UNITED STATES
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
October 7, 1997
Date of Report (Date of earliest event reported)
MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact Name of Registrant as Specified in Charter)
TENNESSEE 1-12762 62-1543819
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
6584 POPLAR AVENUE, SUITE 340
MEMPHIS, TENNESSEE 38138
(Address of principal executive offices)
(901) 682-6600
Registrant's telephone number, including area code
(Former name or address, if changed since last report)
<PAGE>
Item 5. Other events.
The Company released the following press releases on October 1, 1997
and October 7, 1997.
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Memphis, TN: October 1, 1997: Mid-America Apartment Communities, Inc.
(MAA:NYSE) announced today that it has sold 3.333 million shares of
common stock in a public offering at a price of $29 11/16 per share.
The transaction is scheduled to close on October 6.
Managing underwriters for the offering were Morgan Stanley & Co.
Incorporated, Raymond James & Associates, Inc., and Morgan Keegan
& Company, Inc.
This press release does not constitute an offer to sell or a
solicitation of an offer to purchase the subject securities and
such offers or solicitations shall be made only by means of a
Prospectus Supplement and accompanying Prospectus, copies of
which may be obtained from the Company or the underwriters.
Mid-America Apartment Communities, Inc. is a self-administered,
self-managed real estate investment trust which owns and operates
22,258 apartments (including 174 under development) throughout
the southern crescent of the US in 82 properties.
======================================================================
Memphis, TN: October 1, 1997: Mid-America Apartment Communities, Inc.
(MAA:NYSE) announced the purchase on September 30 of Woodwinds
apartment community in Aiken, South Carolina. The 144-unit property
was built in 1988, has an average rent of $590/month, and is
90% occupied. The Company paid $1.5 million for the property and
assumed a loan of $3.5 million at 8.84%.
On September 24, the Company purchased the 166-unit Westside
Creek Phase 2 in Little Rock, Arkansas (having purchased Westside
Creek Phase 1 in March of this year) for a total consideration of
$6.5 million, including a loan assumption of $5 million at 8.76%,
cash of $1.2 million, and 8,856 Operating Partnership units.
Built in 1986, the property has an average rent of $585/month and
is 93% occupied.
Mid-America Apartment Communities, Inc. is a self-administered,
self-managed real estate investment trust which owns and operates
22,258 apartments (including 174 under development) throughout
the southern crescent of the US. The Company recently announced
its intention to merge with Flournoy Development Company which
will bring the total number of apartments owned by the merged
Companies to 32,147, including 2,236 under development.
========================================================================
Memphis, TN: October 7, 1997: Mid-America Apartment Communities, Inc.
(MAA:NYSE) announced today the October 6, 1997 closing
relating of the sale of 3,333,000 shares of common stock in its
recent public offering at a price of $29 11/16 per share.
Managing underwriters for the offering Morgan Stanley & Co.
Incorporated, Raymond James & Associates, Inc., and Morgan Keegan
& Company, Inc. exercised their overallotment for an additional
166,300 shares increasing the gross amount raised in the offering
to $103.9 million.
This press release does not constitute an offer to sell or a
solicitation of an offer to purchase the subject securities and
such offers or solicitations shall be made only by means of a
Prospectus Supplement and accompanying Prospectus, copies of
which may be obtained from the Company or the underwriters.
Mid-America Apartment Communities, Inc. is a self-administered,
self-managed real estate investment trust which owns and operates
82 apartment communities with 22,258 apartment units (including
174 under development) throughout the southern crescent of the US.
<PAGE>
Item 7. Financial Statements and Exhibits.
Exhibit
Number Exhibit
- ------- -------
1 Definitive Underwriting Agreement, dated October 6, 1997,
relating to the sale of 3,333,000 shares of Common Stock, par
value $.01 per share.
<PAGE>
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 thereunto duly authorized.
MID-AMERICA APARTMENT COMMUNITIES, INC.
Date: October 7, 1997 /s/ Simon R.C. Wadsworth
------------------- ------------------------------
Simon R.C. Wadsworth
Executive Vice President
(Principal Financial and Accounting Officer)
3,333,000 Shares
MID-AMERICA APARTMENT COMMUNITIES, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
October 1, 1997
<PAGE>
October 1, 1997
Morgan Stanley & Co. Incorporated
Morgan Keegan & Company, Inc.
Raymond James & Associates, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee
corporation (the "Company"), proposes to issue and sell to
the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 3,333,000 shares of the
Common Stock, par value $.01 per share, of the Company (the
"Firm Shares"), all of which shares are to be issued and
sold by the Company.
The Company also proposes to issue and sell to the
several Underwriters not more than an additional 499,950
shares of its Common Stock, par value $.01 per share (the
"Additional Shares") if and to the extent that you, as
managers of the offering ("Managers"), shall have determined
to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to
as the "Shares." The shares of the Common Stock, par value
$.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are
hereinafter referred to as the "Common Stock."
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on
Form S-3 (Registration No. 333-34775), including a base
prospectus dated September 9, 1997 (the "Base Prospectus"),
relating to the Shares. The registration statement as
amended at the time it became effective, including the
information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the
"Registration Statement." If it is contemplated, at the
time this Agreement is executed, that a post-effective
amendment to the registration statement must be declared
effective before offering of the Shares may commence, the
term "Registration Statement" as this Agreement means the
registration statement as amended by such amendment. The
term "Prospectus" as used in this Agreement means the Base
Prospectus together with the prospectus supplement relating
to the Shares dated the date hereof in the form first filed
with the Commission on or after October 1, 1997, pursuant to
Rule 424(b) under the Securities Act. Any reference in this
Agreement to the Registration Statement or the Prospectus,
shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act, as of the date of the
Registration Statement and the Prospectus, as the case may
be, and any reference to any amendment or supplement to the
Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date
under the Securities Exchange Act of 1934, as amended and
the rules and regulations of the Commission thereunder (the
"Exchange Act") which upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12
of Form S-3. As used herein, the term "Incorporated
Documents" means the documents which at the time are
incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto.
Upon consummation of the transactions contemplated
hereby and application of the net proceeds from the sale of
the Firm Shares, the Company and MAC II of Delaware, Inc., a
wholly owned subsidiary of the Company ("MAC") will own an
approximate 1.0% general partnership interest and an
approximately 84.1% limited partnership interest in Mid-
America Apartments, L.P., a Tennessee limited partnership
(the "Partnership"). The Company, certain of its wholly
owned subsidiaries and the Partnership currently owns 81
apartment communities (individually, a "Community" and
collectively, the "Communities") containing 21,943 apartment
units, located in 12 states. The Company and the
Partnership have entered into an Agreement and Plan of
Reorganization dated September 17, 1997 (the "Flournoy
Agreement") with Flournoy Development Company, a Georgia
corporation ("FDC") to acquire, through a series of merger,
exchange and purchase transactions, 29 additional apartment
communities (the "Proposed Acquisitions") containing 7,225
apartment units and other assets (collectively, the
"Flournoy Assets"), all as described in the Prospectus.
Other capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the
Registration Statement.
1. Representations and Warranties of the
Company. The Company and the Partnership jointly and
severally represent and warrant to and agree with each of
the Underwriters that:
a. The Registration Statement has become effective;
no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings
for such purpose are pending before or threatened by
the Commission.
b. The Company and the transactions contemplated
by this Agreement meet the requirements and conditions
for using a registration statement on Form S-3 under
the Act, set forth in the General Instructions to Form
S-3. When the Registration Statement was declared
effective, and on the Closing Date (as defined in
Section 4) (or the Option Closing Date (as defined in
Section 4), as the case may be) it (i) contained or
will contain all statements required to be stated
therein in accordance with, and complied or will comply
in all material respects with the requirements of, the
Securities Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not
include any untrue statement of a material fact or omit
to state any material fact, necessary to make the
statements therein not misleading. When the Prospectus
or any amendment or supplement thereto is filed with
the Commission pursuant to Rule 424(b) and at the
Closing Date (or the Option Closing Date, as the case
may be), the Prospectus, as amended or supplemented at
any such time, (i) contained or will contain all
statements required to be stated therein in accordance
with, and complied or will comply in all material
respects with the requirements of, the Securities Act
and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any
untrue statement of a material fact or omit to state
any material fact necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading. The
representations and warranties set forth in this
paragraph 1(b) do not apply to statements in the
Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
c. The Incorporated Documents heretofore filed,
when they were filed (or, if any amendment with respect
to any such document was filed, when such amendment was
filed) conformed in all material respects with the
requirements of the Exchange Act, any further
Incorporated Documents so filed will, when they are
filed conform in all material respects with the
requirements of the Exchange Act, no such document when
it was filed (or, if an amendment with respect to any
such document was filed, when such amendment was
filed), contained an 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 not misleading; and no such further
document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a
material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.
d. The Company has been duly incorporated, is
validly existing as a corporation in good standing
under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to
own, lease and operate its property and the properties
it proposes to own, lease and operate as described in
the Registration Statement and the Prospectus and to
conduct its business as now conducted and as proposed
to be conducted as described in the Registration
Statement and the Prospectus and is duly qualified to
transact business and is in good standing in each
jurisdiction in which the nature or conduct of its
business or its ownership or leasing of property as now
conducted or proposed to be conducted as described in
the Registration Statement and the Prospectus requires
such qualification, except to the extent that the
failure to be so qualified or be in good standing would
not have a material adverse effect on the Company and
the Partnership, taken as a whole. Except for the
Subsidiaries (defined below), the Company does not own
or control, directly or indirectly, or own any capital
stock or other beneficial interest in, any corporation,
association or other entity.
e. Each subsidiary of the Company set forth on
Schedule II hereto (each, a "Subsidiary" and
collectively, the "Subsidiaries") has been duly
organized and is validly existing under the laws of its
jurisdiction of organization with all requisite
authority to own, lease and operate its properties and
the properties it proposes to own, lease and operate as
described in the Registration Statement and the
Prospectus and to conduct its business as now conducted
and as proposed to be conducted as described in the
Registration Statement and the Prospectus and (with the
exception of America First South Carolina REIT, Inc.
and America First Tennessee REIT, Inc., which are not
in good standing in South Carolina and Tennessee,
respectively, but which do not have a material adverse
effect on the Company and the Subsidiaries, taken as a
whole) is duly qualified or registered to transact
business and is in good standing in each jurisdiction
in which the nature or conduct of its business or its
ownership or leasing of property as now conducted or
proposed to be conducted as described in the
Registration Statement and the Prospectus requires such
qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a
material adverse effect on the Company and the
Subsidiaries, taken as a whole. The Company is, and at
the Closing Date will be, the sole general partner of
the Partnership, and the Company and MAC collectively
will own an approximate 85.1% interest in the
Partnership and will own the 2,000,000 Series A
Cumulative Preferred Units of partnership interest in
the Partnership ("Preferred Units"), representing all
of the outstanding Preferred Units. Except as
described above, the Company or the Partnership is the
sole direct or indirect owner of all of the equity
interests in each of the Subsidiaries (other than the
Partnership), all of the equity interests of each
Subsidiary have been duly and validly authorized and
issued, and all of such equity interests are fully paid
and non-assessable and are owned directly by the
Company or the Partnership, free and clear of all
liens, encumbrances, equities or claims.
f. The Company has full legal right, power and
authority to enter into and perform this Agreement, to
issue, sell and deliver the Shares as provided herein
and to consummate the transactions contemplated herein.
This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable in
accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general
applicability relating to or affecting creditors'
rights, or by general equity principles and except to
the extent the indemnification provisions set forth in
Section 8 of this Agreement may be limited by federal
or state securities laws or the public policy
underlying such laws.
g. The Partnership has full legal right, power
and authority to enter into and perform this Agreement
and to consummate the transactions contemplated herein.
This Agreement has been duly authorized, executed and
delivered by the Partnership and constitutes a valid
and binding agreement of the Partnership enforceable in
accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general
applicability relating to or affecting creditors'
rights, or by general equity principles and except to
the extent the indemnification provisions set forth in
Section 8 of this Agreement may be limited by federal
or state securities laws or the public policy
underlying such laws.
h. The Amended and Restated Agreement of Limited
Partnership of the Partnership, including any amendment
thereto (the "Partnership Agreement") has been duly and
validly authorized, executed and delivered by or on
behalf of the partners of the Partnership and
constitutes a valid and binding agreement of the
parties thereto, enforceable in accordance with its
terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization or
other laws of general applicability relating to or
affecting creditors' rights or by general equity
principles.
i. Each of the Company and the Partnership, and,
to the best of the Company's knowledge, FDC, has full
legal right, power and authority to enter into the
Flournoy Agreement and consummate the transactions
contemplated therein. The Flournoy Agreement has been
duly authorized, executed and delivered by the Company
and the Partnership and, assuming due authorization,
execution and delivery by FDC, constitutes a valid and
binding agreement, enforceable in accordance with its
terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization or
other laws of general applicability relating to or
affecting creditors' rights or by general equity
principles.
j. No consent, approval, authorization, order,
license, certificate, permit, registration, designation
or filing by or with any governmental agency or body is
required for the execution, delivery and performance by
the Company and the Partnership of their respective
obligations under this Agreement and the consummation
by the Company and the Partnership of the transactions
contemplated hereby, including the valid authorization,
issuance, sale and delivery of the Shares except such
as may be required by the securities or Blue Sky laws
of the various states in connection with the offer and
sale of the Shares.
k. Except as disclosed in the Prospectus and the
Registration Statement, neither the issuance, sale and
delivery by the Company of the Shares, nor the
execution, delivery and performance of this Agreement,
nor the consummation of the transactions contemplated
hereby by the Company or the Partnership will
contravene any of the terms and provisions of the
charter, by-laws, certificate of limited partnership or
partnership agreement, as the case may be, of the
Company or any of the Subsidiaries; or (with or without
the giving of notice or the passage of time or both)
constitute a default under any indenture, mortgage,
deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or any of
the Subsidiaries is a party or to which they, any of
them, any of their respective properties or other
assets is subject; or violate any applicable law
statute, judgment, decree, order, rule or regulation of
any court or governmental agency or body applicable to
any of the foregoing or any of their respective
properties; or result in the creation or imposition of
any lien, charge, claim or encumbrance upon any
property or asset of any of the foregoing.
l. The issuance and sale of the Shares to the
Underwriters hereunder have been duly authorized by the
Company. When issued and delivered against payment
therefor as provided in this Agreement, the Shares will
be validly issued, fully paid and non-assessable and
the issuance of the Shares will not be subject to any
preemptive or similar rights. No person or entity
holds a right to require or participate in the
registration under the Securities Act of the Shares
pursuant to the Registration Statement. No person or
entity has a right of participation or first refusal
with respect to the sale of the Shares by the Company.
Except as set forth in the Prospectus, there are no
contracts, agreements or understandings between the
Company and any person or entity granting such person
or entity the right to require the Company to file a
registration statement under the Securities Act with
respect to any securities of the Company or to require
the Company to include such securities with the Shares
registered pursuant to the Registration Statement.The
form of certificates evidencing the Shares complies
with all applicable legal requirements.
m. The authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus. The Company has an
authorized, issued and outstanding capitalization as
set forth in the Prospectus under the caption
"Capitalization." Immediately after the Closing Date,
16,727,932 shares of Common Stock will be issued and
outstanding, 2,000,000 shares of the Company's Series A
Preferred Stock will be issued and outstanding and no
shares of any other class of capital stock will be
issued and outstanding. All of the issued and
outstanding shares of capital stock of the Company have
been duly authorized and are validly issued, fully paid
and non-assessable, and have been offered, sold and
issued by the Company in compliance with all applicable
laws (including, without limitation, federal and state
securities laws). None of the issued shares of capital
stock of the Company have been issued in violation of
any preemptive or similar rights. Except as disclosed
in the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and
no commitment, plan or arrangement to issue, any shares
of capital stock of the Company or any security
convertible into or exchangeable for capital stock of
the Company.
n. Immediately after the Closing Date, all of
the issued and outstanding units of partnership
interest in the Partnership ("Common Units") and
Preferred Units will be validly issued, fully paid and
non-assessable. None of the Common Units or Preferred
Units has been or will be issued or is owned or held in
violation of any preemptive right. The Common Units
and Preferred Units have been or will be offered, sold
and issued by the Partnership in compliance with all
applicable laws (including, without limitation, federal
and state securities laws).
o. The financial statements (including the related
notes), with the exception of the Unaudited Pro Forma
Condensed Combined Financial Statements in the
Prospectus, included or incorporated by reference in
the Registration Statement and the Prospectus present
fairly the financial position of the respective entity
or entities presented therein as of the dates indicated
and the results of operations and cash flows for the
respective entity or entities presented therein for the
periods specified, all in conformity with generally
accepted accounting principles applied on a consistent
basis throughout the periods specified. The financial
statement schedules included or incorporated by
reference in the Registration Statement present fairly
the information required to be shown therein and have
been compiled on a basis consistent with the financial
statements included or incorporated by reference in the
Registration Statement and the Prospectus. No other
financial statements or schedules are required by Form
S-3 or otherwise to be included in the Registration
Statement or the Prospectus. The unaudited pro forma
financial information (including the related notes and
supporting schedules) included or incorporated by
reference in the Registration Statement and the
Prospectus complies as to form in all material respects
to the applicable accounting requirements of the
Securities Act and the rules and regulations of the
Commission thereunder and management of the Company
believes that the assumptions underlying the pro forma
adjustments are reasonable. All necessary pro forma
adjustments have been properly applied to the
historical amounts in the compilation of the
information and such information fairly presents with
respect to the respective entity or entities presented
therein the financial position, results of operations
and other information purported to be shown therein at
the respective dates and for the respective periods
specified.
p. KPMG Peat Marwick LLP, who has examined and
is reporting upon the audited financial statements and
schedules included or incorporated by reference in the
Registration Statement and the Prospectus, are, and
were during the periods covered by their Reports
included or incorporated by reference in the
Registration Statement and the Prospectus, independent
public accountants within the meaning of the Securities
Act and the rules and regulations of the Commission
thereunder.
q. Neither the Company nor any of its
Subsidiaries has sustained, since December 31, 1996,
any material loss or interference with its business
from fire, explosion, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or
from any labor dispute or arbitrators' or court or
governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given
in the Registration Statement and the Prospectus, and
except as otherwise stated in the Registration
Statement and Prospectus, there has not been (i) any
material change in the capital stock or partnership
interests, as applicable, long-term debt, obligations
under capital leases or short-term borrowings of the
Company and its Subsidiaries, taken as a whole, (ii)
any material adverse change, or any development which
could reasonably be seen as involving a prospective
material adverse change, in or affecting the business,
prospects, properties, assets, results of operations or
condition (financial or other) of the Company and its
Subsidiaries, taken as a whole, (iii) any liability or
obligation, direct or contingent, incurred or
undertaken by the Company or any of its Subsidiaries,
which is material to the business or condition,
financial or otherwise, of the Company and its
Subsidiaries, taken as a whole, except for liabilities
or obligations incurred in the ordinary course of
business, (iv) any declaration or payment of any
dividend or distribution of any kind on or with respect
to the capital stock of the Company or with respect to
the partnership interests of the Partnership, or (v)
any transaction that is material to the Company and its
Subsidiaries, taken as a whole, except transactions in
the ordinary course of business or as otherwise
disclosed in the Registration Statement and the
Prospectus.
r. The Company or its Subsidiaries will have, at
the Closing Date, good and marketable title in fee
simple to all real property and the improvements
located thereon owned by them, free and clear of all
liens, encumbrances, claims, security interests,
restrictions and defects except such as do not have a
material adverse effect on the business or condition,
financial or otherwise, of the Company and its
Subsidiaries taken as a whole and upon consummation of
the transactions contemplated by the Flournoy Agreement
will have good and marketable title in fee simple to
the Flournoy Assets and all related real property, free
and clear of all liens, encumbrances, claims, security
interests, restrictions and defects except such as will
not materially adversely affect the Company's ownership
or use of the Flournoy Assets. Neither the Company nor
any of the Subsidiaries owns or leases any real
property, except as described in the Registration
Statement or the Prospectus. No person has an option
or right of first refusal to purchase all or part of
any Community, any Proposed Acquisition or any interest
therein. Each of the Communities complies with all
applicable codes, laws and regulations (including,
without limitation, building and zoning codes, laws and
regulations and laws relating to access to the
Communities), except if and to the extent disclosed in
the Prospectus and except for such failures to comply
that would not individually or in the aggregate have a
material adverse impact on the condition, financial or
otherwise, or on the earnings, assets, business affairs
or business prospects of the Company and its
Subsidiaries, taken as a whole. Neither the Company
nor any of its Subsidiaries has knowledge of any
pending or threatened condemnation proceeding, zoning
change, or other proceeding or action that will in any
manner affect the size of, use of, improvements on,
construction on or access to a Community, except such
proceedings or actions that would not have a material
adverse effect on the condition, financial or
otherwise, or on the earnings, assets, business affairs
or business prospects of or with respect to the Company
and its Subsidiaries, taken as a whole. Neither the
Company nor any of its Subsidiaries nor, to the
knowledge of the Company and the Partnership, any of
the current owners of the Proposed Acquisitions is in
default under any of the leases governing the apartment
units at any of the Communities or the Proposed
Acquisitions and the Company knows of no event, but for
the passage of time or the giving of notice, or both,
which would constitute a default under any of such
leases, except such default that would not have a
material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or
business prospects of the Company and its Subsidiaries,
taken as a whole.
The Company or a Subsidiary has obtained an
owner's title insurance policy from a title insurance
company to issue such a policy on each of the
Communities and will obtain such a policy with respect
to the Proposed Acquisitions with coverage in an amount
at least equal to the cost of acquisition of such
property, including the principal amount of any
indebtedness assumed with respect to the property.
s. Neither the Company nor any of its
Subsidiaries is in violation of its respective charter,
by-laws, certificate of limited partnership or
partnership agreement, as the case may be, and except
as disclosed in the Prospectus, no default exists, and
no event has occurred, nor state of facts exists,
which, with notice or after the lapse of time to cure
or both, would constitute a default in the due
performance and observance of any obligation,
agreement, term, covenant, consideration or condition
contained in any material indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement
or instrument to which any such entity is a party or to
which any such entity or any of its properties is
subject. Neither the Company nor any of its
Subsidiaries, nor with respect to the Proposed
Acquisitions to the Company's knowledge, the current
owners thereof, is in violation of, or in default with
respect to, any statute, rule, regulation, order,
judgment or decree, except as may be properly described
in the Prospectus or such as in the aggregate do not
now have and will not in the future reasonably be
expected to have a material adverse effect on the
financial position, results of operations or business
of the Company and its Subsidiaries, taken as a whole.
t. Except as described in the Prospectus, there
is not pending or, to the knowledge of the Company,
threatened, any action, suit, proceeding, inquiry or
investigation against any of the Communities, the
Company, any of the Subsidiaries, any of their
respective officers, directors or partners, or the
current owners of the Proposed Acquisitions, or to
which the properties, assets or rights of such entities
(limited with respect to the current owners of the
Proposed Acquisitions to the Proposed Acquisitions and
the related assets and rights) are subject, before or
brought by any court or governmental agency or body or
board of arbitrators, which could reasonably be
expected to result in any material adverse change in
the business, prospects, properties, assets, results of
operations or condition, financial or otherwise, of
the Company and its Subsidiaries, taken as a whole, or
any Proposed Acquisition (limited with respect to the
current owners of the Proposed Acquisitions to the
Proposed Acquisitions) or which could adversely affect
the consummation of the transactions contemplated by
this Agreement; provided, however, that the foregoing
representations are limited to the knowledge of the
Company and the Partnership to the extent they relate
to the current owners of the Proposed Acquisitions.
u. The descriptions in the Registration
Statement and the Prospectus of the contracts, leases
and other legal documents therein described present
fairly the information required to be shown, and there
are no contracts, leases, or other documents of a
character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits
to the Registration Statement which are not described
or filed as required. There are no legal or
governmental proceedings pending or threatened to which
the Company or any Subsidiary is subject that are
required to be described in the Registration Statement
or the Prospectus and are not so described. To the
knowledge of the Company and the Partnership, there are
no statutes or regulations applicable to the Company or
any of the Subsidiaries or certificates, permits or
other authorizations from governmental regulatory
officials or bodies required to be obtained or
maintained by the Company or any of the Subsidiaries of
a character required to be disclosed in the
Registration Statement or the Prospectus which have not
been so disclosed and properly described therein. All
agreements between the Company or any of the
Subsidiaries and third parties expressly referenced in
the Prospectus are legal, valid and binding obligations
of the Company or one or more of its Subsidiaries,
enforceable in accordance with their respective terms,
except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of
general applicability relating to or affecting
creditors' rights and by general equity principles.
v. No relationship, direct or indirect, exists
between or among the Company or any of its Subsidiaries
on the one hand, and the directors, trustees, officers,
shareholders, customers or suppliers of the Company or
any of its Subsidiaries on the other hand, which is
required by the Act to be described in the Registration
Statement and the Prospectus which is not so described.
w. Each of the Company and its Subsidiaries
owns, possesses or has obtained all material permits,
licenses, franchises, certificates, consents, orders,
approvals and other authorizations of governmental or
regulatory authorities as are necessary to own or
lease, as the case may be, and to operate its
respective properties and to carry on its business as
presently conducted, or as contemplated in the
Prospectus to be conducted, and neither the Company nor
the Partnership has received any notice of proceedings
relating to revocation or modification of any such
licenses, permits, certificates, consents, orders,
approvals or authorizations.
x. Neither the Company nor any of its
Subsidiaries is required to own or possess any license
or other rights to use any patents, trademarks, service
marks, trade names, copyrights, software and design
licenses, trade secrets, manufacturing processes, other
intangible property rights and know-how (collectively
"Intangibles") to entitle any of them to conduct their
respective businesses as such businesses are now, and
as they are proposed to be, conducted or operated as
described in the Prospectus, and neither the Company
nor any of its Subsidiaries has received notice of
infringement upon or of conflict with (and the Company
and the Partnership know of no such infringement upon
or of conflict with) asserted rights of others with
respect to any Intangibles which could materially and
adversely affect the business, prospects, properties,
assets, results of operation or condition (financial or
otherwise) of the Company and its Subsidiaries, taken
as a whole.
y. To the Company's and the Partnership's
knowledge, the system of internal accounting controls
of the Company and its Subsidiaries, taken as a whole,
is sufficient to meet the broad objectives of internal
accounting controls insofar as those objectives pertain
to the prevention or detection of errors or
irregularities in amounts that would be material in
relation to the Company's financial statements; and, to
the Company's and the Partnership's knowledge, neither
the Company nor any of its Subsidiaries, nor any
employee or agent thereof, has made any payment of
funds of the Company or any of its Subsidiaries, as the
case may be, or received or retained any funds, and no
funds of the Company or any of its Subsidiaries, as the
case may be, have been set aside to be used for any
payment, in each case in violation of any law, rule or
regulation.
z. Each of the Company and its Subsidiaries (to
the extent not consolidated with the Company) has filed
on a timely basis all necessary federal, state, local
and foreign income and franchise tax returns required
to be filed through the date hereof and has paid all
taxes shown as due thereon; and no tax deficiency has
been asserted against any such entity, nor does the
Company or the Partnership know of any tax deficiency
which is likely to be asserted against any such entity
which, if determined adversely to any such entity,
could materially adversely affect the business,
prospects, properties, assets, results of operations or
condition, financial or otherwise, of the Company and
the Subsidiaries, considered as one enterprise. All
tax liabilities are adequately provided for on the
respective books of such entities.
aa. Each of the Company and its Subsidiaries
maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the
amounts generally deemed adequate for their respective
businesses and assets and, to the best of the Company's
and the Partnership's knowledge, consistent with
insurance coverage maintained by similar companies in
similar businesses, including, but not limited to,
insurance covering real and personal property owned or
leased by the Company and its Subsidiaries against
theft, damage, destruction, acts of vandalism and all
other risks, including liability for personal injury,
customarily insured against, all of which insurance is
in full force and effect.
ab. To the best of the Company's and the
Partnership's knowledge, no general labor problem
exists or is imminent with the employees of the Company
or any of its Subsidiaries.
ac. Each of the Company and its Subsidiaries, and
each of their officers, directors and controlling
persons, has not taken and will not take, directly or
indirectly, any action resulting in a violation of Rule
102 under Regulation M promulgated under the Exchange
Act, or designed to, or that might reasonably be
expected to, cause or result in or that has constituted
or that reasonably might be expected to constitute the
stabilization or manipulation of the price of any
security of the Company or to facilitate the sale or
resale of the Shares.
ad. The Company has complied with all provisions
of Section 517.075, Florida Statutes relating to doing
business with the Government of Cuba or with any person
or affiliate located in Cuba.
ae. Except as otherwise disclosed in the
Registration Statement or the Prospectus, neither the
Company, any of the Subsidiaries nor, to the best of
their knowledge, any former owner of any Community or
any current or former owner of the Proposed
Acquisitions has authorized or conducted or has
knowledge of the generation, transportation, storage,
presence, use, treatment, disposal, release, or other
handling of any hazardous substance, hazardous waste,
hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, asbestos, radon,
polychlorinated biphenyls ("PCBs"), petroleum product
or waste (including crude oil or any fraction thereof),
natural gas, liquefied gas, synthetic gas or other
material defined, regulated, controlled or potentially
subject to any remediation requirement under any
environmental law (collectively, "Hazardous
Materials"), on, in, under or affecting any Community,
the Proposed Acquisitions or any real property
currently leased or owned or by any means controlled by
the Company or any of its Subsidiaries (the "Real
Property") except in material compliance with
applicable laws; to the knowledge of the Company and
the Partnership, the Real Property and the Company's
and its Subsidiaries' and the current and former owners
of the Proposed Acquisitions' operations with respect
to the Real Property are in compliance with all
federal, state and local laws, ordinances, rules,
regulations and other governmental requirements
relating to pollution, control of chemicals, management
of waste, discharges of materials into the environment,
health, safety, natural resources, and the environment
(collectively, "Environmental Laws"), and the Company,
its Subsidiaries and the current owners of the Proposed
Acquisitions have, and are in compliance with, all
licenses, permits, registrations and government
authorizations necessary to operate under all
applicable Environmental Laws. Except as otherwise
disclosed in the Prospectus, neither the Company, its
Subsidiaries nor the current owners of the Proposed
Acquisitions or, any former owner of any of the Real
Property has received any written or oral notice from
any governmental entity or any other person and there
is no pending or threatened claim, litigation or any
administrative agency proceeding that: alleges a
violation of any Environmental Laws by the Company or
any of its Subsidiaries; or, with respect to the
Proposed Acquisitions, the current owners thereof,
alleges that the Company, any of its Subsidiaries or,
with respect to the Proposed Acquisitions, the current
owners thereof, is a liable party or a potentially
responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.
9601, et seq., or any state superfund law; has
resulted in or could result in the attachment of an
environmental lien on any of the Real Property; or
alleges that the Company, any of its Subsidiaries or
any of the current owners of the Proposed Acquisitions
is liable for any contamination of the environment,
contamination of the Real Property, damage to natural
resources, property damage, or personal injury based on
their activities or the activities of their
predecessors or third parties (whether at the Real
Property or elsewhere) involving Hazardous Materials,
whether arising under the Environmental Laws, common
law principles, or other legal standards. In the
ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on
the business, operations and properties of the Company
and its Subsidiaries, in the course of which it
identifies and evaluates associated costs and
liabilities (including, without limitation, any capital
or operating expenditures) required for clean-up,
closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related
constraints on operating activities and any potential
liabilities to third parties.
af. There are no costs or liabilities associated
with Environmental Laws (including, without limitation,
any capital or operating expenditures required for
clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any
potential liabilities to third parties) which would,
singly or in the aggregate, have a material adverse
effect on the Company and the Subsidiaries, taken as a
whole.
ag. The Company is organized in conformity with
the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of
1986, as amended (the "Code"), and the Company's method
of operation will enable it to meet the requirements
for taxation as a real estate investment trust under
the Code. The Subsidiaries of the Company that are
partnerships will be treated as partnerships for
federal income purposes and not as corporations or
associations taxable as corporations.
ah. None of the entities which prepared
appraisals of the Real Property, nor the entities which
prepared Phase I environmental assessment reports with
respect to the Real Property, was employed for such
purpose on a contingent basis or has any substantial
interest in the Company or any of its Subsidiaries, and
none of their directors, officers or employees is
connected with the Company or any of its Subsidiaries
as a promoter, selling agent, voting trustee, officer,
director or employee.
ai. The Shares have been approved for listing,
upon official notice of issuance, on the New York Stock
Exchange (the "NYSE").
aj. Neither the Company nor any of the
Subsidiaries is, or solely as a result of transactions
contemplated hereby and the application of the proceeds
from the sale of the Shares, will become an "investment
company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company
Act of 1940, as amended (the "1940 Act").
2. Agreements to Sell and Purchase. The Company
hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to
purchase from the Company at $28.1289 a share (the "Purchase
Price") the number of Firm Shares set forth in Schedule I
hereto opposite the name of such Underwriter.
On the basis of the representations and warranties
contained in this Agreement, and subject to its terms and
conditions, the Company agrees to sell to the Underwriters
the Additional Shares, and the Underwriters shall have a one-
time right to purchase, severally and not jointly, up to a
total of 499,950 Additional Shares at the Purchase Price.
If you, on behalf of the Underwriters, elect to exercise
such option, you shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which
notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such
shares are to be purchased. Such date may be the same as
the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten business days after the date
of such notice. Additional Shares may be purchased as
provided in Section 4 hereof solely for the purpose of
covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are
to be purchased, each Underwriter agrees, severally and not
jointly, to purchase the number of Additional Shares
(subject to such adjustments to eliminate fractional shares
as you may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total
number of Firm Shares.
The Company hereby agrees that, without the prior
written consent of Morgan Stanley & Co. Incorporated on
behalf of the Underwriters, it will not, during the period
ending 120 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lease or otherwise
transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any
such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Shares to be sold hereunder, (B)
the issuance by the Company of shares of Common Stock upon
the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the
Underwriters have been advised in writing, (C) shares of
Common Stock issuable under the Company's employee stock
ownership plan, stock purchase plan, or dividend
reinvestment and stock purchase plan, (D) shares issuable
upon redemption of Common Units outstanding at the date
hereof, or (E) Common Units issued in connection with any
property acquisition.
3. Terms of Public Offering. The Company is advised
by you that the Underwriters propose to make a public
offering of their respective portions of the Shares as soon
after this Agreement has been executed and delivered as in
your judgment is advisable. The Company is further advised
by you that the Shares are to be offered to the public
initially at $29.6875 a share (the "Public Offering Price")
and to certain dealers selected by you at a price that
represents a concession not in excess of $.9352 a share
under the Public Offering Price.
4. Payment and Delivery. Payment for the Firm Shares
to be sold by the Company shall be made to the Company in
Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective
accounts of the several Underwriters at 10:00 A.M., New York
City time, on October 6, 1997, or at such other time on the
same or such other date, not later than October 11, 1997, as
shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "Closing
Date."
Payment for any Additional Shares shall be made to the
Company in Federal or other funds immediately available in
New York City against delivery of such Additional Shares for
the respective accounts of the several Underwriters at 10:00
A.M., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the
same or on such other date, in any event not later than
November 10, 1997, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred
to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares
shall be in definitive form and registered in such names and
in such denominations as you shall request in writing not
later than one full business day prior to the Closing Date
or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and Additional
Shares shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares
to the Underwriters duly paid, against payment of the
Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The
obligations of the Company to sell the Shares to the
Underwriters and the several obligations of the Underwriters
to purchase and pay for the Shares on the Closing Date are
subject to the following further conditions:
a. If, at the time this Agreement is executed
and delivered, it is necessary for a post-effective
amendment to the Registration Statement to be declared
effective before the offering of the Shares may
commence, such post-effective amendment shall have
become effective not later than 5:30 p.m., New York
City time, on the date hereof, or at such later date
and time as shall be consented to in writing by you.
b. Subsequent to the execution and delivery of
this Agreement and prior to the Closing Date:
1. there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
2. there shall not have occurred any
change, or any development involving a prospective
change, in the condition, financial or otherwise,
or in the earnings, business or operations of the
Company and its Subsidiaries, taken as a whole,
from that set forth in the Prospectus that, in
your judgment, is material and adverse and that
makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner
contemplated in the Prospectus.
3. there shall not have occurred any event
or development relating to or involving the
Company or any Subsidiary or any officer or
director of the Company which makes any statement
made in the Prospectus untrue or which, in the
reasonable opinion of the Company and its counsel
or the Underwriters and their counsel, requires
the making of any addition to or change in the
Prospectus in order to state a material fact
required by the Securities Act or any other law to
be stated therein or necessary in order to make
the statements therein not misleading, if amending
or supplementing the Prospectus to reflect such
event or development would, in your reasonable
opinion, as Managers of the offering, materially
adversely affect the market for the Shares.
c. The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Company, to the
effect set forth in clauses (b)(i) and (b)(iii) above
and to the effect that the representations and
warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that
the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the
Closing Date.
The officer signing and delivering such
certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
d. All filings with the Commission required by
Rule 424 under the Securities Act shall have been made
within the applicable time prior prescribed for such
filing by such Rule.
e. At the Closing Date no stop order suspending
the effectiveness of the Registration Statement shall
have been issued under the Securities Act and no
proceedings for that purpose shall have been instituted
or shall be pending or, to your knowledge or the
knowledge of the Company, shall be contemplated by the
Commission, and any request on the part of the
Commission for additional information shall have been
complied with to the satisfaction of counsel for the
Underwriters.
f. The Underwriters shall have received on the
Closing Date an opinion of Baker, Donelson, Bearman &
Caldwell, outside counsel for the Company, dated the
Closing Date, to the effect that:
1. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Tennessee with all requisite corporate
power and authority to own, lease and operate its properties
and the properties it proposes to own, lease and operate as
described in the Registration Statement and the Prospectus
and to conduct its business as now conducted and as proposed
to be conducted as described in the Registration Statement
and the Prospectus. The Company has been duly qualified or
registered to do business and is in good standing as a
foreign corporation in the states of Arkansas, Florida,
Georgia, Kentucky, Mississippi, Missouri, North Carolina,
Ohio, South Carolina and Virginia. There are no other
jurisdictions in which the ownership or leasing of the
Company's properties or the nature or conduct of its
business as now conducted or proposed to be conducted as
described in the Registration Statement and the Prospectus
requires such qualification, except where the failure to do
so would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole. To such counsel's
knowledge, except for the Subsidiaries, the Company does not
own or control, directly or indirectly, any corporation,
association or other entity.
2. The Partnership has been duly organized and
is validly existing as a limited partnership under
the Tennessee Revised Uniform Limited Partnership
Act, as amended, with all requisite partnership
power and authority to own, lease and operate its
properties and to conduct its business as now
conducted and as proposed to be conducted as
described in the Registration Statement and the
Prospectus. The Partnership has been duly
qualified or registered to do business and is in
good standing as a foreign partnership in the
states of Arkansas, Florida, Georgia, Kentucky,
Mississippi, Missouri, North Carolina, Ohio and
South Carolina. There are no other jurisdictions
in which the ownership or leasing of the
Partnership's properties or the nature or conduct
of its business as now conducted or proposed to be
conducted as described in the Registration
Statement and the Prospectus requires such
qualification, except where the failure to do so
would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
The Company is the sole general partner of the
Partnership, and at the Closing Date, will be the
sole general partner of the Partnership and,
together with MAC, will own an approximately 85.1%
interest in the Partnership and will own all of
the outstanding Preferred Units.
3. Each Subsidiary of the Company (other
than the Partnership) has been duly organized and
is validly existing under the laws of its
jurisdiction of organization with all requisite
power and authority to conduct its business as now
conducted and as proposed to be conducted in the
Registration Statement and the Prospectus and
(with the exception of America First South
Carolina REIT, Inc. and America First Tennessee
REIT, Inc., which are not in good standing in
South Carolina and Tennessee, respectively, but
which do not have a material adverse effect on the
Company and the Subsidiaries, taken as a whole) is
in good standing as a foreign entity in each
jurisdiction in which the ownership of its
properties or the nature or conduct of its
business as now conducted or proposed to be
conducted requires such qualification, except
where the failure to do so would not have a
material adverse effect on the Company and the
Subsidiaries taken as a whole. All of the equity
interests in each of the Subsidiaries have been
duly authorized and are validly issued, fully paid
and non-assessable. The Company is the sole
direct or indirect owner of all of the equity
interests in the Subsidiaries (other than the
Partnership) and such interests are owned by the
Company or one of its Subsidiaries free and clear
of all liens, encumbrances, equities or claims.
4. The Company has full legal right, power
and authority to enter into, deliver and perform
this Agreement, to issue, sell and deliver the
Shares as provided herein and to consummate the
transactions contemplated herein. This Agreement
has been duly authorized, executed and delivered
by the Company.
5. The Partnership has full legal right, power
and authority to enter into, deliver and perform
this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly
authorized, executed and delivered by the
Partnership.
6. The Flournoy Agreement has been duly
authorized, executed and delivered by the Company
and the Partnership and, assuming due
authorization, execution and delivery by FDC,
constitutes a valid and binding agreement,
enforceable in accordance with its terms, except
to the extent that enforceability may be limited
by bankruptcy, insolvency, reorganization or other
laws of general applicability relating to or
affecting creditors' rights or by general equity
principles.
7. No consent, approval, authorization, order,
license, certificate, permit, registration,
designation or filing by or with any governmental
agency or body is required for the execution,
delivery and performance by the Company and the
Partnership of their respective obligations under
this Agreement, and the consummation of the
transactions contemplated hereby including the
valid authorization, issuance, sale and delivery
of the Shares, except such as may be required by
the securities or Blue Sky laws of the various
states in connection with the offer and sale of
the Shares by the Underwriters, as to which such
counsel need express no opinion.
8. Neither the issuance, sale and delivery by
the Company of the Shares, nor the execution,
delivery and performance of this Agreement nor the
consummation of the transactions contemplated
hereby by the Company and the Partnership will
contravene any of the terms and provisions of the
charter, by-laws, certificate of limited
partnership or partnership agreement, as the case
may be, of the Company or any Subsidiary; or, to
such counsel's knowledge, and except as disclosed
in the Prospectus, constitute a default under any
material indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or
instrument to which the Company or any Subsidiary
is a party or to which either of them, any of
their respective properties or other assets or any
Community is subject; or, to such counsel's
knowledge, violate any applicable law, statute,
judgment, decree, order, rule or regulation of any
court or governmental agency or body; or, to such
counsel's knowledge, result in the creation or
imposition of any lien, charge, claim or
encumbrance upon any property or asset of any of
the foregoing.
9. The authorized capital stock of the Company
conforms as to legal matters to the description
thereof contained in the Prospectus and meets the
requirements of Item 9 of Form S-3 under the
Securities Act.
10. The issuance and sale of the Shares to the
Underwriters hereunder have been duly authorized
by the Company. When issued and delivered against
payment therefor as provided in this Agreement,
the Shares will be validly issued, fully paid and
nonassessable. No preemptive or similar rights
exist with respect to any of the Shares. To such
counsel's knowledge, no person or entity holds a
right to participate in the registration under the
Securities Act of the Shares pursuant to the
Registration Statement. To such counsel's
knowledge, no person or entity has a right of
participation or first refusal with respect to the
sale of the Shares by the Company. To such
counsel's knowledge, except as disclosed in the
Prospectus, there is no outstanding option,
warrant or other right calling for the issuance
of, and no commitment, plan or arrangement to
issue, any shares of capital stock of the Company
or any security convertible into or exchangeable
for capital stock of the Company except pursuant
to the Company's Employee Stock Purchase Plan and
its 1994 Restricted Stock and Stock Option Plan
and Dividend Reinvestment and Stock Purchase Plan
and except for the issuance of Common Stock upon
redemption of Common Units. The shares of Common
Stock outstanding prior to the issuance of the
Shares have been duly authorized and are validly
issued, fully paid and non-assessable. The form
of certificate evidencing the Shares complies with
all applicable legal requirements.
11. All of the issued and outstanding Common
Units and Preferred Units have been duly and
validly authorized by the Partnership. None of
the outstanding Common Units or Preferred Units
has been issued or is owned or held in violation
of any preemptive rights. The Common Units to be
issued to the Company at the Closing Date have
been duly and validly authorized by the
Partnership and will be issued, offered and sold
in compliance with all applicable laws (including,
without limitation, federal and state securities
laws). When issued and delivered against payment
therefor as provided in the Partnership Agreement,
such Common Units will be duly and validly issued,
fully paid and non-assessable. The outstanding
Common Units and Preferred Units have been issued,
offered and sold at or prior to the Closing Date
in compliance with all applicable laws (including,
without limitation, federal and state securities
laws). Immediately after the Closing Date,
2,000,000 Preferred Units will be issued and
outstanding and the Company, together with MAC,
will own an approximate 85.1% interest in the
Partnership.
12. To the knowledge of such counsel, neither
the Company nor any of its Subsidiaries is in
violation of its respective charter, by-laws,
certificate of limited partnership or partnership
agreement, as the case may be, and to the
knowledge of such counsel, no material default
exists and no event has occurred which, with
notice or after the lapse of time to cure or both,
would constitute a material default in the due
performance and observance of any obligation,
agreement, term, covenant, or condition contained
in any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or
instrument known to such counsel. To the
knowledge of such counsel, neither the Company nor
any of its Subsidiaries is in violation of, or in
default with respect to, any statute, rule,
regulation, order, judgment or decree, except as
may be properly described in the Prospectus or
such as in the aggregate do not now have and will
not in the future have a material adverse effect
on the financial position, results of operations
or business of the Company and its Subsidiaries,
taken as a whole.
13. To the knowledge of such counsel after due
inquiry, there is not pending or threatened any
legal or governmental action, suit, proceeding,
inquiry or investigation against the Company or
any of its Subsidiaries or any assets or rights
of any such entity are subject, which, if
determined adversely to any such entity, would
individually or in the aggregate have a material
adverse effect on the financial position, results
of operations or business of the Company and it
Subsidiaries, taken as a whole, or which is
required to be disclosed in the Registration
Statement and Prospectus.
14. The descriptions in the Registration
Statement and the Prospectus of the contracts,
leases and other legal documents therein described
present fairly the information required to be
shown and there are no contracts, leases or other
documents known to such counsel of a character
required to be described in the Registration
Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are
not described or filed as required. To such
counsel's knowledge, all agreements between the
Company or any of its Subsidiaries, respectively,
and third parties expressly referenced in the
Prospectus are legal, valid and binding
obligations, enforceable in accordance with their
respective terms, except to the extent
enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of
general applicability relating to or affecting
creditors' rights and to general equitable
principles.
15. After due inquiry, such counsel does not
know of any statutes, regulations, contracts or
other documents that are required to be described
in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration
Statement that are not described or filed as
required.
16. The Shares have been approved for listing
on the NYSE upon official notice of issuance.
17. The Company is organized in conformity with
the requirements for qualification as a real
estate investment trust pursuant to Sections 856
through 860 of the Code, and the Company's
proposed method of operation will enable it to
meet the requirements for qualification and
taxation as a real estate investment trust under
the Code. Each of the Subsidiaries that is
organized as a partnership will be treated as a
partnership for federal income purposes and not as
a corporation or an association taxable as a
corporation.
18. The Registration Statement has become
effective under the Securities Act and, to the
knowledge of such counsel, no stop order
suspending the effectiveness of the Registration
Statement has been issued and no proceeding for
that purpose has been instituted or is pending or
contemplated under the Securities Act. Other than
financial statements and other financial and
operating data and schedules contained therein, as
to which counsel need express no opinion (i) the
Registration Statement, the Prospectus and any
amendment or supplement thereto, at the time they
became effective or were filed, complied as to
form in all material respects with the Securities
Act and the rules and regulations thereunder and
(ii) the documents incorporated by reference in
the Registration Statement, the Prospectus and any
amendment or supplement thereto, at the time they
became effective or were filed, complied as to
form in all material respects with the Exchange
Act and the rules and regulations of the
Commission thereunder.
19. Neither the Company nor any of the
Subsidiaries is, or solely as a result of the
consummation of the transactions contemplated
hereby and the application of the proceeds from
the sale of the Shares will become, an "investment
company," or a company "controlled" by an
"investment company," within the meaning of the
1940 Act.
20. The statements in the Prospectus under
the captions "Risk Factors", "Description of the
Capital Stock of the Company" and "Underwriters"
insofar as such statements constitute summaries of
the legal matters, documents or proceedings
referred to therein, fairly present the
information called for with respect to such legal
matters, documents and proceedings and fairly
summarize the matters referred to therein. The
information in the Prospectus under the caption
"Federal Income Tax Considerations" to the extent
that such information constitutes matters of law
or legal conclusions, has been reviewed by such
counsel, is correct in all material respects and
the discussion thereunder does not omit any
material provisions with respect to the matters
covered and presents fairly the information
required to be disclosed therein under the
Securities Act and the Securities Act Regulations.
21. Such counsel (A) is of the opinion that
the Registration Statement and Prospectus (except
for financial statements and schedules and other
financial and statistical data as to which such
counsel need not express any opinion) comply as to
form in all material respects with the Securities
Act and the applicable rules and regulations of
the Commission thereunder, (B) has no reason to
believe that (except for financial statements and
schedules and other financial and operating data
included therein, as to which counsel need make no
statement), the Registration Statement or any
documents incorporated by reference therein at the
time such Registration Statement became effective,
and as of the date of such opinion, contained or
contains any untrue statement of a material fact
or omitted or omits to state any material fact
required to be stated therein or necessary to make
statements therein not misleading, and (C) has no
reason to believe that (except for financial
statements and schedules and other financial and
operating data included therein, as to which
counsel need not express any belief), the
Prospectus or any amendment or supplement thereto
made prior to the Closing Date, as of its date,
and as of the date of such opinion, contained or
contains any untrue statement of a material fact
or omitted or omits 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.
g. The Underwriters shall have received on the
Closing Date an opinion of Hunton & Williams, counsel
for the Underwriters, dated the Closing Date, covering
the matters referred to in subparagraphs (viii), (x)
(but only as to the first three sentences thereof),
(xx) (but only as to the statements in the Prospectus
under "Description of the Capital Stock of the Company"
and "Underwriters"), and (xxi) of paragraph (f) above.
With respect to subparagraph (xxi) of paragraph
(f) above, Baker, Donelson, Bearman & Caldwell and
Hunton & Williams may state that their opinion and
belief are based upon their participation in the
preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but
are without independent check or verification, except
as specified.
The opinion of Baker, Donelson, Bearman & Caldwell
described in paragraph (f) above shall be rendered to
the Underwriters at the request of the Company and
shall so state therein.
h. The Underwriters shall have received, on each
of the date hereof and the Closing Date, a letter dated
the date hereof or the Closing Date, as the case may
be, in form and substance satisfactory to the
Underwriters, from KPMG Peat Marwick LLP, independent
public accountants, containing statements and
information of the type normally found in accountants'
"comfort letters" to underwriters with respect to the
financial statements and certain financial information
contained in or incorporated by reference into the
Registration Statement and the Prospectus; provided
that the letter delivered on the Closing Date shall use
a "cut off" date not earlier than the date hereof.
i. The "lock-up" agreements, each substantially
in the form of Exhibit A hereto, between you and
certain executive officers of the Company identified by
you relating to sales and certain other dispositions of
shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be
in full force and effect on the Closing Date.
The several obligations of the Underwriters to
purchase Additional Shares hereunder are subject to the
delivery to you on the Option Closing Date of such documents
as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance
of the Additional Shares and other matters related to the
issuance of the Additional Shares.
6. Covenants of the Company and the Partnership. In
further consideration of the agreements of the Underwriters
herein contained, the Company and the Partnership covenant
with each Underwriter as follows:
a. If, at the time this Agreement is executed
and delivered, it is necessary for a post-effective
amendment to the Registration Statement to be declared
effective before the offering of the Shares may
commence, the Company will endeavor to cause such post-
effective amendment to become effective as soon as
possible and will advise you promptly and, if requested
by you, will confirm such advice in writing, when such
post-effective amendment has become effective.
b. To advise you promptly and, if requested by
you, confirm such advice in writing: (i) of any
request by the Commission for amendment of or a
supplement to the Registration Statement or the
Prospectus or for additional information; (ii) of the
issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of
the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation
of any proceeding for such purpose; and (iii) within
the period of time referred to in paragraph (e) below,
of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or
results of operations, or of the happening of any
event, which makes any statement of a material fact
made in the Registration Statement or the Prospectus
(as then amended or supplemented) untrue or which
requires the making of any additions to or changes in
the Registration Statement or the Prospectus (as then
amended or supplemented) in order to state a material
fact required by the Securities Act or the regulations
thereunder to be stated therein or necessary in order
to make the statements therein not misleading, or of
the necessity to amend or supplement the Prospectus (as
then amended or supplemented) to comply with the
Securities Act or any other law. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
c. To furnish to you, without charge, (i) five
signed or conformed copies of the Registration
Statement (including exhibits thereto) and for delivery
to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and
to furnish to you in New York City, without charge,
prior to 10:00 A.M. New York City time on the business
day next succeeding the date of this Agreement and
during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as
you may reasonably request, and (ii) such number of
copies of the Incorporated Documents, including
exhibits, as you may reasonably request.
d. Before amending or supplementing the
Registration Statement or the Prospectus, or, prior to
the end of the period of time referred to in the first
sentence in subsection (e) below, prior to filing any
document which upon filing becomes an Incorporated
Document, to furnish to you a copy of each such
proposed amendment or supplement or document and not to
file any such proposed amendment or supplement or
document to which you reasonably object, and to file
with the Commission within the applicable period
specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
e. If, during such period after the first date
of the public offering of the Shares as in the opinion
of counsel for the Underwriters the Prospectus is
required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend
or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by
you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply
with law. In the event that the Company and you agree
that the Prospectus should be amended or supplemented,
the Company, if requested by you, will promptly issue a
press release announcing or disclosing the matters to
be covered by the proposed amendment or supplement.
f. To endeavor to qualify the Shares for offer
and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request.
g. To make generally available to the Company's
security holders and to you as soon as practicable an
earning statement covering the twelve-month period
ending December 31, 1998 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder.
h. The Company and the Partnership will use the
net proceeds received from the sale of the Shares in
the manner specified in the Prospectus under the
caption "Use of Proceeds."
i. The Company and its Subsidiaries have not
taken, and will not take, directly or indirectly, any
action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or
resale of the Shares.
j. The Company will maintain a transfer agent
and, if necessary under the jurisdiction of
incorporation of the Company, a registrar (which may be
the same entity as the transfer agent) for its Common
Stock.
k. The Company will use its best efforts to
maintain the listing of the Shares on the NYSE.
l. The Company will use its best efforts (i) to
meet the requirements to qualify as a real estate
investment trust under the Code and (ii) to cause each
of its Subsidiaries that is organized as a partnership
to be treated as a partnership for federal income tax
purposes.
m. The Company will comply with all of the
provisions of any undertakings in the Registration
Statement.
n. The Company and its Subsidiaries will conduct
their affairs in such a manner so as to ensure that
neither the Company nor any Subsidiary will be an
"investment company" or an entity "controlled" by an
investment company within the meaning of the 1940 Act.
o. The Company will use its best efforts (not to
include waiver of any conditions to closing) to cause
the closing of the transactions contemplated by the
Flournoy Agreement to occur on or prior to December 31,
1997.
7. Expenses. Whether or not the transactions
contemplated in this Agreement are consummated or this
Agreement is terminated, the Company agrees to pay or cause
to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the registration
and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation
and filing of the Registration Statement, the Prospectus and
amendments and supplements to any of the foregoing,
including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters
and dealers, in the quantities hereinabove specified, (ii)
all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the
filing of any state notice required in connection with the
offer and sale of the Shares in any state as provided
herein, including reasonable fees and disbursements of
counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal
Investment memorandum, (iv) all filing fees and
disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering
of the Shares by the National Association of Securities
Dealers, Inc., (v) the cost of printing certificates
representing the Shares, (vi) the costs and charges of any
transfer agent, registrar or depository, (vii) the costs and
expenses of the Company relating to investor presentations
on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel
and lodging expenses of the representatives and officers of
the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and
(viii) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this
Section, Section 8 entitled "Indemnity and Contribution",
and the last paragraph of Section 10 below, the Underwriters
will pay all of their costs and expenses, including fees and
disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
8. Indemnity and Contribution. a. The Company and
the Partnership, jointly and severally, agree to indemnify
and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement
or any amendment thereof or the Prospectus (as amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any
Underwriter furnished to the Company or the Partnership in
writing by such Underwriter through you expressly for use
therein.
b. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Partnership, the
Company, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement
or any amendment thereof or the Prospectus (as amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference
to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through you expressly
for use in the Registration Statement, the Prospectus or any
amendments or supplements thereto.
c. In case any proceeding (including any
governmental investigation) shall be instituted involving
any person in respect of which indemnity may be sought
pursuant to paragraph (a) or (b) of this Section 8, such
person (the "indemnified party") shall promptly notify the
person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the
indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related
to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and
the indemnified party and representation of both parties by
the same counsel would be inappropriate due to actual or
potential differing interests between them. It is
understood that the indemnifying party shall not, in respect
of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same
jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Partnership,
the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls
the Company within the meaning of either such Section. In
the case of any such separate firm for the Underwriters and
such control persons of any Underwriters, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated.
In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company.
The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying
party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior
to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of
such proceeding.
d. To the extent the indemnification provided
for in paragraph (a) or (b) of this Section 8 is unavailable
to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu
of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party
or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault
of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative
benefits received by the Company and the Partnership on the
one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses)
received by the Company and the Partnership and the total
underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the
Company on the one hand and the underwriters on the other
hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company
or the Partnership or by the Underwriters and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in
proportion to the respective number of Shares they have
purchased hereunder, and not joint.
e. The Company and the Partnership, on the one
hand, and the Underwriters, on the other, agree that it
would not be just or equitable if contribution pursuant to
this Section 8 were determined by pro rata allocation (even
if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in
paragraph (d) of this Section 8. The amount paid or payable
by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the
Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in
this Section 8 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
f. The indemnity and contribution provisions
contained in this Section 8 and the representations,
warranties and other statements of the Company and the
Partnership contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling
any Underwriter, or the Partnership, the Company, its
officers or directors or any person controlling the Company
or the Partnership and (iii) acceptance of and payment for
any of the Shares.
9. Termination. This Agreement shall be subject to
termination by notice given by you to the Company, if (a)
after the execution and delivery of this Agreement and prior
to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may
be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers,
Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities
in New York shall have been declared by either Federal or
New York State or Tennessee authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses (a) (i)
through (iv), such event, singly or together with any other
such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner
contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This
Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as
the case may be, any one or more of the Underwriters shall
fail or refuse to purchase Shares that it has or they have
agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the aggregate number of the Shares to
be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in
Schedule I hereto bears to the aggregate number of Firm
Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you
may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase
pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such
number of Shares without the written consent of such
Underwriter. If, on the closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares
and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or
the Company. In any such case either you or the Company
shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth
of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the
option to (i) terminate their obligation hereunder to
purchase Additional Shares or (ii) purchase not less than
the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter
under this Agreement.
If this Agreement shall be terminated by the
Underwriters, or any of them, because of any failure or
refusal on the part of the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, or if
for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse
the Underwriters or such Underwriters as have so terminated
this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the
offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two
or more counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto
were upon the same instrument.
12. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the
State of New York.
13. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference
only and shall not be deemed a part of this Agreement.
Very truly yours,
MID-AMERICA APARTMENT COMMUNITIES, INC.
By: /s/ Simon R.C. Wadsworth
Name: Simon R.C. Wadsworth
Title: Executive Vice President and CFO
MID-AMERICA APARTMENTS, L.P.
By: MID-AMERICA APARTMENT
COMMUNITIES, INC.,
Its General Partner
By: /s/ Simon R.C. Wadsworth
Name: Simon R.C. Wadsworth
Title: Executive Vice President and CFO
<PAGE>
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Morgan Keegan & Company, Inc.
Raymond James & Associates, Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
herein.
By Morgan Stanley & Co.
Incorporated
By: /s/Robert N. Weaver
Name: Robert N. Weaver
Title: Vice President
<PAGE>
SCHEDULE I
Number of
Firm Shares
To Be
Underwriter Purchased
---------------------------------- ------------
Morgan Stanley & Co., Incorporated 2,333,000
Morgan Keegan & Company, Inc. 500,000
Raymond James & Associates, Inc. 500,000
Total ......... 3,333,000
<PAGE>
SCHEDULE II
Subsidiaries of the Company
Mid-America Apartments, LP
MAC of Delaware, Inc.
Mid-America Apartments of Little Rock, L.P.
America First Austin REIT, Inc.
America First Florida REIT, Inc.
America First South Carolina REIT, Inc.
America First Tennessee REIT, Inc.
America First Texas REIT, Inc.
Madison L.P.
Jackson L.P.
River Hills Partnership
Pine Trails Joint Venture, L.P.
Fairways - Columbia L.P.
MAAC-Tanglewood, L.P.
Woodridge Apartments Joint Venture, L.P.
The Woods of Post House, L.P.
MAC of Austin, Inc.
MAC II of Delaware, Inc.
Mid-America Apartments of Austin, L.P.
Mid-America Apartments of Duval, L.P.
Mid-America Apartments of Texas, L.P.
<PAGE>
Exhibit A
[Form of Lock-up Letter]
________________, 1997
Morgan Stanley & Co. Incorporated
Morgan Keegan & Company, Inc.
Raymond James & Associates, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs:
The undersigned understands that Morgan Stanley &
Co. Incorporated ("Morgan Stanley"), as Representative of
the several Underwriters, proposes to enter into an
Underwriting Agreement (the "Underwriting Agreement") with
Mid-America Apartment Communities, Inc., a Tennessee
corporation (the "Company") providing for the public
offering (the "Public Offering") by the several
Underwriters, including Morgan Stanley (the "Underwriters"),
of 3,333,000 shares of Common Stock, par value $.01 per
share, of the Company (the "Common Stock").
To induce the Underwriters that may participate in
the Public Offering to continue their efforts in connection
with the Public Offering, the undersigned hereby agrees
that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, the undersigned will not, during
the period commencing on the date hereof and ending 120 days
after the date of the final prospectus supplement relating
to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares
of the Company's Series A Preferred Stock (the "Series A
Preferred Stock") or Common Stock or any securities
convertible into or exercisable or exchangeable for Series A
Preferred Stock or Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of
such shares of Series A Preferred Stock or Common Stock,
whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Series A Preferred
Stock or Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that,
without the prior written consent of Morgan Stanley on
behalf of the Underwriters, the undersigned will not, during
the period commencing on the date hereof and ending 120 days
after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any
shares of Series A Preferred Stock or Common Stock or any
security convertible into or exercisable or exchangeable for
Series A Preferred Stock or Common Stock.
Whether or not the Public Offering actually occurs
depends on a number of factors, including market conditions.
Any Public Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Underwriters.
Very truly yours,
(Name)
(Address)
