INTEREST PURCHASE AGREEMENT

This Interest Purchase Agreement (this “Agreement”) is made effective as of January 20, 2012, by and among Lehman Brothers Holdings Inc., a Delaware corporation (“Buyer”), and each of BIH ASN LLC (“BIH”), Archstone Equity Holdings Inc. (“AEH” and, collectively with BIH, “Barclays”), Bank of America, N.A. (“BANA”) and Banc of America Strategic Ventures, Inc. (“BofA Strategic”, and, collectively with BANA, “Bank of America”). Barclays and Bank of America are sometimes referred to herein as “Sellers” and, each, a “Seller.”  Buyer and Sellers are sometimes referred to herein as the “Parties” and each, a “Party.”

 

WHEREAS, Sellers delivered a ROFO Notice (as defined in the Bridge Equity Providers Agreement (as defined herein)) to Buyer dated as of December 2, 2011 and stipulated by Sellers to be deemed delivered and effective as of December 6, 2011;

 

WHEREAS, pursuant to the terms and conditions of the Bridge Equity Providers Agreement (as defined herein), Buyer has elected to exercise its ROFO Right (as defined in the Bridge Equity Providers Agreement) by (i) delivering a non-binding Notice of Intent to Purchase (as defined in the Bridge Equity Providers Agreement) to Sellers on December 14, 2011, (ii) making a Bankruptcy Court Approval Request (as defined in the Bridge Equity Providers Agreement) as of December 20, 2011, (iii) obtaining bankruptcy court approval for Buyer to exercise its ROFO Right and purchase the Purchased Interests and (iv) simultaneously with the execution of this Agreement, (a) delivering a binding Election Notice (as defined in the Bridge Equity Providers Agreement) and (b) depositing the ROFO Deposit (as defined in the Bridge Equity Providers Agreement) with a nationally recognized title company approved by Sellers (the “Title Company”) (which ROFO Deposit in cash in an amount equal to $66,250,000, together with accrued interest thereon (the “ROFO Deposit Amount”), if any, shall be credited against the purchase price payable to Sellers for the Purchased Interests (as defined herein) upon Closing (as defined herein));

 

WHEREAS, contemporaneously with the Closing (as defined herein), Sellers will terminate that certain Interest Purchase Agreement dated as of December 2, 2011 by and among ERP Operating Limited Partnership and Sellers (the “ERP Interest Purchase Agreement”) in accordance with the terms thereof as a result of Buyer’s exercise of its right of first offer to purchase the Purchased Interests (as defined herein);

 

WHEREAS, each of Sellers is the record and beneficial owner of the interests in the Archstone Entities set forth opposite each such Seller’s name on Schedule I attached hereto (collectively, the “Purchased Interests”), which interests constitute 50% of all interests held by each such Seller in the Archstone Entities; and

 

WHEREAS, each of Sellers desires to sell to Buyer (or an Affiliate of Buyer designated by Buyer in writing as the Person to take ownership of the applicable Purchased Interests (each such Person, a “Buyer Designee”)), and Buyer desires to purchase from Sellers, all of each Seller’s right and title to and interest in and to the Purchased Interests, free and clear of all Liens (other than restrictions on transfer by Buyer imposed under applicable securities Laws, the Voting Agreement, the Bridge Equity Providers Agreement and the Organizational Documents

 

of the Primary Archstone Entities), and upon the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:

1.1 Definitions.  When used in this Agreement, the following terms in all of their tenses, cases and correlative forms shall have the meanings assigned to them in this Section 1.1 or elsewhere in this Agreement.  Accounting terms not otherwise defined in this Agreement shall be interpreted in accordance with GAAP.

 

“Affiliate” of any particular Person means any other Person which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person.  For purposes of this definition, “control” of any Person means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; provided that none of the Archstone Entities (nor any of their respective employees or members of any management team) shall be deemed an Affiliate of any Seller or Buyer.

 

“Antitrust Division” means the Antitrust Division of the Department of Justice of the United States.

 

“Antitrust Laws” means any of the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other United States federal or state or foreign statutes, rules, regulations, orders, decrees, administrative or judicial doctrines or other Laws that are designed to prohibit, restrict or regulate mergers and acquisitions and/or actions having the purpose or effect of lessening competition, monopolization or restraining trade.

 

“Archstone” means Archstone, a Maryland real estate investment trust.

 

“Archstone Entities” means, collectively, (a) each of the Primary Archstone Entities, and (b) each Subsidiary of any Primary Archstone Entity, excluding Archstone Multifamily Parallel JV LP.

 

“Archstone Fund Entities” means each of Archstone Multifamily JV LP, Archstone Multifamily Parallel Fund I JV LP and Archstone Multifamily Parallel Fund II JV LP.

 

“Authorization” means any approval, authorization, certificate, concession, consent, exemption, franchise, grant of authority, license, real estate broker license, Order, permission, permit, qualification, ratification, registration, waiver or variance, of or from any Governmental Authority or required by or available under any Law.

 

“Backstop Guarantee” means a guarantee of all indemnification and other payment obligations under this Agreement and the other Transaction Documents by an Affiliate of a Seller with a long-term senior unsecured credit rating of Baa3 or higher by Moody’s Investors Service or BBB- or higher by Standard & Poor’s Ratings Services, in the form attached hereto as Exhibit B.

 

“Backstop Letter of Credit” means an unconditional irrevocable letter of credit from a Seller in a form reasonably acceptable to Buyer, with a face amount equal to (a) the aggregate purchase price payable to the applicable Seller under Section 2.2, multiplied by (b) 0.175, in each case, from a United States bank with offices in New York, New York or Chicago, Illinois that has at all times while such Backstop Letter of Credit is outstanding a long-term senior unsecured credit rating of Baa3 or higher by Moody’s Investors Service or BBB- or higher by Standard & Poor’s Ratings Services.  Each Backstop Letter of Credit shall have an initial expiration date of not less than one year and shall be automatically renewed for successive 12-month periods until such time as all indemnification obligations of the applicable Seller under Article 12 shall have expired.  In addition, Buyer or Buyer Designee shall, at its option, have the right to draw on any Backstop Letter of Credit if the issuing bank has indicated that it will not renew such Backstop Letter of Credit upon its next occurring scheduled expiration date and the applicable Seller fails to replace such expiring Backstop Letter of Credit within 10 Business Days prior to such expiration date.  If a Backstop Letter of Credit shall be drawn on pursuant to the immediately preceding sentence, subject to any then-applicable right of Buyer or Buyer Designee to apply the drawn funds, the drawn funds shall be held in escrow with an escrow agent reasonably acceptable to Buyer and the applicable Seller as security for the satisfaction of the applicable Seller’s indemnification obligations under Article 12 until the earlier of (i) such time as the applicable Seller’s indemnification obligations under Article 12 have expired, or (ii) such time as the applicable Seller delivers a replacement Backstop Letter of Credit to Buyer or Buyer Designee.

 

“BANA Cash Distribution Amount” means an amount equal to BANA’s Sale Percentage of the amount received by BANA prior to the Closing with respect to any declaration, setting aside or payment of any cash dividend or the making of any cash distribution in any such case, after the date hereof, with respect to the Equity Interests of any Primary Archstone Entity.

 

“BANA Purchased Interests” means the Purchased Interests owned or held by BANA, as set forth on Schedule I attached hereto.

 

“Bank Loan Agreement” shall have the meaning given such term in the Voting Agreement.

 

“Bankruptcy Event” means, with respect to any Person, the occurrence of any of the following:

 

(a)

a court of competent jurisdiction enters a decree or order for relief in an involuntary case under applicable bankruptcy, insolvency, or other similar Law now or hereinafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official for such

 

Person or for any substantial part of such Person’s property, or ordering the winding up or liquidation of its affairs;

 

(b)

such Person commences a voluntary case under any applicable bankruptcy, insolvency, or other similar Law now or hereinafter in effect, or consents to the entry of an order for relief in an involuntary case under any such Law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official for such Person or for any substantial part of such Person’s property, or makes any general assignment for the benefit of creditors, or fails generally to, or admits in writing its inability, to pay debts as they become due; or

 

(c)

an insolvency case under any applicable bankruptcy, insolvency, or other similar Law now or hereinafter in effect, is commenced against such Person or for the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official for such Person or for any substantial part of such Person’s property and a stay is not instituted against such case or such case has not been dismissed within sixty (60) days.

 

“Barclays Cash Distribution Amount” means an amount equal to Barclays’ Sale Percentage of the amount received by Barclays prior to Closing with respect to any declaration, setting aside or payment of any cash dividend or the making of any cash distribution in any such case, after the date hereof, with respect to the Equity Interests of any Primary Archstone Entity.

 

“Barclays Purchased Interests” means the Purchased Interests owned or held by Barclays, as set forth on Schedule I attached hereto.

 

“BofA Strategic Cash Distribution Amount” means an amount equal to BofA Strategic’s Sale Percentage of the amount received by BofA Strategic prior to Closing with respect to any declaration, setting aside or payment of any cash dividend or the making of any cash distribution in any such case, after the date hereof, with respect to the Equity Interests of any Primary Archstone Entity.

 

“BofA Strategic Purchased Interests” means the Purchased Interests owned or held by BofA Strategic, as set forth on Schedule I attached hereto.

 

“Bridge Equity Provider” shall have the meaning given such term in the Bridge Equity Providers Agreement.

 

“Bridge Equity Providers Agreement” means the Second Amended and Restated Bridge Equity Providers Agreement, dated as of December 1, 2010, by and among Archstone LB Syndication Partner LLC, Lehman Brothers Holdings Inc., REPE Archstone GP Holdings, LLC, Luxembourg Trading Finance S.a.r.l., Luxembourg Residential Properties Loan Finance S.a.r.l,, Luxembourg Residential Properties Loan Finance 2 S.a.r.l., Lehman Commercial Paper, Inc., BofA Strategic, BANA, BIH, Barclays Capital Real Estate Inc. and AEH.

 

“Business” means the business of the Archstone Entities as of the date of this Agreement.

 

“Business Day” means each day, other than a Saturday, Sunday or other day on which banks in New York, New York are required by Law to close.

 

“Buyer Fundamental Representations” means the representations and warranties set forth in Sections 6.1, 6.2, and 6.6.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commercially Reasonable Efforts” means the commercially reasonable efforts that a reasonably prudent Person desirous of achieving the contemplated result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible; provided that a Party’s commercially reasonable efforts shall not be deemed to include causing any action to be taken that is beyond such Party’s authority under the Organizational Documents of any applicable entity; and provided further that no obligation to use commercially reasonable efforts shall be deemed to require any Party hereto or its Affiliates to take any action that would violate any of the Organizational Documents of any of the Archstone Entities or the Voting Agreement, the Bridge Equity Providers Agreement or the Syndication Agreement.

 

“Consent” means any notice, approval, consent, license, permission or waiver of any Person, other than a Governmental Authority.

 

“Contemplated Transactions” means the sale of the Purchased Interests and the related covenants contemplated by this Agreement or any of the other Transaction Documents.

 

“Contract” means any agreement, contract, instrument, lease or sublease (including any lease and sublease of real property), license, franchise, trust, note, bond, deed, mortgage, indenture, sale or purchase order, delivery order, change order, understanding, arrangement, instrument, or commitment, obligation, promise, or undertaking of any kind (whether written or oral) that is legally binding.

 

“Data Room” means the electronic data room established by Sellers and/or the Archstone Entities for the purpose of making information, agreements, documents and other due diligence materials regarding the Archstone Entities available to Buyer or other Persons in connection with the potential acquisition of the Purchased Interests, the Other Interests and/or any interests in or assets of the Archstone Entities.

 

“Disclosure Schedules” or “Schedules” means the schedules accompanying this Agreement prepared by Sellers pursuant to Articles 4 and 5, which schedules include the information specified in Articles 4 and 5 and exceptions to the representations and warranties of Sellers set forth in Articles 4 and 5 hereof.  Any matter set forth in the Disclosure Schedules with respect to any particular section of the Agreement shall refer only to the section of the Disclosure Schedules corresponding to the applicable Agreement section number, except that any item disclosed in the Disclosure Schedules shall be deemed disclosed under any other applicable section of the Disclosure Schedules if it is reasonably apparent on its face that such disclosure is likewise applicable to such other section of the Disclosure Schedules.  The inclusion of any information in the Disclosure Schedules (or any information provided subsequent thereto) shall

 

not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material, has resulted in or would result in a Material Adverse Effect or is outside the Ordinary Course of Business.

 

“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, or (b) is redeemable at the option of the holder thereof, in whole or in part.

 

“Effect” means any change, effect, event, occurrence, development, circumstance, condition or worsening thereof.

 

“Employee Benefit Plan” means each material “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and each other material employee benefit plan, program or arrangement that is maintained, sponsored or contributed to by the Archstone Entities on behalf of employees located within the United States and elsewhere.

 

“Equity Interest” means (a) the equity ownership rights in a business entity, whether a corporation, company, joint stock company, limited liability company, general or limited partnership, joint venture, bank, association, trust, trust company, land trust, business trust, sole proprietorship or other business entity or organization, and whether in the form of capital stock, ownership unit, limited liability company interest, membership interest, limited or general partnership interest or any other form of ownership, including any preferred stock, preferred membership interests, preferred partnership interests and/or any capital or profits interest, and (b) all rights, warrants, options, convertible securities, convertible indebtedness, exchangeable securities or other instruments or rights that are outstanding and exercisable for, convertible into or exchangeable for any Equity Interest described in the foregoing clause (a) whether at the time of issuance or upon the passage of time or occurrence of some future event.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor Law, and the regulations and rules issued pursuant to that statute or any successor Law.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor Law, and the rules and regulations issued pursuant to that statute or any successor Law.

 

“Executive Employment Arrangement” means all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation, employee loan and all other employee benefit plans, agreements, programs, policies or other arrangements providing compensation or benefits to any senior management employee of Archstone, Archstone Communities LLC or the Primary Archstone Entities, other than an Employee Benefit Plan.

 

“Filing” means any filing or registration with, or a written notice to, a Governmental Authority.

 

“FTC” means the Federal Trade Commission of the United States or any successor agency.

 

“GAAP” means generally accepted accounting principles, as in effect in the United States from time to time.

 

“Governmental Authority” means any government or political subdivision, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any federal, state, local or foreign court, authority, tribunal, department, bureau or commission, in each case having jurisdiction over the applicable matter.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any successor law, and regulations and rules issued pursuant to that statute or any successor Law.

 

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):  (a) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money, (b) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto) (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (a) and (b) and (e)) entered into in the ordinary course of business of such Person to the extent that such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit), (d) all obligations of such Person to pay the deferred and unpaid purchase price of property or services (except trade payables and accrued Liabilities incurred in the Ordinary Course of Business), (e) all capitalized lease obligations of such Person, provided that the determination as to what constitutes a capitalized lease obligation shall be determined in accordance with GAAP as in effect on the date of this Agreement, (f) the redemption, repayment or other repurchase amount of such Person with respect to any Disqualified Equity Interests, (g) all Indebtedness of other Persons secured by a Lien on any asset of such Person to the extent of the fair market value of the asset pledged whether or not such Indebtedness is assumed by such Person, and (h) all Indebtedness of other Persons to the extent guaranteed by such Person.

 

“IRS” means the United States Internal Revenue Service or any successor agency.

 

“Joint Venture” means each Person in which any of the Primary Archstone Entities or any Subsidiaries of any of the Primary Archstone Entities holds an Equity Interest and/or a voting interest (other than the Primary Archstone Entities and the Subsidiaries of any of the Primary Archstone Entities).

 

“Knowledge” means (a) with respect to Barclays, the actual knowledge of the individuals set forth on Schedule 1.1(a)(i), after inquiry of the individuals set forth on Schedule 1.1(a)(ii) with respect to the matters at hand, and (b) with respect to Bank of America, the actual knowledge of the individuals set forth on Schedule 1.l (b), after inquiry of the individuals set forth on Schedule 1.1(a)(ii) with respect to the matters at hand.  The fact that a document or other

 

information is set forth in the Data Room does not imply that any individual has knowledge of such document or information.

 

“Law” means, with respect to any Person, any federal, state, county, municipal, local, multinational or foreign statute, treaty, law, common law, ordinance, rule, regulation, code, order, writ, stipulation, injunction, judicial decision, decree, ruling, determination, finding, permit, constitutional provision or other legally binding requirement of any Governmental Authority applicable to such Person or any of its respective properties, assets, officers, directors, employees, consultants or agents (in connection with such officer’s, director’s, employee’s, consultant’s or agent’s activities on behalf of such Person).

 

“LBO Transaction” means the merger of Archstone-Smith Operating Trust with River Trust Acquisition (MD), LLC and certain other transactions contemplated by the Agreement and Plan of Merger, dated as of May 28, 2007, as amended by Amendment No. 1 thereto, dated as of August 5, 2007, by and among the Archstone-Smith Trust, Archstone-Smith Operating Trust, River Holding, LP, River Acquisition (MD), LP and River Trust Acquisition (MD), LLC.

 

“Liability” means any liability or obligation of whatever kind or nature, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, including any Indebtedness.

 

“Lien” means any mortgage, lien, claim, pledge, charge, security interest or other encumbrance of any kind, title defects, easements and restrictions, invalidities or irregularities, deed of trust, hypothecation, collateral assignment, preference, priority or other security arrangement, claim, conditional sale, title retention arrangement, lessor’s rights under a capital lease, restriction on transfer or voting, right of first offer, right of first refusal or any other right or arrangement having substantially the same legal or economic effect as any of the foregoing.

 

“Loss” or “Losses” means any and all charges, judgments, losses, liabilities, damages, costs, Taxes, penalties, expenses, fees, fines, assessments, sanctions or awards (including (a) amounts paid in settlement, and (b) reasonable costs of investigation and defense, reasonable legal expenses and court costs), but specifically excluding (i) any costs incurred by or allocated to an Indemnified Party with respect to time spent by employees of the Indemnified Party or its Affiliates, and (ii) any consequential, exemplary, indirect, incidental, special or punitive damages, including diminution in value or lost profits (except, in each case, to the extent that such damages are payable in connection with a Third Party Claim, in which case such damages shall be considered Losses hereunder for indemnification purposes).  Notwithstanding the foregoing, any diminution in value or lost profits as a result in the failure of the representations and warranties set forth in Section 4.4 or Section 5.3.1 to be accurate shall constitute a “Loss” for purposes of this Agreement. For the avoidance of doubt, for purposes of this Agreement only “Losses” arising out of, resulting from or related to the Purchased Interests may constitute “Losses” of the Buyer Indemnified Parties.

 

“Major Matter” shall have the meaning given such term in the Voting Agreement.

 

“Material Adverse Effect” means:  (a) an Effect that individually or when taken together with all other Effects that exist at the date of determination, has a material adverse effect, on the

 

business, financial condition or results of operations of the Archstone Entities, taken as a whole; provided, however, that, solely for purposes of clause (a) above, no Effects solely resulting from, relating to or arising out of the following shall be deemed to be, constitute or give rise to a Material Adverse Effect, or shall be taken into account when determining whether a Material Adverse Effect has occurred:  (i) changes in general economic, financial market, credit, capital, business or political conditions in the United States or any other country or changes generally affecting companies in the industry or industries in which the Archstone Entities operate, if and only to the extent such Effects do not adversely affect the Business or the Archstone Entities to a greater degree than other companies of comparable size operating in such industry or industries in which the Archstone Entities operate, (ii) changes in interest, currency or exchange rates or the price of any commodity, security or market index, (iii) changes in accounting requirements or principles required by GAAP or required by any change in applicable Laws and any restatement of the financial statements of the Archstone Entities as a result thereof or public announcement related thereto, (iv) Effects resulting from any change in regulatory conditions or change in applicable Laws affecting the industry in which the Business or the Archstone Entities operate or changes in the interpretation of such regulatory conditions or applicable Laws by Governmental Authorities, (v) Effects arising out of the commencement, continuation or escalation of a war, sabotage, hostilities or other international or national calamity or act of terrorism, if and only to the extent such Effects do not adversely affect the Business or the Archstone Entities to a greater degree than other companies of comparable size operating in such industry or industries in which the Archstone Entities operate, (vi) Effects arising out of, or related to compliance with the terms of, or the taking of any action required by, this Agreement, the taking of any action requested in writing by Buyer, the failure to take any action prohibited by this Agreement, or the failure to take any action requested in writing not to be taken by Buyer, (vii) any Effects resulting from execution of this Agreement, the identity of the Buyer, the announcement or pendency of the Contemplated Transactions, including any loss of employees or any Effects attributable or relating to expenses incurred in connection with the Contemplated Transactions, (viii) any failure to meet any internal or public revenue or earnings projections, forecasts, estimates or guidance for any period, whether relating to financial performance or business metrics, including, without limitation, revenues, net operating incomes, cash flows or cash positions, (ix) any flood, earthquake or other natural disaster if and only to the extent such Effects do not adversely affect the Business or Archstone Entities to a greater degree than other companies of comparable size operating in such industry or industries in which the Archstone Entities operate, or (x) any matters set forth in the Disclosure Schedules; and (b) any Effects that individually or when taken together with all other Effects that exist at the date of determination, are, or would reasonably be expected to, have a material adverse effect on the ability of any Seller or the Archstone Entities to consummate the Contemplated Transactions.

 

“Order” means any award, decree, decision, injunction, judgment, order, ruling, writ, assessment, subpoena, or verdict or arbitration award entered, issued, made, or rendered by any court, administrative agency or other Governmental Authority, whether arising from a Proceeding or applicable Law.

 

“Ordinary Course of Business” means an action taken by a Person only if that action is consistent in nature and scope with the past practices of such Person and is taken in the ordinary course of the normal operations of such Person.

 

“Organizational Documents” means the Articles or Certificate of Incorporation, Code of Regulations and/or Bylaws of a corporate entity, the Articles of Organization or Certificate of Formation and Operating Agreement or Limited Liability Company Agreement of a limited liability company entity, the declaration of trust or trust agreement for a trust entity and other similar organizational and governing documents for entities other than corporations, limited liability companies or trusts.

 

“Other Interests” means all interests, including all Equity Interests and voting interests, held by Sellers in the Archstone Entities, other than the Purchased Interests.

 

“Permitted Liens” means (a) statutory Liens for Taxes and other governmental charges that are not yet delinquent or which are being contested in good faith by appropriate Proceedings or for which a reserve has been established; (b) mechanic’s, workmen’s, repairmen’s, materialmen’s, warehousemen’s, carrier’s and other similar statutory Liens arising or incurred in the Ordinary Course of Business with respect to amounts not yet delinquent or which are being contested in good faith or for which a reserve has been established; (c) with respect to real property, any Liens that do not in the aggregate materially impair the use or planned use of such real property; (d) Liens in respect of customer advances in favor of a customer of the Business arising in the ordinary course of business; (e) rights and licenses granted to others in Intellectual Property entered into in the Ordinary Course of Business prior to the execution of this Agreement; (f) with respect to any of the any leased real property, any Lien in respect of any developer’s, landlord’s or other third party’s interest in the such leased real property, (g) Liens under the Bank Loan Agreement, (h) Liens made in connection with the financing of a joint venture, (i) Liens made in connection with the construction of new developments and (j) Permitted Encumbrances as defined in the Bank Loan Agreement.

 

“Person” means any individual, a corporation (including any non-profit corporation), a limited liability company, a general partnership, a limited partnership, a limited liability partnership, a trust, a venture, a business, a union, a society, an association, a firm, a Governmental Authority or any other entity or organization.

 

“Primary Archstone Entities” means each of Archstone Multifamily (Governance) LLC, Archstone Multifamily Parallel (Governance) LLC, each of the Archstone Fund Entities, Archstone Enterprise LP and Archstone Property Holdings LLC.

 

“Proceeding” means any action, claim, audit or other inquiry, hearing, investigation, suit or other charge or proceeding (whether civil, criminal, administrative, investigative, formal or informal) by or before any Governmental Authority or before an arbitrator or arbitral body or mediator.

 

“Proportionate Share” means, with respect to BANA, 13.914%, with respect to BofA Strategic, 0.016%, and, with respect to Barclays, 12.570%.

 

“Representative” means, with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, Affiliate or other representative of the Person, including legal counsel, accountants and financial advisors.

 

“ROFO Deposit” shall have the meaning given such term in the Bridge Equity Providers Agreement.

 

“ROFO Deposit Amount” shall have the meaning given such term in the Recitals.

 

“Sale Percentage” means, a percentage, as to each of Barclays, BofA Strategic and BANA, equal to 50%.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Seller Fundamental Representations” means the representations and warranties set forth in Sections 4.1, 4.2, 4.3(a), 4.3(e), 4.4, 4.7, 5.1.3, 5.3.1 and 5.7.1.

 

“Securities Act” means the Securities and Exchange Act of 1933, as amended, or any successor Law, and the rules and regulations issued pursuant to that statute or any successor Law.

 

“Subsidiary” means, with respect to any Person, any other Person of which the specified Person, either directly or through or together with any other of its Subsidiaries, owns securities or other ownership interests or Equity Interests having voting power to elect a majority of the board of directors or other governing body or Persons performing similar functions on behalf of such other Person.  For purposes of Sections 5.5 and 11.6 only, the “Subsidiaries” of the Archstone Entities shall include each of the entities consolidated by any of the Archstone Fund Entities or Primary Archstone Entities for GAAP purposes.

 

“Syndication Agreement” means the Amended and Restated Syndication and Modification Agreement, dated as of March 31, 2009, by and among Archstone Multifamily Parallel (GP) LLC, Archstone Multifamily (GP) LLC, Archstone Multifamily (Governance) LLC, REPE Archstone GP Holdings LLC, REPE Archstone LP Holdings LLC, BofA Strategic, BANA, Archstone LB Syndication Partner LLC, BIH, Archstone Multifamily Parallel JV LP, Archstone Multifamily JV LP, Archstone Multifamily Parallel Fund I JV LP, Archstone Multifamily Parallel Fund II JV LP, and the parties listed on Schedule I attached thereto, as amended by Amendment No. 1 to Amended and Restated Syndication and Modification Agreement, dated as of December 2, 2010.

 

“Tax” or “Taxes” means any federal, state, local or foreign net income, gross income, net receipts, gross receipts, profit, severance, property, production, sales, use, license, excise, occupation, franchise, employment, unemployment, disability, payroll, severance, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, estimated, capital stock, registration, license, social security (or similar) or other tax, custom duty, governmental fee or other governmental charge, fee, levy, impost, tariff or assessment of any kind, together with any interest, fine, penalty, addition to tax or additional amount imposed with respect thereto, whether disputed or not, imposed by a Governmental Authority.

 

“Tax Return” means any return, report, filing, declaration, report, questionnaire, estimate, statement, information return or other document (including schedules, attachments or any related or supporting information) relating to any Tax.

 

“Transaction Documents” means this Agreement, if applicable, each of the Backstop Guarantees, if any, and each of the Backstop Letters of Credit, if any.

 

“Transfer Taxes” means all sales, use, value added, documentary, stamp duty, gross receipts, registration, transfer, transfer gain, conveyance, excise, recording, license and other similar taxes and fees, including any interest, penalties, additions to Tax or additional amounts in respect of the foregoing arising out of or in connection with or attributable to the transfer and sale of the Purchased Interests.

 

“Voting Agreement” means the Voting Agreement, dated as of March 31, 2009, by and among Archstone Multifamily (Governance) LLC, Archstone Multifamily Parallel (Governance) LLC, Archstone Multifamily JV LP, Archstone Multifamily Parallel Fund I JV LP, Archstone Multifamily Parallel Fund II JV LP, Archstone Multifamily Parallel Fund JV LP, Archstone Multifamily (GP) LLC, Archstone Multifamily Parallel (GP) LLC, REPE Archstone GP Holdings LLC, BANA and BIH, as amended by Amendment No. 1 to Voting Agreement, dated as of December 2, 2010.

 

“Voting Percentage” shall have the meaning given such term in the Voting Agreement.

 

1.2 Additional Definitions.  In addition to the terms set forth in Section 1.1, the following terms are defined in the text of this Agreement in the locations specified below:

2.1 Purchase and Sale.  Upon the terms and subject to the conditions of this Agreement, at the Closing (as defined below), each Seller hereby agrees to sell, assign, transfer and deliver to Buyer (or Buyer Designee, if applicable), and Buyer (or any Buyer Designee) hereby agrees to purchase from each such Seller, all right, title and interest in and to the Purchased Interests, free and clear of all Liens, other than restrictions on transfer by Buyer imposed under applicable securities Laws, the Voting Agreement, the Bridge Equity Providers Agreement and the Organizational Documents of the Primary Archstone Entities.

 

2.2 Purchase Price.

 

2.2.1 In consideration for the BofA Strategic Purchased Interests, subject to the terms and conditions of this Agreement, at Closing, Buyer or Buyer Designee, if applicable, shall pay and deliver to BofA Strategic an amount in cash equal to (a) $800,000 (the “BofA Strategic Purchase Price”), minus (b) (i) BofA Strategic’s Proportionate Share of the Seller Expenses, and (ii) the BofA Strategic Cash Distribution Amount, if any (the resulting amount, the “BofA Strategic Closing Purchase Price”).  The BofA Strategic Closing Purchase Price shall be paid as provided in Section 3.1 and Section 3.3.

 

2.2.2 In consideration for the BANA Purchased Interests, subject to the terms and conditions of this Agreement, at Closing, Buyer or Buyer Designee, if applicable, shall pay and deliver to BANA an amount in cash equal to (a) $695,694,004 (the “BANA Purchase Price”), minus (b) (i) BANA’s Proportionate Share of the Seller Expenses, and (ii) the BANA Cash Distribution Amount, if any (the resulting amount, the “BANA Closing Purchase Price”).  The BANA Closing Purchase Price shall be paid as provided in Section 3.1 and Section 3.3.

 

2.2.3 In consideration for the Barclays Purchased Interests, subject to the terms and conditions of this Agreement, at Closing, Buyer or Buyer Designee, if applicable, shall pay and deliver to Barclays an amount in cash equal to (a) $628,505,996 (the “Barclays Purchase Price”), minus (b) (i) Barclay’s Proportionate Share of the Seller Expenses, and (ii) the Barclay’s Cash Distribution Amount, if any (the resulting amount, the “Barclays Closing Purchase Price”).  The Barclays Closing Purchase Price shall be paid as provided in Section 3.1 and Section 3.3.

 

2.2.4 For Tax purposes, each Seller and Buyer or the Buyer Designee shall allocate the BofA Strategic Purchase Price, the BANA Purchase Price and the Barclays Purchase Price and other relevant items among the Purchased Interests in accordance with Schedule I attached hereto.  The allocations with respect to the Barclays Purchase Price, the BofA Strategic Purchase Price and the BANA Purchase Price on Schedule I attached hereto will be amended to reflect any adjustment to the BofA Strategic Purchase Price, the BANA Purchase Price and/or the Barclays Purchase Price, as applicable, under Article 12 in a manner consistent with such schedule.

2.3 Closing.  Unless this Agreement shall have been terminated pursuant to Article 13, the closing of the Contemplated Transactions (the “Closing”) shall take place on the later to occur of (a) the date hereof, and (b) the second (2nd) Business Day following the date on which all of the conditions set forth in Articles 7, 8 and 9 (excluding those conditions which by their nature are to be satisfied as part of the Closing, but subject to the fulfillment or waiver of those conditions) have been satisfied or waived, at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 at 9:00 a.m., New York time, or at such other place, time or date as the Parties hereto may agree in writing (the date on which the Closing actually occurs, the “Closing Date”).  The Closing shall be deemed to be effective as of 11:59 p.m. Eastern Time, on the date immediately preceding the Closing Date.

3.1 Required Tax Withholding.  Buyer or Buyer Designee, as applicable, shall be entitled to deduct and withhold from the BofA Strategic Purchase Price, the BANA Purchase Price or the Barclays Purchase Price, as applicable, otherwise payable to BofA Strategic, BANA or Barclays, as applicable, pursuant to this Agreement such amounts as Buyer or Buyer Designee is required to deduct and withhold with respect to the making of such payment under the Code or any other provision of federal, state, local or foreign tax Law; provided that neither Buyer nor Buyer Designee shall deduct or withhold any amounts from the BofA Strategic Purchase Price, the BANA Purchase Price or the Barclays Purchase Price, as applicable, (a) pursuant to Section 1445 of the Code, if BofA Strategic, BANA or Barclays, respectively, has provided either (i) a certificate executed by a duly authorized Representative of such Seller, sworn under penalty of perjury and in form and substance required under the Treasury Regulations under Section 1445 of the Code, to the effect that withholding under Section 1445 of the Code is not required in connection with the acquisition of the Purchased Interests by Buyer and/or Buyer Designee or (ii) a withholding certificate issued by the IRS pursuant to Treasury Regulations Section 1.14453 that is reasonably satisfactory to Buyer or Buyer Designee or (b) otherwise without having provided with respect to each Seller written notice of its intention to withhold and the basis for such withholding five (5) days prior to Closing.  To the extent that amounts are withheld by Buyer or Buyer Designee, such withheld amounts (i) shall be remitted promptly and in accordance with applicable Law by Buyer or Buyer Designee to the applicable Governmental Authority, and (ii) shall be treated for all purposes of this Agreement as having been paid to BofA Strategic, BANA or Barclays, as applicable, in respect of which such deduction and withholding was made by Buyer or Buyer Designee and shall be deemed part of the BofA Strategic Purchase Price, the BANA Purchase Price or the Barclays Purchase Price, as applicable. Buyer or Buyer Designee shall promptly provide to BofA Strategic, BANA or Barclays, as applicable, written evidence reasonably satisfactory to such Person of any such remittance.

 

3.2 No Further Ownership Rights.  At and after the Closing, the BofA Strategic Purchase Price, the BANA Purchase Price and the Barclays Purchase Price, upon payment thereof, shall be deemed to have been paid in full satisfaction of all rights pertaining to the Purchased Interests and neither BofA Strategic, BANA nor Barclays shall have any further ownership or other rights with respect thereto.

3.3 Cash Payments.  All cash amounts payable pursuant to the terms and conditions of this Agreement shall be paid by wire transfer of immediately available funds to an account or accounts designated by the applicable Party to receive such cash amount, which account or accounts shall be designated no later than one (1) day prior to the Closing Date or other date of applicable payment hereunder.  At Closing, the Title Company, on behalf of Buyer or Buyer Designee, as applicable, shall pay and deliver the ROFO Deposit Amount and any accrued interest thereon to the applicable Seller(s) and such payments shall be applied toward the payment of BofA Closing Purchase Price, the BANA Closing Purchase Price and the Barclays Closing Purchase Price, as applicable.

Except as set forth in the Disclosure Schedules, each Seller hereby severally, and not jointly and severally, represents and warrants to Buyer as follows.

 

4.1 Organization and Good Standing.  Such Seller is a legal entity that is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite corporate, company or other entity power and authority to own, lease and operate its properties and to carry on its business as presently conducted.  Such Seller is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of such Seller to consummate the Contemplated Transactions.

4.2 Authorization; Validity of Agreements.  Such Seller has the requisite corporate, company or other entity power and authority to execute and deliver each of the Transaction Documents to which it is a party and to consummate the Contemplated Transactions.  The execution, delivery and performance by such Seller of each of the Transaction Documents to which it is a party, and the consummation by such Seller of the Contemplated Transactions, have been duly authorized by such Seller, and no other proceedings, actions or authorizations on the part of such Seller or any holders of Equity Interests in such Seller are necessary to authorize the execution and delivery by such Seller of any Transaction Document to which it is a party or the consummation by such Seller of the Contemplated Transactions.  Each of the Transaction Documents to which such Seller is a party has been duly executed and delivered by such Seller, or will at the Closing be duly executed and delivered by such Seller, and constitutes, or will constitute at Closing, the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors’ rights generally, and (b) general equitable principles.

 

4.3 Consents and Approvals; No Violations.  The execution, delivery and performance by such Seller of each Transaction Document to which it is a party, and the consummation by such Seller of the Contemplated Transactions, do not and will not (a) violate,

4.4.1 Such Seller is the sole beneficial and record owner and has good, valid and marketable title to, and will, immediately prior to Closing, be the sole beneficial and record owner and have good, valid and marketable title to, all of the Purchased Interests set forth opposite such Seller’s name on Schedule I attached hereto, free and clear of all Liens, other than restrictions on transfer imposed under applicable securities Laws, the Voting Agreement, the Bridge Equity Providers Agreement, the Syndication Agreement and the Organizational Documents of the Primary Archstone Entities.  Except as set forth in Section 4.4.1 of the Disclosure Schedules, such Seller does not directly or indirectly own or hold any Equity Interests, voting interests or other interests in any Primary Archstone Entity and such Seller does not directly own or hold any Equity Interests in any other Archstone Entity.  At Closing, Buyer or Buyer Designee will acquire from such Seller full legal and beneficial ownership of and good and valid title to the Purchased Interests set forth opposite such Seller’s name on Schedule I attached hereto, free and clear of all Liens, other than restrictions on transfer by Buyer imposed under applicable securities Laws, the Voting Agreement, the Bridge Equity Providers Agreement and the Organizational Documents of the Primary Archstone Entities.  There has not been any capital call or similar call for contributions from such Seller with respect to any of the Primary Archstone Entities that has not been fully paid and satisfied by such Seller.  To such Seller’s Knowledge, such Seller does not owe to any Archstone Entity any material amount with respect to any Taxes paid with respect to or on behalf of such Seller for which such Seller is obligated to reimburse the applicable Archstone Entity, and such Seller does not have any Knowledge of any material payments made by any Archstone Entity of Taxes with respect to or on behalf of Seller with respect to which either a demand for payment could be made to Seller by an Archstone Entity for reimbursement

of such amounts or an offset could be made against future amounts distributable from an Archstone Entity to such Seller.

 

4.4.2 Except as set forth in Section 4.4.2 of the Disclosure Schedules, other than pursuant to the terms and conditions of this Agreement, the Voting Agreement, the Bridge Equity Providers Agreement, the Syndication Agreement and the Organizational Documents of the Primary Archstone Entities, (a) such Seller is not a party to any option, warrant, purchase right or other contract that could require (i) any Archstone Entity to issue any ownership interest or other securities of such Archstone Entity, or (ii) such Seller to sell, transfer or otherwise dispose of such Seller’s Purchased Interests or Other Interests, and (b) Seller is not a party to any voting trust, agreement, proxy or other Contract with respect to the voting of any such Seller’s Purchased Interests or Other Interests.

 

4.5 Litigation.  Except as set forth in Section 4.5 of the Disclosure Schedules, as of the date hereof, there are no Proceedings pending against nor, to the Knowledge of such Seller, any Proceedings threatened in writing against, such Seller (a) with respect to any Bankruptcy Event, (b) in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with the Contemplated Transactions, (c) instituted or threatened by any other Bridge Equity Provider or any other holder of Equity Interests in any of the Primary Archstone Entities, or (d) that would reasonably be expected to prevent, or to impede or delay in any material respect, such Seller’s performance under this Agreement or any other Transaction Document or the consummation of the Contemplated Transactions.

 

4.6 Brokerage.  There is no investment banker, broker, finder or other intermediary who has been retained by or is authorized to act on behalf of such Seller who might be entitled to any fee or commission in connection with the Contemplated Transactions for which the Buyer or any Archstone Entity is or will become liable.

 

4.7 Solvency.  Such Seller is solvent for all purposes under federal bankruptcy and applicable state fraudulent transfer and fraudulent conveyance Laws. The Contemplated Transactions will not render such Seller insolvent for such purposes and do not constitute a fraudulent transfer or conveyance under such Laws.

Except as set forth in the Disclosure Schedules, each Seller hereby severally, and not jointly and severally, represents and warrants to Buyer as follows.

 

5.1 Organization and Good Standing.  To such Seller’s Knowledge, each Primary Archstone Entity and Archstone is a legal entity that is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite corporate, company or other entity power and authority to own, lease and operate its properties and to carry on its business as presently conducted.  To such Seller’s Knowledge, each Primary Archstone

Entity and Archstone is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5.1.1 To such Seller’s Knowledge, each Primary Archstone Entity and Archstone has all requisite entity power and authority necessary to own, lease and operate its properties and assets and to conduct its business as currently conducted, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5.1.2 Sellers have made available to the Buyer true, correct and complete copies of the Organizational Documents of each of the Primary Archstone Entities and Archstone as currently in effect.

5.2 Consents and Approvals; No Violations.  To such Seller’s Knowledge, the execution, delivery and performance by such Seller of each Transaction Document to which it is a party, and the consummation by such Seller of the Contemplated Transactions, do not and will not (a) except with respect to consents required under the Contracts set forth in Section 5.2 of the Disclosure Schedules, result in a breach of, constitute a default under (with or without due notice or lapse of time or both) or give rise to any right of termination, cancellation or acceleration of or to a loss of a benefit to which any Archstone Entity is entitled under, any of the terms, conditions or provisions of any Contract; (b) contravene or conflict with or constitute a violation of any Orders or Laws applicable to or binding upon any Archstone Entities; (c) require on the part of any Primary Archstone Entity any filing or registration with, notification to, or authorization, consent or approval of, any Governmental Authority; or (d) result in the creation or imposition of any Lien (other than Permitted Liens) on any of the assets or properties of the Archstone Entities; except, in the case of (a) through (d), as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or prevent, or to impede or delay in any material respect, such Seller from consummating the Contemplated Transactions.

 

5.3.2 To such Seller’s Knowledge, Section 5.3.2(a) of Disclosure Schedules sets forth, as of December 16, 2011, (a) for each Subsidiary of each Primary Archstone Entity the name and ownership chain of each such Subsidiary and (b) for each Person in which a Primary Archstone Entity owns, directly or indirectly, 50% or more of the Equity Interests and that is not otherwise a Subsidiary (such Person, a “Non-Controlled Subsidiary”) the ownership interest of the Archstone Entities in such Non-Controlled

Subsidiary.  Since December 16, 2011, to such Seller’s Knowledge, there has not been any material change to the ownership chain with respect to the Subsidiaries of each of the Primary Archstone Entities or to the ownership of the Archstone Entities in the Non-Controlled Subsidiaries.  To such Seller’s Knowledge, all outstanding Equity Interests and/or voting interests of each Subsidiary of a Primary Archstone Entity and each Non-Controlled Subsidiary owned by an Archstone Entity are duly authorized and validly issued and, if such Subsidiary or Non-Controlled Subsidiary is a corporation, are fully paid and non-assessable.  Except as set forth in Section 5.3.2(b) of the Disclosure Schedules or in the Organizational Documents of the Primary Archstone Entities, neither the Primary Archstone Entities nor, to such Seller’s Knowledge, any of their Subsidiaries or any Non-Controlled Subsidiaries have (i) granted any options, warrants, rights or other securities convertible into, or exchangeable or exercisable for, Equity Interests and/or voting interests of a Subsidiary or Non-Controlled Subsidiary, or (ii) entered into any Contracts (x) relating to the redemption, exchange, issuance, sale, transfer or other disposition, voting or registration of Equity Interests and/or voting interests of a Subsidiary or Non-Controlled Subsidiary, or options, warrants, debt instruments, or other securities convertible into, or exchangeable or exercisable for, any of the foregoing, or (y) which grant stock appreciation rights, “phantom stock” or similar rights that give any Person the right to receive any benefits or rights similar to any rights enjoyed by or accruing to the holders of any Equity Interests and/or voting interests of a Subsidiary or Non-Controlled Subsidiary, in the case of clause (i) and clause (ii) to any Person other than (A) a Primary Archstone Entity or direct or indirect wholly-owned Subsidiary thereof, and (B) the redemption rights and voting rights relating to the Series O Preferred Units of Archstone.  Except for the Voting Agreement, the Bridge Equity Providers Agreement, the Syndication Agreement and the Organizational Documents of the Primary Archstone Entities, there are no equityholder agreements, voting agreements, voting trusts or proxies with respect to the voting, or registration under the Securities Act of any Equity Interests and/or voting interests of any Subsidiary of a Primary Archstone Entity.  The Primary Archstone Entities or the applicable Subsidiary of the Primary Archstone Entities identified in Section 5.3.2(a) of the Disclosure Schedules are the sole record and beneficial owners of, and have good and valid title to, the Equity Interests and/or voting interests in such Subsidiary or Non-Controlled Subsidiary that are held of record by a Primary Archstone Entity or any other Subsidiary of the Primary Archstone Entities (such Equity Interests and/or voting interests, the “Subsidiary Interests”), free and clear of all Liens, other than Permitted Liens.  To such Seller’s Knowledge, Archstone Multifamily Parallel JV LP owns only de minimis assets and has only de minimis liabilities.

5.5.1 Section 5.5.1 of the Disclosure Schedules contains true, correct and complete copies of the following: (a) (i) audited combined consolidated financial statements of Archstone Enterprise LP (or its predecessor) for each of the periods ended December 31, 2008, 2009 and 2010, and (ii) audited combined consolidated financial statements of the Archstone Fund Entities and their respective Subsidiaries for each of the periods ended December 31, 2008, 2009 and 2010 (collectively, the “Audited Financial Statements”), and (b) (i) the unaudited combined consolidated financial statements of Archstone Enterprise LP as of September 30, 2011 and for the nine-month period ended September 30, 2011, and (ii) the unaudited condensed combined consolidated financial statements of the Archstone Fund Entities and their respective Subsidiaries as of September 30, 2011 and for the nine-month period ended September 30, 2011 (collectively, the “Unaudited Financial Statements” and, collectively with the Audited Financial Statements, the “Financial Statements”).

 

5.5.2 The Audited Financial Statements and notes thereto (a) have been prepared from the books and records of the entities disclosed in those financial statements, (b) have been prepared in accordance with GAAP, consistently applied throughout the periods presented, and (c) to such Seller’s Knowledge, fairly present in all material respects the financial condition and results of operations of the reported entities for the periods presented.  The Unaudited Financial Statements (i) have been prepared from the books and records of the entities disclosed in those financial statements, (ii) have been prepared in accordance with GAAP, consistently applied throughout the periods presented, except that footnotes were excluded for the condensed combined consolidated financial statements of the Archstone Fund Entities and the Unaudited Financial Statements are subject to normal year-end adjustments, and (iii) to such Seller’s Knowledge, fairly present in all material respects the financial condition and results of operations of the applicable entities for the periods presented.

 

5.6 No Undisclosed Liabilities.  The Archstone Entities do not have any Liabilities, except for (a) Liabilities reflected, disclosed in the notes, or reserved against in any of the Financial Statements; (b) Liabilities incurred since September 30, 2011 in the Ordinary Course of Business; (c) other Liabilities which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and (d) Liabilities described in Section 5.6 of the Disclosure Schedules.

 

5.7 Absence of Certain Changes or Events.  No Material Adverse Effect has occurred at any time since September 30, 2011.  No Effect has occurred or circumstance has arisen at any

time since September 30, 2011 that, alone or in combination with another Effect, would reasonably be expected to result in a Material Adverse Effect.  Except as described in Section 5.7 of the Disclosure Schedules, between September 30, 2011 and the date of this Agreement:

5.7.1 (a) No Archstone Entity has declared, set aside or paid any dividend or made any distribution with respect to its Equity Interests (other than to any other Archstone Entity); and (b) no Archstone Entity has redeemed, purchased, or otherwise acquired any of its Equity Interests, other than with respect to a wholly-owned Subsidiary of a Primary Archstone Entity and redemptions of Series O Preferred Units of Archstone upon the exercise of put rights by the holders thereof.

 

5.7.2 Other than with respect to a direct or indirect wholly-owned Subsidiary, no Archstone Entity has adopted or commenced any plan of liquidation, dissolution, conversion or merger.

 

5.7.3 No Archstone Entity has changed in any material respect any of the accounting, reserving, underwriting, claims or actuarial methods, principles or practices, or working capital policies applicable to any Archstone Entity.

 

5.8 Taxes.

 

5.8.1 Except as described in Section 5.8.1 of the Disclosure Schedules, (i) each Archstone Entity and its predecessors (a) has filed (or has had filed on its respective behalf) or has properly extended (or has had properly extended on its respective behalf) all material Tax Returns required to have been filed by or for it, and (b) has paid (or had paid on its behalf) all material Taxes (whether or not shown on such Tax Returns) that are required to be paid by it and (ii) there are no ongoing or pending material Proceedings, or to such Seller’s Knowledge, material Proceedings threatened in writing, with respect to Taxes related to the entities covered by the Audited Financial Statements, except as reflected or disclosed in the Financial Statements.

 

5.8.2 Section 5.8.2 of the Disclosure Schedules sets forth each Tax Protection Agreement pursuant to which any Archstone Entity is a party.  As used herein, “Tax Protection Agreements” shall mean any written agreement to which any Archstone Entity is a party pursuant to which, in connection with the deferral of income Taxes of any party to such agreement (or any intended beneficiary of such agreement), any Archstone Entity (or its predecessor) has agreed to (w) maintain a minimum level of debt or continue a particular debt, (x) retain or not dispose of assets for a period of time whether or not that period now has expired, (y) only dispose of assets in a particular manner, and/or (z) permit any party thereto to guarantee (or have guaranteed) debt of any Archstone Entity.

 

5.8.3 Archstone and each of its Subsidiaries (other than the Subsidiaries listed in Section 5.8.3 of the Disclosure Schedules) that is treated as a partnership for U.S. federal income tax purposes has in effect an election pursuant to Section 754 of the Code.

 

5.9.1 To such Seller’s Knowledge, except as set forth in Section 5.9 of the Disclosure Schedules, each Archstone Entity is and has been at all times since January 1, 2011, in compliance with all Laws and Orders applicable to it or to its properties, assets or business, except where the failure to be in compliance with such Laws or Orders would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5.9.2 No Seller has, and, to such Seller’s Knowledge, no other Person acting on its behalf has: (a) used funds of any of the Archstone Entities for unlawful contributions, gifts or entertainment or other unlawful payments relating to political activity; (b) made a payment to a foreign or domestic government official or employee, or to a foreign or domestic political party or campaign in violation of any Law on behalf of any Archstone Entity; (c) violated the Foreign Corrupt Practices Act with respect to any Archstone Entity; (d) made to or received from any Person, private or public, regardless of form, whether in money, property or services, a contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment (i) to unlawfully obtain favorable treatment in securing business, (ii) to unlawfully pay for favorable treatment for business secured, (iii) to unlawfully obtain or provide special concessions or for special concessions already obtained or provided, or (iv) that otherwise was in violation of any Law, in each case for or concerning any Archstone Entity or any Affiliate of the Archstone Entities.

 

5.10 Legal Proceedings; Claims.

 

5.10.1 No Proceeding is pending nor, to such Seller’s Knowledge, has any Proceeding been threatened in writing against any Primary Archstone Entity, which seeks to restrain, prohibit or otherwise challenge legality or validity of this Agreement or any of the Contemplated Transactions.

 

5.10.2 To such Seller’s Knowledge, except as set forth on Section 5.10.2 of the Disclosure Schedules, (i) no Proceeding is pending to which any Archstone Entity is a party, and (ii) no Proceeding has been threatened in writing against any Archstone Entity or any current managing member or any employee or agent of any Archstone Entity or against any former managing member, employee or agent of any Archstone Entity, with respect to which any Archstone Entity has or would reasonably be expected to have a Liability therefore or any indemnification or expense advancement obligation, except to the extent such Proceeding has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5.10.3 Except as set forth on Section 5.10.3 of the Disclosure Schedules, as of the date of this Agreement, to the Knowledge of any such Seller, there are no Proceedings pending against nor threatened in writing against, the Archstone Entities under any bankruptcy or insolvency Law or with respect to any Bankruptcy Event.

 

5.11 Executive Compensation.  To such Seller’s Knowledge, Section 5.11 of the Disclosure Schedules sets forth a true, correct and complete list of each Employee Benefit Plan and Executive Employment Arrangement that is applicable to any senior executive officer of

Archstone, Archstone Communities LLC or any of the Primary Archstone Entities, including any president, chief executive officer, chief financial officer, chief accounting officer, chief investment officer and chief operating officer (or positions with similar responsibilities).  No Primary Archstone Entity directly employs any Person.

 

5.12Brokerage Fees.  There is no investment banker, broker, finder or other intermediary who has been retained by or is authorized to act on behalf of any Archstone Entity who might be entitled to any fee or commission from an Archstone Entity in connection with the Contemplated Transactions.

 

5.13 No Other Representations and Warranties.  Except for the representations and warranties made by the Sellers in this Article 5, none of the Sellers makes any representation or warranty with respect to the Archstone Entities or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to Buyer or any of its Affiliates or Representatives of any documentation, forecasts or other information with respect to any one of more of the foregoing.

6.1 Organization.  Buyer is a corporation that is duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite partnership power and authority to own, lease and operate its properties and to carry on its business as it is presently being conducted.  Buyer Designee is an entity validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is presently being conducted.  Each of Buyer and/or Buyer Designee is duly qualified or licensed and in good standing to do business as a foreign entity in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have a material adverse effect on Buyer and/or Buyer Designee.  Each of ACQ SPV I Holdings LLC, a Delaware limited liability company and ACQ SPV I Paper LLC, a Delaware limited liability company, is a wholly owned indirect Subsidiary of Buyer.

 

6.2 Authorization; Validity of Agreement.  Each of Buyer and Buyer Designee has the requisite partnership, trust, corporate, company or other power and authority to execute and deliver each of the Transaction Documents to which it is a party and to consummate the Contemplated Transactions.  The execution, delivery and performance by Buyer and/or Buyer Designee of each of the Transaction Documents to which it is a party, and the consummation by Buyer and/or Buyer Designee of the Contemplated Transactions, have been duly authorized by, and no other corporate proceedings on the part of Buyer and/or Buyer Designee are necessary to authorize the execution and delivery by Buyer and/or Buyer Designee of any Transaction Document to which it is a party or the consummation by Buyer and/or Buyer Designee of the Contemplated Transactions.  Each of the Transaction Documents to which Buyer and/or Buyer Designee is a party has been duly executed and delivered by Buyer and/or Buyer Designee, or

will at the Closing be duly executed and delivered by Buyer and/or Buyer Designee, and constitutes, or will constitute at Closing, the legal, valid and binding obligation of Buyer and/or Buyer Designee, enforceable against Buyer and/or Buyer Designee in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors’ rights generally, and (b) general equitable principles.

 

6.3 Consents and Approvals; No Violations.  The execution, delivery and performance by Buyer and/or Buyer Designee of each Transaction Document to which it is a party, and the consummation by Buyer and/or Buyer Designee of the Contemplated Transactions, do not and will not (a) violate any provision of any Organizational Documents of Buyer and/or Buyer Designee, as applicable; (b) result in a breach of, or constitute (with or without due notice or lapse of time or both) a default or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Buyer and/or Buyer Designee is a party or by which Buyer, Buyer Designee of any of their respective properties or assets may be bound; (c) violate any material Orders or Laws applicable to Buyer and/or Buyer Designee or any of their respective material properties or assets; or (d) except for filings pursuant to the HSR Act and/or other applicable Antitrust Laws, require on the part of Buyer and/or Buyer Designee any filing or registration with, notification to, or authorization, consent or approval of, any Governmental Authority, except, in the cases of clauses (a) through (d) above, as would not reasonably be expected to prevent, impede or delay the consummation of the Contemplated Transactions.

6.4.1 Buyer and/or Buyer Designee is an “accredited investor” within the meaning of that term as defined in Rule 501(a) promulgated under the Securities Act.

 

6.4.2 The Purchased Interests will be acquired for investment for Buyer’s and/or Buyer Designee’s own account and not with a view to the distribution of any part thereof in violation of the Securities Act.

 

6.4.3 Buyer’s and/or Buyer Designee’s financial condition is such that it is able to bear the risk of holding the Purchased Interests for an indefinite period of time and can bear the loss of its entire investment in its Purchased Interests.

 

6.4.4 Buyer and/or Buyer Designee (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Purchased Interests and is capable of bearing the economic risks of such investment.

 

6.4.5 Each of Buyer and/or Buyer Designee acknowledges that the Purchased Interests have not been registered under the Securities Act or under any state or foreign securities laws.

6.5.1 Buyer and/or Buyer Designee will have, at or prior to the Closing, sufficient liquid funds (through cash on hand, credit arrangements or otherwise) to (a) pay all amounts payable by Buyer and/or Buyer Designee at Closing hereunder, including payment of the BofA Strategic Purchase Price, the BANA Purchase Price and the Barclays Purchase Price and (b) make all other necessary payments of fees and expenses payable by Buyer at Closing in connection with the Contemplated Transactions.

 

6.5.2 Each of Buyer and/or Buyer Designee expressly acknowledges that its obligations hereunder are not subject to any conditions, express or implied, regarding Buyer’s and/or Buyer Designee’s ability to obtain financing (or to obtain financing on terms acceptable to Buyer and/or Buyer Designee) for the consummation of the Contemplated Transactions.

 

6.6 Brokerage Fees. Other than Gleacher and Company, Inc., whose fees will be paid by Buyer, there is no investment banker, broker, finder or other intermediary who has been retained by or is authorized to act on behalf of Buyer and/or Buyer Designee who might be entitled to any fee or commission in connection with the Contemplated Transactions.

 

6.7 Non-Reliance.  In connection with the due diligence investigation of the Archstone Entities by Buyer, Buyer has received and may continue to receive from Sellers certain estimates, projections, forecasts and other forward-looking information, as well as certain business plan information, regarding the Archstone Entities and their business and operations.  Buyer hereby acknowledges that there are uncertainties inherent in attempting to make such estimates, projections, forecasts and other forward-looking statements, as well as in such business plans, with which Buyer is familiar.  Other than the representations and warranties set forth herein, Buyer acknowledges that Sellers make no representation or warranty as to the prospects, financial or otherwise, of the Archstone Entities, and that any projections, estimates or forecasts of future results or events provided by or on behalf of Sellers are subject to uncertainty and to the assumptions used in their preparation.

7.1 Competition Matters.  Any applicable waiting period (and any extension thereof) under any Antitrust Law (including any Antitrust Laws in the European Union) relating to the Contemplated Transactions shall have expired or been terminated and any necessary approvals under any Antitrust Law shall have been obtained.

7.2 No Injunction or Illegality.  There must not be in effect any Order, whether temporary, preliminary or permanent, issued by any Governmental Authority restraining, enjoining, preventing or prohibiting the consummation of the Closing or any of the

8.1 Accuracy of Representations and Warranties.  Each of the representations and warranties of Sellers set forth in Article 4 and Article 5 of this Agreement (disregarding for this purpose all qualifications or exceptions in such representations and warranties relating to materiality, material adverse effect or Material Adverse Effect other than the reference to Material Adverse Effect set forth in Section 5.7) shall be true and correct at and as of the Closing Date as if made at and as of such date (unless such representations and warranties were expressly made as of an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date), except for any breaches of such representations and warranties that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Archstone Entities, taken as a whole, or to have a material adverse effect on the ability of any Seller to consummate the Contemplated Transactions; provided, however, that the Seller Fundamental Representations shall be true and correct in all respects as of the applicable date referred to above, except for any inaccuracies of the Seller Fundamental Representations that would not reasonably be expected to, individually or in the aggregate, result in Losses in excess of $10,000,000 (it being acknowledged and agreed that any such Losses, if actually incurred, would be recoverable by the Buyer Indemnified Parties in accordance with the terms of Article 12).

8.2 Performance of Covenants.  Sellers shall have performed and complied in all material respects with all covenants and obligations in this Agreement required to be complied with by Sellers at or prior to Closing.

(i) constitutes a Special Major Matter under the Voting Agreement, and (ii) in the reasonable judgment of Buyer, has resulted in, or would be expected to result in, individually or in the aggregate with other actions described in clause (i), a material change in the asset composition or capital structure (including by merger, consolidation, recapitalization, public offering or otherwise) of the Archstone Entities and the Joint Ventures taken as whole.

8.6 Other Deliveries. Each of Sellers shall have delivered to Buyer or Buyer Designee, as applicable, at the Closing, each of the following documents in a form and substance reasonably satisfactory to Buyer or Buyer Designee:

 

8.6.1 duly executed counterparts of each of the Transaction Documents to which such Seller is a party, in each case, duly executed by a duly authorized Representative of such Seller;

 

8.6.2 a certificate executed by a duly authorized Representative of such Seller certifying as to the matters set forth in Sections 8.1 and 8.2;

 

8.6.3 if any Purchased Interests are certificated, fully endorsed certificates evidencing such Purchased Interests, together with stock powers, transfer documentation and medallion or other guarantees reasonably requested by Buyer;

 

8.6.4 an Assignment and Purchased Interest Transfer Agreement, substantially in the form of Exhibit A-1 attached hereto, with respect to Barclays, and Exhibit A-2 attached hereto, with respect to Bank of America;

 

8.6.5 any additional documents required under the terms of any of the Organizational Documents of the Primary Archstone Entities to consummate the transfer of the Purchased Interests to Buyer or Buyer Designee; and

 

8.6.6 if requested by Buyer, a Backstop Guarantee, a Backstop Letter of Credit or other collateral of equivalent or greater value reasonably acceptable to Buyer with respect to any Seller that does not hold a long-term senior unsecured credit rating of Baa3 or higher by Moody’s Investors Service or BBB- or higher by Standard & Poor’s Ratings Services.

 

Sellers’ obligations to consummate the Closing and to take the other actions contemplated by this Agreement at Closing is subject to the satisfaction or (to the extent permitted by applicable Law) the waiver by each of Sellers, in their sole and absolute discretion, at or prior to the Closing, of each of the following conditions set forth in this Article 9.

 

9.1 Buyer’s Representations and Warranties.  Each of the representations and warranties of Buyer set forth in Article 6 of this Agreement (disregarding for this purpose all qualifications or exceptions in such representations and warranties relating to materiality or

material adverse effect) shall be true and correct at and as of the Closing Date as if made at and as of such date (unless such representations and warranties were expressly made as of an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date), except for any breaches of such representations and warranties that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Buyer or Buyer Designee to consummate the Contemplated Transactions; provided, however, that the Buyer Fundamental Representations shall be true and correct in all respects as of the applicable dates referred to above.

 

9.2 Performance of Covenants.  Buyer shall have performed and complied in all material respects with all covenants and obligations in this Agreement required to be complied with by Buyer at or prior to Closing.

 

9.3 Other Deliveries.  Buyer or Buyer Designee, as applicable, shall have delivered to the applicable Seller or Sellers, at the Closing, each of the following documents and other deliverables in a form and substance reasonably satisfactory to the applicable Seller:

 

9.3.1 the BofA Strategic Closing Purchase Price;

 

9.3.2 the BANA Closing Purchase Price;

 

9.3.3 the Barclays Closing Purchase Price;

 

9.3.4 duly executed counterparts for each of the Transaction Documents to which any Seller is a party, in each case, duly executed by a duly authorized representative of such Seller;

 

9.3.5 a certificate executed by a duly authorized Representative of each of Buyer and Buyer Designee certifying as to the matters set forth in Sections 9.1 and 9.2;

 

9.3.6 a joinder to the Bridge Equity Providers Agreement;

 

9.3.7 an Assignment and Purchased Interest Transfer Agreement, substantially in the form of Exhibit A-1 attached hereto, with respect to Barclays, and Exhibit A-2 attached hereto, with respect to Bank of America; and

 

9.3.8 any additional documents required under the terms of any of the Organizational Documents of the Primary Archstone Entities to consummate the transfer of the Purchased Interests to Buyer or Buyer Designee, including executed counterparts to the Organizational Documents of the Primary Archstone Entities, if necessary to effect the transfer of the Purchased Interests.

10.1 Notice Regarding Certain Actions.  From the date of this Agreement until the Closing or earlier termination of this Agreement, Sellers shall provide notice in writing to Buyer

10.2 Access.  Except as may be necessary to comply with any applicable Laws and subject to the absolute right of Sellers, the Archstone Entities and the Joint Ventures to preserve any applicable privileges (including the attorney-client privilege), from the date of this Agreement until the Closing Date, Sellers shall use their respective Commercially Reasonable Efforts to cause each of the Archstone Entities and the Joint Ventures to:

 

10.2.1 during normal business hours and upon reasonable prior notice, give Buyer, Buyer Designee and their respective Representatives (the “Buyer Group”) reasonable access to the books, records, Contract and other documents of or pertaining to the Archstone Entities and the Joint Ventures;

 

10.2.2 furnish to the Buyer Group such financial and operating data and other information relating to the Archstone Entities and the Joint Ventures (to the extent available to any Seller) and the Business as the Buyer Group may reasonably request;

 

10.2.3 instruct the employees, counsel, financial advisors and other Representatives of Sellers, the Archstone Entities and the Joint Ventures to cooperate with Buyer’s reasonable requests in its investigation of the Archstone Entities and the Joint Ventures; and

 

10.2.4 permit the Buyer Group to discuss the business of the Archstone Entities and the Joint Ventures with members of management, officers, directors and employees of, and advisors to and counsel and accountants for, the Archstone Entities and the Joint Ventures.

 

10.3 ROFO and Tag-Along Rights.  Each of Sellers hereby waives any and all rights that such Seller may have pursuant to Section 4.02(a) and (b) of the Bridge Equity Providers Agreement with respect to the purchase and/or sale of the Purchased Interests in connection with this Agreement, including any right of first offer and any tag-along rights, and hereby covenants and agrees that such Seller shall not exercise and hereby waives any such rights under Section 4.02 of the Bridge Equity Providers Agreement, including any right to deliver any “Election

Notice”, “Notice of Intent to Sell” or “Notice of Intent to Purchase” (in each case, as defined in the Bridge Equity Providers Agreement).

10.4 Acquisition Proposals.  From the date of this Agreement until the Closing Date or, if earlier, the termination of this Agreement, each Seller agrees that such Seller will not, (a) solicit, initiate, seek, entertain, encourage, facilitate, support or induce the making, submission or announcement by any Person of any inquiry, expression of interest, proposal or offer that constitutes, or could reasonably be expected to lead to the acquisition by any Person (other than Buyer and its Affiliates) of any of the Purchased Interests or the Other Interests, (b) enter into, participate in, maintain or continue any communications (except solely to provide written notice as to the existence of these exclusivity provisions) or negotiations regarding, or deliver or make available to any Person any information with respect to, or take any other action regarding, any inquiry, expression of interest, proposal or offer that constitutes, or could reasonably be expected to lead to, the acquisition by any Person (other than Buyer and its Affiliates) of any of the Purchased Interests or any of the Other Interests, (c) agree to, accept, approve, endorse or recommend any transaction related to the acquisition by any Person (other than Buyer and its Affiliates) of the Purchased Interests or the Other Interests, or (d) enter into any letter of intent or any other contract contemplating or otherwise relating to the acquisition by any Person (other than Buyer and its Affiliates) of the Purchased Interests or the Other Interests.  As of the date of this Agreement, each Seller agrees to (i) immediately cease and cause to be terminated any existing discussions or negotiations with any Person (other than Buyer or its Affiliates) conducted prior to the date hereof with respect to the acquisition by any Person (other than Buyer and its Affiliates) of the Purchased Interests or the Other Interests, (ii) notify each other Person with whom it was engaged in ongoing discussions or negotiation with respect to the Purchased Interests immediately prior to the date hereof that it has entered into a binding agreement relating to the sale of the Purchased Interests, and (iii) terminate any negotiations or discussions under any confidentiality, non-disclosure, document and information access and/or other agreements (other than any such agreement with Buyer and/or its Affiliates) with respect to the sale of the Purchased Interests and the Other Interests.

11.1.1 Subject to the terms and conditions of this Agreement, including Section 11.3.2, Buyer and Sellers shall use their respective Commercially Reasonable Efforts to take, or cause to be taken (including by using their respective Commercially Reasonable Efforts to cause the Archstone Entities to take actions), all actions and to do, or cause to be done, all things necessary or desirable under applicable Laws to consummate the Contemplated Transactions, including (a) preparing and filing as promptly as practicable with any Governmental Authority or other Third Party all documentation to affect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, and (b) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other third

party that are necessary, proper, desirable or advisable to consummate the Contemplated Transactions; provided, however, that the foregoing shall not be deemed to require any Party to waive compliance by the other Parties and their Affiliates of their respective covenants or obligations under this Agreement or to waive conditions to the Closing required to be satisfied by the other Parties.

 

11.1.2 Sellers and Buyer agree to execute and deliver such other reasonably requested documents, certificates, agreements and other writings and to take such other reasonably requested actions as may be proper, desirable or advisable in order to consummate or implement expeditiously the Contemplated Transactions.

 

11.1.3 None of Sellers, Buyer or Buyer Designee shall take any action or fail to take any action, which action or failure to act shall cause any Archstone Entity not to comply in any material respect with its obligations under the Indemnity and Release Agreement dated as of March 31 2009; among Tishman Speyer Properties, L.P. and certain of its Affiliates certain Archstone Entities, Lehman Brothers Holdings Inc., Lehman Commercial Paper Inc., Archstone LB Syndication Partner LLC, BANA, BASV, Barclays Capital Real Estate Inc., Barclays Capital Real Estate Finance Inc. and BIH.

 

11.2 Communications with Governmental Authorities.  Between the date hereof and the Closing Date:

 

11.2.1 Subject to compliance with applicable Laws, each Party shall promptly inform the other Parties of any communication from any Governmental Authority regarding any of the Contemplated Transactions.  If any Parties or Affiliate thereof receives a request for additional information or documentary material from any such Governmental Authority with respect to the Contemplated Transactions, then, subject to compliance with applicable Laws, such Party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other Parties, an appropriate response in compliance with such request.

 

11.2.2 Sellers and Buyer shall, with respect to any threatened or pending Order (including a preliminary or permanent injunction) that would adversely affect the ability of the Parties to consummate the Contemplated Transactions, use their respective Commercially Reasonable Efforts to prevent the entry, enactment or promulgation thereof, as the case may be.

 

11.3 Regulatory Authorizations.

 

11.3.1 Sellers and Buyer shall cooperate with one another (a) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from third parties in connection with the consummation of the Contemplated Transactions, and (b) subject to the terms and conditions of this Agreement (and except as otherwise provided in Section 11.3.2), in taking such actions or making any such Filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.  Except as otherwise provided herein, each Party

 

shall bear its respective costs and expenses incurred in connection with obtaining such actions, consents, approvals and waivers.

 

11.3.2 In furtherance, and not in limitation, of the foregoing, the Parties shall use their respective Commercially Reasonable Efforts to (a) make or cause to be made all Filings required of each of them or any of their respective Affiliates under the HSR Act or any other Antitrust Laws with respect to the Contemplated Transactions as promptly as practicable, (b) comply at the earliest practicable date with any request under the HSR Act or other Antitrust Laws for additional information, documents, or other materials received by each of them or any of their respective Subsidiaries or Affiliates from the FTC, the Antitrust Division or any other Governmental Authority in respect of such Filings or the Contemplated Transactions, and (c) cooperate with each other in connection with any such Filing and in connection with resolving any investigation or other inquiry of any of the FTC, the Antitrust Division or other Governmental Authority under any Antitrust Laws with respect to any such Filing or the Contemplated Transactions.  Each such Party shall use its Commercially Reasonable Efforts to furnish to the other Parties all information required for any application or other Filing to be made pursuant to any applicable Law in connection with the Contemplated Transactions (unless the furnishing of such information would (i) violate the provisions of any applicable Law or confidentiality agreement, or (ii) cause the loss of attorney-client privilege with respect thereto, provided that each Party shall seek to furnish the other Parties with the substance of any such communication, whether by redacting parts of such material communication or otherwise, so that such communication would not violate applicable Law or cause the loss of the attorney-client privilege with respect thereto).  Each Party shall promptly inform the other Parties hereto of any oral communication with, and provide copies of written communications with, any Governmental Authority regarding any such Filings.  No Party hereto shall independently participate in any formal meeting with any Governmental Authority in respect of any such Filings, investigation, or other inquiry without giving the other Parties prior notice of the meeting and, to the extent permitted by such Governmental Authority, the opportunity to attend and/or participate.  Subject to applicable Law, the Parties will consult and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party relating to Proceedings under the HSR Act or other Antitrust Laws.  Notwithstanding anything to the contrary contained in this Agreement, any Seller or Buyer shall not be obligated to (1) agree to divest, hold separate or otherwise restrict the use or operation of any business or assets of the Archstone Entities or such Seller or Buyer, (2) consent to any other structural or conduct remedy, (3) agree to any Order regarding Antitrust Laws with respect to the Contemplated Transactions, or (4) take any action the consequence of which would be detrimental to its relationship with any applicable Governmental Authorities.

 

11.4 No Control of Operations.  Nothing in this Agreement shall give Buyer, directly or indirectly, the right to control or direct the operations of the Archstone Entities or the Joint Ventures prior to the Closing Date.

 

 

11.5 Public Announcements.  Except for the disclosure permitted by this Section 11.5, prior to the Closing, none of Sellers, Buyer nor any of their respective Affiliates shall issue any press release or public statement concerning this Agreement or the Contemplated Transactions without obtaining the prior written approval of the other Parties (which approval the other Parties shall not unreasonably withhold, condition or delay).  Each of the Parties acknowledges and agrees that, on or following the date hereof, the Parties or certain of their Affiliates may make a public announcement with respect to the Contemplated Transactions, which shall be subject to this Section 11.5.  Notwithstanding the foregoing, a Party or its applicable Affiliates may make such disclosure as it determines in good faith is required by applicable Law or Order, or by an obligation pursuant to any agreement with any national securities exchange or national securities association of the United States or any other jurisdiction; provided that, prior to issuing any such press release or public statement, such Party or its applicable Affiliates shall advise the other Parties of such press release or public statement and shall discuss the contents of the disclosure with the other Parties.  Each Party and its Affiliates also may make announcements to its employees that are consistent with the public disclosures made by a Party.

 

11.6 SEC Compliance.  Sellers acknowledge that Buyer or certain of its Affiliates may be required to disclose the existence of this Agreement upon full execution and to make certain disclosures in its filings with the SEC that may include audited, unaudited and proforma financial statements prepared in accordance with GAAP with respect to the Archstone Entities.  To assist Buyer and its Affiliates in preparing its filings with the SEC and any required audited and/or unaudited financial statements, from and after the Closing until such time as Sellers no longer holds any Purchased Interests and/or Other Interests, Sellers shall use their Commercially Reasonable Efforts to cause the Archstone Entities and the Joint Ventures to take, the following actions:

 

11.6.1  All reasonably requested actions necessary to enable Buyer or its Affiliates or Representatives to conduct a full audit of the books and records of the Archstone Entities and the Joint Ventures relating to the operations and financial results of the Archstone Entities and the Joint Ventures, to the extent required to comply with applicable securities Laws applicable to Buyer or its Affiliates, including Regulation § 210.3-05, Regulation § 210.3-09 or Regulation § 210.3-14 promulgated under the Exchange Act.

 

11.6.2  All reasonably requested actions necessary to assist Buyer and itsAffiliates in preparing all Filings required to be made by Buyer with the SEC, including, at Buyer’s request, the delivery of an audit inquiry letter regarding pending litigation and other matters in a form reasonably requested by Buyer (the “Audit Inquiry Letter”) to counsel to the Archstone Entities prior to or following the Closing and deliver to Buyer an executed letter from such counsel in response to the Audit Inquiry Letter as soon as reasonably practicable thereafter.

 

11.6.3  All cooperation reasonably required by Buyer and its Affiliates in  connection with any audit of the Archstone Entities or the Joint Ventures (including the Archstone Fund Entities and Archstone Enterprise LP and its Subsidiaries) by the Archstone Entities, the Joint Ventures or their respective Representatives or by Buyer or its Affiliates or Representatives, including, if required by Buyer’s registered independent

accounting firm in order to complete the audit, (a) causing the applicable employees of the Archstone Entities and the Joint Ventures to answer a standard SAS 99. questionnaire from Buyer’s registered independent accounting firm or from the Archstone Entities’ registered independent accounting firm and to deliver a representation letter in form and scope reasonably acceptable to Buyer and Buyer’s registered independent accounting firm, and (b) causing the auditors of the Archstone Entities to deliver comfort letters, consents and other documentation reasonably requested by Buyer.

11.6.4  Intentionally deleted.

 

11.6.5  The provisions of this Section 11.6 shall survive the Closing until such time as Sellers no longer hold any Other Interests.

 

11.7 Extension of Bank Loan Agreement.  From and after the Closing, each Seller agrees that it shall, in its capacity as a “Revolving Credit Lender” (and as defined in the Bank Loan Agreement) under the Bank Loan Agreement, agree to any request by the applicable Archstone Entities for an extension of the maturity date of the Bank Loan Agreement through August 31, 2015, so long as such request has been made in accordance with Section 2.16 of the Bank Loan Agreement and all conditions to such extension that are specified in Section 2.16 of the Bank Loan Agreement (other than consent of the Sellers) have been satisfied.

 

11.8 Appointment of Board Representatives.  From and after the Closing, each of Sellers shall use their Commercially Reasonable Efforts to cause the appointment of (a) a number of Persons to the boards of directors, managers and/or trustees of each of the Subsidiaries of Archstone Multifamily JV LP (other than Archstone Multifamily Series I Trust and Archstone) such that one Person that has been designated by Buyer or Buyer Designee or their respective Affiliates is a member of each such board of directors, managers and/or trustees, and (b) a number of Persons to the board of trustees of Archstone Multifamily Series I Trust such that three Persons designated by Buyer or Buyer Designee or their respective Affiliates are members of such board of trustees. The provisions of this Section 11.8 shall survive the Closing until the earlier of such time as (i) Sellers no longer hold any Other Interests, and (ii) all Persons have been appointed to the applicable boards of directors, managers and/or trustees in accordance with the preceding sentence.

11.9.1 The Party responsible under applicable Law shall prepare all Tax Returns in respect of Transfer Taxes for which such Party is responsible; provided, however, that any such Tax Returns shall be delivered by the Party preparing such Tax Returns to the other Party in draft form, no later than twenty (20) Business Days before the date required for filing such Tax Returns, for approval by the other Party, which approval shall not be unreasonably withheld or delayed.  If required by applicable Law, the other Party will, and/or will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation following review and approval of such Tax Returns and other documentation by such other Party.

11.9.2 Sellers shall use their Commercially Reasonable Efforts to (a) cause each of the Archstone Entities that is a corporation (for U.S. federal income tax purposes) to make a Tax election on IRS Form 8875 in effect at the time of the Closing for each such Archstone Entity to be treated as a “taxable REIT subsidiary” of Buyer or Buyer Designee if such Archstone Entity is eligible to make such election, (b) cooperate with Buyer and Buyer Designee (individually or as a group) to the extent reasonably requested by Buyer or Buyer Designee to ensure that the elections described in clause (a) above are made by each other corporation (for U.S. federal income Tax purposes) eligible to make such election in which one or more Archstone Entities acquires directly or indirectly, a controlling interest in the future, (c) cause each of the Archstone Entities that is set forth on Schedule 5.8.3 to make an election pursuant to Section 754 of the Code for the taxable year in which Closing occurs, and (d) provide to Buyer or Buyer Designee information that is reasonably available to the Sellers upon their request (either individually or together with each other or with each other and Buyer or Buyer Designee) that is reasonably requested by Buyer or Buyer Designee (i) related to the income, operations and assets of the Archstone Entities to the extent relevant to determine whether a real estate investment trust under Subchapter M of the Code (a “REIT”) that owned the Purchased Interests would satisfy the income requirements of Section 856, et. seq. of the Code, determined solely by reference to the Purchased Interests, and (ii) in respect of the allocations pursuant to Section 755 of the Code related to the Contemplated Transactions.

 

11.9.3 The provisions of this Section 11.9 shall survive the Closing until such time as Sellers no longer hold any Other Interests.

11.10 Expenses.  Except as otherwise expressly set forth in this Agreement, (a) Buyer shall pay all fees and expenses with respect to the Contemplated Transactions that are incurred by Buyer, Buyer Designee or their respective Representatives, including any legal expenses of such Persons and all investment-banking and similar fees and expenses incurred by such Persons, and (b) each Seller shall bear a portion equal to two times its Proportionate Share of (i) all fees and expenses with respect to the Contemplated Transactions that are incurred by such Seller, any of its Affiliates, any of the Archstone Entities, any of the Joint Ventures or any of their respective Representatives, including all legal expenses of such Persons, all lender consent fees and expenses incurred by such Persons, and all change of control fees and payments payable as a result of the Contemplated Transactions, provided that no investment banking or similar fees shall be Seller Expenses, and (ii) all Transfer Taxes with respect to the Contemplated Transactions; provided that the Parties acknowledge and agree that the Archstone Entities are required to pay all fees and expenses of Sellers and the Archstone Entities, including legal expenses, Transfer Taxes, lender consent fees and change of control fees and similar payments, in connection with the Contemplated Transactions or any other potential sale of interests in or the assets of any of the Archstone Entities (the “Seller Expenses”).

12.1 Survival. The representations and warranties contained herein (other than the Seller Fundamental Representations and the Buyer Fundamental Representations) or in any

12.2.1 Effective as of the Closing and subject to the limitations set forth in this Article 12, Buyer shall indemnify Sellers, their respective Affiliates and their respective Representatives (together, in each case, with their respective successors and permitted assigns, the “Seller Indemnified Parties”) against, and hold them harmless from, any and all Losses arising out of, resulting from or related to any breach or inaccuracy of any Buyer Fundamental Representation as of the Closing Date (or, in the case of any such representation or warranty that is expressly limited by its terms to another date, the inaccuracy as of such date).

 

12.2.2 Effective as of the Closing and subject to the limitations set forth in this Article 12, Sellers shall severally, and not jointly and severally, indemnify Buyer, Buyer Designee, their respective Affiliates and their respective Representatives (together, in each case, with their respective successors and permitted assigns, the “Buyer Indemnified Parties”) against, and hold them harmless from, any and all Losses (including any Losses incurred by any Archstone Entity) to the extent arising out of, resulting from or related to:

 

(a) any breach or inaccuracy of any Seller Fundamental Representation as of the Closing Date (or, in the case of any such representation or warranty that is expressly limited by its terms to another date, the inaccuracy as of such date);

 

(b) (x) the matters set forth on Schedule 12.2.2, and (y) any Proceedings brought by former holders of Series A-1 units asserting that the LBO Transaction violated any Tax Protection Agreement, any Organizational Documents of Archstone Entities or fiduciary or other duties owed to such

holders, whether alleged prior to or following the Closing (collectively, the “Acquisition Litigation”); and

12.3.1 In no event shall the total amount of Losses for which Buyer is liable pursuant to Section 12.2.1 exceed (i) with respect to Bank of America, the BANA Purchase Price, plus the BofA Strategic Purchase Price, and (ii) with respect to Barclays, the Barclays Purchase Price.

 

12.3.2 Subject to Section 12.3.5, in no event shall the total amount of Losses (i) for which BANA is liable pursuant to Section 12.2.2 exceed the BANA Purchase Price, (ii) for which BofA Strategic is liable pursuant to Section 12.2.2 exceed the BofA Strategic Purchase Price (except that BofA Strategic may be liable for up to $100,000,000 of Losses pursuant to Section 12.2.2(a)), or (iii) for which Barclays is liable pursuant to Section 12.2.2 exceed the Barclays Purchase Price; provided, however, that in no event shall the aggregate amount of Losses for which Bank of America is liable pursuant to Section 12.2.2 exceed the BANA Purchase Price plus the BofA Strategic Purchase Price.

 

12.3.3 Notwithstanding anything to the contrary contained in this Agreement, the Buyer shall not be liable for any claim for indemnification pursuant to Section 12.2.1 unless and until the aggregate amount of Losses which may be recovered from Buyer equals or exceeds $250,000 (the “Basket”), it being understood and agreed that the amount of such Basket shall then be recoverable, together with all other Losses under Section 12.2.1 in excess thereof, subject to the other limitations set forth in this Article 12.

 

12.3.4 Notwithstanding anything to the contrary contained in this Agreement, the Sellers shall not be liable for any claim for indemnification pursuant to Section 12.2.2 unless and until the aggregate amount of Losses which may be recovered from Sellers equals or exceeds the Basket, it being understood and agreed that the amount of such Basket shall then be recoverable, together with all other Losses under Section 12.2.2 in excess thereof, subject to the other limitations set forth in this Article 12.

 

12.3.5 In no event shall the total amount of Losses for which Sellers are liable under Section 12.2.2 as a result of any Proceeding instituted by a Bridge Equity Provider

12.3.6 For any matters that are indemnifiable by any Indemnifying Party under Section 12.2.1 or Section 12.2.2, (a) if any Losses with respect to such matters are out-of-pocket Losses, then such Losses shall not be payable to the Indemnified Party until such expense has actually been incurred and an invoice related thereto has been submitted for payment, or (b) if any Losses relate to the settlement of any claim or judgment, then such Losses shall not be payable to the Indemnified Party until the earliest of (i) the time when such settlement amount or judgment-related amount has actually been paid, (ii) with respect to any judgment, when the judgment has become final and non-appealable, and (iii) when a surety bond in respect thereof is required to be posted.

12.3.7 With respect to Losses arising from a breach of a Seller Fundamental Representation that does not relate solely to a single Seller or the Purchased Interests sold by a single Seller and with respect to any matter set forth in Section 12.2.2(b) or (c), each Seller shall be responsible for its ratable portion of such Losses based on the percentage of the aggregate purchase price paid by Buyer hereunder that was received by such Seller.

12.3.8 Each Seller shall only be responsible to the Buyer Indemnified Parties for such Seller’s Proportionate Share of any Losses incurred by any Archstone Entity.

12.4 Backstop Letters of Credit.  At any time following the Closing, Buyer shall have the right to draw on any Backstop Letter of Credit delivered by any Seller, if any, in such amounts as are payable to any Buyer Indemnified Party under the terms of this Article 12 with respect to any Buyer Claims.  In addition, if any Seller has delivered a Backstop Letter of Credit and at any time following the Closing the issuing bank of such Backstop Letter of Credit does not hold a long-term senior unsecured credit rating of Baa3 or higher by Moody’s Investors Service or BBB- or higher by Standard & Poor’s Ratings Services, then, within five Business Days, the applicable Seller shall deliver to Buyer and/or Buyer Designee a replacement Backstop Letter of Credit from a bank that satisfies the credit rating criteria.

12.5.1 If any Buyer Indemnified Party or Seller Indemnified Party, as the case may be, seeks to make a claim for indemnification (an “Indemnified Claim”) pursuant to Section 12.2.1 or Section 12.2.2, as applicable, other than in respect of a Third Party Claim, the Party entitled to indemnification (the “Indemnified Party”) shall notify the party required to provide indemnity hereunder (the “Indemnifying Party”) in writing of such claim specifying in reasonable detail the factual basis of such claim, stating the amount of Losses (or if not known, a good faith estimate of the amount of Losses) and the method of computation thereof, containing a reference to any and all provisions of this Agreement with respect to which indemnification is being sought (each such notice, a “Claim Notice”).  The failure by any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party from liability under this Agreement which it may have to such Indemnified Party under Section 12.2 hereof except to the extent the Indemnifying Party shall have been prejudiced with respect to such individual indemnified claim in any material respect as a result of such failure.  The Indemnifying Party and the Indemnified Party shall endeavor to negotiate in good faith a resolution of any dispute described in a Claim Notice and, if not resolved through negotiations within 60 days after the delivery of the Claim Notice, such dispute shall be resolved by litigation as provided in Section 14.5.  To the extent permitted by applicable Law, any payment under this Section 12.5.1 shall be treated as an adjustment to the purchase price hereunder for Tax purposes.

 

12.5.2 In the event that any claim is asserted in writing by any Person other than a Buyer Indemnified Party or a Seller Indemnified Party or any Proceeding is commenced or threatened in writing by any Person other than a Buyer Indemnified Party or a Seller Indemnified Party involving a claim for which an Indemnifying Party may be obligated to indemnify an Indemnified Party (a “Third Party Claim”), the Indemnified Party shall give written notice to the Indemnifying Party promptly (and in any event within 30 days) after the Indemnified Party receives written notification of the facts giving rise to such Third Party Claim, specifying in reasonable detail the factual basis of the Third Party Claim, stating the amount of Losses (or if not known, a good faith estimate of the amount of Losses) and the method of computation thereof, containing a reference to any and all provisions of this Agreement with respect to which indemnification is being sought.  The failure of an Indemnified Party to provide notice in accordance with this Section 12.5.2 or any delay in providing such notice, shall not constitute a waiver of that Indemnified Party’s claims to indemnification pursuant to

(a) In the event of receipt of notice of a Third Party Claim from an Indemnified Party pursuant to Section 12.5.2, the Indemnifying Party will be entitled to assume the defense and control of such Third Party Claim subject to the provisions of this Section 12.5.2, and the Indemnified Party shall be permitted to participate in the defense thereof and to employ separate counsel of its choice for such purpose at its own expense (except as otherwise provided in the last sentence of this Section 12.5.2).  After written notice by the Indemnifying Party to the Indemnified Party of its election to assume the defense and control of a Third Party Claim, the Indemnifying Party shall not be liable to such Indemnified Party for any legal fees or expenses subsequently incurred by such Indemnified Party for its own account.  Whether the Indemnifying Party or the Indemnified Party is defending and controlling any such Third Party Claim, it shall select counsel, contractors, experts and consultants of recognized standing and competence, shall take reasonable steps necessary in the investigation, defense or settlement thereof, and shall diligently and promptly pursue the resolution thereof.  The party conducting the defense thereof shall at all times act as if all Losses relating to the Third Party Claim were for its own account and shall act in good faith and with reasonable prudence to minimize Losses therefrom.  The Indemnified Party shall, and shall cause each of its Affiliates and Representatives to, reasonably cooperate with the Indemnifying Party in connection with any Third Party Claim.  Notwithstanding anything to the contrary in this Section 12.5.2(a), (i) in any event the Indemnified Party shall have the right to control, pay or settle any Third Party Claim which the Indemnifying Party shall have undertaken to defend so long as (1) the Indemnified Party shall also waive any right to indemnification therefore by the Indemnifying Party, and (2) the consent to the entry of any judgment, or the entry into any settlement, compromise or discharge, with respect to any such Third Party Claim, (I) does not impose monetary damages, injunctive or other equitable relief against the Indemnifying Party or any of its Affiliates, and (II) does not contain or involve an admission or statement providing for or acknowledging any liability or criminal wrongdoing on behalf of the Indemnifying Party or any of its Affiliates, and (ii) the Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnified Party (x) for any period after notice thereof during which the Indemnifying Party has failed to assume the defense thereof, and (y) if, based on the advice of counsel, a conflict of interest exists between the Indemnifying Party and the Indemnified Party in respect of the matters subject to such Third Party Claim.

 

(b) The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, consent to the entry of any judgment, or enter into any settlement, compromise or discharge, with respect to any Third Party Claim, and

(c) If an Indemnifying Party makes any payment on an Indemnified Claim, the Indemnifying Party shall be subrogated, to the extent of such payment, to all rights and remedies of the Indemnified Party to any insurance benefits or other claims or benefits of the Indemnified Party with respect to such claim.

 

(d) The Parties agree that any indemnification payments made with respect to this Agreement, including under this Section 12.5, shall be treated for all Tax purposes as an adjustment to the purchase price hereunder unless otherwise required by Law (including by a determination of a Tax authority that, under applicable Law, is not subject to further review or appeal).

 

12.6 Existing Claims.  Each of Sellers acknowledges and agrees that, as of the date of this Agreement, (a) the Archstone Entities have suffered Losses in connection with the Acquisition Litigation, including legal fees and related expenses, and (b) Sellers shall be responsible for indemnifying and holding harmless the Buyer Indemnified Parties in accordance with Section 12.2.2 solely for Losses incurred from and after September 30, 2011.

 

12.7 Litigation Cooperation.  Buyer shall, and shall cause each of the other Buyer Indemnified Parties to, use its Commercially Reasonable Efforts to facilitate the participation by Sellers in the conduct of the Acquisition Litigation, including by (a) promptly informing Sellers of the receipt of any notices, correspondence, Filings or other communications with respect to the matters described in Section 12.2.2(b) and 12.2.2(c), (b) keeping Sellers reasonably apprised of the status of Proceedings with respect to the matters described in Section 12.2.2(b) and 12.2.2(c), including by providing Sellers with prior notice of any anticipated vote (including any vote on any “Major Matter” or “Special Major Matter” (as such terms are defined in the Voting Agreement)) by any Buyer Indemnified Party (in its capacity as a direct or indirect equityholder and/or director of the Archstone Entities or any of their Affiliates) on all matters relating to the matters described in Section 12.2.2(b), (c) consulting with Sellers prior to voting on any matter described in clause (b) of this Section 12.7, (d) providing Sellers with access to records, documents or other information of the Archstone Entities or any of their Affiliates to the extent relevant to the matters described in Section 12.2.2(b) and 12.2.2(c), and (e) providing Sellers and their counsel with a reasonable opportunity to comment on any notices, correspondence, Filings or other communications by the Buyer Indemnified Parties or the Archstone Entities or any of their Affiliates concerning the matters described in Section 12.2.2(b) and 12.2.2(c) and to give

good faith consideration to any such comments of Sellers.  Buyer shall, and shall cause each of the other Buyer Indemnified Parties to, use its Commercially Reasonable Efforts to cause the Archstone Entities not to enter into any settlement, compromise or discharge of any claims relating to the Acquisition Litigation without the prior written consent of the Sellers with respect to which Buyer or any Buyer Indemnified Parties intend to seek indemnification under Section 12.2.2.

 

12.8 Tax Benefits.  In calculating the amount of any Losses payable under this Article 12, there shall be deducted from any such Losses payable to the Indemnified Party an amount equal to any cash Tax benefit realized or to be realized in the same Taxable period as the period during which the Indemnified Party became entitled to indemnification with respect to the applicable Loss under this Article 12 (including any cash Tax benefit realized or to be realized in the same Taxable period as the period during which the Indemnified Party became entitled to indemnification with respect to the applicable Loss under Article 12 as a result of being an equity owner in any the Archstone Entities).  If a cash Tax benefit with respect to a Loss that has been the subject of indemnification under this Article 12 is realized by an Indemnified Party in another Taxable period that ends on or prior to the three-year anniversary of the date on which such Loss was incurred, then payments shall be made by the Indemnified Party to the Indemnifying Party to reflect such cash Tax benefit at the time of realization.  In the event there are any indemnity payments required under this Article 12, the Indemnified Party shall provide on an annual basis a certification by a responsible tax officer of the amount (if any) of a cash Tax benefit that would reduce the amount of any such indemnity payments or give rise to an obligation to make a payment to the Indemnifying Party under this Section 12.8.  In applying the foregoing, to the extent that the Purchased Interests are held by a REIT or by an entity that is a disregarded entity or partnership for U.S. federal income Tax purposes in which a REIT owns, directly or indirectly, the beneficial interests, then no Tax benefit shall be considered to have been realized with respect to the beneficial interests owned directly or indirectly by the REIT.

 

12.9 Third Party Recovery.  In calculating the amount of any Losses payable under this Article 12, there shall be deducted from any such Losses payable to the Indemnified Party an amount equal to any payment received from a third party (including an insurer) by such Indemnified Party in respect of any such Loss (or by an Archstone Entity, in respect of any Losses by the Archstone Entities for which the Indemnified Party is indemnified).  If an Indemnified Party recovers an amount from a third party (including an insurer) in respect of a Loss that is the subject of indemnification hereunder after all or a portion of such Loss has been paid by the Indemnifying Party hereunder pursuant to this Article 12, the Indemnified Party shall promptly remit to the Indemnifying Party the excess (if any) of (i) the amount paid by the Indemnifying Party in respect of such Loss, plus the amount actually received from the Third Party in respect thereof, over (ii) the full amount of the Loss.

13.1 Termination of Agreement.  Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Contemplated Transactions may be abandoned at any time prior to the Closing as provided in this Article 13.

 

(b) if there is any Law that makes consummation of any of the Contemplated Transactions illegal or otherwise prohibited; or

 

(c) if a Governmental Authority of competent jurisdiction having valid enforcement authority issues a final Order, not subject to appeal, permanently restraining, prohibiting or enjoining Buyer and/or any Seller from consummating any of the Contemplated Transactions, provided that the right to terminate this Agreement pursuant to this Section 13.1.2(c) shall not be available to any Party that has initiated any Proceeding that results in such Order, or that has not taken any and all reasonable actions necessary to oppose, contest and resist, and to have lifted, rescinded or vacated, such order, decree or judgment before it became final and non-appealable.

 

13.1.3 Breach.  Buyer or any Seller may terminate this Agreement by written notice to the other Parties in the event of a breach by the other Party of any covenant or agreement under this Agreement (including the breach of representations and warranties set forth herein), where the effect of such breach would be to cause the conditions to the obligation to consummate the Closing of the terminating Party not to be capable of being satisfied, and such breach is not cured by the breaching Party within 20 Business Days following receipt of written notice from the terminating Party of the breach or alleged breach, which written notice shall state that, unless such breach is cured in accordance with this Section 13.1.3, the terminating Party intends to terminate this Agreement (it being understood that such 20-Business Day cure period shall not extend the Expiration Date).

13.1.4 Satisfaction of Conditions to Closing. Buyer or any Seller may terminate this Agreement by written notice to the other Parties if any event shall occur after the date of this Agreement that shall have made it impossible to satisfy a condition precedent to the terminating Party’s obligations to perform its obligations hereunder, unless the occurrence of such event shall be due to the failure of the terminating Party to perform or comply with any of the agreements, covenants or conditions hereof to be performed or complied with by such Party prior to the Closing.  Buyer shall be entitled to terminate this Agreement due to the inability of the conditions to Closing set forth in Section 8.4 to be satisfied only if Buyer provides written notice terminating this Agreement within 20 days after the date on which Sellers provide notice to Buyer that the Archstone Entities have taken the action that caused the conditions to Closing set forth in Section 8.4 not to

13.2.1 this Agreement shall forthwith become null and void and of no further force and effect, except that Section 11.5, this Section 13.2 and Article 14 and all applicable definitions in this Agreement shall survive such termination;

 

13.2.2 Buyer shall return all documents, work papers and other materials (and all copies thereof) obtained from any Seller or any of their respective Representatives relating to the Contemplated Transactions, whether so obtained before or after the execution hereof, to Sellers;

 

13.2.3 Sellers shall return all documents, work papers and other materials (and all copies thereof) obtained from any Buyer or any of its Representatives relating to the Contemplated Transactions, whether so obtained before or after the execution hereof, to Buyer;

 

13.2.4 all filings, applications and other submissions made to any Person, including any Governmental Authority, in connection with the Contemplated Transactions shall, to the extent practicable, be withdrawn from such Person; and

 

13.2.5 the sole and exclusive rights and remedies of a Party, if any, following a termination under Section 13.1 shall be termination of this Agreement without other recourse; provided that, notwithstanding anything to the contrary herein, in the event that this Agreement is terminated for any reason other than pursuant to Section 13.1.3 as a result of a breach by Buyer, and at the time of such termination no such breach by Buyer shall have occurred and be continuing, then Buyer shall be entitled to return of the entire ROFO Deposit Amount and Sellers shall cooperate with Buyer to cause the Title Company to pay and deliver the ROFO Deposit Amount over to Buyer promptly after termination of this Agreement; provided further that, notwithstanding anything to the contrary herein, if all of the conditions set forth in Articles 7 and 8 (excluding those conditions which by their nature are to be satisfied as part of the Closing, but subject to the fulfillment or waiver of those conditions) have been satisfied or waived and the Buyer fails to close, then Sellers shall be entitled to payment of the entire ROFO Deposit Amount and Buyer shall cooperate with Sellers to cause the Title Company to pay and deliver the ROFO Deposit Amount over to Sellers promptly after termination of this Agreement.

13.4 Specific Performance.  The Parties agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with the terms hereof and that each of the Parties shall be entitled to specific performance of the terms hereof pursuant to this Section 13.4, in addition to any other remedy at law or in equity. It is

14.1 Notices.  All notices, consents and other communications hereunder shall be in writing (including telecopy or similar writing) and shall be deemed to have been duly given (a) when delivered by hand or by Federal Express or a similar overnight courier to (or if that day is not a Business Day, or if delivered after 5:00 p.m., New York, New York time on a Business Day, on the first following day that is a Business Day), (b) five (5) days after being deposited in any United States Post Office enclosed in a postage prepaid, registered or certified envelope addressed to, or (c) when successfully transmitted by facsimile (with a confirming copy of such communication to be sent as provided in clauses (a) or (b) above) to, the Party for whom intended, at the address or facsimile number for such Party set forth below (or to such other address or facsimile number and with such other copies, as such Party may hereafter specify for the purpose by notice to the other Party):

14.2 Entire Agreement.  This Agreement (including the other Transaction Documents and the other documents and instruments referred to herein and therein) and the Disclosure Schedules sets forth the entire agreement and understanding of the Parties in respect of the Contemplated Transactions and supersedes all prior discussions, negotiations, agreements,

arrangements and understandings, whether oral or written, relating to the subject matter hereof and thereof.  There are no warranties, representations or other agreements between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement.

 

14.3 Amendments and Waivers.

 

14.3.1 Any provision of this Agreement may be amended or modified only by a written instrument signed by all of the Parties hereto.

 

14.3.2 No waiver hereunder shall be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of the waiver is sought.  Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time.  Neither the waiver by any of the Parties of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the Parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder.  Except as otherwise provided herein, no action taken pursuant to this Agreement, including any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement.

 

14.4 Governing Law.  This Agreement shall be construed, performed and enforced in accordance with the laws of the State of Delaware (without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the laws of another jurisdiction).

14.5.1 Each of the Parties irrevocably agrees that any legal action or Proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other Party or its successors or assigns, shall be brought and determined exclusively in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware.  Each of the Parties hereby irrevocably submits with regard to any such action or Proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts, agrees that it will not bring any Proceeding relating to this Agreement or the Contemplated Transactions in any court other than the aforesaid courts and waives any objection to venue laid therein.  Process in any such Proceeding may be served on any Party anywhere in the world, whether within or without the State of Delaware.  Without limiting the foregoing, Sellers and Buyer agree that service of process upon such Party at the address referred to in Section 14.1, together with written

 

notice of such service to such Party, shall be deemed effective service of process upon such Party.

14.5.2 Each of the Parties hereby irrevocably waives, and agrees not to assert as a defense, counterclaim or otherwise, in any Proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve in accordance with Section 14.1, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by the applicable Law, any claim that (i) the Proceeding in such court is brought in an inconvenient forum, (ii) the venue of such Proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

14.6.1 EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY OR CLAIM WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 14.6.1) AND EXECUTED BY EACH OF THE PARTIES HERETO).  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER AGREEMENTS OR DOCUMENTS RELATING TO THE CONTEMPLATED TRANSACTIONS.  The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of the Contemplated Transactions, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

 

14.6.2 EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (1) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.6.

 

 

14.7 Binding Effect.  This Agreement will be binding upon, inure solely to the benefit of and be enforceable by the Parties and their respective permitted successors and assigns.

 

14.8 Interpretation.  As used in this Agreement and required by the context, the singular and plural shall be deemed to include all genders; words importing persons shall include partnerships, corporations and other entities; when reference is made in this Agreement to an Article, Section, Schedule or Exhibit, such reference shall be to an Article, Section, Schedule or Exhibit of this Agreement unless otherwise indicated; and the terms “herein,” “hereof’ and “hereunder” or other similar terms, refer to this Agreement as a whole and not only to the particular sentence, subsection or section in which any such term may be employed.  Whenever in this Agreement the word “including” is used, it shall be deemed to be for purposes of identifying only one or more of the possible alternatives, and the entire provision in which such word appears shall be read as if the phrase “including without limitation” were actually used in the text.  The section headings herein are for convenience only and shall not affect the construction hereof.  All references to dollars (or the symbol “$”) contained herein shall be deemed to refer to United States dollars.  Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person.  Except when used together with the word “either” or otherwise for the purpose of identifying mutually exclusive alternatives, the term “or” has the inclusive meaning represented by the phrase “and/or”.  With regard to each and every term and condition of this Agreement, the Parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the Parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject thereto, no consideration shall be given to the issue of which Party actually prepared, drafted or requested any term or condition of this Agreement.

14.9 Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, such term, provision, covenant or restriction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the Contemplated Transactions is not affected in any manner materially adverse to any Party.  Upon such determination, the Parties shall use Commercially Reasonable Efforts to negotiate in good faith to modify this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner in order that the Contemplated Transactions shall be consummated as originally contemplated to the fullest extent possible.

 

14.10 Counterparts.  This Agreement may be executed and delivered in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. It is the express intent of the Parties to be bound by the exchange of signatures on this Agreement via facsimile or electronic mail via the portable document format (PDF).  A facsimile or other copy of a signature shall be deemed an original.  This Agreement shall become effective when each Party hereto shall have received a counterpart hereof signed by all of the other Parties hereto.  Until and unless each Party has received a

counterpart hereof signed by the other Parties hereto, this Agreement shall have no effect and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

 

14.11 Third Parties.  Except as otherwise expressly provided herein, no provision of this Agreement is intended or shall confer on any Person, other than the Parties (and their successors and permitted assigns), any rights under this Agreement and no other Person shall be entitled to rely thereon.

 

14.12 Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, delegated or otherwise transferred by any Party (whether by operation of law or otherwise) without the prior written consent of the other Parties.  Notwithstanding the foregoing, any Party shall have the right to assign all or certain provisions of this Agreement, or any interest herein, and may delegate any duty or obligation hereunder, without the consent of the other Parties, (i) to any Affiliate of such Party, or (ii) at any time after the Closing, to any purchaser of all or substantially all of the assets or Equity Interests (whether by merger, recapitalization, reorganization or otherwise) of such Party; provided that, in the case of each of clauses (i) through (ii), no such assignment or delegation shall relieve such Party of any of its obligations hereunder. Any attempted assignment, delegation or transfer in violation of this Section 14.12 shall be null and void.

14.13 Schedules and Exhibits.  The schedules and exhibits, if any, referenced in this Agreement constitute an integral part of this Agreement and are incorporated herein by reference and made a part hereof.  Any information disclosed in a schedule or a section of any such schedule shall be deemed to be disclosed in such other schedules or sections of any such schedule to the extent that the disclosure is reasonably apparent from its face to be applicable to such other schedule or section of any such schedule.  Disclosure of any fact or item in any schedule shall not be deemed to constitute an admission that such item or fact is material for the purposes of this Agreement.

 

14.14 Time Periods.  Any action required hereunder to be taken within a certain number of days shall, unless otherwise provided herein, be taken within that number of calendar days; provided, however, that if the last day for taking such action falls on a Saturday, a Sunday, or a legal holiday, the period during which such action may be taken shall be extended to the next Business Day.

all Liens, other than restrictions on transfer by Buyer imposed under applicable securities Laws, the Voting Agreement, the Bridge Equity Providers Agreement and the Organizational Documents of the Primary Archstone Entities, and (ii) all of its right, title and interest under the Voting Agreement with respect to the BofA Purchased Interests, and (b) upon delivery of the BofA Purchased Interests, Assignee accepts from each Assignor, such Assignor’s entire right, title and interest in the BofA Purchased Interests, including, without limitation, any management rights, voting rights and rights in payment or distribution appurtenant to the BofA Purchased Interests.  Effective as of the Closing, each Assignee hereby assumes and agrees to be bound by and to perform and fulfill all of the terms, conditions, provisions, obligations, covenants and duties required to be performed and fulfilled by Assignor with respect to the BofA Purchased Interests under the Voting Agreement from and after the Closing as if Assignee was an original party thereto.

 

2.           Restricted Securities.  Assignee acknowledges and agrees that the interests comprising the BofA Purchased Interests are not and will not be registered under federal or state securities laws and that such interests shall constitute “restricted securities” within the meaning of such laws.

ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Assignment, and the remainder of the terms, provisions, covenants and restrictions of this Assignment shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the Contemplated Transactions is not affected in any manner materially adverse to any party hereto.  Upon such a determination, the parties hereto shall use Commercially Reasonable Efforts to negotiate in good faith to modify this Assignment so as to affect the original intent of the parties as closely as possible in an acceptable manner in order that the Contemplated Transactions shall be consummated as originally contemplated to the fullest extent possible.

 

8.           Recitals.  The Recitals set forth above in this Assignment are hereby incorporated herein as a substantive part of this Assignment.

 

9.           Terms of the Interest Purchase Agreement.  In the event of any conflict or inconsistency between the terms of the Interest Purchase Agreement and the terms hereof, the terms of the Interest Purchase Agreement shall govern.

WHEREAS, capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Interest Purchase Agreement.

this Guarantee exceed [$100,000,0001 / the Barclays Purchase Price] (the “Cap”). This Guarantee constitutes a guarantee of payment and not of collection.  The parties agree that this Guarantee may not be enforced against the Guarantor without giving effect to the Cap.  The Buyer hereby agrees that in no event shall the Guarantor be required to pay to the Buyer under, in respect of, or in connection with this Guarantee, the Contemplated Transactions or the Interest Purchase Agreement any amounts other than as expressly set forth herein.  Any claim for payment under this Guarantee shall be made in writing and set forth in reasonable detail the basis for such claim.

Proceeding relating to this Guarantee that any of the provisions hereof limiting Guarantor’s liability or any other material provision of this Guarantee is illegal, invalid or unenforceable, in whole or in part, or asserting any theory of liability against Guarantor, any Seller or any of their respective Affiliates with respect to the Interest Purchase Agreement, the Contemplated Transactions or this Guarantee, other than liability of Guarantor under this Guarantee (as limited by the provisions hereunder) or the liability of Sellers under any of the Transaction Documents or liability for fraud, then (a) the obligations of Guarantor under this Guarantee shall terminate ab initio and thereupon be null and void, (b) if Guarantor has previously made any payments under this Guarantee it shall be entitled to have such payments refunded by Buyer, and (c) neither Guarantor nor any Non-Recourse Parties (as defined below) shall have any liability to Buyer with respect to the Interest Purchase Agreement, the Contemplated Transactions, this Guarantee or otherwise.

into by the Guarantor in connection with the Interest Purchase Agreement.  Nothing set forth in this Guarantee shall affect or be construed to affect any liability of Sellers to Buyer or shall confer or give or be construed to confer or give to any Person other than Buyer (which for the purposes of this Section 9 shall include any person acting in a representative capacity) any rights or remedies against Sellers or any Non-Recourse Party, including Guarantor, except as expressly set forth herein, or with respect to Sellers, as set forth in the Interest Purchase Agreement.

unconditionally, to the personal jurisdiction of the aforesaid courts (and the appropriate appellate courts), agrees that it will not bring any Proceeding relating to this Guarantee or the Contemplated Transactions in any court other than the aforesaid courts and waives any objection to venue laid therein.  Process in any such Proceeding may be served on any party hereto anywhere in the world, whether within or without the State of Delaware.

(f)           All notices, requests, claims, demands, consents and other communications hereunder shall be given by the means specified in the Interest Purchase Agreement (and shall be deemed given as specified therein), as follows: