations hereunder and the consummation of
the transactions contemplated hereby; and
(iv) not consent to any action of any Development Partnership
which would (A) prevent the Partnership from acquiring the various
partnership interests as contemplated hereby, (B) result in a sale or
refinancing of the project owned by any Development Partnership, (C)
cause or permit the transfer of any interest in any Development
Partnership (except as contemplated by any provision of this
Agreement), or (D) cause or permit any Development Partnership to take
any action outside of the ordinary course of its business.
8. CONDUCT OF BUSINESS PRIOR TO SECOND CLOSING
8.01 AERC'S COVENANTS. Until the Second Closing, AERC shall:
(i) not take or agree to take any action or do anything in the
conduct of the business of AERC, or otherwise, which would be in breach
of any of its material obligations under the terms or provisions of
this Agreement or which would cause any representation and warranty of
AERC contained herein (except as modified by virtue of the Initial
Closing) to be or become untrue in any material respect;
(ii) comply in all material respects with the terms and
conditions of the General Partner Interest Purchase Agreements; and
(iii) comply in all material respects with its obligations
under the Restated Partnership Agreement.
(iv) use its best efforts to continue to be taxed as a REIT
pursuant to Sections 856 through 860 of the Code until the Board of
Directors of AERC decide that AERC should not be taxed as a REIT.
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8.02 EXISTING H/P LIMITED PARTNER COVENANTS. Until the Second Closing, each
Existing H/P Limited Partner agrees that such Existing H/P Limited Partner
shall:
(i) not transfer, pledge, encumber, convey, devise or sell
such Existing H/P Limited Partner's development limited partnership
interest in the Pines Partnership;
(ii) not take or agree to take any action or do anything in
the conduct of the business of such Existing H/P Limited Partner, or
otherwise, which would be in breach of any of its material obligations
under the terms or provisions of this Agreement or which would cause
any representation and warranty of such Existing H/P Limited Partner
(except as modified by virtue of the Initial Closing) contained herein
to be or become untrue in any material respect;
(iii) use its reasonable efforts to obtain all necessary
consents and authorizations (if any) of third parties to the
performance by such Existing H/P Limited Partner of its obligations
hereunder relating to the Second Closing and the consummation of the
transactions contemplated hereby; and
(iv) not consent to any action of any Pines Partnership which
would prevent the Partnership's acquisition of the Pines Partnership
Interests as contemplated hereby, result in a sale or refinancing of
the project owned by the Pines Partnership, cause or permit the
transfer of any interest in the Pines Partnership, or cause or permit
the Pines Partnership to take any action outside of the ordinary course
of its business.
8.03 MIG COVENANTS WITH RESPECT TO GENERAL PARTNER'S INTEREST IN PINES
PARTNERSHIP. Until the Second Closing, MIG shall:
(i) not transfer, pledge, encumber, convey, devise or sell its
general partner interest in the Pines Partnership, and it will
otherwise comply in all material respects with the terms and conditions
of the General Partner Interest Purchase Agreement relating to Pines;
(ii) not take or agree to take any action or do anything in
the conduct of the business of MIG, or otherwise, which would be in
breach of any of its material obligations under the terms or provisions
of this Agreement or which would cause any representation and warranty
of MIG (except as modified by virtue of the Initial Closing) contained
herein to be or become untrue in any material respect;
(iii) use its reasonable efforts to obtain all necessary
consents and authorizations (if any) of third parties to the
performance by MIG of its obligations hereunder relating to the Second
Closing and the consummation of the transactions contemplated hereby;
and
(iv) not consent to any action of the Pines Partnership which
would prevent the Partnership's acquisition of the Pines Partnership
Interests as contemplated hereby, result in
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a sale or refinancing of the project owned by the Pines Partnership,
cause or permit the transfer of any interest in the Pines
Partnership, or cause or permit the Pines Partnership to take any
action outside of the ordinary course of its business.
9. REPRESENTATIONS AND WARRANTIES
9.01 AERC'S REPRESENTATIONS AND WARRANTIES. AERC hereby represents and
warrants as of the date hereof that:
(i) AERC is a corporation duly organized and in good
standing in the State of Ohio;
(ii) AERC has all necessary corporate 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 from whom such consents and authorizations have been obtained
(except for authorization from its board of directors or its
shareholders, which will have been obtained by the Closing Date) or to
whom notices have been given. This Agreement constitutes, and the other
documents and instruments to be delivered by AERC pursuant hereto when
delivered will constitute, the legal, valid and binding obligations of
AERC, enforceable against AERC in accordance with their respective
terms;
(iii) To the best of its knowledge, there is no litigation,
proceeding or action pending or threatened against or relating to AERC
which might materially and adversely affect AERC or which questions the
validity of this Agreement or any action taken or to be taken by AERC
pursuant hereto;
(iv) AERC has qualified to be taxed as a real estate
investment trust pursuant to Sections 856 through 860 of the Internal
Revenue Code, for each of its taxable years ended December 31, 1993
through December 31, 1997, and AERC expects to so qualify for the
fiscal year ending December 31, 1998;
(v) To the best of AERC'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 agreement or instrument to which AERC is a party;
(vi) AERC and each subsidiary of AERC and each partnership or
limited liability company in which AERC holds an interest (any such
subsidiary, partnership or limited liability company is herein called
"Subsidiary") has filed or caused to be filed all federal, state,
local, foreign and other tax returns, reports, information returns and
statement required to be filed by them. AERC and each Subsidiary has
paid or caused to be paid all taxes (including interest and penalties)
that are shown as due and payable on such returns or claims by any
taxing authority to be due and payable with respect to such returns,
except those
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which are being contested by them in good faith by appropriate
proceedings and in respect of which adequate reserves are being
maintained on their books in accordance with generally accepted
accounting principles consistently applied. Neither AERC nor any
Subsidiary has any material liabilities for taxes other than those
incurred in the ordinary course of business and in respect of which
adequate reserves are being maintained by them in accordance with
generally accepted accounting principles consistently applied.
Federal income tax returns for AERC and each Subsidiary have not been
audited by the Internal Revenue Service. No deficiency, assessment
with respect to, or proposed adjustment of federal, state, local,
foreign or other tax returns of AERC or any Subsidiary is pending or,
to the best of the AERC's knowledge, threatened. There is no tax
lien, whether imposed by any federal, state, local or other tax
authority, outstanding against the assets, properties or business of
AERC or any Subsidiary; and
(vii) AERC has filed all required forms, reports and
documents with the Securities and Exchange Commission ("SEC")
required to be filed by it pursuant to the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations
promulgated thereunder, all of which (collectively, the "SEC FORMS")
have complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act,
respectively, and such rules and regulations. None of the SEC Forms
filed by AERC with the SEC since January 1, 1994 (hereafter
collectively referred to as the "REPORTS"), including (without
limitation) any financial statements or schedules included therein,
at the time filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of AERC included in the Reports complied as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
(except as otherwise noted in such financial statements) and present
fairly in all material respects the financial position, results of
operations, cash flows and changes in financial position of AERC and
its consolidated subsidiaries as of the dates or the periods
indicated, subject, in the case of unaudited interim consolidated
financial statements, to normal year-end adjustments.
9.02 EXISTING LIMITED PARTNERS' REPRESENTATIONS AND WARRANTIES. Each Existing
Limited Partner who is a Party hereby represents and warrants, severally, as
of the date hereof that:
(i) MIG is a corporation, duly organized and in good standing
in the State of Florida, and each Development Partnership is a duly
organized and validly existing Florida limited partnership (the
foregoing representation is made as to the Hollywood and Pines
Development Partnerships only by the H/P Existing Limited Partners);
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(ii) Such Existing Limited Partner has all necessary power and
authority (in the case of PF Funds, such power and authority being its
corporate power and authority) to enter into this Agreement, to perform
such Existing Limited Partner's 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 from 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 such Existing Limited Partner pursuant
hereto when delivered will constitute, the legal, valid and binding
obligations of such Existing Limited Partner, enforceable against such
Existing Limited Partner in accordance with their respective terms;
(iii) To the best of such Existing Limited Partner's
knowledge, there is no litigation, proceeding or action pending or
threatened against or relating to such Existing Limited Partner which
might prevent such Existing Limited Partner from performing its
obligations hereunder or which questions the validity of this Agreement
or any action taken or to be taken by such Existing Limited Partner
pursuant hereto;
(iv) 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 or
instrument to which such Existing Limited Partner is a party;
(v) Such Existing Limited Partner owns its Development Limited
Partnership Interests free and clear of all pledges, liens, security
interests, encumbrances and restrictions of any nature whatsoever;
(vi) Such Existing Limited Partner (a) is acquiring the Units
for such Existing Limited Partner's own account for investment only,
not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof; (b) has no present intention of
selling, granting any participation in, or otherwise distributing the
Units; and (c) does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to
such person or to any third person, with respect to any of the Units,
in each case except as follows: (A) to the extent registration of the
Units is contemplated by the Restated Partnership Agreement; (B) if
such Existing Limited Partner is a corporation, in dissolution thereof
and otherwise in distribution to the beneficial shareholders thereof,
as applicable; and (C) each Existing Limited Partner reserves the
right, to the extent it would not thereby violate the provisions of the
Restated Partnership Agreement, to transfer, assign, pledge or grant a
security interest in any or all of its Units to (1) any other Existing
Limited Partner, (2) any Existing General Partner or (3) any financial
institution as collateral security for any loan or loans.
(vii) Such Existing Limited Partner has sufficient knowledge
and experience in financial and business matters so as to be capable of
evaluating the merits and risks of investments generally, and of such
Existing Limited Partner's investment in the Units in
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<PAGE> 35
particular. Such Existing Limited Partner is able to bear (a) the
economic risk of an investment in the Units and (b) any lack of
liquidity inherent in holding the Units, with the full understanding
that such Existing Limited Partner can lose its entire investment.
Such Existing Limited Partner acknowledges that the loss of its
entire investment in the Units will not have a material adverse
effect on its business operations. Such Existing Limited Partner has
been advised by AERC to seek expert legal, tax, and accounting advice
in connection with its investment decision; and
(viii) In order to evaluate the merits and the risks
inherent in acquiring and holding the Units, AERC has made available
to each Existing Limited Partner, during the course of this
transaction and prior to the investment in the Units, the opportunity
to ask questions of, and receive answers from, AERC and those persons
acting on AERC's behalf, concerning the terms and conditions of this
transaction. Such Existing Limited Partner has had all such questions
answered to its satisfaction and has been supplied all additional
information deemed necessary by such Existing Limited Partner to
verify the accuracy of the information provided to it by AERC to the
extent that AERC possesses such information or can acquire it without
unreasonable effort or expense. Such Existing Limited Partner has had
a full and complete opportunity to examine all relevant documents
relating to the Partnership and such Existing Limited Partner's
prospective interest therein and relating to AERC that have been made
available by AERC and is familiar with the contents thereof and, in
particular, with all risk factors associated with any investment in
the Partnership. Each Existing Limited Partner has been provided the
opportunity, to such Existing Limited Partner's satisfaction, to ask
questions and receive answers concerning the terms and conditions of
this transaction, has had all such questions answered to such
Existing Limited Partner's satisfaction and has been supplied all
additional information deemed necessary by such Existing Limited
Partner to verify the accuracy of the information supplied to such
Existing Limited Partner; each Existing Limited Partner is familiar
with the condition of the Partnership, and such Existing Limited
Partner has had access to such information as such Existing Limited
Partner deems material in making the investment decision called for;
and each Existing Limited Partner believes that the Units are
securities of the kind such Existing Limited Partner wishes to
acquire and hold for investment.
9.03 EXISTING GENERAL PARTNERS' REPRESENTATIONS AND WARRANTIES. Each Existing
General Partner who is a Party hereby represents and warrants, severally, as
of the date hereof that:
(i) Such Existing General Partner has all necessary power and
authority to enter into this Agreement, to perform such Existing
General Partner's obligations hereunder and to consummate the
transactions contemplated hereby, without the consent or authorization
of, or notice to, any third party (except for such consents or
authorizations which have been obtained or notices which have been
given). This Agreement constitutes, and the other documents and
instruments to be delivered by such Existing General Partner pursuant
hereto when delivered will constitute, the legal, valid and binding
obligations of such Existing
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General Partner, enforceable against such Existing General Partner in
accordance with their respective terms;
(ii) To the best of such Existing General Partner's knowledge,
there is no litigation, proceeding or action pending or threatened
against or relating to such Existing General Partner which might
prevent such Existing General Partner from performing its obligations
hereunder or which questions the validity of this Agreement or any
action taken or to be taken by such Existing General Partner pursuant
hereto;
(iii) 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 material term or provision of any
material agreement or instrument to which such Existing General Partner
is a party;
(iv) Such Existing General Partner owns its general
partnership interests in the Partnership free and clear of all pledges,
liens, security interests, encumbrances and restrictions of any nature
whatsoever except for those set out in the respective limited
partnership agreements of the Development Partnerships;
(v) Such Existing General Partner (a) is acquiring the Units
for such Existing General Partner's own account for investment only,
not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof; (b) has no present intention of
selling, granting any participation in, or otherwise distributing the
Units; and (c) does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation
to such person or to any third person, with respect to any of the
Units, in each case except as follows: (A) to the extent registration
of the Units is contemplated by the Restated Partnership Agreement;
and (B) each Existing Limited Partner reserves the right, to the
extent it would not thereby violate the provisions of the Restated
Partnership Agreement, to transfer, assign, pledge or grant a
security interest in any or all of its Units to (1) any other
Existing Limited Partner, (2) any Existing General Partner or (3) any
financial institution as collateral security for any loan or loans.
(vi) Such Existing General Partner has sufficient knowledge
and experience in financial and business matters so as to be capable of
evaluating the merits and risks of investments generally, and of such
Existing General Partner's investment in the Units in particular. Such
Existing General Partner is able to bear (a) the economic risk of an
investment in the Units and (b) any lack of liquidity inherent in
holding the Units, with the full understanding that such Existing
General Partner can lose its entire investment. Such Existing General
Partner acknowledges that the loss of its entire investment in the
Units will not have a material adverse effect on its business
operations. Such Existing General Partner has been advised by AERC to
seek expert legal, tax, and accounting advice in connection with such
Existing General Partner's investment decision;
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(vii) In order to evaluate the merits and the risks inherent
in acquiring and holding the Units, AERC has made available to each
Existing General Partner, during the course of this transaction and
prior to the investment in the Units, the opportunity to ask questions
of, and receive answers from, AERC and those persons acting on AERC's
behalf, concerning the terms and conditions of this transaction. Such
Existing General Partner has had all such questions answered to its
satisfaction and has been supplied all additional information deemed
necessary by such Existing General Partner to verify the accuracy of
the information provided to it by AERC to the extent that AERC
possesses such information or can acquire it without unreasonable
effort or expense. Such Existing General Partner has had a full and
complete opportunity to examine all relevant documents relating to the
Partnership and such Existing General Partner's interest and
prospective interest therein relating to AERC that have been made
available by AERC and is familiar with the contents thereof and, in
particular, with all risk factors associated with any investment in the
Partnership. Each Existing General Partner has been provided the
opportunity, to such Existing General Partner's satisfaction, to ask
questions and receive answers concerning the terms and conditions of
this transaction, has had all such questions answered to such Existing
General Partner's satisfaction and has been supplied all additional
information deemed necessary by such Existing General Partner to verify
the accuracy of the information supplied to such Existing General
Partner; each Existing General Partner is familiar with the condition
of the Partnership, and such Existing General Partner has had access to
such information as such Existing General Partner deems material in
making the investment decision called for; and each Existing General
Partner believes that the Units are securities of the kind such
Existing General Partner wishes to acquire and hold for investment; and
(viii) The Existing General Partners who are Parties jointly
and severally represent and warrant that the Partnership is a duly
organized and validly existing Florida general partnership; that the
Existing General Partners are all the partners thereof; that the
Partnership presently owns no property and conducts no operations
other than those which relate directly or indirectly to one or more
of the Development Partnerships; and that all requisite partnership
action has been taken by the Existing General Partners and is
presently in effect to authorize, for and on behalf of the
Partnership, the transactions contemplated hereby.
9.04 MIG REPRESENTATIONS AND WARRANTIES. MIG represents and warrants as of the
date hereof that it owns its general partner's interests in the Development
Partnerships free and clear of all pledges, liens, security interests,
encumbrances and restrictions of any nature whatsoever (except for those set
out in the respective limited partnership agreements of the Development
Partnerships); that it is a duly organized and validly existing Florida
corporation in good standing; that all of its shareholders and their interests
therein are identified on EXHIBIT E attached hereto and made a part hereof;
all of its directors are identified on EXHIBIT E; that a true and complete
copy of its articles of incorporation or charter and its bylaws are attached
hereto as EXHIBIT F; and, that all requisite action of shareholders and
directors necessary to authorize the transactions contemplated hereby has been
taken and is presently in effect to authorize, for and on behalf of MIG, the
transactions contemplated hereby.
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All of the representations and warranties set forth in this Paragraph
9 shall be deemed renewed by the Parties on the Initial Closing Date and, with
respect to the Pines Partnership only, on the Second Closing Date (except with
respect to those representations and warranties that have changed by virtue of
the Initial Closing or the giving of a Hollywood No-Close Notice) as if made
at such time and shall survive the closings of the transactions contemplated
by this Agreement for a period equal to the applicable statute of limitations.
NO PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES HEREUNDER OR CONCERNING THE
SUBJECT MATTER HEREOF OTHER THAN THE EXPRESS REPRESENTATIONS AND WARRANTIES
SET OUT IN THIS ARTICLE 9; ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS
OR IMPLIED, ARE EXCLUDED, NEGATED AND DISCLAIMED.
10. COSTS AND EXPENSES
10.01 Each Party shall pay its own attorneys' and accountants' fees and all of
its other costs and expenses except to the extent expressly provided otherwise
herein.
10.02 To the extent that, under the express provisions of the respective
General Partner Interest Purchase Agreements, certain specific closing costs
thereunder are to be paid by the Partnership out of the Initial Contribution
of AERC and are to be charged against the Limited Partners' capital accounts
in a particular Development Partnership, that shall be done and the
appropriate Existing Limited Partners' and Existing General Partners'
respective capital account and number of Units in the Partnership shall be
proportionately reduced by an amount equal to such partner's said pro rata
share thereof.
11. CONDITIONS TO INITIAL CLOSING
11.01 AERC'S CONDITIONS TO INITIAL CLOSING. AERC's obligations to proceed with
the Initial Closing are conditional upon the satisfaction or occurrence of the
following:
(i) The Escrow Agent has received the closing documents to be
delivered to AERC as described in the appropriate subparagraphs of
Paragraph 5 of this Agreement;
(ii) The Existing Limited Partners and the Existing General
Partners shall be in compliance in all material respects with their
respective obligations under this Agreement and the representations or
warranties of the Existing Limited Partners and the Existing General
Partners shall be true and accurate in all material respects when made
and as of the Initial Closing Date;
(iii) The transactions contemplated by the Merger Agreement
shall have closed substantially simultaneously with (or, with respect
to the so-called MRT transactions, prior to) the Initial Closing;
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(iv) The transactions contemplated by the General Partner
Interest Purchase Agreements relating to Kirkman and (if no Hollywood
No-Close Notice was timely given) Hollywood shall have closed
simultaneously with the Initial Closing; and
(v) Wright shall have acquired either (A) the Gutin Interests
or (B) Gutin's written consent described in the last sentence of
Section 7.03 hereinabove.
11.02 EXISTING LIMITED PARTNERS' AND EXISTING GENERAL PARTNERS' CONDITIONS TO
INITIAL CLOSING. The Existing Limited Partners' and Existing General Partners'
respective obligations to proceed to the Initial Closing are conditional upon
the satisfaction or occurrence of the following:
(i) The Escrow Agent has received AERC's Initial Contribution
and the other documents and deliveries described in Paragraph 5.01 of
this Agreement;
(ii) AERC shall be in compliance in all material respects with
its obligations under this Agreement and the representations or
warranties of AERC shall be true and accurate in all material respects
when made and as of the Initial Closing Date;
(iii) The transactions contemplated by the Merger Agreement
shall have closed substantially simultaneously with (or, with respect
to the so-called MRT transactions, prior to) the Initial Closing; and
(iv) The transactions contemplated by the General Partner
Interest Purchase Agreements relating to Kirkman and (if no Hollywood
No-Close Notice was timely given) Hollywood shall have closed
simultaneously with the Initial Closing.
11.03 RIGHTS UPON A FAILURE OF A CONDITION. If a condition precedent to any
Party's obligation to proceed with the Initial Closing (other than a material
default by another Party which is governed by and subject to the provisions of
Section 17 hereinbelow) is not satisfied at the time of the proposed Initial
Closing, the Party whose performance is conditioned on such eventuality shall
have the right to (i) waive such condition (and all rights and claims relating
thereto) and proceed with the Initial Closing or (ii) terminate this Agreement,
in which case, except as otherwise provided herein, all Parties (other than a
Party whose breach of any of its obligations hereunder was the cause of such
termination) shall be released of all obligations hereunder and the Escrow Agent
shall return the Earnest Money Deposit to AERC and all other documents
previously deposited into escrow shall be delivered to the Party who deposited
the same.
12. INITIAL CLOSING
Subject to the provisions of Paragraph 11, the closing of the
transaction contemplated by Paragraph 2 hereof (the "INITIAL CLOSING") shall
be held at the offices of Baker & Hostetler LLP in Cleveland, Ohio, on the
date (the "INITIAL CLOSING DATE") designated by AERC in a written notice given
at least 5 business days in advance to the Existing Limited Partners and
Existing General
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Partners, which date shall not be later than the first to occur of June 30,
1998 and the closing of the Merger and shall be simultaneous with the closing
of the transactions contemplated by the General Partner Interest Purchase
Agreements relating to Kirkman and (if no Hollywood No-Close is timely given)
Hollywood.
13. CONDITIONS TO SECOND CLOSING
13.01 AERC'S CONDITIONS TO SECOND CLOSING. AERC's obligations to proceed to
the Second Closing are conditional upon the satisfaction or occurrence of the
following:
(i) The Escrow Agent has received the closing documents to be
delivered to AERC described in the appropriate subparagraphs of
Paragraph 6 of this Agreement;
(ii) The Existing H/P Limited Partners and the Existing
General Partners shall be in compliance in all material respects with
their respective obligations under this Agreement (to the extent then
still applicable) and their respective representations and warranties
(to the extent then still applicable) shall have been true and correct
when made and shall (to the extent they relate to Pines or the Second
Closing) be true and correct as of the Second Closing Date;
(iii) Neither the Existing H/P Limited Partners nor the
Existing General Partners shall be in default in any material respect
in the performance of any of their respective obligations as limited
partners in the Partnership as set forth in the Restated Partnership
Agreement;
(iv) MIG shall not be in default of any of its
post-Initial-Closing obligations arising under the General Partner
Interest Purchase Agreements;
(v) The Initial Closing shall have occurred; and
(vi) The transactions contemplated by the General Partner
Interest Purchase Agreement relating to Pines shall have closed
simultaneously with the Second Closing.
13.02 EXISTING H/P LIMITED PARTNERS' CONDITIONS TO THE SECOND CLOSING. The
Existing H/P Limited Partners' obligations to proceed to the Second Closing are
conditional upon the satisfaction or occurrence of the following:
(i) The Escrow Agent has received AERC's Second Contribution
and the other documents and deliveries described in Paragraph 6.02 of
this Agreement;
(ii) AERC shall be in compliance in all material respects with
its obligations under this Agreement (to the extent then still
applicable) and the representations or warranties of AERC (to the
extent then still applicable) shall have been, and shall continue
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<PAGE> 41
to be, true and accurate in all material respects when made and as of
the Second Closing Date;
(iii) AERC shall not be in default in the performance of (A)
any of its obligations set forth in the Restated Partnership Agreement
or (B) any of its post-Initial-Closing obligations arising under the
General Partner Interest Purchase Agreement relating to Pines;
(iv) The Initial Closing shall have occurred; and
(v) The transactions contemplated by the General Partner
Interest Purchase Agreement relating to Pines shall close
simultaneously with the Second Closing.
13.03 RIGHTS UPON A FAILURE OF A CONDITION. If a condition precedent to any
Party's obligation to proceed with the Second Closing (other than a material
default by another Party which is governed by and subject to the provisions of
Section 17 hereinbelow) is not satisfied at the time of the proposed Second
Closing, the Party whose performance is conditioned on such eventuality shall
have the right to (i) waive such condition (and all rights and claims relating
thereto) and proceed with the Second Closing or (ii) terminate this Agreement,
in which case, except as otherwise provided herein, (A) all Parties (other
than a Party whose breach of any of its obligations hereunder was the cause of
such termination) shall be released of all obligations hereunder, for, on
account of or relating to the Second Closing and the representations,
warranties and covenants directly or indirectly relating thereto or to the
Pines Partnership and (B) the Escrow Agent shall return the Earnest Money
Deposit to AERC and all other documents previously deposited into escrow shall
be delivered to the Party who deposited the same.
14. SECOND CLOSING
Subject to the satisfaction of the conditions set forth in Paragraph
13 hereof, the closing of the transaction contemplated by Paragraph 3 hereof
(the "SECOND CLOSING") shall be held at the offices of Baker & Hostetler LLP
in Cleveland, Ohio, on the date (the "SECOND CLOSING DATE") designated by AERC
in a written notice given at least 5 business days in advance to MIG and to
the Existing H/P Limited Partners, which date shall be simultaneous with the
closing of the transactions contemplated by (and the date specified for the
closing as set out in) the General Partner Interest Purchase Agreement
relating to Pines.
15. ASSIGNMENT
15.01 AERC may freely assign all of its right, title and interest in and to
this Agreement to a wholly owned subsidiary of, or other entity controlled by,
AERC, but not to any other person or entity without the prior written consent
of at least three of the Existing General Partners and all of the Existing H/P
Limited Partners, which consents may be withheld. With respect to any
assignment by AERC (whether to a wholly owned subsidiary of, or other entity
controlled by, AERC or any other person): such assignment shall not relieve
AERC of its obligations under this Agreement; and,
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<PAGE> 42
AERC will deliver to all of the other Parties a copy of all documents of
transfer or assignment promptly after the assignment occurs.
15.02 The Existing Limited Partners and the Existing General Partners may not
assign their rights under this Agreement to any person other than an Existing
Limited Partner or an Existing General Partner without the prior written consent
of AERC, which consent may be withheld. With respect to any assignment by an
Existing Limited Partner or an Existing General Partner (whether or not the
consent of AERC is required therefor): such assignment shall not relieve the
assigning Party of its obligations under this Agreement; and, the assignor will
deliver to AERC a copy of all documents of transfer or assignment promptly after
the assignment occurs.
15.03 Notwithstanding anything to the contrary in this Agreement or in any of
the General Partner Interest Purchase Agreements (and the provisions of this
Paragraph 15.03 shall govern and control over any inconsistent provisions
herein or therein): (i) It is anticipated that, at or before the Initial
Closing, by a written agreement signed by Gutin and accepted in writing by
Wright, Gutin will transfer and assign to Wright or Wright's designee all of
her right, title and interests in, to, under and concerning all of the
Development Partnerships; (ii) if Wright accepts such transfer and assignment
and assumes in writing (such writing being referred to herein as a "TRANSFER
AND ASSUMPTION AGREEMENT") all of Gutin's obligations and liabilities with
respect to the interests thereby transferred and assigned, then (A)
simultaneously therewith, and automatically and without any further act, deed
or notice of any kind, Wright (or his designee, as the case may be) shall have
and succeed to all of what formerly had been Gutin's right, title and
interests therein, thereto, thereunder and concerning therewith and Gutin
shall be completely, unconditionally and forever released and discharged from,
and relieved of, any and all obligations and liabilities thereunder or with
respect thereto (except for any obligations or liabilities to Wright as may be
provided for in such Transfer and Assumption Agreement) and (B) Wright will be
obligated under this Agreement to cause the interests in the Development
Partnerships it had so acquired from Gutin to be transferred and assigned to
AERC on and subject to the terms, provisions and conditions of this Agreement;
and (iii) if Wright or Gutin delivers to AERC or to the Partnership a copy of
a Transfer and Assumption Agreement, not later than two business days after
its receipt thereof both AERC and the Partnership will execute and deliver to
Gutin a written instrument reasonably satisfactory to Gutin completely,
unconditionally and forever releasing and discharging Gutin from, and
relieving Gutin of, any and all obligations and liabilities of any and every
kind whatsoever.
16. INDEMNIFICATION.
16.01 INDEMNIFICATION OF AERC BY EXISTING LIMITED PARTNERS. Each Existing
Limited Partner who is a Party severally agrees to indemnify and hold AERC
harmless from and against any and all loss, cost, liability, damage or expense
incurred by AERC arising out of any material breach of any representation and
warranty made by such Existing Limited Partner hereunder (individually, an
"EXISTING LIMITED PARTNER'S INDEMNIFICATION OBLIGATION" and collectively, the
"EXISTING LIMITED PARTNERS' INDEMNIFICATION OBLIGATIONS").
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<PAGE> 43
16.02 INDEMNIFICATION OF AERC BY EXISTING GENERAL PARTNERS. Each Existing
General Partner who is a Party severally agrees to indemnify and hold AERC
harmless from and against any and all loss, cost, liability, damage or expense
incurred by AERC arising out of any material breach of any representation or
warranty made by such Existing General Partner hereunder (individually, an
"EXISTING GENERAL PARTNER'S INDEMNIFICATION OBLIGATION" and collectively, the
"EXISTING GENERAL PARTNERS' INDEMNIFICATION OBLIGATIONS").
16.03 INDEMNIFICATION OF EXISTING GENERAL PARTNERS AND EXISTING LIMITED
PARTNERS BY AERC. AERC agrees to indemnify and hold each and all of the
Existing General Partners and the Existing Limited Partners harmless from and
against any and all loss, cost, damage, liability or expense incurred by any
or all of them arising out of any material breach of any representation or
warranty made by AERC hereunder (collectively, the "AERC INDEMNIFICATION
OBLIGATIONS").
16.04 CLAIMS FOR INDEMNIFICATION. The following procedures shall apply if a
claimed breach or other occurrence or matter giving rise to a claim of
indemnification is given by the party seeking indemnification (the "INDEMNIFIED
PARTY") to the party from whom indemnification is sought (the "INDEMNIFYING
PARTY"):
(i) Procedure for Indemnification with Respect to Third Party
Claims. If the Indemnified Party seeks indemnification under this
Article 16 with respect to an Existing Limited Partner Indemnification
Obligation, an Existing General Partner Indemnification Obligation, or
an AERC Indemnification Obligation, as the case may be (collectively,
an "INDEMNIFIABLE CLAIM"), resulting from the assertion of liability by
any third party (i.e., a person not a Party), it shall give notice to
the Indemnifying Party after it becomes aware of any such Indemnifiable
Claim (such notice to be given in any event within the shorter of 15
days or the number of days necessary to respond to the Indemnifiable
Claim), which notice shall set forth such material information with
respect to such Indemnifiable Claim as is then reasonably available to
the Indemnified Party. If any such liability is asserted against the
Indemnified Party and the Indemnified Party notifies the Indemnifying
Party of such liability, the Indemnifying Party shall be entitled, if
it so elects by written notice delivered to the Indemnified Party
within 10 days after receiving the Indemnified Party's notice, to
assume the defense of such asserted liability with counsel selected by
the Indemnifying Party and reasonably satisfactory to the Indemnified
Party. Notwithstanding the foregoing: (a) the Indemnified Party shall
have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be payable by the Indemnified Party;
(b) the Indemnified Party shall not have any obligation to give any
notice of any assertion of liability by a third party unless such
assertion is in writing; and (c) the rights of the Indemnified Party to
be indemnified in respect of Indemnifiable Claims resulting from the
assertion of liability by third parties shall not be adversely affected
by its failure to give notice pursuant to the foregoing provisions
unless, and, if so, only to the extent that, the Indemnifying Party is
materially prejudiced by such failure. With respect to any assertion of
liability by a third party that results in an Indemnifiable Claim, the
Parties shall make available to each other all relevant information in
their possession which is material to any
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<PAGE> 44
such assertion. In the event that the Indemnifying Party fails to
assume the defense of the Indemnified Party against any such
Indemnifiable Claim within 15 days after receipt of the Indemnified
Party's notice of such Indemnifiable Claim, the Indemnified Party
shall have the right to defend, compromise or settle such
Indemnifiable Claim on behalf, for the account, and at the risk of
the Indemnifying Party. Notwithstanding anything in this Paragraph
16.04 to the contrary: (i) if there is a reasonable likelihood that
an Indemnifiable Claim may materially and adversely damage the
Indemnified Party, other than as a result of money damages or other
money payments (each, a "NON-MONETARY INDEMNIFIABLE CLAIM"), then the
Indemnified Party shall provide written notice to the Indemnifying
Party to such effect explaining the reasons therefor and, if the
Indemnifying Party consents thereto (which consent shall not be
unreasonably withhold or delayed), the Indemnifying Party shall have
the right, at the cost and expense of the Indemnifying Party, to
defend such Indemnifiable Claim; and (ii) neither the Indemnifying
Party nor the Indemnified Party shall, without the other's prior
written consent (which consent shall not be unreasonably withheld or
delayed), settle or compromise (A) any Indemnifiable Claim or consent
to entry of any judgment in respect of any Indemnifiable Claim, in
each case involving money damages or other money payments, unless
such settlement, compromise or consent includes as an unconditional
term the giving by the claimant or the plaintiff to the Indemnified
Party a release from all liability in respect of such Indemnifiable
Claim or (B) any Non-monetary Indemnifiable Claim.
(ii) Procedure For Indemnification with Respect to Non-Third
Party Claims. If the Indemnified Party asserts the existence of an
Indemnifiable Claim giving rise to damages for a non-third-party
Indemnifiable Claim, it shall give written notice to the Indemnifying
Party specifying the nature and amount of the Indemnifiable Claim
asserted. If the Indemnifying Party, within 15 business days after
receipt of such notice by the Indemnified Party, has not given
written notice to the Indemnified Party announcing its intent to
contest such assertion by the Indemnified Party, such assertion shall
be deemed accepted and the amount of Indemnifiable Claim shall be
deemed a valid Indemnifiable Claim. In the event, however, that the
Indemnifying Party contests the assertion of an Indemnifiable Claim
by giving such written notice to the Indemnified Party within such 15
business day period, then if the parties, acting in good faith,
cannot reach agreement with respect to such Indemnifiable Claim
within 20 days after such notice, the contested assertion of the
claim shall be resolved by litigation as provided in Paragraphs 17.03
and 19.10 hereof and any other provision of this Agreement relating
to litigation or disputes arising hereunder.
16.05 LIMITATIONS ON INDEMNIFICATION. Rights to indemnification under this
Agreement are subject to the following limitations:
(i) Anything in this Agreement or in any of the General
Partner Interest Purchase Agreements to the contrary notwithstanding
(and the provisions of this sentence shall govern and control over any
inconsistent provision in this Agreement or any of those other
agreements): (A) No Existing General Partner or Existing Limited
Partner shall be liable to pay Damages under or in respect of this
Agreement and all of the General Partner Interest Purchase Agreements
taken together, collectively, in an amount greater than the total value
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<PAGE> 45
(for any such Party, its or his "INITIAL UNIT VALUE"), as of the date
of such Party's first receipt thereof, of all Units delivered to such
Party hereunder or under the General Partner Interest Purchase
Agreements; (B) any Party (other than AERC) may, in his or its
discretion, pay and satisfy all claims against him or it for Damages
hereunder and under the General Partner Interest Purchase Agreements
either in cash or (subject to the provisions of Paragraph 16.07
hereinbelow) by delivering to AERC Units (rather than cash) which are
free and clear of all liens, security interests and encumbrances,
each such Unit to be valued for such purpose at its initial Value
hereunder on the date (i.e., the Initial Closing Date or the Second
Closing Date, as the case may be) it was first acquired by such
Party; and (C) if AERC has actual knowledge of a breach of this
Agreement, or of the inaccuracy of any representation or warranty
made herein, which entitles it to terminate this Agreement or to
decline to proceed to any closing hereunder, and AERC elects not to
exercise any such right of termination (or right to decline to close)
and waives all (but not less than all) of such breaches or closing
conditions solely for the purpose of effecting the Initial Closing or
the Second Closing, no other Party shall be liable to AERC (or its
designee) for Damages relating to or based on such breach or
inaccuracy.
(ii) The obligation of indemnity set forth in this Agreement
shall terminate, with respect to each representation and warranty
hereunder, on the day such representation or warranty ceases to survive
as provided in the last grammatical paragraph of Article 9 of this
Agreement.
16.06 NO POST-CLOSING CLAIMS. Except for the rights of indemnification
expressly set out in this Article 16, no Party shall have, or may assert or
enforce, against any other Party any claim, right or remedy under this
Agreement (i) after the Initial Closing (with respect to the partnership
interests in Hollywood or Kirkman or the Hollywood or Kirkman Development
Projects) or (ii) after the Second Closing (with respect to the partnership
interests in Pines or the Pines Development Project).
16.07 SATISFACTION OF CERTAIN INDEMNIFICATION OBLIGATIONS. Each Existing
Limited Partner or Existing General Partner who is an Indemnifying Party shall
have the option of satisfying any indemnification payment obligation owed to
AERC hereunder either (i) by satisfying such obligation in cash (such cash
payment to be delivered by certified check or wire transfer in immediately
available funds) or (ii) by delivering and assigning to AERC all of such
Indemnifying Party's respective right, title and interest in and to such of
the Indemnifying Party's Units as have a value (set for these purposes as such
Units' value on the Closing Date) equal to the amount such Indemnifying Party
then owes to AERC with respect to its Indemnification Obligation. (The option
to pay with Units rather than cash, described in clause (ii) of the preceding
sentence, is referred to herein as the "UNIT PAYMENT OPTION".) The Unit
Payment Option may be utilized only with respect to Units owned by an
Indemnifying Party that can be assigned and delivered to AERC free and clear
of all liens, pledges, restrictions and encumbrances whatsoever. Each such
Indemnifying Party acknowledges and agrees that AERC shall have no obligation
to accept the assignment and delivery of any Units from any Indemnifying Party
seeking to utilize the Unit Payment Option unless and until that Indemnifying
Party delivers to Buyer (A) a certificate
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<PAGE> 46
representing and warranting that such Indemnifying Party owns those of his
respective Units being tendered free and clear of all liens, pledges,
restrictions and encumbrances whatsoever and (B) Uniform Commercial Code
searches of all applicable jurisdictions reasonably requested by AERC that show
no encumbrances on such Indemnifying Party's Units being tendered.
17. DEFAULT/REMEDIES
17.01 REMEDIES UPON DEFAULT OF AERC. If AERC is in default under this
Agreement and neither the Existing Limited Partners nor the Existing General
Partners are in material default, the sole and exclusive remedy of the
Existing Limited Partners and the Existing General Partners shall be to
terminate this Agreement by notice given to AERC and in such event AERC shall
be liable to the Existing Limited Partners for liquidated damages in the
amount of the Earnest Money Deposit. The Escrow Agreement shall provide that
the entire Earnest Money Deposit shall be delivered to the Existing Limited
Partners in such event. The Parties recognize and agree that such remedy
provides for liquidated damages in a reasonable amount in the context of the
transactions in which the measurement of damages is not feasible or
convenient.
17.02 [INTENTIONALLY OMITTED.]
17.03 REMEDIES UPON DEFAULT OF EXISTING LIMITED PARTNERS AND EXISTING GENERAL
PARTNERS. If all or any of the Existing Limited Partners or Existing General
Partners are in default of their obligations under this Agreement and AERC is
not in material default, then AERC shall have the right to (i) terminate this
Agreement and receive the Earnest Money Deposit in which case this Agreement
shall be of no further force and effect and, except as otherwise expressly set
forth herein, none of the Parties shall have any further liability to the
other, (ii) bring an action to cause the specific performance of this
Agreement or (iii) pursue any of its other rights and remedies available to it
at law or in equity, including the right to seek monetary damages, provided,
that AERC's right to monetary damages shall be limited to an amount not to
exceed, in total, an amount equal to the Earnest Money Deposit deposited by
AERC.
17.04 PAYMENT OF LITIGATION EXPENSES. If any dispute or litigation arises
under this Agreement or concerning the subject matter hereof, the reasonable
costs and expenses thereof (including, without limitation, court costs and
reasonable attorneys' fees and expenses for all appellate and trial court
proceedings) shall be paid and reimbursed to the substantially prevailing
party by the non-prevailing party whether or not a final judgment on the
merits of such dispute is ever entered in such litigation, with the court to
determine who is the substantially prevailing party for these purposes (which
party need not be awarded, or otherwise receive, all of the relief it had
requested in order to be deemed "substantially prevailing" for purposes
hereof). The limitation set out in clause A of subparagraph 16.05(i) above on
the amount of Damages payable by any Existing General Partner or any Existing
Limited Partner does not apply to the payment and reimbursement obligation set
out in this Paragraph 17.03 except with respect to Elwood, Kalik and Wayman
(as to whom that limitation will apply hereto).
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<PAGE> 47
17.05 SUIT FOR SPECIFIC PERFORMANCE. If any Party brings a suit against any
other Party for specific performance of this Agreement, the Party against whom
such suit is brought will not raise or assert as a defense that the remedy of
specific performance is unavailable or inappropriate because this is a contract
for the sale or disposition of personal property rather than interests in real
property (but such Party shall be free to assert any and all defenses relating
to the unavailability or inappropriateness of specific performance that would
have been available to it if this were a contract for the sale of interests in
real property).
18. NOTICES.
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 a nationally recognized overnight courier
service, by facsimile, personally or served by certified 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:
If to AERC:
ASSOCIATED ESTATES REALTY CORPORATION
Attn: Mr. Jeffrey I. Friedman, President
5025 Swetland Court
Richmond Heights, Ohio 44143-1467
Phone (216) 473-8700
Fax (216) 289-6400
With a copy to:
BAKER & HOSTETLER LLP
Attn: Albert T. Adams, Esq.
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3485
Phone (216) 861-7484
Fax (216) 696-0740
If to the Existing Limited Partners or the Existing General Partners:
MIG REALTY ADVISORS, INC.
Attn: Larry Wright, President
250 Australian Avenue, South - Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
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<PAGE> 48
With copies to:
JAMES ELWOOD AND LANNY KALIK
250 Australian Avenue, South - Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
and
MAYER, BROWN & PLATT
Attn: Stuart P. Pergament, Esq.
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-1882
Phone (202) 778-0600
Fax (202) 861-0473
If to Escrow Agent to:
__________________________
__________________________
__________________________
19. MISCELLANEOUS.
19.01 ASSIGNMENT BY DEVELOPMENT PARTNERSHIPS OF CERTAIN ASSETS. It is
understood, acknowledged and agreed that before the Initial Closing or the
Second Closing the Development Partnerships, respectively, will transfer and
assign to one or more of the Existing Limited Partners (or entities owned or
controlled by them) certain items described in the respective General Partner
Interest Purchase Agreements, and that the consideration deliverable at the
Closings by AERC to the Existing General Partners and the Existing Limited
Partners, respectively, hereunder or under the General Partner Interest
Purchase Agreements will not be reduced, diminished or affected in any way on
account thereof or in respect thereof.
19.02 SUCCESSORS. The rights and obligations of the Parties under this
Agreement shall inure to the benefit of and be binding upon the Parties and
all persons who succeed to their respective rights and obligations.
19.03 MODIFICATIONS/WAIVERS. This Agreement cannot be changed, and no
provision of this Agreement, or any right or remedy of any Party, can be
waived, orally. Changes and waivers can only be made in writing and the change
or waiver must be signed by the Party against whom the change or waiver is
sought to be enforced. Any waiver of any provision of this Agreement, or any
right or remedy, given on any one or more occasion shall not be deemed a
waiver with respect to any other occasion.
19.04 [INTENTIONALLY OMITTED.]
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19.05 ENTIRE AGREEMENT. This Agreement is signed by the Parties as a final
expression of all of the terms, covenants and conditions of their agreement with
respect to the subject matter hereof and as a complete and exclusive statement
of its terms, covenants and conditions.
19.06 COUNTERPARTS. This Agreement may be signed in one or more counterparts
or duplicate signature pages with the same force and effect as if all required
signatures were contained in a single original instrument.
19.07 CAPTIONS. The captions contained in this Agreement were inserted for
the convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the Parties.
19.08 BACKGROUND/EXHIBITS INCORPORATED. The exhibits attached to this
Agreement (other than Exhibits C and D) are hereby incorporated by reference
in their entirety with the same force and effect as if they were set forth at
length in this Agreement. Section One of this Agreement entitled "Background"
is hereby incorporated by reference into the body of this Agreement and is
and shall be deemed to be a substantive portion of this Agreement.
19.09 GOVERNING LAW. The laws of the State of Florida shall govern and
control the construction, interpretation and enforcement of this Agreement.
19.10 EXCLUSIVE JURISDICTION AND VENUE. Any litigation or other formal
dispute resolution process under, concerning, arising out of or relating to
this Agreement or the performance of any duty or obligation hereunder shall
be brought, instituted, maintained and conducted solely and exclusively in
the Florida State courts or Federal courts sitting in Palm Beach County,
Florida or in any other Florida county in which is situated any of the
multi-family apartment projects owned by any of the Development Partnerships
(collectively, "FLORIDA COURTS"). Each Party irrevocably consents to
jurisdiction over its person and property in and by, and venue in, such
courts for purposes of adjudicating any and all disputes ("DISPUTES") arising
under, concerning, or relating in any way to this Agreement or any subject
matter hereof or matter addressed or dealt with herein. Each Party
irrevocably agrees that all Disputes will be adjudicated and resolved solely
and exclusively in and by Florida Courts, and further agrees that it will not
file, commence or prosecute any claim for or relating to any Dispute in any
other court or forum.
19.11 SEVERABILITY. If one or more provisions of this Agreement or the
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions or any
other application thereof shall in no way be affected or impaired.
19.12 DATE FOR PERFORMANCE. 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 day
which is not a Saturday, Sunday or federal holiday.
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19.13 FURTHER ACTION. The Parties shall at any time, and from time to time on
and after the Closing Date, upon the request of the other Party, do, execute,
acknowledge and deliver all such further acts, deeds, assignments and other
instruments as may be reasonably required for the consummation of this
transaction.
19.14 PRONOUNS. References to "his", "her", "its", "he", "she", and "it" in
this Agreement shall be gender neutral and not limit the class of persons or
entities referred to herein.
45
<PAGE> 51
IN WITNESS WHEREOF, the Parties have signed this Agreement as
of the date set forth on the first page of this Agreement.
AERC
ASSOCIATED ESTATES REALTY CORPORATION,
an Ohio corporation
By:_________________________________
Jeffrey I. Friedman, its President
EXISTING LIMITED PARTNERS
- -------------------------------- --------------------------------------
Ed Wayman Louis E. Vogt
- -------------------------------- --------------------------------------
Larry Wright William T. Hughes, Jr.
- -------------------------------- --------------------------------------
James Cote Gregory L. Golz
________________________________ PF Funds, Inc.
James Elwood
________________________________ By:___________________________________
Lanny Kalik Name:
Title:
MIG
MIG Development Company, a
Florida corporation
By:_____________________________
Its:________________________
<PAGE> 52
EXISTING GENERAL PARTNERS
- --------------------------------
Louis E. Vogt
- --------------------------------
William T. Hughes, Jr.
- --------------------------------
Gregory L. Golz
- --------------------------------
James Cote
<PAGE> 53
EXHIBITS
EXHIBIT A: AMENDED AND RESTATED PARTNERSHIP AGREEMENT
EXHIBIT B: SCHEDULE OF OWNERSHIP INTERESTS IN DEVELOPMENT
PARTNERSHIPS
EXHIBIT C: ORIGINAL HP ADVISORS RESTATED PARTNERSHIP
AGREEMENT
EXHIBIT D: [INTENTIONALLY OMITTED.]
EXHIBIT E: MIG PRINCIPALS AND INTERESTS
EXHIBIT F: MIG CHARTER AND BYLAWS
EXHIBIT G: [INTENTIONALLY OMITTED.]
EXHIBIT H: GENERAL PARTNER INTEREST PURCHASE AGREEMENT FOR
PINES
EXHIBIT H-1 GENERAL PARTNER INTEREST PURCHASE AGREEMENT FOR
KIRKMAN
EXHIBIT H-2 GENERAL PARTNER INTEREST PURCHASE AGREEMENT FOR
HOLLYWOOD
EXHIBIT I FORMULA FOR DETERMINATION OF CAPITAL ACCOUNT
BALANCE AND UNIT VALUATIONS FOR HOLLYWOOD
PARTNERSHIP
EXHIBIT I-1 FORMULA FOR DETERMINATION OF CAPITAL ACCOUNT
BALANCE AND UNIT VALUATIONS FOR KIRKMAN
PARTNERSHIP
EXHIBIT I-2 FORMULA FOR DETERMINATION OF AERC UNITS
RELATING TO AERC'S INITIAL CONTRIBUTION
EXHIBIT I-3 [INTENTIONALLY OMITTED.]
EXHIBIT J FORMULA FOR DETERMINATION OF CAPITAL ACCOUNT
BALANCE AND UNIT VALUATIONS FOR PINES
PARTNERSHIP
<PAGE> 54
EXHIBIT J-1 FORMULA FOR DETERMINATION OF AERC UNITS
RELATING TO AERC'S SECOND CONTRIBUTION
EXHIBIT J-2 [INTENTIONALLY OMITTED]
EXHIBIT K-1 WAYMAN'S ASSIGNMENT AGREEMENTS
EXHIBIT K-2
EXHIBIT K-3
EXHIBIT L-1 WRIGHT'S ASSIGNMENT AGREEMENTS
EXHIBIT L-2
EXHIBIT L-3
EXHIBIT M-1 COTE'S ASSIGNMENT AGREEMENTS
EXHIBIT M-2
EXHIBIT M-3
EXHIBIT N-1 ELWOOD'S ASSIGNMENT AGREEMENTS
EXHIBIT N-2
EXHIBIT N-3
EXHIBIT O-1 KALIK'S ASSIGNMENT AGREEMENTS
EXHIBIT O-2
EXHIBIT O-3
EXHIBIT P VOGT'S ASSIGNMENT AGREEMENT
EXHIBIT Q ALLOCATION OF E UNITS DELIVERED AT THE INITIAL
CLOSING
EXHIBIT R HUGHES' ASSIGNMENT AGREEMENT
EXHIBIT RR GOLZ'S ASSIGNMENT AGREEMENT
EXHIBIT S PF FUNDS' ASSIGNMENT AGREEMENT
EXHIBIT T SCHEDULE OF RECLASSIFICATION OF UNITS PURSUANT TO
SECTION 2.19
<PAGE> 55
Contribution and Partnership
Purchase Agreement EXHIBIT A
---------
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
<PAGE> 56
Contribution and Partnership
Purchase Agreement EXHIBIT B
---------
<TABLE>
<CAPTION>
SCHEDULE OF OWNERSHIP INTERESTS IN
DEVELOPMENT PARTNERSHIPS
- --------------------------------------------------------------------------------------------------------------
% Ownership % Ownership % Ownership
Name of Partner Interest in Hollywood Interest in Kirkman Interest in Pines *
--------------- --------------------- ------------------- -------------------
<S> <C> <C> <C>
Mig Development Co. 1.00000% 1.00000% 1.00000%
Elwood 26.78205% 24.75500% 26.78205%
Kalik 26.78205% 24.75500% 26.78205%
Wayman 19.53744% 16.95920% 19.53744%
Cote 6.81538% 5.14250% 6.81538%
Wright 19.08308% 14.39900% 19.08308%
Vogt 2.53465%
Gutin 2.53465%
Hughes 0.21000%
Golz 0.21000%
PF Funds, Inc. 7.50000%
Total 100.00000% 100.00000% 100.00000%
- ----------------------------------------------------------------------------------------------------------------
<FN>
______________________
* Pines percentages may be adjusted as between the persons named here so
as to effectuate the provisions of Paragraph 6.2(ii) of the Limited
Partnership Agreement of MIG/Pines Development, Ltd.
</TABLE>
<PAGE> 57
Contribution and Partnership
Purchase Agreement EXHIBIT C
---------
ORIGINAL HP ADVISORS RESTATED PARTNERSHIP AGREEMENT
<PAGE> 58
Contribution and Partnership
Purchase Agreement EXHIBIT D
---------
[INTENTIONALLY OMITTED.]
<PAGE> 59
Contribution and Partnership
Purchase Agreement EXHIBIT E
---------
MIG PRINCIPALS AND INTERESTS
<PAGE> 60
Contribution and Partnership
Purchase Agreement EXHIBIT F
----------
MIG CHARTER AND BYLAWS
<PAGE> 61
Contribution and Partnership
Purchase Agreement EXHIBIT G
----------
[INTENTIONALLY OMITTED.]
<PAGE> 62
Contribution and Partnership
Purchase Agreement EXHIBIT H
---------
GENERAL PARTNER INTEREST PURCHASE
AGREEMENT FOR PINES
<PAGE> 63
EXHIBIT H-1
PARTNERSHIP INTEREST PURCHASE AGREEMENT
PINES
MIG DEVELOPMENT COMPANY
AND
ASSOCIATED ESTATES REALTY CORPORATION
<PAGE> 64
TABLE OF CONTENTS
PAGE
DEFINITIONS................................................................. ii
1. PURCHASE AND SALE OF PARTNERSHIP INTERESTS......................... 2
2. CONSIDERATION AND PAYMENT.......................................... 2
3. REPRESENTATIONS AND WARRANTIES OF SELLER........................... 2
4. REPRESENTATIONS AND WARRANTIES OF BUYER............................ 10
5. CONSTRUCTION OF THE PROJECT/OPERATIONS PENDING CLOSING............. 11
6. TITLE AND POSSESSION OF THE PROPERTY............................... 15
7. CONDITIONS TO CLOSING.............................................. 17
8. DELIVERIES......................................................... 19
9. DUE DILIGENCE PERIOD............................................... 21
10. CLOSING DATE....................................................... 23
11. PRORATIONS AND CLOSING COSTS....................................... 24
12. FIRE OR OTHER CASUALTY............................................. 26
13. CONDEMNATION AND EMINENT DOMAIN.................................... 27
14. INDEMNIFICATION.................................................... 28
15. MECHANICS' LIENS................................................... 30
16. SELLER'S AND BUYER'S REPRESENTATIVES/SUBSTANTIAL COMPLETION........ 30
17. MISCELLANEOUS...................................................... 32
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<PAGE> 65
DEFINITIONS
This definition section is incorporated into, and made a part of, the
Partnership Interests Purchase Agreement by and among MIG Development Company,
the Management Team (as defined herein) and Associated Estates Realty
Corporation dated as of the date hereof.
A. "ADJUSTMENT DATE" shall mean 11:59 pm of the day preceding the Closing Date.
B. "AGREEMENT" shall mean this Partnership Interest Purchase Agreement, as it
may be modified, amended, supplemented or restated from time to time as provided
herein.
C. "APPURTENANT RIGHTS" shall mean 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.
D. "ADJUSTMENT DATE" shall mean as of midnight of the day preceding the Closing
Date.
E. "ASSIGNMENT AGREEMENT" shall have the meaning set forth in Section 8(a)(ii)
of this Agreement.
F. "BOOKS AND RECORDS" shall mean all books of account, customer lists, files,
papers, and records relating to the Project that are either (i) included on the
SCHEDULE REGARDING BOOKS AND RECORDS attached hereto and made a part hereof as
EXHIBIT M or (ii) are not included on the Schedule Regarding Books and Records
but are nevertheless deemed by Buyer (and Buyer identifies to Seller in writing)
or Seller, or both to be relevant to the operation and value of the Project or
the Partnership, or both.
G. "BUYER" shall mean Associated Estates Realty Corporation, an Ohio
corporation.
H. "BUYER'S REPRESENTATIVE" shall have the meaning set forth in Section 16 of
this Agreement.
I. "CLAIM EXPIRATION DATE" shall have the meaning set forth in Section 14 of
this Agreement.
J. "CLOSING" shall mean the consummation of the transactions contemplated by
this Agreement, including, without limitation, the delivery of the Assignment
Agreements and full execution and delivery of any other documents required to be
delivered under this Agreement.
K. "CLOSING DATE" shall have the meaning set forth in Section 10 of this
Agreement.
L. "CONSTRUCTION DOCUMENTS" shall mean the plans, elevations, floor plans, site
plans drawings and specifications for the Project as set forth on EXHIBIT C
(which, as the same may be modified, amended or supplemented from time to time
by Seller in non-material respects or, with Buyer's approval, which will not be
unreasonably withheld or delayed, in material respects, is referred to herein as
the "Approved Plans and Specifications") and any documentation relating thereto,
any and all "as-built" plans, construction studies, soil tests and reports or
other engineering studies, architect contracts, engineering contracts,
construction contracts, other written agreements,
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<PAGE> 66
records, change orders, critical path analysis, permits and certificates of
occupancy, construction draw and lien waiver documentation and any other
documentation whatsoever relating to construction and development of the Project
that Buyer identifies to or requests from Seller in writing.
M. "CONTRIBUTION AGREEMENT" shall have the meaning set forth in the second
recital of this Agreement.
N. "DEPOSITS" shall mean all security deposits, pet deposits, application
deposits received from tenants, all prepaid rentals under Tenant Leases and any
other miscellaneous deposits and prepaid expenses related to the ownership or
operation of the Project, which have not been delivered, returned or applied by
the Partnership pursuant to the respective Tenant Leases to which they relate.
O. "DISAPPROVED MATTERS" shall have the meaning set forth in Section 16 of this
Agreement.
P. "DUE DILIGENCE PERIOD" shall have the meaning set forth in Section 9 of this
Agreement.
Q. "EARNEST MONEY DEPOSIT" shall have the meaning set forth in Section 2(a) of
this Agreement.
R. "FORCE MAJEURE" shall mean the failure of Seller to perform any obligation
hereunder by reason of any act of God, unusual governmental restriction,
regulation or control, strike, enemy or hostile governmental action, civil
commotion, insurrection, sabotage, fire or other casualty. Force Majeure shall
not mean Seller's failure to perform any obligation hereunder due to lack of
money or inability to raise capital or borrow for any purpose.
S. "HAZARDOUS MATERIALS" shall mean any and all substances subject to
environmental regulation of any type in effect, or which could subject Buyer to
environmental liability of any type, including, but not limited to, "hazardous
substances," "hazardous waste," "hazardous materials," "pollutants,"
"contaminants" or "toxic substances" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, ET SEQ.; the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, ET SEQ.; the Resource Conservation and Recovery Act, 42 U.S.C. Section
9601, ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 2601, ET
SEQ.; "hazardous chemicals" as defined under OSHA's hazard communication
standard, 29 C.F.R. ss. 1910.1200; and those substances defined as "hazardous
wastes" or as "hazardous substances" under the laws of the State of Florida; and
in the regulations adopted, published and/or promulgated pursuant to such laws.
T. "HP" shall mean AERC HP Advisors LP, a Florida limited partnership.
U. "INTANGIBLE RIGHTS" shall mean all of the Seller's or the Partnership's
rights under 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, all transferable rights under architects and construction contracts,
including, without limitation, the Construction Documents, any intangible rights
relating to Tenant Leases, Project Contracts, Personal Property Leases and the
right, if owned by Seller or the Partnership, to use the name "Windsor Pines
Apartments" or any derivations thereof at or in connection with the Project, but
specifically excluding all rights described or referred to in
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<PAGE> 67
Section 17(k) of this Agreement.
V. "LEASING REQUIREMENTS" shall having the meaning set forth in Section 5(e) and
Exhibit E.
W. "MANAGEMENT TEAM" shall mean Larry Wright, James A Cote', Louis E. Vogt, Greg
L. Golz and William T. Hughes, Jr.
X. "PARTNERSHIP" shall mean MIG/Pines Development, Ltd., a Florida limited
partnership.
Y. "PARTNERSHIP INTEREST" shall have the meaning set forth in the recitals
section of this Agreement.
Z. "PERMITS" shall mean 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 Property required by law.
AA. "PERMITTED EXCEPTIONS" shall have the meaning set forth in Section 6(a) of
this Agreement.
BB. "PERSONAL PROPERTY" shall mean 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 Property, including,
without limitation, the personal property listed on EXHIBIT B.
CC. "PERSONAL PROPERTY LEASES" shall mean all leases (if any) of equipment,
vehicles, and other tangible personal property used by Seller in connection with
the ownership and operation of the Property.
DD. "PROPERTY" shall mean that certain parcel of real property on which a
368-unit apartment complex known as Windsor Pines Apartments, is being
constructed at Pembroke Pines, Florida, which real property is more fully
described on EXHIBIT A attached hereto and made a part hereof, together with all
buildings, clubhouses, pools, fixtures, and all personal property identified on
EXHIBIT B and other improvements located thereon and therein and all appliances,
fixtures, plumbing, incinerators, lighting equipment, radiators, furnaces,
boilers, hot water heaters, water systems, and air-conditioning equipment
located thereon or therein or attached thereto and all Appurtenant Rights.
EE. "PROJECT" shall mean (a) the Property, (b) the Personal Property; (c) the
Permits, (d) the Tenant Leases, (e) the Deposits, (f) the Personal Property
Leases, (g) the Project Contracts, (h) the Intangible Rights and (i) the Books
and Records.
FF. "PROJECT CONTRACTS" shall mean all maintenance and service contracts, supply
contracts, and other agreements, contracts, and contract rights relating to the
ownership or operation of the Property, or any part thereof.
GG. "PUNCHLIST HOLDBACK ESCROW" shall mean an amount equal to 150% of the
reasonably anticipated amount of the costs relating to the Punchlist Work as
described in Section 5(b) and Section 11(h).
HH. "PUNCHLIST WORK" shall mean items commonly known as punchlist items which
(1) do not
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<PAGE> 68
materially interfere with the use and occupancy of the Project, and (2) are
reasonably expected to be completed within thirty (30) calendar days or such
longer reasonable period of time as is acceptable to Buyer.
II. "PURCHASE PRICE" shall have the meaning set forth in Section 2 of this
Agreement.
JJ. "SELLER" shall mean MIG Development Company, a Florida corporation.
KK. "SELLER'S REPRESENTATIVE" shall have the meaning set forth in Section 16 of
this Agreement.
LL. "SOLID WASTES" shall mean any and all substances subject to environmental
regulation of any type in effect or which could subject Buyer to environmental
liability of any type, including, but not limited to, "solid wastes" as defined
in the Resource Conservation and Recovery Act or under the laws of the State of
Florida.
MM. "SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY COMPLETED" shall mean the point
at which the construction of the Project has been substantially completed in
accordance with the Approved Plans and Specifications and local law and (a)
final occupancy permits have been issued in (customary local form) for all of
the Project's units and the owner of the Project is legally entitled to permit
tenants to occupy all the units in the Project; and (b) the Buyer receives
certification, as set forth in Section 16 of this Agreement which confirms that
the Project has been substantially completed in accordance with the Approved
Plans and Specifications subject only to Punchlist Work items; and, the
completed Project complies, in all respects, with the FHAA regulations and
Americans with Disabilities Act.
NN. "TENANT LEASES" shall mean all leases, written or oral, and tenancies with
tenants with respect to the occupancy of all or any portion of the Property.
OO. "TITLE COMMITMENT" shall have the meaning set forth in Section 6 of this
Agreement.
PP. "TITLE COMPANY" shall mean First American Title Insurance Company, Troy
Michigan office.
QQ. "TITLE POLICY" shall have the meaning set forth in Section 6 of this
Agreement.
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<PAGE> 69
THIS PARTNERSHIP INTERESTS PURCHASE AGREEMENT (this
"Agreement") made as of the _____ day of April, 1998 by and among MIG
DEVELOPMENT COMPANY, a Florida corporation ("Seller"), Larry Wright ("Wright"),
James A Cote' ("Cote'"), Louis E. Vogt ("Vogt"), Greg L. Golz ("Golz") and
William T. Hughes, Jr. ("Hughes"; Wright, Cote', Vogt, Golz and Hughes
collectively the "Management Team"), and ASSOCIATED ESTATES REALTY CORPORATION,
an Ohio corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns a general partnership interest (the
"Partnership Interest") in MIG/Pines Development Ltd., a Florida limited
partnership (the "Partnership");
WHEREAS, Buyer's affiliate, AERC HP Advisors LP ("HP"), has
entered into that certain Contribution and Partnership Interest Agreement with
all of the limited partners of the Partnership whereby HP will acquire all of
the limited partnership interests in the Partnership (such agreement as
modified, amended or restated in accordance with its provisions, the
"Contribution Agreement");
WHEREAS, the Management Team includes certain limited partners
in the Partnership;
WHEREAS, upon the closing of the transactions contemplated by
this Agreement and the Contribution Agreement, Buyer and HP will collectively
own One Hundred Percent (100%) of the partnership interests in the Partnership;
WHEREAS, the Partnership is the fee owner of the Project;
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, on the terms and subject to the conditions hereinafter
stated, the Partnership Interest;
NOW, THEREFORE, for good and valuable consideration received
to the full satisfaction of each of them, the parties agree as follows:
<PAGE> 70
1. PURCHASE AND SALE OF PARTNERSHIP INTEREST. Upon the terms and
subject to the conditions set forth herein, Seller agrees to convey, sell,
transfer, assign, and deliver 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 Partnership Interest, free and
clear in each case of all liens, security interests, and encumbrances
whatsoever.
2. CONSIDERATION AND PAYMENT. The purchase price for the Partnership
Interest shall be the amount (expressed in dollars) that is equal to the product
of multiplying 0.01 by the Pines Net Exchange Amount (as defined in Paragraph
3.02 of the Contribution Agreement) (the "Purchase Price") payable by Buyer to
Seller as follows:
(a) Two Thousand Dollars ($2,885) in earnest money to be
deposited by Buyer in escrow upon execution of this Agreement in
accordance with this Section 2 (the "Earnest Money Deposit"); and
(b) The balance of the Purchase Price shall be deposited in
escrow by Buyer on or before the Closing Date (defined below) in
immediately available funds.
Within five (5) business days following the execution of this
Agreement, Buyer shall open an escrow account with the Title Company as escrow
agent, and deposit the Earnest Money Deposit therein. Buyer shall notify Seller
of the opening, the deposit, the number of the escrow, and the employee or
employees of the Title Company in charge of the escrow. Each party shall execute
such documentation as may 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.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller and the Management
Team, jointly and severally, represent and warrant to Buyer that:
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(a) The Partnership is, and will be at the Closing, a Florida
limited partnership duly organized, validly existing and in full force
and effect under the laws of the State of Florida The Partnership has,
and at the Closing will have, the power and authority to carry on the
business for which it has been organized.
(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 against Seller in accordance with their respective terms.
The persons executing this Agreement on behalf of Seller, and Seller,
are duly authorized to so act, and all requisite corporate 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.
(c) The Partnership, the Project and the conduct by Seller of
its business relating thereto, to the best of Seller's and the
Management Team's knowledge, are in compliance in all material respects
with all applicable laws, ordinances, and regulations of proper public
authorities, and Seller has no written notice or knowledge of any
material violation, whether actual, claimed or alleged, thereof.
(d) To the best of Seller's and the Management Team's
knowledge, except for the matters identified in SCHEDULE 3(D) attached
hereto and made a part hereof, there is no litigation, proceeding or
action pending or threatened against or relating to the Partnership,
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<PAGE> 72
the Partnership Interest, Seller or the Project which might materially
and adversely affect the Partnership, the Partnership Interest, Seller
or the Project or which questions the validity of this Agreement or any
action taken or to be taken by Seller pursuant hereto.
(e) 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 Seller or the Partnership is a party,
subject to 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.
(f) To the best of Seller's and the Management Team's
knowledge, true, correct, and complete copies of all of the following,
or in the case of oral arrangements, written summaries of the same,
together with any modifications or amendments thereof, have been or
will immediately be available to Buyer after the execution of this
Agreement and, in the case of agreements or documents that come into
existence after execution hereof, within five (5) days of Seller's or
Seller's agents or representatives or consultants receipt of such
documentation: (i) all Tenant Leases and a certified rent roll, (ii)
all Project Contracts, (iii) all Personal Property Leases and (iv) all
writings (including, without limitation, correspondence, notices,
pleadings, and memoranda) relating to any potential, threatened, or
pending eminent domain or other similar action or proceeding in respect
to all or a portion of the Project. To the best of Seller's and the
Management Team's knowledge, except as disclosed on SCHEDULE 3(F)
attached hereto and made a part hereof, all of the Tenant Leases,
Project Contracts and Personal Property Leases are in full force and
effect. Neither Seller nor the Management Team has actual knowledge of
any action or failure to act by Seller or any other party to any Tenant
Lease, Project Contract, Personal Property Lease which, with
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<PAGE> 73
the giving of notice or the passage of time or otherwise, would
constitute a default in any material respect or otherwise entitle
either party to damages or a right to terminate, and no such other
party has given written notice with respect to the condition of the
Project or the use or repair of the same or of any alleged material
default by Seller under any such Tenant Lease, Project Contract,
Personal Property Lease. Seller has no actual knowledge of any material
incorrectness in the information, collectively, contained in the
documents, instruments or other writings to be delivered or made
available to Buyer by Seller in accordance with the provisions of
Section 9 hereof.
(g) All federal, state, and other taxes, assessments, fees and
other governmental charges upon Seller or the Partnership with respect
to the Project or the business conducted thereon or in connection with
the Project which are due and payable have been paid.
(h) To the best of Seller's and the Management Team's
knowledge, (i) each of the Permits is currently valid and in full force
and effect, and (ii) the Permits constitute all licenses, permits,
consents, authorizations, approvals, and certificates of any
regulatory, administrative or other governmental agency or body
necessary to Seller's development, construction, ownership or operation
of the Project as an apartment complex. To the best of Seller's and the
Management Team's knowledge, neither Seller nor the Project is in
violation in any material respect of any of the Permits and there is no
pending or, to the knowledge of Seller, threatened proceeding which
could result in the revocation or cancellation of, or inability of
Seller to renew, any Permit.
(i) To the best of Seller's and the Management Team's
knowledge, except as disclosed on SCHEDULE 3(I) attached hereto and
made a part hereof: The Project is in compliance in all material
respects with all applicable federal, state and local laws, ordinances
and regulations relating to air, water or noise pollution, or the
production, storage,
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<PAGE> 74
labeling or disposition, or release of Hazardous Materials or Solid
Wastes or the health, safety or environmental conditions on, under or
about the Project, including, without limitation, soil and groundwater
conditions; neither Seller nor the Management Team has actual knowledge
that any Hazardous Materials or Solid Wastes have been or are currently
on, under or about the Project; and neither Seller nor the Partnership
has received any written notice from any governmental agency or private
or public entity advising that Seller or the Partnership is responsible
for or potentially responsible for response costs or response actions
with respect to a release, a threatened release or cleanup of
substances produced by, or resulting from, any business, commercial or
industrial activities, operations or processes related to the Project
or of the Partnership, Seller or predecessors of Seller.
(j) The Partnership has no employees.
(k) Except as disclosed on SCHEDULE 3(K) attached hereto and
made a part hereof, there are no brokerage commissions owing by Seller
with respect to any of the Tenant Leases or otherwise relating to the
Project which have not been paid and no ongoing commission or leasing
fee obligations.
(l) Except as set forth on SCHEDULE 3(L) attached hereto and
made a part hereof (i) there is no mortgage indebtedness encumbering
the Project and (ii) to the best of the Seller's and the Management
Team's knowledge, the Partnership has no other material obligations or
liabilities to third parties that will not be satisfied at no cost,
liability or expense to Buyer on or prior to the Closing Date. Neither
Seller nor the Partnership is in default, nor will the entering into of
this Agreement by Seller result in a default by Seller or the
Partnership, of any of their respective obligations under any loan
documents that relate to or encumber the Project.
(m) All utilities are or will be available and in place and
adequate for the
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<PAGE> 75
operation of the Project, and the utilities are either located in the
public streets adjacent to the Project or are subject to appurtenant
easements in favor of Seller.
(n) Except for the rights of first refusal contained in the
Partnership Agreement (as hereafter defined), which rights have been or
will be waived with regard to this matter prior to Closing, no person
or entity has an option or right of first refusal to purchase any of
the Project or the Partnership Interest.
(o) Seller owns the Partnership Interest, free and clear of
all mortgages, pledges, liens, security interests, encumbrances, and
restrictions of any nature whatsoever.
(p) There has been no material adverse financial change from
that shown in the most recent financial statements, tax returns or
books and records delivered or made available to Buyer by Seller
pursuant to Section 3(f), 3(s) and Section 9 hereof and to the best
knowledge of Seller and the Management Team, there are no material
liabilities, contingent or otherwise, asserted in writing with respect
to the Project other than those shown on such financial statements, tax
returns, and books and records.
(q) Seller and the Management Team do not have actual
knowledge, that the information, collectively, that has been, or will
be, supplied, delivered or made available to Buyer by Seller or agents
of Seller, during the course of Buyer's review of the Project
(including, without limitation, all information supplied, delivered or
made available to Buyer prior or subsequent to the execution of this
Agreement) is, will be, or was at the time such information was or will
be supplied, delivered or made available, materially untrue or
materially misleading (without warranting the accuracy of any
information contained in any documents authorized, created or provided
by unaffiliated third parties).
(r) The construction of the Project has been approved by the
City of Pembroke Pines on the basis of the Approved Plans and
Specifications and when constructed will
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<PAGE> 76
comply in all material respects with all applicable zoning ordinances
and regulations and except as set forth on SCHEDULE 3(R) attached
hereto and made a part hereof, no variances or conditional use permits
have been or will be issued by any governmental body which affect the
Project.
(s) True and correct copies of all financial books and
records relating to the Project and the Partnership (including, but not
limited to, a current rent roll certified by Seller) for the current
year will be made available upon execution of this Agreement. True and
correct copies of the operating statements for the Project for the most
recent year to date and any other document or instrument reasonably
requested by Buyer shall be delivered to Buyer within three (3)
business days following the execution of this Agreement.
(t) The Project has been or will be constructed and completed
in all material respects in accordance with the Approved Plans and
Specifications attached hereto and made a part hereof as EXHIBIT C, in
a good and workmanlike manner and in compliance in all material
respects with all applicable laws, ordinances, and directives of all
governmental or quasi-governmental authorities, and at Closing final
certificates of occupancy (or the jurisdictional equivalent of a
certificate of occupancy) shall have been issued and be valid for all
of the Project's units.
(u) True, correct, and complete copies of the Construction
Documents together with any modifications or amendments thereof, have
been or will immediately be available to Buyer upon the execution of
this Agreement and, in the case of agreements or documents that come
into existence after execution hereof, within five (5) days after
Seller's or Seller's agents or representatives or consultants receipt
of such documentation. All of the material contracts relating to the
construction of the Project in existence as of the date hereof are in
full force and effect. Except as disclosed on SCHEDULE 3(U) attached
hereto and made a part
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hereof, Seller has taken no action or failed to take any action nor
has, to Seller's actual knowledge, any other party to any of the
Construction Documents taken any action which, with the giving of
notice or the passage of time or otherwise, would constitute a default
in any material respect or otherwise entitle either party to damages or
a right to terminate, and no such other party has given written notice
with respect to any alleged material default by Seller or the
Partnership under any such material contracts relating to the
construction of the Project.
(v) True, correct, and complete copies of the partnership
agreement of the Partnership (the "Partnership Agreement"), including
all modifications and amendments thereof, are attached hereto as
EXHIBIT D, and the Partnership Agreement has not been further modified
or amended.
(w) Upon the Closing, Buyer and HP will own One Hundred
Percent (100%) of the partnership interests in the Partnership.
(x) The Schedule Regarding Books and Records and the other
documents delivered by Seller to Buyer contain all documents in
Seller's possession or actually known to Seller relevant to the
operation and value of the Project, the Partnership or both and Seller
has not failed to disclose to Buyer on (or in the documents referred to
in) the Schedule Regarding Books and Records any document in its
possession or actually known to Seller that would have a material
adverse impact on the Project, the Partnership or both.
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
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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 matter 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 7(a) hereof are
not satisfied.
Except to the extent of any matters disclosed by Seller on the
attachment to EXHIBIT I hereof that will be delivered by Seller to Buyer at
Closing, and subject to the provisions of the preceding paragraph (without
affecting the right of Buyer to decline to close hereunder if any of the Closing
conditions under Section 7(a) hereof are not satisfied), all of the
representations and warranties set forth in this Section 3 shall be deemed
renewed by Seller on the Closing Date as if made at such time shall survive the
Closing for a period of one (1) year, except that the representations and
warranties set forth in Section 3(o) of this Agreement shall survive
indefinitely.
4. 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
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Articles of Incorporation or Code of Regulations of Buyer or be in
conflict with or constitute a default under any term or provision of
any agreement, instrument or lease to which Buyer is a party.
(c) To the best of Buyer's knowledge, there is no litigation,
proceeding or action pending or threatened against or relating to Buyer
which might materially and adversely affect the ability of Buyer to
consummate the transactions contemplated hereby or which questions the
validity of this Agreement or any action taken or to be taken by Buyer
pursuant hereto.
All of the representations and warranties set forth in this
Section 4 shall be deemed renewed by Buyer on the Closing Date as if made at
such time and shall survive the Closing for a period of one (1) year.
5. CONSTRUCTION OF THE PROJECT/OPERATIONS PENDING CLOSING. Seller and
the Management Team (solely with respect to Section 5(d) hereof) shall:
(a) Complete or cause to be completed the construction of the
Project in accordance with the Approved Plans and Specifications and
cause such construction to be Substantially Completed on or before
October 1, 1998 subject, however, to acts or events of Force Majeure.
(b) Cause all Punchlist Work to be completed no later than the
earlier of (i) thirty (30) days after Substantial Completion or such
longer period as may be acceptable to Buyer as evidenced by written
notice thereof to Seller or (ii) the Closing Date. Notwithstanding the
foregoing, if despite Seller's having exercised its best efforts,
Seller is unable to complete the Punchlist Work within the time frames
required above, then, so long as Seller agrees that the Title Company
shall hold in escrow the Punchlist Holdback Escrow, Seller shall have
an additional thirty (30) days to complete all Punchlist Work.
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(c) Cooperate and cause the Partnership to cooperate with
Buyer and Buyer's agents at all times, including providing Buyer and
Buyer's agents with access to the Project during reasonable hours to
permit inspections of the Project.
(d) Warrant for one (1) year (x) from the date of the issuance
of the respective certificates of occupancy for each building at the
Project and (y) one (1) year from the Closing Date for the common areas
at the Project that each such building and common areas and all other
work and materials described in the Approved Plans and Specifications
shall have been constructed in a good and workmanlike manner, free from
improper workmanship and defective materials, and fit for the use and
purpose as an apartment project; correct or cause to be corrected
defective materials and work during a period of (a) one (1) year, from
the date of the issuance of the respective certificates of occupancy
for each building and (b) from the Closing Date with respect to the
common areas at the Project, upon written notice thereof (within these
respective time frames) to Seller and assign to Buyer all assignable
warranties for construction and equipment obtained by the Seller from
the contractors, installers or suppliers for the Project.
(e) Use good faith and reasonable efforts to lease up or cause
the Partnership to lease up the residential suites comprising the
Project in accordance with Buyer's credit requirements and minimum
rental leasing requirements delineated in EXHIBIT E attached hereto and
made a part hereof (collectively the "Leasing Requirements") and in
connection therewith employ the form lease set forth on EXHIBIT F
attached hereto and made a part hereof, which lease form has been
previously approved by Buyer or any other form mutually acceptable to
the parties hereto.
(f) Operate or cause the Partnership to operate the Project
and conduct or cause to be conducted its business in the regular and
ordinary course, consistent with the
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Construction Documents (to the extent applicable) and the Leasing
Requirements, and exercise reasonable efforts to preserve intact the
operation of the Project.
(g) Maintain or cause the Partnership to maintain the Project
in good condition and repair and otherwise in accordance with the
Construction Documents (to the extent applicable) and the Tenant
Leases.
(h) Not permit or cause the Partnership to remove, sell,
mortgage, pledge or otherwise encumber or dispose of any portion of the
Project, except in the ordinary course of business and with the prior
written consent of Buyer. Buyer acknowledges that the Project is
currently encumbered by two construction loans.
(i) Continue or cause the Partnership to continue to maintain
all insurance on the Project covering the risks and in the amounts of
coverage in effect on the date hereof as increased to cover all new
construction.
(j) Duly observe and perform or cause the Partnership to duly
observe and perform all material terms, conditions, and requirements of
the Tenant Leases, the Project Contracts, the Personal Property Leases,
and (to the extent applicable) Construction Documents and not knowingly
do any act or omit to do any act, or permit any act or omission to act,
which will, upon the occurrence thereof or with the passage of time,
cause a material breach or material default under any Tenant Lease,
Project Contract, Personal Property Lease, or (to the extent
applicable) Construction Document.
(k) Not permit or cause the Partnership, without the Buyer's
prior written consent which shall not be unreasonably withheld,
conditioned or delayed to (i) renew, amend or extend any Project
Contract or Personal Property Lease, (ii) incur any new mortgage
indebtedness or other material indebtedness relating to the Project
(but they may be permitted to increase the amount of indebtedness
outstanding under presently existing
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loan or credit agreements as necessary to complete construction), or
(iii) enter into or renew any contract or agreement pertaining to any
portion of the Project (other than Tenant Leases entered into in the
ordinary course of business as contemplated by this Agreement) unless
such contract or agreement can be terminated at will by Buyer without
obligation after the Closing.
(l) Not cause or permit the Partnership to take, agree to take
or knowingly permit to be taken any action or do or knowingly permit to
be done anything in the conduct of the business of Seller, or
otherwise, which would be in breach of any of the terms or provisions
of this Agreement or which would cause any representation and warranty
of Seller contained herein to be or become untrue.
(m) Use its reasonable efforts 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.
(n) Effective as of the Closing Date, cause any management
contract relating to the Project to be terminated, unless otherwise
expressly instructed by Buyer to Seller, through written notice to
Seller.
(o) Obtain final zoning approval from all applicable
governmental authorities for the construction and operation of the
Project as contemplated hereby, without any variances or conditional
use permits, except as may be set forth on SCHEDULE 3(R).
(p) Notify Buyer's Representative as required by Section 16 of
this Agreement upon Substantial Completion of the Project.
(q) Upon the lease-up of eighty percent (80%) of the apartment
units at the Project, deliver to Buyer, in form and substance
reasonably acceptable to Buyer, a rent roll confirming that eighty
percent (80%) of the Project has been leased in
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accordance with the Leasing Requirements.
(r) Not transfer, pledge, encumber, convey, devise or sell the
Partnership Interest.
(s) Deliver to Buyer, for Buyer's approval, such approval to
not be unreasonably withheld or delayed, any and all proposed material
changes or material modifications to the Approved Plans and
Specifications.
6. 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 (for the
benefit of the Partnership) 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, with the standard exceptions deleted, subject to rights of
tenants under the Tenant Leases, and with such endorsements as Buyer
may reasonably require, including, without limitation, non-imputation
and fairways endorsements, in the amount of $37,028,000 (the "Title
Policy") issued by the Title Company, as assurance that upon the
Closing, the Partnership holds and will hold good, valid, and
marketable 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 as follows (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 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 to and
approved by Buyer, in writing, unless otherwise waived or
deemed waived by Buyer as hereinafter provided.
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(b) Seller represents, warrants, and covenants to Buyer that
upon the Closing Date the Partnership will have complete possession of
the Property, subject only to the interests of the tenants under the
Tenant Leases.
(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")
with copies of all instruments referred to as exceptions or conditions
in the Title Commitment, setting forth all real estate taxes and
special assessments, the state of record title to the Property and all
exceptions to, or encumbrances upon, title to the Property which would
appear in the Title Policy. Buyer shall have until the end of the Due
Diligence Period (as defined in Section 9 of this Agreement) to review
such items and to give notice to Seller of such objections as Buyer may
have to any matters set forth in the Title Commitment or survey. Seller
understands and agrees that prior to the expiration of the Due
Diligence Period, Buyer may deliver to Seller an objection letter or
objection letters at any time during the Due Diligence Period and
Seller agrees that any such delivery or deliveries shall not be
construed in any way to limit or restrict Buyer's right to deliver
additional objections to Seller at any time during Due Diligence
Period. If Buyer timely (i.e during 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 9 of this Agreement,
in which event neither party shall thereafter
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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 (i) consensual
liens affirmatively granted by Seller, (ii) mechanics' liens, (iii)
judgement liens or (iv) non- consensual liens (other than mechanics' or
judgement liens) which do not exceed Twenty Five Thousand Dollars
($25,000) in the aggregate, that can be released by payment of the
underlying obligation, shall be removed, bonded or title insured over
by Seller and if not so removed, bonded or title insured over by the
Closing then such amount shall be charged against the capital accounts
of the Limited Partners (as defined in the Contribution Agreement) all
as more fully provided in Section 11(g) hereof. 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.
7. CONDITIONS TO CLOSING.
(a) Subject to the provisions of Sections 12 and 13, Buyer's
obligations under this Agreement are expressly conditioned upon the
satisfaction of the following conditions:
(i) the representations and warranties of Seller set
forth in Section 3 hereof shall have been true and correct in
all material respects when made and true and correct in all
material respects as of the Closing and Seller shall have
complied in all material respects with all covenants as set
forth in Section 5 herein and shall have otherwise performed
all of its obligations hereunder, in all material respects;
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(ii) all required 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 8 hereof and
delivered or made available all other material items and
information required by this Agreement in accordance with the
terms of this Agreement;
(iv) Buyer shall have notified Seller pursuant to
Section 9 herein that Buyer has elected to proceed with the
transactions contemplated by this Agreement;
(v) the financial and physical condition of the
Project, with the exception of ongoing construction as
contemplated hereby, shall not have changed in any
material adverse respect from the condition in existence or
reflected by writings produced during the Due Diligence Period
(as hereinafter defined);
(vi) Seller shall have arranged without any cost or
liability to Buyer for the termination, effective not later
than the Closing, of any management contract of any property
manager relating to the Project.
(vii) Seller, at its own cost and expense, shall
have: (A) Substantially Completed the Project in conformity
and in accordance with the Approved Plans and Specifications
and (B) completed all Punchlist Work or, if such Punchlist
Work has not been completed prior to the Closing, established
an escrow account with the Title Company in the amount of the
Punchlist Holdback Escrow;
(viii) the transactions contemplated by the Second
Closing (as defined in the Contribution Agreement) shall have
closed substantially simultaneously with the Closing of this
transaction;
(ix) the transactions contemplated by that certain
Agreement and Plan of Merger by and among Buyer, MIG Realty
Advisors, Inc. and certain shareholders of MIG Realty
Advisors, Inc. shall have closed;
(x) Seller shall have leased at least eighty percent
(80%) of the units at the Project (which units shall be
occupied) in accordance with the Leasing Requirements or, as
to leases entered into before this Agreement is fully executed
and delivered in accordance with Seller's current leasing
standards, and Seller shall have delivered the certification
required by Section 5(q) of this Agreement;
(xi) the Title Company shall be ready, willing and
able to issue the Title Policy to the Partnership in
accordance with the provisions of Section 6 hereof;
(xiii) on or before the Closing, Wright, Cote', Lanny
M. Kalik, James C. Elwood and Edwin B. Wayman shall have each
executed and delivered the guaranty in the form attached
hereto and made a part hereof as EXHIBIT K; and
(xiv) other than trade payables not past due or
delinquent, all of the
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liabilities referenced on SCHEDULE 3(L) shall have been paid
in full by Seller on or before the Closing Date at no cost,
liability or expense to Buyer.
(b) Subject to the provisions of Sections 12 and 13 hereof,
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 4 hereof shall have been true and correct in
all material respects when made and true and correct in all
material respects as of the Closing Date 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 8(b) hereof;
(iii) the transactions contemplated by the Second
Closing (as defined in the Contribution Agreement) shall have
closed prior to or substantially simultaneously with the
Closing of this transaction;
(iv) the transactions contemplated by that certain
Agreement and Plan of Merger by and among Buyer, MIG Realty
Advisors, Inc. and certain shareholders of MIG Realty
Advisors, Inc. shall have closed; and
(v) 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.
8. DELIVERIES.
(a) 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) an Assignment and Assumption of Partnership
Interest from Seller, in the form of EXHIBIT G attached hereto
and made a part hereof, conveying, selling, transferring,
assigning, and delivering to Buyer good and valid title to the
Partnership Interest, free and clear of all mortgages,
pledges, liens, security interests, encumbrances, and
restrictions (the "Assignment Agreement");
(iii) such confirmation of authorization,
organization, valid existence, and
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good standing, including legal opinions as Buyer may
reasonably request;
(iv) the Books and Records, all of which may
alternatively be delivered to Buyer at the Project at or prior
to the Closing together with a Letter Regarding Books and
Records in the form of EXHIBIT H attached hereto and made a
part hereof;
(v) any affidavit required by the Title Company to
remove the standard printed exceptions from the Title Policy;
(vi) if not already delivered to Buyer, the originals
of all certificates of occupancy for all buildings at the
Project;
(vii) the originals of all Tenant Leases, Personal
Property Leases, Project Contracts, Construction Documents,
and Permits, together with all amendments and any attachments
and supplements thereof, all of which may alternatively be
delivered to Buyer at the Project upon or prior to the
Closing;
(ix) 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;
(x) settlement statements agreed to by Buyer and
Seller and executed by Seller;
(xi) signed escrow instructions, reasonably
satisfactory to the Title Company and Buyer, in form and
substance sufficient to carry out the Closing;
(xii) a certificate of Seller in the form of EXHIBIT
I attached hereto and made a part hereof;
(xiii) documentation reasonably acceptable to Buyer
confirming the termination of any management agreement
relating to the Project;
(xiv) a rent roll that is certified as true and
correct as of the Closing Date;
(xv) such other or further documentation as Buyer may
reasonably request at any time or from time to time in order:
(A) to convey, vest, confirm or evidence Seller's title to the
Partnership Interest intended to be conveyed, sold,
transferred, assigned, and delivered to Buyer under this
Agreement; or (B) to vest, confirm or evidence title to all or
part of the Property being in the name of the Partnership; and
(xvi) a copy of any appraisals of the Project
obtained by Seller.
(b) Buyer shall deliver the balance of the Purchase Price to
or for the benefit of Seller through escrow on or prior to the Closing
Date together with the following:
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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, in form and substance
sufficient to carry out the Closing;
(iii) a certificate of Buyer in the form of EXHIBIT J
attached hereto and made a part hereof; and
(iv) 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.
9. DUE DILIGENCE PERIOD. For a period commencing on the date of this
Agreement and ending on May 7, 1998 (the "Due Diligence Period"), Buyer shall be
permitted to conduct a complete physical inspection of the Project, complete due
diligence on the Project and review all materials to be provided by Seller to
Buyer hereunder or otherwise reasonably requested. Without limiting the
foregoing, Buyer or its representative shall have the right to conduct an audit
of the financial records relating to the Project and the Partnership. Seller
shall grant reasonable access to Buyer and its representatives to the Project
for the purpose of examining, inspecting or determining the condition of any
part or all of the Project or records or information relating thereto (excluding
internal reports expressing opinions concerning the value of the Project).
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 Project. Buyer shall promptly and completely repair and
restore any and all damage to the Project 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
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inspections, investigations, audits, tests or visits to the Project. Buyer's
restoration and indemnification obligations set forth in this Section shall
survive the Closing or termination of this Agreement. At Buyer's request, Seller
shall promptly after the execution of this Agreement, deliver to Buyer or make
available for inspection and copying to Buyer the following, if in Seller's
possession or control:
(a) a copy of the most recent "Phase I Environmental
Assessment" of the Property (if any), and any other written information
concerning the environmental condition of the Project, including
wetlands delineations, as Buyer may reasonably request and any
authorizations reasonably necessary for Buyer, at Buyer's expense, to
update such assessment or information, or reasonably necessary for
Buyer, at Buyer's expense, or its agents to independently assess the
environmental condition of the Property;
(b) a copy of Seller's most recent complete boundary survey of
the Project (Buyer shall be entitled to receive and approve as set
forth herein an updated and upgraded survey as reasonably required by
Buyer);
(c) true and correct copies of the Books and Records, Tenants
Leases, Personal Property Leases, Project Contracts and any other
document, instrument or other writing relating to the Project (but not
internal expressions or opinions concerning the value of the Project or
the operation thereof, any personal information relating to the
principals of Seller or matters that do not relate to the Project) as
Buyer may reasonably request;
(d) a listing of all individuals, if any, who work either on a
full or part time basis at the Project and all such individuals'
positions and salaries regardless of who such individuals are employed
by; and
(e) true and correct copies of all documents and instruments
relating to any mortgage indebtedness.
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Without limiting the rights accorded to Buyer pursuant to
Section 7 hereof, at any time during or at the end of the Due Diligence Period,
Buyer, in Buyer's sole discretion, may terminate this Agreement (by giving
notice of such termination to Seller). Buyer shall notify Seller in writing
either during or at the end of the Due Diligence Period with respect to whether
or not Buyer elects to proceed with the transactions contemplated by this
Agreement. If Buyer's written notice to Seller indicates that Buyer has elected
to proceed with the transactions contemplated by this Agreement then the parties
shall, subject to the satisfaction of the conditions set forth herein, proceed
to the Closing. If Buyer's written notice to Seller indicates that Buyer has
elected not to proceed with the transactions contemplated by this Agreement then
this Agreement shall terminate and the Earnest Money Deposit shall be returned
to Buyer. Upon termination of this Agreement by Buyer pursuant to this Section
9, neither party shall thereafter be under any further liability or obligation
to the other, except as to matters which this Agreement expressly states are to
survive a termination of this Agreement.
10. CLOSING DATE. Unless the parties otherwise agree in writing, the
Closing shall occur, subject to the conditions set forth in Section 7 of this
Agreement, on a date designated by Buyer in writing, which date shall not be
earlier than seven (7) days before or later than thirty (30) days after the date
upon which (a) the Project is Substantially Completed and (b) Seller has
delivered to Buyer its certificate to the effect that Seller has entered into
fully executed leases for eighty percent (80%) of the apartment units at the
Project and eighty percent (80%) of such units shall be occupied in accordance
with the Leasing Requirements (the "Closing Date").
If Buyer fails to close hereunder even though all conditions
to its obligations hereunder have been satisfied, or if Buyer otherwise is in
default of any of its material obligations under this Agreement, Seller may, so
long as Seller is not in default of any of its material obligations under this
Agreement, terminate this Agreement by providing written notice to Buyer,
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in which case Seller shall receive the Earnest Money as liquidated damages and
neither party shall thereafter be under any further liability to the other
except for Buyer's obligation to repair damage as set forth in Section 9 above.
Buyer shall have the right to terminate this Agreement at any
time after the Due Diligence Period by providing written notice to Seller.
Notwithstanding anything in this Agreement to the contrary, in the event that
Buyer terminates this Agreement after the Due Diligence Period, other than by
reason of a right afforded Buyer under the terms and provisions hereunder and
Seller has otherwise timely and fully complied with all of its obligations
hereunder, Seller shall receive the Earnest Money Deposit as liquidated damages
and neither party shall thereafter be under any further liability to the other,
except for Buyer's obligation to repair damage as set forth in Section 9 above.
11. PRORATIONS AND CLOSING COSTS. All prorations, adjustments and final
readings shall be made, unless otherwise mutually agreed to by the parties, on
the Adjustment Date, by the Title Company based on information provided by the
parties, as follows:
(a) Payments under any Project Contracts or Personal Property
Leases and fees for any transferable licenses and permits 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 Project, then Seller shall promptly pay all
such increases allocable to the
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period prior to the Closing Date 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 and shall survive the Closing. Any special assessment which is a
lien on the Project at Closing shall be paid by Seller without
proration.
(c) Collected rents shall be prorated based upon the total
rent roll payable for the month in which the Closing occurs. 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, then to pay rents which become due
after the Closing and are currently due and owing as of the date such
payment is received, then pay remaining funds to Seller for any rents
delinquent prior to the Closing; 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 the Closing. Seller shall assign to Buyer all of its right, title
and interest in and to any utility and other similar deposits and
Seller shall receive a credit for all such deposits. If final readings
and billings cannot be obtained prior to the 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 150% of the
reasonably anticipated amount of such billings, based upon the most
recent available billings for similar periods until the Title Company
shall have received notice of payment of such bills, at which time any
remaining amount being withheld for such purpose shall be distributed
to the Seller;
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(e) All salaries, benefits, and payroll taxes for all
employees hired by Buyer shall be prorated;
(f) Seller shall assign to Buyer or Buyer's affiliate (as
directed by Buyer) at the Closing an amount equal to all Deposits which
Seller received under the Tenant Leases and which Seller has not
returned or applied in accordance with the provision of Tenant Leases;
and
(g) Except with respect to attorney's fees as discussed below,
all closing costs relating to this transaction, including, (i) any
escrow fee at the Closing, (ii) the cost of a new or upgraded or
updated survey of the Property and (iii) the cost of the Title Policy
together with all endorsements attached thereto shall be paid by Buyer,
but such payments shall be charged against the capital accounts of the
Limited Partner's (as defined in the Contribution Agreement) pursuant
to the Contribution Agreement. Additionally, any prorations that Buyer
may receive under this Section 11 that would otherwise be credited
against the balance of the Purchase Price shall instead be charged
against the capital accounts of the Limited Partners as provided above.
Each party shall pay its own attorneys' fees.
(h) In the event that there is a Punchlist Holdback Escrow,
Seller shall deliver to the Title Company to hold in escrow an amount
equal to 125% of the reasonably anticipated amount of such Punchlist
Holdback Escrow, until the Title Company shall have received notice
from Buyer and Seller of completion of the Punchlist Work and
assurances of payment of such bills relating to the Punchlist Holdback
Escrow, at which time any remaining amount being withheld for such
purpose shall be distributed to the Seller.
12. FIRE OR OTHER CASUALTY. Seller agrees to promptly advise Buyer in writing of
any material damage to the Project. If all or any substantial portion of the
Project (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
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damage shall not have been repaired or reconstructed prior to the Closing in a
good and workmanlike manner to the reasonable satisfaction of Buyer, Buyer may,
at Buyer's option: (a) remain obligated to perform this Agreement and receive
all insurance proceeds received by or payable to Seller as a result of such
damage or destruction plus an amount equal to any insurance policy deductible;
or (b) by written notice of termination given to Seller not later than thirty
(30) days after Seller provides Buyer with written notice of such damage or
destruction, terminate this Agreement and receive any documents, instruments and
funds previously deposited or paid including the Earnest Money Deposit (together
with all interest earned thereon). If an unsubstantial portion of the Project
(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
12, neither party shall thereafter be under any further liability to the other,
except as otherwise expressly set forth in this Agreement.
13. CONDEMNATION AND EMINENT DOMAIN. If, prior to the Closing Date, all
or any portion of the Project 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 event Seller shall assign to Buyer all proceeds
resulting from such taking. Seller and Buyer each agree to
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forward promptly to the other any notice of intent received pertaining to a
taking of all or a portion of the Project by way of condemnation, eminent domain
or similar procedure for a taking of the Project in connection with any public
or quasi-public use.
14. INDEMNIFICATION.
(a) Buyer shall fully indemnify and hold Seller and its
officers, directors, representatives, successors, and assigns harmless
from and against any and all claims, demands, losses, liabilities,
damages, and expenses (including reasonable attorneys' fees) arising
out of or in connection with (i) the failure of Buyer to perform in any
material respect any of its obligations hereunder, (ii) any material
breach or inaccuracy of any representation or warranty of Buyer
hereunder or (iii) the ownership of the Project or the Partnership
Interest if that claim, demand, loss, liability, damage or expense
first arises, accrues or exists from and 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 or breach
of any covenant made by Seller hereunder)
(b) Subject to the limitations set forth in Section 14(c)
below, Seller and the Management Team, jointly and severally, shall
fully indemnify Buyer and hold Buyer, its officers, directors,
successors, and assigns harmless from and against any and all claims,
demands, losses, liabilities, damages, and expenses (including
reasonable attorneys' fees) arising out of or in connection with (i)
the failure of Seller or the Management Team to perform in any material
respect any of its obligations hereunder, (ii) the material inaccuracy
of any representation or warranty made by Seller or the Management Team
hereunder, or (iii) the ownership of the Project or the Partnership
Interest if that claim, demand, loss, liability, damage or expense
arose, accrued or existed prior to the Closing (except to the extent
that such indemnification obligation would arise directly as a result
of the inaccuracy
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of any representation or warranty or breach of any covenant made by
Buyer hereunder).
(c) Notwithstanding anything to the contrary contained in this
Agreement or the Contribution Agreement, (i) Seller's liability under
this Agreement (taken together with Seller's liability under the
Contribution Agreement relating to the same matters) shall be limited
to an amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate and (ii) each member of the Management
Team's liability under this Agreement and the Contribution Agreement
shall be limited to an amount equal to the total compensation received
by each such member of the Management Team under this Agreement and the
Contribution Agreement which amounts are set forth on EXHIBIT L
attached hereto and made a part hereof. Each member of the Management
Team shall have the option of satisfying any indemnification obligation
owed to Buyer hereunder either (i) by satisfying such obligation in
cash (such cash payment to be delivered by certified check or wire
transfer in immediately available funds) or (ii) subject to the
limitations described in this Section 14(c) below, by delivering and
assigning to Buyer all of such member's respective right, title and
interest in and to such of the limited partnership units in HP having a
value (set for these purposes, as such units' value on the Closing
Date) equal to the amount that it receives pursuant to the terms of the
Contribution Agreement. The right to elect to exercise option (ii)
above in connection with the satisfaction of any indemnification
obligation owed to Buyer may be exercised only with respect to such
limited partnership units owned by such member that can be assigned and
delivered to Buyer free and clear of all liens, pledges, restrictions
and encumbrances whatsoever. Each member of the Management Team
acknowledges and agrees that Buyer shall have no obligation to accept
the assignment and delivery of any limited partnership units
contemplated by option (ii) above unless and until the member or
members of the Management Team (as the case may
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be) seeking to exercise the rights provided in option (ii) deliver to
Buyer (x) a certificate representing and warranting that such member
owns those of his respective limited partnership units in HP being
tendered free and clear of all liens, pledges, restrictions and
encumbrances whatsoever and (y) uniform commercial code searches of all
applicable jurisdictions reasonably requested by Buyer that show no
encumbrances on such member's limited partnership units in HP.
(d) Except for any claim relating to a breach of any
representation and warranty set forth in Section 3(o) of this
Agreement, any claim for indemnification under clause (ii) of Section
14(a) or Section 14(b) must be asserted in writing and with specificity
by the date (the "Claim Expiration Date") that 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.
15. MECHANICS' LIENS. Seller shall hold Buyer harmless from and against
any and all costs, damages, and expenses incurred by Buyer, directly or
indirectly as the owner of the Project, including reasonable attorneys' fees, as
a result of the filing against the Project of any mechanics' lien by any person
or entity claiming to have performed work on the Project or supplied materials
for the Project prior to the Closing pursuant to authorization from Seller or
the agents or employees of Seller or in connection with the Punchlist Work (if
any). Seller and Buyer each agree to give the other notice of any such lien
promptly after obtaining knowledge thereof. Notwithstanding the foregoing, if
any such liens are not discharged of record or bonded or title insured over by
the Closing Date, Buyer shall have the right to pay the full amount of any such
liens to the lien claimants, and Seller on demand shall reimburse Buyer for any
such payments.
16. SELLER'S AND BUYER'S REPRESENTATIVES/SUBSTANTIAL COMPLETION.
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(a) Seller and Buyer shall meet on at least a monthly basis to
discuss all matters pertaining to the Project. Seller will report on
all construction activities, the construction schedule, change orders
and other requested changes to any Construction Document, lease form or
other document for which Buyer's approval is required by any other
provision of this Agreement. The Approved Plans and Specifications
together with any material contracts relating to the construction of
the Project shall not be materially amended or modified without the
prior written approval of Buyer as more fully provided in Section 5(s)
of this Agreement, but Seller may, without Buyer's approval or consent,
make or consent to any changes and modifications thereof which are not
material, and all of such changes and modifications shall be deemed to
be part of and included in, the "Approved Plans and Specifications" for
all purposes. Seller will report to Buyer on all management and
operating activities, including presenting to Buyer all new or modified
Tenant Leases that have been entered into in accordance with the
Leasing Requirements, new or modified Project Contracts (as permitted
under Section 5(k) hereof) and new or modified Personal Property Leases
(as permitted under Section 5(k) hereof) for the Project. Seller and
Buyer will be available on a more frequent basis as is reasonably
required for the needs of the construction, leasing and operation of
the Project. All such meetings will be held at the Project or Seller's
office unless Seller and Buyer agree otherwise.
(b) When Seller believes that the Project has been
Substantially Completed, Seller shall deliver to Buyer, an architect's
certificate in customary form confirming that the Project has been
Substantially Completed in accordance with the Construction Documents
subject only to Punchlist Work together with the following: (i) final
occupancy certificates for all of the Project's units in customary
local form; (ii) documentation from the architect and such other
persons as reasonably requested by Buyer confirming that the Project
has
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been Substantially Completed, (iii) an architect's certificate or other
documentation acceptable to Buyer confirming that the completed Project
complies with the FHAA regulations and Americans with Disabilities Act.
Within a reasonable time, but in no event more than fifteen (15) days
after Buyer's receipt of all of the above documents, Buyer shall notify
Seller with respect to whether or not Buyer accepts Seller's conclusion
that the Project has been Substantially Completed. The notice shall
include a list of Punchlist Work, if any, to be completed in accordance
with Section 5(b) of this Agreement. If Buyer accepts Seller's
conclusion that the Project has been Substantially Completed, then
subject to the conditions set forth in Paragraph 7 of this Agreement,
the parties shall proceed to the Closing. If Buyer concludes that the
Project has not been substantially Completed, then the notice delivered
by Buyer shall indicate the reasons behind Buyer's conclusion that the
Project has not been Substantially Completed, but Buyer's conclusion
will not be conclusive or binding on Seller.
17. 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. All of the
Exhibits referred and attached to this Agreement are an integral part
of this Agreement and are incorporated herein by reference.
(b) 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 personally, by nationally
recognized overnight courier, or served by certified or registered mail
or facsimile to the parties at the addresses and facsimile numbers set
forth below, unless different addresses or facsimile numbers are given
by one party to the other:
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AS TO SELLER:
-------------
MIG DEVELOPMENT COMPANY
Attn: Larry Wright
250 Australian Avenue, South, Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
WITH A COPIES TO:
-----------------
MAYER, BROWN & PLATT
Attn: Robert Berger, Esq.
190 S. LaSalle Street
Chicago, Illinois 60603
Phone (312) 701-7711
Fax (312) 782-0600
and
JAMES ELWOOD AND LANNY KALIK
C/O MIG DEVELOPMENT COMPANY
250 Australian Avenue, South, Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
AS TO BUYER:
------------
ASSOCIATED ESTATES REALTY CORPORATION
Attn: Martin A. Fishman, Esq., Vice President
5025 Swetland Court
Richmond Heights, Ohio 44143
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 represent and warrant to the other
that such party has
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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 Partnership Interest to Buyer, which representations and warranties
shall survive the closing of the transactions contemplated hereby. If
for any reason any such commission shall become due, the party who
retained such broker shall pay any such commission and agrees to
indemnify and save the other party harmless from any and all claims for
any such commission and from any attorneys' fees and litigation or
other expenses relating to any such claim.
(d) This Agreement may not be assigned by Seller without the
prior written consent of Buyer. This Agreement may be assigned by Buyer
without the prior written consent of Seller to an entity wholly owned
or controlled by Buyer but no such assignment shall relieve Buyer from
its obligations hereunder. 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 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 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 of Florida.
(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
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Saturday, Sunday or federal holiday, the date for such performance
shall automatically be extended to the first succeeding business which
is not a Saturday, Sunday or federal holiday.
(i) Lanny M. Kalik, James C. Elwood and Edwin B. Wayman hereby
join in this Agreement solely for the purpose of confirming their
respective agreements to execute and deliver the guaranty attached as
EXHIBIT K on or before the Closing Date and Wright and Cote', also
hereby agree, without limiting or diminishing their obligations under
this Agreement as members of the Management Team, to execute and
deliver the guaranty attached as EXHIBIT K.
(j) Any litigation or other formal dispute resolution process
under, concerning, arising out or relating to this Agreement or the
performance of any duty or obligation hereunder shall be brought,
instituted, maintained and conducted solely and exclusively in the
Florida State or Federal courts sitting in Broward County, Florida (or
the Federal District Court for Broward County). Each party to this
Agreement irrevocably consents to jurisdiction over its person and
property in and by, and venue in, such courts for purposes of
adjudicating any and all disputes arising under, concerning, or
relating in any way to this Agreement or any subject matter hereof or
matter addressed or dealt with herein. Buyer agrees to use reasonable
efforts to join all parties to this Agreement and the guaranty attached
as EXHIBIT K in a single action in the event that any litigation is
commenced by Buyer hereunder or under or in respect of any such
guaranty. If any dispute or litigation arises under this Agreement or
concerning the subject matter hereof, the reasonable costs and expenses
thereof (including, without limitation, court costs and reasonable
attorneys' fees and expenses for all appellate and trial court
proceedings) shall be paid and reimbursed to the substantially
prevailing party by the non-prevailing party whether or not a final
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judgment on the merits of such dispute is ever entered in such
litigation, with the court to determine who is the substantially
prevailing party for these purposes (which party need not be awarded,
or otherwise receive, all of the relief it had request in order to be
deemed "substantially prevailing" for purposes hereof). Notwithstanding
any of the other provisions of this Agreement to the contrary, if Buyer
is deemed to be the substantially prevailing party in any of the
litigation discussed above and the amount of such fees, together with
the amount of any relief or judgments granted to Buyer as a result of
such litigation, exceed (i) Seller's limitation on liability set forth
in Section 14(c) hereof or (ii) any of Lanny M. Kalik's, James C.
Elwood's or Edwin B. Wayman's respective limitations on liability set
forth in the guaranty attached hereto as EXHIBIT K, then each member of
the Management Team, jointly and severally, hereby agrees to pay and
reimburse Buyer for all such excess costs, without regard to the
liability limitations set forth in Section 14(c) of this Agreement and
will promptly pay and reimburse to Buyer all such excess costs and
expenses.
(k) It is understood and agreed that before the Closing Date,
Seller will cause the Partnership to do the following, all without any
reduction in the consideration being delivered by Buyer to Seller
hereunder: (i) transfer and assign to Seller the claim by the
Partnership described on EXHIBIT N attached hereto and made a part
hereof and (ii) transfer and assign to Elwood and Kalik any world wide
right, title and interest that Seller may presently have in the
Approved Plans and Specifications. Seller acknowledges and
agrees that all of the liabilities arising out of or relating to the
claim in clause (i) of the preceding sentence shall be retained by
Seller, that Buyer nor the Partnership shall have any liability
whatsoever with respect to such liabilities and that any liability
arising from or relating to such claim shall be a matter as to which
Seller and the Management Team will be required to indemnify Buyer
under Section 14(b) of this Agreement. Buyer acknowledges and agrees
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as follows (i) neither it nor the Partnership will have any right of
any kind to have or use the Approved Plans and Specifications other
than the Partnership's right to use the same in connection with the
ownership and operation of the Project and (ii) until the fifth
anniversary of the Closing Date, neither it nor the Partnership will,
directly or indirectly or through a corporation, partnership or entity
that either of them owns, use (without the consent of Elwood and Kalik)
any of the architects listed in SCHEDULE 17(K) attached hereto and made
a part hereof (who are architects that Elwood and Kalik have used, and
expect to use in the future, in connection with their development or
construction of garden apartment projects in Florida) in connection
with their development in Florida of any 2-story or 3-story garden
apartment projects having between 200 and 800 units. The restriction
contained in subpart (ii) of the preceding sentence is not intended to
restrict Buyer, nor shall it prohibit Buyer, the Partnership or any
corporation, partnership or entity that either of them owns from
acquiring any apartment project in Florida that was architecturally
designed in whole or in part by any of the architects listed in
SCHEDULE 17(K) nor from entering into a contract with any
builder/developer or other person for the purpose of acquiring an
apartment project upon completion of construction, which is designed,
in whole or in part, by any of the architects listed in SCHEDULE 17(K)
pursuant to a bona fide transaction initiated by that builder/developer
or other person.
(l) The parties acknowledge that the transactions contemplated
by this Agreement do NOT constitute a sale, conveyance or transfer of
real property. Nevertheless, to avoid any possibility that the letter,
the spirit or the general policy reflected in the relevant Florida
statute would not be satisfied, the parties include the following
legend here: Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of
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radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
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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 date shall be date upon which
Buyer executes this Agreement.
BUYER: SELLER:
ASSOCIATED ESTATES MIG DEVELOPMENT COMPANY
REALTY CORPORATION
By: By:
------------------------------------ -------------------------------
Jeffrey I. Friedman, President Larry Wright, Chief Executive
Officer
MANAGEMENT TEAM
-----------------------------------
of guarantor)
-----------------------------------
James A. Cote'(also in his capacity
of guarantor)
-----------------------------------
Louis E. Vogt
-----------------------------------
Greg L. Golz
-----------------------------------
William T. Hughes, Jr.
GUARANTORS
-----------------------------------
Lanny M. Kalik
-----------------------------------
James C. Elwood
-----------------------------------
Edwin B. Wayman
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EXHIBITS AND SCHEDULES
EXHIBIT A DESCRIPTION OF PROPERTY
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C APPROVED PLANS AND SPECIFICATIONS
EXHIBIT D PARTNERSHIP AGREEMENT
EXHIBIT E LEASING GUIDELINES
EXHIBIT F FORM LEASE
EXHIBIT G ASSIGNMENT OF PARTNERSHIP INTEREST
EXHIBIT H LETTER REGARDING BOOKS AND RECORDS
EXHIBIT I SELLER'S CERTIFICATE
EXHIBIT J BUYER'S CERTIFICATE
EXHIBIT K GUARANTY
EXHIBIT L LIABILITY CAPS
EXHIBIT M BOOKS AND RECORDS
EXHIBIT N GENERAL CONTRACTOR LAWSUIT
SCHEDULES
SCHEDULE 3(D)
SCHEDULE 3(F)
SCHEDULE 3(I)
SCHEDULE 3(K)
SCHEDULE 3(L)
SCHEDULE 3(R)
SCHEDULE 3(U)
SCHEDULE 17(K)
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<PAGE> 109
Exhibit E
LEASING GUIDELINES
------------------
1. MINIMUM RENT: No suites may be leased for less than the following
minimum rents:
Type of Number of
Suite Minimum Rent Suites
----- ------------ ------
Center Units $___ per month __
End Units $___ per month __
2. SECURITY DEPOSITS:
a. minimum security deposit for each suite shall be equal to
one-half (1/2) of one (1) month's rent.
3. PET DEPOSITS:
a. $300 ($150 shall be refundable at the end of the
lease term, assuming no damages);
b. $20 per month in addition to minimum rent;
c. Pet to not weigh more than thirty-five (35) lbs.;and
d. Only one (1) pet per household.
4. TERM:
a. Minimum lease term of one (1) year.
5. CREDIT REQUIREMENTS:
a. Rent to income ratio should not exceed thirty percent
(30%) per household;
b. Debt to income ratio should be no more than fifty
percent (50%) per household;
c. Credit report should be obtained for all rental
applicants who are twenty one (21) years of age or
older;
d. Verification of current residence
i. if current landlord is a
multi-family property then call must
be placed to confirm reasons for the
termination of the
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applicant's existing lease;
e. Verification of current employer
i. verification of previous employer if
current employment is less than five
(5) years;
f. If any applicant fails to meet any of the foregoing
credit requirements then, except with respect to
matters described in subsection (g) below require (i)
one (1) month of rent as security deposit; or (ii)
co-sign of lease;
g. Grounds for rejection:
i. foreclosure in last year
ii. repossession in last three (3) years
iii. poor credit ratios
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EXHIBIT G
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of the ____ day of ______________,
1998, by and between MIG DEVELOPMENT COMPANY, a Florida corporation
("Assignor"), and [AERC REIT SUB], an Ohio corporation, (the "Assignee"),
WHEREAS, Assignor is the owner of a general partnership
interest in MIG/Pines Development, Ltd., a Florida limited partnership (the
"Partnership Interest");
WHEREAS, Assignor desires, in exchange for an amount of cash
heretofore agreed upon, to transfer all of his right, title and interest in and
to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment
of his Partnership Interest;
NOW, THEREFORE, for value received, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby transfer and
assign all of its right, title and interest in and to its Partnership Interest
to the Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed
this Assignment as of the date first above written.
ASSIGNOR:
MIG Development Company
By:
-----------------------------
Its:
-----------------------------
ASSIGNEE:
[Associated Estates Realty
Its: General Partner
By:___________________________
Martin A. Fishman
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Its: Vice President
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<PAGE> 113
EXHIBIT H
______________ __, 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:
-----------------------------
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EXHIBIT I
SELLER'S CERTIFICATE
--------------------
_______________________________ (the "Seller"), hereby
certifies, represents, and warrants to Associated Estates Realty Corporation
("AERC") pursuant to Section ______ of the Partnership Interests 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 7(a)(i) of the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate as
of the _____ day of ______________, 19___.
-------------------------------
By:
--------------------------------
Its:
-------------------------------
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ATTACHMENT 1
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EXHIBIT J
ASSOCIATED ESTATES REALTY CORPORATION
BUYER'S CERTIFICATE
-------------------
Associated Estates Realty Corporation, an Ohio corporation
("AERC") certifies, represents, and warrants pursuant to Section _____ of the
Partnership Interests 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 7(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
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ATTACHMENT 1
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EXHIBIT K
---------
GUARANTY
--------
GUARANTY, dated as of ____________ ___, 1998, made by LARRY
WRIGHT, JAMES A. COTE', LANNY M. KALIK ("Kalik") , JAMES C. ELWOOD ("Elwood")
and EDWIN B. WAYMAN ("Wayman") (collectively the "Guarantors" or singularly a
"Guarantor"), in favor of ASSOCIATED ESTATES REALTY CORPORATION, an Ohio
corporation ("AEC") and [AERC REIT Sub, an ___________________ ("Sub")] AEC and
sub collectively "AERC").
PRELIMINARY STATEMENTS:
(1) AEC, as subsequently assigned to Sub, has entered into a
Partnership Interest Purchase dated March __, 1998 (the "Purchase Agreement")
with MIG Development Company, a Florida corporation ("MIG"), pursuant to which,
subject to certain conditions, Sub will purchase the Partnership Interest (as
defined in the Purchase Agreement) from to MIG.
(2) It is a condition precedent to Sub purchasing the
Partnership Interest from MIG that Guarantors shall execute and deliver to AERC
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order
to induce AERC to consummate the transactions contemplated by the Purchase
Agreement, Guarantors hereby agree with AERC as follows:
SECTION 1. GUARANTY. Lanny M. Kalik, James C. Elwood and Edwin
B. Wayman, severally and each of the other Guarantors, jointly and severally,
hereby absolutely, unconditionally and irrevocably guarantee to AERC (i) the
full, complete and prompt performance and observance of all of the obligations,
duties and agreements of MIG arising under the Purchase Agreement in strict
accordance with the terms and conditions thereof (the "Obligations"); PROVIDED,
HOWEVER, that this Guaranty shall be limited to Two Hundred Fifty Thousand
Dollars ($250,000), in the aggregate, and will be further limited with respect
to Lanny M. Kalik to $_________________, James C. Elwood to $_________________
and Edwin B. Wayman to $_________________, respectively. All recoveries
hereunder up to a total of $250,000 in the aggregate will be allocated and
apportioned between the Guarantors in proportion to their respective maximum
liability amounts set out in the preceding sentence (and, for purposes of this
sentence only, the respective amounts of each of Larry Wright and James Cote'
will be one-half of the amount by which $250,000 exceeds the total of the
maximum liability amounts of Kalik, Elwood and Wayman). There shall be counted
and charged against the respective maximum liability amounts of Kalik, Elwood
and Wayman hereunder any amounts recovered from them in respect of
"substantially prevailing party" legal fees under Section 17.03 of the Purchase
Agreement. All payments by Guarantors or any Guarantor shall be made in lawful
money of the United States of America. Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Obligations and would be owed by MIG or the Management
Team to AERC under the Purchase Agreement, but for the fact that they are
unenforceable or not allowable due to
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the existence of a bankruptcy, reorganization or similar proceeding involving
MIG.
SECTION 2. GUARANTY ABSOLUTE. Lanny M. Kalik, James C. Elwood
and Edwin B. Wayman severally and each of the other Guarantors, jointly and
severally, guarantee that the Obligations will performed strictly in accordance
with the terms of the Purchase Agreement, irrespective of:
(i) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
consent to departure from the Purchase Agreement; or
(iii) any failure to give notice to any Guarantor of MIG's
failure to perform any of the Obligations when required, or of
any default or event of default under the Purchase Agreement.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if, at any time, any of the Obligations are rescinded by AERC upon the
insolvency, bankruptcy or reorganization of MIG or otherwise, all as though such
recision had not occurred.
SECTION 3. GUARANTY ABSOLUTE.Guarantors hereby waive
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Guaranty and, any requirement that AERC exhaust
any right or take any action against MIG or any other person or entity or any
real or personal property of MIG or any other person or entity.
SECTION 4. NO SUBROGATION. Guarantors hereby waive and
relinquish any right to subrogation or other right or claim to payment against
MIG arising out of or on account of any sum paid or agreed to be paid by
Guarantors under this Guaranty, whether such right or claim is liquidated,
unliquidated, fixed, contingent, matured or unmatured. If any amount shall be
paid to Guarantors or any Guarantor in violation of the preceding sentence at
any time prior to the performance of all Obligations then to be performed, such
amount shall be deemed to have been paid to such Guarantor or Guarantors, as the
case may be, and held in trust, for the benefit of AERC and shall forthwith be
paid to AERC to be credited and applied to the Obligations, whether matured
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or unmatured, in accordance with the terms of the Purchase Agreement. Guarantors
acknowledge that they will receive direct and indirect benefits for the
arrangements contemplated by the Purchase Agreement and that the waiver set
forth in this Section 4 is knowingly made in contemplation of such benefits.
Guarantors consent and agree that AERC shall not be under any obligation to
marshall any assets in favor of Guarantors or any Guarantor or against or in
performance of any or all of the Obligations. This Section 4 is made for the
express benefit of MIG as well as AERC and may be enforced independently by MIG.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Guarantor
hereby represents and warrants as follows:
(a) The execution, delivery and performance by such
Guarantor of this Guaranty does not and will not (i) violate
any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently
in effect having applicability to such Guarantor; or (ii)
result in a breach of or constitute a default under any
indenture, loan or credit agreement, lease, or any other
agreement or instrument to which such Guarantor is a party or
by which he or any of his properties may be bound or affected;
and such Guarantor is not in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease
or instrument;
(b) This Guaranty is the legal, valid and binding
obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms;
(c) No authorization, consent, license, approval or
other action by, and no notice to or filing with, any federal,
state or local government or any court, governmental
department, commission, board, bureau, agency or
instrumentality thereof, is or will be required for the due
execution, delivery and performance by Guarantor of this
Guaranty; and
(e) The assumption by such Guarantor of his
obligations under this Guaranty will result in direct
financial benefit to such Guarantor.
SECTION 6. AMENDMENTS, WAIVER, ETC. (a) No amendment or waiver
of any provision of this Guaranty nor consent to any departure by Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by AERC, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) The waiver (whether expressed or implied) by AERC of any
breach
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of the terms or conditions of this Guaranty, shall not prejudice any remedy of
AERC in respect of any continuing or other breach of the terms and conditions
hereof, and shall not be construed as a bar to any right or remedy which AERC
would otherwise have on any future occasion under this Guaranty.
(c) No failure to exercise nor any delay in exercising on the
part of AERC any right, power or privilege under this Guaranty, shall operate as
a waiver thereof or a consent thereto; further, no single or partial exercise of
any right, power or privilege under this Guaranty shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
SECTION 7. ACTIONS. Each failure of Guarantors or any
Guarantor to perform any part or portion of the Obligations when required shall
give rise to a separate cause of action against Guarantors or any Guarantor
under this Guaranty and separate suits may be brought against Guarantors or any
Guarantor hereunder as each cause of action arises.
SECTION 8. CONTINUING GUARANTY. This Guaranty is a continuing
guaranty and shall (i) remain in full force and effect until the complete and
prompt performance of the Obligations and (ii) be binding upon each Guarantor,
and his respective heirs and representatives; and (iii) inure to the benefit of
and be enforceable by AERC and their respective successors, transferees and
assigns.
SECTION 9. SEVERABILITY. If any term or provision of this
Guaranty is or shall become illegal, invalid or unenforceable in any
jurisdiction, all other terms and provisions of this Guaranty shall remain
legal, valid and enforceable in such jurisdiction and such illegal, invalid or
unenforceable provision shall be legal, valid and enforceable in any other
jurisdiction.
SECTION 10. GOVERNING LAW. This Guaranty shall be governed by,
and construed in accordance with, the law of the State of Florida, without
reference to principles of conflicts of law.
SECTION 11. JURISDICTION. Any litigation or other formal
dispute resolution process under, concerning, arising out or relating to this
Guaranty or the performance of any duty or obligation of any Guarantor hereunder
shall be brought, instituted, maintained and conducted solely and exclusively in
the Florida State or Federal courts sitting in Broward County, Florida (or the
Federal District Court for Broward County). Each party to this Guaranty
irrevocably consents to jurisdiction over its person and property in and by, and
venue in, such courts for purposes of adjudicating any and all disputes arising
under, concerning, or relating in any way to this Guaranty or any subject matter
hereof or matter addressed or dealt with herein. AERC agrees to use reasonable
efforts to join all parties to this Guaranty and MIG in a single action in the
event that any litigation is commenced by AERC hereunder.
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IN WITNESS WHEREOF, this Guaranty has been executed by the
undersigned at Broward, Florida after having read and fully understanding the
language contained herein, as of the day and year first above written.
GUARANTORS:
-----------------------------
Larry Wright
-----------------------------
James A. Cote'
-----------------------------
Lanny M. Kalik
-----------------------------
James C. Elwood
-----------------------------
Edwin B. Wayman
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Contribution and Partnership
Purchase Agreement EXHIBIT H-1
-----------
GENERAL PARTNER INTEREST PURCHASE
AGREEMENT FOR KIRKMAN
<PAGE> 124
EXHIBIT H-2
PARTNERSHIP INTEREST PURCHASE AGREEMENT
KIRKMAN
MIG DEVELOPMENT COMPANY
AND
ASSOCIATED ESTATES REALTY CORPORATION
<PAGE> 125
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
DEFINITIONS................................................................................................. ii
1. PURCHASE AND SALE OF PARTNERSHIP INTERESTS............................................................. 2
2. CONSIDERATION AND PAYMENT.............................................................................. 2
3. REPRESENTATIONS AND WARRANTIES OF SELLER............................................................... 3
4. REPRESENTATIONS AND WARRANTIES OF BUYER................................................................. 9
5. CONSTRUCTION OF THE PROJECT/OPERATIONS PENDING CLOSING................................................. 10
6. TITLE AND POSSESSION OF THE PROPERTY................................................................... 13
7. CONDITIONS TO CLOSING.................................................................................. 15
8. DELIVERIES............................................................................................. 17
9. DUE DILIGENCE PERIOD................................................................................... 19
10. CLOSING DATE........................................................................................... 21
11. PRORATIONS AND CLOSING COSTS........................................................................... 21
12. FIRE OR OTHER CASUALTY................................................................................. 23
13. CONDEMNATION AND EMINENT DOMAIN........................................................................ 23
14. INDEMNIFICATION........................................................................................ 24
15. MECHANICS' LIENS....................................................................................... 26
16. ....................................................................................................... 27
17. MISCELLANEOUS.......................................................................................... 27
</TABLE>
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DEFINITIONS
This definition section is incorporated into, and made a part of, the
Partnership Interests Purchase Agreement by and among MIG Development Company,
the Management Team (as defined herein) and Associated Estates Realty
Corporation dated as of the date hereof.
A. "ADJUSTMENT DATE" shall mean 11:59 pm of the day preceding the Closing Date.
B. "AGREEMENT" shall mean this Partnership Interest Purchase Agreement, as it
may be modified, amended, supplemented or restated from time to time as provided
herein.
C. "APPURTENANT RIGHTS" shall mean 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.
D. "ADJUSTMENT DATE" shall mean as of midnight of the day preceding the Closing
Date.
E. "ASSIGNMENT AGREEMENT" shall have the meaning set forth in Section 8(a)(ii)
of this Agreement.
F. "BOOKS AND RECORDS" shall mean all books of account, customer lists, files,
papers, and records relating to the Project that are either (i) included on the
SCHEDULE REGARDING BOOKS AND RECORDS attached hereto and made a part hereof as
EXHIBIT O or (ii) are not included on the Schedule Regarding Books and Records
but are nevertheless deemed by Buyer (and Buyer identifies to Seller in writing)
or Seller, or both to be relevant to the operation and value of the Project or
the Partnership, or both.
G. "BUYER" shall mean Associated Estates Realty Corporation, an Ohio
corporation.
H. "BUYER'S REPRESENTATIVE" shall have the meaning set forth in Section 16 of
this Agreement.
I. "CLAIM EXPIRATION DATE" shall have the meaning set forth in Section 14 of
this Agreement.
J. "CLOSING" shall mean the consummation of the transactions contemplated by
this Agreement, including, without limitation, the delivery of the Assignment
Agreements and full execution and delivery of any other documents required to be
delivered under this Agreement.
K. "CLOSING DATE" shall have the meaning set forth in Section 10 of this
Agreement.
L. "CONSTRUCTION DOCUMENTS" shall mean the plans, elevations, floor plans, site
plans drawings and specifications for the Project as set forth on EXHIBIT C
(which, as the same may be modified, amended or supplemented from time to time
by Seller in non-material respects or, with Buyer's approval, which will not be
unreasonably withheld or delayed, in material respects, is referred to herein as
the "Approved Plans and Specifications") and any documentation relating thereto,
any and all "as-built" plans, construction studies, soil tests and reports or
other engineering studies, architect contracts, engineering contracts,
construction contracts, other written agreements,
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records, change orders, construction budgets, critical path analysis, permits
and certificates of occupancy, construction draw and lien waiver documentation
and any other documentation whatsoever relating to construction and development
of the Project that Buyer identifies to or requests from Seller in writing.
Without limiting the foregoing enumeration, the Construction Documents
specifically include the General Construction Contract between [Seller] and
_________ dated _________, a true and correct copy of which is attached hereto
and made a part hereof as EXHIBIT P and the Performance, Payment and Surety
Bonds issued by ____________ to [Seller], true and correct copies of which are
attached hereto and made a part hereof as EXHIBIT Q.
M. "CONTRIBUTION AGREEMENT" shall have the meaning set forth in the second
recital of this Agreement.
N. "DUE DILIGENCE PERIOD" shall have the meaning set forth in Section 9 of this
Agreement.
O. "EARNEST MONEY DEPOSIT" shall have the meaning set forth in Section 2(a) of
this Agreement.
P. "FORCE MAJEURE" shall mean the failure of Seller to perform any obligation
hereunder by reason of any act of God, unusual governmental restriction,
regulation or control, strike, enemy or hostile governmental action, civil
commotion, insurrection, sabotage, fire or other casualty. Force Majeure shall
not mean Seller's failure to perform any obligation hereunder due to lack of
money or inability to raise capital or borrow for any purpose.
Q. "HAZARDOUS MATERIALS" shall mean any and all substances subject to
environmental regulation of any type in effect, or which could subject Buyer to
environmental liability of any type, including, but not limited to, "hazardous
substances," "hazardous waste," "hazardous materials," "pollutants,"
"contaminants" or "toxic substances" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, ET SEQ.; the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, ET SEQ.; the Resource Conservation and Recovery Act, 42 U.S.C. Section
9601, ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 2601, ET
SEQ.; "hazardous chemicals" as defined under OSHA's hazard communication
standard, 29 C.F.R. Section 1910.1200; and those substances defined as
"hazardous wastes" or as "hazardous substances" under the laws of the State of
Florida; and in the regulations adopted, published and/or promulgated pursuant
to such laws.
R. "HP" shall mean AERC HP Advisors LP, a Florida limited partnership.
S. "INTANGIBLE RIGHTS" shall mean all of the Seller's or the Partnership's
rights under 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, all transferable rights under architects and construction contracts,
including, without limitation, the Construction Documents, and the right, if
owned by Seller or the Partnership, to use the name "Windsor at Kirkman" or any
derivations thereof at or in connection with the Project, but specifically
excluding all rights described or referred to in Section 17(k) of this
Agreement.
T. "MANAGEMENT TEAM" shall mean Larry Wright, James A Cote', Louis E. Vogt, Greg
L. Golz and William T. Hughes, Jr.
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U. "PARTNERSHIP" shall mean MIG/Orlando Development, Ltd., a Florida limited
partnership.
V. "PARTNERSHIP INTEREST" shall have the meaning set forth in the recitals
section of this Agreement.
W. "PERMITS" shall mean all licenses, permits, consents, authorizations,
approvals, and certificates of any regulatory, administrative or other
governmental agency or body, issued to or held by Seller and related to the
ownership or operation of the Property required by law, including, without
limitation, all building, subdivision, site plan, storm water, utility and
wetlands permits, licenses, consents, authorizations and approvals.
X. "PERMITTED EXCEPTIONS" shall have the meaning set forth in Section 6(a) of
this Agreement.
Y. "PERSONAL PROPERTY" shall mean all furniture, equipment, supplies, and other
personal property owned by Seller, used or usable in connection with the Project
and located on or in the Property, including, without limitation, the personal
property listed on EXHIBIT B.
Z. "PROPERTY" shall mean that certain parcel of real property on which a
460-unit apartment complex known as Windsor at Kirkman Apartments, is being
constructed at Orlando, Florida, which real property is more fully described on
EXHIBIT A attached hereto and made a part hereof, together with all buildings,
clubhouses, pools, fixtures (whether completed or currently under construction),
and all personal property identified on EXHIBIT B and other improvements located
thereon and therein and (to the extent they exist) all appliances, fixtures,
plumbing, incinerators, lighting equipment, radiators, furnaces, boilers, hot
water heaters, water systems, and air-conditioning equipment located thereon or
therein or attached thereto and all Appurtenant Rights.
AA. "PROJECT" shall mean (a) the Property, (b) the Personal Property; (c) the
Permits, (d) the Intangible Rights and (e) the Books and Records.
BB. "PURCHASE PRICE" shall have the meaning set forth in Section 2 of this
Agreement.
CC. "SELLER" shall mean MIG Development Company, a Florida corporation.
DD. "SOLID WASTES" shall mean any and all substances subject to environmental
regulation of any type in effect or which could subject Buyer to environmental
liability of any type, including, but not limited to, "solid wastes" as defined
in the Resource Conservation and Recovery Act or under the laws of the State of
Florida.
EE. "TITLE COMMITMENT" shall have the meaning set forth in Section 6 of this
Agreement.
FF. "TITLE COMPANY" shall mean First American Title Insurance Company, Troy
Michigan office.
GG. "TITLE POLICY" shall have the meaning set forth in Section 6 of this
Agreement.
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THIS PARTNERSHIP INTERESTS PURCHASE AGREEMENT (this
"Agreement") made as of the _____ day of April, 1998 by and among MIG
DEVELOPMENT COMPANY, a Florida corporation ("Seller"), Larry Wright ("Wright"),
James A Cote' ("Cote'"), Louis E. Vogt ("Vogt"), Greg L. Golz ("Golz") and
William T. Hughes, Jr. ("Hughes"; Wright, Cote', Vogt, Golz and Hughes
collectively the "Management Team"), and ASSOCIATED ESTATES REALTY CORPORATION,
an Ohio corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns a general partnership interest (the
"Partnership Interest") in MIG/Orlando Development Ltd., a Florida limited
partnership (the "Partnership");
WHEREAS, Buyer's affiliate, AERC HP Advisors LP ("HP"), has
entered into that certain Contribution and Partnership Interest Agreement with
all of the limited partners of the Partnership whereby HP will acquire all of
the limited partnership interests in the Partnership (such agreement as
modified, amended or restated in accordance with its provisions, the
"Contribution Agreement");
WHEREAS, the Management Team includes certain limited partners
in the Partnership;
WHEREAS, upon the closing of the transactions contemplated by
this Agreement and the Contribution Agreement, Buyer and HP will collectively
own One Hundred Percent (100%) of the partnership interests in the Partnership;
WHEREAS, the Partnership is the fee owner of the Project;
WHEREAS, the Project is currently under construction and will
not be completed prior to the Closing; and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, on the terms and subject to the conditions hereinafter
stated, the Partnership Interest;
NOW, THERFORE, for good and valuable consideration received
to the full
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satisfaction of each of them, the parties agree as follows:
1. PURCHASE AND SALE OF PARTNERSHIP INTERESTS. Upon the terms and
subject to the conditions set forth herein, Seller agrees to convey, sell,
transfer, assign, and deliver 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 Partnership Interest, free and
clear in each case of all liens, security interests, and encumbrances
whatsoever.
2. CONSIDERATION AND PAYMENT. The purchase price for the Partnership
Interest shall be the amount (expressed in dollars) that is equal to the product
of multiplying 0.01 by the Kirkman Net Exchange Amount (as defined in Paragraph
2.02 of the Contribution Agreement) (the "Purchase Price") payable by Buyer to
Seller as follows:
(a) Three Thousand One Hundred Fifty Four Dollars ($3,154) in
earnest money to be deposited by Buyer in escrow upon execution of this
Agreement in accordance with this Section 2 (the "Earnest Money
Deposit"); and
(b) The balance of the Purchase Price shall be deposited in
escrow by Buyer on or before the Closing Date (defined below) in
immediately available funds.
Within five (5) business days following the execution of this
Agreement, Buyer shall open an escrow account with the Title Company as escrow
agent, and deposit the Earnest Money Deposit therein. Buyer shall notify Seller
of the opening, the deposit, the number of the escrow, and the employee or
employees of the Title Company in charge of the escrow. Each party shall execute
such documentation as may 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.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller and the Management
Team,
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jointly and severally, represent and warrant to Buyer that:
(a) The Partnership is, and will be at the Closing, a Florida
limited partnership duly organized, validly existing and in full force
and effect under the laws of the State of Florida The Partnership has,
and at the Closing will have, the power and authority to carry on the
business for which it has been organized.
(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 against Seller in accordance with their respective terms.
The persons executing this Agreement on behalf of Seller, and Seller,
are duly authorized to so act, and all requisite corporate 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.
(c) The Partnership, the Project and the conduct by Seller of
its business relating thereto, to the best of Seller's and the
Management Team's knowledge, are in compliance in all material respects
with all applicable laws, ordinances, and regulations of proper public
authorities, and Seller has no written notice or knowledge of any
material violation, whether actual, claimed or alleged, thereof.
(d) To the best of Seller's and the Management Team's
knowledge, except as set forth on SCHEDULE 3(d) attached hereto and
made a part hereof, there is no litigation,
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proceeding or action pending or threatened against or relating to the
Partnership, the Partnership Interest, Seller or the Project which
might materially and adversely affect the Partnership, the Partnership
Interest, Seller or the Project or which questions the validity of this
Agreement or any action taken or to be taken by Seller pursuant hereto.
(e) 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 Seller or the Partnership is a party,
subject to 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.
(f) To the best of Seller's and the Management Team's
knowledge, true, correct, and complete copies of all writings
(including, without limitation, correspondence, notices, pleadings, and
memoranda) relating to any potential, threatened, or pending eminent
domain or other similar action or proceeding in respect to all or a
portion of the Project or in the case of oral arrangements, written
summaries of the same, together with any modifications or amendments
thereof, have been or will immediately be available to Buyer after the
execution of this Agreement and, in the case of agreements or documents
that come into existence after execution hereof, within five (5) days
of Seller's or Seller's agents or representatives or consultants
receipt of such documentation. Seller has no actual knowledge of any
material incorrectness in the information, collectively, contained in
the documents, instruments or other writings to be delivered or made
available to Buyer by Seller in accordance with the provisions of
Section 9 hereof.
(g) All federal, state, and other taxes, assessments, fees and
other governmental charges upon Seller or the Partnership with respect
to the Project or the business conducted
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thereon or in connection with the Project which are due and payable
have been paid.
(h) To the best of Seller's and the Management Team's
knowledge, (i) each of the Permits is currently valid and in full force
and effect, and (ii) the Permits constitute all licenses, permits,
consents, authorizations, approvals, and certificates of any
regulatory, administrative or other governmental agency or body
necessary to Seller's development, construction and ownership of the
Project as an apartment complex (in view of the present status of
construction and development) and Seller and the Management Team have
no actual knowledge of any impediment to the issuance of any additional
permits that will be required in connection with the completion of the
Project. To the best of Seller's and the Management Team's knowledge,
neither Seller nor the Project is in violation in any material respect
of any of the Permits and there is no pending or, to the knowledge of
Seller, threatened proceeding which could result in the revocation or
cancellation of, or inability of Seller to renew, any Permit.
(i) To the best of Seller's and the Management Team's
knowledge, except as disclosed on SCHEDULE 3(i) attached hereto and
made a part hereof: The Project is in compliance in all material
respects with all applicable federal, state and local laws, ordinances
and regulations relating to air, water or noise pollution, or the
production, storage, labeling or disposition, or release of Hazardous
Materials or Solid Wastes or the health, safety or environmental
conditions on, under or about the Project, including, without
limitation, soil and groundwater conditions; neither Seller nor the
Management Team has actual knowledge that any Hazardous Materials or
Solid Wastes have been or are currently on, under or about the Project;
and neither Seller nor the Partnership has received any written notice
from any governmental agency or private or public entity advising that
Seller or the Partnership is responsible for or potentially responsible
for response
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costs or response actions with respect to a release, a threatened
release or cleanup of substances produced by, or resulting from, any
business, commercial or industrial activities, operations or processes
related to the Project or of the Partnership, Seller or predecessors of
Seller.
(j) The Partnership has no employees, except for a project
superintendent.
(k) Except as set forth on SCHEDULE 3(k) attached hereto and
made a part hereof (i) there is no mortgage indebtedness encumbering
the Project and (ii) to the best of the Seller's and the Management
Team's knowledge, the Partnership has no other material obligations or
liabilities to third parties that will not be satisfied at no cost,
liability or expense to Buyer on or prior to the Closing Date. Neither
Seller nor the Partnership is in default, nor will the entering into of
this Agreement by Seller result in a default by Seller or the
Partnership, of any of their respective obligations under any loan
documents that relate to or encumber the Project.
(l) All utilities will be available and in place and adequate
for the operation of the Project, and the utilities are or will be
either located in the public streets adjacent to the Project or are
subject to appurtenant easements in favor of Seller, subject to Buyer's
payment of all applicable governmental or utility fees and charges and
fulfillment of all applicable requirements and conditions contemplated
by the Construction Documents.
(m) Except for the rights of first refusal contained in the
Partnership Agreement (as hereafter defined), which rights have been or
will be waived with regard to this matter prior to Closing, no person
or entity has an option or right of first refusal to purchase any of
the Project or the Partnership Interest.
(n) Seller owns the Partnership Interest, free and clear of
all mortgages, pledges, liens, security interests, encumbrances, and
restrictions of any nature whatsoever.
(o) There has been no material adverse financial change from
that shown in the
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most recent financial statements, tax returns or Books and Records
delivered or made available to Buyer by Seller pursuant to Section
3(f), 3(r) and Section 9 hereof and to the best knowledge of Seller and
the Management Team, there are no material liabilities, contingent or
otherwise, asserted in writing with respect to the Project other than
those shown on such financial statements, tax returns or Books and
Records.
(p) Seller and the Management Team do not have actual
knowledge, that the information, collectively, that has been, or will
be, supplied, delivered or made available to Buyer by Seller or agents
of Seller, during the course of Buyer's review of the Project
(including, without limitation, all information supplied, delivered or
made available to Buyer prior or subsequent to the execution of this
Agreement) is, will be, or was at the time such information was or will
be supplied, delivered or made available, materially untrue or
materially misleading (without warranting the accuracy of any
information contained in any documents authorized, created or provided
by unaffiliated third parties).
(q) To best of Seller's actual knowledge as of the Closing
Date, the construction of the Project has been approved by the City of
Orlando in accordance with the Approved Plans and Specifications and
the Approved Plans and Specifications as so approved comply with all
applicable building, subdivision, land development, fire and zoning
ordinances, except as set forth on SCHEDULE 3(q) attached hereto and
made a part thereof, without the need for any variances or conditional
use permits.
(r) True and correct copies of all financial books and
records relating to the Project and the Partnership for the current
year will be made available upon execution of this Agreement. True and
correct copies of the operating statements (if any) for the Project for
the most recent year to date and any other document or instrument
reasonably requested by Buyer shall be delivered to Buyer within three
(3) business days following the execution
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of this Agreement.
(s) The Project is currently being constructed and completed
in all material respects in accordance with the Approved Plans and
Specifications attached hereto and made a part hereof as EXHIBIT C, in
a good and workmanlike manner and in compliance in all material
respects with all applicable laws, ordinances, and directives of all
governmental or quasi-governmental authorities.
(t) True, correct, and complete copies of the Construction
Documents, including, without limitation, the General Construction
Contract (attached as EXHIBIT P) and the Performance, Payment and
Surety Bonds (attached as EXHIBIT Q) together with any modifications or
amendments thereof, have been or will immediately be available to Buyer
upon the execution of this Agreement and, in the case of agreements or
documents that come into existence after execution hereof, within five
(5) days after Seller's or Seller's agents or representatives or
consultants receipt of such documentation. All of the material
contracts relating to the construction of the Project in existence as
of the date hereof are in full force and effect. Except as disclosed on
SCHEDULE 3(t) attached hereto and made a part hereof, Seller has taken
no action or failed to take any action nor has, to Seller's actual
knowledge, any other party to any of the Construction Documents taken
any action which, with the giving of notice or the passage of time or
otherwise, would constitute a default in any material respect or
otherwise entitle either party to damages or a right to terminate, and
no such other party has given written notice with respect to any
alleged material default by Seller or the Partnership under any such
material contracts relating to the construction of the Project.
(u) True, correct, and complete copies of the partnership
agreement of the Partnership (the "Partnership Agreement"), including
all modifications and amendments
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thereof, are attached hereto as EXHIBIT D, and the Partnership
Agreement has not been further modified or amended.
(v) Upon the Closing, Buyer and HP will own One Hundred
Percent (100%) of the partnership interests in the Partnership.
(w) The Schedule Regarding Books and Records and the other
documents delivered by Seller to Buyer contain all documents in
Seller's possession or actually known to Seller relevant to the
operation and value of the Project, the Partnership or both and Seller
has not failed to disclose to Buyer on (or in the documents referred to
in) the Schedule Regarding Books and Records any document in its
possession or actually known to Seller that would have a material
adverse impact on the Project, the Partnership or both.
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 matter 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 7(a) hereof are not satisfied.
Except to the extent of any matters disclosed by Seller on the
attachment to EXHIBIT I hereof that will be delivered by Seller to Buyer at
Closing, and subject to the provisions of the preceding paragraph (without
affecting the right of Buyer to decline to close hereunder if any of the Closing
conditions under Section 7(a) hereof are not satisfied), all of the
representations and
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warranties set forth in this Section 3 shall be deemed renewed by Seller on the
Closing Date as if made at such time shall survive the Closing for a period of
one (1) year, except that the representations and warranties set forth in
Section 3(n) of this Agreement shall survive indefinitely.
Except for the representations and warranties contained in
this Section 3, Seller makes no other representations or warranties whatsoever
and expressly disclaims all other representations and warranties of any kind.
Seller does not warrant that the projected results on the prospective budgets
and construction schedules will in fact be achieved.
4. 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 Articles of Incorporation
or Code of Regulations of Buyer 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
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affect the ability of Buyer to consummate the transactions contemplated
hereby or which questions the validity of this Agreement or any action
taken or to be taken by Buyer pursuant hereto.
All of the representations and warranties set forth in this
Section 4 shall be deemed renewed by Buyer on the Closing Date as if made at
such time and shall survive the Closing for a period of one (1) year.
5. CONSTRUCTION OF THE PROJECT/OPERATIONS PENDING CLOSING. Seller and
the Management Team (solely with respect to Sections 5(b) and 5(n) hereof) shall
until the Closing:
(a) Continue with the construction of the Project in
accordance with the Approved Plans and Specifications and its current
construction schedule subject, however, to acts or events of Force
Majeure.
(b) Cooperate and cause the Partnership to cooperate with
Buyer and Buyer's agents at all times, including providing Buyer and
Buyer's agents with access to the Project during reasonable hours to
permit inspections of the Project.
(c) Operate or cause the Partnership to operate the Project
and conduct or cause to be conducted its business in the regular and
ordinary course, consistent with the Construction Documents (to the
extent applicable) and exercise reasonable efforts to preserve intact
the operation of the Project.
(d) Maintain or cause the Partnership to maintain the Project
in good condition and repair and otherwise in accordance with the
Construction Documents (to the extent applicable).
(e) Not permit or cause the Partnership to remove, sell,
mortgage, pledge or otherwise encumber or dispose of any portion of the
Project, except in the ordinary course of business and with the prior
written consent of Buyer. Buyer acknowledges that the
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Project is currently encumbered by a construction loan.
(f) Continue or cause the Partnership to continue to maintain
all insurance on the Project covering the risks and in the amounts of
coverage in effect on the date hereof as increased to cover all new
construction.
(g) Duly observe and perform or cause the Partnership to duly
observe and perform all material terms, conditions, and requirements of
the (to the extent applicable) Construction Documents and not knowingly
do any act or omit to do any act, or permit any act or omission to act,
which will, upon the occurrence thereof or with the passage of time,
cause a material breach or material default under any (to the extent
applicable) Construction Document.
(h) Not permit or cause the Partnership, without the Buyer's
prior written consent which shall not be unreasonably withheld,
conditioned or delayed to (i) incur any new mortgage indebtedness or
other material indebtedness relating to the Project (but they may be
permitted to increase the amount of indebtedness outstanding under
presently existing loan or credit agreements as necessary to complete
construction), or (ii) enter into or renew any contract or agreement
pertaining to any portion of the Project unless such contract or
agreement can be terminated at will by Buyer without obligation after
the Closing or relate to construction of the Project in the ordinary
course and such contract involves the payment of less than $10,000 or
all such contracts in the aggregate involve the payment of less than
$50,000.
(i) Not cause or permit the Partnership to take, agree to take
or knowingly permit to be taken any action or do or knowingly permit to
be done anything in the conduct of the business of Seller, or
otherwise, which would be in breach of any of the terms or provisions
of this Agreement or which would cause any representation and warranty
of
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Seller contained herein to be or become untrue.
(j) Use its reasonable efforts 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.
(k) Effective as of the Closing Date, cause any management
contract relating to the Project to be terminated, unless otherwise
expressly instructed by Buyer to Seller, through written notice to
Seller.
(l) Not transfer, pledge, encumber, convey, devise or sell the
Partnership Interest.
(m) Deliver to Buyer, for Buyer's approval, such approval to
not be unreasonably withheld or delayed, any and all proposed material
changes or material modifications to the Approved Plans and
Specifications.
(n) Not enter into any leases for occupancy of the Property
other than leases ("Tenant Leases") which are substantially in the form
of EXHIBIT R attached hereto and made a part hereof and satisfy the
requirements set forth on EXHIBIT E attached hereto and made a part
hereof.
(o) On or before the Closing Date, each member of the
Management Team covenants and agrees to execute and deliver to Buyer
the Indemnity Agreement set forth on EXHIBIT N.
6. 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 (for the
benefit of the Partnership) 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, with the standard exceptions deleted, and with such
endorsements as
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Buyer may reasonably require, including, without limitation, non-
imputation and fairways endorsements, in the amount of $40,000,000 (the
"Title Policy") issued by the Title Company, as assurance that upon the
Closing, the Partnership holds and will hold good, valid, and
marketable 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 as follows (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 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 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 the Partnership will have complete possession of
the Property.
(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")
with copies of all instruments referred to as exceptions or conditions
in the Title Commitment, setting forth all real estate taxes and
special assessments, the state of record title to the Property and all
exceptions to, or encumbrances upon, title to the Property which would
appear in the Title Policy. Buyer shall have until the end of the Due
Diligence Period (as defined in Section 9 of this Agreement) to review
such items and to give notice to Seller of such objections as Buyer may
have to any matters set forth in the Title Commitment or survey. Seller
understands and agrees that prior to the expiration of the Due
Diligence Period, Buyer may deliver to Seller an objection letter or
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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 9 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 (i) consensual liens affirmatively granted
by Seller, (ii) mechanics' liens, (iii) judgement liens or (iv) non-
consensual liens (other than mechanics' or judgement liens) which do
not exceed Twenty Five Thousand Dollars ($25,000) in the aggregate that
can be released by payment of the underlying obligation, shall be
removed, bonded or title insured over by Seller and if not so removed,
bonded or title insured over by the Closing then such amount shall be
charged against the capital accounts of the Limited Partners (as
defined in the Contribution Agreement) all as more fully provided in
Section 11 hereof. Buyer shall conclusively be
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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.
7. CONDITIONS TO CLOSING.
(a) Subject to the provisions of Sections 12 and 13, Buyer's
obligations under this Agreement are expressly conditioned upon the
satisfaction of the following conditions:
(i) the representations and warranties of Seller set
forth in Section 3 hereof shall have been true and correct in
all material respects when made and true and correct in all
material respects as of the Closing and Seller shall have
complied in all material respects with all covenants as set
forth in Section 5 herein and shall have otherwise performed
all of its obligations hereunder, in all material respects;
(ii) all required 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 8 hereof and
delivered or made available all other material items and
information required by this Agreement in accordance with the
terms of this Agreement;
(iv) Buyer shall have notified Seller pursuant to
Section 9 herein that Buyer has elected to proceed with the
transactions contemplated by this Agreement;
(v) the condition of the Project, with the exception
of ongoing construction as contemplated hereby, shall not have
changed in any material adverse respect from the condition in
existence or reflected by writings produced during the Due
Diligence Period (as hereinafter defined);
(vi) Seller shall have arranged without any cost or
liability to Buyer for the termination, effective not later
than the Closing, of any management contract of any property
manager relating to the Project.
(vii) the transactions contemplated by the Initial
Closing (as defined in the Contribution Agreement) shall have
closed substantially simultaneously with the Closing of this
transaction;
(viii) the transactions contemplated by that certain
Agreement and Plan of
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Merger by and among Buyer, MIG Realty Advisors, Inc. and
certain shareholders of MIG Realty Advisors, Inc. shall have
closed substantially simultaneously with or (with respect to
the so-called MRT transactions, prior to) the Closing of this
transaction;
(ix) the Title Company shall be ready, willing and
able to issue the Title Policy to the Partnership in
accordance with the provisions of Section 6 hereof;
(x) on or before the Closing, Wright, Cote', Lanny M.
Kalik, James C. Elwood and Edwin B. Wayman shall have each
executed and delivered the guaranty in the form attached
hereto and made a part hereof as EXHIBIT K; and
(xi) all liabilities of the Partnership shall have
been paid in full by Seller on or before the Closing Date,
except for (i) obligations then currently payable pursuant to
any liabilities described in attached SCHEDULE 3(k), (ii)
those obligations then currently payable created pursuant to
any contracts permitted pursuant to the provisions of Section
5(h) of this Agreement and (iii) bills of the general
contractor, subcontractors, materialmen, laborers, the
architect and other persons performing construction work or
services in connection with the Project for the then current
draw period (i.e., the period of time between the Closing Date
and the last draw request submitted to and paid by the
construction lender(s)), which are otherwise eligible for
payment under Seller's construction mortgage(s).
(b) Subject to the provisions of Sections 12 and 13 hereof,
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 4 hereof shall have been true and correct in
all material respects when made and true and correct in all
material respects as of the Closing Date 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 8(b) hereof;
(iii) the transactions contemplated by the Initial
Closing (as defined in the Contribution Agreement) shall have
closed prior to or substantially simultaneously with the
Closing of this transaction;
(iv) the transactions contemplated by that certain
Agreement and Plan of Merger by and among Buyer, MIG Realty
Advisors, Inc. and certain shareholders of MIG Realty
Advisors, Inc. shall have closed substantially simultaneously
with or (with respect to the so-called MRT transactions, prior
to) the Closing of this transaction; and
(v) All consents to or authorization of the
performance by Buyer of its
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obligations hereunder and the consummation of the transaction
contemplated hereby shall have been obtained.
8. DELIVERIES.
(a) Seller shall deliver or cause to be delivered 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) an Assignment and Assumption of Partnership
Interest from Seller, in the form of EXHIBIT G attached hereto
and made a part hereof, conveying, selling, transferring,
assigning, and delivering to Buyer good and valid title to the
Partnership Interest, free and clear of all mortgages,
pledges, liens, security interests, encumbrances, and
restrictions (the "Assignment Agreement");
(iii) such confirmation of authorization,
organization, valid existence, and good standing, including
legal opinions as Buyer may reasonably request;
(iv) the Books and Records, all of which may
alternatively be delivered to Buyer at the Project at or prior
to the Closing together with a Letter Regarding Books and
Records in the form of EXHIBIT H attached hereto and made a
part hereof;
(v) any affidavit required by the Title Company to
remove the standard printed exceptions from the Title Policy;
(vi) the originals of all Construction Documents, and
Permits, together with all amendments and any attachments and
supplements thereof, all of which may alternatively be
delivered to Buyer at the Project upon or prior to the
Closing;
(vii) Development Consultant shall have executed and
delivered the Development Consulting Agreement attached hereto
and made a part hereof as EXHIBIT M.
(viii) each member of the Management Team shall have
executed and delivered the Indemnity Agreement attached hereto
and made a part hereof as EXHIBIT N.
(ix) 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;
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(x) settlement statements agreed to by Buyer and
Seller and executed by Seller;
(xi) signed escrow instructions, reasonably
satisfactory to the Title Company and Buyer, in form and
substance sufficient to carry out the Closing;
(xii) a certificate of Seller in the form of EXHIBIT
I attached hereto and made a part hereof;
(xiii) documentation reasonably acceptable to Buyer
confirming the termination of any management agreement
relating to the Project;
(xiv) such other or further documentation as Buyer
may reasonably request at any time or from time to time in
order: (A) to convey, vest, confirm or evidence Seller's title
to the Partnership Interest intended to be conveyed, sold,
transferred, assigned, and delivered to Buyer under this
Agreement; or (B) to vest, confirm or evidence title to all or
part of the Property being in the Partnership; and
(xv) a copy of any appraisals of the Project obtained
by Seller.
(b) Buyer shall deliver the balance of the Purchase Price to
or for the benefit of Seller through escrow on or prior to the Closing
Date together with the following:
(i) settlement statements agreed to by Seller and
executed by Buyer;
(ii) signed escrow instructions, reasonably
satisfactory to the Title Company, in form and substance
sufficient to carry out the Closing;
(iii) a certificate of Buyer in the form of EXHIBIT J
attached hereto and made a part hereof; and
(iv) 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.
9. DUE DILIGENCE PERIOD. For a period commencing on the date of this
Agreement and ending on May 7, 1998 (the "Due Diligence Period"), Buyer shall be
permitted to conduct a complete physical inspection of the Project, complete due
diligence on the Project and review all materials to be provided by Seller to
Buyer hereunder or otherwise reasonably requested. Without limiting the
foregoing, Buyer or its representative shall have the right to conduct an audit
of the financial records relating to the Project and the Partnership. Seller
shall grant reasonable access to
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Buyer and its representatives to the Project for the purpose of examining,
inspecting or determining the condition of any part or all of the Project or
records or information relating thereto (excluding internal reports expressing
opinions concerning the value of the Project). 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 Project.
Buyer shall promptly and completely repair and restore any and all damage to the
Project 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
Project. Buyer's restoration and indemnification obligations set forth in this
Section shall survive the Closing or termination of this Agreement. At Buyer's
request, Seller shall promptly after the execution of this Agreement, deliver to
Buyer or make available for inspection and copying to Buyer the following, if in
Seller's possession or control:
(a) a copy of the most recent "Phase I Environmental
Assessment" of the Property (if any), and any other written information
concerning the environmental condition of the Project, including
wetlands delineations, as Buyer may reasonably request and any
authorizations reasonably necessary for Buyer, at Buyer's expense, to
update such assessment or information, or reasonably necessary for
Buyer, at Buyer's expense, or its agents to independently assess the
environmental condition of the Property;
(b) a copy of Seller's most recent complete boundary survey of
the Project
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(Buyer shall be entitled to receive and approve as set forth herein an
updated and upgraded survey as reasonably required by Buyer);
(c) true and correct copies of the Books and Records for the
Project, the Construction Documents, Tenant Leases, personal property
leases, project contracts and any other document, instrument or other
writing relating to the Project (but not internal expressions or
opinions concerning the value of the Project, any personal information
relating to the principals of Seller or matters that do not relate to
the Project) or the operation thereof as Buyer may reasonably request;
(d) a listing of all individuals, if any, who work either on a
full or part time basis at the Project and all such individuals'
positions and salaries regardless of who such individuals are employed
by; and
(e) true and correct copies of all documents and instruments
relating to any mortgage indebtedness.
Without limiting the rights accorded to Buyer pursuant to
Section 7 hereof, at any time during or at the end of the Due Diligence Period,
Buyer, in Buyer's sole discretion, may terminate this Agreement (by giving
notice of such termination to Seller). Buyer shall notify Seller in writing
either during or at the end of the Due Diligence Period with respect to whether
or not Buyer elects to proceed with the transactions contemplated by this
Agreement. If Buyer's written notice to Seller indicates that Buyer has elected
to proceed with the transactions contemplated by this Agreement then the parties
shall, subject to the satisfaction of the conditions set forth herein, proceed
to the Closing. If Buyer's written notice to Seller indicates that Buyer has
elected not to proceed with the transactions contemplated by this Agreement then
this Agreement shall terminate and the Earnest Money Deposit shall be returned
to Buyer. Upon termination of this Agreement by Buyer pursuant to this Section
9, neither party shall thereafter be under any further liability to the
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other, except as to matters which this Agreement expressly states are to survive
a termination of this Agreement.
10. CLOSING DATE. Unless the parties otherwise agree in writing, the
Closing shall occur, subject to the conditions set forth in Section 7 of this
Agreement, on a date designated by Buyer in writing, which date shall not be
later than June 2, 1998, unless the Securities and Exchange Commission reviews
Buyer's proxy statement in which case such date shall be no later than June 30,
1998 (the "Closing Date").
If Buyer fails to close hereunder even though all conditions
to its obligations hereunder have been satisfied, or if Buyer otherwise is in
default of any of its material obligations under this Agreement, Seller may, so
long as Seller is not in default of any of its material obligations under this
Agreement, terminate this Agreement by providing written notice to Buyer, in
which case Seller shall receive the Earnest Money as liquidated damages and
neither party shall thereafter be under any further liability to the other
except for Buyer's obligation to repair damage as set forth in Section 9 above.
Buyer shall have the right to terminate this Agreement at any
time after the Due Diligence Period by providing written notice to Seller.
Notwithstanding anything in this Agreement to the contrary, in the event that
Buyer terminates this Agreement after the Due Diligence Period, other than by
reason of a right afforded Buyer under the terms and provisions hereunder and
Seller has otherwise timely and fully complied with all of its obligations
hereunder, Seller shall receive the Earnest Money Deposit as liquidated damages
and neither party shall thereafter be under any further liability to the other,
except for Buyer's obligation to repair damage as set forth in Section 9 above.
11. PRORATIONS AND CLOSING COSTS. There shall be no proration,
adjustment or final reading for any item of any kind (including, without
limitation):
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(a) Payments for any licenses or permits;
(b) All salaries, benefits or payroll taxes for employees of
the Partnership; and
(c) Except with respect to delinquent real estate taxes and
assessments that shall be paid in full by Seller at Closing, Buyer
shall pay all closing costs relating to this transaction, including,
(i) any escrow fee at the Closing, (ii) the cost of a new or upgraded
or updated survey of the Property and (iii) the cost of the Title
Policy together with all endorsements attached thereto. Each party
shall pay its own attorneys' fees. Buyer agrees to accept the
Partnership Interest without any reduction in the Purchase Price or any
other credit or adjustment of any kind relative to or on account of (i)
items customarily prorated in the sale of real estate or (ii) the
indebtedness, liabilities, accrued expenses and obligations of the
Partnership arising on the Closing Date (except for indebtedness or
obligations incurred by Seller in violation of the provisions of this
Agreement). Any positive net cash flow generated from operations of the
Project shall be accumulated and either delivered or credited to Buyer
after Closing.
12. FIRE OR OTHER CASUALTY. Seller agrees to promptly advise Buyer in
writing of any material damage to the Project. If all or any substantial portion
of the Project (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 Project (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 12, neither party shall
thereafter be under any further liability to the other, except as otherwise
expressly set forth in this Agreement.
13. CONDEMNATION AND EMINENT DOMAIN. If, prior to the Closing Date, all
or any portion of the Project 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 event Seller shall assign to Buyer all proceeds
resulting from such taking. 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 Project by way of condemnation, eminent domain or similar
procedure for a taking of the Project in connection with any public or
quasi-public use.
14. INDEMNIFICATION.
(a) From and after the Closing, Buyer shall fully indemnify
and hold Seller and its officers, directors, representatives,
successors, and assigns harmless from and against any and all claims,
demands, losses, liabilities, damages, and expenses (including
reasonable
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attorneys' fees) arising out of or in connection with (i) the failure
of Buyer to perform in any material respect any of its obligations
hereunder, (ii) any material breach or inaccuracy of any representation
or warranty of Buyer hereunder or (iii) the ownership of the Project or
the Partnership Interest if that claim, demand, loss, liability, damage
or expense first arises, accrues or exists from and 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 or breach of any covenant made by Seller hereunder) or (iv)
claims by third parties relating to contracts entered into by the
Partnership or liabilities incurred by the Partnership (except to the
extent that such indemnification obligation would arise directly as a
result of the inaccuracy of any representation or warranty or breach of
any covenant made by Buyer hereunder).
(b) From and after the Closing, subject to the limitations set
forth in Section 14(c) below, Seller and the Management Team, jointly
and severally, shall fully indemnify Buyer and hold Buyer, its
officers, directors, successors, and assigns harmless from and against
any and all claims, demands, losses, liabilities, damages, and expenses
(including reasonable attorneys' fees) arising out of or in connection
with (i) the failure of Seller or the Management Team to perform in any
material respect any of its obligations hereunder or (ii) the material
inaccuracy of any representation or warranty made by Seller or the
Management Team hereunder.
(c) Notwithstanding anything to the contrary contained in this
Agreement or the Contribution Agreement, (i) Seller's liability under
this Agreement (taken together with Seller's liability under the
Contribution Agreement relating to the same matters) shall be limited
to an amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate and (ii) each member of the Management
Team's liability under this Agreement and the Contribution Agreement
shall be limited to an amount equal to the total compensation received
by each such member of the Management Team under this Agreement
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<PAGE> 154
and the Contribution Agreement which amounts are set forth on EXHIBIT L
attached hereto and made a part hereof. Each member of the Management
Team shall have the option of satisfying any indemnification obligation
owed to Buyer hereunder either (i) by satisfying such obligation in
cash (such cash payment to be delivered by certified check or wire
transfer in immediately available funds) or (ii) subject to the
limitations described in this Section 14(c) below, by delivering and
assigning to Buyer all of such member's respective right, title and
interest in and to such of the limited partnership units in HP having a
value (set for these purposes, as such units' value on the Closing
Date) equal to the amount that it receives pursuant to the terms of the
Contribution Agreement. The right to elect to exercise option (ii)
above in connection with the satisfaction of any indemnification
obligation owed to Buyer may be exercised only with respect to such
limited partnership units owned by such member that can be assigned and
delivered to Buyer free and clear of all liens, pledges, restrictions
and encumbrances whatsoever. Each member of the Management Team
acknowledges and agrees that Buyer shall have no obligation to accept
the assignment and delivery of any limited partnership units
contemplated by option (ii) above unless and until the member or
members of the Management Team (as the case may be) seeking to exercise
the rights provided in option (ii) deliver to Buyer (x) a certificate
representing and warranting that such member owns those of his
respective limited partnership units in HP being tendered free and
clear of all liens, pledges, restrictions and encumbrances whatsoever
and (y) uniform commercial code searches of all applicable
jurisdictions reasonably requested by Buyer that show no encumbrances
on such member's limited partnership units in HP.
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(d) Except for any claim relating to a breach of any
representation and warranty set forth in Section 3(o) of this
Agreement, any claim for indemnification under clause (ii) of Section
14(a) or Section 14(b) must be asserted in writing and with specificity
by the date (the "Claim Expiration Date") that 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.
15. MECHANICS' LIENS. Seller and Buyer each agree to give the other
notice of any lien promptly after obtaining knowledge thereof.
16. INTENTIONALLY OMITTED
17. 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) 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 personally, by nationally
recognized overnight courier, or served by certified or registered mail
or facsimile to the parties at the addresses and facsimile numbers set
forth below, unless different addresses or facsimile numbers are given
by one party to the other:
AS TO SELLER:
-------------
MIG DEVELOPMENT COMPANY
Attn: Larry Wright
250 Australian Avenue, South, Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
WITH A COPIES TO:
-----------------
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<PAGE> 156
MAYER, BROWN & PLATT
Attn: Robert Berger, Esq.
190 S. LaSalle Street
Chicago, Illinois 60603
Phone (312) 701-7711
Fax (312) 782-0600
and
JAMES ELWOOD AND LANNY KALIK
C/O MIG DEVELOPMENT COMPANY
250 Australian Avenue, South, Suite 400
West Palm Beach, Florida 33401
Phone (561) 820-1300
Fax (561) 832-1622
AS TO BUYER:
------------
ASSOCIATED ESTATES REALTY CORPORATION
Attn: Martin A. Fishman, Esq., Vice President
5025 Swetland Court
Richmond Heights, Ohio 44143
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 represent and warrant 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 Partnership Interest 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
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party harmless from any and all claims for any such commission and from
any attorneys' fees and litigation or other expenses relating to any
such claim.
(d) This Agreement may not be assigned by Seller without the
prior written consent of Buyer. This Agreement may be assigned by Buyer
without the prior written consent of Seller to an entity wholly owned
or controlled by Buyer but no such assignment shall relieve Buyer from
its obligations hereunder. 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 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 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 of Florida.
(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 Saturday, Sunday or federal holiday.
(i) Lanny M. Kalik, James C. Elwood and Edwin B. Wayman hereby
join in this Agreement solely for the purpose of confirming their
respective agreements to execute
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<PAGE> 158
and deliver the guaranty attached as EXHIBIT K and the Development
Consulting Agreement attached as EXHIBIT M on or before the Closing
Date, and Wright and Cote', also hereby agree, without limiting or
diminishing their obligations under this Agreement as members of the
Management Team, to execute and deliver the guaranty attached as
EXHIBIT K.
(j) Any litigation or other formal dispute resolution process
under, concerning, arising out or relating to this Agreement or the
performance of any duty or obligation hereunder shall be brought,
instituted, maintained and conducted solely and exclusively in the
Florida State or Federal courts sitting in Orange County, Florida (or
the Federal District Court for Orange County). Each party to this
Agreement irrevocably consents to jurisdiction over its person and
property in and by, and venue in, such courts for purposes of
adjudicating any and all disputes arising under, concerning, or
relating in any way to this Agreement or any subject matter hereof or
matter addressed or dealt with herein. Buyer agrees to use reasonable
efforts to join all parties to this Agreement and the guaranty attached
as EXHIBIT K in a single action in the event that any litigation is
commenced by Buyer hereunder or under or in respect of any such
guaranty. If any dispute or litigation arises under this Agreement or
concerning the subject matter hereof, the reasonable costs and expenses
thereof (including, without limitation, court costs and reasonable
attorneys' fees and expenses for all appellate and trial court
proceedings) shall be paid and reimbursed to the substantially
prevailing party by the non-prevailing party whether or not a final
judgment on the merits of such dispute is ever entered in such
litigation, with the court to determine who is the substantially
prevailing party for these purposes (which party need not be awarded,
or otherwise receive, all of the relief it had request in order to be
deemed "substantially prevailing" for purposes hereof). Notwithstanding
any of the other provisions
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of this Agreement to the contrary, if Buyer is deemed to be the
substantially prevailing party in any of the litigation discussed above
and the amount of such fees, together with the amount of any relief or
judgments granted to Buyer as a result of such litigation, exceed (i)
Seller's limitation on liability set forth in Section 14(c) hereof or
(ii) any of Lanny M. Kalik's, James C. Elwood's or Edwin B. Wayman's
respective limitations on liability set forth in the guaranty attached
hereto as EXHIBIT K, then each member of the Management Team, jointly
and severally, hereby agrees to pay and reimburse Buyer for all such
excess costs, without regard to the liability limitations set forth in
Section 14(c) of this Agreement and will promptly pay and reimburse to
Buyer all such excess costs and expenses.
(k) It is understood and agreed that before the Closing Date,
Seller will cause the Partnership to do the following, all without any
reduction in the consideration being delivered by Buyer to Seller
hereunder: Transfer and assign to Elwood and Kalik any world wide
right, title and interest that Seller may presently have in the
Approved Plans and Specifications. Buyer acknowledges and agrees as
follows (i) neither it nor the Partnership will have any right of any
kind to have or use the Approved Plans and Specifications other than
the Partnership's right to use the same in connection with the
ownership and operation of the Project and (ii) until the fifth
anniversary of the Closing Date, neither it nor the Partnership will,
directly or indirectly or through a corporation, partnership or entity
that either of them owns, use (without the consent of Elwood and Kalik)
any of the architects listed in SCHEDULE 17(k) attached hereto and made
a part hereof (who are architects that Elwood and Kalik have used, and
expect to use in the future, in connection with their development or
construction of garden apartment projects in Florida) in connection
with their development in Florida of any 2-story or 3-story garden
apartment projects having between 200 and 800 units. The restriction
contained in subpart (ii) of the preceding
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sentence is not intended to restrict Buyer, nor shall it prohibit
Buyer, the Partnership or any corporation, partnership or entity that
either of them owns from acquiring any apartment project in Florida
that was architecturally designed in whole or in part by any of the
architects listed in SCHEDULE 17(k) nor from entering into a contract
with any builder/developer or other person for the purpose of acquiring
an apartment project upon completion of construction, which is
designed, in whole or in part, by any of the architects listed in
SCHEDULE 17(k) pursuant to a bona fide transaction initiated by that
builder/developer or other person.
(l) The parties acknowledge that the transactions contemplated
by this Agreement do NOT constitute a sale, conveyance or transfer of
real property. Nevertheless, to avoid any possibility that the letter,
the spirit or the general policy reflected in the relevant Florida
statute would not be satisfied, the parties include the following
legend here: Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
[balance of page intentionally left blank]
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<PAGE> 161
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 date shall be date upon which
Buyer executes this Agreement.
<TABLE>
<S> <C>
BUYER: SELLER:
ASSOCIATED ESTATES MIG DEVELOPMENT COMPANY
REALTY CORPORATION
By: By:
______________________________ ______________________________
Jeffrey I. Friedman, President Larry Wright, Chief Executive
Officer
MANAGEMENT TEAM
__________________________________
Larry Wright (also in his capacity
of guarantor)
__________________________________
James A. Cote'(also in his capacity
of guarantor)
__________________________________
Louis E. Vogt
__________________________________
Greg L. Golz
__________________________________
William T. Hughes, Jr.
GUARANTORS
__________________________________
Lanny M. Kalik
__________________________________
James C. Elwood
__________________________________
Edwin B. Wayman
</TABLE>
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EXHIBITS AND SCHEDULES
EXHIBIT A LEGAL DESCRIPTION OF PROPERTY
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C APPROVED PLANS AND SPECIFICATIONS
EXHIBIT D PARTNERSHIP AGREEMENT
EXHIBIT E LEASE GUIDELINES
EXHIBIT F INTENTIONALLY OMITTED
EXHIBIT G ASSIGNMENT OF PARTNERSHIP INTEREST
EXHIBIT H LETTER REGARDING BOOKS AND RECORDS
EXHIBIT I SELLER'S CERTIFICATE
EXHIBIT J BUYER'S CERTIFICATE
EXHIBIT K GUARANTY
EXHIBIT L LIABILITY CAPS
EXHIBIT M DEVELOPMENT CONSULTING AGREEMENT
EXHIBIT N INDEMNITY AGREEMENT
EXHIBIT O BOOKS & RECORDS
EXHIBIT P GENERAL CONSTRUCTION CONTRACT
EXHIBIT Q PERFORMANCE, PAYMENT AND SURETY BONDS
EXHIBIT R LEASE FORM
SCHEDULE 3(d)
SCHEDULE 3(i)
SCHEDULE 3(k)
SCHEDULE 3(q)
SCHEDULE 3(t)
SCHEDULE 17(k)
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<PAGE> 163
EXHIBIT E
---------
LEASING GUIDELINES
------------------
1. MINIMUM RENT: No suites may be leased for less than the following minimum
rents:
<TABLE>
<CAPTION>
Type of Number of
Suite Minimum Rent Suites
----- ------------ ------
<S> <C> <C> <C>
Center Units $___ per month __
End Units $___ per month __
</TABLE>
2. SECURITY DEPOSITS:
a. minimum security deposit for each suite shall be equal to
one-half (1/2) of one (1) month's rent.
3. PET DEPOSITS:
a. $300 ($150 shall be refundable at the end of the lease term,
assuming no damages);
b. $20 per month in addition to minimum rent;
c. Pet to not weigh more than thirty-five (35) lbs.;and
d. Only one (1) pet per household.
4. TERM:
a. Minimum lease term of one (1) year.
5. CREDIT REQUIREMENTS:
a. Rent to income ratio should not exceed thirty percent (30%)
per household;
b. Debt to income ratio should be no more than fifty percent
(50%) per household;
c. Credit report should be obtained for all rental applicants who
are twenty one (21) years of age or older;
d. Verification of current residence
i. if current landlord is a multi-family property then
call must be placed to confirm reasons for the
termination of the applicant's existing lease;
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<PAGE> 164
e. Verification of current employer
i. verification of previous employer if current
employment is less than five (5) years;
f. If any applicant fails to meet any of the foregoing credit
requirements then, except with respect to matters described in
subsection (g) below require (i) one (1) month of rent as
security deposit; or (ii) co-sign of lease;
g. Grounds for rejection:
i. foreclosure in last year
ii. repossession in last three (3) years
iii. poor credit ratios
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<PAGE> 165
EXHIBIT G
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of the ____ day of ______________,
1998, by and between MIG DEVELOPMENT COMPANY, a Florida corporation
("Assignor"), and [AERC REIT SUB], an Ohio corporation, (the "Assignee"),
WHEREAS, Assignor is the owner of a general partnership
interest in MIG/Pines Development, Ltd., a Florida limited partnership (the
"Partnership Interest");
WHEREAS, Assignor desires, in exchange for an amount of cash
heretofore agreed upon, to transfer all of his right, title and interest in and
to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment
of his Partnership Interest;
NOW, THEREFORE, for value received, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby transfer and
assign all of its right, title and interest in and to its Partnership Interest
to the Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed
this Assignment as of the date first above written.
ASSIGNOR:
MIG Development Company
By: ____________________________
Its:____________________________
ASSIGNEE:
[Associated Estates Realty
Corporation REIT Sub]
Its: General Partner
By:___________________________
Martin A. Fishman
Its: Vice President
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EXHIBIT H
______________ __, 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:____________________________
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<PAGE> 167
EXHIBIT I
SELLER'S CERTIFICATE
--------------------
_______________________________ (the "Seller"), hereby
certifies, represents, and warrants to Associated Estates Realty Corporation
("AERC") pursuant to Section ______ of the Partnership Interests 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 7(a)(i) of the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate as
of the _____ day of ______________, 19___.
______________________________
By:_____________________________
Its:____________________________
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ATTACHMENT 1
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<PAGE> 169
EXHIBIT J
ASSOCIATED ESTATES REALTY CORPORATION
BUYER'S CERTIFICATE
-------------------
Associated Estates Realty Corporation, an Ohio corporation
("AERC") certifies, represents, and warrants pursuant to Section _____ of the
Partnership Interests 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 7(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
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<PAGE> 170
ATTACHMENT 1
-42-
<PAGE> 171
EXHIBIT K
---------
GUARANTY
--------
GUARANTY, dated as of ____________ ___, 1998, made by LARRY
WRIGHT, JAMES A. COTE', LANNY M. KALIK ("Kalik") , JAMES C. ELWOOD ("Elwood")
and EDWIN B. WAYMAN ("Wayman") (collectively the "Guarantors" or singularly a
"Guarantor"), in favor of ASSOCIATED ESTATES REALTY CORPORATION, an Ohio
corporation ("AEC") and [AERC REIT Sub, an ___________________ ("Sub")] AEC and
sub collectively "AERC").
PRELIMINARY STATEMENTS:
(1) AEC, as subsequently assigned to Sub, has entered into a
Partnership Interest Purchase dated March __, 1998 (the "Purchase Agreement")
with MIG Development Company, a Florida corporation ("MIG"), pursuant to which,
subject to certain conditions, Sub will purchase the Partnership Interest (as
defined in the Purchase Agreement) from to MIG.
(2) It is a condition precedent to Sub purchasing the
Partnership Interest from MIG that Guarantors shall execute and deliver to AERC
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order
to induce AERC to consummate the transactions contemplated by the Purchase
Agreement, Guarantors hereby agree with AERC as follows:
SECTION 1. GUARANTY. Lanny M. Kalik, James C. Elwood and Edwin
B. Wayman, severally and each of the other Guarantors, jointly and severally,
hereby absolutely, unconditionally and irrevocably guarantee to AERC (i) the
full, complete and prompt performance and observance of all of the obligations,
duties and agreements of MIG arising under the Purchase Agreement in strict
accordance with the terms and conditions thereof (the "Obligations"); PROVIDED,
HOWEVER, that this Guaranty shall be limited to Two Hundred Fifty Thousand
Dollars ($250,000), in the aggregate, and will be further limited with respect
to Lanny M. Kalik to $_________________, James C. Elwood to $_________________
and Edwin B. Wayman to $_________________, respectively. All recoveries
hereunder up to a total of $250,000 in the aggregate will be allocated and
apportioned between the Guarantors in proportion to their respective maximum
liability amounts set out in the preceding sentence (and, for purposes of this
sentence only, the respective amounts of each of Larry Wright and James Cote'
will be one-half of the amount by which $250,000 exceeds the total of the
maximum liability amounts of Kalik, Elwood and Wayman). There shall be counted
and charged against the respective maximum liability amounts of Kalik, Elwood
and Wayman hereunder any amounts recovered from them in respect of
"substantially prevailing party" legal fees under Section 17.03 of the Purchase
Agreement. All payments by Guarantors or any Guarantor shall be made in lawful
money of the United States of America. Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Obligations and would be owed by MIG or the Management
Team to AERC under the Purchase Agreement, but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving MIG.
SECTION 2. GUARANTY ABSOLUTE. Lanny M. Kalik, James C. Elwood
and Edwin B.
<PAGE> 172
Wayman severally and each of the other Guarantors, jointly and severally,
guarantee that the Obligations will performed strictly in accordance with the
terms of the Purchase Agreement, irrespective of:
(i) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
consent to departure from the Purchase Agreement; or
(iii) any failure to give notice to any Guarantor of MIG's
failure to perform any of the Obligations when required, or of
any default or event of default under the Purchase Agreement.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if, at any time, any of the Obligations are rescinded by AERC upon the
insolvency, bankruptcy or reorganization of MIG or otherwise, all as though such
recision had not occurred.
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<PAGE> 173
SECTION 3. GUARANTY ABSOLUTE.Guarantors hereby waive
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Guaranty and, any requirement that AERC exhaust
any right or take any action against MIG or any other person or entity or any
real or personal property of MIG or any other person or entity.
SECTION 4. NO SUBROGATION. Guarantors hereby waive and
relinquish any right to subrogation or other right or claim to payment against
MIG arising out of or on account of any sum paid or agreed to be paid by
Guarantors under this Guaranty, whether such right or claim is liquidated,
unliquidated, fixed, contingent, matured or unmatured. If any amount shall be
paid to Guarantors or any Guarantor in violation of the preceding sentence at
any time prior to the performance of all Obligations then to be performed, such
amount shall be deemed to have been paid to such Guarantor or Guarantors, as the
case may be, and held in trust, for the benefit of AERC and shall forthwith be
paid to AERC to be credited and applied to the Obligations, whether matured or
unmatured, in accordance with the terms of the Purchase Agreement. Guarantors
acknowledge that they will receive direct and indirect benefits for the
arrangements contemplated by the Purchase Agreement and that the waiver set
forth in this Section 4 is knowingly made in contemplation of such benefits.
Guarantors consent and agree that AERC shall not be under any obligation to
marshall any assets in favor of Guarantors or any Guarantor or against or in
performance of any or all of the Obligations. This Section 4 is made for the
express benefit of MIG as well as AERC and may be enforced independently by MIG.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Guarantor
hereby represents and warrants as follows:
(a) The execution, delivery and performance by such
Guarantor of this Guaranty does not and will not (i) violate
any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently
in effect having applicability to such Guarantor; or (ii)
result in a breach of or constitute a default under any
indenture, loan or credit agreement, lease, or any other
agreement or instrument to which such Guarantor is a party or
by which he or any of his properties may be bound or affected;
and such Guarantor is not in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease
or instrument;
(b) This Guaranty is the legal, valid and binding
obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms;
(c) No authorization, consent, license, approval or
other action by, and no notice to or filing with, any federal,
state or local government or any court, governmental
department, commission, board, bureau, agency or
instrumentality thereof, is or will be required for the due
execution, delivery and performance by Guarantor of this
Guaranty; and
(e) The assumption by such Guarantor of his
obligations under this Guaranty will result in direct
financial benefit to such Guarantor.
-45-
<PAGE> 174
SECTION 6. AMENDMENTS, WAIVER, ETC. (a) No amendment or waiver
of any provision of this Guaranty nor consent to any departure by Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by AERC, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) The waiver (whether expressed or implied) by AERC of any
breach of the terms or conditions of this Guaranty, shall not prejudice any
remedy of AERC in respect of any continuing or other breach of the terms and
conditions hereof, and shall not be construed as a bar to any right or remedy
which AERC would otherwise have on any future occasion under this Guaranty.
(c) No failure to exercise nor any delay in exercising on the
part of AERC any right, power or privilege under this Guaranty, shall operate as
a waiver thereof or a consent thereto; further, no single or partial exercise of
any right, power or privilege under this Guaranty shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
SECTION 7. ACTIONS. Each failure of Guarantors or any
Guarantor to perform any part or portion of the Obligations when required shall
give rise to a separate cause of action against Guarantors or any Guarantor
under this Guaranty and separate suits may be brought against Guarantors or any
Guarantor hereunder as each cause of action arises.
SECTION 8. CONTINUING GUARANTY. This Guaranty is a continuing
guaranty and shall (i) remain in full force and effect until the complete and
prompt performance of the Obligations and (ii) be binding upon each Guarantor,
and his respective heirs and representatives; and (iii) inure to the benefit of
and be enforceable by AERC and their respective successors, transferees and
assigns.
SECTION 9. SEVERABILITY. If any term or provision of this
Guaranty is or shall become illegal, invalid or unenforceable in any
jurisdiction, all other terms and provisions of this Guaranty shall remain
legal, valid and enforceable in such jurisdiction and such illegal, invalid or
unenforceable provision shall be legal, valid and enforceable in any other
jurisdiction.
SECTION 10. GOVERNING LAW. This Guaranty shall be governed by,
and construed in accordance with, the law of the State of Florida, without
reference to principles of conflicts of law.
SECTION 11. JURISDICTION. Any litigation or other formal
dispute resolution process under, concerning, arising out or relating to this
Guaranty or the performance of any duty or obligation of any Guarantor hereunder
shall be brought, instituted, maintained and conducted solely and exclusively in
the Florida State or Federal courts sitting in Broward County, Florida (or the
Federal District Court for Broward County). Each party to this Guaranty
irrevocably consents to jurisdiction over its person and property in and by, and
venue in, such courts for purposes of adjudicating any and all disputes arising
under, concerning, or relating in any way to this Guaranty or any subject matter
hereof or matter addressed or dealt with herein. AERC agrees to use reasonable
efforts to join all parties to this Guaranty and MIG in a single action in the
event that any litigation is commenced by AERC hereunder.
-46-
<PAGE> 175
IN WITNESS WHEREOF, this Guaranty has been executed by the
undersigned at Broward, Florida after having read and fully understanding the
language contained herein, as of the day and year first above written.
GUARANTORS:
____________________________
Larry Wright
____________________________
James A. Cote'
____________________________
Lanny M. Kalik
____________________________
James C. Elwood
____________________________
Edwin B. Wayman
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<PAGE> 176
Contribution and Partnership
Purchase Agreement EXHIBIT H-2
-----------
GENERAL PARTNER INTEREST PURCHASE
AGREEMENT FOR HOLLYWOOD
<PAGE> 177
Contribution and Partnership
Purchase Agreement EXHIBIT I
----------
FORMULA FOR VALUATION OF HOLLYWOOD PARTNERSHIP INTERESTS
I. A UNIT AND B UNIT VALUATIONS: Each A Unit and B Unit shall be equal in
value to the value of a common share, without par value, of AERC
("COMMON SHARES") based upon the following formula:
(i) if the Closing Share Price is greater than or equal to 106% of
the Average Share Price, the value of each A and B Unit shall
equal the result of the Closing Share Price divided by 1.06;
(ii) if the Closing Share Price is less than or equal to the
Average Share Price, the value of each A and B Unit shall
equal 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 value
of each A and B Unit shall equal the Average Share Price.
For purposes of this Formula:
(A) "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.
(B) "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.
(C) "TRADING DAYS" shall mean each day that Common Shares
are traded on the New York Stock Exchange.
II. C UNIT VALUATIONS: Each C Unit shall be valued at $23.63 per Unit.
III. GENERAL: No certificates for fractional Units shall be issued or
delivered in connection herewith. To the extent that a fractional
Unit would otherwise have been deliverable, any Limited Partner
shall be entitled to receive a cash payment therefor in an amount
equal to the value of such fractional interest. Such payment with
respect to fractional Units is merely intended to provide a
mechanical rounding off of, and is not separately bargained for,
consideration. The foregoing shall apply to, under and with respect
to all exhibits to this Agreement, including (without limitation)
Exhibits I-1, I-2, J, and J-1.
<PAGE> 178
Contribution and Partnership
Purchase Agreement EXHIBIT I-1
-----------
FORMULA FOR VALUATION OF KIRKMAN PARTNERSHIP INTERESTS
A, B AND C UNIT VALUATIONS: Each A, B and C Unit shall be valued at
$23.63 per Unit.
<PAGE> 179
Contribution and Partnership
Purchase Agreement EXHIBIT I-2
-----------
FORMULA FOR VALUATION OF AERC'S UNITS RELATING
TO INITIAL CONTRIBUTION
A General Partner's Unit ("AERC UNITS") shall be valued at the weighted
average of the aggregate of all A, B and C Units issued at the Initial
Closing.
<PAGE> 180
Contribution and Partnership
Purchase Agreement EXHIBIT J
---------
FORMULA FOR VALUATION OF PINES PARTNERSHIP INTERESTS
I. NEW A UNIT AND D UNIT VALUATIONS: The value of each New A Unit and New
D Unit shall be equal to the average closing prices of the Common
Shares for the twenty (20) Trading Days immediately preceding the
Closing Date. ("COMMON SHARES" and "TRADING DAYS" are defined on
Exhibit I, above.)
II. E UNIT VALUATIONS: Each E Unit shall be valued at $23.63 per Unit.
<PAGE> 181
Contribution and Partnership
Purchase Agreement EXHIBIT J-1
-----------
FORMULA FOR VALUATION OF AERC'S UNITS RELATING
TO SECOND CONTRIBUTION
A General Partner's Unit (AERC Units) shall be valued at the weighted
average of the aggregate of all A, D and E Units issued at the Second
Closing.
<PAGE> 182
Contribution and Partnership
Purchase Agreement EXHIBIT K-1
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
ED WAYMAN ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Hollywood Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
___________________________________
Ed Wayman
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 183
Contribution and Partnership
Purchase Agreement EXHIBIT K-2
------------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
ED WAYMAN ("Assignor"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
______________________________
Ed Wayman
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 184
Contribution and Partnership
Purchase Agreement EXHIBIT K-3
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
ED WAYMAN ("Assignor"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Pines Development, Ltd., a Florida limited partnership (the "PARTNERSHIP
INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
________________________________
Ed Wayman
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 185
Contribution and Partnership
Purchase Agreement EXHIBIT L-1
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LARRY WRIGHT ("Assignor"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Hollywood Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
________________________________
Larry Wright
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 186
Contribution and Partnership
Purchase Agreement EXHIBIT L-2
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LARRY WRIGHT ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
_________________________________
Larry Wright
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 187
Contribution and Partnership
Purchase Agreement EXHIBIT L-3
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LARRY WRIGHT ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Pines Development, Ltd., a Florida limited partnership (the "PARTNERSHIP
INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
________________________________
Larry Wright
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 188
Contribution and Partnership
Purchase Agreement EXHIBIT M-1
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
JAMES A. COTE ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Hollywood Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
________________________________
James A. Cote
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 189
Contribution and Partnership
Purchase Agreement EXHIBIT M-2
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
JAMES A. COTE ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
___________________________________
James A. Cote
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 190
Contribution and Partnership
Purchase Agreement EXHIBIT M-3
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
JAMES A. COTE ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Pines Development, Ltd., a Florida limited partnership (the "PARTNERSHIP
INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
________________________________
James A. Cote
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 191
Contribution and Partnership
Purchase Agreement EXHIBIT N-1
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
JAMES ELWOOD ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Hollywood Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
___________________________________
James Elwood
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: _____________________________
Martin A. Fishman
Its: Vice President
<PAGE> 192
Contribution and Partnership
Purchase Agreement EXHIBIT N-2
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ____________, 1998, by and between
JAMES ELWOOD ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
__________________________________
James Elwood
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 193
Contribution and Partnership
Purchase Agreement EXHIBIT N-3
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
JAMES ELWOOD ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Pines Development, Ltd., a Florida limited partnership (the "PARTNERSHIP
INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
___________________________________
James Elwood
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 194
Contribution and Partnership
Purchase Agreement EXHIBIT O-1
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LANNY KALIK ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Hollywood Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
________________________________
Lanny Kalik
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 195
Contribution and Partnership
Purchase Agreement EXHIBIT O-2
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LANNY KALIK ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
_______________________________
Lanny Kalik
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 196
Contribution and Partnership
Purchase Agreement EXHIBIT O-3
-----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LANNY KALIK ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Pines Development, Ltd., a Florida limited partnership (the "PARTNERSHIP
INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee or cash or a combination thereof, to transfer all of
his right, title and interest in and to his Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
_________________________________
Lanny Kalik
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 197
Contribution and Partnership
Purchase Agreement EXHIBIT P
----------
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of ______________, 1998, by and between
LOUIS E. VOGT ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
___________________________________
Louis E. Vogt
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 198
Contribution and Partnership
Purchase Agreement EXHIBIT Q
---------
ALLOCATION OF E UNITS DELIVERED AT THE INITIAL CLOSING
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Increase in # of E Units
Name of Partner Capital Account Received
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Cote $844,000 35,717
Wright 1,604,000 67,880
Vogt 452,000 19,128
Gutin 452,000 19,128
Hughes 324,000 13,711
Golz 324,000 13,711
---------------- --------------
Total $4,000,000.00 169,275
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 199
Contribution and Partnership
Purchase Agreement EXHIBIT R
---------
ASSIGNMENT OF PARTNERSHIP INTEREST AGREEMENT
THIS ASSIGNMENT is made as of ______________, 1998, by and between
WILLIAM T. HUGHES, JR. ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida
limited partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
____________________________________
William T. Hughes, Jr.
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 200
Contribution and Partnership
Purchase Agreement EXHIBIT RR
----------
ASSIGNMENT OF PARTNERSHIP INTEREST AGREEMENT
THIS ASSIGNMENT is made as of ______________, 1998, by and between
GREGORY L. GOLZ ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for a limited partnership
interest in the Assignee, to transfer all of his right, title and interest in
and to his Partnership Interest to the Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of his
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of his right, title and interest in and to his Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
____________________________________
Gregory L. Golz
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ___________________________
Martin A. Fishman
Its: Vice President
<PAGE> 201
Contribution and Partnership
Purchase Agreement EXHIBIT S
---------
ASSIGNMENT OF PARTNERSHIP INTEREST AGREEMENT
THIS ASSIGNMENT is made as of ______________, 1998, by and between
PF FUNDS, INC. ("ASSIGNOR"), and AERC HP ADVISORS LP, a Florida limited
partnership, (the "ASSIGNEE"),
WHEREAS, Assignor is the owner of a limited partnership interest in
MIG/Orlando Development, Ltd., a Florida limited partnership (the
"PARTNERSHIP INTEREST");
WHEREAS, Assignor desires, in exchange for cash, to transfer all of
its right, title and interest in and to its Partnership Interest to the
Assignee; and
WHEREAS, the Assignee desires to accept Assignor's assignment of its
Partnership Interest;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer and assign all
of its right, title and interest in and to its Partnership Interest to the
Assignee free and clear of all pledges, liens, security interests,
encumbrances, and restrictions whatsoever.
IN TESTIMONY WHEREOF, Assignor and the Assignee have executed this
Assignment as of the date first above written.
ASSIGNOR:
PF FUNDS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
ASSIGNEE:
AERC HP Advisors LP
By: Associated Estates Realty Corporation
Its: General Partner
By: ______________________________
Martin A. Fishman
Its: Vice President
<PAGE> 202
Contribution and Partnership
Purchase Agreement EXHIBIT T
----------
SCHEDULE OF RECLASSIFICATION OF UNITS
PURSUANT TO SECTION 2.19
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
$ Amount of Initial
Capital Account # of C Units to
Partner to be Reclassified be Reclassified A Units C Units E Units
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cote $1,266,000 53,576 17,857 24,291 11,428
Wright $2,406,000 101,820 33,937 46,165 21,718
Vogt $678,000 28,692 9,563 13,009 6,120
Gutin $678,000 28,692 9,563 13,009 6,120
Hughes $486,000 20,567 6,855 9,325 4,387
Golz $486,000 20,567 6,855 9,325 4,387
--------------- ----------- ---------- ---------- -----------
Total $6,000,000.00 253,914 84,630 115,124 54,160
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
