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
November 12, 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 November 14, 1997
and November 17, 1997.
MEMPHIS, TN: November 14, 1997. Mid-America Apartment
Communities, Inc. (NYSE:MAA) announced the purchase on
November 12, of the 192 unit apartment community, Sterling
Ridge, in Augusta, Georgia. The purchase price was
$7,672,000 which includes an assumption of approximately
$4.8 million in tax-exempt bonds. The balance of
approximately $2.9 was paid in cash at closing. Sterling
Ridge, considered to be one of the premier properties in
Augusta, was built in 1986 and has maintained a 97%
occupancy or greater during the last two years. The total
MAA units in the Augusta/Aiken area is 608 with another 184
unit property under contract to close in December.
Mid-America Apartment Communities, Inc. is a self-
administered, self-managed Real Estate Investment Trust
which owns and manages 22,645 apartments (including 126
under development) throughout the southern crescent of the
U.S. The Company recently announced its intention to merge
with Flournoy Development Company which will bring the total
number of apartment owned by the merged Companies to 32,534
including 2,236 under development.
For further information, contact Simon R. C. Wadsworth at
(901) 682-6668, ext 104, 6584 Poplar Ave., Suite 340,
Memphis, TN 38138, (901) 682-6600 FAX: (901)682-6667.
==========================
Memphis, TN: November 17, 1997. Mid-America Apartment
Communities, Inc. (NYSE:MAA) announced today that it has
sold 1,875,000 shares of its 8.875% Series B Cumulative
Preferred Stock in a public offering. Managing underwriters
for the transaction are Morgan Keegan & Company, Inc., J. C.
Bradford & Co., and Raymond James & Associates, Inc. The
offering was priced at $25 per share with a dividend payable
monthly at the annual rate of 8.875%, and the Series B
Preferred Stock will be listed on the NYSE under the symbol
"MAA PrB".
MAA expects the transaction to be completed November 20. The
company increased the size of the offering from 1.6 million
shares to 1.875 million shares before the exercise of the
underwriters' overallotment.
MAA will receive net proceeds after offering expenses
approximating $45.2 million which will be used to repay
certain indebtedness and to fund the cash portion of its
merger during November with Flournoy Development Company.
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.
For further information, contact Simon R.C. Wadsworth at
(901) 682-6668, ext. 104. 6584 Poplar Ave., Suite 340,
Memphis, TN 38138, (901) 682-6600 FAX: (901) 682-6667.
<PAGE>
Item 7. Financial Statements and Exhibits.
Exhibit
Number Exhibit
- --------- ----------
1.1 Definitive Underwriting Agreement, dated November 14, 1997,
relating to the sale of 1,875,000 shares of Series B
Cumulative Preferred Stock, par value $.01 per share.
23.1 Consent of KPMG Peat Marwick LLP
<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: November 20, 1997 /s/ Simon R.C. Wadsworth
-------------------- ----------------------------
Simon R.C. Wadsworth
Executive Vice President
(Principal Financial and Accounting Officer)
EXHIBIT 1.1
MID-AMERICA APARTMENT COMMUNITIES, INC.
8 7/8% Series B Cumulative Preferred Stock
UNDERWRITING AGREEMENT
November 14, 1997
MORGAN KEEGAN & COMPANY, INC.
J.C BRADFORD & CO.
RAYMOND JAMES & ASSOCIATES, INC.
c/o Morgan Keegan & Company, Inc.
50 Front Street
Memphis, Tennessee 38103
Dear Sirs:
Mid-America Apartment Communities, Inc., a Tennessee
corporation (the "Company"), proposes to issue and sell to
Morgan Keegan & Company, Inc., J.C Bradford & Co. and
Raymond James & Associates, Inc. (the "Underwriters," which
term shall also include any underwriters substituted as
provided in Section 10 hereof) an aggregate of 1,875,000
shares of 8 7/8% Series B Cumulative Preferred Stock, $.01
par value per share (the "Series B Preferred Stock") of the
Company (the "Firm Shares"). The Firm Shares are to be sold
to each Underwriter, acting severally and not jointly, in
such amounts as are set forth in Schedule A opposite the
name of such Underwriter.
The Company also grants to the Underwriters, severally
and not jointly, the option described in Section 2 to
purchase, on the same terms as the Firm Shares, up to
281,250 additional shares of Series B Preferred Stock (the
"Option Shares") solely to cover over-allotments. The Firm
Shares, together with all or any part of the Option Shares,
are collectively herein called the "Shares." Capitalized
terms used and not otherwise defined herein shall have the
meanings set forth in the Registration Statement, as defined
below.
The Company and MAC II of Delaware, Inc., a wholly
owned subsidiary of the Company ("MAC") own an approximate
1.0% general partnership interest and an approximate 84.2%
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 own 84 apartment communities
(individually, a "Community" and collectively, the
"Communities") containing 22,471 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, 32 additional apartment communities (the
"Proposed Acquisitions") containing 8,641 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 (as defined
herein).
Section 1. Representations and Warranties of the
Company. The Company and the Partnership jointly and
severally represent and warrant to each of the Underwriters
as follows:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a Registration
Statement on Form S-3 (Commission File No. 333-34775),
including the related prospectus included in the
Registration Statement, for the registration under the
Securities Act of 1933, as amended (the "1933 Act"), and the
rules and regulations of the Commission thereunder (the
"1933 Act Regulations"), of the offering and sale of up to
$233,875,000 aggregate issue price of securities, including
the Shares. The Company has filed with, or shall promptly
hereafter file with the Commission, a final prospectus
supplement specifically relating to the Shares pursuant to
Rule 424 under the 1933 Act. The Company has included in
such Registration Statement and the Preliminary Prospectus
(as defined herein), each as amended or supplemented at the
time of execution of this Agreement (the "Execution Time"),
and has included or will include in the Prospectus (as
defined herein) all information required by the 1933 Act to
be included therein with respect to the Shares and the
offering thereof, which information, except to the extent
the Underwriters shall agree in writing to a modification,
shall be in all substantive respects in the form furnished
to the Underwriters prior to the Execution Time or, to the
extent not completed at the Execution Time, shall contain
only such specific additional information and other changes
as the Company has advised the Underwriters, prior to the
Execution Time, will be included or made therein.
The term "Registration Statement" as used in this
Agreement shall mean such registration statement at the
time such registration statement became effective (the
"Effective Time") including any prospectus included
with such Registration Statement, each document
incorporated therein by reference and, in the event any
post-effective amendment thereto becomes effective
prior to the Closing Time (as hereinafter defined),
shall also mean such registration statement as so
amended; provided, however, that such term shall also
include (i) all Rule 430A Information (as hereinafter
defined) deemed to be included in such registration
statement at the time such registration statement
becomes effective as provided by Rule 430A of the 1933
Act Regulations and (ii) the information contained in
the form of any final prospectus or prospectus
supplement filed with the Commission pursuant to Rule
424(b) of the 1933 Act. The term "Preliminary
Prospectus" shall mean any preliminary prospectus
supplement describing the Shares and the base
prospectus included in the Registration Statement at
the Effective Time and each document incorporated
therein by reference. The term "Prospectus" as used in
this Agreement shall mean the final prospectus
supplement relating to the Shares, together with such
base prospectus, in the form in which it is filed with
the Commission after the Execution Time pursuant to
Rule 424(b) of the 1933 Act Regulations and each
document incorporated therein by reference. The term
"Rule 430A Information" means information with respect
to the Shares and the offering thereof permitted
pursuant to Rule 430A of the 1933 Act Regulations to be
omitted from the Registration Statement when it became
effective.
(b) No order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus has been issued by
the Commission, and no proceedings for that purpose have
been instituted or, to the knowledge of the Company,
threatened by the Commission or the state securities or blue
sky authority of any jurisdiction, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the 1933 Act and
the 1933 Act Regulations, and did not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by an Underwriter expressly authorizing its use in
the Registration Statement.
(c) The Registration Statement has been declared effective
by the Commission under the 1933 Act; no stop order
suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened
by the Commission.
(d) When the Prospectus is first filed pursuant to Rule
424(b) of the 1933 Act Regulations, when any amendment to
the Registration Statement becomes effective, when any
amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Time and Date of Delivery (as
hereinafter defined), (i) the Registration Statement, the
Prospectus and any amendments thereof and supplements
thereto will conform in all material respects with the
applicable requirements of the 1933 Act and the 1933 Act
Regulations, and (ii) neither the Registration Statement,
the Prospectus nor any amendment or supplement thereto will
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter
expressly authorizing its use in the Registration Statement.
(e) Each document incorporated by reference in the
Registration Statement (an "Incorporated Document"), as of
the date such Incorporated Document became effective with or
was filed with the Commission, as the case may be, conformed
in all material respects to the requirements of the 1933 Act
or the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (the
"Exchange Act") (as applicable), and when read together with
the other information in the Preliminary Prospectus or
Prospectus (as applicable), as of the Execution Time and at
the Closing Time, did not and will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such
documents become effective with or are filed with the
Commission, as the case may be, will conform in all material
respects to the requirements of the 1933 Act or the Exchange
Act, as applicable, and the rules and regulations of the
Commission thereunder, and when read together with the other
information in the Prospectus, as of the Execution Time and
at the Closing Time, did not and will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter
expressly authorizing its use therein.
(f) The conditions for the use by the Company of a
registration statement on Form S-3 set forth in the General
Instructions to Form S-3 have been satisfied and the Company
is entitled to use such form for the transactions
contemplated herein.
(g) 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 to
transact business and is in good standing as a foreign
corporation in each jurisdiction in which the ownership or
leasing of its 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 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, its
Subsidiaries or any Community. Except for the Subsidiaries
(defined below) or as described in the Prospectus, 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.
(h) Each of the Company's subsidiaries set forth on
Schedule B 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 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. Each
Subsidiary 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 Time will be, the sole general partner of the
Partnership, and the Company and MAC collectively own an
approximate 85.2% interest in the Partnership and will own
14,573,062 of the units of partnership interest in the
Partnership (the "Common Units"), all of the 2,000,000
Series A Cumulative Preferred Units of partnership interest
in the Partnership (the "Series A Preferred Units"), and all
of the 1,938,830 Series B Cumulative Preferred Units of
partnership interest in the Partnership (the "Series B
Preferred Units") (such Series A Preferred Units and Series
B Preferred Units being, collectively, the "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.
(i) The Company has full corporate right, power and
authority to enter into and perform its obligations under
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 7 of this
Agreement may be limited by federal or state securities laws
or the public policy underlying such laws.
(j) The Partnership has full partnership right, power and
authority to enter into and perform its obligations under
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 6
of this Agreement may be limited by federal or state
securities laws or the public policy underlying such laws.
(k) The Amended and Restated Agreement of Limited
Partnership of the Partnership, including all amendments
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 their respective terms; provided, however,
that the enforceability of the Partnership Agreement may be
limited by bankruptcy, insolvency, reorganization or other
laws of general applicability relating to or affecting
creditors' rights or by general equity principles.
(l) 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.
(m) The amendment to the Company's charter creating the
Series B Preferred Stock and designating the rights,
preferences and restrictions thereof (the "Designating
Amendment") has been duly and validly authorized and
approved by all necessary corporate action on behalf of the
Company. Each consent, approval, authorization, order,
license, certificate, permit, registration, designation or
filing by or with any governmental agency or body necessary
for the valid authorization, issuance, sale and delivery of
the Shares and the execution, delivery and performance of
this Agreement and the consummation by the Company and the
Partnership of the transactions contemplated hereby has been
made or obtained or will be made or obtained and is or will
be in full force and effect.
(n) 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 or
thereby by the Company or the Partnership, as applicable,
will conflict with or result in a breach or violation of any
of the terms and provisions of, or (with or without the
giving of notice or the passage of time or both) constitute
a default under, the charter, by-laws, certificate of
limited partnership or partnership agreement, as the case
may be, of the Company or any of the Subsidiaries; 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
or any Proposed Acquisition 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.
(o) 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 duly authorized and
validly issued, fully paid and non-assessable. No
preemptive rights of shareholders exist with respect to any
of the Shares. The Shares conform to the description of the
Series B Preferred Stock contained in the Prospectus. No
person or entity holds a right to require or participate in
the registration under the 1933 Act of the Shares pursuant
to the Registration Statement; and no person holds a right
to require registration under the 1933 Act of any shares of
Preferred Stock of the Company at any other time. No person
or entity has a right of participation or first refusal with
respect to the sale of the Shares by the Company. The form
of certificates evidencing the Shares complies with all
applicable legal requirements.
(p) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the
caption "Capitalization." Immediately after the Closing
Time, 16,894,232 shares of the Company's Common Stock, $.01
par value per share (the "Common Stock") will be issued and
outstanding, 2,000,000 shares of 9.5% Series A Cumulative
Preferred Stock, $.01 par value per share ("Series A
Preferred Stock"), and 1,938,830 shares of the Series B
Preferred Stock (such Series A Preferred Stock and Series B
Preferred Stock being, collectively, the "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 validly issued, are
fully paid and non-assessable, have been or will have been
offered, sold and issued by the Company in compliance with
all applicable laws (including, without limitation, federal
and state securities laws), and conform to the description
of the Common Stock and Preferred Stock contained in the
Prospectus. None of the issued shares of capital stock of
the Company have been issued or are owned or held in
violation of any preemptive or similar rights of
shareholders. 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.
(q) All of the issued and outstanding Common Units and
Preferred Units (the Common Units and the Preferred Units
being, collectively, the "Units") have been duly and validly
authorized and issued and are fully paid. None of the issued
Units has been issued or is owned or held in violation of
any preemptive or similar right. The issuance of the
Preferred Units to the Company has been approved by all
necessary action on behalf of the Partnership and its
partners. Immediately after the Closing Time, all of the
issued and outstanding Units will be validly issued, fully
paid and non-assessable. None of the Units has been or will
be issued, or is owned or held, in violation of any
preemptive right. The 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).
(r) The financial statements (including the related notes)
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 in
the Registration Statement and the amounts in the Prospectus
under the caption "Prospectus Summary - Summary Financial
and Operating Data" 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 combined financial information (including the related
notes and supporting schedules) included in the Prospectus
complies as to form in all material respects to the
applicable accounting requirements of the 1933 Act and the
1933 Act Regulations and management of the Company believes
that the assumptions underlying the pro forma adjustments
are reasonable. Such 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.
(s) KPMG Peat Marwick LLP, who has examined and reported
upon the audited financial statements and schedules included
or incorporated by reference in the Registration Statement,
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 1933 Act and the 1933 Act
Regulations.
(t) 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, any of its Subsidiaries or any Community, (iii)
any liability or obligation, direct or contingent, incurred
or undertaken by the Company, any of its Subsidiaries or any
Community, which is material to the business or condition
(financial or other) 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.
(u) The Company or its Subsidiaries will have, at the
Closing Time, 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 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.
(v) 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.
(w) 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 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.
(x) 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. 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.
(y) 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
1933 Act to be described in the Registration Statement and
the Prospectus which is not so described.
(z) 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.
(aa) 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") necessary 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.
(ab) 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.
(ac) 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 any such
entity. All tax liabilities are adequately provided
for on the respective books of such entities.
(ad) 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.
(ae) 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.
(af) 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 (other than to the
Underwriters pursuant to this Agreement) or resale
of the Shares.
(ag) To the Company's knowledge, the Company does no
business with any person or affiliate located in
Cuba within the meaning of Florida Rule 3E-900.001.
(ah) The Company has not incurred any liability for a
fee, commission or other compensation on account of
the employment of a broker or finder in connection
with the transactions contemplated by this Agreement
other than as contemplated hereby.
(ai) Except as otherwise disclosed in the
Registration Statement or the Prospectus, neither
the Company, any of its Subsidiaries nor, to the
knowledge of the Company and the Partnership, any
current or former owner of any Community or 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
(i) 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, or (ii) the Proposed Acquisitions
(collectively, 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 Communities' operations with respect to
the Real Property are in material 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 material
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 to the knowledge of the Company and
the Partnership, 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 or 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 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.
(aj) 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.
(ak) 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.
(al) Neither the Company nor any of its
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, or will conduct their
respective businesses in a manner in which any such
entity would 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") and is not
required to be registered under the 1940 Act.
(am) 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.
(an) The Partnership is not currently prohibited,
directly or indirectly, from making distributions to
the Company, from repaying to the Company any loans
or advances to the Partnership or from transferring
any of the Partnership's property or assets to the
Company, except as disclosed in the Prospectus.
(ao) The Shares have been approved for listing, upon
official notice of issuance, on The New York Stock
Exchange (the "NYSE").
(ap) The statements set forth in the Prospectus under
the caption "Federal Income Tax Considerations" and
"Certain Federal Income Tax Considerations," insofar
as they purport to describe the provisions of the
laws and documents referred to therein, are accurate
and complete in all material respects.
Any certificate signed by any officer of the Company on
behalf of the Company or the Partnership and delivered to
you or to counsel for the Underwriters shall be deemed a
representation and warranty by such entity to each
Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery of the Shares to the
Underwriters; Closing.
(a) On the basis of the representations and
warranties herein contained, and subject to the terms and
conditions herein set forth, the Company agrees to sell to
each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company the number of Firm
Shares set forth opposite the name of such Underwriter in
Schedule A (the proportion which each Underwriter's share of
the total number of the Firm Shares bears to the total
number of Firm Shares is hereinafter referred to as such
Underwriter's "underwriting obligation proportion"), at a
purchase price of $24.2125 per share.
(b) In addition, on the basis of the
representations and warranties herein contained, and subject
to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional 281,250 Option
Shares at the same purchase price as shall be applicable to
the Firm Shares. The option hereby granted will expire if
not exercised within the thirty (30) day period after the
first date on which the Firm Shares are released by you for
sale to the public, by giving written notice to the Company.
The option granted hereby may be exercised in whole or in
part (but not more than once), only for the purpose of
covering over-allotments that may be made in connection with
the offering and distribution of the Firm Shares. The
notice of exercise shall set forth the number of Option
Shares as to which the several Underwriters are exercising
the option, and the time and date of payment and delivery
thereof. Such time and date of delivery (the "Date of
Delivery") shall be determined by you but shall not be later
than seven full business days after the exercise of such
option, nor in any event prior to the Closing Time. If the
option is exercised as to all or any portion of the Option
Shares, the Option Shares as to which the option is
exercised shall be purchased by the Underwriters, severally
and not jointly, in their respective underwriting obligation
proportions.
(c) Payment of the purchase price for and
delivery of certificates in definitive form representing the
Firm Shares shall be made at the offices of Morgan Keegan &
Company, Inc., 50 Front Street, Memphis, Tennessee 38103 or
at such other place as shall be agreed upon by the Company
and you, at 10:00 a.m. E.D.T., on November 19, 1997 (the
"Closing Time"). The place of closing for the Firm Shares
and the Closing Time may be varied by agreement between you
and the Company. In addition, in the event that any or all
of the Option Shares are purchased by the Underwriters,
payment of the purchase price for and delivery of
certificates in definitive form representing the Option
Shares shall be made at the offices of Morgan Keegan &
Company, Inc. in the manner set forth above, or at such
other place as the Company and you shall determine, on the
Date of Delivery as specified in the notice from you to the
Company. Payment for the Firm Shares and the Option Shares
shall be made to the Company by certified or official bank
check or checks in New York Clearing House or similar next
day funds payable to the order of the Company, against
delivery to you for the respective accounts of the
Underwriters of the Shares to be purchased by them.
(d) The certificates representing the Shares to
be purchased by the Underwriters shall be in such
denominations and registered in such names as you may
request in writing at least three full business days before
the Closing Time or the Date of Delivery, as the case may
be. The certificates representing the Shares will be made
available at the offices of Morgan Keegan & Company, Inc. or
at such other place as Morgan Keegan & Company, Inc. may
designate for examination and packaging not later than 10:00
a.m. on the last business day prior to the Closing Time or
the Date of Delivery, as the case may be.
(e) You intend to offer the Shares to the public
as set forth in the Prospectus, but after the initial public
offering of such Shares you may in your discretion vary the
public offering price.
Section 3. Certain Covenants of the Company and the
Partnership. The Company and the Partnership covenant and
agree with each Underwriter as follows:
(a) To file with the Secretary of State of
Tennessee and cause to become effective prior to the Closing
Time the Designating Amendment in such form as has been
approved by the Underwriters and their counsel.
(b) To amend the Partnership Agreement to create
the Series B Preferred Units effective upon issuance of the
Shares.
(c) If the Company elects to rely upon Rule 430A
of the 1933 Act Regulations or the filing of the Prospectus
is otherwise required under Rule 424(b) of the 1933 Act
Regulations, the Company will comply with the requirements
of Rule 430A and will file the Prospectus, properly
completed, pursuant to the applicable provisions of Rule
424(b) within the time period prescribed. The Company will
notify you immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration
Statement shall have become effective, or any amended
Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the
Commission to amend the Registration Statement or amend or
supplement the Prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or the suspension
of the qualification of the Shares for offering or sale in
any jurisdiction, or of the institution or threatening of
any proceeding for any such purposes. The Company will use
every reasonable effort to prevent the issuance of any such
stop order or of any order preventing or suspending such use
and, if any such order is issued, to obtain the withdrawal
thereof at the earliest possible moment.
(d) The Company will not at any time file or make
any amendment to the Registration Statement or any amendment
or supplement to the Prospectus if you shall not have
previously been advised and furnished a copy thereof a
reasonable time prior to the proposed filing, or if you or
counsel for the Underwriters shall reasonably object to such
amendment or supplement.
(e) The Company has furnished or will furnish to you,
at its expense, as soon as available, as many signed copies
of the Registration Statement as originally filed and of all
amendments thereto, whether filed before or after the
Registration Statement became effective, copies of all
exhibits and documents filed therewith and signed copies of
all consents and certificates of experts, as you may
reasonably request, and has furnished or will furnish to
each Underwriter one (1) conformed copy of the Registration
Statement as originally filed and of each amendment thereto
(but without exhibits).
(f) The Company will deliver to each Underwriter,
at the Company's expense, from time to time, as many copies
of each Preliminary Prospectus as such Underwriter may
reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act.
The Company will deliver to each Underwriter, at the
Company's expense, from time to time as requested during the
period when the Prospectus is required to be delivered under
the 1933 Act, such number of copies of the Prospectus (as
supplemented or amended) as each Underwriter may reasonably
request. The Company will comply to the best of its ability
with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Shares as
contemplated in this Agreement and in the Prospectus. If the
delivery of a prospectus is required at any time prior to
the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of Shares
and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or
supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the
circumstances existing at the time such Prospectus is
delivered to a purchaser, not misleading, or, if for any
reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the 1933 Act or the
Exchange Act, the Company will notify you and, upon your
request, prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies
as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus (in
form and substance reasonably satisfactory to counsel for
the Underwriters) which will amend or supplement the
Prospectus so that it will not contain an untrue statement
or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances
existing at the time it is delivered to a purchaser, not
misleading, and in case any Underwriter is required to
deliver a prospectus in connection with the sale of any
Shares at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the
expense of such Underwriter, the Company will prepare and
deliver to the Underwriters a reasonable number of an
amended or supplemented Prospectus complying with Section
10(a)(3) of the 1933 Act.
(g) To timely file all reports and any definitive
proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a Prospectus is required in connection with the
offering or sale of the Shares.
(h) The Company will use its best efforts to
qualify the Shares for offering and sale under the
applicable securities laws and real estate syndication laws
of such states and other jurisdictions as you may designate.
In each jurisdiction in which the Shares have been so
qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not
less than one year from the effective date of the
Registration Statement; provided, however, that the Company
shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified or to make
any undertakings in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the
Shares have been qualified as above provided.
(i) The Company will make generally available to
its security holders as soon as practicable, but in any
event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date
of the Registration Statement, an earnings statement
complying with the provisions of Rule 158 of the 1933 Act
Regulations and covering a period of twelve (12) months
beginning not later than the first day of the Company's
fiscal quarter next following the effective date (as defined
in Rule 158) of the Registration Statement.
(j) 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."
(k) The Company will furnish to its security
holders, as soon as practicable after the end of each
respective period, annual reports (including financial
statements audited by independent public accountants) and
unaudited quarterly reports of operations for each of the
first three quarters of the fiscal year. During a period of
five years after the date hereof, the Company will furnish
to you promptly upon becoming available: (i) statements of
operations of the Company for each of the first three
quarters in the form furnished to the Company's security
holders; (ii) a balance sheet of the Company as of the end
of such fiscal year, together with statements of operations,
of cash flows and of security holders' equity of the Company
for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent public
accountants; (iii) copies of all reports (financial or
otherwise) mailed to security holders; (iv) copies of all
reports and financial statements furnished to or filed with
the Commission or any securities exchange; (v) every
material press release in respect of the Company or its
affairs which is released or prepared by the Company, and
(vi) any additional information of a public nature
concerning the Company, its Subsidiaries or the Communities
that you may reasonably request. During such five-year
period, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the
Company are consolidated with any subsidiaries, and shall be
accompanied by similar financial statements for any
significant subsidiary that is not so consolidated.
(l) For a period of 90 days from the date hereof,
the Company will not, without your prior written consent,
directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any shares
of Preferred Stock of the Company or securities convertible
into Preferred Stock of the Company, other than to the
Underwriters pursuant to this Agreement.
(m) 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 the Series B Preferred Stock.
(n) The Company will use its best efforts to
maintain the listing of the Shares on the NYSE.
(o) The Company will comply with all the
provisions of any undertakings contained in the Registration
Statement.
(p) The Company and the Partnership will conduct
their affairs in such a manner so as to ensure that neither
the Company nor any of its Subsidiaries will be an
"investment company" or an entity "controlled" by an
"investment company" within the meaning of the 1940 Act.
(q) The Company will not, and will use its best
efforts to cause its officers, directors and affiliates not
to (i) take, directly or indirectly, prior to completion of
the distribution of the Shares contemplated by this
Agreement, 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 (other than to the Underwriters
pursuant to this Agreement) or resale of the Shares, (ii)
sell, bid for, purchase or pay anyone any compensation for
soliciting purchases of the Shares, or (iii) pay or agree to
pay to any person any compensation for soliciting any order
to purchase any other securities of the Company.
(r) If at any time during which delivery of a
Prospectus is required in connection with the offering or
sale of the Shares, any rumor, publication or event relating
to or affecting the Company shall occur as a result of which
in your reasonable opinion the market price of the Preferred
Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus)
and after written notice from you advising the Company to
the effect set forth above, the Company agrees to forthwith
prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting
on such rumor, publication or event.
(s) 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.
(t) Subject to the terms hereof, the Company and
the Partnership will do and perform their respective
obligations to the extent required to consummate the
transactions contemplated hereby and thereby.
(u) Prior to the Closing Time, the Company and
the Partnership will notify you in writing immediately if
any event occurs that renders any of the representations and
warranties of the Company or the Partnership contained
herein inaccurate or incomplete in any respect.
(v) The Company will endeavor to comply with all
provisions of Section 517.075 of the Florida Securities and
Investor Protection Act, and all regulations thereunder
relating to issuers doing business with Cuba.
Section 4. Payment of Expenses. The Company will pay
and bear all costs, fees and expenses incident to the
performance of its obligations under this Agreement
(excluding fees and expenses of counsel for the
Underwriters, except as specifically set forth below),
including (a) the preparation, printing and filing of the
Registration Statement (including financial statements and
exhibits), as originally filed and as amended, the
Preliminary Prospectuses and the Prospectus and any
amendments or supplements thereto, and the cost of
furnishing copies thereof to the Underwriters, (b) the
preparation, printing and distribution of this Agreement,
any Agreement Among Underwriters, any Selected Dealers
Agreement, the certificates representing the Shares, the
Blue Sky Memoranda and any instruments relating to any of
the foregoing, (c) the issuance and delivery of the Shares
to the Underwriters, including any transfer taxes payable
upon the sale of the Shares to the Underwriters (other than
transfer taxes on resales by the Underwriters), (d) the fees
and disbursements of the Company's counsel and accountants,
(e) the qualification of the Shares under the applicable
securities and real estate syndication laws in accordance
with Section 3(h) of this Agreement and any filing for
review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the Underwriters in connection
therewith and in connection with the Blue Sky Memoranda, (f)
all costs, fees and expenses in connection with the
application for listing the Shares on the NYSE, (g) the
transfer agent's and registrar's fees and all miscellaneous
expenses referred to in Item 14 of the Registration
Statement, (h) costs related to travel and lodging incurred
by the Company and its representatives relating to meetings
with and presentations to prospective purchasers of the
Shares reasonably determined by the Underwriters to be
necessary or desirable to effect the sale of the Shares to
the public, and (i) all other costs and expenses incident to
the performance of the Company's obligations hereunder
(including costs incurred in closing the purchase of the
Option Shares, if any) that are not otherwise specifically
provided for in this section. The Company, upon your
request, will provide funds in advance for filing fees in
connection with "Blue Sky" qualifications.
If the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the
Underwriters set forth in Section 5 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or
because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with
any provision hereof other than by reason of default by any
of the Underwriters, the Company will reimburse the
Underwriters severally on demand for all reasonable out-of-
pocket expenses, including fees and disbursements of
Underwriters' counsel, reasonably incurred by the
Underwriters in reviewing the Registration Statement and the
Prospectus, and in investigating and making preparations for
the marketing of the Shares.
Section 5. Conditions of Underwriters' Obligations. The
obligations of the Underwriters to purchase and pay for the
Shares that they have respectively agreed to purchase
pursuant to this Agreement (including any Option Shares as
to which the option granted in Section 2 has been exercised
and the Date of Delivery determined by you is the same as
the Closing Time) are subject to the accuracy of the
representations and warranties of the Company and the
Partnership contained herein or in certificates of any
officer of the Company and the Partnership delivered
pursuant to the provisions hereof, to the performance by the
Company and the Partnership of their obligations hereunder,
and to the following further conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424 within the applicable time
prior prescribed for such filing by such Rule.
(b) At the Closing Time no stop order suspending
the effectiveness of the Registration Statement shall have
been issued under the 1933 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.
(c) The Designating Amendment shall have been
filed with the Secretary of State of Tennessee and become
effective.
(d) Subsequent to the execution and delivery of
this Agreement and prior to the Closing Time, there shall
not have occurred any downgrading, nor shall any notice have
been given of (i) any intended or potential downgrading or
(ii) any review or possible change that does not indicate an
improvement, in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized
statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the 1933 Act.
(e) At the Closing Time, you shall have received
a favorable opinion of Baker, Donelson, Bearman & Caldwell,
a professional corporation, counsel for the Company and the
Partnership, dated as of the Closing Time in form and
substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) 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 transact 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 to the extent that 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.
(ii) 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, South
Carolina and Virginia. 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 Time, will be the
sole general partner of the Partnership and,
together with MAC, will be the holder of
14,573,062 Common Units or approximately 85.2% of
the issued and outstanding Common Units and will
own all of the issued and outstanding Preferred
Units.
(iii) 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 is duly qualified or registered to
transact business and 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 any perfected
liens, encumbrances and restrictions and, to such
counsel's knowledge, any other lien, encumbrance
or restriction.
(iv) 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 and, assuming due authorization,
execution and delivery by the other parties
hereto, constitutes a valid and binding agreement
of the Company, enforceable in accordance with its
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 or by general
equity principles and except to the extent that
enforcement of the indemnification provisions set
forth in Section 7 of this Agreement may be
limited by federal or state securities laws or the
public policy underlying such laws.
(v) 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 and, assuming due
authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding
agreement of the Partnership enforceable in
accordance with its 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 or by general principles of
equity, whether considered at law or in equity,
and except to the extent that enforcement of the
indemnification provisions set forth in Section 7
of this Agreement may be limited by federal or
state securities laws or the public policy
underlying such laws.
(vi) 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.
(vii) The Designating Amendment has been
duly and validly authorized and approved by all
necessary corporate action on behalf of the
Company. Each consent, approval, authorization,
order, license, certificate, permit, registration,
designation or filing by or with any governmental
agency or body 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 or by the National Association of
Securities Dealers, Inc. in connection with the
purchase and distribution of the Shares by the
Underwriters, as to which such counsel need
express no opinion, has been made or obtained or
will be made or obtained.
(viii) 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 violate any of the terms and
provisions of, or constitute a default under 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.
(ix) The description of the Company's
authorized capital stock contained in the
Registration Statement and the Prospectus under
the captions "Description of Series B Preferred
Stock" and "Description of Capital Stock" meets
the requirements of Item 9 of Form S-3 under the
1933 Act, and the Preferred Stock conforms in all
material respects as to legal matters to the
description thereof contained in the Registration
Statement and the Prospectus.
(x) 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. No preemptive or
similar rights of shareholders exist with respect
to any of the Shares. To such counsel's
knowledge, and except as provided in this
Agreement, no person or entity holds a right to
participate in the registration under the 1933 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, its 1994 Restricted Stock and Stock
Option Plan and its Dividend Reinvestment and
Stock Purchase Plan and except for the issuance of
Common Stock upon redemption of Common Units. The
shares of Common Stock and Series A Preferred
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.
(xi) All of the issued and outstanding Common
Units and Preferred Units have been duly and
validly authorized by the Partnership. None of
the outstanding Units has been issued or is owned
or held in violation of any preemptive rights.
The Series B Preferred Units to be issued to the
Company at the Closing Time 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 Series B
Preferred 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 Time
in compliance with all applicable laws (including,
without limitation, federal and state securities
laws). Immediately after the Closing Time,
2,000,000 Series A Preferred Units and 1,938,830
Series B Preferred Units will be issued and
outstanding and the Company, together with MAC,
will own an approximate 85.2% interest in the
Partnership.
(xii) 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.
(xiii) 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 of their
respective partners, officers or directors or to
which the properties, 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 the Prospectus.
(xiv) 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.
There are no statutes or regulations applicable to
the Company, its Subsidiaries or the Communities
or certificates, permits or other authorizations
from governmental regulatory officials or bodies
required to be obtained or maintained by the
Company, its Subsidiaries or the Communities,
known to such counsel, of a character required to
be disclosed in the Registration Statement or the
Prospectus which have not been so disclosed and
properly described therein. 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.
(xv) 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.
(xvi) The Shares have been approved for
listing on the NYSE upon official notice of
issuance.
(xvii) 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.
(xviii) The Registration Statement has
become effective under the 1933 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 1933 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, all Preliminary
Prospectuses, 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 1933 Act and the
1933 Act Regulations and (ii) the documents
incorporated by reference in the Registration
Statement, all Preliminary Prospectuses, 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.
(xix) Neither the Company nor any of its
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.
(xx) The descriptions in the Prospectus of
statutes, regulations, legal or governmental
proceedings are accurate and present fairly a
summary of the information required to be shown
under the 1933 Act and the 1933 Act Regulations.
The information in the Prospectus under the
captions "Certain Federal Income Tax
Considerations," and "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 1933 Act and the 1933
Act Regulations.
(xxi) Based solely on such counsel's
participation in conferences during which the
contents thereof were discussed, and without any
independent inquiry, 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 1933 Act and the applicable
rules and regulations of the Commission
thereunder, (B) has no reason to believe that the
Registration Statement or any documents
incorporated by reference therein (except for
financial statements and schedules and other
financial and operating data included therein, as
to which counsel need make no statement), 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 the Prospectus (except for
financial statements and schedules and other
financial and operating data included therein, as
to which counsel need make no statement), or any
amendment or supplement thereto made prior to the
Closing Time, as of its issue 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.
In rendering the foregoing opinion, such
counsel may rely on the following:
(A) as to matters involving the
application of laws other than the laws of
the United States and jurisdictions in which
they are admitted, to the extent such counsel
deems proper and to the extent specified in
such opinion, upon an opinion or opinions of
other counsel familiar with the applicable
laws (in form and substance and from counsel
reasonably satisfactory to Underwriters'
counsel),
(B) as to matters of fact, to the
extent they deem proper, on certificates of
responsible officers of the Company and the
Partnership and certificates or other written
statements of officers or departments of
various jurisdictions having custody of
documents respecting the existence or good
standing of such entities. The opinion of
counsel for the Company shall state that the
opinion of any other counsel, or certificate
or written statement, on which such counsel
is relying is in form satisfactory to such
counsel and that you and they are justified
in relying thereon. Copies of all such
opinions, statements or certificates shall be
delivered to Underwriters' counsel.
(f) At the Closing Time, you shall have received a
favorable opinion from Hunton & Williams, counsel for the
Underwriters, dated as of the Closing Time, with respect to
the incorporation of the Company, the issuance and sale of
the Shares, the Registration Statement, the Prospectus and
other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for
the purpose of enabling them to pass on such matters.
(g) At the Closing Time, (i) the Registration
Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required
to be stated therein under the 1933 Act and the 1933 Act
Regulations and in all material respects shall conform to
the requirements of the 1933 Act and the 1933 Act
Regulations; the Company shall have complied in all material
respects with Rule 430A and neither the Registration
Statement nor the Prospectus, as they may then be amended or
supplemented, shall contain an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading, (ii) there shall not have been,
since the respective dates as of which information is given
in the Registration Statement, any material adverse change
in the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the
Company, any of its Subsidiaries or the Communities, whether
or not arising in the ordinary course of business, (iii) no
action, suit or proceeding at law or in equity shall be
pending or, to the best of the Company's knowledge,
threatened against the Company or any of its Subsidiaries,
or affecting the Communities, that would be required to be
set forth in the Prospectus other than as set forth therein
and no proceedings shall be pending or, to the best
knowledge of the Company, threatened against the Company,
any of its Subsidiaries or the Communities before or by any
federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding
could materially adversely affect the business, prospects,
assets, results of operations or condition (financial or
otherwise) of the Company or any of its Subsidiaries, other
than as set forth in the Prospectus, (iv) the Company and
the Partnership shall have complied with all agreements and
satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Time, and (v) the
representations and warranties of the Company and the
Partnership set forth in Section 1 shall be accurate as
though expressly made at and as of the Closing Time. At the
Closing Time, you shall have received a certificate executed
by the President and Chief Financial Officer of the Company
and the general partner of the Partnership, dated as of the
Closing Time, to such effect and with respect to the
following additional matters: (A) the Registration
Statement has become effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the
Prospectus has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best
of their knowledge, threatened under the 1933 Act; (B) they
have reviewed the Registration Statement and the Prospectus
and, when the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus
and any amendments or supplements thereto contained all
statements and information required to be included therein
or necessary to make the statements therein not misleading
and neither the Registration Statement nor the Prospectus
nor any amendment or supplement thereto included any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and, since the
effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended or
supplemented Prospectus that has not been so set forth; and
(C) certain other factual matters specified by you.
(h) At the time that this Agreement is executed by
the Company, you shall have received from KPMG Peat Marwick
LLP a letter, dated the date hereof, in form and substance
satisfactory to you, together with signed or reproduced
copies of such letter for each of the other Underwriters,
confirming that they are independent public accountants with
respect to the Company and the Partnership and the
Communities within the meanings of the 1933 Act and 1933 Act
Regulations, and stating in effect that:
(i) in their opinion, the financial
statements and any supplementary financial
information and schedules included or incorporated
by reference in the Registration Statement and
covered by their opinion therein comply as to form
in all material respects with the applicable
accounting requirements of the 1933 Act and the
1933 Act Regulations;
(ii) on the basis of limited procedures (set
forth in detail in such letter and made in
accordance with such procedures as may be
specified by you) not constituting an audit in
accordance with generally accepted auditing
standards, consisting of (but not limited to) a
reading of the latest available unaudited
financial statements of the Company, a reading of
the minute books of the Company, inquiries of
officials of the Company responsible for financial
and accounting matters, a reading of the unaudited
pro forma financial statements included or
incorporated by reference in the Registration
Statement and Prospectus, and such other inquiries
and procedures as may be specified in such letter,
nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements
and supporting schedules and other unaudited
financial data of the Company included or
incorporated by reference in the Registration
Statement do not comply as to form in all
material respects with the applicable
accounting requirements of the 1933 Act and
the 1933 Act Regulations or that any material
modifications should be made to such
financial information for them to be in
conformity with generally accepted accounting
principles ;
(B) any other unaudited income
statement data and balance sheet items
included or incorporated by reference in the
Prospectus do not agree with the
corresponding items in the unaudited
financial statements from which such data and
items were derived or that any such unaudited
data and items were not determined on a basis
substantially consistent with the basis for
the corresponding items in the audited
financial statements included in the
Prospectus;
(C) any unaudited pro forma financial
information included in the Prospectus does
not comply as to form in all material
respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act
Regulations or that the pro forma adjustments
have not been properly applied to historical
amounts in the compilation of that
information;
(D) at a specified date not more than
three (3) days prior to the date of delivery
of such letter, there was any change in the
Company's capital stock, any increase in the
Company's notes payable or any decrease in
shareholders' equity or in the Company's real
estate assets less accumulated depreciation
(except for normal depreciation) or total
assets from that set forth in the Company's
balance sheet at September 30, 1997], or
changes in any other items specified by the
Underwriters, from that set forth in the
Company's consolidated balance sheet as of
September 30, 1997, except as described in
such letter, and
(E) for the period from September 30,
1997 to a specified date not more than three
(3) days prior to the date of delivery of
such letter, there were any decreases in
total revenues or net income for the Company,
in each case as compared with the
corresponding period of the preceding year,
except in each case for decreases which the
Prospectus discloses have occurred or may
occur or which are described in such letter;
and
(iii) in addition to the procedures
referred to in clause (ii) above and the
examination referred to in their reports included
or incorporated by reference in the Registration
Statement, they have carried out certain specified
procedures, not constituting an audit in
accordance with generally accepted auditing
standards, with respect to certain amounts,
percentages and financial information specified by
you which are derived from the general accounting
records of the Company, which appear or are
incorporated by reference in the Registration
Statement or the exhibits or schedules thereto or
the Prospectus and are specified by you, and have
compared such amounts, percentages and financial
information with the accounting records of the
Company and with material derived from such
records and have found them to be in agreement for
a period of three (3) years.
i) At the Closing Time, you shall have received from KPMG
Peat Marwick LLP a letter, in form and substance
satisfactory to you and dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (h) above, except that the
specified date referred to shall be a date not more than
three days prior to the Closing Time.
j) In the event that either of the letters to be delivered
pursuant to subsections (h) and (i) above sets forth any
such changes, decreases or increases, it shall be a further
condition to your obligations that you shall have reasonably
determined, after discussions with officers of the Company
responsible for financial and accounting matters and with
KPMG Peat Marwick LLP that such changes, decreases or
increases as are set forth in such letters do not reflect a
material adverse change in the capital stock, long-term
debt, total assets, real estate assets less accumulated
depreciation, net current assets or shareholders' equity of
the Company as compared with the amounts shown in the
condensed consolidated balance sheet of the Company at
September 30, 1997, or a material adverse change in revenues
or net income for the Company, in each case as compared with
the results of the Company for the corresponding period of
the prior year.
k) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such letters, documents,
certificates and opinions as they may request for the
purpose of enabling them to pass upon the issuance and sale
of the Shares as contemplated in this Agreement and the
matters referred to in Section 5(f) and in order to evidence
the accuracy and completeness of any of the representations,
warranties or statements of the Company or the Partnership,
the performance of any of the covenants of the Company or
the Partnership, or the fulfillment of any of the conditions
herein contained; and all proceedings taken by the Company
at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Shares as
contemplated in this Agreement shall be satisfactory in form
and substance to you and to counsel for the Underwriters.
The Company and the Partnership will furnish you with such
number of conformed copies of such opinions, certificates,
letters and documents as you shall reasonably request.
l) At or prior to the Closing Time, the Firm Shares and
the Option Shares, if any, shall have been duly listed on
the NYSE subject to official notice of issuance.
m) Subsequent to the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally or in
securities of the Company on the NYSE, on the American Stock
Exchange or in the over-the-counter market, (ii) a general
moratorium on commercial banking activities in Tennessee or
New York declared by either federal or state authorities, as
the case may be, or (iii) the outbreak or escalation of
hostilities involving the United States or the declaration
by the United States of a national emergency or war if the
effect of any such event specified in this clause (iii) in
your reasonable judgment makes it impracticable or
inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
n) The Partnership shall have provided to the Underwriters
copies of owner's title insurance policies relating to each
of the Communities and a copy of the proposed title
commitment of the Proposed Acquisitions.
If any of the conditions specified in this Section 5
shall not have been fulfilled when and as required by this
Agreement to be fulfilled, this Agreement may be terminated
by you on notice to the Company at any time at or prior to
the Closing Time, and such termination shall be without
liability of any party to any other party, except as
provided in Section 4. Notwithstanding any such
termination, the provisions of Section 7 shall remain in
effect.
Section 6. Conditions to Purchase of Option Shares. In
the event that the Underwriters exercise the option granted
in Section 2 hereof to purchase all or any part of the
Option Shares and the Date of Delivery determined by you
pursuant to Section 2 hereof is later than the Closing Time,
the obligations of the several Underwriters to purchase and
pay for the Option Shares that they shall have respectively
agreed to purchase pursuant to this Agreement are subject to
the accuracy of the representations and warranties of the
Company and the Partnership herein contained, to the
performance by the Company and the Partnership of their
obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall remain
effective at the Date of Delivery, and, at the Date of
Delivery, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933
Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to 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.
(b) At the Date of Delivery, the provisions of
Sections 5(g)(i) through 5(g)(v) shall have been complied
with at and as of the Date of Delivery and, at the Date of
Delivery, you shall have received a certificate executed by
the President and Chief Financial Officer of the Company and
the general partner of the Partnership, dated as of the Date
of Delivery, to such effect and to the effect set forth in
clauses (A), (B) and (C) of Section 5(g).
(c) At the Date of Delivery, you shall have
received an opinion of Baker, Donelson, Bearman & Caldwell,
P.C., counsel for the Company and the Partnership, together
with signed or reproduced copies of such opinion for each of
the other Underwriters, in form and substance satisfactory
to counsel for the Underwriters, dated as of the Date of
Delivery, relating to the Option Shares and otherwise to the
same effect as the opinion required by Section 5(e).
(d) At the Date of Delivery, you shall have
received an opinion of Hunton & Williams, counsel for the
Underwriters, dated as of the Date of Delivery, relating to
the Option Shares and otherwise to the same effect as the
opinion required by Section 5(f).
(e) At the Date of Delivery, you shall have
received a letter from KPMG Peat Marwick LLP, in form and
substance satisfactory to you and dated as of the Date of
Delivery, to the effect that they reaffirm the statements
made in the letter furnished pursuant to Section 5(h),
except that the specified date referred to shall be a date
not more than five days prior to the Date of Delivery.
(f) At the Date of Delivery, counsel for the
Underwriters shall have been furnished with all such
documents, certificates and opinions as they may request for
the purpose of enabling them to pass upon the issuance and
sale of the Option Shares as contemplated in this Agreement
and the matters referred to in Section 6(a) and in order to
evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company and
the Partnership, the performance of any of the covenants of
the Company and the Partnership, or the fulfillment of any
of the conditions herein contained; and all proceedings
taken by the Company at or prior to the Date of Delivery in
connection with the authorization, issuance and sale of the
Option Shares as contemplated in this Agreement shall be
satisfactory in form and substance to you and to counsel for
the Underwriters.
(g) At or prior to the Date of Delivery, the
Option Shares shall have been duly listed on the NYSE
subject to official notice of issuance.
Section 7. Indemnification and Contribution. The
Company and the Partnership, jointly and severally, will
indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject under the 1933
Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any breach of any
warranty or covenant of the Company or the Partnership
herein contained or any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arise out
of or are based upon the performance by the Underwriters in
any capacity of any services to the Company, and will
reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company or
the Partnership shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance
upon and in conformity with written information furnished to
the Company by any Underwriter expressly for use therein,
provided, further, that the indemnity agreement contained in
this Section 6(a) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom
the person asserting any such losses, claims, damages or
liabilities purchased the Shares which are the subject
thereof (or to the benefit of any person controlling such
Underwriter), if such Underwriter failed to send or give a
copy of the Prospectus to such person at or prior to the
written confirmation of the sale of such Shares to such
person in any case where delivery is required by the 1933
Act of the 1933 Act Regulations and if the Prospectus would
have cured any untrue statement or alleged untrue statement
or omission or alleged omission giving rise to such loss,
claim, damage or liability. In addition to their other
obligations under this Section 7(a), the Company and the
Partnership agree that, as an interim measure during the
pendency of any such claim, action, investigation, inquiry
or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission,
described in this Section 7(a), they will reimburse the
Underwriters on a monthly basis for all reasonable legal and
other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Company's and the Partnership's obligation to reimburse the
Underwriters for such expenses and the possibility that such
payments might later be held to have been improper by a
court of competent jurisdiction. Any such interim
reimbursement payments that are not made to an Underwriter
within thirty (30) days of a request for reimbursement shall
bear interest at the prime rate (or reference rate or other
commercial lending rate for borrowers of the highest credit
standing) published from time to time by The Wall Street
Journal (the "Prime Rate") from the date of such request.
This indemnity agreement shall be in addition to any
liabilities that the Company and the Partnership may
otherwise have. Neither the Company nor the Partnership
will, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment
in any pending or threatened action or claim or related
cause of action or portion of such cause of action in
respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such action
or claim), unless such settlement, compromise or consent
includes an unconditional release of such Underwriter from
all liability arising out of such action or claim (or
related cause of action or portion thereof).
The indemnity agreement in this Section 7(a) shall
extend upon the same terms and conditions to, and shall
inure to the benefit of, each person, if any, who controls
any Underwriter within the meaning of the 1933 Act or the
Exchange Act to the same extent as such agreement applies to
the Underwriters.
(b) Each Underwriter, severally, but not jointly, and in
proportion to their respective underwriting commitments,
will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company
may become subject, under the 1933 Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any breach of any warranty or covenant by
such Underwriters herein contained or any untrue statement
or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement thereto in
reliance upon and in conformity with written information
furnished to the Company by such Underwriter expressly for
use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss,
claim, damage, liability or action. In addition to its
other obligations under this Section 7(b), the Underwriters
agree that, as an interim measure during the pendency of any
such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in
this Section 7(b), they will reimburse the Company on a
monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of
their obligation to reimburse the Company for such expenses
and the possibility that such payments might later be held
to have been improper by a court of competent jurisdiction.
Any such interim reimbursement payments that are not made to
the Company within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to
any liabilities that the Underwriters may otherwise have.
The indemnity agreement in this Section 7(b) shall
extend upon the same terms and conditions to, and shall
inure to the benefit of, each officer and director of the
Company and each person, if any, who controls the Company
within the meaning of the 1933 Act or the Exchange Act to
the same extent as such agreement applies to the Company.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party
under such subsection, notify the indemnifying party in
writing of the commencement thereof; no indemnification
provided for in Section 7(a) or 7(b) shall be available to
any party who shall fail to give notice as provided in this
Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have
related and was materially prejudiced by the failure to give
such notice, but the failure so to notify the indemnifying
party will not relieve the indemnifying party from any
liability that it may have to any indemnified party
otherwise than under this Section 7. In case any such
action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel
satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel
to the indemnifying party), except that if the indemnified
party has been advised by counsel in writing that there are
one or more defenses available to the indemnified party
which are different from or additional to those available to
the indemnifying party, then the indemnified party shall
have the right to employ separate counsel and in that event
the reasonable fees and expenses of such separate counsel
for the indemnified party shall be paid by the indemnifying
party; provided, however, that if the indemnifying party is
the Company, the Company shall only be obligated to pay the
reasonable fees and expenses of a single law firm (in
addition to those of its own counsel and any reasonably
necessary local counsel) employed by all of the indemnified
parties and the persons referred to in Section 7(a) hereof.
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.
(d) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set
forth in Section 7(a) and 7(b) hereof, including the amounts
of any requested reimbursement payments, the method of
determining such amounts and the basis on which such amounts
shall be apportioned among the indemnifying parties, shall
be settled by arbitration conducted pursuant to the Code of
Arbitration Procedure of the National Association of
Securities Dealers, Inc. ("NASD") Any such arbitration must
be commenced by service of a written demand for arbitration
or a written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to
do so. Any such arbitration will be limited to the
operation of the interim reimbursement provisions contained
in Sections 7(a) and 7(b) hereof and will not resolve the
ultimate propriety or enforceability of the obligation to
indemnify for expenses that is created by the provisions of
Sections 7(a) and 7(b).
(e) In order to provide for just and equitable contribution
in circumstances under which the indemnity provided for in
this Section 7 is for any reason judicially determined (by
the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal
or the denial of the right of appeal) to be unenforceable by
the indemnified parties although applicable in accordance
with its terms, the Company and the Partnership, on the one
hand, and the Underwriters, on the other hand, shall
contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such
indemnity incurred by the Company and the Partnership and
one or more of the Underwriters, as incurred, in such
proportions that (a) the Underwriters are responsible for
that portion represented by the percentage that the
underwriting discount appearing on the cover page of the
Prospectus bears to the initial public offering price
(before deducting expenses) appearing thereon, and (b) the
Company and the Partnership are responsible for the balance,
provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation; provided, further, that if the allocation
provided above is not permitted by applicable law, the
Company and the Partnership, on the one hand, and the
Underwriters, on the other, shall contribute to the
aggregate losses in such proportion as is appropriate to
reflect not only the relative benefits referred to above but
also the relative fault of the Company and the Partnership,
on the one hand, and the Underwriters, on the other, in
connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to
information supplied by the Company or the Partnership, on
the one hand, or by the Underwriters, on the other hand, and
the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission. The Company, the Partnership and the
Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(e) 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 which does not take account of the
equitable considerations referred to above in this Section
7(e). The amount paid or payable by a party as a result of
the losses, claims, damages or liabilities referred to above
shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection
with investigating or defending such action or claim.
Notwithstanding the provisions of this Section 7(e), 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
which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or
omission or alleged omission. The Underwriters' obligations
in this Section 7(e) to contribute are several in proportion
to their respective underwriting obligations and not joint.
For purposes of this Section 7(e), each person, if any, who
controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company.
Section 8. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties,
indemnities, agreements and other statements of the Company
or the Partnership or officers of the Company set forth in
or made pursuant to this Agreement will remain operative and
in full force and effect regardless of any investigation
made by or on behalf of the Company, the Partnership or any
Underwriter or controlling person, with respect to an
Underwriter or the Company or the Partnership, and will
survive delivery of and payment for the Shares or
termination of this Agreement for a period of two (2) years.
Section 9. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective immediately as to
Sections 4 and 7 and, as to all other provisions at 10:00
a.m. E.D.T. on the first full business day following the
date of execution of this Agreement; but this Agreement
shall nevertheless become effective at such earlier time as
you may determine on and by notice to the Company or by
release of any of the Shares for sale to the public. For
the purposes of this Section 9, the Shares shall be deemed
to have been so released upon the release of publication of
any newspaper advertisement relating to the Shares or upon
the release by you of telegrams or facsimile transmission
(i) advising the Underwriters that the Shares are released
for public offering, or (ii) offering the Shares for sale to
securities dealers, whichever may occur first. By giving
notice before the time this Agreement becomes effective, you
or the Company, may prevent this Agreement from becoming
effective, without liability of any party to any other
party, except that the Company shall remain obligated to pay
costs and expenses to the extent provided in Section 4
hereof.
(b) You may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Time (i) in
accordance with the last paragraph of Section 5 of this
Agreement, or (ii) if there has been since the respective
dates as of which information is given in the Registration
Statement, any material adverse change, or any development
involving a prospective material adverse change, in or
affecting the business, prospects, management, properties,
assets, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a
whole, whether or not arising in the ordinary course of
business, or (iii) if there has occurred or accelerated any
outbreak of hostilities or other national or international
calamity or crisis or change in economic or political
conditions the effect of which on the financial markets of
the United States is such as to make it, in your judgment,
impracticable to market the Shares or enforce contracts for
the sale of the Shares, or (iv) if trading in any securities
of the Company has been suspended by the Commission or by
the NASD, or if trading generally on the NYSE, the American
Stock Exchange or in the over-the-counter market has been
suspended, or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have
been fixed, or minimum or maximum ranges for prices for
securities have been required, by the NYSE, the American
Stock Exchange or the NASD or by order of the Commission or
any other governmental authority, or (v) if a banking
moratorium has been declared by federal or New York or
Tennessee authorities, or (vi) any federal or state statute,
regulation, rule or order of any court or other governmental
authority has been enacted, published, decreed or otherwise
promulgated which in your reasonable opinion materially
adversely affects or will materially adversely affect the
business or operations of the Company, any of its
Subsidiaries or any Community, or (vii) any action has been
taken by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the
securities markets in the United States.
(a) If this Agreement is terminated pursuant to
this Section 9, such termination shall be without liability
of any party to any other party, except to the extent
provided in Section 4. Notwithstanding any such
termination, the provisions of Section 7 shall remain in
effect.
Section 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at the Closing
Time to purchase the Shares that it or they are obligated to
purchase pursuant to this Agreement (the "Defaulted
Securities"), you shall have the right, within 36 hours
thereafter, to make arrangements for the non-defaulting
Underwriters or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms set forth
in this Agreement; if, however, you have not completed such
arrangements within such 36-hour period, then:
(a) If the aggregate number of Firm Shares which
are Defaulted Securities does not exceed 10% of the
aggregate number of Firm Shares to be purchased pursuant to
this Agreement, the non-defaulting Underwriter shall be
obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligation
proportions bear to the aggregate underwriting obligation
proportions of all non-defaulting Underwriters, and
(b) If the aggregate number of Firm Shares which
are Defaulted Securities exceeds 10% of the aggregate number
of Firm Shares to be purchased pursuant to this Agreement,
this Agreement shall terminate without liability on the part
of the non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall
relieve the defaulting Underwriter from liability in
respect of its default.
In the event of any such default that does not
result in a termination of this Agreement, either you
or the Company shall have the right to postpone the
Closing Time for a period not exceeding seven days in
order to effect any required changes in the
Registration Statement or Prospectus or in any other
documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration
Statement or supplements to the Prospectus that may
thereby be made necessary. As used in this Agreement,
the term "Underwriter" includes any person substituted
for an Underwriter under this Section 10.
Section 11. Default by the Company. If the Company shall
fail at the Closing Time to sell and deliver the aggregate
number of Firm Shares that it is obligated to sell, then
this Agreement shall terminate without any liability on the
part of any non-defaulting party, except to the extent
provided in Section 4 and except that the provisions of
Section 7 shall remain in effect.
No action taken pursuant to this Section shall relieve
the Company from liability, if any, in respect to such
default.
Section 12. Notices. All notices and other
communications under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered, mailed
or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o Morgan
Keegan & Company, Inc., 50 Front Street, Memphis, Tennessee
38103, Attention: Randolph C. Coley, Managing Director (with
a copy sent in the same manner to Hunton & Williams,
Riverfront Plaza, East Tower, 951 East Byrd Street,
Richmond, Virginia 23219-4074, Attention: David C. Wright,
Esq.); and notices to the Company and the Partnership shall
be directed to them at Mid-America Apartment Communities,
Inc., 6584 Poplar Avenue, Suite 340, Memphis, Tennessee
38138, Attention: George E. Cates, President (with a copy
sent in the same manner to Baker, Donelson, Bearman, &
Caldwell, P.C., 165 Madison Avenue, 20th Floor, Memphis,
Tennessee 38103, Attention: John A. Good, Esq.).
Section 13. Parties. This Agreement is made solely for
the benefit of and is binding upon the Underwriters, the
Company and the Partnership and, to the extent provided in
Section 7, any person controlling the Company, the
Partnership, or any of the Underwriters, the officers and
directors of the Company, and their respective executors,
administrators, successors and assigns and, subject to the
provisions of Section 10, no other person shall acquire or
have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include any
purchaser, as such purchaser, from any of the several
Underwriters of the Shares.
All of the obligations of the Underwriters hereunder
are several and not joint.
Section 14. Governing Law and Time. This Agreement
shall be governed by the laws of the State of Tennessee.
Specified time of the day refers to United States Eastern
Time. Time shall be of the essence of this Agreement.
Section 15. Counterparts. This Agreement may be
executed in one or more counterparts and when a counterpart
has been executed by each party, all such counterparts taken
together shall constitute one and the same agreement.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us
a counterpart hereof, whereupon this instrument will become
a binding agreement among the Company, the Partnership and
the several Underwriters in accordance with its terms. It
is understood that your acceptance of this letter on behalf
of the Underwriters is pursuant to the authorities set forth
in a form of Agreement Among Underwriters, the form of which
shall be submitted to the Company for examination, upon
request, but without warranty on your part as to the
authority of the signers thereof.
Section 16. Power of Attorney. J.C Bradford & Co.
and Raymond James & Associates, Inc. each hereby confers
upon Morgan Keegan & Company, Inc. full power and authority
to act for it in connection with all matters pertaining to
this Agreement.
[Signatures Appear on Following Page]
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us
a counterpart hereof, whereupon this instrument will become
a binding agreement among the Company, the Partnership and
the several Underwriters in accordance with its terms.
Very truly yours,
MID-AMERICA APARTMENT COMMUNITIES, INC.
By: /s/ Simon R.C. Wadsworth
Name: Simon R.C. Wadsworth
Title: Executive Vice President and
Chief Financial Officer
MID-AMERICA APARTMENTS, L.P.
By: MID-AMERICA APARTMENT COMMUNITIES, INC.
General Partner
By: /s/ Simon R.C. Wadsworth
Name: Simon R.C. Wadsworth
Title: Executive Vice President and
Chief Financial Officer
Confirmed and accepted as of the date
first above written:
MORGAN KEEGAN & COMPANY, INC.
By: /s/ James E. Harwood
Name: James E. Harwood
Title: Vice President
J.C BRADFORD & CO.
By: /s/ Linda S. Costello
Name: Linda S. Costello
Title: Partner
RAYMOND JAMES & ASSOCIATES, INC.
By: /s/ Terry L. Barnes
Name: Terry L. Barnes
Title: Senior Vice President
SCHEDULE A
Number of
Firm Shares
Underwriters to be Purchased
Morgan Keegan & Company, Inc. 850,000
J.C Bradford & Co. 525,000
Raymond James & Associates, Inc. 500,000
----------------
Total 1,875,000
SCHEDULE B
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.
Hermitage at Beechtree, L.L.C.
Mid-America Stassney Woods Limited Partnership
Mid-America Runaway Bay Limited Partnership
Mid-America Travis Station Limited Partnership
MAACP, Inc.
Mid-America Capital Partners, L.R.
EXHIBIT 23.1
Consent of Independent Auditors
Shareholders and Partners
Flournoy Properties Group:
We consent to the incorporation by reference in the
registration statement on Form S-3 of Mid-America Apartment
Communities, Inc. of our report dated May 5, 1997, except
for note 9, which is as of September 17, 1997, with respect
to the combined balance sheets of Flournoy Properties Group
as of December 31, 1996 and 1995, and the related combined
statements of operations, partners' and owners' deficit, and
cash flows for each of the years in the three-year period
ended December 31, 1996, which report appears in the Form 8-
K of Mid-America Apartment Communities, Inc. dated September
17, 1997, as amended. We also consent to the reference to
our firm under the caption "Experts" in the prospectus.
KPMG Peat Marwick LLP
Atlanta, Georgia
November 13, 1997
