<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 30, 1998
CAMDEN PROPERTY TRUST
(Exact name of Registrant as specified in its Charter)
Texas 1-12110 76-6088377
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification Number)
3200 Southwest Freeway, Suite 1500, Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 964-3555
Not applicable
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
In connection with the April 8, 1998 merger of Oasis Residential, Inc.
with and into a wholly owned subsidiary of Camden Property Trust, a Texas real
estate investment trust ("Camden"), Camden disclosed its intentions of forming
a joint venture partnership (the "Joint Venture") in order to transfer into the
Joint Venture 18 apartment communities located in Las Vegas and one apartment
community located in Laughlin, Nevada.
On June 30, 1998, Camden completed the transfer (the "Transaction")
of the 19 apartment communities (the "Properties") for an aggregate of $248
million to Sierra-Nevada Multifamily Investments, LLC, a Delaware limited
liability company of which Camden is the managing member and has a 20% interest
(the "LLC"). The remaining 80% interest is owned by a Fortune 500 company
pension fund represented by Schroder Real Estate Associates.
The Transaction was consummated pursuant to (i) an Agreement of
Purchase and Sale, dated June 26, 1998, by and between NQRS, Inc., a Nevada
corporation and a wholly owned subsidiary of Camden, and the LLC; (ii) an
Agreement of Purchase and Sale, dated June 26, 1998, by and between Camden
Subsidiary, Inc., a Delaware corporation and a wholly owned subsidiary of Camden
("Camden Sub"), and the LLC; and (iii) a Contribution Agreement, dated June 26,
1998, by and between Camden Sub and the LLC.
The Transaction was funded with capital invested by the LLC
members, the assumption of $9.9 million of existing indebtedness and two new
debt financings. The first new debt facility consisted of 17 cross
collateralized and cross defaulted loans made by Berkshire Mortgage Finance
Limited Partnership ("Berkshire") to the LLC in an aggregate principal amount of
$180 million, which loans were funded through an issuance of Freddie Mac PC Gold
mortgage backed securities. Such loans were issued pursuant to the terms of a
commitment letter dated June 26, 1998.
The second new debt facility consisted of two second lien mortgage
loans to the LLC pursuant to the Federal National Mortgage Association
Multifamily Delegated Underwriting and Servicing product line for
mortgage-backed securities for two of the Properties in an aggregate principal
amount of $7,040,000. Such loans were issued pursuant to the terms of two
commitment letters, each of which was dated June 23, 1998 and was between
Washington Mortgage Financial Group, Ltd. and the LLC.
Camden used the net proceeds from the Transaction to reduce
outstanding debt by $124 million, and set aside $112 million into an escrow
account which may be used to make tax-free exchange acquisitions or to further
reduce debt if the exchange acquisitions are not completed. No book gain or loss
was recorded by Camden as a result of the Transaction.
Pursuant to two Residential Property Management and Exclusive Leasing
Agreements, each of which is dated as of June 29, 1998 and is by and between the
LLC and Camden Development, Inc., a Delaware corporation and a wholly owned
subsidiary of Camden ("Camden Development"), Camden Development will provide all
management and maintenance operations of the Properties.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
2.1 Contribution Agreement, dated June 26, 1998, by and between
Camden Subsidiary, Inc. and Sierra-Nevada Multifamily
Investments, LLC
2.2 Agreement of Purchase and Sale, dated June 26, 1998, by and
between Camden Subsidiary, Inc. and Sierra-Nevada Multifamily
Investments, LLC
2.3 Agreement of Purchase and Sale, dated June 26, 1998, by and
between NQRS, Inc. and Sierra-Nevada Multifamily Investments,
LLC
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99.1 Amended and Restated Limited Liability Company Agreement of
Sierra-Nevada Multifamily Investments, LLC, adopted as of June
29, 1998 by Camden Subsidiary, Inc. and TMT-Nevada, L.L.C.
99.2 Residential Property Management and Exclusive Leasing
Agreement which includes a 0.5% management fee term, dated as
of June 29, 1998, by and between Sierra-Nevada Multifamily
Investments, LLC and Camden Development, Inc.
99.3 Residential Property Management and Exclusive Leasing
Agreement which includes a 3.5% management fee term, dated as
of June 29, 1998, by and between Sierra-Nevada Multifamily
Investments, LLC and Camden Development, Inc.
99.4 Commitment Letter, dated June 26, 1998, between Berkshire
Mortgage Finance Limited Partnership and Sierra-Nevada
Multifamily Investments, LLC
99.5 Commitment Letter in the amount of $5,440,000, dated June 23,
1998, between Washington Mortgage Financial Group, Ltd. and
Sierra-Nevada Multifamily Investments, LLC
99.6 Commitment Letter in the amount of $1,600,000, dated June 23,
1998, between Washington Mortgage Financial Group, Ltd. and
Sierra-Nevada Multifamily Investments, LLC
99.7 Press Release, dated June 30, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 14, 1998
CAMDEN PROPERTY TRUST
By: /s/ G. Steven Dawson
---------------------------------------
G. Steven Dawson
Senior Vice President - Finance
Chief Financial Officer and Treasurer
<PAGE> 5
CAMDEN PROPERTY TRUST
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
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<S> <C>
2.1 Contribution Agreement, dated June 26, 1998, by and between
Camden Subsidiary, Inc. and Sierra-Nevada Multifamily
Investments, LLC
2.2 Agreement of Purchase and Sale, dated June 26, 1998, by and
between Camden Subsidiary, Inc. and Sierra-Nevada Multifamily
Investments, LLC
2.3 Agreement of Purchase and Sale, dated June 26, 1998, by and
between NQRS, Inc. and Sierra-Nevada Multifamily Investments,
LLC
99.1 Amended and Restated Limited Liability Company Agreement of
Sierra-Nevada Multifamily Investments, LLC, adopted as of June
29, 1998 by Camden Subsidiary, Inc. and TMT-Nevada, L.L.C.
99.2 Residential Property Management and Exclusive Leasing
Agreement which includes a 0.5% management fee term, dated
as of June 29, 1998, by and between Sierra-Nevada Multifamily
Investments, LLC and Camden Development, Inc.
99.3 Residential Property Management and Exclusive Leasing
Agreement which includes a 3.5% management fee term, dated as
of June 29, 1998, by and between Sierra-Nevada Multifamily
Investments, LLC and Camden Development, Inc.
99.4 Commitment Letter, dated June 26, 1998, between Berkshire
Mortgage Finance Limited Partnership and Sierra-Nevada
Multifamily Investments, LLC
99.5 Commitment Letter in the amount of $5,440,000, dated
June 23, 1998, between Washington Mortgage Financial Group,
Ltd. and Sierra-Nevada Multifamily Investments, LLC
99.6 Commitment Letter, in the amount of $1,600,000, dated
June 23, 1998, between Washington Mortgage Financial Group,
Ltd. and Sierra-Nevada Multifamily Investments, LLC
99.7 Press Release, dated June 30, 1998
</TABLE>
<PAGE> 1
Exhibit 2.1
CONTRIBUTION AGREEMENT
(GAIN ASSETS)
THIS CONTRIBUTION AGREEMENT (the "Agreement") is by and between CAMDEN
SUBSIDIARY, INC., a Delaware corporation (hereinafter called the "Contributor")
and SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC, a Delaware limited liability
company (hereinafter called the "Company").
ARTICLE 1.
Definitions
Section 1.1 As used in this Agreement, unless the context otherwise
requires or it is otherwise herein expressly provided, the following terms shall
have the following meanings:
CLOSING: The consummation of the transaction contemplated by this
Agreement.
CLOSING DATE: June 29, 1998 or such earlier or later date as mutually
agreed to by Company and Contributor.
IMPROVEMENTS: The buildings, structures, fixtures and other
improvements of every kind and nature situated on, in or under the Real
Property.
PERMITTED EXCEPTIONS: With respect to each parcel of land comprising
the Real Property, separately from all other such parcels, the matters
identified on Exhibit H attached hereto as the Permitted Exceptions
relating to that parcel or to all parcels.
PERSONAL PROPERTY: All fixtures; equipment; compressors; engines;
electrical systems, fixtures and equipment; plumbing fixtures, systems
and equipment; heating fixtures, systems and equipment; air
conditioning fixtures, systems and equipment; furniture; refrigerators;
dishwashers; disposals; ranges; range hoods; ovens; microwaves;
carpets, drapes; maintenance equipment; washing machines and dryers;
appliances of every kind; tools; landscaping; pool equipment; statuary;
television antennae, systems and equipment; intercom equipment and
systems; elevator fixtures, systems and equipment; central music
systems and equipment; security and fire alarms, systems and equipment;
and all other machinery; equipment; fixtures; automotive vehicles;
carts; supplies; replacement parts; building materials; and personal
property of every kind and character, tangible or intangible, owned by
the Contributor and used or usable in connection with the operation of
the Improvements, including any and all trade names used in connection
with the ownership, use or operation of the Property other than the
name "Oasis" which is expressly reserved to Contributor and its
affiliates (collectively, the "Trade Names").
REAL PROPERTY: The real property described on Exhibit "A" annexed
hereto and made a part hereof consisting of nine (9) tracts of land in
the State of Nevada and all easements, rights, appurtenances and
hereditaments relating or appertaining thereto.
<PAGE> 2
RELATED AGREEMENTS: The two Agreements of Purchase and Sale bearing
even date herewith entered into by Company (as the "Purchaser"
thereunder) and Camden Subsidiary, Inc., and NQRS, Inc., respectively
(as the "Seller" thereunder), which are substantially similar to this
Agreement but provide, respectively, for Company's purchase from Camden
Subsidiary, Inc. and NQRS, Inc., respectively of an aggregate of ten
(10) residential apartment properties situated in the State of Nevada.
TENANT LEASES: Leases, licenses, contracts and other agreements for the
use or occupancy of any space in the Real Property or Improvements,
written or verbal.
Section 1.2 The effective date of this Agreement (the "Effective
Date") shall be the later of the two dates upon which this Agreement is
executed by Contributor and Company as set forth beside their respective
signatures.
Section 1.3 To the extent other terms are defined elsewhere in this
Agreement, such terms shall have the meanings set forth herein.
ARTICLE 2.
Contribution
Section 2.1 Subject to the terms and provisions hereof, the
Contributor agrees to contribute to the Company, and the Company agrees to
acquire from the Contributor the following (collectively, the "Property"):
(a) Fee simple title to and ownership of the Real Property
and Improvements, together with all right, title and interest, if any,
of Contributor in and to any unpaid award made or to be made for the
taking by condemnation or otherwise, for public or quasi-public use or
purpose of such right, title or interest and any unpaid award for
damage to any or all of the Real Property or Improvements by reason of
change of grade of any such street, road or avenue; and all easements,
right-of-way, privileges, licenses (written or oral), and all
appurtenances thereto;
(b) All of Contributor's right, title and interest, if any,
in and to:
(1) All plans and specifications, site plans, soil and
substrata studies, architectural drawings, floor plans,
landscape plans, and other plans, reports or documents of any
kind whatsoever relating to the Real Property or Improvements;
(2) The Trade Name and any telephone listings thereof;
(3) All guaranties or warranties delivered to, or whose
benefit has been assigned to Contributor or made to or inuring
to the benefit of Contributor in connection with the
construction, development, ownership, use, improvement,
repair, operation or maintenance of the Improvements, and all
agreements or contracts (if any) entered into by, or whose
benefit has been assigned to, Contributor or made to or
inuring to the benefit of Contributor in connection with the
development, construction, ownership, use, improvement,
repair, operation or maintenance of the Improvements (the
"Miscellaneous Agreements");
<PAGE> 3
(4) All building and other permits, licenses or approvals
heretofore or hereafter granted by any governmental authority
with respect to the development, construction, ownership, use,
improvement, repair, maintenance, occupancy or operation of
the Improvements.
(5) All unpaid insurance proceeds relating to any damage
to or destruction of, and all unpaid damages and awards
relating to any condemnation or other taking of, all or any
part of the Property.
(c) The Personal Property.
(d) The Tenant Leases.
(e) All reports, files, correspondence, documents and
writings of any kind whatsoever relating to any of the foregoing which
are in Contributor's possession or control.
ARTICLE 3.
Consideration for Conveyance
Section 3.1 Subject to the terms, conditions and provisions herein
contained, Company agrees to pay and assign to Contributor, and Contributor
agrees to accept, as consideration for the contribution of the Property to the
Company, (a) the sum of Eighty-Six Million Six Hundred Eighty-Five Thousand and
No/100 Dollars ($86,685,000) (the "Purchase Price"), which shall be due and
payable at Closing as follows:
(a) The sum of Seventy-Six Million Seven Hundred Three and
No/100 Dollars ($76,703,000) shall be due and payable in cash or
immediately available funds at Closing (the "Cash Payment");
(b) Company shall assume the outstanding principal balances
(collectively, the "Assumed Loan Balance") as of the Closing Date (not
to exceed the amount of the original principal balances) of, but no
accrued and unpaid interest, fees or other charges as of the Closing
Date under or relating to, (i) that one certain loan (the "Plaza
Assumed Loan") in the original principal amount of $6,000,000.00 from
Washington Mortgage Financial Group, Inc. ("Lender") to Oasis
Residential, Inc. (predecessor to Contributor) ("Oasis"), such Loan
being secured in part by liens on the portion of the Property
identified on Exhibit "A" as the Plaza Property and being evidenced in
part by a promissory note from Oasis to Lender in the original
principal amount of $6,000,000.00 and dated August 11, 1994 (together
with any and all other documents securing, evidencing or pertaining to
the Plaza Assumed Loan, the "Plaza Assumed Loan Documents"), the
outstanding balance of which on the Closing Date is estimated to be
$6,000,000.00 and (ii) that one certain loan (the "Landing Assumed
Loan") in the original principal amount of $4,095,000.00, from Lender
to Oasis, such Loan being secured in part by liens on that portion of
the Property identified on "Exhibit A" as the Landing Property and
being evidenced in part by a promissory note from Oasis to Lender in
the original principal amount of $4,095,000.00 and dated October 22,
1993 (together with any and all other documents securing, evidencing or
pertaining to the Landing Assumed Loan, the "Landing Assumed Loan
Documents"), the outstanding balance of which on the
<PAGE> 4
Closing Date is estimated to be $3,982,000. The Plaza Assumed Loan and
the Landing Assumed Loan are hereinafter collectively called the
"Assumed Loan" and the Plaza Assumed Loan Documents and the Landing
Assumed Loan Documents are hereinafter referred to as the "Assumed Loan
Documents". If at Closing the outstanding amounts due under the Assumed
Loan has been reduced from the estimated amounts set forth above, the
Purchase Price shall not be reduced, but to the extent (if any) that
the cash amounts due under the Related Agreements is not incurred
correspondingly, the Cash Payment will be increased by the amount of
such reduction.
(c) Company shall issue to Contributor all of the limited
liability company interests in the Company.
Section 3.2 At Closing, Company shall assume and agree to pay the
Assumed Loan Balance of the Assumed Loan. At Closing, Contributor and Company
shall execute and deliver all such documents and instruments (the "Loan
Assumption Documents") required by Lender to evidence such assumption in form
reasonably satisfactory to Lender and Company. Company shall not be responsible
for the payment at Closing of any assumption or transfer fees or any other
transaction costs incurred in connection with assumption of the Assumed Loan
Balance.
Section 3.3 As consideration for the conveyance of the Trade Names,
Company shall pay to the Contributor, and Contributor agrees to accept, the sum
of TEN AND NO/100 DOLLARS ($10.00) in cash at Closing. It is expressly agreed
that such sum represents that portion of the Purchase Price that is attributable
to or paid for the Trade Names.
ARTICLE 4.
Survey and Title
Section 4.1 Contributor will, at Contributor's expense, cause to be
delivered to Company at the Closing the following, all of which will be subject
to Company's approval: (i) a title commitment signed by the title company
agreeing to deliver an ALTA owner's policy of title insurance in the amount of
the Purchase Price, with extended coverage over any general permitted exceptions
to such policies at Company's expense, insuring Company as the owner of the Real
Property and Improvements subject to no exceptions other than the Permitted
Exceptions (the "Title Policy"); and (ii) a currently-dated as-built plat of
survey of each parcel of land comprising the Real Property, certified to Company
as having been prepared in accordance with the standards most recently adopted
by ALTA and ACSM (the "Survey").
ARTICLE 5.
Representations, Warranties and Covenants of Contributor
Section 5.1 Contributor represents and warrants to Company that as of
the Effective Date and also as of the Closing Date, the following statements are
and will be true and correct:
(a) Except as disclosed on Schedule 5.1(a) hereto, the
Assumed Loan Documents are in full force and effect, and Contributor
has not received written notice from Lender, nor does it otherwise have
knowledge of, any default or event of default thereunder.
<PAGE> 5
(b) There are no parties in possession of, and no person has
any right to the use or possession of, or to occupy, any portion of the
Real Property or Improvements as lessees or tenants at sufferance or
otherwise, except for tenants under the Tenant Leases, and, except for
such tenants, no person has any right to enter onto the Real Property
except for those who, pursuant to easements or other Permitted
Exceptions or the Miscellaneous Agreements have the right to enter onto
the Real Property solely for purposes of providing or servicing
utilities to the property or providing laundry services or facilities
at the Real Property.
(c) Except as disclosed on Schedule 5.1(c) hereof,
Contributor has not received notice of, and Contributor has no actual
knowledge of any pending or threatened condemnation, eminent domain, or
similar proceeding, or any special or other assessment affecting the
Real Property or Improvements or any part thereof.
(d) Contributor is duly authorized and empowered to sell the
Property. Contributor has obtained all necessary approvals required
under its organizational or operational documents for entering into
this Agreement and for the consummation of this transaction. This
Agreement has been duly authorized by all necessary and appropriate
action of Contributor, has been executed on Contributor's behalf by its
duly authorized representative, and is a legal, valid and binding
obligation of Contributor.
(e) Except as disclosed on Schedule 5.1(e) hereof,
Contributor has not received notice of, and Contributor has no actual
knowledge of, any pending or threatened claims or lawsuits which could,
if decided adversely to Contributor or Company or otherwise, materially
affect the Real Property or Improvements or any part thereof or the use
or value thereof or which could become a lien on any thereof.
(f) All obligations of Contributor arising from the ownership
and operation of the Real Property, including, but not limited to,
salaries and the like, have been paid as they became due or will be
paid at or prior to Closing. Except for obligations for which
provisions are made herein for assumption by Company or with respect to
which a proration adjustment is made in Company's favor at Closing,
there will be no obligations of Contributor with respect to, relating
to or affecting the Real Property or any part thereof outstanding as of
Closing which could give rise to a lien on or claim against or
affecting the Real Property or any part thereof.
(g) Contributor has not received notice of, and Contributor
has no actual knowledge of, any attachments, executions, assignments
for the benefit of creditors or voluntary or involuntary proceedings in
bankruptcy or under any other debtor relief laws contemplated by or
pending or threatened against Contributor or the Real Property or any
part thereof.
(h) The matters set out in the rent roll attached hereto as
Exhibit I are true and correct and are not misleading. The rent roll
identifies all deposits made by, or credit for which is owed to, any
tenant under any Tenant Lease except to the extent (if any) expressly
stated on the rent roll. Each Tenant Lease identified or referred to
therein is in full force and effect. Except as disclosed on Schedule
5.1(h) hereof, Contributor has not received any notice from any tenant
alleging a default by Contributor or the landlord, and Contributor has
<PAGE> 6
no actual knowledge of any default by or unperformed obligation of the
landlord, under any of the Tenant Leases, and, to the best of
Contributor's knowledge, no tenant under any of the Tenant Leases is in
default thereunder.
(i) Contributor is the fee simple owner of the Real Property
and the Improvements, subject to no restrictions, covenants,
conditions, liens, claims, encumbrances, reservations, easements or
other exceptions to title other than the Permitted Exceptions.
(j) Except as disclosed in Schedule 5.1(j) hereof Contributor
has not received written notice of, and has no actual knowledge of, any
existing condition with respect to the Real Property or Improvements
(or any part thereof) or its operation which violates any law,
ordinance, code, regulation or court or administrative order.
(k) Except as disclosed in Schedule 5.1(k) hereof,
Contributor has not received written notice, and Contributor has no
actual knowledge that the Real Property or the Improvements or any part
thereof is being used for the storage or disposal of any hazardous or
toxic materials or that any such materials are present on, under or in,
or were released or discharged from, the Real Property or the
Improvements in violation of applicable laws. To Contributor's actual
knowledge, no hazardous or toxic materials now are or ever were placed
or situated on, under or in, or were released or discharged from, the
Real Property or the Improvements.
(l) No portion of the Real Property or the Improvements
constitutes "plan assets" of any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, or any "plan" as defined in Section 4975(e)(2) of the Internal
Revenue Code of 1986, as amended.
(m) The data and information contained in each of the
financial statements and operating reports relating to the Real
Property and Improvements (or any part or parts thereof) hereto
furnished by Contributor to Company are true and correct and are not
misleading and do not omit any material information.
Contributor shall promptly advise Company in writing if any
representation or warranty contained in this Section 5.1 becomes false or
misleading prior to the Closing; provided, however, that the delivery of such
notification shall not waive, limit, diminish or affect the right of Company to
object thereto (or except as expressly provided in this grammatical paragraph)
any right or remedy of Company relating thereto. As a condition precedent to
Company's obligations hereunder, the representations and warranties contained in
this Section 5.1 shall be true and correct on the Closing Date. However, in the
event of a breach hereof by Contributor or in the event Contributor has given
Company written notice of a material change in any matter made the subject of
the foregoing representations and warranties, Company's sole and exclusive
remedy prior to Closing will be to (i) waive the default by Contributor and
close the transaction contemplated hereby, without any reduction in the Purchase
Price, or (b) terminate this Agreement. To the extent Company has received
written notice from Contributor at or prior to Closing, that any one or more of
the foregoing representations and warranties are not true and correct (the
"Waived Representation(s)"), and Company consummates the transaction
contemplated hereby, Company waives any claims against Contributor for a breach
of a Waived Representation. Company's right to bring a claim against
<PAGE> 7
Contributor for breach of any representations and warranties contained herein
shall survive until one (1) year after the Closing.
Section 5.2. From the Effective Date until the Closing Date or earlier
termination of this Agreement, Contributor shall:
(a) Operate the Real Property and Improvements, and continue
its marketing and leasing efforts, in the same manner as heretofore,
and use reasonable efforts to preserve for the benefit of Company the
Tenant Leases and the relationships of Contributor and its tenants.
(b) Keep, maintain and repair the Real Property and
Improvements in a good, safe, neat, clean and presentable condition,
and comply in all material respects with all laws, ordinances,
regulations, licenses, permits and court or governmental orders
affecting the Property.
(c) Keep, observe and perform its obligations as landlord
under the Tenant Leases, and as long as tenants are not in default
thereunder, not cause the termination of any Tenant Lease nor alter,
amend or otherwise modify or supplement any Tenant Lease without the
prior written consent of Company.
(d) Not enter into any written or oral service contract or
other agreement with respect to the Property that will not be fully
performed on or before Closing, or that will not be cancelable by
Company with thirty (30) days notice without liability on or after
Closing without the prior written consent of Company.
(e) Promptly advise Company of any pending or threatened
litigation, arbitration, administrative hearing or legislation before
any governmental body or agency, or any tax increase or assessment, of
which Contributor becomes aware, that concerns or could affect the
Property or any part thereof.
(f) Not take or omit to take any action which would have the
effect of violating any of the representations, warranties, covenants
or agreements of Contributor contained herein.
(g) Not further encumber or allow the encumbrance of the
title to the Property, or modify the terms or conditions of any
existing encumbrances (other than Tenant Leases), if any, which will
not be released at Closing, without in each case the prior written
consent of Company.
Contributor shall promptly advise Company in writing if any covenant
contained in this Section 5.2 is breached prior to the Closing; provided,
however, that the delivery of such notification shall not waive, limit,
diminish or affect the right of Company to object thereto or any right or
remedy of Company relating thereto. As a condition precedent to Company's
obligations hereunder, the covenants contained in this Section 5.2 shall have
been fully performed at all times up to and including the Closing Date.
<PAGE> 8
ARTICLE 6.
Inspection and Audit; Company's "Due Diligence"
Section 6.1 The Contributor agrees that from the Effective Date until
Closing, Company, personally or through its authorized agents, designees or
representatives, shall be entitled to enter upon the Real Property and into the
Improvements to conduct such physical and environmental and other inspections,
independent appraisals, and other tests, examinations and studies of the
Property as Company desires, (but only upon twenty-four (24) hours prior notice
to Contributor), during business hours and provided that such inspections do not
interfere with rights of tenants under the Tenant Leases or Contributor's
operation of the Property. Contributor agrees to provide Company with all access
described in this Section and to facilitate Company's entry and conduct of its
inspections and tests. Company agrees to indemnify and hold Contributor harmless
of and from any claim for physical damages or physical injuries arising from
Company's inspection of the Property, and notwithstanding anything to the
contrary in this Agreement, such obligation to indemnify shall survive Closing
or any termination of this Agreement.
Section 6.2 Contributor agrees that all times until the Closing
occurs, promptly in response to Company's reasonable request therefor
Contributor will make available and deliver to Company and Company's agents,
representatives and designees all reports, financial statements, operating
statements, contracts, permits, licenses, Tenant Leases, records, files and
writings of any and every kind whatsoever that relate in any way directly or
indirectly to the Property, the Real Property, the Improvements, any part of any
thereof, any or all of the Tenant Leases, or the business or affairs of
Contributor.
Section 6.3 If Company, in its sole and unreviewable discretion, is
not satisfied in any respect with any matter relating in any way directly or
indirectly to the Property or any component or aspect thereof, Company may give
Contributor a notice (a "Due Diligence Termination Notice") at any time before
the Closing terminating this Agreement, in which event this Agreement will be
terminated without liability of or to either party and neither party shall have
any further obligations hereunder other than those that expressly survive the
termination of this Agreement.
ARTICLE 7.
Conditions Precedent to Obligations of Company
Section 7.1 The satisfaction of each and every one of the following
shall be a condition precedent to Company's obligation to close hereunder:
(a) the representations and warranties of Contributor
contained in Section 5.1 shall have been true and correct on the
Effective Date and on the Closing Date;
(b) Contributor shall have performed and complied with all of
its covenants, agreements and undertakings contained in Section 5.2 or
elsewhere herein;
(c) There shall not have occurred any material damage to or
change in the condition of any component or part of the Real Property
or Improvements since the Effective Date;
<PAGE> 9
(d) There shall not be pending or threatened any condemnation
or proceeding in the nature of eminent domain affecting all or any part
of the Real Property;
(e) Contributor shall have delivered to Company the
commitment for the Title Policy, the Survey, all of the documents
described in Section 8.2 hereof and all other documents, writings and
things which, under any provision of this Agreement, Contributor is to
deliver to Company at or before the Closing;
(f) Company shall have failed to deliver a "Due Diligence
Termination Notice" to Contributor before the Closing;
(g) The closings shall have occurred, or shall simultaneously
be occurring, under all of the Related Agreements; and
(h) All other conditions precedent (if any) to Contributor's
obligation to close, as set out in any provision of this Agreement,
shall have been satisfied.
Section 7.2 If any condition precedent to Company' s obligation to
close hereunder is not timely satisfied, then Company may elect, in its sole
discretion, to waive any such defect or requirement and close the transaction
contemplated herein or terminate this Agreement without liability and neither
party shall have any further obligations hereunder other than those that
expressly survive the termination of this Agreement.
ARTICLE 8.
Closing
Section 8.1 The Closing hereunder shall take place at the offices of
Contributor unless otherwise agreed between the parties in writing, on or before
the Closing Date, unless the Closing Date shall be extended by agreement by
Company and Contributor in writing in accordance with the terms hereof.
Section 8.2 At the Closing, Contributor shall deliver or cause to be
delivered to Company each of the following items, each duly executed by
Contributor as required and in form and substance satisfactory to Company:
(a) A bargain and sale deed, in the form of Exhibit "B"
attached hereto, duly executed and acknowledged by Contributor, and in
form for recording, conveying good and indefeasible fee simple title in
the Real Property and Improvements to Company, subject only to the
liens securing the Assumed Loan Balance of the Assumed Loan and, with
respect to each specific land parcel and the improvements situated
thereon, the Permitted Exceptions that apply to that particular parcel
as set out on Exhibit H attached hereto.
(b) A bill of sale, in the form of Exhibit "C" attached
hereto, with a list of the Personal Property attached, duly executed by
Contributor, conveying to Company the Personal Property.
(c) Executed originals of all Tenant Leases to the extent in
Contributor's possession and, as to any Tenant Lease for which the
executed original is not in Contributor's
<PAGE> 10
possession, a true photocopy of the actual signed lease (each to be
delivered at the respective property), together with an assignment, in
the form of Exhibit "D" attached hereto, duly executed and acknowledged
by Contributor and in recordable form, assigning to Company all the
Tenant Leases and all security deposits held pursuant to the Tenant
Leases.
(d) The Loan Assumption Documents.
(e) Letters addressed to each tenant under each Tenant Lease,
in the form of Exhibit "E" attached hereto, conforming to the
requirements of applicable state law and advising of the change of
ownership of the Property, the transfer of the security deposits (to
the extent the same are transferred) to Company, and informing such
tenant to make future rental payments to the person, at the address,
designated by Company.
(f) An assignment, in the form of Exhibit "F" attached
hereto, duly executed by Contributor, assigning to Company (i) all of
Contributor's rights and benefits under any Miscellaneous Agreements
affecting the Property, (ii) all warranties, guaranties, and bonds
applicable to the Property or any part thereof, without representation
or warranty by Contributor, and (iii) all of Contributor's right,
title, and interest in the Trade Names without representation or
warranty by Contributor.
(g) To be delivered at each respective property, all keys to
all locks on the Real Property or Improvements (and an accounting for
keys in possession of others); all books, records, files, documents,
reports, advertising materials, and correspondence pertaining to the
Property; all documents in the possession of the Contributor pertaining
to tenants of the Property, including, but not by way of limitation,
all applications, correspondence and credit reports relating to each
such tenant.
(h) A Certification in a form of Exhibit "G" attached hereto,
duly executed by the Contributor under penalties of perjury, containing
the following:
(i) The Contributor's U.S. Taxpayer Identification Number
and business address; and
(ii) A statement that the Contributor is not a foreign
person within the meaning of Sections 1445 and 7701 of
the Internal Revenue Code and applicable regulations.
In the event that the Contributor fails to deliver such Certification
at Closing or the Contributor delivers such Certification but the
Company has actual knowledge that such Certification is false or the
Company receives notice that the Certification is false from any agent
of the Company or the Contributor, the Company shall be entitled to
withhold from the Purchase Price a sum equal to ten percent (10%) of
the total amount which otherwise would have been realized by the
Contributor from such sale, which sum will be paid by the Company to
the United States Treasury pursuant to the requirements of Section 1445
of the IRC and the regulations promulgated thereunder.
(i) Such evidence or documents as may reasonably be required
by Company or the title insurance company issuing the Title Policy
evidencing the status and capacity of
<PAGE> 11
Contributor and the authority of the person or persons who are
executing the various documents on behalf of Contributor in connection
with the sale of the Property.
(j) The amount of any deposits or fees or prepaid rent, both
refundable and non-refundable, held by the Contributor pursuant to
provisions of any Tenant Leases.
(k) A written guaranty of payment executed by Camden Property
Trust in favor of Company, guaranteeing the payment by Contributor of
any of its obligations and liabilities to Company under this Agreement
as to which claims are asserted, and are permitted to be asserted, by
Company after the Closing.
(l) A closing settlement statement acceptable to Contributor
and Company, duly signed by Contributor.
(m) All other items comprising the Property and all other
documents, agreements, certificates, writings or items that any
provision of this Agreement obligates Contributor to deliver to
Company.
(n) All other declarations (including, without limitation,
transfer tax declarations), documents, instruments and writings that
are required by law to be, or are customarily, executed or delivered by
sellers of multifamily residential real estate properties in connection
with the sale or conveyance thereof.
Section 8.3 At the Closing, Company shall deliver to Contributor the
following items, each duly executed by Company as required:
(a) The Cash Payment.
(b) The Loan Assumption Documents.
(c) Any of the conveyance documents described in Section 8.2
that require the signature of Company.
(d) Such evidence or documents as may reasonably be required
by Contributor evidencing the status and capacity of Company and the
authority of the person or persons who are executing the various
documents on behalf of Company in connection with the sale of the
Property.
(e) A closing settlement statement acceptable to Contributor
and Company, duly signed by Contributor.
Section 8.4 At Closing, the following items shall be adjusted or
prorated between Contributor and Company, such prorations to be made effective
as the Closing Date (Seller receiving the benefit and burden thereof):
(a) Rents collected for month in which Closing occurs shall
be prorated. No proration shall be made for rents not collected as of
the Closing Date and Company shall have no liability to Contributor for
such delinquent rents; provided, however, that if
<PAGE> 12
Company collects after Closing any rents which are owing to the
Contributor by tenants of the Property and specifically designated by
the payor thereof for periods prior to the Closing Date, and if at that
time all other rents due or payable from those tenants are fully and
currently paid (Company shall be entitled to apply all rental payments
to the latest period for which rentals are due), Company shall promptly
remit to Contributor that portion of such rental payments as is
allocable to the period before the Closing. This provision shall not be
deemed an obligation, express or implied, by or on behalf of Company to
take any action to collect such rents.
(b) Taxes, ad valorem, personal or otherwise, for the
Property for the current calendar year shall be prorated. The
Contributor's pro rata portion of such taxes shall be based upon taxes
actually assessed for the current calendar year. If, for any reason,
taxes for the current calendar year have not been assessed on the
Property such proration shall be estimated based upon the most recently
published tax rate and valuation for the Property for calendar year in
which the Closing Date occurs, and adjusted within thirty (30) days
following the date when exact amounts are available and such adjustment
provision shall expressly survive the closing hereof.
(c) All other income and ordinary operating expenses for or
pertaining to the Property, public utility charges, maintenance,
service charges, and all other normal operating charges of the Property
shall be prorated.
In the event any adjustments pursuant to this Section 8.4 are,
subsequent to Closing, found to be erroneous, then either party hereto who is
entitled to additional monies shall invoice the other party for such additional
amounts as may be owing, and such amount (reduced by any monies due to the
other party) shall be paid within ten (10) days from receipt of the invoice.
This covenant shall survive the Closing of the sale contemplated hereby.
Section 8.5 Neither this Agreement, nor any of the rights and
obligations hereunder, may be assigned by Company without Contributor's prior
written consent, which may be withheld in Contributor's sole and absolute
discretion. The preceding sentence shall not apply to, or reflect or limit in
any way, the admission of new or additional members into Company.
Section 8.6 Exclusive possession of the Property shall be delivered
to Company by Contributor at the Closing, subject only to the rights of tenants
under the Tenant Leases and subject to the Permitted Exceptions.
Section 8.7 Contributor shall pay for the Title Policy, the Survey,
and all transfer taxes relating to the transactions contemplated hereby. All
other costs and expenses (if any) in connection with the transaction
contemplated by this Agreement shall be borne by Contributor and Company in the
manner in which such costs and expenses are customarily allocated between the
parties at closings of multifamily residential real property similar to the
Property in the Las Vegas, Nevada area. Except as specifically provided in
Section 10.5 hereof, each party hereto shall pay its own attorneys' fees and
expenses incurred in the preparation and negotiation of this Agreement and the
Closing of the transaction contemplated hereby.
<PAGE> 13
ARTICLE 9.
Remedies of Default
Section 9.1 In the event of Contributor's default hereunder, Company
may elect, at its option, as its sole and exclusive remedies, either to (a)
terminate this Agreement; or (b) if Contributor's default arises out of its
alleged failure to perform its obligation to convey title on the Closing Date,
enforce specific performance hereunder against Contributor.
Section 9.2 In the event that Contributor is unable to consummate the
sale contemplated hereby due to a default by Company, then, as Contributor's
sole and exclusive remedy and relief, Contributor shall be entitled to the Cash
Payment as liquidated damages for Company's default. Such amount is agreed upon
by and between the Contributor and the Company as liquidated damages, due to the
difficulty and inconvenience of ascertaining and measuring actual damages, and
the uncertainty thereof; and no other damages, rights or remedies shall in any
case be collectible, enforceable or available to the Contributor other than as
specified in this Article 9, but the Contributor shall accept said Cash Payment
as the Contributor's total damages and relief. If Company fails to timely
deliver the Cash Payment, Contributor shall have all rights at law or equity
against Company for its default.
Section 9.3 Notwithstanding the provisions of Sections 9.1 and 9.2
above, in the event that after Closing a party (the "Defaulting Party") breaches
an obligation hereunder which is expressly stated herein to survive Closing, the
Defaulting Party shall be liable to the other party (the "Non-Defaulting Party")
for the damages incurred by the Non- Defaulting Party as a result of such
breach.
Section 9.4 Contributor and Company specifically acknowledge and
agree that any limitation on remedies set forth in this Article 9 does not apply
to the express hold harmless and indemnification agreements set forth in this
Agreement or to the amounts recoverable pursuant to Section 10.5 hereof.
ARTICLE 10.
Miscellaneous
Section 10.1 All notices, demands, or other communications of any
type (herein collectively referred to as "Notices") given by the Contributor or
required to be given to the Company or by the Company to the Contributor,
whether required by this Agreement or in any way related to the transaction
contracted for herein, shall be in writing and given in accordance with the
provisions of this Section 10.1. All notices shall be delivered or sent either
in person, by facsimile, by nationally recognized overnight courier, or by
United States Mail, as a registered or certified item, return receipt requested.
Notices delivered by mail shall be deemed given on the third business day after
being deposited in a post office or other depository under the care or custody
of the United States Postal Service, enclosed in a wrapper with proper postage
affixed, addressed, as follows:
<PAGE> 14
If to Contributor: Camden Subsidiary, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attention: Richard J. Campo
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3599
With a copy to: Elizabeth Pringle Johnson, Esq.
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3590
and a copy to: Robert M. Berger, Esq.
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, IL 60603
Telephone No.: (312) 701-7272
Facsimile No.: (312) 701-7711
Stephen B. Hansen
Schroder Real Estate Associates, Inc.
437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 940-3600
Facsimile No.: (212) 732-5144
If to the Company, as follows:
Sierra-Nevada Multifamily Investments, LLC
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attention: Richard J. Campo
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3599
With a copy to: Elizabeth Pringle Johnson, Esq.
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3590
<PAGE> 15
and a copy to: Robert M. Berger, Esq.
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, IL 60603
Telephone No.: (312) 701-7272
Facsimile No.: (312) 701-7711
Stephen B. Hansen
Schroder Real Estate Associates, Inc.
437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 940-3600
Facsimile No.: (212) 732-5144
Notice given in person, by facsimile or by overnight courier shall be deemed
given upon receipt. Either party hereto may change the address for notice
specified above by giving the other party ten (10) days advance written notice
of such change of address.
Section 10.2 This Agreement shall be construed and interpreted in
accordance with the laws of the State of Nevada. Where required for proper
interpretation, words in the singular shall include the plural; the masculine
gender shall include the neuter and the feminine, and vice versa. The terms
"heirs, executors, administrators and assigns" shall include "successors, legal
representatives and assigns."
Section 10.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns. This Agreement may not be modified or
amended except by an agreement in writing signed by the Contributor and the
Company, a copy of which has been delivered to Messrs. Hansen and Berger at
their respective addresses set out in Section 10.1 above. The parties may
waive any of the conditions contained herein or any of the obligations of the
other party hereunder, but any such waiver shall be effective only if in
writing and signed by the party waiving such conditions or obligations, a copy
of which waiver has been delivered to Messrs. Hansen and Berger at their
respective addresses set out in Section 10.1 above.
Section 10.4 Time is of the essence of this Agreement.
Section 10.5 In the event it becomes necessary for either party
hereto to file a suit to enforce this Agreement or any provisions contained
herein, the party prevailing in such action (as determined by the court) shall
be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and court costs, including appellate costs, incurred
in such suit.
Section 10.6 The descriptive headings of the several Articles,
Sections and Paragraphs contained in this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 10.7 This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No
<PAGE> 16
representation, warranty, covenant, agreement or condition not expressed in
this Agreement shall be binding upon the parties hereto or shall affect or be
effective to interpret, change or restrict the provisions of this Agreement.
Section 10.8 Multiple originals of this Agreement have been executed
by the parties hereto. Each such executed original shall have the full force and
effect of an original executed instrument. Signature pages from the multiple
originals may be assembled to form one document. This Agreement may be executed
in multiple counterparts, all of which when taken together shall constitute one
and the same agreement.
Section 10.9 Unless otherwise specified, in computing any period of
time described in this Agreement, the day of the act or event after which the
designated period of time begins to run is not to be included and the last day
of the period so computed is to be included, unless such last day is a Saturday,
Sunday or legal holiday under the laws of the State of Nevada, in which event
the period shall run until the end of the next day which is neither a Saturday,
Sunday or legal holiday. The final day of any such period shall be deemed to end
at 5:00 o'clock p.m. (Central Time).
Section 10.10 If any term or provision of this Agreement which would
not deprive the parties of the benefit of the bargain shall be held to be
invalid, illegal, unenforceable or inoperative as a matter of law, the remaining
terms and provisions of this Agreement shall not be affected thereby, but each
such remaining term and provision shall be valid and shall remain in full force
and effect.
Section 10.11 Each party hereto acknowledges that each of them has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement has been jointly drafted and shall be construed as having been jointly
drafted by each party hereto. Accordingly, the rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement or any amendments or
exhibits hereto.
Section 10.12 In addition to the acts and deeds recited herein and
contemplated to be performed, executed and/or delivered by Contributor and
Company, both Contributor and Company hereby agree to perform, execute and/or
deliver or cause to be performed, executed and/or delivered at the Closing or
after the Closing, such further acts, deeds and assurances as the other party
hereto may reasonably require to (a) evidence and vest in Company the ownership
of, and title to, all of the Property in accordance with the terms hereof, and
(b) consummate the transactions contemplated hereunder.
Section 10.13 Each party agrees to reasonably cooperate with the
other in connection with any attempted "tax deferred exchange" by the other
party, as may be allowed or permitted under Section 1031 of the Internal
Revenue Code of 1986 and the regulations promulgated thereunder, as such may
have been or may in the future be amended, including the execution of various
assignments or notices of assignments to qualified intermediaries as may be
required to effect such a transaction; provided, however, that the Company will
not be obligated to bear or incur any costs or expenses in connection with such
transaction and shall be indemnified and held harmless by Contributor from,
against and with respect to all aspects of any such exchange and the results or
consequences thereof and all matters arising therefrom. Additionally, the
accomplishment of a tax deferred exchange shall in no event be a condition to
the Closing.
<PAGE> 17
Section 10.14 THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES
AND THE LAWS OF THE STATE OF NEVADA.
Section 10.15 Each party hereto represents to the other that such
respective party has not authorized any broker or finder to act on its behalf
in connection with the contribution hereunder. Each party hereto agrees to
indemnify, defend, and hold harmless the other party from and against any and
all claims, losses, damages, costs, or expenses (including, but not limited to,
reasonable attorney's fees) of any kind or character arising out of or
resulting from any agreement, arrangement, or understanding alleged to have
been made by such party with any broker or finder in connection with this
Agreement or the transaction contemplated hereby. This Section 10.15 shall
survive the Closing or any earlier termination of this Agreement.
ARTICLE 11.
Disclaimers and Waivers
Section 11.1 Except as expressly set forth in Section 5.1 hereof,
Contributor makes no representation or warranty as to the truth, accuracy or
completeness of any of the materials, data or information delivered by
Contributor to Company in connection with the transaction contemplated hereby.
Company acknowledges and agrees that except as set forth in Section 5.1, all
materials, data and information delivered by Contributor to Company in
connection with the transaction contemplated hereby is provided to Company as a
convenience only, that such materials, data and information may be incomplete
or inaccurate, that Contributor is released from all claims and liability
arising out of or relating to such materials, data and information, and that
any reliance on or use of such materials, data or information by Company shall
be at the sole risk of Company. Company acknowledges that Contributor makes no
representation or warranty as to Contributor's compliance with the American
With Disabilities Act of 1990 or any amendments or regulations related thereto.
Section 11.2 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, SECTION 5.1 HEREOF) AND AS MAY HEREAFTER BE SET
FORTH IN ANY OF THE EXHIBITS HERETO, IT IS UNDERSTOOD AND AGREED AS FOLLOWS:
THAT CONTRIBUTOR IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY REPRESENTATIONS
OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PROPERTY, INCLUDING BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO
HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER
THAN CONTRIBUTOR'S WARRANTY OF TITLE TO BE SET FORTH IN THE DEED AND ANY OTHER
WARRANTY OR REPRESENTATION BY CONTRIBUTOR TO BE CONTAINED IN ANY OF THE OTHER
EXHIBITS HERETO), ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITION
(INCLUDING THE PRESENCE OF ASBESTOS), UTILITIES, OPERATING HISTORY OR
PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY
WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE ITEMS
DELIVERED TO COMPANY OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF
CONTRIBUTOR TO COMPANY, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY;
THAT UPON CLOSING CONTRIBUTOR SHALL CONVEY TO COMPANY AND COMPANY SHALL ACCEPT
THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS;"
<PAGE> 18
COMPANY WILL NOT RELY ON, AND CONTRIBUTOR IS NOT LIABLE FOR OR BOUND BY, ANY
EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO MADE OR FURNISHED BY
CONTRIBUTOR, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT
REPRESENTING OR PURPORTING TO REPRESENT CONTRIBUTOR, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, VERBALLY OR IN WRITING EXCEPT AS SET OUT IN THIS
AGREEMENT; COMPANY REPRESENTS TO CONTRIBUTOR THAT COMPANY HAS CONDUCTED, OR
WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS
COMPANY DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY
AND THE EXISTENCE OR NONEXISTENCE OF CURATIVE ACTION TO BE TAKEN WITH RESPECT
TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND
WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON
BEHALF OF CONTRIBUTOR OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO EXCEPT AS
SET OUT IN THIS AGREEMENT; UPON CLOSING, COMPANY SHALL ACCEPT THE RISK THAT
ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE
PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY COMPANY'S
INVESTIGATIONS, AND COMPANY, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED CONTRIBUTOR FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES,
DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT
COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH COMPANY
MIGHT HAVE ASSERTED OR ALLEGED AGAINST CONTRIBUTOR AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY CONSTRUCTION DEFECTS, PHYSICAL CONDITIONS, VIOLATIONS OF ANY
APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS,
OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT AS
SET OUT IN THIS AGREEMENT; COMPANY ACKNOWLEDGES THAT THE PURPOSE OF THIS
SECTION IS FOR COMPANY, TO THE FULLEST EXTENT POSSIBLE AT LAW, TO WAIVE,
RELINQUISH, RELEASE AND DISCLAIM, ANY CLAIM OR LIABILITY OF OR AGAINST
CONTRIBUTOR AS THE RESULT OF ANY CONDITION OR STATE OF FACTS RELATING OR
PERTAINING TO THE PROPERTY ON THE CLOSING DATE, EXCEPT AS SET OUT IN THIS
AGREEMENT.
Section 11.3. All of the terms, provisions, releases and covenants
set forth in this Article 11 shall survive the Closing and not be merged
therein.
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to be effective as of the Effective Date.
EXECUTED on this the 26th day of June, 1998, by Company.
SIERRA-NEVADA MULTIFAMILY
INVESTMENTS, LLC, a Delaware limited liability
company
By: Camden Subsidiary, Inc., Manager
By: /s/ G. Steven Dawson
-------------------------------------
G. Steven Dawson, Vice President
EXECUTED on this the 26th day of June, 1998, by Contributor.
CAMDEN SUBSIDIARY, INC.,
A DELAWARE CORPORATION
By: /s/ G. Steven Dawson
------------------------------------------
G. Steven Dawson, Vice President
<PAGE> 1
Exhibit 2.2
AGREEMENT OF PURCHASE AND SALE
(LIKE-KIND ASSETS)
THIS AGREEMENT OF PURCHASE AND SALE (the "Agreement") is by and
between CAMDEN SUBSIDIARY, INC., a Delaware corporation (hereinafter called the
"Seller") and SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC, a Delaware limited
liability company (hereinafter called the "Purchaser").
ARTICLE 1.
Definitions
Section 1.1 As used in this Agreement, unless the context otherwise
requires or it is otherwise herein expressly provided, the following terms shall
have the following meanings:
CLOSING: The consummation of the transaction contemplated by this
Agreement.
CLOSING DATE: June 29, 1998 or such earlier or later date as mutually
agreed to by Purchaser and Seller.
IMPROVEMENTS: The buildings, structures, fixtures and other
improvements of every kind and nature situated on, in or under the Real
Property.
PERMITTED EXCEPTIONS: With respect to each parcel of land comprising
the Real Property, separately from all other such parcels, the matters
identified on Exhibit H attached hereto as the Permitted Exceptions
relating to that parcel or to all parcels.
PERSONAL PROPERTY: All fixtures; equipment; compressors; engines;
electrical systems, fixtures and equipment; plumbing fixtures, systems
and equipment; heating fixtures, systems and equipment; air
conditioning fixtures, systems and equipment; furniture; refrigerators;
dishwashers; disposals; ranges; range hoods; ovens; microwaves;
carpets, drapes; maintenance equipment; washing machines and dryers;
appliances of every kind; tools; landscaping; pool equipment; statuary;
television antennae, systems and equipment; intercom equipment and
systems; elevator fixtures, systems and equipment; central music
systems and equipment; security and fire alarms, systems and equipment;
and all other machinery; equipment; fixtures; automotive vehicles;
carts; supplies; replacement parts; building materials; and personal
property of every kind and character, tangible or intangible, owned by
the Seller and used or usable in connection with the operation of the
Improvements, including any and all trade names used in connection with
the ownership, use or operation of the Property other than the name
"Oasis" which is expressly reserved to Seller and its affiliates
(collectively, the "Trade Names").
REAL PROPERTY: The real property described on Exhibit "A" annexed
hereto and made a part hereof consisting of four (4) tracts of land in
the State of Nevada and all easements, rights, appurtenances and
hereditaments relating or appertaining thereto.
<PAGE> 2
RELATED AGREEMENTS: The Contribution Agreement and Agreement of
Purchase and Sale bearing even date herewith entered into by Purchaser
(as the "Company" or the "Purchaser" thereunder) and Camden Subsidiary,
Inc. or NQRS, Inc., respectively (as the "Contributor" or "Seller"
thereunder), which are substantially similar to this Agreement but
provide, respectively, for Purchaser's acquisition from Camden
Subsidiary, Inc. or NQRS, Inc., respectively of fifteen (15)
residential apartment properties situated in the State of Nevada.
TENANT LEASES: Leases, licenses, contracts and other agreements for the
use or occupancy of any space in the Real Property or Improvements,
written or verbal.
Section 1.2 The effective date of this Agreement (the "Effective
Date") shall be the later of the two dates upon which this Agreement is executed
by Seller and Purchaser as set forth beside their respective signatures.
Section 1.3 To the extent other terms are defined elsewhere in this
Agreement, such terms shall have the meanings set forth herein.
ARTICLE 2.
Sale and Purchase
Section 2.1 Subject to the terms and provisions hereof, the Seller
agrees to sell and convey to the Purchaser, and the Purchaser agrees to purchase
and acquire from the Seller the following (collectively, the "Property"):
(a) Fee simple title to and ownership of the Real Property
and Improvements, together with all right, title and interest, if any, of Seller
in and to any unpaid award made or to be made for the taking by condemnation or
otherwise, for public or quasi-public use or purpose of such right, title or
interest and any unpaid award for damage to any or all of the Real Property or
Improvements by reason of change of grade of any such street, road or avenue;
and all easements, right-of-way, privileges, licenses (written or oral), and all
appurtenances thereto;
(b) All of Seller's right, title and interest, if any, in and
to:
(1) All plans and specifications, site plans, soil and
substrata studies, architectural drawings, floor plans, landscape
plans, and other plans, reports or documents of any kind whatsoever
relating to the Real Property or Improvements;
(2) The Trade Name and any telephone listings thereof;
(3) All guaranties or warranties delivered to, or whose
benefit has been assigned to Seller or made to or inuring to the
benefit of Seller in connection with the construction, development,
ownership, use, improvement, repair, operation or maintenance of the
Improvements, and all agreements or contracts (if any) entered into by,
or whose benefit has been assigned to, Seller or made to or inuring to
the benefit of Seller in connection with the development, construction,
ownership, use, improvement, repair, operation or maintenance of the
Improvements (the "Miscellaneous Agreements");
<PAGE> 3
(4) All building and other permits, licenses or approvals
heretofore or hereafter granted by any governmental authority with
respect to the development, construction, ownership, use, improvement,
repair, maintenance, occupancy or operation of the Improvements.
(5) All unpaid insurance proceeds relating to any damage to
or destruction of, and all unpaid damages and awards relating to any
condemnation or other taking of, all or any part of the Property.
(c) The Personal Property.
(d) The Tenant Leases.
(e) All reports, files, correspondence, documents and
writings of any kind whatsoever relating to any of the foregoing which are in
Seller's possession or control.
ARTICLE 3.
Consideration for Conveyance
Section 3.1 Subject to the terms, conditions and provisions herein
contained, Purchaser agrees to pay and assign to Seller, and Seller agrees to
accept, as consideration for the conveyance and sale of the Property, (a) the
sum of Sixty-Four Million Four Hundred Fifty Thousand and No/100 Dollars
($64,450,000.00) (the "Purchase Price"), which shall be due and payable at
Closing in immediately available funds:
Section 3.2 Intentionally Deleted.
Section 3.3 As consideration for the conveyance of the Trade Names,
Purchaser shall pay to the Seller, and Seller agrees to accept, the sum of TEN
AND NO/100 DOLLARS ($10.00) in cash at Closing. It is expressly agreed that such
sum represents that portion of the Purchase Price that is attributable to or
paid for the Trade Names.
ARTICLE 4.
Survey and Title
Section 4.1 Seller will, at Seller's expense, cause to be delivered
to Purchaser at the Closing the following, all of which will be subject to
Purchaser's approval: (i) a title commitment signed by the title company
agreeing to deliver an ALTA owner's policy of title insurance in the amount of
the Purchase Price, with extended coverage over any general permitted exceptions
to such policies at Purchaser's expense, insuring Purchaser as the owner of the
Real Property and Improvements subject to no exceptions other than the Permitted
Exceptions (the "Title Policy"); and (ii) a currently-dated as-built plat of
survey of each parcel of land comprising the Real Property, certified to
Purchaser as having been prepared in accordance with the standards most recently
adopted by ALTA and ACSM (the "Survey").
<PAGE> 4
ARTICLE 5.
Representations, Warranties and Covenants of Seller
Section 5.1 Seller represents and warrants to Purchaser that as of
the Effective Date and also as of the Closing Date, the following statements are
and will be true and correct:
(a) Intentionally Deleted.
(b) There are no parties in possession of, and no person has
any right to the use or possession of, or to occupy, any portion of the
Real Property or Improvements as lessees or tenants at sufferance or
otherwise, except for tenants under the Tenant Leases, and, except for
such tenants, no person has any right to enter onto the Real Property
except for those who, pursuant to easements or other Permitted
Exceptions or the Miscellaneous Agreements have the right to enter onto
the Real Property solely for purposes of providing or servicing
utilities to the property or providing laundry services or facilities
at the Real Property.
(c) Except as disclosed on Schedule 5.1(c) hereof, Seller has
not received notice of, and Seller has no actual knowledge of any
pending or threatened condemnation, eminent domain, or similar
proceeding, or any special or other assessment affecting the Real
Property or Improvements or any part thereof.
(d) Seller is duly authorized and empowered to sell the
Property. Seller has obtained all necessary approvals required under
its organizational or operational documents for entering into this
Agreement and for the consummation of this transaction. This
Agreement has been duly authorized by all necessary and appropriate
action of Seller, has been executed on Seller's behalf by its duly
authorized representative, and is a legal, valid and binding
obligation of Seller.
(e) Except as disclosed on Schedule 5.1(e) hereof, Seller has
not received notice of, and Seller has no actual knowledge of, any
pending or threatened claims or lawsuits which could, if decided
adversely to Seller or Purchaser or otherwise, materially affect the
Real Property or Improvements or any part thereof or the use or value
thereof or which could become a lien on any thereof.
(f) All obligations of Seller arising from the ownership and
operation of the Real Property, including, but not limited to, salaries
and the like, have been paid as they became due or will be paid at or
prior to Closing. Except for obligations for which provisions are made
herein for assumption by Purchaser or with respect to which a proration
adjustment is made in Purchaser's favor at Closing, there will be no
obligations of Seller with respect to, relating to or affecting the
Real Property or any part thereof outstanding as of Closing which could
give rise to a lien on or claim against or affecting the Real Property
or any part thereof.
(g) Seller has not received notice of, and Seller has no
actual knowledge of, any attachments, executions, assignments for the
benefit of creditors or voluntary or involuntary proceedings in
bankruptcy or under any other debtor relief laws contemplated by or
pending or threatened against Seller or the Real Property or any part
thereof.
<PAGE> 5
(h) The matters set out in the rent roll attached hereto as
Exhibit I are true and correct and are not misleading. The rent roll
identifies all deposits made by, or credit for which is owed to, any
tenant under any Tenant Lease except to the extent (if any) expressly
stated on the rent roll. Each Tenant Lease identified or referred to
therein is in full force and effect. Except as disclosed on Schedule
5.1(h) hereof, Seller has not received any notice from any tenant
alleging a default by Seller or the landlord, and Seller has no actual
knowledge of any default by or unperformed obligation of the landlord,
under any of the Tenant Leases, and, to the best of Seller's knowledge,
no tenant under any of the Tenant Leases is in default thereunder.
(i) Seller is the fee simple owner of the Real Property and
the Improvements, subject to no restrictions, covenants, conditions,
liens, claims, encumbrances, reservations, easements or other
exceptions to title other than the Permitted Exceptions.
(j) Except as disclosed in Schedule 5.1(j) hereof Seller has
not received written notice of, and has no actual knowledge of, any
existing condition with respect to the Real Property or Improvements
(or any part thereof) or its operation which violates any law,
ordinance, code, regulation or court or administrative order.
(k) Except as disclosed in Schedule 5.1(k) hereof, Seller has
not received written notice, and Seller has no actual knowledge that
the Real Property or the Improvements or any part thereof is being used
for the storage or disposal of any hazardous or toxic materials or that
any such materials are present on, under or in, or were released or
discharged from, the Real Property or the Improvements in violation of
applicable laws. To Seller's actual knowledge, no hazardous or toxic
materials now are or ever were placed or situated on, under or in, or
were released or discharged from, the Real Property or the
Improvements.
(l) No portion of the Real Property or the Improvements
constitutes "plan assets" of any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, or any "plan" as defined in Section 4975(e)(2) of the Internal
Revenue Code of 1986, as amended.
(m) The data and information contained in each of the
financial statements and operating reports relating to the Real
Property and Improvements (or any part or parts thereof) hereto
furnished by Seller to Purchaser are true and correct and are not
misleading and do not omit any material information.
Seller shall promptly advise Purchaser in writing if any
representation or warranty contained in this Section 5.1 becomes false or
misleading prior to the Closing; provided, however, that the delivery of such
notification shall not waive, limit, diminish or affect the right of Purchaser
to object thereto (or except as expressly provided in this grammatical
paragraph) any right or remedy of Purchaser relating thereto. As a condition
precedent to Purchaser's obligations hereunder, the representations and
warranties contained in this Section 5.1 shall be true and correct on the
Closing Date. However, in the event of a breach hereof by Seller or in the
event Seller has given Purchaser written notice of a material change in any
matter made the subject of the foregoing representations and warranties,
Purchaser's sole and exclusive remedy prior to Closing will be to (i) waive the
default by Seller and close the transaction contemplated hereby, without any
reduction in the
<PAGE> 6
Purchase Price, or (b) terminate this Agreement. To the extent Purchaser has
received written notice from Seller at or prior to Closing, that any one or more
of the foregoing representations and warranties are not true and correct (the
"Waived Representation(s)"), and Purchaser consummates the transaction
contemplated hereby, Purchaser waives any claims against Seller for a breach of
a Waived Representation. Purchaser's right to bring a claim against Seller for
breach of any representations and warranties contained herein shall survive
until one (1) year after the Closing.
Section 5.2. From the Effective Date until the Closing Date or
earlier termination of this Agreement, Seller shall:
(a) Operate the Real Property and Improvements, and
continue its marketing and leasing efforts, in the same manner as
heretofore, and use reasonable efforts to preserve for the benefit of
Purchaser the Tenant Leases and the relationships of Seller and its
tenants.
(b) Keep, maintain and repair the Real Property and
Improvements in a good, safe, neat, clean and presentable condition,
and comply in all material respects with all laws, ordinances,
regulations, licenses, permits and court or governmental orders
affecting the Property.
(c) Keep, observe and perform its obligations as landlord
under the Tenant Leases, and as long as tenants are not in default
thereunder, not cause the termination of any Tenant Lease nor alter,
amend or otherwise modify or supplement any Tenant Lease without the
prior written consent of Purchaser.
(d) Not enter into any written or oral service contract or
other agreement with respect to the Property that will not be fully
performed on or before Closing, or that will not be cancelable by
Purchaser with thirty (30) days notice without liability on or after
Closing without the prior written consent of Purchaser.
(e) Promptly advise Purchaser of any pending or threatened
litigation, arbitration, administrative hearing or legislation before
any governmental body or agency, or any tax increase or assessment, of
which Seller becomes aware, that concerns or could affect the Property
or any part thereof.
(f) Not take or omit to take any action which would have the
effect of violating any of the representations, warranties, covenants
or agreements of Seller contained herein.
(g) Not further encumber or allow the encumbrance of the
title to the Property, or modify the terms or conditions of any
existing encumbrances (other than Tenant Leases), if any, which will
not be released at Closing, without in each case the prior written
consent of Purchaser.
Seller shall promptly advise Purchaser in writing if any covenant
contained in this Section 5.2 is breached prior to the Closing; provided,
however, that the delivery of such notification shall not waive, limit,
diminish or affect the right of Purchaser to object thereto or any right or
remedy of Purchaser relating thereto. As a condition precedent to Purchaser's
obligations hereunder, the
<PAGE> 7
covenants contained in this Section 5.2 shall have been fully performed at all
times up to and including the Closing Date.
ARTICLE 6.
Inspection and Audit; Purchaser's "Due Diligence"
Section 6.1 The Seller agrees that from the Effective Date until
Closing, Purchaser, personally or through its authorized agents, designees or
representatives, shall be entitled to enter upon the Real Property and into the
Improvements to conduct such physical and environmental and other inspections,
independent appraisals, and other tests, examinations and studies of the
Property as Purchaser desires, (but only upon twenty-four (24) hours prior
notice to Seller), during business hours and provided that such inspections do
not interfere with rights of tenants under the Tenant Leases or Seller's
operation of the Property. Seller agrees to provide Purchaser with all access
described in this Section and to facilitate Purchaser's entry and conduct of
its inspections and tests. Purchaser agrees to indemnify and hold Seller
harmless of and from any claim for physical damages or physical injuries
arising from Purchaser's inspection of the Property, and notwithstanding
anything to the contrary in this Agreement, such obligation to indemnify shall
survive Closing or any termination of this Agreement.
Section 6.2 Seller agrees that all times until the Closing occurs,
promptly in response to Purchaser's reasonable request therefor Seller will make
available and deliver to Purchaser and Purchaser's agents, representatives and
designees all reports, financial statements, operating statements, contracts,
permits, licenses, Tenant Leases, records, files and writings of any and every
kind whatsoever that relate in any way directly or indirectly to the Property,
the Real Property, the Improvements, any part of any thereof, any or all of the
Tenant Leases, or the business or affairs of Seller.
Section 6.3 If Purchaser, in its sole and unreviewable discretion, is
not satisfied in any respect with any matter relating in any way directly or
indirectly to the Property or any component or aspect thereof, Purchaser may
give Seller a notice (a "Due Diligence Termination Notice") at any time before
the Closing terminating this Agreement, in which event this Agreement will be
terminated without liability of or to either party and neither party shall have
any further obligations hereunder other than those that expressly survive the
termination of this Agreement.
ARTICLE 7.
Conditions Precedent to Obligations of Purchaser
Section 7.1 The satisfaction of each and every one of the following
shall be a condition precedent to Purchaser's obligation to close hereunder:
(a) the representations and warranties of Seller contained in
Section 5.1 shall have been true and correct on the Effective Date and
on the Closing Date;
(b) Seller shall have performed and complied with all of its
covenants, agreements and undertakings contained in Section 5.2 or
elsewhere herein;
<PAGE> 8
(c) There shall not have occurred any material damage to or
change in the condition of any component or part of the Real Property
or Improvements since the Effective Date;
(d) There shall not be pending or threatened any condemnation
or proceeding in the nature of eminent domain affecting all or any part
of the Real Property;
(e) Seller shall have delivered to Purchaser the commitment
for the Title Policy, the Survey, all of the documents described in
Section 8.2 hereof and all other documents, writings and things which,
under any provision of this Agreement, Seller is to deliver to
Purchaser at or before the Closing;
(f) Purchaser shall have failed to deliver a "Due Diligence
Termination Notice" to Seller before the Closing;
(g) The closings shall have occurred, or shall simultaneously
be occurring, under all of the Related Agreements; and
(h) All other conditions precedent (if any) to Seller's
obligation to close, as set out in any provision of this Agreement,
shall have been satisfied.
Section 7.2 If any condition precedent to Purchaser' s obligation to
close hereunder is not timely satisfied, then Purchaser may elect, in its sole
discretion, to waive any such defect or requirement and close the transaction
contemplated herein or terminate this Agreement without liability and neither
party shall have any further obligations hereunder other than those that
expressly survive the termination of this Agreement.
ARTICLE 8.
Closing
Section 8.1 The Closing hereunder shall take place at the offices of
Seller unless otherwise agreed between the parties in writing, on or before the
Closing Date, unless the Closing Date shall be extended by agreement by
Purchaser and Seller in writing in accordance with the terms hereof.
Section 8.2 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser each of the following items, each duly executed by
Seller as required and in form and substance satisfactory to Purchaser:
(a) A bargain and sale deed, in the form of Exhibit "B"
attached hereto, duly executed and acknowledged by Seller, and in form
for recording, conveying good and indefeasible fee simple title in the
Real Property and Improvements to Purchaser, subject only to the liens
securing the Assumed Loan Balance of the Assumed Loan and, with
respect to each specific land parcel and the improvements situated
thereon, the Permitted Exceptions that apply to that particular parcel
as set out on Exhibit H attached hereto.
(b) A bill of sale, in the form of Exhibit "C" attached
hereto, with a list of the Personal Property attached, duly executed
by Seller, conveying to Purchaser the Personal Property.
<PAGE> 9
(c) Executed originals of all Tenant Leases to the extent in
Seller's possession and, as to any Tenant Lease for which the executed
original is not in Seller's possession, a true photocopy of the actual
signed lease (each to be delivered at the respective property),
together with an assignment, in the form of Exhibit "D" attached
hereto, duly executed and acknowledged by Seller and in recordable
form, assigning to Purchaser all the Tenant Leases and all security
deposits held pursuant to the Tenant Leases.
(d) Intentionally Deleted.
(e) Letters addressed to each tenant under each Tenant
Lease, in the form of Exhibit "E" attached hereto, conforming to the
requirements of applicable state law and advising of the change of
ownership of the Property, the transfer of the security deposits (to
the extent the same are transferred) to Purchaser, and informing such
tenant to make future rental payments to the person, at the address,
designated by Purchaser.
(f) An assignment, in the form of Exhibit "F" attached
hereto, duly executed by Seller, assigning to Purchaser (i) all of
Seller's rights and benefits under any Miscellaneous Agreements
affecting the Property, (ii) all warranties, guaranties, and bonds
applicable to the Property or any part thereof, without representation
or warranty by Seller, and (iii) all of Seller's right, title, and
interest in the Trade Names without representation or warranty by
Seller.
(g) To be delivered at each respective property, all keys
to all locks on the Real Property or Improvements (and an accounting
for keys in possession of others); all books, records, files,
documents, reports, advertising materials, and correspondence
pertaining to the Property; all documents in the possession of the
Seller pertaining to tenants of the Property, including, but not by
way of limitation, all applications, correspondence and credit reports
relating to each such tenant.
(h) A Certification in a form of Exhibit "G" attached
hereto, duly executed by the Seller under penalties of perjury,
containing the following:
(i) The Seller's U.S. Taxpayer Identification Number and
business address; and
(ii) A statement that the Seller is not a foreign person
within the meaning of Sections 1445 and 7701 of the Internal
Revenue Code and applicable regulations.
In the event that the Seller fails to deliver such Certification at
Closing or the Seller delivers such Certification but the Purchaser
has actual knowledge that such Certification is false or the Purchaser
receives notice that the Certification is false from any agent of the
Purchaser or the Seller, the Purchaser shall be entitled to withhold
from the Purchase Price a sum equal to ten percent (10%) of the total
amount which otherwise would have been realized by the Seller from
such sale, which sum will be paid by the Purchaser to the United
States Treasury pursuant to the requirements of Section 1445 of the
IRC and the regulations promulgated thereunder.
<PAGE> 10
(i) Such evidence or documents as may reasonably be required
by Purchaser or the title insurance company issuing the Title Policy
evidencing the status and capacity of Seller and the authority of the
person or persons who are executing the various documents on behalf of
Seller in connection with the sale of the Property.
(j) The amount of any deposits or fees or prepaid rent, both
refundable and non-refundable, held by the Seller pursuant to
provisions of any Tenant Leases.
(k) A written guaranty of payment executed by Camden Property
Trust in favor of Purchaser, guaranteeing the payment by Seller of any
of its obligations and liabilities to Purchaser under this Agreement as
to which claims are asserted, and are permitted to be asserted, by
Purchaser after the Closing.
(l) A closing settlement statement acceptable to Seller and
Purchaser, duly signed by Seller.
(m) All other items comprising the Property and all other
documents, agreements, certificates, writings or items that any
provision of this Agreement obligates Seller to deliver to Purchaser.
(n) All other declarations (including, without limitation,
transfer tax declarations), documents, instruments and writings that
are required by law to be, or are customarily, executed or delivered by
sellers of multifamily residential real estate properties in connection
with the sale or conveyance thereof.
Section 8.3 At the Closing, Purchaser shall deliver to Seller the
following items, each duly executed by Purchaser as required:
(a) The Purchase Price.
(b) Intentionally Deleted.
(c) Any of the conveyance documents described in Section 8.2
that require the signature of Purchaser.
(d) Such evidence or documents as may reasonably be required
by Seller evidencing the status and capacity of Purchaser and the
authority of the person or persons who are executing the various
documents on behalf of Purchaser in connection with the sale of the
Property.
(e) A closing settlement statement acceptable to Seller and
Purchaser, duly signed by Seller.
Section 8.4 At Closing, the following items shall be adjusted or
prorated between Seller and Purchaser, such prorations to be made effective as
of the Closing Date (Seller receiving the benefit and burden thereof):
<PAGE> 11
(a) Rents collected for month in which Closing occurs shall
be prorated. No proration shall be made for rents not collected as of
the Closing Date and Purchaser shall have no liability to Seller for
such delinquent rents; provided, however, that if Purchaser collects
after Closing any rents which are owing to the Seller by tenants of the
Property and specifically designated by the payor thereof for periods
prior to the Closing Date, and if at that time all other rents due or
payable from those tenants are fully and currently paid (Purchaser
shall be entitled to apply all rental payments to the latest period for
which rentals are due), Purchaser shall promptly remit to Seller that
portion of such rental payments as is allocable to the period before
the Closing. This provision shall not be deemed an obligation, express
or implied, by or on behalf of Purchaser to take any action to collect
such rents.
(b) Taxes, ad valorem, personal or otherwise, for the
Property for the current calendar year shall be prorated. The Seller's
pro rata portion of such taxes shall be based upon taxes actually
assessed for the current calendar year. If, for any reason, taxes for
the current calendar year have not been assessed on the Property such
proration shall be estimated based upon the most recently published tax
rate and valuation for the Property for calendar year in which the
Closing Date occurs, and adjusted within thirty (30) days following the
date when exact amounts are available and such adjustment provision
shall expressly survive the closing hereof.
(c) All other income and ordinary operating expenses for or
pertaining to the Property, public utility charges, maintenance,
service charges, and all other normal operating charges of the Property
shall be prorated.
In the event any adjustments pursuant to this Section 8.4 are,
subsequent to Closing, found to be erroneous, then either party hereto who is
entitled to additional monies shall invoice the other party for such additional
amounts as may be owing, and such amount (reduced by any monies due to the
other party) shall be paid within ten (10) days from receipt of the invoice.
This covenant shall survive the Closing of the sale contemplated hereby.
Section 8.5 Neither this Agreement, nor any of the rights and
obligations hereunder, may be assigned by Purchaser without Seller's prior
written consent, which may be withheld in Seller's sole and absolute
discretion. The preceding sentence shall not apply to, or reflect or limit in
any way, the admission of new or additional members into Purchaser.
Section 8.6 Exclusive possession of the Property shall be delivered
to Purchaser by Seller at the Closing, subject only to the rights of tenants
under the Tenant Leases and subject to the Permitted Exceptions.
Section 8.7 Seller shall pay for the Title Policy, the Survey, and
all transfer taxes relating to the transactions contemplated hereby. All other
costs and expenses (if any) in connection with the transaction contemplated by
this Agreement shall be borne by Seller and Purchaser in the manner in which
such costs and expenses are customarily allocated between the parties at
closings of multifamily residential real property similar to the Property in the
Las Vegas, Nevada area. Except as specifically provided in Section 10.5 hereof,
each party hereto shall pay its own attorneys' fees and expenses incurred in the
preparation and negotiation of this Agreement and the Closing of the transaction
contemplated hereby.
<PAGE> 12
ARTICLE 9.
Remedies of Default
Section 9.1 In the event of Seller's default hereunder, Purchaser may
elect, at its option, as its sole and exclusive remedies, either to (a)
terminate this Agreement; or (b) if Seller's default arises out of its alleged
failure to perform its obligation to convey title on the Closing Date, enforce
specific performance hereunder against Seller.
Section 9.2 In the event that Seller is unable to consummate the sale
contemplated hereby due to a default by Purchaser, then, as Seller's sole and
exclusive remedy and relief, Seller shall be entitled to the Cash Payment as
liquidated damages for Purchaser's default. Such amount is agreed upon by and
between the Seller and the Purchaser as liquidated damages, due to the
difficulty and inconvenience of ascertaining and measuring actual damages, and
the uncertainty thereof; and no other damages, rights or remedies shall in any
case be collectible, enforceable or available to the Seller other than as
specified in this Article 9, but the Seller shall accept said Cash Payment as
the Seller's total damages and relief. If Purchaser fails to timely deliver the
Cash Payment, Seller shall have all rights at law or equity against Purchaser
for its default.
Section 9.3 Notwithstanding the provisions of Sections 9.1 and 9.2
above, in the event that after Closing a party (the "Defaulting Party") breaches
an obligation hereunder which is expressly stated herein to survive Closing, the
Defaulting Party shall be liable to the other party (the "Non-Defaulting Party")
for the damages incurred by the Non- Defaulting Party as a result of such
breach.
Section 9.4 Seller and Purchaser specifically acknowledge and agree
that any limitation on remedies set forth in this Article 9 does not apply to
the express hold harmless and indemnification agreements set forth in this
Agreement or to the amounts recoverable pursuant to Section 10.5 hereof.
ARTICLE 10.
Miscellaneous
Section 10.1 All notices, demands, or other communications of any type
(herein collectively referred to as "Notices") given by the Seller or required
to be given to the Purchaser or by the Purchaser to the Seller, whether required
by this Agreement or in any way related to the transaction contracted for
herein, shall be in writing and given in accordance with the provisions of this
Section 10.1. All notices shall be delivered or sent either in person, by
facsimile, by nationally recognized overnight courier, or by United States Mail,
as a registered or certified item, return receipt requested. Notices delivered
by mail shall be deemed given on the third business day after being deposited in
a post office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, addressed, as
follows:
If to Seller: Camden Subsidiary, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attention: Richard J. Campo
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3599
<PAGE> 13
With a copy to: Elizabeth Pringle Johnson, Esq.
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3590
and a copy to: Robert M. Berger, Esq.
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, IL 60603
Telephone No.: (312) 701-7272
Facsimile No.: (312) 701-7711
Stephen B. Hansen
Schroder Real Estate Associates, Inc.
437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 940-3600
Facsimile No.: (212) 732-5144
If to the Purchaser, as follows:
Sierra-Nevada Multifamily Investments, LLC
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attention: Richard J. Campo
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3599
With a copy to: Elizabeth Pringle Johnson, Esq.
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3590
and a copy to: Robert M. Berger, Esq.
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, IL 60603
Telephone No.: (312) 701-7272
Facsimile No.: (312) 701-7711
Stephen B. Hansen
Schroder Real Estate Associates, Inc.
437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 940-3600
Facsimile No.: (212) 732-5144
<PAGE> 14
Notice given in person, by facsimile or by overnight courier shall be deemed
given upon receipt. Either party hereto may change the address for notice
specified above by giving the other party ten (10) days advance written notice
of such change of address.
Section 10.2 This Agreement shall be construed and interpreted in
accordance with the laws of the State of Nevada. Where required for proper
interpretation, words in the singular shall include the plural; the masculine
gender shall include the neuter and the feminine, and vice versa. The terms
"heirs, executors, administrators and assigns" shall include "successors, legal
representatives and assigns."
Section 10.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns. This Agreement may not be modified or
amended except by an agreement in writing signed by the Seller and the
Purchaser, a copy of which has been delivered to Messrs. Hansen and Berger at
their respective addresses set out in Section 10.1 above. The parties may
waive any of the conditions contained herein or any of the obligations of the
other party hereunder, but any such waiver shall be effective only if in
writing and signed by the party waiving such conditions or obligations, a copy
of which waiver has been delivered to Messrs. Hansen and Berger at their
respective addresses set out in Section 10.1 above.
Section 10.4 Time is of the essence of this Agreement.
Section 10.5 In the event it becomes necessary for either party
hereto to file a suit to enforce this Agreement or any provisions contained
herein, the party prevailing in such action (as determined by the court) shall
be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and court costs, including appellate costs, incurred
in such suit.
Section 10.6 The descriptive headings of the several Articles,
Sections and Paragraphs contained in this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 10.7 This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement or condition not expressed in this Agreement
shall be binding upon the parties hereto or shall affect or be effective to
interpret, change or restrict the provisions of this Agreement.
Section 10.8 Multiple originals of this Agreement have been executed
by the parties hereto. Each such executed original shall have the full force and
effect of an original executed instrument. Signature pages from the multiple
originals may be assembled to form one document. This Agreement may be executed
in multiple counterparts, all of which when taken together shall constitute one
and the same agreement.
<PAGE> 15
Section 10.9 Unless otherwise specified, in computing any period of
time described in this Agreement, the day of the act or event after which the
designated period of time begins to run is not to be included and the last day
of the period so computed is to be included, unless such last day is a Saturday,
Sunday or legal holiday under the laws of the State of Nevada, in which event
the period shall run until the end of the next day which is neither a Saturday,
Sunday or legal holiday. The final day of any such period shall be deemed to end
at 5:00 o'clock p.m. (Central Time).
Section 10.10 If any term or provision of this Agreement which would
not deprive the parties of the benefit of the bargain shall be held to be
invalid, illegal, unenforceable or inoperative as a matter of law, the remaining
terms and provisions of this Agreement shall not be affected thereby, but each
such remaining term and provision shall be valid and shall remain in full force
and effect.
Section 10.11 Each party hereto acknowledges that each of them has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement has been jointly drafted and shall be construed as having been jointly
drafted by each party hereto. Accordingly, the rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement or any amendments or
exhibits hereto.
Section 10.12 In addition to the acts and deeds recited herein and
contemplated to be performed, executed and/or delivered by Seller and
Purchaser, both Seller and Purchaser hereby agree to perform, execute and/or
deliver or cause to be performed, executed and/or delivered at the Closing or
after the Closing, such further acts, deeds and assurances as the other party
hereto may reasonably require to (a) evidence and vest in Purchaser the
ownership of, and title to, all of the Property in accordance with the terms
hereof, and (b) consummate the transactions contemplated hereunder.
Section 10.13 Each party agrees to reasonably cooperate with the other
in connection with any attempted "tax deferred exchange" by the other party, as
may be allowed or permitted under Section 1031 of the Internal Revenue Code of
1986 and the regulations promulgated thereunder, as such may have been or may in
the future be amended, including the execution of various assignments or notices
of assignments to qualified intermediaries as may be required to effect such a
transaction; provided, however, that the Purchaser will not be obligated to bear
or incur any costs or expenses in connection with such transaction and shall be
indemnified and held harmless by Seller from, against and with respect to all
aspects of any such exchange and the results or consequences thereof and all
matters arising therefrom. Additionally, the accomplishment of a tax deferred
exchange shall in no event be a condition to the Closing.
Section 10.14 THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES
AND THE LAWS OF THE STATE OF NEVADA.
Section 10.15 Each party hereto represents to the other that such
respective party has not authorized any broker or finder to act on its behalf
in connection with the purchase and sale hereunder. Each party hereto agrees to
indemnify, defend, and hold harmless the other party from and against any and
all claims, losses, damages, costs, or expenses (including, but not limited to,
reasonable attorney's fees) of any kind or character arising out of or
resulting from any agreement,
<PAGE> 16
arrangement, or understanding alleged to have been made by such party with any
broker or finder in connection with this Agreement or the transaction
contemplated hereby. This Section 10.15 shall survive the Closing or any
earlier termination of this Agreement.
ARTICLE 11.
Disclaimers and Waivers
Section 11.1 Except as expressly set forth in Section 5.1 hereof,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any of the materials, data or information delivered by Seller
to Purchaser in connection with the transaction contemplated hereby. Purchaser
acknowledges and agrees that except as set forth in Section 5.1, all materials,
data and information delivered by Seller to Purchaser in connection with the
transaction contemplated hereby is provided to Purchaser as a convenience only,
that such materials, data and information may be incomplete or inaccurate, that
Seller is released from all claims and liability arising out of or relating to
such materials, data and information, and that any reliance on or use of such
materials, data or information by Purchaser shall be at the sole risk of
Purchaser. Purchaser acknowledges that Seller makes no representation or
warranty as to Seller's compliance with the American With Disabilities Act of
1990 or any amendments or regulations related thereto.
Section 11.2 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, SECTION 5.1 HEREOF) AND AS MAY HEREAFTER BE SET
FORTH IN ANY OF THE EXHIBITS HERETO, IT IS UNDERSTOOD AND AGREED AS FOLLOWS:
THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PROPERTY, INCLUDING BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO
HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER
THAN SELLER'S WARRANTY OF TITLE TO BE SET FORTH IN THE DEED AND ANY OTHER
WARRANTY OR REPRESENTATION BY SELLER TO BE CONTAINED IN ANY OF THE OTHER
EXHIBITS HERETO), ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITION
(INCLUDING THE PRESENCE OF ASBESTOS), UTILITIES, OPERATING HISTORY OR
PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY
WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE ITEMS
DELIVERED TO COMPANY OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF
SELLER TO COMPANY, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY; THAT
UPON CLOSING SELLER SHALL CONVEY TO COMPANY AND COMPANY SHALL ACCEPT THE
PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS;" COMPANY WILL NOT RELY ON, AND
SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES,
GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE
PROPERTY OR RELATING THERETO MADE OR FURNISHED BY SELLER, THE MANAGER OF THE
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO
REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, VERBALLY
OR IN WRITING EXCEPT AS SET OUT IN THIS AGREEMENT; COMPANY REPRESENTS TO SELLER
THAT COMPANY HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH
INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS COMPANY DEEMS NECESSARY TO
<PAGE> 17
SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR
NONEXISTENCE OF CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR
TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON
SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS
AGENTS OR EMPLOYEES WITH RESPECT THERETO EXCEPT AS SET OUT IN THIS AGREEMENT;
UPON CLOSING, COMPANY SHALL ACCEPT THE RISK THAT ADVERSE MATTERS, INCLUDING BUT
NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL
CONDITIONS, MAY NOT HAVE BEEN REVEALED BY COMPANY'S INVESTIGATIONS, AND
COMPANY, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND
RELEASED SELLER FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND
EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR
CHARACTER, KNOWN OR UNKNOWN, WHICH COMPANY MIGHT HAVE ASSERTED OR ALLEGED
AGAINST SELLER AT ANY TIME BY REASON OF OR ARISING OUT OF ANY CONSTRUCTION
DEFECTS, PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY
ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT AS SET OUT IN THIS
AGREEMENT; COMPANY ACKNOWLEDGES THAT THE PURPOSE OF THIS SECTION IS FOR
COMPANY, TO THE FULLEST EXTENT POSSIBLE AT LAW, TO WAIVE, RELINQUISH, RELEASE
AND DISCLAIM, ANY CLAIM OR LIABILITY OF OR AGAINST SELLER AS THE RESULT OF ANY
CONDITION OR STATE OF FACTS RELATING OR PERTAINING TO THE PROPERTY ON THE
CLOSING DATE, EXCEPT AS SET OUT IN THIS AGREEMENT.
Section 11.3. All of the terms, provisions, releases and covenants set
forth in this Article 11 shall survive the Closing and not be merged therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to be effective as of the Effective Date.
EXECUTED on this the 26th day of June, 1998, by Purchaser.
SIERRA-NEVADA MULTIFAMILY
INVESTMENTS, LLC, a Delaware limited liability
company
By: Camden Subsidiary, Inc., Manager
By: /s/ G. Steven Dawson
----------------------------------------
G. Steven Dawson, Vice President
<PAGE> 18
EXECUTED on this the 26th day of June, 1998, by Seller.
CAMDEN SUBSIDIARY, INC., A DELAWARE
CORPORATION
By: /s/ G. Steven Dawson
------------------------------------------
G. Steven Dawson, Vice President
<PAGE> 1
Exhibit 2.3
AGREEMENT OF PURCHASE AND SALE
(LOSS ASSETS)
THIS AGREEMENT OF PURCHASE AND SALE (the "Agreement") is by and
between NQRS, INC., a Nevada corporation (hereinafter called the "Seller") and
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC, a Delaware limited liability
company (hereinafter called the "Purchaser").
ARTICLE 1.
Definitions
Section 1.1 As used in this Agreement, unless the context
otherwise requires or it is otherwise herein expressly provided, the following
terms shall have the following meanings:
CLOSING: The consummation of the transaction contemplated by this
Agreement.
CLOSING DATE: June 29, 1998 or such earlier or later date as mutually
agreed to by Purchaser and Seller.
IMPROVEMENTS: The buildings, structures, fixtures and other
improvements of every kind and nature situated on, in or under the Real
Property.
PERMITTED EXCEPTIONS: With respect to each parcel of land comprising
the Real Property, separately from all other such parcels, the matters
identified on Exhibit H attached hereto as the Permitted Exceptions
relating to that parcel or to all parcels.
PERSONAL PROPERTY: All fixtures; equipment; compressors; engines;
electrical systems, fixtures and equipment; plumbing fixtures, systems
and equipment; heating fixtures, systems and equipment; air
conditioning fixtures, systems and equipment; furniture; refrigerators;
dishwashers; disposals; ranges; range hoods; ovens; microwaves;
carpets, drapes; maintenance equipment; washing machines and dryers;
appliances of every kind; tools; landscaping; pool equipment; statuary;
television antennae, systems and equipment; intercom equipment and
systems; elevator fixtures, systems and equipment; central music
systems and equipment; security and fire alarms, systems and equipment;
and all other machinery; equipment; fixtures; automotive vehicles;
carts; supplies; replacement parts; building materials; and personal
property of every kind and character, tangible or intangible, owned by
the Seller and used or usable in connection with the operation of the
Improvements, including any and all trade names used in connection with
the ownership, use or operation of the Property other than the name
"Oasis" which is expressly reserved to Seller and its affiliates
(collectively, the "Trade Names").
REAL PROPERTY: The real property described on Exhibit "A" annexed
hereto and made a part hereof consisting of six (6) tracts of land in
the State of Nevada and all easements, rights, appurtenances and
hereditaments relating or appertaining thereto.
<PAGE> 2
RELATED AGREEMENTS: The Contribution Agreement and Agreement of
Purchase and Sale bearing even date herewith entered into by Purchaser
(as the "Company" or "Purchaser" thereunder) and Camden Subsidiary,
Inc. (as the "Contributor" or "Seller" thereunder), which are
substantially similar to this Agreement but provide, respectively, for
Purchaser's acquisition from Camden Subsidiary, Inc. of an aggregate of
thirteen (13) residential apartment properties situated in the State of
Nevada.
TENANT LEASES: Leases, licenses, contracts and other agreements for the
use or occupancy of any space in the Real Property or Improvements,
written or verbal.
Section 1.2 The effective date of this Agreement (the "Effective
Date") shall be the later of the two dates upon which this Agreement is
executed by Seller and Purchaser as set forth beside their respective
signatures.
Section 1.3 To the extent other terms are defined elsewhere in this
Agreement, such terms shall have the meanings set forth herein.
ARTICLE 2.
Sale and Purchase
Section 2.1 Subject to the terms and provisions hereof, the Seller
agrees to sell and convey to the Purchaser, and the Purchaser agrees to purchase
and acquire from the Seller the following (collectively, the "Property"):
(a) Fee simple title to and ownership of the Real Property
and Improvements, together with all right, title and interest, if any,
of Seller in and to any unpaid award made or to be made for the taking
by condemnation or otherwise, for public or quasi-public use or purpose
of such right, title or interest and any unpaid award for damage to any
or all of the Real Property or Improvements by reason of change of
grade of any such street, road or avenue; and all easements,
right-of-way, privileges, licenses (written or oral), and all
appurtenances thereto;
(b) All of Seller's right, title and interest, if any, in
and to:
(1) All plans and specifications, site plans, soil and
substrata studies, architectural drawings, floor plans,
landscape plans, and other plans, reports or documents of any
kind whatsoever relating to the Real Property or Improvements;
(2) The Trade Name and any telephone listings thereof;
(3) All guaranties or warranties delivered to, or whose
benefit has been assigned to Seller or made to or inuring to
the benefit of Seller in connection with the construction,
development, ownership, use, improvement, repair, operation or
maintenance of the Improvements, and all agreements or
contracts (if any) entered into by, or whose benefit has been
assigned to, Seller or made to or inuring to the benefit of
Seller in connection with the development, construction,
ownership, use, improvement, repair, operation or maintenance
of the Improvements (the "Miscellaneous Agreements");
<PAGE> 3
(4) All building and other permits, licenses or approvals
heretofore or hereafter granted by any governmental authority
with respect to the development, construction, ownership, use,
improvement, repair, maintenance, occupancy or operation of the
Improvements.
(5) All unpaid insurance proceeds relating to any damage
to or destruction of, and all unpaid damages and awards
relating to any condemnation or other taking of, all or any
part of the Property.
(c) The Personal Property.
(d) The Tenant Leases.
(e) All reports, files, correspondence, documents and
writings of any kind whatsoever relating to any of the foregoing which
are in Seller's possession or control.
ARTICLE 3.
Consideration for Conveyance
Section 3.1 Subject to the terms, conditions and provisions herein
contained, Purchaser agrees to pay and assign to Seller, and Seller agrees to
accept, as consideration for the conveyance and sale of the Property to the
Purchaser, the sum of $96,906,000 (the "Purchase Price"), which shall be due and
payable at Closing as follows:
(a) The sum of One Thousand and No/100 Dollars ($1,000.00)
shall be due and payable in cash or immediately available funds at
Closing (the "Cash Payment");
(b) Purchaser shall assume the outstanding principal balance
(the "Assumed Loan Balance") as of the Closing Date (not to exceed the
amount of the original principal balance) of, but no interest, fees or
other charges under or relating to, that one certain loan (the "Assumed
Loan") in the original principal amount of $98,716,057.00 from Camden
Subsidiary II, Inc. (successor by merger to Oasis Residential, Inc. and
k/n/a Camden Subsidiary, Inc.) ("Lender") to Seller, such Loan being
secured in part by liens on the Property and being evidenced in part by
a promissory note from Seller to Lender in the original principal
amount of $98,716,057.00 and dated April 6, 1998 (together with any and
all other documents securing, evidencing or pertaining to the Assumed
Loan, the "Assumed Loan Documents"). The Purchase Price was determined
based upon the expectation that at Closing the outstanding balance due
under the Assumed Loan will be $96,905,000. If at Closing the principal
amount of the Assumed Loan has been further reduced, the Purchase Price
shall not be reduced, but to the extent (if any) that the aggregate of
the Cash Payments made under the Related Agreements is not increased,
the Cash Payment shall be increased by the amount of such principal
reduction.
Section 3.2 At Closing, Purchaser shall assume and agree to pay the
Assumed Loan Balance of the Assumed Loan. At Closing, Seller and Purchaser shall
execute and deliver all such documents and instruments (the "Loan Assumption
Documents") required by Lender to evidence
<PAGE> 4
such assumption in form reasonably satisfactory to Lender and Purchaser.
Purchaser shall not be responsible for the payment at Closing of any assumption
or transfer fees or any other transaction costs incurred in connection with
assumption of the Assumed Loan Balance.
Section 3.3 As consideration for the conveyance of the Trade Names,
Purchaser shall pay to the Seller, and Seller agrees to accept, the sum of TEN
AND NO/100 DOLLARS ($10.00) in cash at Closing. It is expressly agreed that such
sum represents that portion of the Purchase Price that is attributable to or
paid for the Trade Names.
ARTICLE 4.
Survey and Title
Section 4.1 Seller will, at Seller's expense, cause to be delivered
to Purchaser at the Closing the following, all of which will be subject to
Purchaser's approval: (i) a title commitment signed by the title company
agreeing to deliver an ALTA owner's policy of title insurance in the amount of
the Purchase Price, with extended coverage over any general permitted exceptions
to such policies at Purchaser's expense, insuring Purchaser as the owner of the
Real Property and Improvements subject to no exceptions other than the Permitted
Exceptions (the "Title Policy"); and (ii) a currently-dated as-built plat of
survey of each parcel of land comprising the Real Property, certified to
Purchaser as having been prepared in accordance with the standards most recently
adopted by ALTA and ACSM (the "Survey").
ARTICLE 5.
Representations, Warranties and Covenants of Seller
Section 5.1 Seller represents and warrants to Purchaser that as of
the Effective Date and also as of the Closing Date, the following statements are
and will be true and correct:
(a) The Assumed Loan Documents are in full force and effect,
and Seller has not received written notice from Lender, nor does it
otherwise have knowledge of, any default or event of default
thereunder.
(b) There are no parties in possession of, and no person has
any right to the use or possession of, or to occupy, any portion of the
Real Property or Improvements as lessees or tenants at sufferance or
otherwise, except for tenants under the Tenant Leases, and, except for
such tenants, no person has any right to enter onto the Real Property
except for those who, pursuant to easements or other Permitted
Exceptions or the Miscellaneous Agreements have the right to enter onto
the Real Property solely for purposes of providing or servicing
utilities to the property or providing laundry services or facilities
at the Real Property.
(c) Except as disclosed on Schedule 5.1(c) hereof, Seller has
not received notice of, and Seller has no actual knowledge of any
pending or threatened condemnation, eminent domain, or similar
proceeding, or any special or other assessment affecting the Real
Property or Improvements or any part thereof.
(d) Seller is duly authorized and empowered to sell the
Property. Seller has obtained all necessary approvals required under
its organizational or operational documents for entering into this
Agreement and for the consummation of this transaction. This
<PAGE> 5
Agreement has been duly authorized by all necessary and appropriate
action of Seller, has been executed on Seller's behalf by its duly
authorized representative, and is a legal, valid and binding obligation
of Seller.
(e) Except as disclosed on Schedule 5.1(e) hereof, Seller has
not received notice of, and Seller has no actual knowledge of, any
pending or threatened claims or lawsuits which could, if decided
adversely to Seller or Purchaser or otherwise, materially affect the
Real Property or Improvements or any part thereof or the use or value
thereof or which could become a lien on any thereof.
(f) All obligations of Seller arising from the ownership and
operation of the Real Property, including, but not limited to, salaries
and the like, have been paid as they became due or will be paid at or
prior to Closing. Except for obligations for which provisions are made
herein for assumption by Purchaser or with respect to which a proration
adjustment is made in Purchaser's favor at Closing, there will be no
obligations of Seller with respect to, relating to or affecting the
Real Property or any part thereof outstanding as of Closing which could
give rise to a lien on or claim against or affecting the Real Property
or any part thereof.
(g) Seller has not received notice of, and Seller has no
actual knowledge of, any attachments, executions, assignments for the
benefit of creditors or voluntary or involuntary proceedings in
bankruptcy or under any other debtor relief laws contemplated by or
pending or threatened against Seller or the Real Property or any part
thereof.
(h) The matters set out in the rent roll attached hereto as
Exhibit I are true and correct and are not misleading. The rent roll
identifies all deposits made by, or credit for which is owed to, any
tenant under any Tenant Lease except to the extent (if any) expressly
stated on the rent roll. Each Tenant Lease identified or referred to
therein is in full force and effect. Except as disclosed on Schedule
5.1(h) hereof, Seller has not received any notice from any tenant
alleging a default by Seller or the landlord, and Seller has no actual
knowledge of any default by or unperformed obligation of the landlord,
under any of the Tenant Leases, and, to the best of Seller's knowledge,
no tenant under any of the Tenant Leases is in default thereunder.
(i) Seller is the fee simple owner of the Real Property and
the Improvements, subject to no restrictions, covenants, conditions,
liens, claims, encumbrances, reservations, easements or other
exceptions to title other than the Permitted Exceptions.
(j) Except as disclosed in Schedule 5.1(j) hereof Seller has
not received written notice of, and has no actual knowledge of, any
existing condition with respect to the Real Property or Improvements
(or any part thereof) or its operation which violates any law,
ordinance, code, regulation or court or administrative order.
(k) Except as disclosed in Schedule 5.1(k) hereof, Seller has
not received written notice, and Seller has no actual knowledge that
the Real Property or the Improvements or any part thereof is being used
for the storage or disposal of any hazardous or toxic materials or that
any such materials are present on, under or in, or were released or
discharged from, the Real Property or the Improvements in violation of
applicable laws. To Seller's actual
<PAGE> 6
knowledge, no hazardous or toxic materials now are or ever were placed
or situated on, under or in, or were released or discharged from, the
Real Property or the Improvements.
(l) No portion of the Real Property or the Improvements
constitutes "plan assets" of any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or any "plan" as defined in Section 4975(e)(2) of the
Internal Revenue Code of 1986, as amended.
(m) The data and information contained in each of the
financial statements and operating reports relating to the Real
Property and Improvements (or any part or parts thereof) hereto
furnished by Seller to Purchaser are true and correct and are not
misleading and do not omit any material information.
Seller shall promptly advise Purchaser in writing if any
representation or warranty contained in this Section 5.1 becomes false or
misleading prior to the Closing; provided, however, that the delivery of such
notification shall not waive, limit, diminish or affect the right of Purchaser
to object thereto (or except as expressly provided in this grammatical
paragraph) any right or remedy of Purchaser relating thereto. As a condition
precedent to Purchaser's obligations hereunder, the representations and
warranties contained in this Section 5.1 shall be true and correct on the
Closing Date. However, in the event of a breach hereof by Seller or in the
event Seller has given Purchaser written notice of a material change in any
matter made the subject of the foregoing representations and warranties,
Purchaser's sole and exclusive remedy prior to Closing will be to (i) waive the
default by Seller and close the transaction contemplated hereby, without any
reduction in the Purchase Price, or (b) terminate this Agreement. To the
extent Purchaser has received written notice from Seller at or prior to
Closing, that any one or more of the foregoing representations and warranties
are not true and correct (the "Waived Representation(s)"), and Purchaser
consummates the transaction contemplated hereby, Purchaser waives any claims
against Seller for a breach of a Waived Representation. Purchaser's right to
bring a claim against Seller for breach of any representations and warranties
contained herein shall survive until one (1) year after the Closing.
Section 5.2. From the Effective Date until the Closing Date or
earlier termination of this Agreement, Seller shall:
(a) Operate the Real Property and Improvements, and
continue its marketing and leasing efforts, in the same manner as
heretofore, and use reasonable efforts to preserve for the benefit of
Purchaser the Tenant Leases and the relationships of Seller and its
tenants.
(b) Keep, maintain and repair the Real Property and
Improvements in a good, safe, neat, clean and presentable condition,
and comply in all material respects with all laws, ordinances,
regulations, licenses, permits and court or governmental orders
affecting the Property.
(c) Keep, observe and perform its obligations as landlord
under the Tenant Leases, and as long as tenants are not in default
thereunder, not cause the termination of any Tenant Lease nor alter,
amend or otherwise modify or supplement any Tenant Lease without the
prior written consent of Purchaser.
<PAGE> 7
(d) Not enter into any written or oral service contract or
other agreement with respect to the Property that will not be fully
performed on or before Closing, or that will not be cancelable by
Purchaser with thirty (30) days notice without liability on or after
Closing without the prior written consent of Purchaser.
(e) Promptly advise Purchaser of any pending or threatened
litigation, arbitration, administrative hearing or legislation before
any governmental body or agency, or any tax increase or assessment, of
which Seller becomes aware, that concerns or could affect the Property
or any part thereof.
(f) Not take or omit to take any action which would have the
effect of violating any of the representations, warranties, covenants
or agreements of Seller contained herein.
(g) Not further encumber or allow the encumbrance of the
title to the Property, or modify the terms or conditions of any
existing encumbrances (other than Tenant Leases), if any, which will
not be released at Closing, without in each case the prior written
consent of Purchaser.
Seller shall promptly advise Purchaser in writing if any covenant
contained in this Section 5.2 is breached prior to the Closing; provided,
however, that the delivery of such notification shall not waive, limit,
diminish or affect the right of Purchaser to object thereto or any right or
remedy of Purchaser relating thereto. As a condition precedent to Purchaser's
obligations hereunder, the covenants contained in this Section 5.2 shall have
been fully performed at all times up to and including the Closing Date.
ARTICLE 6.
Inspection and Audit; Purchaser's "Due Diligence"
Section 6.1 The Seller agrees that from the Effective Date until
Closing, Purchaser, personally or through its authorized agents, designees or
representatives, shall be entitled to enter upon the Real Property and into the
Improvements to conduct such physical and environmental and other inspections,
independent appraisals, and other tests, examinations and studies of the
Property as Purchaser desires, (but only upon twenty-four (24) hours prior
notice to Seller), during business hours and provided that such inspections do
not interfere with rights of tenants under the Tenant Leases or Seller's
operation of the Property. Seller agrees to provide Purchaser with all access
described in this Section and to facilitate Purchaser's entry and conduct of
its inspections and tests. Purchaser agrees to indemnify and hold Seller
harmless of and from any claim for physical damages or physical injuries
arising from Purchaser's inspection of the Property, and notwithstanding
anything to the contrary in this Agreement, such obligation to indemnify shall
survive Closing or any termination of this Agreement.
Section 6.2 Seller agrees that all times until the Closing occurs,
promptly in response to Purchaser's reasonable request therefor Seller will make
available and deliver to Purchaser and Purchaser's agents, representatives and
designees all reports, financial statements, operating statements, contracts,
permits, licenses, Tenant Leases, records, files and writings of any and every
kind whatsoever that relate in any way directly or indirectly to the Property,
the Real Property, the
<PAGE> 8
Improvements, any part of any thereof, any or all of the Tenant Leases, or the
business or affairs of Seller.
Section 6.3 If Purchaser, in its sole and unreviewable discretion, is
not satisfied in any respect with any matter relating in any way directly or
indirectly to the Property or any component or aspect thereof, Purchaser may
give Seller a notice (a "Due Diligence Termination Notice") at any time before
the Closing terminating this Agreement, in which event this Agreement will be
terminated without liability of or to either party and neither party shall have
any further obligations hereunder other than those that expressly survive the
termination of this Agreement.
ARTICLE 7.
Conditions Precedent to Obligations of Purchaser
Section 7.1 The satisfaction of each and every one of the following
shall be a condition precedent to Purchaser's obligation to close hereunder:
(a) the representations and warranties of Seller contained in
Section 5.1 shall have been true and correct on the Effective Date and
on the Closing Date;
(b) Seller shall have performed and complied with all of its
covenants, agreements and undertakings contained in Section 5.2 or
elsewhere herein;
(c) There shall not have occurred any material damage to or
change in the condition of any component or part of the Real Property
or Improvements since the Effective Date;
(d) There shall not be pending or threatened any condemnation
or proceeding in the nature of eminent domain affecting all or any part
of the Real Property;
(e) Seller shall have delivered to Purchaser the commitment
for the Title Policy, the Survey, all of the documents described in
Section 8.2 hereof and all other documents, writings and things which,
under any provision of this Agreement, Seller is to deliver to
Purchaser at or before the Closing;
(f) Purchaser shall have failed to deliver a "Due Diligence
Termination Notice" to Seller before the Closing;
(g) The closings shall have occurred, or shall simultaneously
be occurring, under all of the Related Agreements; and
(h) All other conditions precedent (if any) to Seller's
obligation to close, as set out in any provision of this Agreement,
shall have been satisfied.
Section 7.2 If any condition precedent to Purchaser' s obligation to
close hereunder is not timely satisfied, then Purchaser may elect, in its sole
discretion, to waive any such defect or requirement and close the transaction
contemplated herein or terminate this Agreement without liability and neither
party shall have any further obligations hereunder other than those that
expressly survive the termination of this Agreement.
<PAGE> 9
ARTICLE 8.
Closing
Section 8.1 The Closing hereunder shall take place at the offices of
Seller unless otherwise agreed between the parties in writing, on or before the
Closing Date, unless the Closing Date shall be extended by agreement by
Purchaser and Seller in writing in accordance with the terms hereof.
Section 8.2 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser each of the following items, each duly executed by
Seller as required and in form and substance satisfactory to Purchaser:
(a) A bargain and sale deed, in the form of Exhibit "B"
attached hereto, duly executed and acknowledged by Seller, and in form
for recording, conveying good and indefeasible fee simple title in the
Real Property and Improvements to Purchaser, subject only to the liens
securing the Assumed Loan Balance of the Assumed Loan and, with
respect to each specific land parcel and the improvements situated
thereon, the Permitted Exceptions that apply to that particular parcel
as set out on Exhibit H attached hereto.
(b) A bill of sale, in the form of Exhibit "C" attached
hereto, with a list of the Personal Property attached, duly executed
by Seller, conveying to Purchaser the Personal Property.
(c) Executed originals of all Tenant Leases to the extent in
Seller's possession and, as to any Tenant Lease for which the executed
original is not in Seller's possession, a true photocopy of the actual
signed lease (each to be delivered at the respective property),
together with an assignment, in the form of Exhibit "D" attached
hereto, duly executed and acknowledged by Seller and in recordable
form, assigning to Purchaser all the Tenant Leases and all security
deposits held pursuant to the Tenant Leases.
(d) The Loan Assumption Documents.
(e) Letters addressed to each tenant under each Tenant
Lease, in the form of Exhibit "E" attached hereto, conforming to the
requirements of applicable state law and advising of the change of
ownership of the Property, the transfer of the security deposits (to
the extent the same are transferred) to Purchaser, and informing such
tenant to make future rental payments to the person, at the address,
designated by Purchaser.
(f) An assignment, in the form of Exhibit "F" attached
hereto, duly executed by Seller, assigning to Purchaser (i) all of
Seller's rights and benefits under any Miscellaneous Agreements
affecting the Property, (ii) all warranties, guaranties, and bonds
applicable to the Property or any part thereof, without representation
or warranty by Seller, and (iii) all of Seller's right, title, and
interest in the Trade Names without representation or warranty by
Seller.
(g) To be delivered at each respective property, all keys to
all locks on the Real Property or Improvements (and an accounting for
keys in possession of others); all books, records, files, documents,
reports, advertising materials, and correspondence pertaining to the
Property; all documents in the possession of the Seller pertaining to
tenants of the
<PAGE> 10
Property, including, but not by way of limitation, all applications,
correspondence and credit reports relating to each such tenant.
(h) A Certification in a form of Exhibit "G" attached hereto,
duly executed by the Seller under penalties of perjury, containing the
following:
(i) The Seller's U.S. Taxpayer Identification Number and
business address; and
(ii) A statement that the Seller is not a foreign person
within the meaning of Sections 1445 and 7701 of the
Internal Revenue Code and applicable regulations.
In the event that the Seller fails to deliver such Certification at
Closing or the Seller delivers such Certification but the Purchaser
has actual knowledge that such Certification is false or the Purchaser
receives notice that the Certification is false from any agent of the
Purchaser or the Seller, the Purchaser shall be entitled to withhold
from the Purchase Price a sum equal to ten percent (10%) of the total
amount which otherwise would have been realized by the Seller from
such sale, which sum will be paid by the Purchaser to the United
States Treasury pursuant to the requirements of Section 1445 of the
IRC and the regulations promulgated thereunder.
(i) Such evidence or documents as may reasonably be required
by Purchaser or the title insurance company issuing the Title Policy
evidencing the status and capacity of Seller and the authority of the
person or persons who are executing the various documents on behalf of
Seller in connection with the sale of the Property.
(j) The amount of any deposits or fees or prepaid rent, both
refundable and non-refundable, held by the Seller pursuant to
provisions of any Tenant Leases.
(k) A written guaranty of payment executed by Camden Property
Trust in favor of Purchaser, guaranteeing the payment by Seller of any
of its obligations and liabilities to Purchaser under this Agreement as
to which claims are asserted, and are permitted to be asserted, by
Purchaser after the Closing.
(l) A closing settlement statement acceptable to Seller and
Purchaser, duly signed by Seller.
(m) All other items comprising the Property and all other
documents, agreements, certificates, writings or items that any
provision of this Agreement obligates Seller to deliver to Purchaser.
(n) All other declarations (including, without limitation,
transfer tax declarations), documents, instruments and writings that
are required by law to be, or are customarily, executed or delivered by
sellers of multifamily residential real estate properties in connection
with the sale or conveyance thereof.
<PAGE> 11
Section 8.3 At the Closing, Purchaser shall deliver to Seller the
following items, each duly executed by Purchaser as required:
(a) The Cash Payment.
(b) The Loan Assumption Documents.
(c) Any of the conveyance documents described in Section 8.2
that require the signature of Purchaser.
(d) Such evidence or documents as may reasonably be required
by Seller evidencing the status and capacity of Purchaser and the
authority of the person or persons who are executing the various
documents on behalf of Purchaser in connection with the sale of the
Property.
(e) A closing settlement statement acceptable to Seller and
Purchaser, duly signed by Seller.
Section 8.4 At Closing, the following items shall be adjusted or
prorated between Seller and Purchaser, such prorations to be made effective as
of the Closing Date (Seller receiving the benefit and burden thereof):
(a) Rents collected for month in which Closing occurs shall
be prorated. No proration shall be made for rents not collected as of
the Closing Date and Purchaser shall have no liability to Seller for
such delinquent rents; provided, however, that if Purchaser collects
after Closing any rents which are owing to the Seller by tenants of the
Property and specifically designated by the payor thereof for periods
prior to the Closing Date, and if at that time all other rents due or
payable from those tenants are fully and currently paid (Purchaser
shall be entitled to apply all rental payments to the latest period for
which rentals are due), Purchaser shall promptly remit to Seller that
portion of such rental payments as is allocable to the period before
the Closing. This provision shall not be deemed an obligation, express
or implied, by or on behalf of Purchaser to take any action to collect
such rents.
(b) Taxes, ad valorem, personal or otherwise, for the
Property for the current calendar year shall be prorated. The
Seller's pro rata portion of such taxes shall be based upon taxes
actually assessed for the current calendar year. If, for any reason,
taxes for the current calendar year have not been assessed on the
Property such proration shall be estimated based upon the most
recently published tax rate and valuation for the Property for
calendar year in which the Closing Date occurs, and adjusted within
thirty (30) days following the date when exact amounts are available
and such adjustment provision shall expressly survive the closing
hereof.
(c) All other income and ordinary operating expenses for or
pertaining to the Property, public utility charges, maintenance,
service charges, and all other normal operating charges of the Property
shall be prorated.
In the event any adjustments pursuant to this Section 8.4 are,
subsequent to Closing, found to be erroneous, then either party hereto who is
entitled to additional monies shall invoice the other
<PAGE> 12
party for such additional amounts as may be owing, and such amount (reduced by
any monies due to the other party) shall be paid within ten (10) days from
receipt of the invoice. This covenant shall survive the Closing of the sale
contemplated hereby.
Section 8.5 Neither this Agreement, nor any of the rights and
obligations hereunder, may be assigned by Purchaser without Seller's prior
written consent, which may be withheld in Seller's sole and absolute
discretion. The preceding sentence shall not apply to, or reflect or limit in
any way, the admission of new or additional members into Purchaser.
Section 8.6 Exclusive possession of the Property shall be delivered
to Purchaser by Seller at the Closing, subject only to the rights of tenants
under the Tenant Leases and subject to the Permitted Exceptions.
Section 8.7 Seller shall pay for the Title Policy, the Survey, and
all transfer taxes relating to the transactions contemplated hereby. All other
costs and expenses (if any) in connection with the transaction contemplated by
this Agreement shall be borne by Seller and Purchaser in the manner in which
such costs and expenses are customarily allocated between the parties at
closings of multifamily residential real property similar to the Property in the
Las Vegas, Nevada area. Except as specifically provided in Section 10.5 hereof,
each party hereto shall pay its own attorneys' fees and expenses incurred in the
preparation and negotiation of this Agreement and the Closing of the transaction
contemplated hereby.
ARTICLE 9.
Remedies of Default
Section 9.1 In the event of Seller's default hereunder, Purchaser may
elect, at its option, as its sole and exclusive remedies, either to (a)
terminate this Agreement; or (b) if Seller's default arises out of its alleged
failure to perform its obligation to convey title on the Closing Date, enforce
specific performance hereunder against Seller.
Section 9.2 In the event that Seller is unable to consummate the
sale contemplated hereby due to a default by Purchaser, then, as Seller's sole
and exclusive remedy and relief, Seller shall be entitled to the Cash Payment
as liquidated damages for Purchaser's default. Such amount is agreed upon by
and between the Seller and the Purchaser as liquidated damages, due to the
difficulty and inconvenience of ascertaining and measuring actual damages, and
the uncertainty thereof; and no other damages, rights or remedies shall in any
case be collectible, enforceable or available to the Seller other than as
specified in this Article 9, but the Seller shall accept said Cash Payment as
the Seller's total damages and relief. If Purchaser fails to timely deliver
the Cash Payment, Seller shall have all rights at law or equity against
Purchaser for its default.
Section 9.3 Notwithstanding the provisions of Sections 9.1 and 9.2
above, in the event that after Closing a party (the "Defaulting Party") breaches
an obligation hereunder which is expressly stated herein to survive Closing, the
Defaulting Party shall be liable to the other party (the "Non-Defaulting Party")
for the damages incurred by the Non- Defaulting Party as a result of such
breach.
Section 9.4 Seller and Purchaser specifically acknowledge and agree
that any limitation on remedies set forth in this Article 9 does not apply to
the express hold harmless and
<PAGE> 13
indemnification agreements set forth in this Agreement or to the amounts
recoverable pursuant to Section 10.5 hereof.
ARTICLE 10.
Miscellaneous
Section 10.1 All notices, demands, or other communications of any type
(herein collectively referred to as "Notices") given by the Seller or required
to be given to the Purchaser or by the Purchaser to the Seller, whether required
by this Agreement or in any way related to the transaction contracted for
herein, shall be in writing and given in accordance with the provisions of this
Section 10.1. All notices shall be delivered or sent either in person, by
facsimile, by nationally recognized overnight courier, or by United States Mail,
as a registered or certified item, return receipt requested. Notices delivered
by mail shall be deemed given on the third business day after being deposited in
a post office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, addressed, as
follows:
If to Seller: NQRS, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attention: Richard J. Campo
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3599
With a copy to: Elizabeth Pringle Johnson, Esq.
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3590
and a copy to: Robert M. Berger, Esq.
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, IL 60603
Telephone No.: (312) 701-7272
Facsimile No.: (312) 701-7711
Stephen B. Hansen
Schroder Real Estate Associates, Inc.
437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 940-3600
Facsimile No.: (212) 732-5144
<PAGE> 14
If to the Purchaser, as follows:
Sierra-Nevada Multifamily Investments, LLC
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attention: Richard J. Campo
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3599
With a copy to: Elizabeth Pringle Johnson, Esq.
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telephone No.: (713) 964-3555
Facsimile No.: (713) 964-3590
and a copy to: Robert M. Berger, Esq.
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, IL 60603
Telephone No.: (312) 701-7272
Facsimile No.: (312) 701-7711
Stephen B. Hansen
Schroder Real Estate Associates, Inc.
437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 940-3600
Facsimile No.: (212) 732-5144
Notice given in person, by facsimile or by overnight courier shall be deemed
given upon receipt. Either party hereto may change the address for notice
specified above by giving the other party ten (10) days advance written notice
of such change of address.
Section 10.2 This Agreement shall be construed and interpreted in
accordance with the laws of the State of Nevada. Where required for proper
interpretation, words in the singular shall include the plural; the masculine
gender shall include the neuter and the feminine, and vice versa. The terms
"heirs, executors, administrators and assigns" shall include "successors, legal
representatives and assigns."
Section 10.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns. This Agreement may not be modified or
amended except by an agreement in writing signed by the Seller and the
Purchaser, a copy of which has been delivered to Messrs. Hansen and Berger at
their respective addresses set out in Section 10.1 above. The parties may
waive any of the conditions contained herein or any of the obligations of the
other party hereunder, but any such waiver shall be effective only if in
writing and signed by the party waiving such conditions or obligations, a copy
of which waiver has been delivered to Messrs. Hansen and Berger at their
respective addresses set out in Section 10.1 above.
<PAGE> 15
Section 10.4 Time is of the essence of this Agreement.
Section 10.5 In the event it becomes necessary for either party
hereto to file a suit to enforce this Agreement or any provisions contained
herein, the party prevailing in such action (as determined by the court) shall
be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and court costs, including appellate costs, incurred
in such suit.
Section 10.6 The descriptive headings of the several Articles,
Sections and Paragraphs contained in this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
Section 10.7 This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement or condition not expressed in this Agreement
shall be binding upon the parties hereto or shall affect or be effective to
interpret, change or restrict the provisions of this Agreement.
Section 10.8 Multiple originals of this Agreement have been executed
by the parties hereto. Each such executed original shall have the full force and
effect of an original executed instrument. Signature pages from the multiple
originals may be assembled to form one document. This Agreement may be executed
in multiple counterparts, all of which when taken together shall constitute one
and the same agreement.
Section 10.9 Unless otherwise specified, in computing any period of
time described in this Agreement, the day of the act or event after which the
designated period of time begins to run is not to be included and the last day
of the period so computed is to be included, unless such last day is a Saturday,
Sunday or legal holiday under the laws of the State of Nevada, in which event
the period shall run until the end of the next day which is neither a Saturday,
Sunday or legal holiday. The final day of any such period shall be deemed to end
at 5:00 o'clock p.m. (Central Time).
Section 10.10 If any term or provision of this Agreement which would
not deprive the parties of the benefit of the bargain shall be held to be
invalid, illegal, unenforceable or inoperative as a matter of law, the remaining
terms and provisions of this Agreement shall not be affected thereby, but each
such remaining term and provision shall be valid and shall remain in full force
and effect.
Section 10.11 Each party hereto acknowledges that each of them has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement has been jointly drafted and shall be construed as having been jointly
drafted by each party hereto. Accordingly, the rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement or any amendments or
exhibits hereto.
Section 10.12 In addition to the acts and deeds recited herein and
contemplated to be performed, executed and/or delivered by Seller and
Purchaser, both Seller and Purchaser hereby agree to perform, execute and/or
deliver or cause to be performed, executed and/or delivered at the Closing or
after the Closing, such further acts, deeds and assurances as the other party
hereto may
<PAGE> 16
reasonably require to (a) evidence and vest in Purchaser the ownership of, and
title to, all of the Property in accordance with the terms hereof, and (b)
consummate the transactions contemplated hereunder.
Section 10.13 Each party agrees to reasonably cooperate with the other
in connection with any attempted "tax deferred exchange" by the other party, as
may be allowed or permitted under Section 1031 of the Internal Revenue Code of
1986 and the regulations promulgated thereunder, as such may have been or may in
the future be amended, including the execution of various assignments or notices
of assignments to qualified intermediaries as may be required to effect such a
transaction; provided, however, that the Purchaser will not be obligated to bear
or incur any costs or expenses in connection with such transaction and shall be
indemnified and held harmless by Seller from, against and with respect to all
aspects of any such exchange and the results or consequences thereof and all
matters arising therefrom. Additionally, the accomplishment of a tax deferred
exchange shall in no event be a condition to the Closing.
Section 10.14 THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES
AND THE LAWS OF THE STATE OF NEVADA.
Section 10.15 Each party hereto represents to the other that such
respective party has not authorized any broker or finder to act on its behalf
in connection with the sale and purchase hereunder. Each party hereto agrees to
indemnify, defend, and hold harmless the other party from and against any and
all claims, losses, damages, costs, or expenses (including, but not limited to,
reasonable attorney's fees) of any kind or character arising out of or
resulting from any agreement, arrangement, or understanding alleged to have
been made by such party with any broker or finder in connection with this
Agreement or the transaction contemplated hereby. This Section 10.15 shall
survive the Closing or any earlier termination of this Agreement.
ARTICLE 11.
Disclaimers and Waivers
Section 11.1 Except as expressly set forth in Section 5.1 hereof,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any of the materials, data or information delivered by Seller
to Purchaser in connection with the transaction contemplated hereby. Purchaser
acknowledges and agrees that except as set forth in Section 5.1, all materials,
data and information delivered by Seller to Purchaser in connection with the
transaction contemplated hereby is provided to Purchaser as a convenience only,
that such materials, data and information may be incomplete or inaccurate, that
Seller is released from all claims and liability arising out of or relating to
such materials, data and information, and that any reliance on or use of such
materials, data or information by Purchaser shall be at the sole risk of
Purchaser. Purchaser acknowledges that Seller makes no representation or
warranty as to Seller's compliance with the American With Disabilities Act of
1990 or any amendments or regulations related thereto.
Section 11.2 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, SECTION 5.1 HEREOF) AND AS MAY HEREAFTER BE SET
FORTH IN ANY OF THE EXHIBITS HERETO, IT IS UNDERSTOOD AND AGREED AS FOLLOWS:
THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR
<PAGE> 17
IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING BUT NOT LIMITED TO, WARRANTIES
OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE (OTHER THAN SELLER'S WARRANTY OF TITLE TO BE SET
FORTH IN THE DEED AND ANY OTHER WARRANTY OR REPRESENTATION BY SELLER TO BE
CONTAINED IN ANY OF THE OTHER EXHIBITS HERETO), ZONING, TAX CONSEQUENCES,
PHYSICAL OR ENVIRONMENTAL CONDITION (INCLUDING THE PRESENCE OF ASBESTOS),
UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS,
THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR
COMPLETENESS OF THE ITEMS DELIVERED TO COMPANY OR ANY OTHER INFORMATION
PROVIDED BY OR ON BEHALF OF SELLER TO COMPANY, OR ANY OTHER MATTER OR THING
REGARDING THE PROPERTY; THAT UPON CLOSING SELLER SHALL CONVEY TO COMPANY AND
COMPANY SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS;" COMPANY
WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR
IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO MADE OR FURNISHED BY SELLER, THE
MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR
INDIRECTLY, VERBALLY OR IN WRITING EXCEPT AS SET OUT IN THIS AGREEMENT; COMPANY
REPRESENTS TO SELLER THAT COMPANY HAS CONDUCTED, OR WILL CONDUCT PRIOR TO
CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE
PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS COMPANY DEEMS NECESSARY TO
SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR
NONEXISTENCE OF CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR
TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON
SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS
AGENTS OR EMPLOYEES WITH RESPECT THERETO EXCEPT AS SET OUT IN THIS AGREEMENT;
UPON CLOSING, COMPANY SHALL ACCEPT THE RISK THAT ADVERSE MATTERS, INCLUDING BUT
NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL
CONDITIONS, MAY NOT HAVE BEEN REVEALED BY COMPANY'S INVESTIGATIONS, AND
COMPANY, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND
RELEASED SELLER FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES,
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<PAGE> 18
DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT
COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH COMPANY
MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY CONSTRUCTION DEFECTS, PHYSICAL CONDITIONS, VIOLATIONS OF ANY
APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS,
OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT AS
SET OUT IN THIS AGREEMENT; COMPANY ACKNOWLEDGES THAT THE PURPOSE OF THIS
SECTION IS FOR COMPANY, TO THE FULLEST EXTENT POSSIBLE AT LAW, TO WAIVE,
RELINQUISH, RELEASE AND DISCLAIM, ANY CLAIM OR LIABILITY OF OR AGAINST SELLER
AS THE RESULT OF ANY CONDITION OR STATE OF FACTS RELATING OR PERTAINING TO THE
PROPERTY ON THE CLOSING DATE, EXCEPT AS SET OUT IN THIS AGREEMENT.
Section 11.3. All of the terms, provisions, releases and covenants
set forth in this Article 11 shall survive the Closing and not be merged
therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to be effective as of the Effective Date.
EXECUTED on this the 26th day of June, 1998, by Purchaser.
SIERRA-NEVADA MULTIFAMILY
INVESTMENTS, LLC, a Delaware limited liability
company
By: Camden Subsidiary, Inc., Manager
By: /s/ G. Steven Dawson
--------------------------------------
G. Steven Dawson, Senior Vice President
EXECUTED on this the 26th day of June, 1998, by Seller.
NQRS, INC., A NEVADA CORPORATION
By: /s/ G. Steven Dawson
---------------------------------------------
G. Steven Dawson, Senior Vice President
<PAGE> 1
Exhibit 99.1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
(A Delaware Limited Liability Company)
THESE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT
CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
ARE SET FORTH HEREIN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 Definitions.....................................................................................1
ARTICLE 2 Formation of the Company.......................................................................12
Section 2.1. Name and Formation....................................................................12
Section 2.2. Principal Place of Business...........................................................13
Section 2.3. Assumed Name Certificate..............................................................13
Section 2.4. Registered Office and Registered Agent................................................13
Section 2.5. Term..................................................................................13
Section 2.6. Registration..........................................................................13
Section 2.7. Purpose, Powers and Character of the Business of the Company..........................13
Section 2.8. Admission of Members..................................................................14
ARTICLE 3 Capital........................................................................................14
Section 3.1. Capital of Company....................................................................14
Section 3.2. Initial Capital Contributions.........................................................14
Section 3.3. Additional Capital Contributions of the Members.......................................15
Section 3.4. Company Capital.......................................................................17
Section 3.5. Liability of Members..................................................................17
Section 3.6. Loans by Members or Affiliates........................................................17
Section 3.7. Capital Accounts......................................................................18
Section 3.8. Capital and Sharing Ratios............................................................19
ARTICLE 4 Rights and Powers of the Manager...............................................................19
Section 4.1. Manager's Powers and Responsibilities.................................................19
Section 4.2. Actions Requiring Consent of All Members..............................................20
Section 4.3. Operating Plan........................................................................22
Section 4.4. Operating Budget......................................................................22
Section 4.5. Delegation of Authority...............................................................23
Section 4.6. Manager Fee for the Manager and Reimbursement of Expenses.............................23
Section 4.7. Liability of the Manager..............................................................24
Section 4.8. Indemnification and Exculpation of the Manager........................................25
Section 4.9. Rights of Competition.................................................................26
Section 4.10. REIT Requirements.....................................................................26
Section 4.11. UBTI Requirements.....................................................................27
Section 4.12. Resignation and Removal...............................................................27
Section 4.13. REOC Requirements.....................................................................27
ARTICLE 5 Meetings of Members............................................................................27
Section 5.1. Place of Meetings.....................................................................27
Section 5.2. Meetings of Members...................................................................27
Section 5.3. Notice of Meetings of Members.........................................................27
Section 5.4. Quorum................................................................................28
Section 5.5. Voting on Matters.....................................................................28
Section 5.6. List of Members Entitled to Vote......................................................28
Section 5.7. Registered Members....................................................................28
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.8. Actions With or Without a Meeting and Telephone Meetings..............................28
Section 5.9. Limitations on Powers of Members......................................................28
ARTICLE 6 Books and Records..............................................................................29
Section 6.1. Books and Records.....................................................................29
Section 6.2. Accounting Basis for Tax Reporting Purposes; Fiscal Year..............................29
Section 6.3. Reports...............................................................................29
Section 6.4. Returns and Other Elections...........................................................30
Section 6.5. Tax Matters Partner...................................................................30
ARTICLE 7 Allocations and Distributions..................................................................30
Section 7.1. Distributions.........................................................................30
Section 7.2. Allocation of Profits, Losses and Distributive Shares of Tax Items....................32
Section 7.3. Compliance with Code..................................................................37
Section 7.4. Allocations upon Transfer of Membership Interest......................................38
Section 7.5. Restricted Distributions. ...........................................................38
Section 7.6. Amortization and Allocation of Organization and Start-Up Expenses.....................38
ARTICLE 8 Officers.......................................................................................38
Section 8.1. Number................................................................................38
Section 8.2. General Duties........................................................................38
Section 8.3. Election, Term of Office and Qualifications...........................................39
Section 8.4. Removal...............................................................................39
Section 8.5. Resignation...........................................................................39
Section 8.6. Indemnification.......................................................................39
ARTICLE 9 Transferability of Membership Interests........................................................39
Section 9.1. Restrictions on Transfer of Interest of and in a Member...............................39
Section 9.2. Right of First Refusal................................................................41
Section 9.3. Buy-Sell..............................................................................41
Section 9.4. Marketing Right.......................................................................42
Section 9.5. Bankruptcy of a Member................................................................44
Section 9.6. Assignees.............................................................................46
Section 9.7. Substituted Members...................................................................47
ARTICLE 10 Representations and Warranties of the Members..................................................47
Section 10.1. Acquisition of Interest for Investment................................................47
Section 10.2. Access to Information.................................................................47
Section 10.3. No Registration.......................................................................47
Section 10.4. No Obligation to Register.............................................................48
Section 10.5. Suitability of Investment.............................................................48
Section 10.6. Accreditation.........................................................................48
Section 10.7. Representations and Warranties Regarding Members......................................48
Section 10.8. No Brokers............................................................................49
ARTICLE 11 Liquidation and Dissolution of Company.........................................................49
Section 11.1. Events of Dissolution.................................................................49
Section 11.2. Liquidation; Sale of Substantially all of the Assets..................................50
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 11.3. Distributions in Kind.................................................................51
Section 11.4. Date of Termination...................................................................51
Section 11.5. Waiver of Partition...................................................................51
Section 11.6. Certificate of Cancellation...........................................................51
ARTICLE 12 Miscellaneous..................................................................................51
Section 12.1. Notice................................................................................51
Section 12.2. Application of Delaware Law...........................................................52
Section 12.3. Jurisdiction and Venue................................................................52
Section 12.4. No Partnership........................................................................52
Section 12.5. Effect of Agreement...................................................................52
Section 12.6. Entire Agreement......................................................................52
Section 12.7. Amendment.............................................................................52
Section 12.8. Counterparts..........................................................................53
Section 12.9. Severability..........................................................................53
Section 12.10. Captions..............................................................................53
Section 12.11. Interpretation........................................................................53
Section 12.12. Additional Documents and Acts.........................................................53
Section 12.13. Confidentiality.......................................................................53
Section 12.14. Creditors Not Benefitted..............................................................54
Section 12.15. Involvement of the Company in Certain Proceedings.....................................54
Section 12.16. Dispute Resolution and Arbitration....................................................55
Section 12.17. Sections..............................................................................56
Section 12.18. No Waiver.............................................................................56
Section 12.19. Additional Remedies...................................................................56
Section 12.20. U.S. Dollars..........................................................................56
Section 12.21. Approvals.............................................................................57
</TABLE>
<PAGE> 5
SCHEDULES
Schedule 1 - Members Names, Addresses, Initial Capital Contributions,
Capital Ratios and Sharing Ratios
Schedule 2 - Real Property Description
Schedule 3 - Initial Operating Plan
Schedule 4 - Initial Operating Budget
Schedule 5 - NAV Formula
<PAGE> 6
AMENDED AND RESTATED
LIMITED LIABILITY
COMPANY AGREEMENT
OF
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"AGREEMENT") of SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC, a Delaware limited
liability company (the "Company"), is hereby duly adopted, approved, ratified
and confirmed as of June 29, 1998 by CAMDEN SUBSIDIARY, INC. ("CPT SUB"), a
Delaware corporation, as a Member and the Manager and TMT-NEVADA, L.L.C.
("TMT"), a Delaware limited liability company, as a Member of the Company.
WHEREAS, a Limited Liability Company Agreement of the Company dated
May 1, 1998 (the "Original Agreement") was entered into by CPT Sub as its sole
member (the "Original Member"); and
WHEREAS, the Original Agreement is superseded in its entirety by this
Agreement and TMT is admitted as an additional Member of the Company hereby;
NOW, THEREFORE, in consideration of the mutual promises made herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1.
DEFINITIONS
As used in this Agreement, each term set out below shall, unless the
context otherwise requires, have the meaning specified in this Article.
"ACT" means the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101 et seq., as amended from time to time.
"ACTUAL RETURN AMOUNT" means, at any time, the total distributions
theretofore received by TMT from the Company pursuant to Sections 7.1(a)(3),
7.1(a)(4), 7.1(b)(3) and 7.1(b)(4) and the distributions pursuant to Section
11.2(b)(3) which correspond to distributions pursuant to Section 7.1(b)(3) and
7.1(b)(4).
"ADDITIONAL CAPITAL CONTRIBUTION" means, with respect to any Member,
any amount contributed, required to be contributed or deemed to have been
contributed to the capital of the Company by any Member pursuant to Section
3.3.
<PAGE> 7
"ADJUSTED CAPITAL ACCOUNT" means, as of any particular date with
respect to any Member, such Member's Capital Account as of the close of business
on that date, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Member is deemed to be obligated to restore pursuant to Treasury Regulations
Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704- 1(b)(2)(ii)(d)(4), (5) and (6).
This definition of Adjusted Capital Account is intended to comply with the
provisions of Treasury Regulations Sections 1.704-1(b)(2)(ii)(d) and 1.704-2,
and shall be interpreted consistently therewith.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member,
the deficit balance, if any, in that Member's Adjusted Capital Account.
"AFFILIATE" means, with respect to any Member, any Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person to whom reference is
made. The term "control" as used herein (including the terms "controlling,"
"controlled by," and "under common control with") means the possession,
directly or indirectly, of the ability (a) to vote ten percent (10%) or more of
the outstanding voting securities of or voting interest in a Person, or (b)
otherwise to direct the management policies of such Person, by contract or
otherwise.
"AGREED VALUE" has the meaning assigned to it in Section 3.2(a).
"AGREEMENT" means this Amended and Restated Limited Liability Company
Agreement, as amended, restated or supplemented from time to time.
"ALLOCATED DEFAULT AMOUNT" means, with respect to each Member (i) the
aggregate amount of Profits previously allocated to each Member pursuant to
Section 7.2(a)(2) and Section 7.2(c)(2) less (ii) the aggregate amount of Loss
previously allocated to each Member pursuant to Section 7.2(b)(3) and Section
7.2(d)(4).
"ALLOCATED PREFERRED AMOUNT" means, with respect to each Member, (i)
the aggregate amount of Profits previously allocated to such Member pursuant to
Section 7.2(a)(3) and Section 7.2(c)(3) less (ii) the aggregate amount of
Losses previously allocated to such Member pursuant to Section 7.2(b)(2) and
Section 7.2(d)(3).
"ALLOCATED TARGET AMOUNT" means, with respect to TMT, (i) the
aggregate amount of Profits previously allocated to TMT pursuant to Sections
7.2(a)(3), 7.2(a)(4), 7.2(c)(3), 7.2(c)(4) and 7.2(c)(5) less (ii) the
aggregate amount of Losses previously allocated to TMT pursuant to Sections
7.2(b)(1), 7.2(b)(2), 7.2(d)(2), and 7.2(d)(3).
<PAGE> 8
"BANKRUPT MEMBER" means any Member who is insolvent, who has filed a
voluntary petition in bankruptcy or against whom another person has filed an
involuntary petition in bankruptcy (which involuntary petition has not been
dismissed within sixty (60) days).
"BANKRUPTCY OPTION" has the meaning assigned to it in Section 9.5(b).
"BASE RETURN AMOUNT" means the amount obtained by applying a
cumulative internal rate of return of nine percent (9%) per annum (compounded
annually) to the daily outstanding amount of a Member's unreturned Capital
Contributions, calculated from the date each such Capital Contribution was made
to the Company and based on a 365 day (or 366 day) year, as the case may be.
"BOOK VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except (a) the initial Book Value of any
asset contributed by a Member to the Company shall be the fair market value of
such asset as agreed by the Members; (b) the Book Value of all Company assets
shall be adjusted in the event of a revaluation as provided in Section 3.7(d);
(c) the Book Value of any Company asset distributed to any Member shall be the
fair market value of such asset on the date of distribution as agreed by the
Members; and (d) such Book Value shall be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Profits and
Losses.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a
holiday on which national banking associations in Houston, Texas are closed.
"BUY-SELL OFFER" has the meaning assigned to it in Section 9.3(a).
"BUYOUT EVENT" has the meaning assigned to it in Section 9.3(a).
"BUYOUT NOTICE" has the meaning assigned to it in Section 9.3(a).
"CAPITAL ACCOUNT" means, with respect to any Member, the account
maintained for such Member in accordance with Section 3.7.
"CAPITAL CONTRIBUTIONS" means, with respect to any Member, the total
of all capital contributions made by that Member (other than Default
Contributions) and, with respect to all of the Members collectively, it means
the total of all capital contributions made by all of the Members (other than
Default Contributions), in all cases pursuant to Sections 3.2 and 3.3
(including, but not limited to, the Initial Capital Contributions and the
Additional Capital Contributions, but excluding Default Contributions).
"CAPITAL PROCEEDS" means, with respect to any capital transaction (as
defined under generally accepted accounting principles), the following: (a) in
the case of a sale or disposition of all or any portion of the Properties of
the Company, an amount equal to the excess of the gross cash proceeds payable
to or received by the Company in exchange for such Properties less the
Disposition Cost of such Properties relating to such sale or disposition, (b)
in the event of casualty or condemnation involving all or any portion of the
Properties, an amount equal to the excess of the cash proceeds payable to or
received by the Company as a result of such casualty or condemnation less the
Disposition Cost of such Properties relating to such casualty or condemnation,
and (c) in the case
<PAGE> 9
of the re-financing of any mortgage loan encumbering the Properties, an amount
equal to the excess of the net proceeds of the new mortgage loan (net of any
costs of the refinancing) over the then unpaid principal amount of the mortgage
loan or loans then being refinanced thereby.
"CAPITAL RATIO" means, with respect to any Member at any time, the
percentage assigned to such Member under the column of the same name on
Schedule 1 as then in effect.
"CASH AMOUNT" means with respect to the exercise of the Marketing
Right by TMT under Section 9.4(a), an amount, in cash, equal to the value of
TMT's Membership Interest determined under the NAV Formula and with respect to
the exercise of the Partial Disposition Right, an amount, in cash, equal to the
value of the Tendered Membership Interest, as determined using the NAV Formula.
"CERTIFICATE OF FORMATION" means the certificate of formation of the
Company filed with the Office of the Delaware Secretary of State in accordance
with the Act.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, together with all rules and regulations promulgated thereunder and
interpretations thereof by the Internal Revenue Service, or any successor
federal statute.
"COMPANY" means Sierra-Nevada Multifamily Investments, LLC, a Delaware
limited liability company.
"COMPANY VALUE" has the meaning assigned to it in Section 9.3(b).
"CONTRIBUTION NOTICE" has the meaning assigned to it in Section
3.3(a).
"CPT" means Camden Property Trust, a Texas real estate investment
trust.
"CPT SUB" means Camden Subsidiary, Inc., a Delaware corporation.
"DEFAULT ALLOCATION AMOUNT" means, with respect to any Member, an
amount equal to three times the amount of such Member's Default Contribution.
"DEFAULT CONTRIBUTION" has the meaning assigned to it in Section
3.3(b).
"DEFAULT DATE" has the meaning assigned to it in Section 3.3(b).
"DEFAULT NOTICE" has the meaning assigned to it in Section 3.3(b).
"DEFAULT RETURN" means, with respect to any Default Contribution, an
amount equal to three times the amount of such Default Contribution.
"DEPRECIATION" means, for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that
if the Book Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period (as a result
of property contributions or adjustments to such values), Depreciation shall be
adjusted as necessary so as to be
<PAGE> 10
an amount which bears the same ratio to such beginning Book Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year or other period bears to such beginning adjusted tax basis;
provided, however, that if the federal income tax depreciation, amortization,
or other cost recovery deduction for such year or other period is zero,
Depreciation for such year or other period shall be determined with reference
to such beginning Book Value using any reasonable method selected by the
Manager.
"DISCOUNT PRICE" means the product of the Market Price multiplied by
0.98.
"DISPOSE," "DISPOSING" OR "DISPOSITION" (whether the first letter of
such word is capitalized or is in lower case type) means, with respect to any
asset (including, without limitation, a Membership Interest or any portion
thereof), a sale, assignment, transfer, conveyance, gift, pledge, encumbrance,
exchange or other disposition of such asset, whether such disposition be
voluntary, involuntary or by operation of law, including (without limitation)
the following: (a) in the case of an asset owned by a natural person, a
transfer of such asset upon the death of its owner, whether by will, intestate
succession or otherwise; (b) in the case of an asset owned by an Entity, (i) a
merger or consolidation of such Entity, (ii) a conversion of such Entity into
another type of Entity, (iii) a distribution of such asset in connection with
the dissolution, liquidation, winding-up or termination of such Entity (unless,
in the case of a merely technical dissolution, such Entity's business is
continued without the commencement of liquidation or winding- up), and (iv) the
sale, transfer or other disposition, in one or more related or unrelated
transactions of 40% or more of all the ownership interests in such entity
within any period of 12 consecutive months; and (c) disposition in connection
with, or in lieu of, a foreclosure of an encumbrance; provided, however, such
term does not refer to the lease to residential apartment tenants of
residential apartments within the Properties in the ordinary course of the
multifamily residential business of the Company.
"DISPOSING MEMBER" has the meaning assigned to it in Section 9.2.
"DISPOSITION COST" refers to items paid or payable in cash and means,
in the case of a sale, disposition or condemnation of or casualty involving all
or any portion of the Properties, an amount equal to the sum of (a) all costs
and expenses paid or payable in cash by the Company in connection with such
sale, disposition, condemnation or casualty (including, without limitation,
costs incurred by the Manager and its Affiliates and properly allocated to the
Company in accordance with the terms of this Agreement), (b) all amounts
required to be paid to any lender in connection with such sale, disposition,
condemnation, or casualty, (c) any other amounts which the Members,
collectively, reasonably determine are required or advisable to pay to any
person not a Member as a result of or in connection with such sale,
disposition, condemnation or casualty, and (d) in the case of a condemnation or
casualty involving all or any portion of the Properties, all costs and expenses
of restoration actually paid by the Company.
"DISTRIBUTABLE CASH FLOW" means, for any period, the amount by which
the Net Cash Flow for such period exceeds the Reserve Deduction for that
period.
"ENTITY" (whether the first letter of the word is capitalized or in
lower case type) means any Person other than a natural person.
<PAGE> 11
"FINANCING DOCUMENTS" means documents executed by the Company in
connection with any financing or loan transaction, including the assumption by
the Company of any existing financing or loan, with respect to any Property.
"FISCAL YEAR" means each fiscal year of the Company as provided in
Section 6.2.
"GAINS FROM CAPITAL TRANSACTIONS" shall mean all net income and gain
recognized for federal income tax purposes (with the modifications specified in
the definition of Profits and Losses) resulting from any capital transactions
(as determined in accordance with generally accepted accounting principles).
"INCOME FROM OPERATIONS" shall mean all net income and gain recognized
for federal income tax purposes (with the modifications specified in the
definition of Profits and Losses) other than Gains from Capital Transactions.
"IDENTIFIED PROPERTIES" has the meaning assigned to it in Section
9.4.(c).
"INITIAL CAPITAL CONTRIBUTION" means, as to any Member, any amount
contributed to the capital of the Company by a Member pursuant to Section
3.2(b).
"LOSSES FROM CAPITAL TRANSACTIONS" shall mean all net losses
recognized for federal income tax purposes (with the modifications specified in
the definition of Profits and Losses) resulting from any capital transactions
(as determined in accordance with generally accepted accounting principles).
"LOSSES FROM OPERATIONS" shall mean all net losses recognized for
federal income tax purposes (with the modifications specified in the definition
of Profits and Losses) other than Losses from Capital Transactions.
"MANAGER" means CPT Sub or any person that is elected to act as
Manager of the Company as provided herein.
"MANAGER FEE" has the meaning assigned to it in Section 4.6.
"MARKET PRICE" means the mean average, for the most recent thirty (30)
consecutive trading days for the REIT Shares preceding the date upon which TMT
receives the Option Notice, of the last reported sale price per share of the
REIT Shares at the close of trading on each such day or, if the REIT Shares
have not traded for at least thirty (30) consecutive days, then the average as
aforesaid of the days on which the REIT Shares have traded over the thirty (30)
Business Days preceding the date upon which TMT receives the Option Notice.
"MARKETING NOTICE" has the meaning assigned to it in Section 9.4(a).
"MARKETING RIGHT" has the meaning assigned to it in Section 9.4(a).
"MEMBERS" means, collectively, at any time, the persons who are
members of the Company as provided in this Agreement and under the Act, such
persons being, on the date of this Agreement, the persons listed as Members on
Schedule 1 of this Agreement (or such persons' respective successors), and at
any time thereafter those persons (except for any thereof who cease to be
<PAGE> 12
members of the Company) and any other person admitted as an additional member
to the Company in accordance with this Agreement and the Act, each in its
capacity as a member of the Company. "MEMBER" means any one of such Members.
"MEMBER NONRECOURSE DEBT" means any nonrecourse debt (as defined in
Treasury Regulations Section 1.704-2(b)(4)) of the Company for which any Member
bears the economic risk of loss, in accordance with Treasury Regulations
Sections 1.704-2(b)(4) and 1.752-2.
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means, for each Member, the
amount of Minimum Gain for the Fiscal Year or other period attributable to such
Member's Member Nonrecourse Debt, determined in accordance with Treasury
Regulations Section 1.704-2(i)(3).
"MEMBER NONRECOURSE DEDUCTIONS" means any Losses or other losses or
deductions of the Company that must be allocated to a Member who bears the
economic risk of loss for the partner nonrecourse liability to which the Losses
or other losses or deductions relate, determined in accordance with Treasury
Regulations Section 1.704-2(i)(1).
"MEMBERSHIP INTEREST" means, at any particular time, the entire
limited liability company interest of a Member in the Company at that time,
including the rights and obligations of such Member under this Agreement and
the Act.
"MEMBER'S OFFER" has the meaning assigned to it in Section 9.2.
"MINIMUM GAIN" means, with respect to all Nonrecourse Liabilities of
the Company, the minimum amount of gain that would be realized by the Company
if the Company disposed of the Company property subject to such liability in
full satisfaction thereof computed in accordance with Treasury Regulations
Section 1.704-2(d).
"MINIMUM GAIN SHARE" means, for each Member, such Member's share of
Minimum Gain for the Fiscal Year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
"NAV FORMULA" means the methodology set forth in Schedule 5 attached
hereto for purposes of determining the net asset value of all of the Company in
connection with the determination of the value of TMT's Membership Interest
pursuant to Section 9.4.
"NET CASH FLOW" means for any period the amount equal to:
(i) all cash receipts of the Company other than Capital
Proceeds;
decreased by
(ii) disbursements of the Company for operating expenses
(including, without limitation, the Manager Fee and amounts paid or
payable under the Property Management Agreement), expenditures for
capital investments and reinvestments, and principal payments on
indebtedness, interest and other expenses, required or elected to be
made in connection with any refinancing, sale or other event to the
extent such principal, interest and other expenses are not properly
included in the determination of Capital Proceeds.
<PAGE> 13
"NONRECOURSE DEDUCTIONS" means, for each Fiscal Year or other period,
an amount of Company deductions that are characterized as "nonrecourse
deductions" under Treasury Regulations Section 1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulations Section 1.752-1(a)(2).
"NOTICE DATE" has the meaning assigned to it in Section 9.5(c).
"OFFERED INTERESt" has the meaning assigned to it in Section 9.2.
"OFFERED PRICE" has the meaning assigned to it in Section 9.3(b).
"OFFERING MEMBER" has the meaning assigned to it in Section 9.3(a).
"OFFICER" means, at any time, a President, any Vice President,
Secretary, Treasurer or other duly elected officer of the Company appointed by
the Manager under the terms of this Agreement and serving in that capacity.
"OPERATING BUDGET" has the meaning assigned to it in Section 4.4.
"OPERATING PLAN" has the meaning assigned to it in Section 4.3.
"ORIGINAL PROPERTIES" means those certain properties identified as
Original Properties in Schedule 2 attached hereto.
"PARTIAL DISPOSITION RIGHT" has the meaning assigned to it in Section
9.4(c).
"PARTIAL DISPOSITION NOTICE" has the meaning assigned to it in Section
9.4(c).
"PERSON" (whether the initial letter of the word is capitalized or in
lower case type) means any individual, corporation, sole proprietorship,
partnership, limited liability company, association, trust, joint venture, or
other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"PERSONAL REPRESENTATIVE" has the meaning assigned to it in Section
9.5(a).
"PREFERRED ALLOCATION AMOUNT" means, with respect to each Member, the
sum of the amounts, calculated on a daily basis for each day during the term of
the Company in which there exists a Capital Contribution for such Member, equal
to the Capital Contribution outstanding on each such day times nine percent
(9%) per annum.
"PROFITS" and "LOSSES" (respectively) means, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
<PAGE> 14
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition, shall be subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Book Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from such Book Value;
(d) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year or
other period, computed in accordance with the definition of "Depreciation"
herein; and
(e) Notwithstanding any other provision of this definition,
any items which are specifically allocated pursuant to Section 7.2(c) and
Section 7.2(e) shall not be taken into account in computing Profits or Losses.
"PROPERTIES" means, collectively, the following: the nineteen (19)
multifamily residential apartment properties (including, without limitation,
all land, improvements and other property, and all fixtures and personal
property, comprising each such property, respectively) containing an aggregate
of five thousand one hundred nineteen (5,119) residential apartment units,
described in Schedule 2 attached hereto; any future multifamily residential
apartment properties which may be owned from time to time by the Company; and,
any other real and personal property which is owned by the Company at any time.
The term "Property" shall refer to any of the Properties in the singular.
"PURCHASE NOTICE" has the meaning assigned to it in Section 9.5(b).
"PROPERTY MANAGEMENT AGREEMENT" means that certain Property Management
Agreement dated of even date herewith by and between the Company and Camden
Development, Inc.
"PURCHASE OFFER" has the meaning assigned to it in Section 9.2.
"PURCHASER" has the meaning assigned to it in Section 9.3(a).
"PURCHASING MEMBER" has the meaning assigned to it in Section 9.5(c).
"QUALIFIED ORGANIZATION" means any qualified organization within the
meaning of Section 514(c)(9)(C) of the Code.
"REIT REQUIREMENTS" has the meaning assigned to it in Section 4.9.
<PAGE> 15
"REIT SHARE" means a common share of beneficial interest in CPT that
is registered for sale under the federal securities laws.
"REIT SHARES AMOUNT" means, for purposes of any particular calculation
or use thereof, the number of REIT Shares determined by dividing the Cash
Amount being utilized in such calculation by the Discount Price applicable for
purposes of such calculation. Any fractional number of REIT Shares shall be
rounded up or down (as the case may be) to the nearest full share.
"RESERVES" means, at any time, the total amount of the reasonable
reserves established and maintained by the Company at that time, in amounts
reasonably determined in the annual Operating Plan and Operating Budget or
otherwise approved by all of the Members to be adequate and appropriate for
current and future operating and working capital and for structural capital
expenditures, tenants' alterations and leasing commissions or other costs and
expenses incident to the Company's business.
"RESERVE DEDUCTION" means, with respect to any period, the amount set
aside in that period to be added to Reserves, as determined in the annual
Operating Plan and Operating Budget for that period or as otherwise approved by
all the Members.
"RESPONDING MEMBER" has the meaning assigned to it in Section 9.3(a).
"SELLER" has the meaning assigned to it in Section 9.3(a).
"SELLING MEMBER" has the meaning assigned to it in Section 9.5(c).
"SELL-OUT PRICE" has the meaning assigned to it in Section 9.3(b).
"SHARING RATIO" means, at any time, with respect to any Member, the
percentage assigned to such Member under the column of the same name on
Schedule 1 as amended from time to time.
"TARGET ALLOCATION AMOUNT" means, at any time with respect to TMT, the
sum of (A) the sum of the amounts, calculated on a daily basis for each day
during the term of the Company in which TMT has a Capital Contribution
outstanding, equal to the Capital Contribution outstanding on each such day
times 14 percent (14%) per annum and (B) an amount equal to (i) 50% of the
total Capital Contributions made by CPT Sub reduced by (ii) the Allocated
Target Amount.
"TARGET RETURN AMOUNT" means the amount obtained by applying a
cumulative internal rate of return of fourteen percent (14%) per annum
(compounded annually) to the daily outstanding amount of TMT's unreturned
Capital Contributions, calculated from the date each such Capital Contribution
was made to the Company and based on a 365 day (or 366 day) year, as the case
may be.
"TENDERED INTEREST PURCHASE OPTION" has the meaning assigned to it in
Section 9.4(d).
"TENDERED INTEREST OPTION NOTICE" has the meaning assigned to it in
Section 9.4(d).
"TENDERED MEMBERSHIP INTEREST" has the meaning assigned to it in
Section 9.4(c).
<PAGE> 16
"TMT" means TMT-Nevada, L.L.C., a Delaware limited liability company.
"TMT RETURN" means, at any time, an amount equal to (i) fifty percent
(50%) of the total Capital Contributions made by CPT Sub pursuant to the terms
of this Agreement, reduced (but not below zero) by (ii) the excess (if any) of
the Actual Return Amount over the Target Return Amount.
"TREASURY REGULATIONS" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"UNALLOCATED DEFAULT AMOUNT" means, with respect to any Member (A)
such Member's Default Allocation Amount minus (B) such Member's Allocated
Default Amount.
"UNALLOCATED PREFERRED AMOUNT" means, with respect to any Member, (A)
such Member's Preferred Allocation Amount minus (B) such Member's Allocated
Preferred Amount.
"UNALLOCATED TARGET AMOUNT" means, with respect to TMT, (A) the Target
Allocation Amount minus (B) the Allocated Target Amount.
"UNPAID DEFAULT RETURN" means, with respect to any Member, the Default
Return due such Member less all amounts distributed to such Member in reduction
thereof pursuant to Sections 7.1(a)(2) and 7.1(b)(2) and distributions pursuant
to Section 11.2(b)(3) which correspond to distributions pursuant to Section
7.1(b)(2).
"UNRETURNED DEFAULT CONTRIBUTION" means, with respect to any Member,
the total Default Contributions made by such Member less all amounts
distributed to such Member in reduction thereof pursuant to Sections 7.1(a)(1)
and 7.1(b)(1) and distributions pursuant to Section 11.2(b)(3) which correspond
to distributions pursuant to Section 7.1(b)(1).
ARTICLE 2.
FORMATION OF THE COMPANY
SECTION 2.1. NAME AND FORMATION. The name of the Company is
Sierra-Nevada Multifamily Investments, LLC. The Certificate of Formation of
the Company was filed on behalf of the Original Member by an authorized person
on May 1, 1998 and the Company was formed as a Delaware limited liability
company pursuant to the Act. The rights and liabilities of the Members shall
be as provided in the Act, except as otherwise set forth herein. In the event
that any provision in this Agreement conflicts with the Act, such provision in
this Agreement shall control and govern to the extent permitted by applicable
law.
SECTION 2.2. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be c/o Camden Subsidiary, Inc., 3200 Southwest
Freeway, Suite 1500, Houston, Texas 77027, or such other address as may be
designated from time to time by all the Members.
SECTION 2.3. ASSUMED NAME CERTIFICATE. The Company shall do business
under the name set forth in Section 2.1 above or under any other name or names
which the Members shall agree upon
<PAGE> 17
from time to time. If the Company does business under a name other than that
set forth under Section 2.1, the Manager shall file or cause to be filed an
assumed name or fictitious name certificate or any other document as required
by applicable law in appropriate jurisdictions and the Members shall execute
such certificates, documents or other writings as may be reasonably requested
by the Manager in connection therewith.
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT. The address of
the Company's registered office in the State of Delaware shall be 9 East
Loockerman Street, Dover, Delaware 19901. The name of its registered agent at
such address shall be National Registered Agents, Inc. The Manager may, from
time to time upon notice to each Member and without amending this Agreement,
change the Company's registered agent and the address of its registered office.
SECTION 2.5. TERM. The Company shall commence to exist on the date
of the filing of the Certificate of Formation with the Secretary of State of
Delaware and shall terminate its existence on December 31, 2048, unless sooner
terminated in accordance with the provisions of this Agreement or the Act.
SECTION 2.6. REGISTRATION. The Manager shall cause the Company to
register to do business as a foreign limited liability company in any
jurisdiction where the Company will conduct its business and where such
registration is required.
SECTION 2.7. PURPOSE, POWERS AND CHARACTER OF THE BUSINESS OF THE
COMPANY. The purposes, powers and character of the business of the Company
shall be as follows:
(a) to acquire, hold and manage the Properties and any other
real or personal property and make any improvements thereon;
(b) to enter into the Property Management Agreement;
(c) to own, operate, manage, maintain, repair and otherwise deal
with the Properties and any other property owned by the Company and to carry
on any other business which may be favorable to an owner of multifamily
projects;
(d) to acquire, hold, use, lease, own, develop, improve and
otherwise deal with all or any portion of the Properties;
(e) to mortgage, sell, lease, assign, transfer, exchange or
otherwise encumber or dispose of all of the Properties of the Company, or any
portion thereof or interest therein;
(f) to obtain temporary or permanent financing in the form of
acquisition loans, construction loans, participating loans, working capital
loans, and intermediate and long-term debt for the purposes recited in this
Section 2.7;
(g) to make any investment and expenditure, to borrow money and
to take any and all other actions which are incidental or reasonably related to
any of the purposes recited in this Section 2.7;
<PAGE> 18
(h) to do any other act or activity, and carry on any business,
related directly or indirectly to ownership in real property or interests
therein; and
(i) to do any and all things necessary or desirable to carry out
the foregoing activities and any other activity contemplated by this Agreement
or the Act.
SECTION 2.8. ADMISSION OF MEMBERS. Upon the execution of this
Agreement or a counterpart of this Agreement, TMT shall be admitted to the
Company as a Member. Any additional Member may be admitted at such time and
upon such terms and conditions as may be determined by the written act or
consent of all of the Members pursuant to Article 9.
ARTICLE 3.
CAPITAL
SECTION 3.1. CAPITAL OF COMPANY. The capital of the Company shall be
the aggregate amount of cash and fair market value of property contributed to
the Company in the manner hereinafter set forth in this Article 3.
SECTION 3.2. INITIAL CAPITAL CONTRIBUTIONS.
(a) Pursuant to the Original Agreement and in connection with
the formation of the Company, CPT Sub contributed those certain Original
Properties to the Company. The undersigned Members agree that the initial Book
Value of the Original Properties upon the Original Property Contribution was
$151,095,000 (the "Agreed Value").
(b) Upon execution of this Agreement, (i) TMT shall contribute
to the Company the cash set forth opposite its name on Schedule 1 attached
hereto and (ii) CPT Sub shall contribute to the Company cash in the sum of
$500,000 and the Company shall distribute to CPT Sub an amount of cash equal to
$129,832,022 so that CPT Sub's net contribution to the Company shall be as set
forth opposite its name on Schedule 1. The entire amount of CPT Sub's net
contribution to the Company as further reflected opposite its name on the
attached Schedule 1 shall be the Initial Capital Contribution of CPT Sub. The
cash contribution made by TMT pursuant to this Section 3.2(b) shall be the
Initial Capital Contribution of TMT and, upon making such contribution set
forth opposite its name on Schedule 1 attached hereto and following the
contribution of $500,000 by CPT Sub to the Company and the payment of the cash
distribution by the Company to CPT Sub each as further described in the first
sentence of this Section 3.2(b), TMT shall receive its Membership Interest and
CPT Sub's Membership Interest shall be adjusted as set forth on Schedule 1.
SECTION 3.3. ADDITIONAL CAPITAL CONTRIBUTIONS OF THE MEMBERS.
(a) After the Initial Capital Contributions have been made to
the Company, no Member shall have any obligation to contribute any additional
capital to the Company except pursuant to a capital call that has been approved
by all the Members. If at any time the Manager determines that additional
funds are required by the Company to fund the anticipated cash needs of the
Company, the Manager shall notify the Members in writing of such circumstance.
Such notice (a "CONTRIBUTION NOTICE") shall set forth the total amount of money
needed, the proposed use of such
<PAGE> 19
funds, each Member's share of such amount determined in accordance with each
Member's Capital Ratio, and the due date thereof, which shall be no earlier
than thirty (30) days nor later than forty-five (45) days after the date on
which such Contribution Notice is given. Each Member shall be deemed to have
approved and consented to the recommendation of the Manager set forth in any
Contribution Notice unless such Member notifies the Manager within fifteen (15)
days of the Contribution Notice being given that such Member does not approve
or consent to the additional capital call set forth in the Contribution Notice.
(b) If any Member shall fail to make the Additional Capital
Contribution required to be made by such Member by the due date thereof as
provided in a Contribution Notice approved by all the Members, then the
non-defaulting Member shall give the defaulting Member notice of its failure to
so make such an Additional Capital Contribution as required in this Section 3.3
("DEFAULT NOTICE"). If the defaulting Member has not cured the default within
ten (10) days after the Default Notice is given (the "DEFAULT DATE") (i) by
delivering to the Company payment in the amount set forth in such Default
Notice or (ii) by curing such default by other means acceptable to the
non-defaulting Member, the non-defaulting Member shall have the right to make
the Additional Capital Contribution that the defaulting Member failed to make
(the "DEFAULT CONTRIBUTION") by contributing to the Company an amount equal to
the Default Contribution within ten (10) days after the Default Date. If the
non-defaulting Member does not make the Default Contribution and has already
made the Additional Capital Contribution required by the Contribution Notice,
such Additional Capital Contribution shall be treated by the Company and the
non-defaulting Member as a loan by the non-defaulting Member to the Company (in
lieu of a Capital Contribution) and the Company shall immediately return to the
non-defaulting Member the amount of such Additional Capital Contribution with
interest thereon at the lesser of (i) the maximum rate of interest permitted by
applicable law or (ii) nine percent (9%) per annum, for the number of days such
funds were held by the Company and no Member shall have any further obligation
with respect to such Contribution Notice. If, however, the non- defaulting
Member timely makes the Default Contribution, the non-defaulting Member shall
be entitled to a priority return of such Default Contribution and a Default
Return, and the Capital Ratios and Sharing Ratios of the Members shall be
adjusted as follows: (A) each defaulting Member's Capital Ratio and Sharing
Ratio shall be reduced based upon 100 divided by the sum of the total Capital
Contributions and Default Contributions after such Default Contribution,
multiplied by four times the Default Contribution made on behalf of the
defaulting Member; and (B) the Capital Ratio and Sharing Ratio of the
non-defaulting Member shall be similarly increased by the same amount by which
the Capital Ratio and Sharing Ratio of the defaulting Member was reduced. As
an example of the foregoing: If total Capital Contributions are $50,000,000, an
Additional Capital Contribution of $5,000,000 is required under Section 3.3(a)
above, and a Member having an 80% Capital Ratio and 50% Sharing Ratio fails to
make its required $4,000,000 Additional Capital Contribution, the defaulting
Member's Capital Ratio shall be reduced from 80% to 50.91% and the defaulting
Member's Sharing Ratio shall be reduced from 50% to 20.91%. Likewise the
non-defaulting Member's Capital Ratio would be increased from 20% to 49.09% and
the non-defaulting Member's Sharing Ratio would be increased from 50% to
79.09%. (100/55,000,000 x [4,000,000 x 4] = 29.09%; 80% - 29.09% = 50.91%; 50%
- - 29.09% = 20.91%; 20% + 29.09% = 49.09%; 50% + 29.09% = 79.09%). Further, the
Capital Account balances of the Members shall immediately after such default be
adjusted so that the Adjusted Capital Account balances of the Members shall
equal an amount such that if all Company assets were sold for their then Book
Value and all liabilities allocable to such assets were then satisfied
according to their terms and the proceeds distributed in accordance with
Section 7.1 (taking into account the most
<PAGE> 20
recent adjustments to Capital Ratios and Sharing Ratios) all Capital Accounts
would equal zero after the distribution.
(c) If a Member makes a payment directly to a creditor or
another Member in satisfaction of any indebtedness of the Company pursuant to
any indemnity, guaranty or contribution obligation of such Member in respect of
Company indebtedness, or if any collateral interest granted by such Member to
such creditor or other Member to secure any such indebtedness shall be
foreclosed and the proceeds of such foreclosure shall be applied to reduce or
satisfy such indebtedness and any foreclosure-related expenses, such Member
shall be deemed to have made an Additional Capital Contribution equal to such
amount, and shall receive a credit to its Capital Account in the amount
thereof.
(d) Notwithstanding any actual or implied provision to the
contrary in this Section 3.3, no Member shall be liable to make any Additional
Capital Contribution to the Company and no Member shall have any obligation to
make a payment of an amount due the Company by another Member. The right of a
non-defaulting Member to make a Default Contribution and receive the benefits
set forth in Section 3.3(b) shall be the only remedy against a Member who fails
to make an Additional Capital Contribution required by a Contribution Notice.
SECTION 3.4. COMPANY CAPITAL.
(a) Except as may be otherwise specifically provided in this
Agreement, no Member shall be paid interest on any Capital Contribution,
Default Contribution or Original Property Contribution to the Company.
(b) No Member shall have the right to withdraw all or any part
of its Capital Contribution, Default Contribution or Original Property
Contribution or to receive any return on any portion of its Capital
Contribution, Default Contribution or Original Property Contribution except as
may be otherwise specifically provided in this Agreement.
(c) When the Company is to return to any Member all or part of
its Capital Contribution, Default Contribution or Original Property
Contribution or make any other distribution (whether in liquidation or
otherwise) to any Member, no Member shall have the right to receive property
other than cash. No distribution in kind shall be made to any Member without
the prior written approval of all the Members.
(d) All Capital Contributions and Default Contributions must be
made in cash unless, and only to the extent, expressly provided otherwise in a
written instrument of approval or consent signed by all of the Members.
SECTION 3.5. LIABILITY OF MEMBERS. No Member, in such capacity or as
a Manager, shall (i) be liable for the debts, liabilities, contracts or any
other obligation of the Company, except to the extent expressly provided herein
or in the Act, (ii) be liable for the debts or liabilities of any other Member,
(iii) be required to contribute to the capital of, or loan, the Company any
funds other than as expressly required in this Agreement, (iv) be liable for
the return of all or any portion of the Capital Contributions, Default
Contributions or the Original Property Contribution of any Member, or (VIA
FEDERAL EXPRESS) except as otherwise expressly provided herein, have any
priority
<PAGE> 21
over any other Member as to the return of its contributions to capital or as to
compensation by way of income.
SECTION 3.6. LOANS BY MEMBERS OR AFFILIATES. Subject to the other
provisions hereof and to other agreements between the Company and some or all
of the Members and subject to obtaining the prior written approval of all of
the Members in each and every case, any Member or Affiliate may (but shall not
be obligated to) at any time loan money or guarantee a loan to the Company to
finance Company operations, to finance or refinance any assets of the Company,
to pay the debts and obligations of the Company, or for any other Company
purpose. Except as otherwise provided herein or in any other agreement between
the Company and some or all of the Members which has been approved by all of
the Members, if any Member or its Affiliate lends funds or guarantees a loan of
funds to the Company, such Member or Affiliate shall be entitled to receive
interest on such loan, or a fee for guaranteeing any such loan, at an interest
rate or fee to be agreed upon by such Member or and all of the Members.
SECTION 3.7. CAPITAL ACCOUNTS.
(a) A Capital Account shall be established and maintained by the
Company for each Member in accordance with this Section 3.7.
(b) A Member's Capital Account shall be credited with (i) the
amount of cash and the initial Book Value of any property contributed by such
Member to the Company, (ii) such Member's allocable share of Profits, income
and gain and (iii) the amount of any Company liabilities that are expressly
assumed by such Member or that are secured by any Company property distributed
to such Member.
(c) A Member's Capital Account shall be debited by (i) the
amount of cash and the Book Value of any Company property distributed to such
Member pursuant to any provision of this Agreement, (ii) such Member's
allocable share of Losses, deductions and other losses and (iii) the amount of
any liabilities of such Member that are expressly assumed by the Company or
that are secured by any property contributed by such Member to the Company.
(d) Upon the occurrence of certain events described in Treasury
Regulations Sections 1.704- 1(b)(2)(iv)(f), 1.704-1(b)(4) and 1.704-2, the
Manager shall increase or decrease the Capital Accounts of the Members to
reflect a revaluation of Company property on the Company's books to its fair
market value (as determined by the Manager and taking into account Section
7701(g) of the Code).
(e) The Capital Account of each Member shall be determined after
giving effect to all transactions which have been effected prior to the time
when such determination is made giving rise to the allocation of income, gain,
Profits, Losses, deductions and other expenses and to all contributions and
distributions theretofore made. Any person who acquires a Membership Interest
directly from a Member shall have a Capital Account which includes all or part
of the Capital Account balance of the Membership Interest so acquired or
transferred.
(f) In the event that any Member makes a loan to the Company,
such loan shall not be considered a contribution to the capital of the Company
and shall not increase the Capital Account
<PAGE> 22
of the lending Member. Repayment of such loans shall not be deemed withdrawals
from the capital of the Company.
(g) Any fees, salary, interest or similar compensation payable
to a Member pursuant to this Agreement shall be deemed a guaranteed payment for
federal income tax purposes and not a distribution to such Member for such
purposes. Such payments to a Member shall not reduce the Capital Account of
such Member, except to the extent of its distributive share of any Company
Losses or other downward capital adjustment resulting from such payment.
(h) From time to time the Manager may make such modifications to
the manner in which the Capital Accounts are computed to comply with Treasury
Regulations Sections 1.704-1(b) and 1.704-2 provided that such modification
does not and will not have a material effect on the amounts distributable to
any Member pursuant to this Agreement.
(i) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
(j) No Member with an Adjusted Capital Account Deficit shall
have any obligation to the Company or any other Member to restore such deficit
balance. Furthermore, a deficit Capital Account balance of a Member shall not
be deemed to be a Company asset or Company property.
SECTION 3.8. CAPITAL AND SHARING RATIOS. The Capital Ratio and
Sharing Ratio of each Member is set forth opposite its respective name on
Schedule 1, attached hereto and hereby made a part of this Agreement. The
Capital and Sharing Ratios set forth on Schedule 1 may be amended from time to
time by the unanimous written consent of the Members.
ARTICLE 4
RIGHTS AND POWERS
OF THE MANAGER
SECTION 4.1. MANAGER'S POWERS AND RESPONSIBILITIES. The Manager of
the Company shall be CPT Sub or such other person as may be appointed to serve
as Manager from time to time by agreement of the Members. The Manager shall
manage the affairs of the Company as provided herein. Without limiting the
foregoing (but subject to and limited by the provisions of Section 4.2), the
Manager shall have full power and authority to do the following to the extent
necessary for the conduct of the Company's business (provided, however, that
except as expressly provided to the contrary herein, the Manager shall not
expend Company funds for any purpose or in any amount other than as set forth
in the applicable Operating Plan or Operating Budget):
(a) to supervise or arrange for the supervision of day-to-day
operations of the Company;
(b) to institute, prosecute, defend or settle any legal,
arbitration or administrative actions or proceedings on behalf of or against
the Company;
<PAGE> 23
(c) retain accountants, attorneys, consultants and other
independent contractors to the extent such professional services are required
to carry on the business of the Company;
(d) to collect all rents and other payments due and owing to the
Company;
(e) to incur normal operating expenses of, and to pay the
obligations of, the Company, and to enter into, perform and carry out contracts
and agreements on behalf of the Company for the conduct of the Company's
business;
(f) to perform, or cause to be performed, all the Company's
obligations, and to exercise or cause to be exercised all of Company's rights
under any agreement (including, without limitation, the Financing Documents and
any limited liability company agreement, partnership agreement, joint venture
agreement, shareholder's agreement or other similar agreement) to which the
Company or any nominee of the Company is a party;
(g) to pay all taxes, assessments, rents and other impositions
applicable to Company assets and undertake when appropriate any action or
proceeding seeking to reduce such taxes, assessments, rents or other
imposition;
(h) to obtain, maintain or cancel any type of insurance coverage
on the Properties or other assets of the Company, including any commercially
reasonable and customary insurance to protect the Manager against liability
from third parties in such amounts as are reasonably necessary and appropriate;
(i) to open or maintain bank accounts for the deposit of Company
funds, provided that withdrawals may be made only upon the Manager's signature
or any other signature that all of the Members designate;
(j) to make tax elections and other decisions affecting the tax
treatment of a Member in connection with the Member's participation in the
Company and to prepare and file tax returns on behalf of the Company in any
federal, state, local or foreign tax jurisdiction which may apply;
(k) to do any and all acts which may be necessary or desirable
for the proper management and maintenance of the Properties, including any
matters provided for in the Property Management Agreement;
(l) to execute and deliver such documents on behalf of the
Company as it reasonably deems necessary or desirable and in connection with
the foregoing provisions; and
(m) to do any act which is necessary or desirable to carry out
any of the foregoing.
SECTION 4.2. ACTIONS REQUIRING CONSENT OF ALL MEMBERS.
Notwithstanding anything to the contrary contained in this Article 4 or
elsewhere in this Agreement, unless the action is provided for in the Operating
Plan or Operating Budget or the Manager has obtained the written consent of all
of the Members the Manager shall not cause the Company to do, nor shall the
Manager have the power or authority to cause or permit the Company to do, any
of the following:
<PAGE> 24
(a) to purchase or acquire, or contract or commit to purchase or
acquire, any property or asset for a price exceeding $10,000 on any single
property or asset; provided that such expenditures shall not exceed $25,000 in
the aggregate per Property for any fiscal year;
(b) to Dispose of all or any portion of, or any estate or
interest in, the Properties (other than leasehold interests granted in the
ordinary course of business) or assets of the Company, including its goodwill;
(c) to enter into any contract under which, or as a result of
which, the Company could be or become obligated or liable in an amount
exceeding $10,000 with respect to any single contract; provided that any such
obligations or liabilities shall not exceed $25,000 in the aggregate per
Property for any fiscal year;
(d) to borrow any money or enter into any financing, refinancing
or loan transaction or grant a security interest in all or any portion of the
Properties;
(e) to lease any Property of the Company, except in the ordinary
course of the Company's business and in accordance with the Property Management
Agreement;
(f) to enter into, or amend, any contract between the Company
and a Member or an Affiliate of a Member;
(g) to hire any employee for the Company;
(h) to enter into any agreement restricting the Company or any
Member or Affiliate from competing with the business of any Person in any
manner;
(i) to enter into any agreement for, or to consummate, any
merger, consolidation, recapitalization, reorganization, reconstitution or any
similar rearrangement of the Company or any of its equity, assets or
liabilities;
(j) to admit any Person to the Company as an additional or
substitute Member;
(k) to commit the Company to an assignment for the benefit of
creditors, commence (as the debtor) a case in bankruptcy, or commence (as the
debtor) any proceeding under any other insolvency law, or consent to or
acquiesce in the commencement of any such proceeding against the Company, or
admit or confess the insolvency or bankruptcy of the Company;
(l) to settle any legal, arbitration or administrative claim or
proceeding asserted or brought against the Company, or confess a judgement
against the Company, at a cost to the Company in excess of the lesser of
$500,000.00 or the amount therefor expressly provided in the Operating Budget
as a separate line item specifically identifying the particular claim or
proceeding;
(m) to institute or prosecute any legal, arbitration or
administrative action, claim or proceeding on behalf of the Company in an
amount in excess of $500,000.00;
(n) to dissolve or wind up the Company or cause or permit the
termination of its existence;
<PAGE> 25
(o) to change the name of the Company;
(p) to commit the Company to any capital or operating
expenditures in excess of the Operating Plan or Operating Budget as specified
in Sections 4.3 and 4.4; or
(q) to do any act in contravention of this Agreement.
SECTION 4.3. OPERATING PLAN. The Members have approved the initial
annual plan for the Company including a pro forma income statement including
allocation of sources of income, allocation of expenses, statement of cash
distributions and equity contribution schedules (collectively, the "OPERATING
PLAN") for the partial calendar year ending December 31, 1998. The initial
Operating Plan is more fully described on Schedule 3. No later than November
15 of each calendar year, the Manager will present a proposed Operating Plan
for the following year to all of the Members for their consideration and
approval. Any future Operating Plan is subject to revisions as may be required
by the agreement of all of the Members. Any Member who does not send a written
objection to the proposed Operating Plan to the Manager within thirty (30) days
after receiving the proposed Operating Plan, will be deemed to have approved
such proposed Operating Plan. If any Member objects to the Operating Plan
within such thirty (30) day period, the Members will cooperate in good faith to
try to reach agreement on an Operating Plan approved by all of the Members;
until an Operating Plan is approved by all of the Members, the Manager shall be
authorized to utilize, with respect to ordinary, normal and recurring items
only, the prior year's Operating Plan with increases not greater than increases
in the Consumer Pricing Index, except for interest, taxes and insurance which
shall be increased based on actual increases, if any, in cost.
SECTION 4.4 OPERATING BUDGET. The Members have approved the initial
operating budget, leasing plan and capital expenditure schedule for each
Property (collectively, the "OPERATING BUDGET") for the partial calendar year
ending December 31, 1998. The initial Operating Budget is more fully described
on Schedule 4. The Operating Budget for subsequent calendar years shall
consist of a reasonable estimate of the costs to be incurred for the
management, administration and maintenance of the Properties in the manner
approved by the Members. No later than November 15 of each calendar year, the
Manager will present a proposed Operating Budget for the following year to all
of the Members for their consideration and approval. Any future Operating
Budget is subject to revisions as may be required by the agreement of all of
the Members. Any Member who does not send a written objection to the proposed
Operating Budget to the Manager within thirty (30) days after receiving the
proposed Operating Budget, will be deemed to have approved such proposed
Operating Budget. If any Member objects to the Operating Budget within such
thirty (30) day period, the Members will cooperate in good faith to try to
reach agreement on an Operating Budget approved by all of the Members; until an
Operating Budget is approved by all of the Members, the Manager shall be
authorized to utilize, with respect to ordinary, normal and recurring items
only, the prior year's Operating Budget with increases not greater than
increases in the Consumer Pricing Index, except for interest, taxes and
insurance which shall be increased based on actual increases, if any, in cost.
Notwithstanding the foregoing, with respect to each Property and
without the consent of the Members, the Manager shall have the right, in its
reasonable discretion, (i) to expend up to 5% more than the amount budgeted for
the aggregate operating expense categories for any Fiscal Year, (ii) to expend
up to 10% more than the amount budgeted for any capital expenditure budget line
item, and (iii) to expend up to $10,000 on any single unbudgeted item
including, the purchase or acquisition
<PAGE> 26
of any property or the execution of a contract in relation to any Property for
such amount, not to exceed a maximum of $25,000 in the aggregate for each
Property for any fiscal year.
SECTION 4.5. DELEGATION OF AUTHORITY. The Manager may from time to
time delegate in writing to one or more Members or other Persons (including,
without limitation, the property manager designated in the Property Management
Agreement) such authority as the Manager may deem advisable and may elect one
or more Persons as an Officer of the Company. No Officer need be a Member,
Manager, or resident of the State of Delaware.
SECTION 4.6. MANAGER FEE FOR THE MANAGER AND REIMBURSEMENT OF
EXPENSES.
(a) As long as the Manager serves as the Manager hereunder, it
shall receive, as its sole and exclusive compensation for its services under
this Agreement, a fee of $20,833.33 per month (the "MANAGER FEE"), payable in
advance on the first day of each month and pro rated for any partial month
after the date hereof. The Manager Fee for the first month after the execution
hereof shall be due and payable upon the execution hereof. The Manager Fee
paid hereunder may be modified from time to time by agreement of all of the
Members. The Manager Fee paid to Manager as provided herein is separate and
distinct from the property management fee to be paid in accordance with the
terms of the Property Management Agreement. The Manager Fee paid to Manager
shall be in lieu of general, administrative, management services and overhead
charges for ministerial accounting, record keeping, payroll and similar
functions performed on behalf of the Company by employees of Manager or its
Affiliates. The Manager Fee, however, shall not be in lieu of, and the Manager
and its Affiliates shall be reimbursed for amounts paid to persons other than a
Member, Manager or any of their respective Affiliates for goods and services
provided to the Company and included in the Operating Plan.
(b) The Manager and Members shall be reimbursed for any
reasonable, out-of-pocket expenses, fees, and costs which any of them pays for,
and which are directly related to, the operations of the Company (including
costs associated with the acquisition and disposition of any Property) and
which are included in the Operating Plan or agreed to by all the Members.
(c) The Company shall not have employees.
SECTION 4.7. LIABILITY OF THE MANAGER. It is the intent of this
Section 4.7 to restrict the fiduciary nature of the Manager's duties and
liabilities hereunder to the maximum extent permitted under applicable law.
Neither the Company nor any Member shall have any claim against the Manager by
reason of any act or omission of such Manager performed by the Manager in the
reasonable, good faith belief that it was acting within the scope of its
authority under this Agreement unless such act or omission involves the
Manager's bad faith, gross negligence, willful misconduct or fraud. Further,
the Manager shall have no liability hereunder for failing to act if such act
required the consent of some or all of the Members and the required consent to
such action was requested by Manager but not granted. However, the Manager
will be liable to the Company for failing to do any thing specifically required
of it by this Agreement and for any act taken without the consent or approval
of the Members when such consent is required, provided such failure to do
anything specifically required of it by this Agreement or act taken without the
required consent or approval of Members (a) involves the Manager's bad faith,
gross negligence, wilful misconduct or fraud, or (b) resulted in actual,
material damage to the Company or a Member. Any amendment, modification or
repeal of this Section 4.7 or any provision in this Section 4.7 shall be
prospective only and shall
<PAGE> 27
not in any way affect the limitations on the Manager's liability to the Company
and the Members under this Section 4.7 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted. In furtherance of
this limitation of fiduciary liability and duties of the Manager, but not by
way of limitation, the following provisions shall apply:
(a) It will not constitute a breach of fiduciary or other duty
for the Manager to engage in activities of the type conducted by the Company,
even if in direct competition with the Company, including without limitation,
the purchase, sale and leasing of multifamily projects or the purchase and sale
of any real property;
(b) It will not constitute a breach of fiduciary or other duty
for the Manager to resolve any conflicts of interest related to any REIT
Requirements;
(c) It will not constitute a breach of fiduciary or other duty
for the Manager to engage, as attorneys, accountants and other advisors on
behalf of the Company, persons who may also be retained from time to time by
the Manager or its Affiliates, or any of their respective officers, directors
or shareholders (including without limitation engaging the auditors for CPT to
audit and certify the financial statements of the Company in accordance with
Section 6.3(a) hereof), and such persons may be engaged by both the Company and
the Manager or its Affiliates with respect to any matter; provided, however,
that unless approved by all of the Members after full disclosure of any
conflict of interest, such persons may not be engaged with respect to any
matter in which the interest of the Company and the Manager may conflict. The
Manager shall not be responsible for any misconduct or negligence on the part
of any such attorney, accountant or other advisor;
(d) It will not constitute a breach of fiduciary or other duty
for a Manager, or an Affiliate of a Manager, to contract or enter into any
agreement or arrangement with the Company with respect to any aspect of the
operations of the Company if approved after full disclosure by all of the
Members; and
(e) It will not constitute a breach of fiduciary or other duty
for the Manager to devote time to other matters not related to the operations
of the Company, as long as the Manager devotes such time and attention to the
business and affairs of the Company as is necessary to reasonably conduct the
business and affairs of the Company as set forth herein.
SECTION 4.8. INDEMNIFICATION AND EXCULPATION OF THE MANAGER.
(a) The Company shall indemnify the Manager, any Officer or any
Member of the Company from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including reasonable legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that are instituted by any Persons other than
Members or their Affiliates and relate to the operations of the Company as set
forth in this Agreement in which the Manager, such Officer or Member may be
involved, or is threatened to be involved, as a party or otherwise, unless it
is established that the act or omission of such Manager, Officer or Member was
material to the matter giving rise to the proceeding and was committed in bad
faith or was the result of gross negligence, willful misconduct or fraud. The
termination of any proceeding by judgment,
<PAGE> 28
order or settlement does not, without a finding or judgement that the requisite
standard of conduct was not met, create a presumption that the Manager, Officer
or Member did not meet the requisite standard of conduct set forth in this
Section 4.8(a). The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a conclusive presumption that the Manager, Officer
or Member acted in a manner contrary to that specified in this Section 4.8(a).
Any indemnification pursuant to this Section 4.8 shall be made only out of the
assets of the Company, including insurance proceeds, if any.
(b) The indemnification provided by this Section 4.8 shall be in
addition to any other rights to which the Manager, Officers or Members may be
entitled under any agreement, as a matter of law or otherwise.
(c) The Company may purchase and maintain insurance on behalf of
the Manager, Officers and Members as the Manager shall determine with the
approval of all the Members, against any liability that may be asserted against
or expenses that may be incurred by the Manager, Officers or Members in
connection with the Company's activities, regardless of whether the Company
would have the power to indemnify the Manager, Officers or Members against such
liability under the provisions of this Agreement.
(d) In no event may the Manager subject any Member to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(e) No Manager, Officer or Member shall be denied
indemnification in whole or in part under this Section 4.8 because the Manager,
Officer or Member had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
(f) The provisions of this Section 4.8 are for the sole and
exclusive benefit of the Manager, the Officers and the Members and their
respective successors, assigns, directors, officers and employees, agents,
representatives and Affiliates and shall not be deemed to create any rights for
the benefit of any other Persons.
SECTION 4.9. RIGHTS OF COMPETITION. Each Member or Manager, in its
individual capacity or otherwise, and their respective principals and
Affiliates, shall be free to engage in, conduct or participate in any business
or activity whatsoever, including, without limitation, the purchase, sale and
lease of multifamily projects, without any accountability, liability, or
obligation whatsoever to the Company or to any other Member. Any competing
business or activity of a Member or a Manager may be undertaken with or without
notice to or participation therein by any other Member. Each Member and the
Company hereby WAIVES any right or claim it may have against any Member or
Manager with respect to any competing business or activity or the income or
profits therefrom.
SECTION 4.10 REIT REQUIREMENTS. Each Member understands and
acknowledges that CPT has elected to be treated as a real estate investment
trust ("REIT") under Code Section 856 and that such status inures to the
benefit of all Members. Each Member further understands and acknowledges that
in order to maintain its status as a REIT, CPT must comply with numerous and
complex rules and regulations set forth in the Code and the Treasury
Regulations, many of which are applied on a quarterly and/or annual basis (the
"REIT REQUIREMENTS"), and that the management
<PAGE> 29
and operation of the Company will have a material effect on the ability of CPT
to continue to maintain its status as a REIT. Accordingly, notwithstanding any
other provision of this Agreement or any non-mandatory provision of the Act,
the Company shall not take any action which (or fail to take any action, the
omission of which) (i) could adversely affect the ability of CPT to qualify or
continue to qualify as a REIT, (ii) could subject CPT to any additional taxes
under Code Section 857 or Code Section 4981 or other potentially adverse
consequences under the Code, or (iii) otherwise could cause CPT to violate the
REIT Requirements. In addition, notwithstanding any other provision of this
Agreement or any non-mandatory provision of the Act, any action of the Manager
on behalf of the Company or any decision of the Manager to refrain from acting
on behalf of the Company, undertaken in the Manager's business judgment that
such action or omission is necessary or advisable in order (i) to protect the
ability of CPT to continue to qualify as a REIT or (ii) to avoid CPT incurring
any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Members.
To the extent practicable, the Manager shall give the Members three Business
Days' notice of such action or failure to act.
SECTION 4.11. UBTI REQUIREMENTS. The Manager shall use its best
efforts to operate the Company in a manner that will not cause any Member
subject to Section 511 of the Code to recognize unrelated business taxable
income under Sections 512 or 514 of the Code.
SECTION 4.12. RESIGNATION AND REMOVAL. The Manager may resign at any
time after giving all of the Members at least sixty (60) days' prior written
notice of its intention to do so, which notice shall set out the effective date
of the resignation. The Manager may be removed by any Member only at such time
as none of CPT or its Affiliates is a Member. Upon such resignation or
removal, a replacement Manager shall be appointed by all of the Members.
SECTION 4.13. REOC REQUIREMENTS. Notwithstanding any other provision
of this Agreement to the contrary, the Manager shall use its reasonable best
efforts to ensure that the Company shall be operated so that it at all times
qualifies as a "real estate operating company" within the meaning of Department
of Labor regulation 29 C.F.R. Section 2510.3-101 (a "REOC") such that the
assets of the Company are not treated as plan assets of any Member that is a
plan or is itself treated as holding plan assets of a plan. Should any action
or inaction that might otherwise be required or permitted under the last
sentence of Section 4.10 of this Agreement adversely affect the Company's
ability to continue to qualify as a REOC or should the Company otherwise be
unable to satisfy the REOC requirements, the Manager shall consult in good
faith with CPT and TMT to determine a course of action or inaction that is
satisfactory to CPT and TMT.
ARTICLE 5
MEETINGS OF MEMBERS
SECTION 5.1. PLACE OF MEETINGS. All meetings of the Members shall be
held at the principal office of the Company or at such other place within or
without the State of Delaware as may be determined by all of the Members and
set forth in the respective notice or waivers of notice of such meeting.
Notwithstanding the preceding sentence, no meeting shall be held in any place
other than Las Vegas, Nevada, Houston, Texas or New York City, New York,
without the prior consent of all Members.
<PAGE> 30
SECTION 5.2. MEETINGS OF MEMBERS. Meetings of the Members shall be
held at least quarterly and may be called by the Manager or any Member. The
Manager shall serve as chairperson of the meetings unless all the Members
determine otherwise.
SECTION 5.3. NOTICE OF MEETINGS OF MEMBERS. Written or printed
notice stating the place, day and hour of the meeting shall be delivered not
later than seven (7) nor earlier than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the Manager or
Member calling the meeting, to each Member of record entitled to vote at such
meeting. Notice of any meeting may be waived by the Members.
SECTION 5.4. QUORUM. All of the Members shall constitute a quorum at
all meetings of the Members, except as otherwise required by law. Once a
quorum is present at the meeting of the Members, the subsequent withdrawal from
the meeting of any Member prior to adjournment or the refusal of any Member to
vote shall not affect the presence of a quorum at the meeting. If, however,
such quorum shall not be present at any meeting of the Members, the Members
entitled to vote at such meeting shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
all of the Members shall be present or represented.
SECTION 5.5. VOTING ON MATTERS. At any meeting of the Members at
which a quorum is present, the vote of all of the Members shall be the act of
the Members.
SECTION 5.6. LIST OF MEMBERS ENTITLED TO VOTE. The Manager shall
make, at least five (5) days before each meeting of Members, a complete list of
the Members entitled to vote at such meeting, or any adjournment of such
meeting, arranged in alphabetical order, with the address of and the Capital
Ratio and Sharing Ratio held by each, which list, for a period of five (5) days
prior to such meeting, shall be kept on file at the principal office of the
Company and shall be subject to inspection by any Member at any time during
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to inspection of any Member
during the whole time of the meeting. However, failure to comply with the
requirements of this Section shall not affect the validity of any action taken
at such meeting.
SECTION 5.7. REGISTERED MEMBERS. The Company shall be entitled to
treat the holder of record of any Membership Interest as the holder in fact of
such Membership Interest for all purposes, and accordingly shall not be bound
to recognize any equitable or other claim to, or interest in, such Membership
Interest on the part of any other person, whether or not it shall have express
or other notice of such claim or interest, except as expressly provided by this
Agreement or by applicable law.
SECTION 5.8. ACTIONS WITH OR WITHOUT A MEETING AND TELEPHONE MEETINGS.
Notwithstanding any provision contained in this Article, all actions of the
Members provided for herein shall be taken either at a meeting and evidenced by
written minutes thereof executed by an authorized Member or by written consent
without a meeting. Any meeting of the Members may be held by means of a
telephone conference. Any action which may be taken by the Members without a
meeting shall be effective only if the written consent (or consents) sets forth
the action so taken, and is signed by all of the Members.
SECTION 5.9. LIMITATIONS ON POWERS OF MEMBERS. Except as expressly
authorized by this Agreement, no Member shall, directly or indirectly, do any
of the following without the written consent or approval of all of the other
Members: (i) withdraw from the Company, (ii) voluntarily
<PAGE> 31
dissolve, terminate or liquidate the Company, (iii) petition a court for the
dissolution, termination or liquidation of the Company, or (iv) cause any
property of the Company to be subject to the authority of any court, trustee or
receiver (including suits for partition and bankruptcy, insolvency and similar
proceedings). Except for approvals of Members or matters to be determined by
Members as provided in this Agreement, no Member, in such capacity, may (A) act
for or on behalf of the Company or take part in the operation, management or
control of the Company's business, (B) transact any business in the name of the
Company, or (C) have the authority or power to sign documents for or otherwise
bind the Company; provided, however, such restriction shall not apply to any
action taken by a Member who is the Manager and takes such action in its
capacity as Manager.
ARTICLE 6
BOOKS AND RECORDS
SECTION 6.1. BOOKS AND RECORDS. At all times during the existence of
the Company, the Manager shall keep or cause to be kept at the Company's
principal office true and complete books of account in accordance with
generally accepted accounting principles ("GAAP"), including: (a) a current
list of the full name and business address of each Member, (b) a copy of the
Certificate of Formation and all certificates of amendment thereto, (c) copies
of the Company's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Company for the
five most recent years, and (e) all documents and information required under
the Act. Such books and records shall be available for examination and copying
(and the Company will, at its expense, make such copies and deliver them to any
Member who requests them at reasonable intervals) at such office by any Member
and its duly authorized representatives. Such documents may also be examined
at the Company's office by any potential transferee of a Membership Interest or
any portion thereof where a Member authorizes such proposed transferee to
examine the same in a writing addressed to the Manager and copies of which are
sent to all other Members and such proposed transferee has executed and
delivered to the Company a confidentiality agreement substantially identical to
the provisions set forth in Section 12.13. Any Member, at its own expense, may
cause an audit of the books and records of the Company during regular business
hours and shall furnish a written report thereof to the other Members.
SECTION 6.2. ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL
YEAR. The books and records of the Company shall be kept on the accrual method
of reporting for tax and financial reporting purposes. The Fiscal Year of the
Company shall be the calendar year.
SECTION 6.3. REPORTS.
(a) Not later than sixty (60) days after the end of each Fiscal
Year, the Manager shall cause the Company to prepare and send interim financial
statements of the Company for such Fiscal Year to each Member, and not later
than ninety (90) days after the end of each Fiscal Year, the Manager shall cause
the Company to prepare and send to each Member the following: (1) a statement of
operations, a balance sheet, a statement of cash flows and statement of changes
in Members' equity for that Fiscal Year (which financial statements shall be
audited and certified by the auditors for CPT); and (2) a copy of each federal
and, if applicable, state and local income tax return of the Company for that
Fiscal Year, together with such other tax information as shall be
<PAGE> 32
reasonably necessary for the preparation by each Member of its federal, state
and local income tax returns.
(b) Not later than forty-five (45) days after the end of each
fiscal quarter, the Manager shall cause the Company to prepare and send to each
Member the following: (1) a statement of cash distributions and equity
contributions, and (2) the Manager's discussion and analysis of the results
of operations of the Company.
(c) Not later than fifteen (15) days after the end of each
month, the Manager shall cause the Company to prepare and send to each Member
the following: (1) an operating statement showing variance from the Operating
Budget for each Property and variance from the Operating Plan with respect to
the Company, (2) with respect to each Property, an operating statement, a
budget variance analysis with explanations, a capital expenditure schedule, an
occupancy report and an analysis of marketing and leasing activities, (3) the
reports required by any lenders with respect to the Properties, and (4) such
other reports that the Members may reasonably request.
SECTION 6.4. RETURNS AND OTHER ELECTIONS. The Manager shall cause
the preparation and timely filing of all tax returns required to be filed by
the Company pursuant to the Code and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business. The Manager
shall have the right to cause the Company to withhold and pay to any applicable
governmental tax collecting authority or agency any federal or state income or
other tax required or permitted to be withheld by the Company pursuant to any
applicable law. Any such withheld amount shall be deemed to have been
distributed or paid to the Member with respect to whom such amounts have been
withheld.
SECTION 6.5. TAX MATTERS PARTNER. The Manager shall be the "tax
matters partner" of the Company pursuant to Section 6231(a)(7) of the Code. The
Manager shall take such action as may be necessary to cause each Member to
become a "notice partner" within the meaning of Section 6231(a)(8) of the Code.
The Manager shall inform each Member of all significant matters that may come
to its attention in its capacity as "tax matters partner" by giving notice
thereof within five Business Days after the Manager becomes aware thereof and,
within that time, shall forward to each Member copies of all significant
written communications it may receive in that capacity.
ARTICLE 7
ALLOCATIONS AND DISTRIBUTIONS
SECTION 7.1 DISTRIBUTIONS.
(a) Except as otherwise provided in Section 11.2 regarding
liquidation proceeds, Distributable Cash Flow shall be distributed to the
Members monthly in the following order of priority:
(1) First, to each Member in respect of such Member's
Unreturned Default Contribution, in the proportion that such Member's
Unreturned Default Contribution bears to the sum of all Members'
Unreturned Default Contributions, until each Member's Unreturned
Default Contribution is reduced to zero;
<PAGE> 33
(2) Next, to each Member in respect of such Member's
Unpaid Default Return, in the proportion that such Member's Unpaid
Default Return bears to the sum of all Members' Unpaid Default
Returns, until each Member's Unpaid Default Return is reduced to zero;
(3) Next, to each Member in the proportion that such
Member's Base Return Amount bears to the sum of all Members' Base
Return Amounts until each Member has received distributions under this
Section 7.1(a)(3) and Section 7.1(b)(3) equal to such Member's Base
Return Amount; and
(4) The balance, if any, to each Member, pro rata, in
accordance with their respective Capital Ratios.
(b) Except as otherwise provided in Section 11.2 regarding
liquidation proceeds, Capital Proceeds shall be distributed to the Members in
the following order of priority:
(1) First, to each Member in respect of such Member's
Unreturned Default Contribution, in the proportion that such Member's
Unreturned Default Contribution bears to the sum of all Members'
Unreturned Default Contributions, until each Member's Unreturned
Default Contribution is reduced to zero;
(2) Next, to each Member in respect of such Member's
Unpaid Default Return, in the proportion that such Member's Unpaid
Default Return bears to the sum of all Members' Unpaid Default
Returns, until each Member's Unpaid Default Return is reduced to zero;
(3) Next, to each Member in the proportion that such
Member's Base Return Amount bears to the sum of all Members' Base
Return Amounts until each Member has received distributions under this
Section 7.1(b)(3) equal to such Member's Base Return Amount;
(4) Then, to TMT in respect of TMT's accrued and
unpaid Target Return Amount, but only to the extent of the excess (if
any) of the Target Return Amount over the Actual Return Amount;
(5) Then, an amount equal to the TMT Return, reduced
by any previous distributions made to TMT in respect of the TMT Return
under this Section 7.1(b)(5), shall be distributed to TMT; and
(6) The balance, if any, to each Member, pro rata, in
accordance with each Member's respective Sharing Ratio.
SECTION 7.2. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIVE SHARES OF
TAX ITEMS.
(a) ALLOCATIONS OF INCOME FROM OPERATIONS. Subject to Section
7.2(e), Section 7.2(f) and Section 7.3, Income from Operations for any Fiscal
Year will be allocated in the following order:
<PAGE> 34
(1) first, to the Members in accordance with their
respective Capital Ratios until the cumulative amount of Income from
Operations allocated pursuant to this Section 7.2(a)(1) equals the
cumulative amount of Losses from Operations allocated pursuant to
Section 7.2(b)(3) and not previously offset pursuant to this Section
7.2(a)(1);
(2) second, to each Member to the extent of and in
proportion to each such Member's Unallocated Default Amount;
(3) third, to each Member to the extent of and in
proportion to each such Member's Unallocated Preferred Amount; and
(4) the balance, if any, to each Member in accordance
with their respective Capital Ratios.
(b) ALLOCATIONS OF LOSSES FROM OPERATIONS. Subject to Section
7.2(e), Section 7.2(f) and Section 7.3, Losses from Operations for any fiscal
year will be allocated in the following order:
(1) first, to the Members in accordance with their
respective Capital Ratios until the cumulative amount of Losses from
Operations allocated pursuant to this Section 7.2(b)(1) equals the
cumulative amount of Income from Operations allocated to each Member
pursuant to Section 7.2(a)(4) and not previously offset by this
Section 7.2(b)(1);
(2) second, to each Member until each Member has been
allocated a cumulative amount of Losses from Operations pursuant to
this Section 7.2(b)(2) in an amount equal to the cumulative amount of
Income from Operations allocated to each Member pursuant to Section
7.2(a)(3) and not previously offset by this Section 7.2(b)(2);
(3) third, to each Member until each Member has been
allocated a cumulative amount of Losses from Operations pursuant to
this Section 7.2(b)(3) in an amount equal to the cumulative amount of
Income from Operations allocated to each Member pursuant to Section
7.2(a)(2) and not previously offset by this Section 7.2(b)(3); and
(4) thereafter, to the Members in accordance with their
respective Capital Ratios.
(c) ALLOCATIONS OF GAINS FROM CAPITAL TRANSACTIONS. Except as
provided in Section 7.2(j), and subject to Section 7.2(e), Section 7.2(f) and
Section 7.3, Gains from Capital Transactions for any Fiscal Year shall be
allocated in the following order:
(1) first, to the Members in accordance with their
respective Capital Ratios until the cumulative amount of Gain from
Capital Transactions allocated under this Section 7.2(c)(1) equals the
cumulative amount of Loss from Capital Transactions allocated to the
Members pursuant to Section 7.2(d)(5) and not previously offset by
this Section 7.2(c)(1);
(2) second, to each Member to the extent of and in
proportion to each such Member's Unallocated Default Amount;
<PAGE> 35
(3) third, to each Member to the extent of and in
proportion to each such Member's Unallocated Preferred Amount;
(4) fourth, 100% to TMT until the cumulative amount of
Gain from Capital Transactions allocated to TMT pursuant to this
Section 7.2(d)(4) equals the sum of (i) the Unallocated Target Amount
and (ii) the aggregate amount of Loss from Capital Transactions
previously allocated pursuant to Section 7.2(d)(2); and
(5) the balance, if any, to the Members in accordance
with their respective Sharing Ratios.
(d) ALLOCATIONS OF LOSS FROM CAPITAL TRANSACTIONS. Except as
provided in Section 7.2(j), and subject to Section 7.2(e), Section 7.2(f) and
Section 7.3, Loss from Capital Transactions for any Fiscal Year shall be
allocated in the following order:
(1) first, to the Members in accordance with their
respective Sharing Ratios until the cumulative amount of Loss from
Capital Transactions allocated to the Members pursuant to this Section
7.2(d)(1) equals the cumulative amount of Gain from Capital
Transactions allocated to each Member pursuant to Section 7.2(c)(5)
and not previously offset by this Section 7.2(d)(1);
(2) second, 100% to TMT until the cumulative amount of
Loss from Capital Transactions allocated to TMT pursuant to this
Section 7.2(d)(2) equals the cumulative amount of Gain from Capital
Transactions allocated to TMT pursuant to Section 7.2(c)(4) and not
previously offset pursuant to this Section 7.2(d)(2);
(3) third, to each Member until the cumulative amount
of Loss from Capital Transactions allocated to each Member pursuant to
this Section 7.2(d)(3) equals the cumulative amount of Gains from
Capital Transactions allocated to each member pursuant to Section
7.2(c)(3) and not previously offset pursuant to this Section
7.2(d)(3);
(4) fourth, to each Member until the cumulative amount
of Loss from Capital Transactions allocated to each Member pursuant to
this Section 7.3(d)(4) equals the cumulative amount of Gains from
Capital Transactions allocated to each member pursuant to Section
7.3(c)(2) and not previously offset pursuant to this Section
7.3(d)(4); and
(5) thereafter, to the Members in accordance with
their respective Capital Ratios.
(e) SPECIAL ALLOCATIONS. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following
order and priority:
(1) COMPANY MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Section, if there is a net decrease in
Company Minimum Gain during any taxable year or other period for which
allocations are made, the Members will be specially allocated items of
Company income and gain for that period (and, if necessary, subsequent
periods). The amount allocated to each Member under this Section
shall be an amount equal to the total net decrease in the Member's
Minimum Gain Share at the end of the immediately
<PAGE> 36
preceding taxable year. The items to be allocated will be determined
in accordance with Treasury Regulations Section 1.704-2(g)(2). This
Section 7.2(c)(1) is intended to comply with the "partnership minimum
gain chargeback" requirements of the Treasury Regulations and the
exceptions thereto and will be interpreted consistently therewith.
(2) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section (other than
Section 7.2(c)(1) which shall be applied first), if there is a net
decrease in Member Nonrecourse Debt Minimum Gain during any taxable
year or other period for which allocations are made, any Member with a
share of such Member Nonrecourse Debt Minimum Gain attributable to any
Member nonrecourse debt (determined under Treasury Regulations Section
1.704-(2)(i)(5)) as of the beginning of the year shall be specially
allocated items of Company income and gain for that period (and, if
necessary, subsequent periods) in proportion to the portion of such
Member's share of the net decrease in the Member Nonrecourse Debt
Minimum Gain with respect to such Member nonrecourse debt that is
allocable to the disposition of Company property subject to such
Member nonrecourse debt. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(g). This
Section is intended to comply with the "partner minimum gain
chargeback" requirements of the Treasury Regulations and the
exceptions thereto and shall be interpreted consistently therewith.
(3) QUALIFIED INCOME OFFSET. A Member who
unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) will be specially allocated items of Company income and
gain in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the Adjusted Capital Account
Deficit of the Member as quickly as possible.
(4) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions
for any taxable year or other period for which allocations are made
will be allocated among the Members in proportion to their respective
Sharing Ratios in the Company.
(5) MEMBER NONRECOURSE DEDUCTIONS. Notwithstanding
anything to the contrary in this Agreement, any Member Nonrecourse
Deductions for any taxable year or other period for which allocations
are made will be allocated to the Member who bears the economic risk
of loss with respect to the Member nonrecourse debt to which the
Member Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704- 2(i).
(6) CODE SECTION 754 ADJUSTMENTS. To the extent an
adjustment to the adjusted tax basis of any Company asset under Code
Sections 734(b) or 743(b) is required to be taken into account in
determining Capital Accounts under Treasury Regulations Section
1.704-1(b)(2)(iv)(m), the amount of the adjustment to the Capital
Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis), and the gain or loss will be specially allocated to the
Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted under Treasury Regulations
Section 1.704-1(b)(2)(iv)(m).
(7) REALLOCATION. Subject to Section 7.3, to the
extent Losses allocated to a Member would cause such Member to have an
Adjusted Capital Account Deficit at the end
<PAGE> 37
of any Fiscal Year, the Losses will be reallocated to the other
Members with positive Capital Account balances in accordance with and
to the extent of such positive Capital Account balances provided,
however, that the allocation of Net Losses to CPT Sub shall be made
only to the extent permitted by Code Section 514(c)(9)(E) and that any
limitation on the allocation of Net Losses which may be allocated to
TMT is intended to comply with Section 1.514(c)-2(h) of the Treasury
Regulations and any further allocation of Net Losses to CPT Sub shall
be limited to the extent permitted by Treasury Regulations Sections
1.514(c)-2(e), (f) and (g), as applicable. If any Member receives an
allocation of Losses in accordance with this Section, such Member
shall be allocated Profits in subsequent Fiscal Years necessary to
reverse the effect of such allocation of Losses. Such allocation of
Profits (if any) shall be made before any allocations under Section
7.2(a) but after any other allocations under Section 7.2(c).
(8) DEPRECIATION RECAPTURE. In the event there is any
recapture of Depreciation or investment tax credit, the allocation of
gain or income attributable to such recapture shall be shared by the
Members in the same proportion as the deduction for such Depreciation
or investment tax credit was shared.
(9) INTEREST IN COMPANY. Notwithstanding any other
provision of this Agreement, no allocation of Profit or Loss or item
of Profit or Loss will be made to a Member if the allocation would not
have "economic effect" under Treasury Regulations Section
1.704-1(b)(2)(ii) or otherwise would not be in accordance with the
Member's interest in the Company within the meaning of Treasury
Regulations Section 1.704-1(b)(3) or 1.704- 1(b)(4)(iv). The Manager
will have the authority to reallocate any item in accordance with this
Section 7.2(c)(9).
(f) CURATIVE ALLOCATIONS. The allocations set forth in Section
7.2(c)(1) through (9) (the "REGULATORY ALLOCATIONS") are intended to comply
with certain requirements of Treasury Regulations Section 1.704-1(b) and
1.704-2. The Regulatory Allocations may not be consistent with the manner in
which the Members intend to divide Company distributions. Accordingly, the
Manager is authorized to further allocate Profits, Losses, and other items
among the Members so as to prevent the Regulatory Allocations from distorting
the manner in which Company distributions would be divided among the Members
under Sections 7.1 and 11.2 but for application of the Regulatory Allocations.
In general, the reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Members so that the net amount of the Regulatory
Allocations and the special allocations to each Member is zero. The Manager
will have discretion to accomplish this result in any reasonable manner that is
consistent with Code Section 704 and the related Treasury Regulations.
(g) TAX ALLOCATIONS--CODE SECTION 704(c). In accordance with
Code Section 704(c) and the related Treasury Regulations, income, gain, loss
and deduction with respect to any property contributed to the capital of the
Company, solely for tax purposes, will be allocated among the Members so as to
take account of any variation between the adjusted basis to the Company of the
property for federal income tax purposes and the initial Book Value. If the
Book Value of any Company asset is adjusted, subsequent allocations of income,
gain, loss and deduction with respect to that asset will take account of any
variation between the adjusted basis of the asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c) and
the related Treasury Regulations. Any elections or other decisions relating to
allocations under this
<PAGE> 38
Section 7.2(g) will be made in any manner that the Manager determines is in
accordance with such Treasury Regulations. Allocations under this Section are
solely for purposes of federal, state and local taxes and will not affect, or in
any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses or other items or distributions under any provision of
this Agreement.
(h) OTHER ALLOCATION RULES. The following rules will apply to
the calculation and allocation of Profits, Losses and other items:
(1) For purposes of determining the Profits, Losses or
any other item allocable to any period, Profits, Losses and other
items will be determined on a daily, monthly or other basis, as
determined by the Manager using any permissible method under Code
Section 706 and the related Treasury Regulations.
(2) Except as otherwise provided in this Agreement,
all items of Company income, gain, loss, deduction, credit and other
allocations not provided for in this Agreement will be divided among
the Members in the same proportions as they share Profits and Losses.
(i) MEMBER ACKNOWLEDGMENT. The Members agree to be bound by the
provisions of this Section in reporting their shares of Company income and loss
for income tax purposes.
(j) SPECIAL ALLOCATION IN DISPOSITION YEAR AND SUBSEQUENT YEARS.
Notwithstanding Section 7.2 but subject to Section 7.3, in connection with the
dissolution of the Company, Profits or Losses shall be allocated among the
Members in such a manner that the distributions to each Member pursuant to
Section 11.2 shall be, to the maximum extent possible, the same amount as would
be distributed to such Member if such distributions were to be governed solely
by Section 7.1. Notwithstanding the preceding sentence, actual distributions
made subsequent to the allocations under this Section 7.2(j) shall be made
pursuant to Section 7.1.
(k) RECHARACTERIZATION. If the Internal Revenue Service
successfully asserts an adjustment to the taxable income of a Member and, as a
result of such adjustment, the Company is entitled to a deduction for federal
income tax purposes in excess of any gain recognized by the Company, such
excess deduction shall be allocated to such Member. If the Internal Revenue
Service successfully asserts an adjustment to the taxable income of the Company
and, as a result of such adjustment, any Member is entitled to a deduction for
federal income tax purposes in excess of any gain recognized by such Member,
the additional Company taxable income shall be allocated to such Member. If
the Internal Revenue Service successfully asserts an adjustment to the taxable
income of the Company disallowing deductions for any of the fees paid or
payable to the Manager, then additional Company taxable income allocable to the
Members as a result of such disallowance shall be reallocated to the Manager.
SECTION 7.3 COMPLIANCE WITH CODE.
(a) The provisions of this Agreement relating to the allocation
of Profits, Losses and other items for federal income tax purposes are intended
to comply with Section 514(c)(9)(E) of the Code (to the extent applicable) and
Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be adjusted
insofar as may be required to meet the requirements of Section 514(c)(9)(E) of
the Code and Treasury Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding anything to the
<PAGE> 39
contrary, no allocation specified in this Article shall be made if it would lack
"substantial economic effect."
(b) Notwithstanding Section 7.2, if, as of the last day of a
Fiscal Year any Qualified Organization would be allocated an amount of
aggregate Profits for any Fiscal Year ending on the liquidation date of the
Company that would cause its percentage share of aggregate Profits for such
Fiscal Year to exceed its lowest Capital Ratio used for the allocation of Loss
(taking into account redemptions of Membership Interests, admissions of new
Members or similar events), an amount of Profits that would otherwise be
allocated to such Qualified Organization shall instead be allocated to the
Manager in the amount required to cause the Profits allocable to such Qualified
Organization to not exceed its lowest Capital Ratio used for the allocation of
Loss (taking into account redemptions of Membership Interests, admissions of
new Members or similar events) and an equal amount of Profit shall be
reallocated to such Qualified Organization in subsequent years to the extent
not inconsistent with this paragraph.
SECTION 7.4 ALLOCATIONS UPON TRANSFER OF MEMBERSHIP INTEREST. In the
event of the transfer of all or any part of a Membership Interest (in
accordance with the provisions of this Agreement) at any time other than the
end of a Fiscal Year, the share of Profits or Losses (in respect of the
Membership Interest so transferred) shall be allocated between the transferor
and the transferee in the same ratio as the number of days in such Fiscal Year
before and after such transfer; provided, however, that (a) Profits and Losses
from the sale or other disposition of all or any substantial part of the assets
of the Company shall be allocated on the basis of the Members' Sharing Ratios
on the date of closing of the sale or other disposition, and (b) extraordinary
or nonrecurring items of gain or loss shall be allocated on the basis of the
Members' Sharing Ratios on the date the gain is realized or the loss incurred,
as the case may be.
SECTION 7.5 RESTRICTED DISTRIBUTIONS. Notwithstanding any provision
to the contrary contained in this Agreement, the Company, and the Manager on
behalf of the Company, shall not make a distribution to any Member on account
of its Membership Interest to the extent (if any) that such distribution would
violate Section 18-607 of the Act or other applicable law.
SECTION 7.6 AMORTIZATION AND ALLOCATION OF ORGANIZATION AND START-UP
EXPENSES. The Company shall elect to amortize the following over a period of
60 calendar months: (i) all organization expenses in accordance with the
provisions of Section 709(b) of the Code; and (ii) all start-up expenses in
accordance with the provisions of Section 195 of the Code. The Company shall
pay all of its own legal fees and expenses (if any) relating to the preparation
of this Agreement.
ARTICLE 8
OFFICERS
SECTION 8.1 NUMBER. The principal Officers of the Company, if any,
may consist of a President, one or more Vice Presidents, the Secretary, the
Treasurer, and such other Officers and assistant Officers and agents as may be
deemed necessary and elected or appointed by the Manager, at such time and in
such manner and for such terms as the Manager may prescribe. Any two or more
offices may be held by the same person.
<PAGE> 40
SECTION 8.2 GENERAL DUTIES. All Officers and agents of the Company
shall have only such authority and perform such duties as is assigned to them
by the Manager, but in all cases the authority of every Officer and agent shall
be derived from, and shall never exceed, the authority granted to the Manager
by the provisions of this Agreement. All Officers shall serve on behalf of the
Company and subject to the provisions of this Agreement.
SECTION 8.3. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The
Officers may be appointed by the Manager in its sole and absolute discretion at
any time. Each Officer shall hold office until a successor is chosen and
qualified or until the death, resignation, or removal of such Officer.
SECTION 8.4. REMOVAL. Any Officer or agent elected or appointed by
the Manager may be removed (with or without cause) by the Manager at any time.
SECTION 8..5 RESIGNATION. Any Officer may resign at any time by
giving written notice to the Manager. Such resignation shall take effect at
the time specified in the notice, and, unless otherwise specified in the
notice, the acceptance of such resignation shall not be necessary to make it
effective. Such resignation shall be without prejudice to the contract rights
or claims, if any, of the Company.
SECTION 8.6. INDEMNIFICATION. The Officers shall be indemnified by
the Company to the extent and in the manner described in Section 4.8.
ARTICLE 9
TRANSFERABILITY OF MEMBERSHIP INTERESTS
SECTION 9.1. RESTRICTIONS ON TRANSFER OF INTEREST OF AND IN A MEMBER.
(a) Except as otherwise provided in this Article, unless all of
the Members consent (which consent shall not be unreasonably withheld), no
Member shall withdraw or retire from the Company, substitute any person in its
stead or sell, exchange, transfer, give, assign, pledge, hypothecate, mortgage
or dispose of all or any portion of or interest in its Membership Interest, and
any such prohibited sale, exchange, transfer, gift, assignment, pledge,
hypothecation, mortgage or disposition shall be void.
(b) Notwithstanding anything to the contrary contained herein,
unless all of the Members consent (which consent shall be in the sole and
absolute discretion of each Member), no Member may sell, transfer or assign all
or any portion of its Membership Interest if such sale, transfer or assignment:
(1) would cause the Company to lose its status as a
partnership for federal income tax purposes;
(2) would violate any federal securities laws or any
applicable state securities laws (including suitability standards); or
(3) would violate any of the REIT Requirements.
<PAGE> 41
(c) Without the express prior written consent of Manager, TMT
may not Dispose, or create or permit any encumbrance against, any beneficial or
equity interest in TMT to any other Person or issue additional equity interests
in TMT to any other Person.
(d) No admission (or purported admission) of a Member, and no
transfer (or purported transfer) of all or any part of a Member's interest in
the Company (or any interest therein), other than to a person who then and
theretofore is already a Member, shall be effective, and any such admission or
transfer (or purported admission or transfer) shall be void ab initio, and no
Person shall otherwise become a Member if (i) at the time of such admission or
transfer (or purported admission or transfer) any interest in the Company (or
economic interest therein) is traded on an established securities market or
readily tradeable on a secondary market or the substantial equivalent thereof
or (ii) after or as a result of such admission or transfer (or purported
admission or transfer) the Company would have more than 100 Members. For
purposes of clause (i) of the preceding sentence, an established securities
market is a national securities exchange that is either registered under
Section 6 of the Securities Exchange Act of 1934 (the "1934 Act") or exempt
from registration because of the limited volume of transactions, a foreign
securities exchange that, under the law of the jurisdiction where it is
organized, satisfies regulatory requirements that are analogous to the
regulatory requirements of the 1934 Act, a regional or local exchange, or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations by identified brokers or dealers by electronic means or otherwise.
For purposes of such clause (i), interests in the Company (or interests
therein) are readily tradeable on a secondary market or the substantial
equivalent thereof if (i) interests in the Company (or interests therein) are
regularly quoted by any person, such as a broker or dealer, making a market in
the interests; (ii) any person regularly makes available to the public
(including customers or subscribers) bid or offer quotes with respect to
interests in the Company (or interests therein) and stands ready to effect buy
or sell transactions at the quoted prices for itself or on behalf of others;
(iii) the holder of an interest in the Company has a readily available,
regular, and ongoing opportunity to sell or exchange such interest (or
interests therein) through a public means of obtaining or providing information
of offers to buy, sell, or exchange such interests; or (iv) prospective buyers
and sellers otherwise have the opportunity to buy, sell, or exchange interests
in the Company (or interests therein) in a time frame and with the regularity
and continuity that is comparable to that described in clauses (i), (ii) and
(iii) of this sentence. For purposes of determining whether the Company will
have more than 100 Members, each Person indirectly owning an interest in the
Company through a partnership (including any entity treated as a partnership
for federal income tax purposes), a grantor trust or an S corporation (each
such entity a "flow-through entity") shall be treated as a Member unless the
Manager determines in its sole discretion, after consulting with qualified tax
counsel, that less than substantially all of the value of the beneficial
owner's interest in the flow-through entity is attributable to the flow-through
entity's interest (direct or indirect) in the Company.
SECTION 9.2. RIGHT OF FIRST REFUSAL. Except as provided to the
contrary in Section 9.1(e) hereof, no Member shall Dispose of all or any part
of its Membership Interest to any Person other than an Affiliate of which it
owns more than 50% of all the equity interests (and rights to convert into
equity interests) unless it first satisfies and complies with the provisions of
this Section 9.2 with respect to such proposed disposition. Before accepting
any offer (a "PURCHASE OFFER") from another Person to purchase or acquire all,
but not less than all, of its Membership Interest, or allowing another Person
to accept its offer to sell or Dispose of all, but not less than all, of its
Membership Interest, a Member ("DISPOSING MEMBER") shall first offer to sell to
the other Member the Membership Interest (the "OFFERED INTEREST") which such
Disposing Member proposes to transfer.
<PAGE> 42
Such offer (the "MEMBER'S OFFER") shall be made by an irrevocable written offer
to sell the Membership Interest which the Disposing Member proposes to transfer
for the same price and on the same terms and conditions as which the Disposing
Member proposes to Dispose of such Membership Interest to the proposed
transferee. The Member's Offer shall also contain a complete description of
the transaction in which the Disposing Member proposes to transfer such
Membership Interest to the third party, including the name of the proposed
transferee and the consideration for and other terms of the proposed transfer.
The other Member shall have thirty (30) days after actual receipt of such
Member's Offer within which to notify the Disposing Member whether or not such
other Member will accept the Member's Offer. If the other Member does not
accept the Member's Offer, the Disposing Member shall then have 180 days within
which to sell or transfer such Membership Interest, upon the same terms and
conditions as those set forth in such Member's Offer. Any such transfer of
Membership Interest to a third party shall be subject to all of the other terms
and provisions of this Agreement, and shall not be effective unless the
transferee signs a written agreement reasonably satisfactory to the other
Members in which such transferee joins and becomes a party to this Agreement as
described hereunder.
SECTION 9.3. BUY-SELL.
(a) At any time after the effective date of this Agreement
(subject to the provisions of Section 9.4(e)), and prior to the time TMT has
exercised its Marketing Right under Section 9.4(a), a Member (the "OFFERING
MEMBER") may request the other Member ( the "RESPONDING MEMBER") to purchase
all, but not less than all, of its Membership Interest (such purchase or sale
is hereinafter referred to as a "BUYOUT EVENT," and the purchasing Member in
such Buyout Event is referred to herein as the "PURCHASER") by giving written
notice (a "BUYOUT NOTICE") to the other Member. The Buyout Notice shall
contain an irrevocable written offer (the "BUY-SELL OFFER") including the
information required in Section 9.3(b) and shall set out the Offering Member's
offer (1) to purchase all, but not less than all, of the Membership Interest of
the Responding Member, or (2) if the Responding Member is unwilling to sell
its Membership Interest on the terms set out in the Buy-Sell Offer, to sell
all, but not less than all, of its Membership Interest to the Responding
Member. The Responding Member shall have the option for sixty (60) days after
actual receipt of the Buy-Sell Offer to notify the Offering Member that the
Responding Member has elected either (1) to sell all, but not less than all, of
its Membership Interest to the Offering Member on the terms and conditions set
out in the Buy-Sell Offer, or (2) to purchase all, but not less than all, of
the Membership Interest of the Offering Member on such terms and conditions.
If the Responding Member fails to respond within such time, the Responding
Member will be deemed to have elected to sell all of its Membership Interest to
the Offering Member on the terms and conditions set out in the Buy-Sell Offer.
(b) The Buy-Sell Offer shall set forth the dollar value the
Offering Member places on the entire equity value (i.e., all of the Membership
Interests) of the Company ("COMPANY VALUE"). The Buy-Sell Offer shall state the
price in cash (the "OFFERED PRICE") at which the Purchaser offers to buy the
entire Membership Interest of the Responding Member, and it shall also state
the price in cash (the "SELL-OUT PRICE") at which the Purchaser is willing to
sell its entire Membership Interest to the Responding Member. The Sell-Out
Price should reflect the identical Company Value as is reflected in the Offered
Price, i.e., it should reflect the amount which each Member would receive
assuming that all of the assets of the Company have been sold for cash and,
after satisfying all liabilities of the Company, the Company has only cash
remaining in an amount equal to the Company Value and that a hypothetical
distribution of the Company Value is then made to the
<PAGE> 43
Members according to the terms of Section 11.2 in complete liquidation of the
Company. The entire price (i.e., the Offered Price, or the Sell-Out Price, as
the case may be) shall be payable in cash at the closing of such sale. Any
sale pursuant to such Buyout Event shall be consummated within one hundred
twenty (120) days after actual receipt by the Responding Member of the Buy-Sell
Offer as described in Section 9.3(a), and the selling Member must deliver its
entire Membership Interest to the Purchaser at the closing, free and clear of
all encumbrances and claims.
SECTION 9.4. MARKETING RIGHT.
(a) At any time on or after the third anniversary of the
effective date of this Agreement, if no Member has then exercised its rights
under the Buy-Sell provisions of Section 9.3, then TMT shall have the right
(the "MARKETING RIGHT") to require the Manager to market all the Properties for
Disposition for the purposes of liquidating the Company upon such Disposition
(provided, however, that such marketing Right shall not extend to nor shall it
apply to any Identified Property, unless and until any such Identified Property
is no longer subject to Disposition under Section 9.4(c)). TMT may exercise
its Marketing Right by sending the Manager and CPT Sub a written notice (the
"MARKETING NOTICE") which states that TMT has exercised its Marketing Right.
Upon receipt of the Marketing Notice, Manager shall, in a commercially
reasonable and reasonably effective manner, market all of the Properties in a
single portfolio sale and may secure the services of a third party to assist
Manager with the marketing of the Properties on such terms and conditions as
are approved by all of the Members. The Manager shall seek to secure a
purchaser and complete the Disposition of all of the Properties within six
months after receipt of the Marketing Notice. If the Manager is unable to
secure a purchaser for the Properties who tenders an offer to purchase the
Properties on terms that are acceptable to all of the Members within three
months after receipt of the Marketing Notice, then TMT may undertake to market
the Properties along with the Manager. Unless all the Property of the Company
is under a binding contract for sale at the conclusion of the six-month period
following Manager's receipt of the Marketing Notice, the Buy-Sell rights of
Section 9.3 shall immediately be available to each Member on the date which is
six months after Manager's receipt of the Marketing Notice.
(b) Notwithstanding the provisions of Section 9.4(a), CPT Sub
shall have the right (the "PURCHASE OPTION") at any time within thirty (30)
days after the Manager's receipt of the Marketing Notice to elect to purchase
the Membership Interest of TMT or to cause the Company to redeem the Membership
Interest of TMT. CPT Sub shall exercise the Purchase Option by giving written
notice (the "OPTION NOTICE") to TMT of the exercise by CPT Sub of such Purchase
Option and by designating therein whether CPT Sub (or its designee) shall
purchase the Membership Interest of TMT or whether the Company shall redeem the
Membership Interest of TMT. In either event, TMT shall be deemed to have
agreed to sell its entire Membership Interest upon receipt of the Option
Notice, and CPT Sub (or its designee) shall have agreed to purchase the
Membership Interest of TMT for the Cash Amount or the Company shall have agreed
to redeem the Membership Interest of TMT for the REIT Shares Amount. The
closing of the purchase or redemption of TMT's Membership Interest under this
Section 9.4(b) shall occur on a Business Day designated by CPT Sub which is not
more than sixty (60) days following the date upon which CPT Sub delivered the
Option Notice to TMT; provided, however, that to the extent that TMT shall have
exercised the Partial Disposition Right under Section 9.4(c) below, any
adjustments to its Membership Interest under Section 9.4(d) below, shall be
made prior to the calculation of the Cash Amount or REIT Shares Amount for
purposes of this Section 9.4(b).
<PAGE> 44
(c) At any time on or after the third anniversary of the
effective date of this Agreement, if no Member has exercised its rights under
the Buy-Sell provisions of Section 9.3 and provided that TMT has not exercised
the Marketing Right under Section 9.4(a), then TMT shall have the right (the
"PARTIAL DISPOSITION RIGHT") to require the Manager to market certain of the
Properties for Disposition. TMT may exercise the Partial Disposition Right by
sending the Manager and CPT Sub a written notice (the "PARTIAL DISPOSITION
NOTICE") which states that TMT has exercised its Partial Disposition Right, and
the specific portion (expressed as a percentage) of its Membership Interest
that TMT elects to Dispose of in accordance with this Section 9.4(c) (the
"TENDERED MEMBERSHIP INTEREST"). Upon receipt of the Partial Disposition
Notice, Manager and TMT shall mutually agree upon and identify certain
Properties (the "IDENTIFIED PROPERTIES") which if sold by the Company in a
single sale in a commercially reasonable manner should result in Capital
Proceeds to the Company that are sufficient to enable the Company to make
distributions to the Members in accordance with Section 7.1(b) hereof which
shall result in total distributions to TMT equal to the Cash Amount
attributable to the Tendered Membership Interest. Following, the
identification of the Identified Properties, the Manager shall, in a
commercially reasonable and reasonably effective manner, market all of the
Identified Properties in a single sale and may secure the services of a third
party to assist the Manager with the marketing of such Identified Properties on
such terms and conditions as are approved by all of the Members. The Manager
shall seek to secure a purchase and complete the Disposition of all of the
Identified Properties within six months after the identification of such
Identified Properties by TMT and the Manager. If the Manager is unable to
secure a purchaser for the Identified Properties who tenders an offer to
purchase the Properties on terms that are acceptable to all of the Members
within the first three months of the foregoing six month period, then TMT may
undertake to market the Identified Properties along with the Manager.
(d) Notwithstanding the provisions of Section 9.4(c), CPT Sub
shall have the right (the "TENDERED INTEREST PURCHASE OPTION") at any time
within thirty (30) days after the Manager's receipt of the Partial Disposition
Notice to elect to purchase the Tendered Membership Interest or to cause the
Company to redeem the Tendered Membership Interest. CPT Sub shall exercise the
Tendered Interest Purchase Option by giving written notice (the "TENDERED
INTEREST OPTION NOTICE") to TMT of the exercise by CPT Sub of such Tendered
Interest Purchase Option and by designating therein whether CPT Sub (or its
designee) shall purchase the Tendered Membership Interest or whether the
Company shall redeem the Tendered Membership Interest. In either event, TMT
shall be deemed to have agreed to sell the entire Tendered Membership Interest
upon receipt of the Tendered Membership Interest Option Notice, and CPT Sub (or
its designee) shall have agreed to purchase the entire Tendered Membership
Interest for the Cash Amount or the Company shall have agreed to redeem the
entire Tendered Membership Interest for the REIT Shares Amount. The closing of
the purchase or redemption of TMT's Tendered Membership Interest under this
Section 9.4(d) shall occur on a Business Day designated by CPT Sub which is not
more than sixty days following the date upon which CPT Sub delivered the
Tendered Interest Option Notice to TMT. It shall be a condition to the closing
of such purchase or redemption of the Tendered Membership Interest that CPT Sub
and TMT execute an amendment to this Agreement which reflects an appropriate
adjustment to the Capital Ratios, Sharing Ratios and Capital Account balances
of the Members to reflect the Disposition of the Tendered Membership Interest
hereunder.
(e) No Member may exercise the Buy-Sell further described in
Section 9.3 hereof during the period commencing upon delivery by TMT to the
Manager of the Partial Disposition Notice and ending upon the closing of the
Disposition of the Identified Properties or, as applicable, the Tendered
Membership Interest under Section 9.4; provided, however, that in the event
that the
<PAGE> 45
Disposition of the Identified Properties or the Tendered Membership Interest
under Section 9.4(d) shall not have occurred on or before the expiration of 240
days following delivery of the Partial Disposition Notice by TMT to CPT Sub,
either TMT or CPT Sub may exercise the Buy-Sell further described in Section
9.3 hereof, in which event the Partial Disposition Right shall lapse and shall
no longer apply and instead the provisions of Section 9.3 shall be applicable
to the Disposition of the Offering Member's Membership Interest.
(f) The Members acknowledge that if CPT Sub elects to cause the
Company to redeem TMT's Membership Interest or any portion thereof for the REIT
Shares Amount as provided in Section 9.4(b) or 9.4(d), CPT Sub shall be
obligated to pay TMT a fee equal to one percent (1%) of the REIT Shares Amount.
SECTION 9.5. BANKRUPTCY OF A MEMBER.
(a) If a Member becomes a Bankrupt Member, the personal
representative, trustee or receiver of its estate (the "PERSONAL
REPRESENTATIVE") shall have only such rights of that Member as are necessary
for the purpose of settling or managing its estate and such power as the Member
possessed, if any, to assign all or any part of its interest and to join with
such assignee in satisfying conditions precedent to such assignee's becoming a
substituted Member. It shall not have any rights of a Member to grant or
withhold consents, or any other rights except for those specified in the
preceding sentence.
(b) If a Member becomes a Bankrupt Member, the other Member
shall have the right (the "BANKRUPTCY OPTION") to elect at any time within 180
days after the Member has become a Bankrupt Member to purchase the entire
Membership Interest of the Bankrupt Member for the Fair Market Value of such
Membership Interest as determined in Section 9.5(c); provided, however, if TMT
is the Bankrupt Member, CPT Sub shall have the additional option to purchase
TMT's Membership Interest for the Cash Amount or to cause the Company to redeem
TMT's Membership Interest for the REIT Shares Amount. In any event, the
Bankruptcy Option shall be exercised by giving notice (the "PURCHASE NOTICE")
to the Personal Representative of the Bankrupt Member within the 180 day period
permitted for the exercise of the Bankruptcy Option. If the other Member
declines to purchase all of the Membership Interest of the Bankrupt Member in
accordance with this Section 9.5(b), the option to purchase such Membership
Interest shall terminate, and the Personal Representative may proceed, subject
to the terms and provisions of this Agreement, to distribute the Membership
Interest of such Member to the successors entitled to receive the same, but
such distributions will only be effective as to such successors who thereupon
(by written supplement to this Agreement) become a party to this Agreement and
who thereby agree to hold all of the Membership Interest transferred to such
successor subject in all respects to the terms and provisions of this
Agreement.
(c) The sales price of each Membership Interest to be sold for
the price specified in this Section 9.5(c) shall be the Fair Market Value (as
hereinafter defined) of such Membership Interest. For purposes of this Section
9.5(c): Fair Market Value of the Company shall mean the total amount of cash
that would be available for distribution to the Members if the Company sold all
of its assets for cash at a purchase price equal to their fair market value as
of the date of determination of the Fair Market Value, and all such cash (after
satisfying the Company's debts and other obligations including costs of sale
not to exceed one percent (1%) of the gross fair market value of the assets)
was distributed to the Members in accordance with Section 11.2; and, the Fair
Market Value of the
<PAGE> 46
Membership Interest being sold shall mean an amount equal to what the Bankrupt
Member would receive in distributions under Section 11.2. The Member whose
Membership Interest is to be sold hereunder (the "SELLING MEMBER") and the
party purchasing such Membership Interest (the "PURCHASING MEMBER") shall
attempt to agree on the Fair Market Value of the Membership Interest to be
sold. If the Purchasing Member and the Selling Member are unable to agree on
such Fair Market Value within thirty (30) days after notice is given by the
Purchasing Member or the Selling Member requesting such an agreement as to Fair
Market Value (the date on which such notice is given being referred to herein
as the "NOTICE DATE"), Fair Market Value shall be determined by a nationally
recognized "Big Six" accounting firm selected by the Purchasing Member and
Selling Member, or if they cannot agree to such appointment within ninety (90)
days after the Notice Date, then the senior sitting federal district judge for
the Southern District of Texas, Houston Division, on active status, acting in a
nonjudicial capacity, shall appoint such nationally recognized Big Six
accounting firm on written request made by any Member. The accounting firm so
appointed shall determine the Fair Market Value of the Membership Interest to
be sold as provided herein. The fees and expenses of such accounting firm
shall be born equally by the Purchasing Member and the Selling Member. Fair
Market Value shall be determined as of a date as near as reasonably practicable
to the date of the occurrence of the event which results in the sale of the
Membership Interest hereunder and the closing of the sale of the Membership
Interest shall occur on the closing date agreed upon by the Purchasing Member
and Selling Member or if there is no agreement among them as to the closing
date, then on the first Business Day following the day which is thirty (30)
days after the date on which the Fair Market Value is determined.
(d) At the closing of any sale of a Membership Interest to be
sold on the terms and conditions specified in this Section 9.5, the Selling
Member shall assign and deliver the Membership Interest to the Purchasing
Member free and clear of all encumbrances and claims, together with such
documents of transfer as shall be reasonably requested by the Purchasing
Member, and the Purchasing Member shall deliver or cause to be delivered to the
Selling Member the full consideration therefor, payable in cash, by wire
transfer or other immediately available funds. Any transfer or similar taxes
involved in such sale shall be paid by the Selling Member, and the Selling
Member shall provide the Purchasing Member with such evidence of the Selling
Member's authority to sell hereunder and such tax lien waivers and similar
instruments as the Purchasing Member may reasonably request.
SECTION 9.6. ASSIGNEES.
(a) The Company shall not recognize for any purpose any
purported sale, assignment or transfer of all or any fraction of the interest
of a Member unless all provisions of this Agreement relating thereto have been
satisfied, all costs of such assignment have been paid by the assigning Member,
such sale, assignment or transfer is exempt from registration under the
Securities Act of 1933, as amended, and any other applicable state or federal
securities act, and there is delivered to the Company, upon request of the
Manager or any Member, a written opinion of counsel acceptable to the Manager
or such requesting Member with respect thereto, and there is filed with the
Company a written and dated notification of such sale, assignment or transfer,
in form satisfactory to the Manager, executed by both the seller, assignor or
transferor and the purchaser, assignee or transferee and such notification (1)
contains the acceptance by the purchaser, assignee or transferee of and
agreement to be bound by all the terms and provisions of this Agreement and (2)
represents that such sale, assignment or transfer was made in accordance with
all applicable securities laws and regulations (including suitability
standards). Any sale, assignment or transfer shall be recognized
<PAGE> 47
by the Company as effective on the date of such notification if the date of
such notification is within fifteen (15) days of the date on which such
notification is filed with the Company, and otherwise shall be recognized as
effective on the date such notification is filed with the Company.
(b) Any Member who transfers or assigns its entire interest in
the Company shall cease to be a Member, except that, unless and until a
substituted Member has been admitted into the Company, such assigning Member
shall retain the statutory rights of the assignor of a Member's interest under
the Act.
(c) A person who is the assignee of all or any portion of the
interest of a Member but does not become a substituted Member, and who desires
to make a further assignment of such interest it had acquired, shall be (and
its proposed transfer shall be) subject to all the provisions of this Agreement
relating to the Disposition of interests to the same extent and in the same
manner as any Member desiring to make an assignment of its interest.
SECTION 9.7. SUBSTITUTED MEMBERS. Except with respect to the
Disposition of CPT Sub's Membership Interest under Section 9.1(e), only upon
the unanimous written consent of all of the Members, which consent shall not be
unreasonably withheld, shall a purchaser, assignee, transferee, or other
recipient of all or a portion of a Membership Interest who was not previously
admitted to the Company as a Member may be admitted as a substituted Member to
the extent of its acquired interest in the Company. In the event that any such
Person is admitted to the Company as a substituted Member, the Manager shall
have the power and authority to amend this Agreement to reflect the admission
of such Person as a substituted Member and such Person shall have all the
rights, duties and obligations of a Member under this Agreement. The Manager
shall promptly deliver to TMT (in any permissible manner further described in
Section 12.1 hereof) a copy of any amendments to this Agreement made by the
Manager under this Section 9.7).
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
SECTION 10.1. ACQUISITION OF INTEREST FOR INVESTMENT. Each Member
hereby represents and warrants to the Company and the other Member(s) that its
acquisition of its Membership Interest is made for its own account for
investment purposes only and not with a view toward the resale or distribution
of such Membership Interest.
SECTION 10.2. ACCESS TO INFORMATION. Each Member has been afforded
full opportunity to request any and all relevant information and ask questions
concerning the proposed purposes and business of the Company, has been provided
all information and copies of documents it has requested and has received
answers to such questions to its full satisfaction. Each Member represents and
warrants that such Member has not relied upon any information relating to the
Company other than information supplied by the Company.
SECTION 10.3. NO REGISTRATION. Each Member recognizes that the
Membership Interests have not been registered under the Securities Act of 1933,
as amended, or applicable state securities laws and are being sold pursuant to
the exemptions from registration offered by Section 4(2) of the such Act and by
applicable state law provisions. Each Member recognizes that, as a
consequence, its Membership Interest must be held indefinitely unless it is
subsequently registered under the
<PAGE> 48
Securities Act of 1933, as amended, and applicable state securities laws, or an
exemption from such registration is available, so that each Member must bear
the economic risk of investment in its Membership Interest for an indefinite
period of time.
SECTION 10.4. NO OBLIGATION TO REGISTER. Each Member acknowledges
that neither the Company nor the Manager is under any obligation to register
the Membership Interests under any securities laws, and neither of them has any
present intention to do so. Each Member understands that there is no
established market for the Membership Interests, and it is extremely unlikely
that any public or private market will develop.
SECTION 10.5. SUITABILITY OF INVESTMENT. Each Member understands the
nature of the investment being made and that it involves a high degree of risk.
Each Member recognizes that the Company is a newly organized entity and has no
history of operations or earnings.
SECTION 10.6. ACCREDITATION. Each member represents that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for the funds it
has invested in the Company in what it understands to be a highly speculative
and illiquid investment.
SECTION 10.7. REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS. Each
Member represents and warrants to the Manager and the other Members concerning
itself as follows:
(a) Organization. It is a limited liability company,
partnership, corporation, or other entity duly formed, validly
existing and in good standing under the laws of the jurisdiction of
its organization.
(b) Authorization. Its execution and delivery of this
Agreement, the performance by it of its obligations under this
Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all requisite corporate or
other action on its part.
(c) No Conflicting Agreements. Its execution and
delivery of, and its performance and compliance with the terms and
provisions of, this Agreement do not violate any of the terms,
conditions or provisions of (i) its Articles of Incorporation,
Certificate of Incorporation, Certificate of Formation or other
certificate of organization that may apply to it, or other applicable
organizational agreements or governing instruments, (ii) any judgment,
order, injunction, decree, regulation or ruling of any court or other
governmental authority to which it is subject or by which any of its
assets are bound, or (iii) any material agreement or contract to which
the Member is a party or to which it or its property is subject.
(d) Approvals. No authorization, consent, order,
approval or license from filing with, or other act by any agency,
bureau or department of any federal, state or local government
authority or other Person is or will be necessary to permit the valid
execution and delivery by it of this Agreement or the performance by
it of the obligations to be performed by it under this Agreement, or
if any such authorizations, consents, orders, approvals or licenses
are required, they have been obtained.
<PAGE> 49
(e) Activities. Solely as to TMT, it conducts no
business other than holding the Membership Interest of the Company.
SECTION 10.8. NO BROKERS. TMT has entered into a financial
arrangement with Schroder Real Estate Associates in connection with the
transactions associated with the admission of TMT as a Member of the Company
for which arrangement TMT shall be solely liable without cost to the Company or
CPT Sub, and CPT Sub has entered into a financial arrangement with Donaldson,
Lufkin & Jenrette Securities Corporation in connection with the transactions
associated with the formation of the Company for which arrangement CPT Sub
shall be solely liable without cost to the Company or TMT. Except as provided
in the preceding sentence, each Member represents and warrants to the other
Member that it has not dealt with any agent or broker in connection with the
transactions contemplated by this Agreement and that no agent, broker, or other
Person acting pursuant to express or implied authority of such Member is
entitled to a commission or finder's fee, or will be entitled to recover on any
claim against any other Member or the Company for a commission or finder's fee,
in connection with the transactions contemplated by this Agreement.
SECTION 10.9. YEAR 2000 COMPLIANCE. The Manager shall use its
commercially reasonable efforts to be Year 2000 Compliant. As used in this
paragraph, the term "Year 2000 Compliant" shall mean that all software,
hardware, equipment, goods or systems utilized by or material to the physical
operations, business operations, or financial reporting of such property or
entity (collectively the "systems") will (i) properly perform date sensitive
functions before, during and after the year 2000; (ii) accurately perform leap
year calculations; and (iii) will not cause any other information technology to
fail or generate errors related to any such dates.
ARTICLE 11
LIQUIDATION AND DISSOLUTION OF COMPANY
SECTION 11.1 EVENTS OF DISSOLUTION.
(a) The Company shall be dissolved upon the happening of any of
the following events:
(1) when the period fixed for its duration in Section
2.5 of this Agreement has expired;
(2) upon the unanimous written agreement of all of the
Members;
(3) upon the entry of a judgment, order or decree of a
court of competent jurisdiction adjudicating the Company to
be a bankrupt and the expiration without appeal of the
period, if any, allowed by applicable law in which to appeal
therefrom; or
(4) upon the entry of a decree of judicial dissolution
under Section 18-802 of the Act or any successor or similar
provision of applicable law.
(b) The events set forth in Section 11.1(a) constitute the only
situations or events on which a dissolution of the Company shall occur.
<PAGE> 50
(c) Dissolution of the Company shall be effective as of the day
on which the event occurs giving rise to the dissolution, but the Company shall
not terminate until there has been a winding up of the Company's business and
affairs and the assets of the Company have been distributed as provided in
Section 11.2.
SECTION 11.2. LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS.
(a) Subject to the restrictions and limitations contained in
this Agreement, upon dissolution of the Company the Manager may cause any part
or all of the Company assets to be sold in such manner as the Manager shall
determine in an effort to obtain the best prices for such assets (provided,
however, that with the approval of all of the Members the Manager may
distribute Company assets in kind to the Members on the basis approved by the
Members). During the liquidation period, the Manager shall have the right to
continue to operate and otherwise to deal with Company property to the same
extent the Manager has such right prior to dissolution of the Company. In the
event that the Manager has dissolved, withdrawn or becomes bankrupt or legally
incapacitated, all of the Members may, within thirty (30) days after any such
occurrence, appoint a person to perform the functions of the Manager in
liquidating the assets of the Company and winding up its affairs.
(b) In settling accounts after dissolution, the assets of the
Company shall be paid or distributed in the following order:
(1) first, to creditors other than Members and their
Affiliates, in the order of priority provided by law;
(2) then, to the Members and their respective
Affiliates for any fees or other compensation or any
unreimbursed costs and expenses owing to the Members or
their respective Affiliates in accordance with the terms of
this Agreement, and then to the repayment of any loans (with
interest) made by any Member to the Company in accordance
with the terms of this Agreement;
(3) then, to those Members whose Capital Accounts have
positive balances, in accordance with such balances, after
taking into account all adjustments thereto for the taxable
year(s) during which such liquidation occurs. It is
intended that such distributions will result in the Members
receiving aggregate distributions equal to the amount of
distributions that would have been received if the
liquidating distributions were made in accordance with
Section 7.1(b). However, subject to Section 7.3, if the
balances in the Capital Accounts do not result in such
intention being satisfied, items of Profit and Loss will be
reallocated among the Members for the Fiscal Year of the
liquidation (and, at the election of the Manager, if
necessary, prior Fiscal Years) so as to cause the balances
in the Capital Accounts to be in the amounts necessary to
assure that such result is achieved.
Notwithstanding the foregoing, no distributions shall be made pursuant
to this Section 11.2 before giving effect to the allocations of Profits, Losses
and other items, pursuant to Section 7.2.
<PAGE> 51
SECTION 11.3. DISTRIBUTIONS IN KIND. If any assets of the Company are
distributed in kind pursuant to this Agreement (which shall be done only with
the approval of all of the Members), such assets shall be distributed to the
Members in the same proportions of value as the Members would have been entitled
to receive as cash distributions if such property had been sold for cash at its
fair market value and the net proceeds thereof distributed to the Members. In
the event that distributions in kind are made to the Members, the Capital
Account balances of such Members shall be adjusted to reflect the Members'
allocable share of gain or loss which would have resulted if the distributed
property had been sold at its fair market value (as determined in accordance
with the method for determining Book Value).
SECTION 11.4. DATE OF TERMINATION. The Company shall be terminated
when all the cash or property available for application and distribution under
Section 11.2 hereof shall have been applied and distributed in accordance
therewith and a Certificate of Cancellation shall have been filed pursuant to
Section 11.6 hereof.
SECTION 11.5. WAIVER OF PARTITION. Each Member hereby irrevocably
WAIVES any right or power it may possess now or hereafter to compel a partition
or sale of any asset of the Company or to compel a dissolution of the Company
other than as expressly set forth in this Agreement.
SECTION 11.6. CERTIFICATE OF CANCELLATION. Upon the dissolution and
the completion and winding up of the Company, the Manager shall cause to be
filed with the Office of the Secretary of State of the State of Delaware, a
Certificate of Cancellation, pursuant to the requirements of the Act, canceling
the Certificate of Formation.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. NOTICE. Any notice, demand or other communication
required or permitted to be given under this Agreement shall be in writing and
shall be given to the Members at their respective addresses set forth on
Schedule 1 attached hereto or at such other address as any Member may hereafter
designate in a notice duly given to all the other Members, as its address for
receipt of notices hereunder. Such notices may be delivered by hand, by
electronic facsimile ("fax"), by commercial courier service, by telegram or
may be mailed by U.S. certified or registered mail, return receipt requested.
All notices which are hand-delivered or given by telegram or fax shall be
deemed given on the date of delivery. All notices which are mailed by U.S.
certified or registered mail, return receipt requested, shall be deemed to have
been given on the third business day after being deposited in the United States
mails, proper postage prepaid. All notices which are sent by commercial
courier service shall be deemed given one Business Day after being deposited
with such courier.
SECTION 12.2. APPLICATION OF DELAWARE LAW. This Agreement and the
application or interpretation hereof shall be governed exclusively by, and
construed exclusively in accordance with, the laws of the State of Delaware,
and specifically the Act, without regard to principles of conflicts of laws.
SECTION 12.3. JURISDICTION AND VENUE. Any process against any Member
in, or in connection with, any suit, action or proceeding arising out of or
relating to this Agreement or any
<PAGE> 52
Member's performance hereof may be served personally or, to the extent
permitted by law, by certified mail at that Member's address for receipt of
notices hereunder with the same effect as though served on such Member
personally. Each Member hereby irrevocably submits in any suit, action or
proceeding arising out of or relating to this Agreement or any Member's
performance hereof or rights or obligations hereunder to the jurisdiction of
the Delaware Court of Chancery and waives any and all objections to the
jurisdiction of, or venue in, such court that such Member may have under
applicable laws.
SECTION 12.4. NO PARTNERSHIP. The Members intend that the Company not
constitute or be deemed to be a partnership (including, without limitation, a
limited partnership) or joint venture, and that no Member or Manager constitute
or be deemed to be a partner, agent or joint venturer of any other Member or
Manager, for any purposes other than federal and state income tax purposes, and
this Agreement shall not be construed, interpreted or applied to suggest
otherwise.
SECTION 12.5. EFFECT OF AGREEMENT. This Agreement shall be binding
upon all Members and the Manager and their respective assigns and successors.
SECTION 12.6. ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto, if any, together with all other contracts and agreements which
either are referred to herein or bear even date herewith, contain all of the
understandings and agreements of whatsoever kind and nature existing between
the Members with respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings with respect thereto.
SECTION 12.7. AMENDMENT. Except as otherwise expressly set forth in
this Agreement, this Agreement may be amended, supplemented or restated only by
a written agreement executed by each of the Members. Notwithstanding anything
to the contrary in this Section 12.7, the Certificate of Formation and this
Agreement may be amended, supplemented or restated, for the following purposes
only by the Manager without the necessity of obtaining the written consent of
any of the Members: the change of the registered agent, the address of the
registered agent or the address of the principal place of business of the
Company.
SECTION 12.8. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and shall be
binding upon the Member who executed the same, but all of such counterparts
together shall constitute one and the same agreement.
SECTION 12.9. SEVERABILITY. Every provision hereof is intended to be
severable and to be enforced to the fullest extent permitted by applicable law,
and if any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
<PAGE> 53
SECTION 12.10. CAPTIONS. The title and captions contained herein are
for convenience of reference only and shall not be deemed part of the context
of this Agreement.
SECTION 12.11. INTERPRETATION. Where the context so indicates, the
masculine shall include feminine and neuter, the singular shall include the
plural and the plural shall include the singular. The term "including"
wherever it appears in this Agreement is not limiting and means "including
without limitation." Unless otherwise expressly provided herein, references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement. This Agreement is the result of
negotiations among and have been reviewed by counsel to the other parties
thereto and are the products of all parties. Accordingly, it shall not be
construed against any party merely because of such party's involvement in its
preparation.
SECTION 12.12. ADDITIONAL DOCUMENTS AND ACTS. In connection with
this Agreement, as well as all transactions contemplated by this Agreement, the
Members agree to execute such additional documents and papers, and to perform
and do such additional acts, as may be necessary and proper to effectuate and
carry out all of the provisions of this Agreement.
SECTION 12.13. CONFIDENTIALITY.
(a) The provisions of this Agreement and of any other agreement
relating to the Company or its Properties to which the Company or any Member is
a party, the identity of any person with whom the Company may be holding
discussions with respect to any investment, acquisition, Disposition, or other
transaction or in whom the Company may invest directly or indirectly, and all
other business, financial or other information relating directly to the
business or affairs of the Company or the relative or absolute rights or
interests of any of the Members (collectively, the "INFORMATION") that has not
been publicly disclosed with the consent of all of the Members is confidential
and proprietary information of the Company the disclosure of which could cause
irreparable harm to the Company and the Members. Accordingly, each Member
represents that it has not, and agrees that it will not and that it will direct
its shareholders, directors, officers, agents, advisors (including, without
limitation, any appraiser selected by or on behalf of it, or by or on behalf of
any appraiser selected by it) and Affiliates not to, disclose to any person
(except to the extent, if any, it is required by applicable law to make
disclosure to a court or governmental authority) any Information or confirm any
statement made by any other person regarding Information unless all of the
Members consent thereto or until the Company has publicly disclosed the
Information and has notified each Member that it has done so.
(b) The covenants and agreements contained in this Section will
continue to bind all Members and other parties to this Agreement after they
cease to be Members or hold any interest in the Company and will survive the
termination of the Company.
(c) Notwithstanding any contrary provision in this Section, any
Member may, without breach of the covenants set forth in this Section and
without notice to or consent of the Manager, disclose any Information to any
potential transferee of a Membership Interest if such transferee executes and
delivers to the Company a written confidentiality agreement in which it agrees
to be bound by the terms and provisions of this Section 12.13 on the same basis
and in the same manner as would apply if it were a Member of the Company who
had signed this Agreement. The parties
<PAGE> 54
agree that if this Section 12.13 is breached the remedy at law may be
inadequate, and therefore, in addition to any other remedy to which a party may
be entitled, the non-breaching party shall be entitled to an injunction or
injunctions to prevent breaches of this Section 12.13 and/or to compel specific
performance of this Section 12.13.
SECTION 12.14. CREDITORS NOT BENEFITTED. No creditor of the Company
or other Person not a Member shall have any right or benefit under or in
respect of this Agreement (and, without limiting the generality of the
foregoing, no such Person shall have any right to enforce any obligation of any
Member to make capital contributions or loans or to pursue any other right or
remedy hereunder or in respect hereof or at law or in equity), it being
understood and agreed that the provisions of this Agreement shall be solely for
the benefit of, and may be enforced solely by, the Members and the Company and
their respective successors and assigns. None of the rights or obligations of
the Members herein set forth to make capital contributions or loans to the
Company shall be deemed an asset of the Company for any purpose by any creditor
or other third party, nor may such rights or obligations be sold, transferred
or assigned by the Company or pledged or encumbered by the Company to secure
any debt or other obligation of the Company or of any of the Members. In
addition, it is the intent of the parties hereto that no distribution to any
Member shall be deemed a return of money or other property in violation of the
Act.
SECTION 12.15. INVOLVEMENT OF THE COMPANY IN CERTAIN PROCEEDINGS. If
any Member or any Affiliate of a Member becomes involved in legal proceedings
unrelated to the business of the Company in which the Company is called upon to
provide information, the Member will indemnify, defend and hold harmless the
Company against all costs and expenses (including, without limitation, fees and
expenses of attorneys and other advisors) paid or incurred by the Company in
preparing or producing the required information or in resisting any request for
production or obtaining a protective order limiting the availability of the
information provided by the Company or in otherwise protecting its interests.
SECTION 12.16. DISPUTE RESOLUTION AND ARBITRATION.
(a) Any claim, action, dispute or controversy of any kind
arising out of or relating to this Agreement or concerning any aspect of
performance by any Member under the terms of this Agreement ("DISPUTE") shall
be resolved by mandatory and binding arbitration administered by the American
Arbitration Association (the "AAA") pursuant to the Federal Arbitration Act
(Title 9 of the United States Code) in accordance with this Agreement and the
then-applicable Commercial Arbitration Rules of the AAA. The Members
acknowledge and agree that the transactions evidenced and contemplated hereby
involve "commerce" as contemplated in Section 2 of the Federal Arbitration Act.
If Title 9 of the United States Code is inapplicable to any such Dispute for
any reason, such arbitration shall be conducted pursuant to the Delaware
Voluntary Alternative Dispute Resolution Act (Del. Code. Ann. tit. 6, Sections
7701-21), this Agreement and the then-applicable Commercial Arbitration Rules
of the AAA. To the extent that any inconsistency exists between this Agreement
and the foregoing statutes or rules, this Agreement shall control. Judgment
upon the award rendered by the arbitrator acting pursuant to this Agreement may
be entered in, and enforced by, any court having jurisdiction absent manifest
disregard by such arbitrator of applicable law; provided, however, that the
arbitrator shall not amend, supplement or reform in any manner any of the
rights or obligations of any Member hereunder or the enforceability of any of
the terms or provisions of this Agreement. Any arbitration proceedings under
this Agreement shall be conducted in Las Vegas, Nevada before a single
arbitrator who has no direct or indirect relationship with any
<PAGE> 55
Member or any Member's Affiliate and who has recognized expertise in the fields
of commercial real estate investment and limited liability company and
partnership law and practice.
(b) Upon the request of any Member who is a party to such
Dispute set out in a written notice delivered in accordance with Section 12.1
hereof or to the other Members who are parties to such Dispute, whether made
before or after the institution of any legal proceeding, but prior to the
expiration of the statutory time period within which any Member must respond
upon receipt of valid service of process in order to avoid a default judgment,
any Dispute shall be resolved by mandatory and binding arbitration in
accordance with the terms of this Agreement. Within ten (10) days after a
Member's receipt of such notice, the Members who are parties to the Dispute
shall agree upon a qualified arbitrator. If the Members cannot agree within
such 10-day period, an arbitrator shall be appointed by the AAA. If a
replacement arbitrator is necessary for any reason, such replacement arbitrator
shall be appointed by the AAA.
(c) Any Member may bring summary proceedings (including, without
limitation, a plea in abatement or motion to stay further proceedings) in court
to compel arbitration of any Dispute in accordance with this Agreement.
(d) All statutes of limitation that would otherwise be
applicable shall apply to any arbitration proceeding. Any attorney-client
privilege and other protection against disclosure of privileged or confidential
information (including, without limitation, any protection afforded the
work-product of any attorney) that could otherwise be claimed by any Member
shall be available to, and may be claimed by, any such Member in any
arbitration proceeding. No Member waives any attorney-client privilege or any
other protection against disclosure of privileged or confidential information
by reason of anything contained in, or done pursuant to, the arbitration
provisions of this Agreement.
(e) The arbitration shall be conducted and concluded as soon as
is reasonably practicable, based on a schedule established by the arbitrator.
Any arbitration award shall be based on and accompanied by findings of fact and
conclusions of law, shall be conclusive as to the facts so found and shall be
confirmable by any court having jurisdiction over the Dispute, provided that
such award, findings and conclusions are not in manifest disregard of
applicable law.
(f) Each Member shall bear its own expenses of the arbitration,
including, without limitation, fees and expenses of counsel incident to any
mediation or arbitration. The fees and expenses of the arbitrator and the AAA
shall be borne equally by the Members. The arbitrator shall have the power and
authority to award expenses to the prevailing Member if the arbitrator elects
to do so.
(g) In order for an arbitration award to be conclusive, binding
and enforceable under this Agreement, the arbitration must follow the
procedures set forth in the portions of this Agreement relating to such
arbitration and any award or determination shall not be in manifest disregard
of applicable law. The obligation to arbitrate any Dispute shall be binding
upon the successors and assigns of each of the Members.
SECTION 12.17. SECTIONS. Unless the context requires otherwise, all
references in this Agreement to Sections or Articles shall be deemed to mean
and refer to Sections or Articles of this Agreement.
<PAGE> 56
SECTION 12.18. NO WAIVER. No waiver, express or implied, by any
Member of any obligation of, or any breach or default by any other Member in
the performance by the other Member of its obligations, hereunder shall be (i)
binding or enforceable except to the extent (if any) set out in a writing
signed by the Member sought to be charged thereby or (ii) deemed or construed
to be a waiver of any other breach or default under this Agreement. Failure on
the part of any Member to complain of any act or omission of any other Member,
or to declare such other Member in default irrespective of how long such
failure continues, shall not constitute a waiver hereunder. No notice to or
demand on a defaulting Member shall entitle such defaulting Member to any other
or further notice or demand in similar or other circumstances.
SECTION 12.19. ADDITIONAL REMEDIES. Unless the context requires
otherwise, the rights and remedies of the Members hereunder shall not be
mutually exclusive so that the exercise of one or more of the rights or
remedies hereunder shall not preclude the exercise of any other.
SECTION 12.20. U.S. DOLLARS. All references in this Agreement to
dollar amounts shall refer to United States currency.
SECTION 12.21. APPROVALS. Except where otherwise expressly stated in
this Agreement, all approval, consent and other similar rights of the Manager
or of the Members pursuant to this Agreement (i) shall be set out in a writing
signed by the person whose approval, consent or exercise of any other right is
required and (ii) may be exercised by such parties, and such approvals and
consents may be granted or denied by such parties, in their sole and absolute
discretion.
<PAGE> 57
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above.
CAMDEN SUBSIDIARY, INC., as a Member and as Manager
By:/s/ G. Steven Dawson
---------------------------------------------------------
Name: G. Steven Dawson
Title: Sr. Vice President and Chief Financial Officer
TMT-NEVADA, L.L.C., as a Member
By:/s/ Stephen B. Hansen
---------------------------------------------------------
Name: Stephen B. Hansen
Title: Vice President
<PAGE> 1
Exhibit 99.2
RESIDENTIAL PROPERTY MANAGEMENT AND EXCLUSIVE LEASING AGREEMENT
BY AND BETWEEN
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
AND
CAMDEN DEVELOPMENT, INC.
<PAGE> 2
RESIDENTIAL PROPERTY MANAGEMENT AND
EXCLUSIVE LEASING AGREEMENT
THIS RESIDENTIAL PROPERTY MANAGEMENT AND EXCLUSIVE LEASING AGREEMENT
(this "Agreement") is made as of June 29, 1998 by and between SIERRA-NEVADA
MULTIFAMILY INVESTMENTS, LLC (herein referred to as "Owner") and CAMDEN
DEVELOPMENT, INC. (herein referred to as "Property Manager").
R-E-C-I-T-A-L-S
WHEREAS, Owner is the owner of the multifamily properties located in
the State of Nevada, the name, address and location of each being more
particularly set forth on Exhibit "A" attached hereto and incorporated herein by
reference (such multifamily properties being herein referred to collectively as
the "Properties" and individually and generically as a "Property");
WHEREAS, Property Manager is engaged in the business of managing,
operating, leasing and maintaining commercial real estate properties such as the
Properties;
WHEREAS, Owner desires that Property Manager undertake and perform all
management and maintenance operations of the Property, including all appropriate
marketing, leasing, maintenance and servicing duties, and that Property Manager
act as an independent contractor in the performance of such duties on and
subject to the terms and conditions set forth in this Agreement.
WHEREAS, Property Manager and Owner have concurrently herewith entered
into a separate but similar Residential Property Management Agreement (the
"Other Agreement") pertaining to Property Manager's management of the same
Properties as are covered by this Agreement and the parties wish to enter into
this Agreement to provide for the payment by Owner to Property Manager of an
additional 0.50% management fee.
W-I-T-N-E-S-S-E-T-H
NOW, THEREFORE, in consideration of the premises and of the mutual and
dependent covenants and agreements herein contained, and other good and valuable
considerations, the receipt and sufficiency of which being acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the
following terms shall have the meanings set forth opposite such terms,
respectively:
"Capital Budget" means, with respect to each Property, the annual
capital budget for the expenditures for major repairs, renovations and/or
capital improvements in, on or about such Property, detailing the timing of such
matters and the estimated cost.
"Legal Requirements" means all statutes, laws, orders, codes,
regulations and requirements affecting the management, leasing, use,
construction, repair or reconstruction of a Property by any federal, state or
local governmental authority having jurisdiction as well as the orders of the
fire marshall, board of fire underwriters and similar bodies.
<PAGE> 3
"Monthly Gross Collections" means, with respect to any Property, the
amount of all cash receipts from such Property for each month during the term of
this Agreement and shall include (a) rentals collected pursuant to all
residential, carport, garage, storage and other leases for such month (or
partial month) in effect during the term of this Agreement, (b) security, pet
and other deposits forfeited during the term of this Agreement, (c) proceeds
from rental interruption insurance, (d) late charges or fees, (e) application
and processing fees and forfeited application deposits, (f) proceeds from the
rental of washers and dryers, (g) proceeds from vending machines or other
concessions or the rental paid to Owner by the supplier of such vending machines
or other concessions, (h) gross revenues collected for utilities provided and
billed to tenants of the Properties (hereinafter "Residents") which may include,
without limitation, water, telephone (inclusive of local, long distance and
internet services), electricity, gas and cable TV, (i) any fees charged to any
Resident in connection with any redecoration of any unit in a Property or other
Resident improvements, and (j) other income which is directly related to
management of the Properties, provided, however, it shall not include (I)
Owner's capital contributions or working capital advances, nor any interest
thereon, (II) the proceeds of any financing or voluntary conversion, sale,
exchange, pledging or other disposition or encumbrance of all or any part of the
Property, (III) casualty insurance proceeds (other than from loss of rents),
(IV) condemnation awards, (V) rental deposits or security and pet deposits
received from Residents or other deposits received from Residents or applicants
(other than forfeited deposits) (VI) abatement or reduction of taxes, (VII)
discounts and dividends on insurance policies, or (VIII) trade discounts and/or
rebates received in connection with the operation and maintenance of the
Properties and/or purchase of personal property.
"Operating Plan" means, with respect to each Property, the overall
annual plan for the management and leasing of such Property approved by Owner
and consisting of (i) the annual operating budget for such Property which sets
forth the detail and summary of anticipated receipts and costs to be incurred
for the management, administration and maintenance for the upcoming fiscal year
for such Property; (ii) the annual capital budget for expenditures for major
repairs, renovations and/or capital improvements in, on or about such Property,
detailing the timing of such matters and their estimated cost; (iii) the leasing
plan and guidelines, (iv) the Standard Lease Form, and (v) the Rules and
Regulations.
"Property" or "Properties" shall have the meaning set forth in the
recitals above and any other improvements, amenities and appurtenances
associated therewith.
"Property Account" shall mean the bank account established by the
Property Manager for the Properties in accordance with the provisions of Section
3.9 hereof.
"Rules and Regulations"shall mean the rules and regulations intended to
govern the day-to-day activities of the Residents of the Properties in
accordance with the policies and procedures manual of the Property Manager.
"Standard Lease Forms" means the forms approved for use for each
Property by Owner from time to time. Until a different form of lease is approved
by Owner, the Standard Lease Forms to be used by Property Manager for each
Property shall be the form of that included in the Operating Plan.
ARTICLE 2
APPOINTMENT OF PROPERTY MANAGER/TERM
SECTION 2.1 Appointment of Property Manager. Subject to the terms and
conditions as hereinafter provided, Owner hereby appoints Property Manager as
the sole and exclusive management and leasing agent for the Properties for the
term of this Agreement. Property Manager hereby accepts such appointments and
shall use diligent good faith efforts for the management and leasing of the
Properties in accordance with the terms of this Agreement and in accordance with
the Operating Plan.
SECTION 2.2 Term. This initial term of this Agreement shall commence
upon the date hereof and shall continue until December 31st of the calendar year
in which this Agreement is executed. This
<PAGE> 4
Agreement shall automatically renew annually thereafter unless (a) either party
provides written notice to the other party of such party's intent to terminate
this Agreement at least ninety (90) days prior to the expiration of the initial
term or any renewal term, or (b) this Agreement has been terminated in
accordance with other terms or conditions herein contained.
ARTICLE 3
DUTIES OF PROPERTY MANAGER
SECTION 3.1 Property Manager's General Duties. In managing and
leasing the Properties, Property Manager covenants to exercise prudence and
diligence in protecting the property rights and investment of Owner. Property
Manager's duties shall include, but shall not necessarily be limited to, the
specific duties listed below in this ARTICLE 3.
SECTION 3.2 Preparation of Annual Operating Plan. The Owner has
approved the Operating Plan for the Properties for the partial calendar year
ending December 31, 1998. No later than November 15th of each calendar year,
Property Manager shall prepare and deliver to Owner the Operating Plan for the
Properties for the following year for review, comment and approval by Owner.
Following receipt of the Operating Plan, Owner shall respond promptly,
indicating its approval or changes to be made in all or any of the plans
incorporated into the Operating Plan. If Owner fails to disapprove or provide
written comments to the Operating Plan within twenty (20) days after its
submission by Property Manager, the Operating Plan shall be deemed approved by
Owner in all respects. Property Manager shall adopt and incorporate any changes
required by Owner into the plan and forward copies of the final Operating Plan
to Owner within twenty (20) days after receipt of Owner's comments. The
Operating Plan shall constitute a standard to which Property Manager shall
adhere in the operation of each of the Properties. Property Manager shall not
expend funds in any calendar year in excess of the budgeted line item amounts in
the Operating Plan without Owner's prior written approval; provided that
notwithstanding the foregoing, with respect to each Property and without the
consent of the Owner, Property Manager shall have the right, in its reasonable
discretion, (i) to expend up to five percent (5%) more than the amount budgeted
for the aggregate operating expense categories (exclusive of capital expenditure
or capital items) for such Property for a fiscal year, (ii) to expend up to ten
percent (10%) more than the amount budgeted for a capital expenditure budget
line item for such Property for a fiscal year, and (iii) to expend up to $10,000
on any single unbudgeted operating expense including, without limitation, the
purchase or acquisition of any property or the execution of a contract
obligating the Property Manager in relation to any Property for such amount, not
to exceed a maximum of $25,000 in the aggregate for each Property for any fiscal
year.
SECTION 3.3 Leasing of Properties. Property Manager shall use
diligent, good faith efforts to lease the Properties as expeditiously as
possible, and to keep the Properties leased to suitable tenants pursuant to the
Operating Plan. All inquiries for any lease(s) or renewals(s) for the leasing of
a Property shall be referred to Property Manager and all negotiations connected
therewith shall be conducted by or under the direction of Property Manager
subject to the terms of this Agreement and the leasing guidelines included in
the Operating Plan. Property Manager may make non-material changes to the
Standard Lease Form without Owner's approval. Property Manager is authorized to
execute, deliver and renew leases on behalf of Owner.
SECTION 3.4 Employment of Personnel. On the basis of the Operating
Plan, Property Manager shall provide, investigate, hire, train, pay (subject to
reimbursement as provided in Section 4.2), supervise and discharge the personnel
necessary to be employed in order to manage and lease the Properties. Such
personnel shall in every instance be deemed employees of Property Manager and
not of Owner. Subject to reimbursement as provided in Section 4.2 below,
Property Manager shall have full and exclusive responsibility and liability for
withholding and payment of all federal, state and local payroll taxes and for
contributions for unemployment insurance, and other benefits imposed or assessed
under any provision of law or by regulation, and which are measured by salaries,
wages or other remuneration paid or payable by Property Manager to its employees
engaged in any work in connection with this Agreement or indicated herein.
Property Manager shall execute and file all returns and other instruments
required by any federal, state or local law or regulation
<PAGE> 5
with respect to such salaries, wages or other remuneration. The Property Manager
shall carry workers' compensation and employer's liability insurance at limits
no less than the statutory requirements where required to do so by law. The
Property Manager shall comply with all federal, state and local laws and
regulations applicable to any employees, including without limitation, minimum
wage laws. The Property Manager shall provide a fidelity bond, at Owner's
expense, for its employees in an amount equal to at least three times the
Monthly Gross Collections. Such bond or insurance may be on a blanket form
covering the employees and all other personnel or employees of the Property
Manager.
SECTION 3.5 Service Contracts. On the basis of the Operating Plan,
Property Manager shall execute in the applicable Property's name and on behalf
of Owner, contracts for water, electricity, gas, fuel, oil, landscape
maintenance, security services, pool maintenance, cleaning, apartment locator
services, washer and dryer rental, copier rental, cable TV, sign service,
vending, telephone, vermin extermination, trash removal and other necessary or
appropriate services. Any of the foregoing contracts which are entered into in
arms length transactions on the basis of the Operating Plan at then current
market rates and on competitive terms and which are cancelable by Owner, or by
Property Manager on behalf of Owner, on thirty (30) days written notice without
any termination fee or penalty shall not require Owner's prior approval.
Property Manager shall, on behalf of the Owner, place orders for such equipment,
tools, appliances, materials and supplies as are necessary to properly manage
and lease the Properties. Property Manager shall include a provision in all such
contracts requiring that the contractor carry workmen's compensation insurance
in accordance with the laws of the state in which the Properties are located and
employer's liability insurance applicable to and covering all persons engaged in
the performance of work hereunder, and Property Manager shall require that any
such contractor furnish Property Manager with certificates showing such
insurance to be in force.
SECTION 3.6 Maintenance and Repair of Property. Property Manager
shall, subject to the parameters of the Operating Budget and Section 3.2 hereof,
maintain the buildings, appurtenances and grounds of each of the Properties in
substantial compliance with all Legal Requirements and in substantial accordance
with standards prescribed by Owner, including, without limitation thereof,
interior and exterior cleaning, painting and decorating, plumbing, carpentry,
and such other normal maintenance and repair work as may be desirable. Property
Manager may make, outside of the Operating Budget, emergency repairs necessary
for the preservation and safety of a Property or the avoidance or the suspension
of any service to a Property or the protecting of life or property from serious
injury or damage provided that Property Manager confers promptly with Owner
regarding every such expenditure and furnishes a complete written report as soon
as possible.
SECTION 3.7 Collection of Monies. On behalf of Owner, Property
Manager shall collect all rent and other charges due from residents, applicants
and others.
SECTION 3.8 Enforcement of Collections. On behalf of Owner, Property
Manager shall request, demand, collect, receive and provide receipts for all
rental and other income of the Properties and, whenever it appears appropriate
to do so, shall institute legal proceedings for the collection thereof and the
dispossession and/or termination of a Resident's rights of possession or a
contracting party's contractual agreement.
SECTION 3.9 Property Account. Property Manager, on behalf of Owner,
shall promptly deposit all Monthly Gross Collections from each Property in a
single interest-bearing bank account in Owner's name at a federally-insured
banking institution (such account hereinafter referred to as the "Property
Account") in a manner to indicate the custodial nature thereof, such account to
be the same account as referenced in the Other Agreement as the "Property
Account". The funds in the Property Account shall not be commingled with any
funds of Property Manager. The Property Account shall be used to pay for all
obligations and expenditures necessarily incurred for and on account of the
Owner in the management and operation of the Property in accordance with the
Operating Plan and Section 3.2, including without limitation, insurance
premiums, taxes, supplies, repairs, maintenance, mortgage payments, if any,
improvements and such other expenses and obligations as have been provided for
in this Agreement or the Operating Plan. All disbursements of funds shall be
substantiated by appropriate records and accounting procedures. Owner shall be
responsible for providing funds or causing funds to be provided necessary for
the Property Account to meet, on a timely basis,
<PAGE> 6
the cash requirements for the proper operation of the Properties. Property
Manager, from time to time as directed by Owner, shall (i) remit to Owner all
cash in the Property Account and (ii) deliver to Owner true and correct copies
of all records relating to the Property Account (all of which records are
acknowledged to be Owner's property). Property Manager shall not be obligated to
make any advance to or for the account of Owner or to pay any sums, except out
of funds held in any account maintained under this Section 3.9, nor shall
Property Manager be obligated to incur any liability or obligation for the
account of Owner without assurance that the necessary funds for the discharge
thereof will be provided.
SECTION 3.10 Property Manager Disbursements. Property Manager shall
pay the following items to the extent of Monthly Gross Collections collected
from the Properties: (a) all expenses incurred through operating, renting,
servicing, maintaining or repairing the Properties, including, without
limitation, expenses for all services rendered by professionals, such as
attorneys, accountants, engineers, architects, collection agents and tax
advisors, and such other expenses as may be authorized by Owner, (b) provided
that Owner provides Property Manager with all necessary or appropriate
information and documents, all sums due to lenders on loans secured by or
otherwise affecting the Properties, including amounts due for interest,
amortization of principal and allocation to reserves or escrow funds; and (c)
all real and personal property taxes and other taxes or assessments levied and
assessed against the Properties. If at any time the funds in the Property
Account are sufficient to pay all the expenses which Property Manager is
required or permitted to pay pursuant to this Agreement, Property Manager shall
give Owner notice of the need for additional funds and, in the event that Owner
fails to furnish sufficient funds to pay for the foregoing: (i) Property Manager
shall apply the funds available to satisfy outstanding liabilities, costs and
expenses according to such priority as Owner directs; (ii) Property Manager
shall have no liability whatsoever for any consequences arising from such
failure by Owner; and (iii) Owner hereby indemnifies Property Manager and agrees
to save Property Manager harmless from any and all claims or actions by third
parties and all liability, cost and expense arising from failure to make any
expenditures or from inability to draw checks or from the failure or refusal of
any entity upon which a check is drawn to honor same by reason of the failure of
Owner to provide sufficient funds in response to such notice.
SECTION 3.11 Records. Property Manager shall maintain at its principal
office a system of office records, books and accounts relating to each Property.
Owner and other parties designated by the Owner shall have at all reasonable
times during Property Manager's normal business hours, upon prior notice, access
to such records, accounts and books and to all vouchers, files and all other
materials pertaining to the Properties and this Agreement.
SECTION 3.12 Reporting. Not later than fifteen (15) days after the end
of each month, Property Manager shall deliver to Owner the reports required by
Section 6.3(c) of the Amended and Restated Limited Liability Company Agreement
of the Owner, including, without limitation, the following: (1) an operating
statement showing variance from the Operating Plan for each Property, (2) with
respect to each Property, an operating statement, a budget variance analysis
with explanations, a capital expenditure schedule, an occupancy report and an
analysis of marketing and leasing activities, (3) the reports required by any
lenders with respect to the Properties, and (4) such other reports that the
Owner or any member of Owner may reasonably request.
SECTION 3.13 Returns Required by Law. Property Manager shall execute
and file punctually when due all forms, reports and returns required by law
relating to the employment of personnel and to the management or operation of
the Properties.
SECTION 3.14 Compliance with Legal Requirements. Property Manager
shall take such actions as may be necessary to substantially comply with any and
all Legal Requirements, subject to the limitations contained in this Section.
Property Manager, however, shall not be required to take any such action as long
as Owner is contesting, or has affirmed its intention to contest and promptly
institutes proceedings contesting any such order or requirement, except that, if
failure to comply promptly with any such order or requirement would or might
expose Owner, Property Manager or any of Property Manager's employees or agents
to
<PAGE> 7
criminal liability, Property Manager shall cause the same to be complied with
without first obtaining Owner's approval. Property Manager shall promptly, and
in no event later than forty-eight (48) hours from the time of their receipt,
forward to Owner copies of all such orders and notices of Legal Requirements.
SECTION 3.15 Services to Residents. In connection with its management
and leasing of the Properties, Manager shall provide or arrange for supplying to
the Residents of the Properties (i) the utilities and other services stipulated
in the leases, (ii) such other services as Owner may approve or specify in
writing, and (iii) the services contemplated and/or specifically prescribed in
the Operating Plan.
SECTION 3.16 Claims. Property Manager shall advise Owner promptly of
the service upon Property Manager of any summons, subpoena, citation, claim or
other legal process which either (i) is served or purports to be served on
Owner, or (ii) relates in any way to a Property (whether by leasing, operation,
management, maintenance or otherwise).
SECTION 3.17 Rules and Regulations. Property Manager shall adopt and
from time to time modify the Rules and Regulations which are intended to govern
the day-to-day activities of the residents of the Properties, such Rules and
Regulations to be in accordance with Property Manager's policies and procedures
manual, the current version of which Owner acknowledges has been received and
approved by Owner. Property Manager shall deliver to Owner on a monthly basis a
copy of any changes made during such month to the Rules and Regulations.
SECTION 3.18 Legal Counsel. For matters in the ordinary course of
business and within the Operating Budget, Property Manager shall employ, at
Owner's cost, legal counsel of Property Manager's choosing, for any of the
foregoing in order to protect and represent the Owner's interest therein. For
matters other than in the ordinary course of business, Property Manager shall
inform Owner thereof and shall conform to the Owner's desired course of action
and shall utilize the attorney selected by Owner.
SECTION 3.19 Notices to Owner. Property Manager shall notify the Owner
within forty-eight (48) hours of receipt (which notice shall include copies of
supporting documentation) of: (i) any notice of violation of any Legal
Requirements; any material defect in any Property; (ii) any fire or other
material casualty loss to any Property; (iii) any condemnation action, rezoning
or other governmental order or action (or any threat of any thereof) and (iv)
any tax assessment notices.
SECTION 3.20 Property Manager's Affiliates and Subsidiaries. In
performing work at the Properties, Property Manager may, from time to time, deal
with certain of its affiliated or subsidiary organizations as independent
contractors. The amounts payable to any such related entity shall not be greater
than would have been paid under an arms-length contract with a non-related
entity provided that such amounts shall be within the Operating Budget. Property
Manager shall include in its monthly report to Owner a list of all contracts
with such affiliated or subsidiary entities and amounts paid to such affiliates
or subsidiaries.
SECTION 3.21 Use and Maintenance of Premises. Property Manager agrees
not to knowingly permit the use of the Properties for any purpose which might
void any policy of insurance held by Owner or which might render any loss
thereunder uncollectible or serve as a defense to a claim brought thereunder, or
which would be in violation of any Legal Requirement including, but not limited
to, violation of any environmental laws, and Property Manager shall routinely
monitor each Property for such violations.
SECTION 3.22 Employee Discounts. To the extent set forth in the
Operating Plan, Property Manager may implement its internal policy to provide
monetary discounts for accommodations to its employees to live on-site.
SECTION 3.23 Licenses and Permits. The Property Manager shall obtain
and maintain in full force and effect, at Owner's cost, any and all licenses or
permits required for the Property Manager lawfully to perform fully its
obligations under this Agreement and shall obtain on Owner's behalf or assist
Owner in
<PAGE> 8
obtaining, any and all licenses or permits required for the maintenance,
operation and use of the Properties as contemplated herein.
SECTION 3.24 Year 2000 Compliance. Property Manager shall use its
commercially reasonable efforts to be Year 2000 Compliant. As used in this
section, the term "Year 2000 Compliant" shall mean that all software, hardware,
equipment, goods or systems utilized by or material to the physical operations,
business operations, or financial reporting of Property Manager (collectively
the "systems") will (i) properly perform date sensitive functions before, during
and after the year 2000; (ii) accurately perform leap year calculations; and
(iii) will not cause any other information technology to fail or generate errors
related to any such dates.
ARTICLE 4
COMPENSATION/REIMBURSEMENT TO PROPERTY MANAGER
SECTION 4.1 Monthly Management Fee. Owner agrees to pay to Property
Manager a fee (the "Monthly Management Fee") computed and payable monthly in
arrears in an amount equal to one-half percent (0.50%)of Monthly Gross
Collections from each Property. The Monthly Management Fee and the Construction
Management Fee (hereinafter defined) shall be the sole and exclusive
compensation for the Property Manager under this Agreement; provided that the
payment of such fee will not affect Owner's obligation to pay any fees due to
Property Manager under the Other Agreement. The Monthly Management Fee for a
given month shall be paid to the Property Manager by the 20th day of the month
following the month in which it accrued provided that the Owner shall have
received a calculation of the Monthly Gross Collections by the 15th day of such
month. If the Monthly Gross Collections are not sufficient to pay all or any
portion of the Monthly Management Fee, Owner shall pay the Property Manager the
unpaid amount of such Monthly Management Fee within ten (10) days of receipt of
the Property Manager's statement therefor.
SECTION 4.2 Reimbursable Expenses. Everything done by Property
Manager under the provisions of ARTICLE 3, and all obligations or expenses
incurred hereunder shall be for the account of, on behalf of and at the expense
of Owner, and Property Manager shall be entitled to reimbursement for costs and
expenses incurred in connection therewith in accordance with Sections 3.4, 3.9
and 3.10 and subject to the Operating Plans or other written approval of Owner.
Additionally, the costs of gross salaries, including payroll taxes, insurance,
worker's compensation, and other employee benefits of the on-site or off-site
Property Manager and employees of Property Manager shall be reimbursed to
Property Manager at then current market rates. To the extent provided in the
Operating Plan, Property Manager shall be reimbursed for incentive compensation
paid to key management and leasing staff. Additionally, overhead costs for
security (both equipment and personnel) at each Property, training of employees
of Property Manager and landscaping expenses shall be reimbursed to Manager to
the extent provided in the Operating Plan. The above notwithstanding, Owner
shall not be obligated to reimburse Manager for any obligations or expenses
resulting from the gross negligence, fraud or willful misconduct of Property
Manager, nor for the failure of Property Manager to perform its material
obligations and duties under this Agreement. This section shall be inapplicable
to the extent that Property Manager receives 100% of its reimbursable expenses
under and pursuant to the Other Agreement.
SECTION 4.3 Subordination of Monthly Management Fee. Property Manager
agrees that the Monthly Management Fee shall be subordinated each month to the
prompt and timely payment of all obligations of Owner under the first
Multifamily Deed of Trust, Assignment of Rents and Security Agreement (the
"Mortgage") from Owner to Berkshire Mortgage Finance Limited Partnership
("Berkshire") encumbering such Property. So long as Owner is current in the
payment of all obligations under the Mortgage and the Multifamily Note secured
thereby (the "Note") and is not otherwise in default thereunder beyond the
expiration of any applicable grace or notice and cure periods, Property Manager
shall be entitled to payment of the Monthly Management Fee. Property Manager
agrees not to accept from Owner, whether from Monthly Gross Collections or
otherwise, the payment of any Monthly Management Fee after receipt by Property
Manager of
<PAGE> 9
a notice from Berkshire or any subsequent holder of the Note (the "Noteholder")
claiming a default thereunder or under the Mortgage and that such default has
not been cured within any applicable grace or notice and cure periods (a "Notice
of Default") until such time, if any, as Property Manager receives notice from
Noteholder that such default has been cured. In the event that Property Manager
receives payment of the Monthly Management Fee after receipt by Property Manager
from Noteholder of a Notice of Default, then Property Manager shall hold such
payment in trust for the benefit of Noteholder and shall turn over such amount
to Noteholder immediately upon the receipt of written request for same from
Noteholder.
ARTICLE 5
OWNER'S OBLIGATIONS
Owner hereby covenants and agrees as follows:
SECTION 5.1 Obligation to Fund. If, for any respective month, funds
in the Property Account are not sufficient to cover expenses specified in the
approved Operating Plan or to be disbursed pursuant to Section 3.10 or Section
4.1 or 4.2, or those which have been approved in writing by Owner, Owner shall,
within ten (10) days after receipt of written notice from Property Manager of
the amount of the estimated insufficiency, deposit in the applicable Project
Account an amount equal to such estimated shortfall. Manager shall have no
liability whatsoever to fund the deficiency.
SECTION 5.2 Insurance. Owner shall cause to be placed and kept in
force, at Owner's expense, for each of the Properties:
5.2.1 Such Fire and Extended Coverage Insurance for the
improvements constituting each of the Properties as Owner may desire.
5.2.2 Rental Interruption Insurance for a period of not less
than twelve (12) months.
5.2.3 Comprehensive General Liability Insurance on an
occurrence basis in an amount of not less than $5,000,000.00, combined
single limit, naming Property Manager as an additional insured.
5.2.4 Such Boiler and Machinery Insurance, as Owner may desire.
SECTION 5.3 Waiver of Subrogation. Owner hereby releases Property
Manager, its agents, contractors and employees, from any and all liability and
responsibility to Owner or anyone claiming by, through or under Owner by way of
subrogation or otherwise, for any loss covered by the Owner's property
insurance, REGARDLESS OF THE FAULT OR NEGLIGENCE OF PROPERTY MANAGER OR OF ITS
AGENTS, CONTRACTORS OR EMPLOYEES.
ARTICLE 6
INDEMNIFICATION
SECTION 6.1 Indemnification. Owner agrees to hold Property Manager
harmless from and to defend Property Manager against all costs, claims,
disputes, litigation and judgments arising from (i) any incorrect information
supplied by Owner, unless such information or representation was made as a
result of information provided Owner by Property Manager, or (ii) any material
fact known by Owner concerning a Property which Owner fails to disclose to
Property Manager. Property Manager agrees to hold Owner and Owner's agents
harmless from all costs, claims, disputes, litigation or judgments arising from
(i) any incorrect information or material representation made by Property
Manager unless such information or representation was made as a result of
information provided Property Manager by Owner, or (ii) any material fact known
by
<PAGE> 10
Property Manager concerning a Property which Property Manager fails to disclose
to Owner. Both parties hereto hereby agree to indemnify, defend and hold the
other harmless from any and all claims, demands, causes of action, losses,
damages, fines, penalties, liabilities, costs and expenses, including attorneys'
fees and court costs, sustained and incurred by or asserted against the other
party by reason of or arising out of either party's breach of or failure to
properly perform the duties and obligations required by this Agreement to be
performed by it, subject, however to Section 5.3 above. Owner further agrees to
release and save Property Manager harmless from all damage suits in connection
with the management of the Property and from liability for injuries suffered by
any employee of Owner or other person whomsoever WHETHER SUCH DAMAGE SUITS OR
LIABILITY ARISES OUT OF THE SOLE OR JOINT NEGLIGENCE OF PROPERTY MANAGER OR ITS
AGENTS, CONTRACTORS OR EMPLOYEES, but not with respect to any damage suits or
liability resulting in whole or in part from the gross negligence, fraud or
willful misconduct of Property Manager.
ARTICLE 7
DEFAULT AND TERMINATION
SECTION 7.1 Default and Termination - For Cause. If either party
shall default in the performance of any of its obligations hereunder, and such
default shall continue for fifteen (15) days after written notice from the other
party designating such default, or either party shall make any assignment for
the benefit of creditors or there shall be filed by or against either party any
petition for adjudication as a bankrupt or for reorganization, or an
arrangement, or for any relief under other debtor relief laws, the other party
may terminate this Agreement by written notice at any time thereafter while such
default or other events shall be continuing and thereupon this Agreement shall
forthwith terminate. If termination shall occur through default of Owner,
Property Manager as its sole and exclusive remedy, shall be paid, as
compensation, its fees and reimbursable expenses hereunder accrued through the
date of such termination. Termination of this Agreement because of Owner's
default shall release Property Manager from liability for failure to perform any
of the duties or obligations of Property Manager as expressed herein and
required to be performed after such termination except for the duties and
obligations to deliver to Owner all funds in the Property Account, all records
and documents relating to the Properties and all other property of Owner and any
other obligation or duty (including, without limitation, those set out in
Section 7.3) which this Agreement provides is to be performed after termination.
SECTION 7.2 Termination - Without Cause. Notwithstanding anything
contained in Section 7.1, this Agreement shall terminate without liability to
the terminating party for or on account of such termination.
(a) At the election of Owner on the date that is thirty (30)
days after Owner provides written notice of termination to Property
Manager; or
(b) At the election of Property Manager, on the date that is
sixty (60) days after Property Manager provides written notice of
termination to Owner; or
(c) As to a particular Property only, upon the sale,
assignment, transfer or other disposition, whether by voluntary or
involuntary transfer, or the substantial condemnation of such Property,
upon thirty (30) days prior written notice; or.
(d) On the date that Camden Subsidiary Inc. or another
wholly-owned subsidiary of Camden Property Trust ceases to be a member
of Owner.
Except as provided in subsection (c), if this Agreement is terminated pursuant
to this Section 7.2, such termination shall be effective as to all Properties
and this Agreement shall terminate in its entirety. If this Agreement is
terminated with respect to only a particular Property pursuant to subsection
(c), it shall continue in full force and effect with respect to all other
Properties. Upon termination pursuant to Section 7.2, Property Manager shall be
paid its fees and reimbursable expenses hereunder accrued through the date of
such
<PAGE> 11
termination within ten (10) days thereafter (subject, however, to offset for any
amounts owed by Property Manager to Owner).
SECTION 7.3 Duties Upon Termination. Upon any termination, Property
Manager shall forthwith (a) surrender and deliver up to Owner the Properties (or
applicable Property pursuant to Section 7.2(c)) and all rents and income of the
Properties and other monies of Owner on hand and in the Property Account, (b)
deliver to Owner as received any monies due Owner under this Agreement but
received after such termination, (c) deliver to Owner all leases, receipts of
deposits, materials and supplies, keys and documents, and such other
accountings, papers and records pertaining to such Property or this Agreement,
(d) assign such existing contracts relating to the operations and maintenance of
the Property as Owner shall require, provided Owner shall agree to assume and
indemnify Property Manager for all liability thereunder occurring after the
termination of this Agreement; and (e) vacate any occupied space and cause all
spaces occupied by employees or affiliates of Property Manager at or below
standard rental rates to be vacated. Within thirty (30) days after such
termination, Property Manager shall deliver to Owner the written report required
by Section 3.12 for any period not covered by such a report at time of
termination, and within thirty (30) days after any such termination, Property
Manager shall deliver to Owner as required by Section 3.12 the profit and loss
statement for the calendar year or portion thereof ending on the day of
termination and the balance sheet of each Property as of the date of
termination. No termination of this Agreement shall release either party from
any obligations that, by their express terms, continue beyond the term or
termination of this Agreement, including, without limitation, indemnity
obligations.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Entire Agreement. This Agreement, together with any
agreements executed in connection herewith, constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings of the
parties in connection therewith. No covenant, representation or condition not
expressed in this Agreement or such other agreements, if any, shall affect, or
be effective to interpret, change or restrict the express provisions of this
Agreement.
SECTION 8.2 Heading. The article and section headings contained
herein are for convenience of reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement.
SECTION 8.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY ITS TERMS AND THE LAWS OF THE STATE OF NEVADA, AND THE PARTIES
HERETO MAY COMMENCE LITIGATION IN ANY COURT SITUATED IN THAT JURISDICTION.
SECTION 8.4 Attorney's Fees. In the event of any dispute arising out
of or concerning the terms hereof, the prevailing party in such dispute shall be
entitled to recover its reasonable attorney's fees, court costs and expenses,
whether at the trial or appellate level or otherwise.
SECTION 8.5 Third Party Beneficiaries. Any provision herein to the
contrary notwithstanding, it is agreed that none of the provisions of this
Agreement shall be for the benefit of or enforceable by any party other than the
parties to this Agreement.
SECTION 8.6 Assignment. Property Manager shall not assign any of its
rights or obligations under this Agreement without the prior written consent of
Owner; provided, however, that Property Manager may assign it rights duties and
obligations hereunder to an affiliate of Property Manager engaged in a similar
business as Property Manager provided written notice thereof is given to Owner
concurrently with such assignment. Subject to the immediately preceding
sentence, this Agreement and all of its terms and provisions shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns.
<PAGE> 12
SECTION 8.7 Notices. All notices, approvals and other communications
required or permitted to be delivered hereunder must be in writing and may be
sent by a recognized private courier company, by United States mail, registered
or certified, return receipt requested, postage prepaid, or by personal delivery
or by facsimile provided that the sending facsimile machine generates a
confirmation of receipt, and must be delivered or addressed to Owner or Property
Manager, as the case may be, at the following addresses:
If to Owner: Sierra-Nevada Multifamily Investments, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attn: Richard J. Campo
Telecopy: 713.621.7374
With Copy to: TMT-Nevada, LLC
c/o Schroder Real Estate Associates
437 Madison Avenue
New York, New York 10022
Attn: Norman L. Pack
Telecopy: 212.644.2790
If to Property Manager: Camden Development, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attn: Richard J. Campo
Telecopy: 713.621.7374
Either party may change its address by notice to the other party. Such notices,
approvals and other communications shall be deemed delivered to the respective
party upon receipt or refusal to accept delivery (such refusal being evidenced
by the U.S. Postal Services return receipt or similar advice from the courier
company) or, if sent by facsimile, upon receipt. Any such notice, approval or
other communication shall also be deemed to be delivered to the addressee if (i)
personal delivery is attempted at the addressee's specified address on a
business day between the hours of 9:00 a.m. and 5:00 p.m., Houston Texas time,
(ii) no one is present at such address to accept the delivery and (iii) it is
left in a prominent place (e.g., on a receptionist's desk or taped to a front
door).
SECTION 8.8 Severability. If any provision of this Agreement is
declared or found to be illegal, unenforceable or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
SECTION 8.9 Performance. Time is of the essence in the performance
of all duties, covenants and obligations hereunder.
SECTION 8.10 Exhibits. All Exhibits to this Agreement which are
attached hereto are incorporated herein by reference.
SECTION 8.11 Relationship of Owner and Property Manager. Property
Manager is an independent contractor of Owner. This Agreement shall not be
construed as to create any type of partnership or other relationship between
Owner and Property Manager.
<PAGE> 13
SECTION 8.12 Signs. Property Manager, at Property Manager's expense,
may display dignified, attractive and appropriate signs in and upon the Property
announcing that it is under Property Manager's management; provided that
Property Manager must first obtain Owner's approval of all such signs, such
approval not to be unreasonably withheld, conditioned or delayed.
SECTION 8.13 Other Endeavors. Owner expressly acknowledges and agrees
that Property Manager and/or certain of its affiliates, and each of their
directors, officers, employees, agents or representatives (collectively
"Property Manager Parties") are currently or may in the future be engaged in the
business of managing properties similar to the Properties. Property Manager and
any Property Manager Party may have business interests and shall be entitled to
engage in business activities in addition to those relating to the management of
the Properties provided that Property Manager shall not enter into any
management agreement for Properties of a similar nature as the Properties which
are in direct competition with the Properties except as expressly approved by
Owner in writing.
SECTION 8.14 Equal Opportunity. The Property Manager is an equal
opportunity non-discriminatory employer. The Property Manager and owner each
mutually agree that there shall be no discrimination against or segregation of
any person or group of persons on account of race, color, religion, creed, sex,
or national origin in leasing, transferring, use, servicing, maintenance,
repair, occupancy, tenure or enjoyment of any Property, no shall owner or
Property Manager permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of Residents.
SECTION 8.15 EFFECT. This Agreement is a "stand alone " agreement and
does not in any way or manner affect, alter, amend or modify the terms of the
Other Agreement and Owner's and Property Manager's rights, duties, liabilities
or obligations thereunder
EXECUTED as of the date and year first above written.
OWNER:
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
BY:/s/ G. Steven Dawson
------------------------------------------
Name: G. Steven Dawson
Title: Sr. Vice President and Chief Financial
Officer
PROPERTY MANAGER:
CAMDEN DEVELOPMENT, INC.
BY:/s/ G. Steven Dawson
------------------------------------------
Name: G. Steven Dawson
Title: Sr. Vice President and Chief Financial
Officer
<PAGE> 1
Exhibit 99.3
RESIDENTIAL PROPERTY MANAGEMENT AND EXCLUSIVE LEASING AGREEMENT
BY AND BETWEEN
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
AND
CAMDEN DEVELOPMENT, INC.
<PAGE> 2
RESIDENTIAL PROPERTY MANAGEMENT AND
EXCLUSIVE LEASING AGREEMENT
THIS RESIDENTIAL PROPERTY MANAGEMENT AND EXCLUSIVE LEASING AGREEMENT
(this "Agreement") is made as of June 29, 1998 by and between SIERRA-NEVADA
MULTIFAMILY INVESTMENTS, LLC (herein referred to as "Owner") and CAMDEN
DEVELOPMENT, INC. (herein referred to as "Property Manager").
R-E-C-I-T-A-L-S
WHEREAS, Owner is the owner of the multifamily properties located in
the State of Nevada, the name, address and location of each being more
particularly set forth on Exhibit "A" attached hereto and incorporated herein by
reference (such multifamily properties being herein referred to collectively as
the "Properties" and individually and generically as a "Property");
WHEREAS, Property Manager is engaged in the business of managing,
operating, leasing and maintaining commercial real estate properties such as the
Properties;
WHEREAS, Owner desires that Property Manager undertake and perform all
management and maintenance operations of the Property, including all appropriate
marketing, leasing, maintenance and servicing duties, and that Property Manager
act as an independent contractor in the performance of such duties on and
subject to the terms and conditions set forth in this Agreement.
WHEREAS, Property Manager and Owner have concurrently herewith entered
into a separate but similar Residential Property Management Agreement (the
"Other Agreement") pertaining to Property Manager's management of the same
Properties as are covered by this Agreement and the parties wish to enter into
this Agreement to provide for the payment by Owner to Property Manager of an
additional 3.50% management fee.
W-I-T-N-E-S-S-E-T-H
NOW, THEREFORE, in consideration of the premises and of the mutual and
dependent covenants and agreements herein contained, and other good and valuable
considerations, the receipt and sufficiency of which being acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the following
terms shall have the meanings set forth opposite such terms, respectively:
"Capital Budget" means, with respect to each Property, the annual
capital budget for the expenditures for major repairs, renovations and/or
capital improvements in, on or about such Property, detailing the timing of such
matters and the estimated cost.
"Legal Requirements" means all statutes, laws, orders, codes,
regulations and requirements affecting the management, leasing, use,
construction, repair or reconstruction of a Property by any federal, state or
local governmental authority having jurisdiction as well as the orders of the
fire marshall, board of fire underwriters and similar bodies.
<PAGE> 3
"Monthly Gross Collections" means, with respect to any Property, the
amount of all cash receipts from such Property for each month during the term of
this Agreement and shall include (a) rentals collected pursuant to all
residential, carport, garage, storage and other leases for such month (or
partial month) in effect during the term of this Agreement, (b) security, pet
and other deposits forfeited during the term of this Agreement, (c) proceeds
from rental interruption insurance, (d) late charges or fees, (e) application
and processing fees and forfeited application deposits, (f) proceeds from the
rental of washers and dryers, (g) proceeds from vending machines or other
concessions or the rental paid to Owner by the supplier of such vending machines
or other concessions, (h) gross revenues collected for utilities provided and
billed to tenants of the Properties (hereinafter "Residents") which may include,
without limitation, water, telephone (inclusive of local, long distance and
internet services), electricity, gas and cable TV, (i) any fees charged to any
Resident in connection with any redecoration of any unit in a Property or other
Resident improvements, and (j) other income which is directly related to
management of the Properties, provided, however, it shall not include (I)
Owner's capital contributions or working capital advances, nor any interest
thereon, (II) the proceeds of any financing or voluntary conversion, sale,
exchange, pledging or other disposition or encumbrance of all or any part of the
Property, (III) casualty insurance proceeds (other than from loss of rents),
(IV) condemnation awards, (V) rental deposits or security and pet deposits
received from Residents or other deposits received from Residents or applicants
(other than forfeited deposits) (VI) abatement or reduction of taxes, (VII)
discounts and dividends on insurance policies, or (VIII) trade discounts and/or
rebates received in connection with the operation and maintenance of the
Properties and/or purchase of personal property.
"Operating Plan" means, with respect to each Property, the overall
annual plan for the management and leasing of such Property approved by Owner
and consisting of (i) the annual operating budget for such Property which sets
forth the detail and summary of anticipated receipts and costs to be incurred
for the management, administration and maintenance for the upcoming fiscal year
for such Property; (ii) the annual capital budget for expenditures for major
repairs, renovations and/or capital improvements in, on or about such Property,
detailing the timing of such matters and their estimated cost; (iii) the leasing
plan and guidelines, (iv) the Standard Lease Form, and (v) the Rules and
Regulations.
"Property" or "Properties" shall have the meaning set forth in the
recitals above and any other improvements, amenities and appurtenances
associated therewith.
"Property Account" shall mean the bank account established by the
Property Manager for the Properties in accordance with the provisions of Section
3.9 hereof.
"Rules and Regulations"shall mean the rules and regulations intended to
govern the day-to-day activities of the Residents of the Properties in
accordance with the policies and procedures manual of the Property Manager.
"Standard Lease Forms" means the forms approved for use for each
Property by Owner from time to time. Until a different form of lease is approved
by Owner, the Standard Lease Forms to be used by Property Manager for each
Property shall be the form of that included in the Operating Plan.
ARTICLE 2
APPOINTMENT OF PROPERTY MANAGER/TERM
SECTION 2.1 Appointment of Property Manager. Subject to the terms and
conditions as hereinafter provided, Owner hereby appoints Property Manager as
the sole and exclusive management and leasing agent for the Properties for the
term of this Agreement. Property Manager hereby accepts such appointments and
shall use diligent good faith efforts for the management and leasing of the
Properties in accordance with the terms of this Agreement and in accordance with
the Operating Plan.
SECTION 2.2 Term. This initial term of this Agreement shall commence
upon the date hereof and shall continue until December 31st of the calendar year
in which this Agreement is executed. This
<PAGE> 4
Agreement shall automatically renew annually thereafter unless (a) either party
provides written notice to the other party of such party's intent to terminate
this Agreement at least ninety (90) days prior to the expiration of the initial
term or any renewal term, or (b) this Agreement has been terminated in
accordance with other terms or conditions herein contained.
ARTICLE 3
DUTIES OF PROPERTY MANAGER
SECTION 3.1 Property Manager's General Duties. In managing and
leasing the Properties, Property Manager covenants to exercise prudence and
diligence in protecting the property rights and investment of Owner. Property
Manager's duties shall include, but shall not necessarily be limited to, the
specific duties listed below in this ARTICLE 3.
SECTION 3.2 Preparation of Annual Operating Plan. The Owner has
approved the Operating Plan for the Properties for the partial calendar year
ending December 31, 1998. No later than November 15th of each calendar year,
Property Manager shall prepare and deliver to Owner the Operating Plan for the
Properties for the following year for review, comment and approval by Owner.
Following receipt of the Operating Plan, Owner shall respond promptly,
indicating its approval or changes to be made in all or any of the plans
incorporated into the Operating Plan. If Owner fails to disapprove or provide
written comments to the Operating Plan within twenty (20) days after its
submission by Property Manager, the Operating Plan shall be deemed approved by
Owner in all respects. Property Manager shall adopt and incorporate any changes
required by Owner into the plan and forward copies of the final Operating Plan
to Owner within twenty (20) days after receipt of Owner's comments. The
Operating Plan shall constitute a standard to which Property Manager shall
adhere in the operation of each of the Properties. Property Manager shall not
expend funds in any calendar year in excess of the budgeted line item amounts in
the Operating Plan without Owner's prior written approval; provided that
notwithstanding the foregoing, with respect to each Property and without the
consent of the Owner, Property Manager shall have the right, in its reasonable
discretion, (i) to expend up to five percent (5%) more than the amount budgeted
for the aggregate operating expense categories (exclusive of capital expenditure
or capital items) for such Property for a fiscal year, (ii) to expend up to ten
percent (10%) more than the amount budgeted for a capital expenditure budget
line item for such Property for a fiscal year, and (iii) to expend up to $10,000
on any single unbudgeted operating expense including, without limitation, the
purchase or acquisition of any property or the execution of a contract
obligating the Property Manager in relation to any Property for such amount, not
to exceed a maximum of $25,000 in the aggregate for each Property for any fiscal
year.
SECTION 3.3 Leasing of Properties. Property Manager shall use
diligent, good faith efforts to lease the Properties as expeditiously as
possible, and to keep the Properties leased to suitable tenants pursuant to the
Operating Plan. All inquiries for any lease(s) or renewals(s) for the leasing of
a Property shall be referred to Property Manager and all negotiations connected
therewith shall be conducted by or under the direction of Property Manager
subject to the terms of this Agreement and the leasing guidelines included in
the Operating Plan. Property Manager may make non-material changes to the
Standard Lease Form without Owner's approval. Property Manager is authorized to
execute, deliver and renew leases on behalf of Owner.
SECTION 3.4 Employment of Personnel. On the basis of the Operating
Plan, Property Manager shall provide, investigate, hire, train, pay (subject to
reimbursement as provided in Section 4.2), supervise and discharge the personnel
necessary to be employed in order to manage and lease the Properties. Such
personnel shall in every instance be deemed employees of Property Manager and
not of Owner. Subject to reimbursement as provided in Section 4.2 below,
Property Manager shall have full and exclusive responsibility and liability for
withholding and payment of all federal, state and local payroll taxes and for
contributions for unemployment insurance, and other benefits imposed or assessed
under any provision of law or by regulation, and which are measured by salaries,
wages or other remuneration paid or payable by Property Manager to its employees
engaged in any work in connection with this Agreement or indicated herein.
Property Manager shall execute and file all returns and other instruments
required by any federal, state or local law or regulation
<PAGE> 5
with respect to such salaries, wages or other remuneration. The Property Manager
shall carry workers' compensation and employer's liability insurance at limits
no less than the statutory requirements where required to do so by law. The
Property Manager shall comply with all federal, state and local laws and
regulations applicable to any employees, including without limitation, minimum
wage laws. The Property Manager shall provide a fidelity bond, at Owner's
expense, for its employees in an amount equal to at least three times the
Monthly Gross Collections. Such bond or insurance may be on a blanket form
covering the employees and all other personnel or employees of the Property
Manager.
SECTION 3.5 Service Contracts. On the basis of the Operating Plan,
Property Manager shall execute in the applicable Property's name and on behalf
of Owner, contracts for water, electricity, gas, fuel, oil, landscape
maintenance, security services, pool maintenance, cleaning, apartment locator
services, washer and dryer rental, copier rental, cable TV, sign service,
vending, telephone, vermin extermination, trash removal and other necessary or
appropriate services. Any of the foregoing contracts which are entered into in
arms length transactions on the basis of the Operating Plan at then current
market rates and on competitive terms and which are cancelable by Owner, or by
Property Manager on behalf of Owner, on thirty (30) days written notice without
any termination fee or penalty shall not require Owner's prior approval.
Property Manager shall, on behalf of the Owner, place orders for such equipment,
tools, appliances, materials and supplies as are necessary to properly manage
and lease the Properties. Property Manager shall include a provision in all such
contracts requiring that the contractor carry workmen's compensation insurance
in accordance with the laws of the state in which the Properties are located and
employer's liability insurance applicable to and covering all persons engaged in
the performance of work hereunder, and Property Manager shall require that any
such contractor furnish Property Manager with certificates showing such
insurance to be in force.
SECTION 3.6 Maintenance and Repair of Property. Property Manager
shall, subject to the parameters of the Operating Budget and Section 3.2 hereof,
maintain the buildings, appurtenances and grounds of each of the Properties in
substantial compliance with all Legal Requirements and in substantial accordance
with standards prescribed by Owner, including, without limitation thereof,
interior and exterior cleaning, painting and decorating, plumbing, carpentry,
and such other normal maintenance and repair work as may be desirable. Property
Manager may make, outside of the Operating Budget, emergency repairs necessary
for the preservation and safety of a Property or the avoidance or the suspension
of any service to a Property or the protecting of life or property from serious
injury or damage provided that Property Manager confers promptly with Owner
regarding every such expenditure and furnishes a complete written report as soon
as possible.
SECTION 3.7 Collection of Monies. On behalf of Owner, Property
Manager shall collect all rent and other charges due from residents, applicants
and others.
SECTION 3.8 Enforcement of Collections. On behalf of Owner, Property
Manager shall request, demand, collect, receive and provide receipts for all
rental and other income of the Properties and, whenever it appears appropriate
to do so, shall institute legal proceedings for the collection thereof and the
dispossession and/or termination of a Resident's rights of possession or a
contracting party's contractual agreement.
SECTION 3.9 Property Account. Property Manager , on behalf of Owner,
shall promptly deposit all Monthly Gross Collections from each Property in a
single interest-bearing bank account in Owner's name at a federally-insured
banking institution (such account hereinafter referred to as the "Property
Account") in a manner to indicate the custodial nature thereof, such account to
be the same account as referenced in the Other Agreement as the "Property
Account". The funds in the Property Account shall not be commingled with any
funds of Property Manager. The Property Account shall be used to pay for all
obligations and expenditures necessarily incurred for and on account of the
Owner in the management and operation of the Property in accordance with the
Operating Plan and Section 3.2, including without limitation, insurance
premiums, taxes, supplies, repairs, maintenance, mortgage payments, if any,
improvements and such other expenses and obligations as have been provided for
in this Agreement or the Operating Plan. All disbursements of funds shall be
substantiated by appropriate records and accounting procedures. Owner shall be
responsible for providing funds or causing funds to be provided necessary for
the Property Account to meet,
<PAGE> 6
on a timely basis, the cash requirements for the proper operation of the
Properties. Property Manager, from time to time as directed by Owner, shall (i)
remit to Owner all cash in the Property Account and (ii) deliver to Owner true
and correct copies of all records relating to the Property Account (all of which
records are acknowledged to be Owner's property). Property Manager shall not be
obligated to make any advance to or for the account of Owner or to pay any sums,
except out of funds held in any account maintained under this Section 3.9, nor
shall Property Manager be obligated to incur any liability or obligation for the
account of Owner without assurance that the necessary funds for the discharge
thereof will be provided.
SECTION 3.10 Property Manager Disbursements. Property Manager shall
pay the following items to the extent of Monthly Gross Collections collected
from the Properties: (a) all expenses incurred through operating, renting,
servicing, maintaining or repairing the Properties, including, without
limitation, expenses for all services rendered by professionals, such as
attorneys, accountants, engineers, architects, collection agents and tax
advisors, and such other expenses as may be authorized by Owner, (b) provided
that Owner provides Property Manager with all necessary or appropriate
information and documents, all sums due to lenders on loans secured by or
otherwise affecting the Properties, including amounts due for interest,
amortization of principal and allocation to reserves or escrow funds; and (c)
all real and personal property taxes and other taxes or assessments levied and
assessed against the Properties. If at any time the funds in the Property
Account are sufficient to pay all the expenses which Property Manager is
required or permitted to pay pursuant to this Agreement, Property Manager shall
give Owner notice of the need for additional funds and, in the event that Owner
fails to furnish sufficient funds to pay for the foregoing: (i) Property Manager
shall apply the funds available to satisfy outstanding liabilities, costs and
expenses according to such priority as Owner directs; (ii) Property Manager
shall have no liability whatsoever for any consequences arising from such
failure by Owner; and (iii) Owner hereby indemnifies Property Manager and agrees
to save Property Manager harmless from any and all claims or actions by third
parties and all liability, cost and expense arising from failure to make any
expenditures or from inability to draw checks or from the failure or refusal of
any entity upon which a check is drawn to honor same by reason of the failure of
Owner to provide sufficient funds in response to such notice.
SECTION 3.11 Records. Property Manager shall maintain at its principal
office a system of office records, books and accounts relating to each Property.
Owner and other parties designated by the Owner shall have at all reasonable
times during Property Manager's normal business hours, upon prior notice, access
to such records, accounts and books and to all vouchers, files and all other
materials pertaining to the Properties and this Agreement.
SECTION 3.12 Reporting. Not later than fifteen (15) days after the end
of each month, Property Manager shall deliver to Owner the reports required by
Section 6.3(c) of the Amended and Restated Limited Liability Company Agreement
of the Owner, including, without limitation, the following: (1) an operating
statement showing variance from the Operating Plan for each Property, (2) with
respect to each Property, an operating statement, a budget variance analysis
with explanations, a capital expenditure schedule, an occupancy report and an
analysis of marketing and leasing activities, (3) the reports required by any
lenders with respect to the Properties, and (4) such other reports that the
Owner or any member of Owner may reasonably request.
SECTION 3.13 Returns Required by Law. Property Manager shall execute
and file punctually when due all forms, reports and returns required by law
relating to the employment of personnel and to the management or operation of
the Properties.
SECTION 3.14 Compliance with Legal Requirements. Property Manager
shall take such actions as may be necessary to substantially comply with any and
all Legal Requirements, subject to the limitations contained in this Section.
Property Manager, however, shall not be required to take any such action as long
as Owner is contesting, or has affirmed its intention to contest and promptly
institutes proceedings contesting any such order or requirement, except that, if
failure to comply promptly with any such order or requirement would or might
expose Owner, Property Manager or any of Property Manager's employees or agents
to
<PAGE> 7
criminal liability, Property Manager shall cause the same to be complied with
without first obtaining Owner's approval. Property Manager shall promptly, and
in no event later than forty-eight (48) hours from the time of their receipt,
forward to Owner copies of all such orders and notices of Legal Requirements.
SECTION 3.15 Services to Residents. In connection with its management
and leasing of the Properties, Manager shall provide or arrange for supplying to
the Residents of the Properties (i) the utilities and other services stipulated
in the leases, (ii) such other services as Owner may approve or specify in
writing, and (iii) the services contemplated and/or specifically prescribed in
the Operating Plan.
SECTION 3.16 Claims. Property Manager shall advise Owner promptly of
the service upon Property Manager of any summons, subpoena, citation, claim or
other legal process which either (i) is served or purports to be served on
Owner, or (ii) relates in any way to a Property (whether by leasing, operation,
management, maintenance or otherwise).
SECTION 3.17 Rules and Regulations. Property Manager shall adopt and
from time to time modify the Rules and Regulations which are intended to govern
the day-to-day activities of the residents of the Properties, such Rules and
Regulations to be in accordance with Property Manager's policies and procedures
manual, the current version of which Owner acknowledges has been received and
approved by Owner. Property Manager shall deliver to Owner on a monthly basis a
copy of any changes made during such month to the Rules and Regulations.
SECTION 3.18 Legal Counsel. For matters in the ordinary course of
business and within the Operating Budget, Property Manager shall employ, at
Owner's cost, legal counsel of Property Manager's choosing, for any of the
foregoing in order to protect and represent the Owner's interest therein. For
matters other than in the ordinary course of business, Property Manager shall
inform Owner thereof and shall conform to the Owner's desired course of action
and shall utilize the attorney selected by Owner.
SECTION 3.19 Notices to Owner. Property Manager shall notify the Owner
within forty-eight (48) hours of receipt (which notice shall include copies of
supporting documentation) of: (i) any notice of violation of any Legal
Requirements; any material defect in any Property; (ii) any fire or other
material casualty loss to any Property; (iii) any condemnation action, rezoning
or other governmental order or action (or any threat of any thereof) and (iv)
any tax assessment notices.
SECTION 3.20 Property Manager's Affiliates and Subsidiaries. In
performing work at the Properties, Property Manager may, from time to time, deal
with certain of its affiliated or subsidiary organizations as independent
contractors. The amounts payable to any such related entity shall not be greater
than would have been paid under an arms-length contract with a non-related
entity provided that such amounts shall be within the Operating Budget. Property
Manager shall include in its monthly report to Owner a list of all contracts
with such affiliated or subsidiary entities and amounts paid to such affiliates
or subsidiaries.
SECTION 3.21 Use and Maintenance of Premises. Property Manager agrees
not to knowingly permit the use of the Properties for any purpose which might
void any policy of insurance held by Owner or which might render any loss
thereunder uncollectible or serve as a defense to a claim brought thereunder, or
which would be in violation of any Legal Requirement including, but not limited
to, violation of any environmental laws, and Property Manager shall routinely
monitor each Property for such violations.
SECTION 3.22 Employee Discounts. To the extent set forth in the
Operating Plan, Property Manager may implement its internal policy to provide
monetary discounts for accommodations to its employees to live on-site.
SECTION 3.23 Licenses and Permits. The Property Manager shall obtain
and maintain in full force and effect, at Owner's cost, any and all licenses or
permits required for the Property Manager lawfully to perform fully its
obligations under this Agreement and shall obtain on Owner's behalf or assist
Owner in
<PAGE> 8
obtaining, any and all licenses or permits required for the maintenance,
operation and use of the Properties as contemplated herein.
SECTION 3.24 Year 2000 Compliance. Property Manager shall use its
commercially reasonable efforts to be Year 2000 Compliant. As used in this
section, the term "Year 2000 Compliant" shall mean that all software, hardware,
equipment, goods or systems utilized by or material to the physical operations,
business operations, or financial reporting of Property Manager (collectively
the "systems") will (i) properly perform date sensitive functions before, during
and after the year 2000; (ii) accurately perform leap year calculations; and
(iii) will not cause any other information technology to fail or generate errors
related to any such dates.
ARTICLE 4
COMPENSATION/REIMBURSEMENT TO PROPERTY MANAGER
SECTION 4.1 Monthly Management Fee. Owner agrees to pay to Property
Manager a fee (the "Monthly Management Fee") computed and payable monthly in
arrears in an amount equal to three and one-half percent (3.50%)of Monthly Gross
Collections from each Property. The Monthly Management Fee and the Construction
Management Fee (hereinafter defined) shall be the sole and exclusive
compensation for the Property Manager under this Agreement; provided that the
payment of such fee will not affect Owner's obligation to pay any fees due to
Property Manager under the Other Agreement.. The Monthly Management Fee for a
given month shall be paid to the Property Manager by the 20th day of the month
following the month in which it accrued provided that the Owner shall have
received a calculation of the Monthly Gross Collections by the 15th day of such
month. If the Monthly Gross Collections are not sufficient to pay all or any
portion of the Monthly Management Fee, Owner shall pay the Property Manager the
unpaid amount of such Monthly Management Fee within ten (10) days of receipt of
the Property Manager's statement therefor.
SECTION 4.2 Reimbursable Expenses. Everything done by Property
Manager under the provisions of ARTICLE 3, and all obligations or expenses
incurred hereunder shall be for the account of, on behalf of and at the expense
of Owner, and Property Manager shall be entitled to reimbursement for costs and
expenses incurred in connection therewith in accordance with Sections 3.4, 3.9
and 3.10 and subject to the Operating Plans or other written approval of Owner.
Additionally, the costs of gross salaries, including payroll taxes, insurance,
worker's compensation, and other employee benefits of the on-site or off-site
Property Manager and employees of Property Manager shall be reimbursed to
Property Manager at then current market rates. To the extent provided in the
Operating Plan, Property Manager shall be reimbursed for incentive compensation
paid to key management and leasing staff. Additionally, overhead costs for
security (both equipment and personnel) at each Property, training of employees
of Property Manager and landscaping expenses shall be reimbursed to Manager to
the extent provided in the Operating Plan. The above notwithstanding, Owner
shall not be obligated to reimburse Manager for any obligations or expenses
resulting from the gross negligence, fraud or willful misconduct of Property
Manager, nor for the failure of Property Manager to perform its material
obligations and duties under this Agreement. This section shall be inapplicable
to the extent that Property Manager receives 100% of its reimbursable expenses
under and pursuant to the Other Agreement.
SECTION 4.3 Construction Management Fee. In addition to the Property
Management Fee set forth in Section 4.1 above, if any improvements, repairs or
replacements are made to a Property from time to time during the term of this
Agreement which cost, in the aggregate, in excess of $20,000.00 (not annually
but as to such specific improvements, repairs or replacements), Owner shall pay
Property Manager a Construction Management Fee in connection therewith in an
amount equal to ten percent (10%) of the total cost of such improvements,
repairs or replacements within ten (10) days after such have been substantially
completed. Any contracts or agreements entered into by Property Manager for such
improvements, replacements or repairs shall be upon commercially reasonable
terms and at then current market rates and must be included within the Operating
Plan or otherwise approved in writing by Owner unless such improvements,
replacements or repairs
<PAGE> 9
are performed by Property Manager under the variances from the Operating Plan
allowed under Section 3.2 above.
ARTICLE 5
OWNER'S OBLIGATIONS
Owner hereby covenants and agrees as follows:
SECTION 5.1 Obligation to Fund. If, for any respective month, funds
in the Property Account are not sufficient to cover expenses specified in the
approved Operating Plan or to be disbursed pursuant to Section 3.10 or Section
4.1 or 4.2, or those which have been approved in writing by Owner, Owner shall,
within ten (10) days after receipt of written notice from Property Manager of
the amount of the estimated insufficiency, deposit in the applicable Project
Account an amount equal to such estimated shortfall. Manager shall have no
liability whatsoever to fund the deficiency.
SECTION 5.2 Insurance. Owner shall cause to be placed and kept in
force, at Owner's expense, for each of the Properties:
5.2.1 Such Fire and Extended Coverage Insurance for the
improvements constituting each of the Properties as Owner may desire.
5.2.2 Rental Interruption Insurance for a period of not less
than twelve (12) months.
5.2.3 Comprehensive General Liability Insurance on an
occurrence basis in an amount of not less than $5,000,000.00, combined
single limit, naming Property Manager as an additional insured.
5.2.4 Such Boiler and Machinery Insurance, as Owner may
desire.
SECTION 5.3 Waiver of Subrogation. Owner hereby releases Property
Manager, its agents, contractors and employees, from any and all liability and
responsibility to Owner or anyone claiming by, through or under Owner by way of
subrogation or otherwise, for any loss covered by the Owner's property
insurance, REGARDLESS OF THE FAULT OR NEGLIGENCE OF PROPERTY MANAGER OR OF ITS
AGENTS, CONTRACTORS OR EMPLOYEES.
ARTICLE 6
INDEMNIFICATION
SECTION 6.1 Indemnification. Owner agrees to hold Property Manager
harmless from and to defend Property Manager against all costs, claims,
disputes, litigation and judgments arising from (i) any incorrect information
supplied by Owner, unless such information or representation was made as a
result of information provided Owner by Property Manager, or (ii) any material
fact known by Owner concerning a Property which Owner fails to disclose to
Property Manager. Property Manager agrees to hold Owner and Owner's agents
harmless from all costs, claims, disputes, litigation or judgments arising from
(i) any incorrect information or material representation made by Property
Manager unless such information or representation was made as a result of
information provided Property Manager by Owner, or (ii) any material fact known
by Property Manager concerning a Property which Property Manager fails to
disclose to Owner. Both parties hereto hereby agree to indemnify, defend and
hold the other harmless from any and all claims, demands, causes of action,
losses, damages, fines, penalties, liabilities, costs and expenses, including
attorneys' fees and court costs, sustained and incurred by or asserted against
the other party by reason of or arising out of either party's breach of or
failure to properly perform the duties and obligations required by this
Agreement to be performed by it, subject, however to Section 5.3 above. Owner
further agrees to release and save Property Manager
<PAGE> 10
harmless from all damage suits in connection with the management of the Property
and from liability for injuries suffered by any employee of Owner or other
person whomsoever WHETHER SUCH DAMAGE SUITS OR LIABILITY ARISES OUT OF THE SOLE
OR JOINT NEGLIGENCE OF PROPERTY MANAGER OR ITS AGENTS, CONTRACTORS OR EMPLOYEES,
but not with respect to any damage suits or liability resulting in whole or in
part from the gross negligence, fraud or willful misconduct of Property Manager.
ARTICLE 7
DEFAULT AND TERMINATION
SECTION 7.1 Default and Termination - For Cause. If either party
shall default in the performance of any of its obligations hereunder, and such
default shall continue for fifteen (15) days after written notice from the other
party designating such default, or either party shall make any assignment for
the benefit of creditors or there shall be filed by or against either party any
petition for adjudication as a bankrupt or for reorganization, or an
arrangement, or for any relief under other debtor relief laws, the other party
may terminate this Agreement by written notice at any time thereafter while such
default or other events shall be continuing and thereupon this Agreement shall
forthwith terminate. If termination shall occur through default of Owner,
Property Manager as its sole and exclusive remedy, shall be paid, as
compensation, its fees and reimbursable expenses hereunder accrued through the
date of such termination. Termination of this Agreement because of Owner's
default shall release Property Manager from liability for failure to perform any
of the duties or obligations of Property Manager as expressed herein and
required to be performed after such termination except for the duties and
obligations to deliver to Owner all funds in the Property Account, all records
and documents relating to the Properties and all other property of Owner and any
other obligation or duty (including, without limitation, those set out in
Section 7.3) which this Agreement provides is to be performed after termination.
SECTION 7.2 Termination - Without Cause. Notwithstanding anything
contained in Section 7.1, this Agreement shall terminate without liability to
the terminating party for or on account of such termination.
(a) At the election of Owner on the date that is thirty (30)
days after Owner provides written notice of termination to Property
Manager; or
(b) At the election of Property Manager, on the date that is
sixty (60) days after Property Manager provides written notice of
termination to Owner; or
(c) As to a particular Property only, upon the sale,
assignment, transfer or other disposition, whether by voluntary or
involuntary transfer, or the substantial condemnation of such Property,
upon thirty (30) days prior written notice; or.
(d) On the date that Camden Subsidiary Inc. or another
wholly-owned subsidiary of Camden Property Trust ceases to be a member
of Owner.
Except as provided in subsection (c), if this Agreement is terminated pursuant
to this Section 7.2, such termination shall be effective as to all Properties
and this Agreement shall terminate in its entirety. If this Agreement is
terminated with respect to only a particular Property pursuant to subsection
(c), it shall continue in full force and effect with respect to all other
Properties. Upon termination pursuant to Section 7.2, Property Manager shall be
paid its fees and reimbursable expenses hereunder accrued through the date of
such termination within ten (10) days thereafter (subject, however, to offset
for any amounts owed by Property Manager to Owner).
SECTION 7.3 Duties Upon Termination. Upon any termination, Property
Manager shall forthwith (a) surrender and deliver up to Owner the Properties (or
applicable Property pursuant to Section 7.2(c)) and all rents and income of the
Properties and other monies of Owner on hand and in the Property
<PAGE> 11
Account, (b) deliver to Owner as received any monies due Owner under this
Agreement but received after such termination, (c) deliver to Owner all leases,
receipts of deposits, materials and supplies, keys and documents, and such other
accountings, papers and records pertaining to such Property or this Agreement,
(d) assign such existing contracts relating to the operations and maintenance of
the Property as Owner shall require, provided Owner shall agree to assume and
indemnify Property Manager for all liability thereunder occurring after the
termination of this Agreement; and (e) vacate any occupied space and cause all
spaces occupied by employees or affiliates of Property Manager at or below
standard rental rates to be vacated. Within thirty (30) days after such
termination, Property Manager shall deliver to Owner the written report required
by Section 3.12 for any period not covered by such a report at time of
termination, and within thirty (30) days after any such termination, Property
Manager shall deliver to Owner as required by Section 3.12 the profit and loss
statement for the calendar year or portion thereof ending on the day of
termination and the balance sheet of each Property as of the date of
termination. No termination of this Agreement shall release either party from
any obligations that, by their express terms, continue beyond the term or
termination of this Agreement, including, without limitation, indemnity
obligations.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Entire Agreement. This Agreement, together with any
agreements executed in connection herewith, constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings of the
parties in connection therewith. No covenant, representation or condition not
expressed in this Agreement or such other agreements, if any, shall affect, or
be effective to interpret, change or restrict the express provisions of this
Agreement.
SECTION 8.2 Heading. The article and section headings contained
herein are for convenience of reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement.
SECTION 8.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY ITS TERMS AND THE LAWS OF THE STATE OF NEVADA, AND THE PARTIES
HERETO MAY COMMENCE LITIGATION IN ANY COURT SITUATED IN THAT JURISDICTION.
SECTION 8.4 Attorney's Fees. In the event of any dispute arising out
of or concerning the terms hereof, the prevailing party in such dispute shall be
entitled to recover its reasonable attorney's fees, court costs and expenses,
whether at the trial or appellate level or otherwise.
SECTION 8.5 Third Party Beneficiaries. Any provision herein to the
contrary notwithstanding, it is agreed that none of the provisions of this
Agreement shall be for the benefit of or enforceable by any party other than the
parties to this Agreement.
SECTION 8.6 Assignment. Property Manager shall not assign any of its
rights or obligations under this Agreement without the prior written consent of
Owner; provided, however, that Property Manager may assign it rights duties and
obligations hereunder to an affiliate of Property Manager engaged in a similar
business as Property Manager provided written notice thereof is given to Owner
concurrently with such assignment. Subject to the immediately preceding
sentence, this Agreement and all of its terms and provisions shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns.
SECTION 8.7 Notices. All notices, approvals and other communications
required or permitted to be delivered hereunder must be in writing and may be
sent by a recognized private courier company, by United States mail, registered
or certified, return receipt requested, postage prepaid, or by personal delivery
or by facsimile provided that the sending facsimile machine generates a
confirmation of receipt, and must be delivered or addressed to Owner or Property
Manager, as the case may be, at the following addresses:
<PAGE> 12
If to Owner: Sierra-Nevada Multifamily Investments, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attn: Richard J. Campo
Telecopy: 713.621.7374
With Copy to: TMT-Nevada, LLC
c/o Schroder Real Estate Associates
437 Madison Avenue
New York, New York 10022
Attn: Norman L. Pack
Telecopy: 212.644.2790
If to Property Manager: Camden Development, Inc.
c/o Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Attn: Richard J. Campo
Telecopy: 713.621.7374
Either party may change its address by notice to the other party. Such notices,
approvals and other communications shall be deemed delivered to the respective
party upon receipt or refusal to accept delivery (such refusal being evidenced
by the U.S. Postal Services return receipt or similar advice from the courier
company) or, if sent by facsimile, upon receipt. Any such notice, approval or
other communication shall also be deemed to be delivered to the addressee if (i)
personal delivery is attempted at the addressee's specified address on a
business day between the hours of 9:00 a.m. and 5:00 p.m., Houston Texas time,
(ii) no one is present at such address to accept the delivery and (iii) it is
left in a prominent place (e.g., on a receptionist's desk or taped to a front
door).
SECTION 8.8 Severability. If any provision of this Agreement is
declared or found to be illegal, unenforceable or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
SECTION 8.9 Performance. Time is of the essence in the performance
of all duties, covenants and obligations hereunder.
SECTION 8.10 Exhibits. All Exhibits to this Agreement which are
attached hereto are incorporated herein by reference.
SECTION 8.11 Relationship of Owner and Property Manager. Property
Manager is an independent contractor of Owner. This Agreement shall not be
construed as to create any type of partnership or other relationship between
Owner and Property Manager.
SECTION 8.12 Signs. Property Manager, at Property Manager's expense,
may display dignified, attractive and appropriate signs in and upon the Property
announcing that it is under Property Manager's management; provided that
Property Manager must first obtain Owner's approval of all such signs, such
approval not to be unreasonably withheld, conditioned or delayed.
<PAGE> 13
SECTION 8.13 Other Endeavors. Owner expressly acknowledges and agrees
that Property Manager and/or certain of its affiliates, and each of their
directors, officers, employees, agents or representatives (collectively
"Property Manager Parties") are currently or may in the future be engaged in the
business of managing properties similar to the Properties. Property Manager and
any Property Manager Party may have business interests and shall be entitled to
engage in business activities in addition to those relating to the management of
the Properties provided that Property Manager shall not enter into any
management agreement for Properties of a similar nature as the Properties which
are in direct competition with the Properties except as expressly approved by
Owner in writing.
SECTION 8.14 Equal Opportunity. The Property Manager is an equal
opportunity non-discriminatory employer. The Property Manager and owner each
mutually agree that there shall be no discrimination against or segregation of
any person or group of persons on account of race, color, religion, creed, sex,
or national origin in leasing, transferring, use, servicing, maintenance,
repair, occupancy, tenure or enjoyment of any Property, no shall owner or
Property Manager permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of Residents.
SECTION 8.15 EFFECT. This Agreement is a "stand alone " agreement and
does not in any way or manner affect, alter, amend or modify the terms of the
Other Agreement and Owner's and Property Manager's rights, duties, liabilities
or obligations thereunder
EXECUTED as of the date and year first above written.
OWNER:
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
BY:/s/ G. Steven Dawson
-----------------------------------------------
Name: G. Steven Dawson
Title: Sr. Vice President and Chief Financial
Officer
PROPERTY MANAGER:
CAMDEN DEVELOPMENT, INC.
BY:/s/ G. Steven Dawson
-----------------------------------------------
Name: G. Steven Dawson
Title: Sr. Vice President and Chief Financial
Officer
<PAGE> 1
Exhibit 99.4
Berkshire Mortgage Finance
Harbor Plaza, 470 Atlantic Avenue
Boston, Massachusetts
June 26, 1998
Mr. G. Steven Dawson
Chief Financial Officer
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, TX 77027
RE: LAS VEGAS APARTMENT POOL
LAS VEGAS, NV
Dear Mr. Dawson:
Berkshire Mortgage Finance Limited Partnership ("BMFLP" or the
"Lender") hereby agrees to make 17 cross collateralized and cross defaulted
loans (the "Loan" or "Mortgage Loan") to Sierra Nevada Multifamily Investment,
LLC, a multiple asset mortgagor, for the projects (the "Project") referenced in
Section 2 hereof, subject to the terms and conditions that follow.
1. BORROWER. The Borrower shall be Sierra Nevada Multifamily Investment,
LLC, a Delaware Limited Liability Company. The following must be a Principal in
the Borrower owning an 80% interest: TMT-Nevada Investments LLC. The Borrower
shall be a multiple asset entity owning only the Projects referenced in Section
2 hereof, Oasis Landing, and Oasis Plaza.
2. LOAN AMOUNTS. The maximum mortgage amounts shall total $180,000,000 as
detailed below:
<TABLE>
<CAPTION>
Project Loan Amount Project Loan Amount
- ------- ----------- ------- -----------
<S> <C> <C> <C>
Oasis Bay $ 6,000,000 Oasis Crossing $ 3,280,000
Oasis Emerald $ 5,040,000 Oasis Gateway $ 20,240,000
Oasis Heritage $ 24,874,000 Oasis Island $ 4,720,000
Oasis Meadows $ 19,840,000 Oasis Palms $ 8,387,000
Oasis Pearl $ 3,760,000 Oasis Place $ 7,348,000
Oasis Ridge $ 13,920,000 Oasis Rose $ 9,671,000
Oasis Springs $ 13,040,000 Oasis Suites $ 10,400,000
Oasis View $ 7,000,000 Oasis Vinings $ 11,120,000
Oasis Vista $ 11,360,000
</TABLE>
The actual mortgage amounts shall be established by dividing the actual
annual debt service amount by the applicable mortgage constant (calculated to
four decimal points). The actual
<PAGE> 2
mortgage amount shall be rounded down to the nearest $1,000 increment, and shall
not exceed the maximum mortgage amount.
3. INTEREST RATE; AMORTIZATION AND LOAN TERM: This Commitment was approved
using 6.88% per annum as the maximum interest rate on the Loans for achieving
the above maximum mortgage amount. Today's mortgage rate would be 6.78%. Upon
satisfaction of the conditions set forth in this Commitment for the setting of
the interest rate on the Loans, the actual interest rate will be set on a date
between now and the closing date (the "Interest Rate Lock").
The interest rage on the loans will be calculated at the time of the
Interest Rate Lock by adding a Mortgage Spread of 133 basis points over the
Treasury yield as outlined below in paragraph 5. Unless otherwise agreed to in
writing in advance, before Borrower may request an Interest Rate Lock, all items
set forth in this Commitment as conditions to closing must have been delivered
to Lender and must be satisfactory to Lender in accordance with the requirements
of this Commitment.
Depending upon the market conditions at the time of Interest Rate Lock,
the interest rate may be different than the rate of interest used in approving
the Loan. In the event that the interest rate exceeds 6.88%, Lender reserves the
right to requalify the loan amounts.
The Interest Rate includes the Servicing Fee described in paragraph 15
herein. The Mortgage Loans shall be 10 year balloon mortgage loans which is
amortized on a level annuity basis based on a thirty (30) year amortization
period commencing on the first day of the second (2nd) month following the
closing of the Mortgage Loan (the "Closing"). On the maturity date of the
Mortgage Loans, the then-outstanding principal balance plus all accrued and
unpaid interest shall be due and payable.
In addition to these principal and interest payments, Borrower will be
required to make monthly deposits to escrows established with BMFLP for real
estate taxes, special assessments (if applicable), and insurance premiums. BMFLP
will determine the amounts of these monthly deposits and may adjust these
amounts from time to time in order to maintain adequate balances necessary for
payments as they become due.
4. SECURITY: The Mortgage Loans will be evidenced by non-recourse
mortgages or deed of trust notes (the "Mortgage Note" or "Note") which will be
secured by a mortgages or deeds of trust, assignment of rents and security
agreements (the "Mortgage") creating, among other things, first liens on the
Borrower's fee simple interest in the Projects referenced in Section 2 hereof.
5. FUNDING OF THE LOAN/INTEREST RATE LOCK-IN
A. FUNDING OF THE LOANS: The Loans shall be funded through an
issuance of Freddie Mac PC Gold mortgage backed securities,
in amounts equal to the Loan Amounts, and the PC Gold
securities shall be sold to a third party investor under
Freddie Mac's Structured Transaction program.
B. INTEREST RAGE LOCK-IN: The Loan Amounts have been determined
based on the Interest Rate stated in Section 3 hereof, which
rate shall be subject to change based upon market conditions
until the Interest Rage Lock-In as described herein has
<PAGE> 3
occurred. Upon BMFLP's determination in its sole discretion
that there exist no material impediments to closing the Loans
in accordance with this Commitment and the Freddie Mac
Structured Transaction program, BMFLP shall notify the
Borrower that the Borrower may lock the interest rate.
Following such notification, the Interest Rage Lock-In shall
take place on the date of the Borrower's choosing.
C. FREDDIE MAC PC GOLD FUNDING: Under PC Gold, the Interest
Rage shall be calculated as the total of: (1) the bond
equivalent yield of U.S. Treasury securities with remaining
term equivalent to the term of the Loans and (2) the
Mortgage Spread to be set at Interest Rage Lock-In. As of
the date of this Commitment, the Mortgage Spread in the
market is approximately 133 basis points, although the
Spread may change over time. The Mortgage Spread is
inclusive of servicing fee.
6. FEES AND CHARGES:
A. GOOD FAITH DEPOSIT. Simultaneously with Borrower's acceptance of
this Commitment, Borrower shall pay BMFLP $180,000 as a Good Faith
Deposit which shall not be refunded for any reason whatsoever. BMFLP
will apply the Good Faith Deposit towards the Rate Lock Deposit
described in paragraph 6B hereof.
B. FREDDIE MAC'S RATE LOCK DEPOSIT. No later than forty-eight (48)
hours prior to the issuance of an Interest Rate Lock by Freddie Mac,
Borrower shall deposit with BMFLP a Rate Lock Deposit Fee equal to one
and one-half percent (1.5%) of the Mortgage Loan amounts (the "Interest
Rate Lock Deposit"). The Rate Lock Deposit will be applied to the
Financing Fee at Closing, with the remainder of the Rate Lock Deposit
refunded following Freddie Mac's purchasing of the loans.
If Borrower accepts this Commitment in the manner provided in Part A
above, then Borrower shall have until July 2, 1998, to lock the
interest rate as described above in Paragraph 5 ("Rate Lock Period").
If Borrower accepts this Commitment but fails to lock the interest rate
as described in Paragraph 5, this Commitment shall be null and void and
Borrower shall pay to Freddie Mac upon demand, a non-delivery fee equal
to one-half percent (0.5%) of the maximum mortgage amounts.
C. APPLICATION FEE. Borrower has paid to BMFLP an Application Fee (the
"Application Fee") equal to $139,500. The Application Fee will be
considered to be fully earned by BMFLP upon issuance of this
Commitment.
D. FINANCING FEE. Simultaneously with Closing, Borrower shall pay BMFLP
a non-refundable Financing Fee in the amount of $540,000 which amount
is equal to 0.30% of the Loan Amounts (the "Financing Fee"). The
Financing Fee shall be included in the RATE Lock Deposit referenced in
Section 6B hereof. The Financing Fee shall be earned upon receipt and
shall not be refunded for any reason whatsoever.
E. LEGAL FEES. At Closing, Borrower shall pay BMFLP $85,000 to be used
to pay the legal fees and expenses charged by BMFLP's counsel in
connection with the negotiation and closing of the Mortgage Loan and
the delivery of the Mortgage Loan to Freddie Mac.
<PAGE> 4
F. FORM OF PAYMENT OF FEES. All fees payable under this Commitment
shall be paid in the form of cash, certified check, or by the wiring of
immediately available Federal funds.
G. MORTGAGE WAREHOUSING: The loan shall be funded at Closing utilizing
BMFLP's warehouse line of credit, which line of credit will be repaid
through the purchase of the loan. In connection with the funding of the
loan from BMFLP's warehouse line of credit, Applicant shall pay BMFLP
as additional interest (whether or not set forth in the Mortgage Note)(
the positive difference, if any, between the Interest Rate set forth
herein, and the Interim Rate (hereinafter defined), calculated on the
principal amount of the Loan from the date of funding to the date the
loan is purchased by Freddie ac for any day during such period that the
Interim Rate is the higher rate. The Interim Rate shall only offset
BMFLP's warehousing costs and shall not include a spread payable to
BMFLP over its costs. At Closing, BMFLP shall collect an amount equal
to the anticipated warehouse interest costs. The warehouse expense to
the Borrower shall not exceed thirty (30) days of positive difference
as calculated herein.
7. PREPAYMENT; PREPAYMENT FEES: Prepayment of Loans is permitted in
accordance with the prepayment provisions of the loan documents.
8. FUNDS AND ESCROWS: At the Closing, Borrower shall establish the
following funds and escrows. If these funds and escrows are in the form of cash
they shall be held in a custodial account in a bank selected by Lender.
A. REPAIR ESCROW. Repair Escrows shall be established in an amount
totaling $750,831.25 to ensure completion of the work to the Project
set forth on the Repair/Reserve Schedule attached hereto as Exhibit B.
Such work must be completed within 365 days after the Closing. BMFLP
shall hold the Repair Escrows pursuant to the Repair Escrow Agreements
to be executed at the Closing.
B. RESERVE FOR REPLACEMENT. At Closing, the Borrower shall not be
required to fund a replacement reserve, nor will monthly replacement
reserve deposits be required during the Loan term, except in the event
of the circumstances described in the Loan Documents.
9. LOAN DOCUMENTS: The Loans shall be evidenced and secured by such
documents ("Loan Documents") as BMFLP and/or Freddie Mac require. The Loan
Documents shall be delivered to BMFLP fully executed and in final form at the
Closing. All of the Loan Documents shall be executed by properly authorized
principals and/or officers of Borrower. All agreements, documents, guaranties
and similar instruments shall be issued or executed by parties and institutions
acceptable to BMFLP.
At Closing, Borrower must deliver current written opinions of counsel
(who must be licensed in the state in which the Project is located and must be
acceptable to BMFLP), in the form required by BMFLP. BMFLP and Freddie Mac may
require changes or modifications and must approve and accept any changes or
modifications made by Borrower or Borrower's representative to that form.
Borrower's counsel's opinion must cover any other matters BMFLP or Freddie Mac
may require.
At Closing, Borrower must execute and deliver to BMFLP a Certificate of
Borrower in the form required by BMFLP. BMFLP may require changes or
modifications and must approve and accept any changes or modifications to this
form.
<PAGE> 5
BMFLP's counsel will prepare the Mortgage Note, Mortgage, estoppel
certificate and any required escrow agreements, together with certain
assignments of the Loan Documents to Freddie Mac Borrower and Borrower's counsel
and agents are responsible for preparing or obtaining all other Loan Documents.
All Loan Documents Borrower and Borrower's counsel and agents are required to
prepare or obtain shall be provided to BMFLP and BMFLP's counsel for review and
approval prior to the Closing.
10. EXPENSES: Borrower agrees to promptly pay all expenses in connection
with the underwriting, negotiation, and making of the Mortgage Loans not later
than Closing. In the event that; (i) the Closing does not occur by the date set
forth in paragraph 12 of this Commitment; (ii) any default by Borrower occurs
under this Commitment; or (iii) the Mortgage Loan may not be delivered to
Freddie Mac and purchased by Freddie Mac prior to the date on which Freddie Mac
Commitment expires as the result of any failure of the Project or the Mortgage
Loan to meet BMFLP's requirements and/or those of Freddie Mac or Borrower
defaults under this Commitment, then Borrower shall pay to Freddie Mac a
non-delivery fee equal to two percent (2%) of the maximum mortgage amount,
Borrower also shall pay an amount equal to all fees and expenses, including
attorneys' fees incurred in connection with this Commitment, Freddie Mac
Commitment and the Mortgage Loan for which BMFLP has not been previously
reimbursed. Borrower agrees to pay such fees and expenses within five (5) days
of receipt of a statement from BMFLP describing such fees and expenses.
11. LATE PAYMENTS. In the event that any installment of principal and
interest under the Note is not paid by the fifth (5th) day of the month in which
such installment is due, a late charge in an amount equal to five percent (5%)
of such installment of principal and interest will be due and payable. In
addition, if any payment under the Note is not received within thirty (30) days
after the scheduled payment's due date, BMFLP may charge Default Interest (as
defined below) on that delinquent payment for the period beginning on the first
(1st) day of the delinquency to the date BMFLP receives that delinquent payment.
"Default Interest" shall mean interest at that rate of interest which is equal
to the lesser of; (i) the Interest Rate borne by the Note plus four percent
(4%); or (ii) the maximum interest rate provided by law.
12. CLOSING. Upon Borrower's compliance with all requirements of this
Commitment, BMFLP will schedule the Closing. After consulting with Borrower,
BMFLP will designate a place and time for the Closing. The Closing must occur on
not later than the fifth (5th) business day following Freddie Mac Interest Rate
Lock (the "Closing Deadline"). BMFLP may, in its sole discretion, extend the
Closing Deadline in the event that BMFLP determined that Borrower will be able
to comply with all requirements of this Commitment and Freddie Mac prior to the
expiration of that extension of the Closing Deadline and that the delivery of
the Mortgage Loan to Freddie Mac can occur prior to the expiration date of
Freddie Mac Commitment. Ia the event that the Closing does not occur by the
Closing Deadline, this Commitment shall expire and be of no force or effect, and
BMFLP shall retain all amounts previously paid by Borrower. Borrower
acknowledges that the failure or inability to deliver the Mortgage Loan to
Freddie Mac following Rate Lock as required by Freddie Mac Commitment will
result in Freddie Mac retaining the 1.5% Rate Lock Deposit, and Borrower shall
be required to pay on demand an additional 0.5% as a "pull out" fee and hedge
loss.
13. ASSIGNMENT OF COMMITMENT: This Commitment shall not be assignable or
assigned by Borrower to any other person or entity without the express written
consent of BMFLP and any
<PAGE> 6
attempted assignment of this Commitment shall automatically terminate this
Commitment. Upon such termination, BMFLP shall retain all amounts previously
received as liquidated damages.
BMFLP may assign this Commitment, the Mortgage Loans and all related
Loan Documents without Borrower's consent to Freddie Mac, or to an affiliate,
parent company or any subsidiary of BMFLP. BMFLP may make any other assignment
of this Commitment only with Borrower's consent, which consent shall not be
unreasonably withheld. If requested by BMFLP, Borrower agrees to execute and
deliver all documents necessary to effectuate such assignment.
14. FINANCIAL CONDITION OF BORROWER AND PROJECT: The financial condition of
the Borrower, the Borrower's General Partner and that of the Projects shall at
all times up to and including Closing, not experience material adverse change.
In the event of any bankruptcy (whether or not voluntary) or similar
proceedings, insolvency, or material adverse change in Borrower's condition or
those of the Projects, any guarantors, or parties affiliated with the foregoing
between the date of this Commitment and the date of Closing, BMFLP may at its
sole discretion declare this Commitment void, whether or not such proceedings or
circumstances shall be existing at the date of Closing.
15. MATERIAL ADVERSE CHANGE: Freddie Mac shall not be obligated to purchase
the Mortgages if there is any material adverse change in the Borrower's
financial position (or that of any Guarantor or Principal of the Borrower), the
Mortgage Premises, rental income, or any other features of the transaction from
that which existed on the date of Freddie Mac's receipt of Borrower's full
application package.
16. LOAN SERVICING. BMFLP or its assigns shall service the Loans pursuant
to contractual arrangements between BMFLP and Freddie Mac. In consideration of
that servicing, BMFLP will receive a Servicing Fee, payable monthly. This
Servicing Fee is included in the Interest Rage specified in paragraph 3 herein.
17. FREDDIE MAC PURCHASE AGREEMENT AND EXTENSION FEE PROVISION:
Notwithstanding anything in this Commitment to the contrary, the effectiveness
of this Commitment shall be at all times contingent on the issuance by Freddie
Mac of the Freddie Mac Purchase Agreement, the continued validity and
enforceability of the Freddie Mac Purchase Agreement, and on the Borrower's
compliance with the terms and conditions of this Commitment and the Freddie Mac
Purchase Agreement. Borrower agrees to take any and all actions within its
control and to cause any other appropriate parties to take any and all actions
necessary to satisfy all terms and conditions of the Freddie Mac Commitment and
to cause the Mortgage Loans to be purchased by Freddie Mac prior to the date on
which the Freddie Mac Purchase Agreement shall expire.
Freddie Mac may require that Borrower execute or obtain additional
documents or that revisions be made in the Loan Documents after the execution of
such Loan Documents. In such an event, notwithstanding any passage of time after
the Closing, Borrower agrees to execute such documents or revisions or
amendments to the Loan Documents as Freddie Mac may require and cause to be
provided to Freddie Mac any additional Loan Documents which Freddie Mac may
require, provided such further documents, revisions or amendments shall not
materially alter the terms of the Loan Documents or the obligations of the
Borrower hereunder.
<PAGE> 7
In the event of any conflict between the terms of this Commitment and
the terms and conditions of the Freddie Mac Purchase Agreement, the terms of the
Freddie Mac Purchase Agreement shall prevail.
BMFLP may, in its sole discretion, extend this Commitment on the
condition that Borrower provides to BMFLP with a current certified rent roll and
any necessary updates to, or additional information required by BMFLP or as
required by Freddie Mac. In the event that this Commitment expires and the
Freddie Mac Purchase Agreement has not been executed and so long as no default
by Borrower under this Commitment has occurred prior to that time, BMFLP shall
return to Borrower the Rate Lock Deposit less out of pocket costs and neither
Borrower nor BMFLP shall have any further rights or obligations under this
Commitment. In the event that there exists a default by Borrower under this
Commitment prior to the expiration of this Commitment as stated in this
paragraph, BMFLP shall retain as liquidated damages all amounts previously paid
to BMFLP.
In the event that Loan Closing has not taken place within thirty (30)
business days from the date of this commitment, this commitment shall be of no
further force or effect.
18. GUARANTORS. Freddie Mac has identified Camden Subsidiary, Inc. and TMT
Nevada LLC as Guarantors in this transaction. In Accordance with the Freddie
Mac's program, Guarantors are required to execute the Exculpation Rider to Note
and Security Instrument and Guaranty Agreement. Base recourse is not required;
therefore "zero" must be inserted in the Exculpation Rider and Guaranty.
19. CONFLICTING PROVISIONS: In the event of any conflict between the terms
hereof and the terms and conditions of the Loan Documents, the Loan Documents
executed at the time of Closing shall prevail.
20. COMPLETE AGREEMENT: This Commitment, together with the Exhibits
attached hereto, when executed by the parties hereto contains the complete and
entire understanding of the parties hereto and no changes will be recognized as
valid unless they are made in writing and similarly executed. No specific waiver
of any of the terms hereof shall be considered as a general waiver. The terms
and conditions of this Commitment s hall survive the Closing of the Mortgage
Loan.
21. SECONDARY FINANCING: Secondary financing with respect to the Project or
the imposition of junior liens on the Project shall be permitted only with the
prior written approval of BMFLP and Freddie Mac and only on such terms and
conditions as may be imposed by BMFLP and Freddie Mac in their sole discretion.
22. CORRESPONDENT/BROKERAGE: By acceptance of this Commitment, Borrower
agrees to pay any and all fees imposed or charged by all brokers hired by the
Borrower who brought about the issuance of this Commitment or the making of the
Mortgage Loan pursuant hereto, and agrees to indemnify and hold BMFLP harmless
from and against any and all claims, demands and liability for brokerage
commissions, assignment fees, finders fees or other compensation whatsoever
arising from this Commitment or Lender's making of the Mortgage Loan which may
be asserted against Lender by any person or entity. BMFLP hereby agrees to pay
any and all fees imposed or charged by all brokers contracted solely by BMFLP.
<PAGE> 8
23. ACCEPTANCE OF COMMITMENT: To accept this Commitment, please return to
BMFLP one copy hereof with your acceptance duly executed thereon, together with
the Good Faith Deposit set forth in paragraph 6(a) hereof. Unless the accepted
Commitment and the Good Faith Deposit are received by BMFLP on or before June
26, 1998, this Commitment shall automatically terminate and be null and void and
BMFLP shall have no further liability or obligation hereunder whatsoever.
24. SPECIAL AND GENERAL CONDITIONS; EFFECTIVENESS OF COMMITMENT: This
Commitment is conditioned upon and is made subject to the satisfaction of the
Special Conditions set forth in Exhibit A attached hereto and incorporated
herein by reference. This Commitment is further conditioned upon and made
subject to the Loan Documents incorporated herein by reference.
25. OCCUPANCY AND CHANGE IN FINANCIAL CONDITION CERTIFICATIONS: This
Commitment is conditioned upon BMFLP's receipt, review, and approval of June,
1998 rents rolls for each Project, certified by the Borrower, indicating
aggregate rental income of at least $2,590,000.
A rent schedule, meeting the requirements for Section 19.3(b) of the
Freddie Mac Guide and dated no more than fifteen (15) days prior to the
Origination Date, must be delivered to Freddie Mac with the final loan delivery
package.
Please execute both originals of this Commitment and return one (1)
original to BMFLP on or before June 26, 1998. We look forward to working with
you on this transaction.
Very truly yours,
BERKSHIRE MORTGAGE FINANCIAL
LIMITED PARTNERSHIP
By: /s/Jeff McVehil
-------------------------------
Jeff McVehil
Vice President
<PAGE> 9
ACCEPTANCE
The undersigned hereby accepts the foregoing Commitment and agrees; (i)
to perform or cause to be performed all of the obligations on the part of
Borrower contained therein; (ii) to be bound by all of the terms, provisions and
conditions thereof; and (iii) to cause the Closing of the Mortgage Loan to be
consummated. Berkshire Mortgage Finance Corporation may utilize the fact that it
is providing financing for the Project in marketing and promotional activities
undertaken by the Berkshire Mortgage Finance Corporation.
By: /s/ G. Steven Dawson
---------------------------------------------------------------------------
Sr. Vice President and Chief Financial Officer of Camden Subsidiary, Inc.
Managing Member of Sierra Nevada Multifamily Investments, LLC
<PAGE> 1
Exhibit 99.5
Washington Mortgage
1593 Spring Hill Road, Ste. 400
Vienna, VA 22182
June 23, 1998
Sierra Nevada Multifamily Investments, L.L.C.
c/o Mr. G. Steven Dawson
Camden Property Trust
3100 Southwest Freeway, Suite 1500
Houston, Texas 77027
Re: Oasis Plaza
Las Vegas, NV
300 Units
Proposed Second Lien Fixed Rate Subordinate FNMA DUS Loan ("Mortgage
Loan") to Sierra Nevada Multifamily Investments, L.L.C. ("Borrower") in
an amount not to exceed Five Million Four Hundred Forty Thousand
Dollars ($5,440,000) ("Loan Amount") for the purpose of providing a
second lien for a 300-unit multifamily rental project known as Oasis
Plaza located in Las Vegas, Nevada ("Property").
Commitment Acceptance Date: No later than July 3, 1998
Commitment Issuance Fee: 0.30% of Loan Amount
Rate Setting Expiration Date: No later than August 3, 1998
Good Faith Deposit: 2% of Loan Amount
Loan Fee: 0.00% of Loan Amount
Pool/Issuance Fee: $4,000
Mortgage Loan Term: 7.5 years
Yield Maintenance Period: 7 years
Amortization Period: 30 years
Processed Interest Rage: 7.260% per annum
Maximum Loan to Value: 80%
FNMA Pricing Tier: 2
Key Principals: n/a
Initial Deposit to Replacement Reserve: $0
Monthly Deposits to Replacement Reserve: Funding Waived
Completion/Repair Deposit: $0
Gentlemen:
Subject to and upon strict compliance by Borrower with each of the
terms, conditions and provisions of this commitment letter (collectively, with
the "General Conditions" and all Exhibits
<PAGE> 2
attached hereto, ("Commitment"), Washington Mortgage Financial Group, Ltd., a
Delaware corporation ("WMF") hereby agrees to make the Mortgage Loan in the Loan
Amount set forth above to Borrower pursuant to the Federal National Mortgage
Association ("FMNA") Multifamily Delegated Underwriting and Servicing product
line for mortgage backed security execution ("MBS/DUS Program"). This Commitment
is issued in material reliance upon (i) the continuing truth and accuracy of all
information and documentation furnished (or to be furnished) to SMF in
connection with the WMF MBS/DUS Program Loan Application ("Loan Application") or
otherwise with respect to Borrower, its principals (including the Key Principals
identified above, if any) and the Property; (ii) the continuing accuracy of the
recitations of fact set forth in this Commitment; and (iii) Borrower's covenant,
evidenced by its acceptance of this Commitment, to comply with each of the
terms, conditions and provisions of this Commitment.
1. Borrower. For the purpose of this Commitment, the term
"Borrower" shall mean the Borrower identified above. Any change in Borrower's
organizational documents, structure or composition, or in the ownership of
interests in Borrower, from that previously disclosed to WMF (in connection with
the Loan Application or otherwise) and relied upon by WMF in issuing this
Commitment shall, at WMF's option, render this Commitment and WMF's agreement to
make the Mortgage Loan null and void and shall relief WMF from further
obligations hereunder unless WMF grants its written approval to such change,
which approval may be granted or withheld by WMF in its sole and absolute
determination. Borrower shall hold legal title to the Property on the "Mortgage
Loan Closing Date" defined below and, for the entire term of the Mortgage Loan,
shall have no assets, legal purpose or business other than ownership and
operation of the Property.
2. Interest Rate
a. Processed Interest Rate. Based on the Loan Application and
related materials submitted to date to WMF, the Mortgage Loan has been
underwritten on the basis of the Processed Net Operating Income, at the Maximum
Loan to Value (which corresponds to the FNMA Pricing Tier assumption), and at
the Processed Interest rate all as set forth above. Borrower understands and
acknowledges that as of the date hereof WMF has not obtained a Commitment from
FNMA to purchase the Mortgage Loan ("FNMA Commitment") and that the FNMA
Commitment will not be obtained by WMF pursuant to this Section 2 unless and
until Borrower has satisfied all of the preconditions set forth in Section 3 of
this Commitment. Accordingly, since FNMA interest rate and pricing options
fluctuate on a daily basis, the actual interest rate selected by Borrower
pursuant to subsection b. below ("Selected Interest Rage") may be other than the
Processed Interest Rate based on FNMA's rate and price quotations at the time
the FNMA Commitment is obtained. Any difference between the Selected Interest
Rate and the Processed Interest Rate may, in accordance with applicable FNMA
MBS/DUS Program underwriting guidelines, result in a corresponding change in the
available Loan Amount.
From time to time, at Borrower's request, WMF will provide to
Borrower an interest rate quote that will show the then current price for
obtaining the Processed Interest RATE and other interest rage and pricing
options available from FNMA with respect to the Mortgage Loan. WMF cannot assure
Borrower that the Processed Interest Rate will be available from FNMA on any
particular date nor at what price FNMA will agree to purchase the Mortgage Loan
at such Processed Interest Rage and by accepting this Commitment Borrower
expressly acknowledges and agrees that WMF shall have no liability for
fluctuations in the FNMA interest rage and pricing options.
<PAGE> 3
b. Selection Interest Rate. On the date (subsequent to
Borrower's satisfaction of the preconditions set forth in Section 3 of this
Commitment and payment to WMF of the Good Faith Deposit and Commitment Issuance
Fee described in Sections 10a. and 10b. of this Commitment) that Borrower
selects a current interest rage and price ("Rate Setting Date") and immediately
prior to WMF obtaining the FNMA Commitment, Borrower must sign and return by
telecopier WMF's rate setting authorization/certification in a form to be
provided on such date by WMF ("Rate Setting Form") by 2:00 p.m. Vienna, Virginia
time. The Rate Setting Form requires that Borrower certify that the Property (i)
is 90% occupied (at rents not less than the average rents used by WMF in
processing the Mortgage Loan), and (ii) has maintained such occupancy of 90% or
better for the three (3) calendar months immediately prior thereto. Further, the
Rate Setting Form establishes the Mortgage Loan Closing Date and includes a
certification of no material adverse change in the Financial Statements and in
the Certification of Previous Multifamily Real Estate Experience for Borrower
and all key Principals of Borrower.
If Borrower has not satisfied the preconditions set forth in
Section 3 of this Commitment and selected an Interest rate and price by 2:00
p.m. Vienna, Virginia time on the Rate Setting Expiration Date set forth above,
this Commitment shall automatically terminate, WMF shall have no obligation to
make the Mortgage Loan and shall be relieved of any further obligations to
Borrower hereunder or otherwise. AT WMF's sole and exclusive option and provided
Borrower pays to WMF in connection therewith a nonrefundable extension fee of
.125% of the Loan Amount, an extension of the Rate Setting Expiration Date may
be granted. The duration of any such extension shall be as determined by WMF in
its sole and exclusive discretion. (Unless the Rate Setting Expiration Date has
been so extended, WMF shall return to Borrower, without interest, the Good Faith
Deposit and Post Purchase Review Fee if previously received from Borrower).
c. Confirmation of Interest RATE and Discount. Immediately
upon selection by Borrower of the Selected Interest Rate on the Rate Setting
Date, WMF shall obtain the FNMA Commitment and deliver to Borrower by telecopier
(or by other expedited means reasonably available to WMF in its sole
discretion), a Selected Interest Rate confirmation ("selected Interest Rate
Confirmation") confirming the Selected Interest Rate, the price at which FNMA
will purchase the Mortgage Loan at the Selected Interest Rage ("Price"), the
related discount fee ("Discount"), if any, to be paid by Borrower to WMF, and
any corresponding change in the Loan Amount resulting from the Selected Interest
Rage being other than the Processed Interest Rage. The Discount due, if any,
shall be equal to the difference between (i) the Loan Amount shown on the
Selected Interest Rate Confirmation and (ii) the product of (i) the Price
(stated as a percentage) shown on the Selected Interest Rage Confirmation and
(ii) the Loan Amount shown on the Selected Interest Rate Confirmation.
3. Preconditions to Obtaining FNMA Commitment. In addition to
WMF's receipt of the Good Faith Deposit, WMF's obtaining of the FNMA Commitment
shall be expressly conditioned upon Borrower's compliance with each of the
following preconditions to the satisfaction of WMF and "WMF's Counsel" (defined
below).
a. Receipt and approval by WMF and WMF's Counsel of a current
As-Built Survey of the Property prepared in accordance with all FNMA and WMF
requirements, including those set forth in the General Conditions attached to
this Commitment, and containing, without amendment, the FNMA promulgated form of
Surveyor's Certificate. (Borrower expressly acknowledges that any deviations
from the FNMA promulgated Surveyor's Certificate form will
<PAGE> 4
require WMF's Counsel to see the prior written approval of FNMA and will delay
obtaining the FNMA Commitment and Closing);
b. Receipt and approval by WMF and WMF's Counsel of a current
Title Insurance Commitment and Pro Forma Title Insurance Policy issued with
respect to the property prepared in accordance with all FNMA and WMF
requirements, including those set forth in the General Conditions attached to
this Commitment;
c. Receipt and approval by WMF and WMF's Counsel of the
results of current UCC, judgment and Tax Liens searches performed at the
appropriate state and local levels which respect to Borrower (and each general
partner of Borrower if Borrower is a partnership);
d. Receipt and approval by WMF and WMF's Counsel of a draft
Opinion of Borrower's Counsel in the FNMA promulgated form. (Borrower expressly
acknowledges that any deviations from the FNMA promulgated Opinion form will
require WMF's Counsel to seek the prior written approval of FNMA and will delay
obtaining the FNMA Commitment and Closing);
e. Receipt and approval by WMF and WMF's Counsel of complete
copies of the organizational documents of Borrower and each general partner of
Borrower, including but not limited to agreement(s) of general or limited
partnership, certificate(s) of limited partnership, good standing certificates,
certificates of authority to transact business in the jurisdiction in which the
jurisdiction in which the Property is located, articles of incorporation,
corporate bylaws, resolutions and incumbency certificates, all evidencing the
due organization, valid existence and good standing of such entities, an
organizational structure suitable to the tasks of owning and operating the
Property, full power and authority to execute, deliver and perform under the
Mortgage Loan Documents, and compliance with all applicable FNMA requirements;
f. Borrower's compliance with the insurance requirements set
forth in the General Conditions attached to this Commitment;
g. Receipt and approval by WMF and WMF's Counsel of evidence
of zoning compliance and certificates of occupancy with respect to the Property
as more particularly described in the General Conditions; and
h. Borrower's compliance with the Special Conditions set
forth in Section 13 of this Commitment.
Notwithstanding anything in this Commitment to the contrary, the
effectiveness of this Commitment shall at all times be contingent upon the
issuance by FNMA of the FNMA Commitment, the continued validity and
enforceability of the FNMA Commitment and on Borrower's compliance with the
terms and conditions of the FNMA Commitment and the MBS/DUS Program requirements
then in effect.
4. Mortgage Loan Term and Amortization Period. The Mortgage loan
Term shall be as set forth above. Interest at the Selected Interest Rage,
calculated on the basis of a 360-day year comprised of twelve (12) thirty day
months, shall be due and payable commencing on the "Mortgage Loan Closing Date"
as hereinafter defined. On the Mortgage Loan Closing Date, WMF will collect
<PAGE> 5
prepaid interest through the last day of the month in which the closing and
funding of the Mortgage Loan occurs.
Level payments of principal and interest, calculated on the basis of
the Amortization Period set forth above, shall commence on the first day of the
second month following the month in which the closing and funding of the
Mortgage Loan occurs ("Amortization Commencement").
In addition to payments of principal and interest, and also commencing
on the date of Authorization Commitment, Borrower will be required to make
monthly deposits to various escrows established with WMF for real estate taxes,
special assessments, reserve for replacements and insurance premiums as more
particularly described in this Commitment.
5. Mortgage Loan Subordination. The Mortgage Loan shall at all
times be subject and subordinate to the lien, operation and effect of the loan
evidenced by a Multifamily Note dated August 11, 1994 in the original principal
amount of $6,000,000 by the Borrower to the Lender and secured by a Multifamily
Deed of Trust, Assignment of Rents and Security Agreement dated August 11, 1994
(the "Prior Loan"). The Mortgage Loan Documents (as defined in paragraph 6
below) shall include a Subordination Agreement under which the Mortgage Loan is
subordinated to the Prior Loan.
6. Mortgage Loan Documentation. The Mortgage Loan shall be
evidenced and secured by such documents, certifications and other instruments
(collectively, "Mortgage Loan Documents") as WMF, FNMA and/or the DUS Guide
require, all of which shall be in force and substance acceptable to WMF and
WMF's Counsel and consistent with all MBS/DUS Program requirements in effect on
the Mortgage Loan Closing Date. By accepting this Commitment, Borrower expressly
acknowledges that the Mortgage Loan Documents, including but not limited to the
FNMA/FHLMC Uniform Form of Multifamily Note and Multifamily Mortgage/Deed of
Trust/Deed to Secure Debt, Assignment of Rents and Security Agreement, will not
contain any provisions providing notice of default nor opportunity to cure.
7. Exceptions to Non-Recourse Liability; Indemnification.
Although the Mortgage Loan will generally be non-recourse, there will be certain
exceptions to non-recourse liability and certain indemnification requirements
contained in the FNMA form of "Addendum to Multifamily Note" and in the FNMA
form of "Rider to Multifamily Instrument" which create personal liability and
indemnification obligations for Borrower, its general partners and/or the Key
Principals identified above. By acceptance of this Commitment, Borrower (for
itself and on behalf of its general partners and the Key Principals) expressly
acknowledges and agrees to such provisions.
8. Prepayment of Mortgage Loan. The Mortgage Loan may be
prepared only in accordance with the terms and conditions of the FNMA form of
Addendum to Multifamily Note. (The Yield Maintenance Period applicable to the
Mortgage Loan Term shall be as set forth above and the "Specified U.S. Treasury
Security", if applicable, defined in the FNMA form of Addendum to Multifamily
Note will be determined by FNMA at the time WMF obtains the FNMA Commitment).
9. Restrictions on Transfer of Property and Interests in
Borrower. The Mortgage Loan Documents, including specifically the FNMA form of
"Rider to Multifamily Instrument", provide that the Mortgage Loan may be
accelerated upon the occurrence of certain transfers of the property
<PAGE> 6
(or interests therein) or of "Significant Interests" in Borrower defined
therein. Further, based upon review by WMF and WMF's Counsel of the
organizational documents of the Borrower entity, certain additional restrictions
on transfer may be imposed by WMF. By acceptance of this Commitment, Borrower
expressly acknowledges and agrees to such provisions.
10. Mortgage Loan Closing Date. Upon compliance by Borrower with
all of the terms, conditions and provisions of this Commitment and the MBS/DUS
Program and issuance of the FNMA Commitment, the Mortgage Loan Closing date
shall be established by WMF to occur on a date and time mutually agreed upon by
WMF and Borrower; provided, however, that the Mortgage Loan Closing Date shall
be no later than that set forth on the Rate Setting Form. Closing of the
Mortgage shall be conducted by the Title Insurance Company, an authorized agent
of which shall attend closing, prepare the settlement sheet, and be responsible
for recording the Mortgage Loan Documents and disbursing the proceeds of the
Mortgage Loan pursuant to written instructions to be delivered by WMF's Counsel.
In the event that the person attending closing on behalf of the Title Insurance
Company is an agent rather than an employee of the Title Insurance Company, such
agent shall deliver to WMF at least five (5) Business Days prior to the Rate
Setting Date an insured closing services letter in form and content satisfactory
to WMF and WMF's Counsel.
11. Charges and Fees to be Paid by Borrower.
a. Commitment Issuance Fee. Upon acceptance of this
Commitment, Borrower shall pay WMF the Commitment Issuance Fee set forth above,
which Commitment Issuance Fee shall be deemed earned by WMF upon issuance and
acceptance of this Commitment. In no event shall the Commitment Issuance Fee be
refunded to Borrower unless the FNMA Commitment is not obtained prior to the
Rate Setting Expiration Date due solely to the willful default by SMF of its
obligations under this Commitment, the suspension of WMF's MBS/DUS Program
license or FNMA's suspension or termination of the MBS/DUS Program. WMF shall be
entitled to commingle the Commitment Issuance Fee with other funds and shall
have no obligation to pay to or credit Borrower with any interest on the
Commitment Issuance Fee.
b. Good-Faith Deposit. As a precondition to selection of the
Selected Interest Rage and WMF's obtaining of the FNMA Commitment, Borrower
shall deposit with WMF the Good Faith Deposit set forth above to secure the
performance of Borrower's obligations under this Commitment and the FNMA
Commitment. The Good Faith Deposit must be received by WMF in immediately
available funds no less than 24 hours prior to the Rate Setting Date. WMF shall
deem the Good Faith Deposit earned upon receipt. If for any reason closing and
funding of the Mortgage Loan does not occur and the Mortgage Loan is not
delivered to FNMA for purchase by the expiration date set forth in the FNMA
Commitment, the Good Faith Deposit will be deemed non-refundable.
Within ten (10) Business Days following FNMA's preliminary
review of the Mortgage Loan Documents and purchase of the Mortgage Loan, WMF
will refund the Good Faith Deposit to Borrower, net of any charges, expenses
and/or other amounts then still due and owing to WMF from Borrower pursuant to
this Commitment. Within 90 days of FNMA' s purchase of the Mortgage Loan, FNMA
will complete a detailed review of the Mortgage Loan Documents and either (i)
accept such Mortgage Loan Documents as delivered or (ii) require certain
additional information and/or corrections, additions or revisions to the
Mortgage Loan Documents as FNMA deems necessary and appropriate. By its
acceptance of this Commitment, and its execution of the Agreement to Amend or
Comply at closing, Borrower expressly covenants and agrees to fully
<PAGE> 7
cooperate, and use its best efforts to cause its counsel, surveyor, title
representative and other professionals to cooperate with WMF in satisfying all
such FNMA post-purchase requirements in a timely manner.
c. Discount. On the Mortgage Loan Closing Date, the Discount,
if any, due to WMF as described in subsection 2(c) of this Commitment, shall be
paid to WMF by Borrower in immediately available funds (or an amount equal to
such Discount shall be deducted from the Mortgage Loan proceeds funded by WMF).
d. Loan Fee. On the Mortgage Loan Closing Date, the Loan Fee
set forth above shall be paid to WMF by Borrower in immediately available funds
(or an amount equal to such Loan Fee shall be deducted from the Mortgage Loan
proceeds funded by WMF).
12. Deposits.
a. Replacement Reserve. Unless otherwise waived, on the
Mortgage Loan Closing Date and to assure the future availability of funds to
satisfy the costs of certain replacement items set forth on Exhibit "A" attached
to this Commitment, Borrower shall deposit with WMF the Initial Deposit to
Replacement Reserves set forth above in immediately available funds (or an
amount equal to the Initial Deposit to Replacement Reserve shall be deducted
from the Mortgage Loan proceeds funded by WMF). The Initial Deposit shall be
held and administered by WMF in an interest- bearing account as additional
security for Borrower's obligations with respect to the Mortgage Loan in
accordance with the terms and conditions of the FNMA form of "Replacement
Reserve and Security Agreement". In addition, concurrently with each monthly
payment of principal and Interest due under the Mortgage Loan, Borrower shall be
required to make the Monthly Deposits to Replacement Reserve set forth above,
which Monthly Deposits to Replacement Reserve shall also be held and
administered by WMF as additional security in accordance with the terms and
conditions of the Replacement Reserve may be adjusted for the 11th through last
year of the Mortgage Loan Term). The FNMA form of "Replacement Reserve and
Security Agreement" shall require Borrower to pay to WMF certain periodic
inspection fees with respect to the Replacement Reserve.
b. Completion/Repair Deposit. On the Mortgage Closing Date,
Borrower shall deposit with WMFG the Completion/Repair Deposit set forth above
in immediately available funds (or an amount equal to the Completion/Repair
Deposit shall be deducted from the Mortgage Loan proceeds funded by WMF). The
Completion/Repair Deposit shall be held and administered by WMF as additional
security for Borrower's obligations with respect to the Mortgage Loan in
accordance with the terms and conditions of the FNMA form of "Completion/Repair
and Security Agreement". The Completion/Repair Deposit is equal to one hundred
fifty percent (150%) of WMF's estimate of the cost of certain required repairs
to the Property described on Exhibit "B" attached to this Commitment. The FNMA
form of "Completion/Repair and Security Agreement" shall require Borrower to pay
to WMF certain periodic administrative and inspection fees with respect to the
Completion/Repair Deposit.
13. WMF Counsel. WMF shall be represented by transactional
counsel ("WMF's Counsel") in connection with the preparation and review of the
Mortgage Loan Documents and all matters relating to the Mortgage Loan. Upon
acceptance of this Commitment and WMF's acknowledgment thereof you may contact
Scott Carter of WMF at (703) 610-1308 to obtain the name of WMF's Counsel and to
discuss closing requirements and logistics. On the Mortgage Loan
<PAGE> 8
Closing Date, Borrower shall pay the fees of WMF's Counsel in immediately
available funds (or an amount equal to such fees shall be deducted from the
Mortgage Loan proceeds funded by WMF). Absent the need to seek FNMA waivers or
the presence of unusual circumstances or unanticipated legal issues, WMF's
Counsel fees will be $5,000.00.
14. Special Conditions. In addition to all the other terms,
conditions and provisions of this Commitment, WMF's obligation to make the
Mortgage Loan to Borrower is subject to satisfaction of the following Special
Conditions in a manner acceptable to WMF in its sale and absolute determination,
prior to the Rate Setting Date and WMF obtaining the FNMA Commitment:
1. Receipt and review of all outstanding application documents
in a forth acceptable to WMF in its sole discretion.
2. Receipt and review of a certified rent roll dated five days
prior to the Rate Setting Date, as well as an operating
statement dated within 30 days.
3. O&M for asbestos to remain in-place for the term of the
second mortgage loan.
4. Borrower will be required to sign a repair agreement for
completion of immediate repairs as outlined by the Engineer.
5. Executed management that states a 3.5% management fee.
6. Completion of WMF's site inspection.
7. Assets (Oasis Plaza and Oasis Greens) which are crossed may
not exceed 65% loan-to-value or go below a 1.35x debt service
coverage on a combined basis.
8. WMF acknowledges approval of the assumption of the first
mortgage on Oasis Plaza. The total Assumption Fee due to
WMF is one percent (1.00%) of the unpaid principal balance
of the Mortgage Loan as of the date of the simultaneous
closing of the assumption ("Assumption Fee"). The $3,000
non-refundable Review Fee is still due to WMF. Upon
acceptance of this commitment, an Assumption Approval
Deposit in the amount of one-half of one percent (0.5%) of
the current unpaid principal balance of the Mortgage Loan
shall be paid to WMF. At the time of closing, this
Assumption Approval Deposit shall be credit toward the full
Assumption Fee. In the event the assumption does not close,
WMF shall return the Assumption Approval Deposit less any
out of pocket costs incurred by WMF in connection with the
Assumption Application including, but not limited to, WMF's
legal fees. WMF shall be entitled to commingle the
Assumption Approval Deposit with other funds and shall have
no obligation to pay or credit any interest on the
Assumption Approval Deposit. On the date of the closing, the
balance of the Assumption Fee set forth above shall be paid
to WMF in immediately available funds.
15. General Conditions and Exhibits. The General Conditions and
Exhibits attached to this Commitment are an integral part of this Commitment,
and are hereby expressly incorporated into, and by this reference made a part
of, this Commitment.
16. Complete Agreement; Amendment and Waiver. This Commitment,
and the General Conditions and Exhibits attached hereto, contain the complete
and entire understanding of the parties hereto of WMF's agreement to provide the
Mortgage Loan as described in this Commitment. No changes or amendments to this
Commitment shall be valid unless made in writing and similarly executed by the
parties hereto. (WMF hereby expressly advised Borrower that only members of
WMF's Loan Commitment have authority to bind WMF to this Commitment shall be
valid unless
<PAGE> 9
made in writing and similarly executed by the parties hereto. (WMF hereby
expressly advises Borrower that only members of WMF's Loan Commitment have
authority to bind WMF to amendments to this Commitment). No specific waiver of
any of the terms of this Commitment shall be considered a general waiver.
17. Survival: Conflicting Provisions. The terms and conditions of
this Commitment shall survive the closing and funding of the Mortgage Loan. In
the event of any conflict between the terms and conditions of this Commitment
and the terms and conditions of the Mortgage Loan Documents, the latter shall
control.
18. Applicable Law. The rights and obligations of the parties
with respect to this Commitment shall be determined in accordance with the laws
of the Commonwealth of Virginia.
19. Counterparts. This Commitment may be executed in any number
of counterparts, each of which together shall constitute one and the same
instrument.
Enclosed are two (2) copies of this Commitment. If the terms,
conditions and provisions of this Commitment are satisfactory, please
acknowledge Borrower's acceptance of this Commitment by executing and delivering
to WMF the two (2) copies of this Commitment, together with the Commitment
Issuance Fee. WMF will acknowledge receipt of Borrower's acceptance of this
Commitment and return one (1) copy of this Commitment to Borrower. Borrower's
acceptance of this Commitment, together with the Commitment Issuance Fee, must
be received by WMF no later than 5:00 p.m. Vienna, Virginia time on the
Commitment Acceptance Date set forth above, otherwise, this Commitment shall
automatically terminate without further notice, WMF's offer to make the Mortgage
Loan shall be void and of no further force or effect and WMF shall be relieved
of any further obligations to Borrower hereunder or otherwise. At WMF's sole and
exclusive option and provided Borrower pays to WMF in connection therewith a
nonrefundable extension fee of .125% of the Loan Amount, an extension of the
Commitment Acceptance Date may be granted. The duration of any such extension
shall be as determined by WMF in its sole and exclusive discretion.
Very truly yours,
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.
/s/Joan C. May
Joan C. May
Senior Vice President
<PAGE> 1
Exhibit 99.6
Washington Mortgage
1593 Spring Hill Road, Ste. 400
Vienna, VA 22182
June 23, 1998
Sierra Nevada Multifamily Investments, L.L.C.
c/o Mr. G. Steven Dawson
Camden Property Trust
3100 Southwest Freeway, Suite 1500
Houston, Texas 77027
Re: Oasis Landing
Las Vegas, NV
144 Units
Proposed Second Lien Fixed Rate Subordinate FNMA DUS Loan ("Mortgage
Loan") to Sierra Nevada Multifamily Investments, L.L.C. ("Borrower") in
an amount not to exceed One Million Six Hundred Thousand Dollars
($1,600,000) ("Loan Amount") for the purpose of providing a second lien
for a 144-unit multifamily rental project known as Oasis Landing
located in Las Vegas, Nevada ("Property").
Commitment Acceptance Date: No later than July 3, 1998
Commitment Issuance Fee: 0.30% of Loan Amount
Rate Setting Expiration Date: No later than August 3, 1998
Good Faith Deposit: 2% of Loan Amount
Loan Fee: 0.00% of Loan Amount
Pool/Issuance Fee: $4,000
Mortgage Loan Term: 7.5 years
Yield Maintenance Period: 7 years
Amortization Period: 30 years
Processed Interest Rage: 7.260% per annum
Maximum Loan to Value: 80%
FNMA Pricing Tier: 2
Key Principals: n/a
Initial Deposit to Replacement Reserve: $0
Monthly Deposits to Replacement Reserve: Funding Waived
Completion/Repair Deposit: $0
Gentlemen:
Subject to and upon strict compliance by Borrower with each of the
terms, conditions and provisions of this commitment letter (collectively, with
the "General Conditions" and all Exhibits
<PAGE> 2
attached hereto, ("Commitment"), Washington Mortgage Financial Group, Ltd., a
Delaware corporation ("WMF") hereby agrees to make the Mortgage Loan in the Loan
Amount set forth above to Borrower pursuant to the Federal National Mortgage
Association ("FMNA") Multifamily Delegated Underwriting and Servicing product
line for mortgage backed security execution ("MBS/DUS Program"). This Commitment
is issued in material reliance upon (i) the continuing truth and accuracy of all
information and documentation furnished (or to be furnished) to SMF in
connection with the WMF MBS/DUS Program Loan Application ("Loan Application") or
otherwise with respect to Borrower, its principals (including the Key Principals
identified above, if any) and the Property; (ii) the continuing accuracy of the
recitations of fact set forth in this Commitment; and (iii) Borrower's covenant,
evidenced by its acceptance of this Commitment, to comply with each of the
terms, conditions and provisions of this Commitment.
1. Borrower. For the purpose of this Commitment, the term
"Borrower" shall mean the Borrower identified above. Any change in Borrower's
organizational documents, structure or composition, or in the ownership of
interests in Borrower, from that previously disclosed to WMF (in connection with
the Loan Application or otherwise) and relied upon by WMF in issuing this
Commitment shall, at WMF's option, render this Commitment and WMF's agreement to
make the Mortgage Loan null and void and shall relief WMF from further
obligations hereunder unless WMF grants its written approval to such change,
which approval may be granted or withheld by WMF in its sole and absolute
determination. Borrower shall hold legal title to the Property on the "Mortgage
Loan Closing Date" defined below and, for the entire term of the Mortgage Loan,
shall have no assets, legal purpose or business other than ownership and
operation of the Property.
2. Interest Rate
a. Processed Interest Rate. Based on the Loan Application and
related materials submitted to date to WMF, the Mortgage Loan has been
underwritten on the basis of the Processed Net Operating Income, at the Maximum
Loan to Value (which corresponds to the FNMA Pricing Tier assumption), and at
the Processed Interest rate all as set forth above. Borrower understands and
acknowledges that as of the date hereof WMF has not obtained a Commitment from
FNMA to purchase the Mortgage Loan ("FNMA Commitment") and that the FNMA
Commitment will not be obtained by WMF pursuant to this Section 2 unless and
until Borrower has satisfied all of the preconditions set forth in Section 3 of
this Commitment. Accordingly, since FNMA interest rate and pricing options
fluctuate on a daily basis, the actual interest rate selected by Borrower
pursuant to subsection b. below ("Selected Interest Rage") may be other than the
Processed Interest Rate based on FNMA's rate and price quotations at the time
the FNMA Commitment is obtained. Any difference between the Selected Interest
Rate and the Processed Interest Rate may, in accordance with applicable FNMA
MBS/DUS Program underwriting guidelines, result in a corresponding change in the
available Loan Amount.
From time to time, at Borrower's request, WMF will provide to
Borrower an interest rate quote that will show the then current price for
obtaining the Processed Interest RATE and other interest rage and pricing
options available from FNMA with respect to the Mortgage Loan. WMF cannot assure
Borrower that the Processed Interest Rate will be available from FNMA on any
particular date nor at what price FNMA will agree to purchase the Mortgage Loan
at such Processed Interest Rage and by accepting this Commitment Borrower
expressly acknowledges and agrees that WMF shall have no liability for
fluctuations in the FNMA interest rage and pricing options.
<PAGE> 3
b. Selection Interest Rate. On the date (subsequent to
Borrower's satisfaction of the preconditions set forth in Section 3 of this
Commitment and payment to WMF of the Good Faith Deposit and Commitment Issuance
Fee described in Sections 10a. and 10b. of this Commitment) that Borrower
selects a current interest rage and price ("Rate Setting Date") and immediately
prior to WMF obtaining the FNMA Commitment, Borrower must sign and return by
telecopier WMF's rate setting authorization/certification in a form to be
provided on such date by WMF ("Rate Setting Form") by 2:00 p.m. Vienna, Virginia
time. The Rate Setting Form requires that Borrower certify that the Property (i)
is 90% occupied (at rents not less than the average rents used by WMF in
processing the Mortgage Loan), and (ii) has maintained such occupancy of 90% or
better for the three (3) calendar months immediately prior thereto. Further, the
Rate Setting Form establishes the Mortgage Loan Closing Date and includes a
certification of no material adverse change in the Financial Statements and in
the Certification of Previous Multifamily Real Estate Experience for Borrower
and all key Principals of Borrower.
If Borrower has not satisfied the preconditions set forth in
Section 3 of this Commitment and selected an Interest rate and price by 2:00
p.m. Vienna, Virginia time on the Rate Setting Expiration Date set forth above,
this Commitment shall automatically terminate, WMF shall have no obligation to
make the Mortgage Loan and shall be relieved of any further obligations to
Borrower hereunder or otherwise. AT WMF's sole and exclusive option and provided
Borrower pays to WMF in connection therewith a nonrefundable extension fee of
.125% of the Loan Amount, an extension of the Rate Setting Expiration Date may
be granted. The duration of any such extension shall be as determined by WMF in
its sole and exclusive discretion. (Unless the Rate Setting Expiration Date has
been so extended, WMF shall return to Borrower, without interest, the Good Faith
Deposit and Post Purchase Review Fee if previously received from Borrower).
c. Confirmation of Interest RATE and Discount. Immediately
upon selection by Borrower of the Selected Interest Rate on the Rate Setting
Date, WMF shall obtain the FNMA Commitment and deliver to Borrower by telecopier
(or by other expedited means reasonably available to WMF in its sole
discretion), a Selected Interest Rate confirmation ("selected Interest Rate
Confirmation") confirming the Selected Interest Rate, the price at which FNMA
will purchase the Mortgage Loan at the Selected Interest Rage ("Price"), the
related discount fee ("Discount"), if any, to be paid by Borrower to WMF, and
any corresponding change in the Loan Amount resulting from the Selected Interest
Rage being other than the Processed Interest Rage. The Discount due, if any,
shall be equal to the difference between (i) the Loan Amount shown on the
Selected Interest Rate Confirmation and (ii) the product of (i) the Price
(stated as a percentage) shown on the Selected Interest Rage Confirmation and
(ii) the Loan Amount shown on the Selected Interest Rate Confirmation.
3. Preconditions to Obtaining FNMA Commitment. In addition to
WMF's receipt of the Good Faith Deposit, WMF's obtaining of the FNMA Commitment
shall be expressly conditioned upon Borrower's compliance with each of the
following preconditions to the satisfaction of WMF and "WMF's Counsel" (defined
below).
a. Receipt and approval by WMF and WMF's Counsel of a current
As-Built Survey of the Property prepared in accordance with all FNMA and WMF
requirements, including those set forth in the General Conditions attached to
this Commitment, and containing, without amendment, the FNMA promulgated form of
Surveyor's Certificate. (Borrower expressly acknowledges that any deviations
from the FNMA promulgated Surveyor's Certificate form will
<PAGE> 4
require WMF's Counsel to see the prior written approval of FNMA and will delay
obtaining the FNMA Commitment and Closing);
b. Receipt and approval by WMF and WMF's Counsel of a current
Title Insurance Commitment and Pro Forma Title Insurance Policy issued with
respect to the property prepared in accordance with all FNMA and WMF
requirements, including those set forth in the General Conditions attached to
this Commitment;
c. Receipt and approval by WMF and WMF's Counsel of the
results of current UCC, judgment and Tax Liens searches performed at the
appropriate state and local levels which respect to Borrower (and each general
partner of Borrower if Borrower is a partnership);
d. Receipt and approval by WMF and WMF's Counsel of a draft
Opinion of Borrower's Counsel in the FNMA promulgated form. (Borrower expressly
acknowledges that any deviations from the FNMA promulgated Opinion form will
require WMF's Counsel to seek the prior written approval of FNMA and will delay
obtaining the FNMA Commitment and Closing);
e. Receipt and approval by WMF and WMF's Counsel of complete
copies of the organizational documents of Borrower and each general partner of
Borrower, including but not limited to agreement(s) of general or limited
partnership, certificate(s) of limited partnership, good standing certificates,
certificates of authority to transact business in the jurisdiction in which the
jurisdiction in which the Property is located, articles of incorporation,
corporate bylaws, resolutions and incumbency certificates, all evidencing the
due organization, valid existence and good standing of such entities, an
organizational structure suitable to the tasks of owning and operating the
Property, full power and authority to execute, deliver and perform under the
Mortgage Loan Documents, and compliance with all applicable FNMA requirements;
f. Borrower's compliance with the insurance requirements set
forth in the General Conditions attached to this Commitment;
g. Receipt and approval by WMF and WMF's Counsel of evidence
of zoning compliance and certificates of occupancy with respect to the Property
as more particularly described in the General Conditions; and
h. Borrower's compliance with the Special Conditions set
forth in Section 13 of this Commitment.
Notwithstanding anything in this Commitment to the contrary, the
effectiveness of this Commitment shall at all times be contingent upon the
issuance by FNMA of the FNMA Commitment, the continued validity and
enforceability of the FNMA Commitment and on Borrower's compliance with the
terms and conditions of the FNMA Commitment and the MBS/DUS Program requirements
then in effect.
4. Mortgage Loan Term and Amortization Period. The Mortgage loan
Term shall be as set forth above. Interest at the Selected Interest Rage,
calculated on the basis of a 360-day year comprised of twelve (12) thirty day
months, shall be due and payable commencing on the "Mortgage Loan Closing Date"
as hereinafter defined. On the Mortgage Loan Closing Date, WMF will collect
<PAGE> 5
prepaid interest through the last day of the month in which the closing and
funding of the Mortgage Loan occurs.
Level payments of principal and interest, calculated on the basis of
the Amortization Period set forth above, shall commence on the first day of the
second month following the month in which the closing and funding of the
Mortgage Loan occurs ("Amortization Commencement").
In addition to payments of principal and interest, and also commencing
on the date of Authorization Commitment, Borrower will be required to make
monthly deposits to various escrows established with WMF for real estate taxes,
special assessments, reserve for replacements and insurance premiums as more
particularly described in this Commitment.
5. Mortgage Loan Subordination. The Mortgage Loan shall at all
times be subject and subordinate to the lien, operation and effect of the loan
evidenced by a Multifamily Note dated October 22, 1993 in the original principal
amount of $4,095,000 by the Borrower to the Lender and secured by a Multifamily
Deed of Trust, Assignment of Rents and Security Agreement dated October 22, 1993
(the "Prior Loan"). The Mortgage Loan Documents (as defined in paragraph 6
below) shall include a Subordination Agreement under which the Mortgage Loan is
subordinated to the Prior Loan.
6. Mortgage Loan Documentation. The Mortgage Loan shall be
evidenced and secured by such documents, certifications and other instruments
(collectively, "Mortgage Loan Documents") as WMF, FNMA and/or the DUS Guide
require, all of which shall be in force and substance acceptable to WMF and
WMF's Counsel and consistent with all MBS/DUS Program requirements in effect on
the Mortgage Loan Closing Date. By accepting this Commitment, Borrower expressly
acknowledges that the Mortgage Loan Documents, including but not limited to the
FNMA/FHLMC Uniform Form of Multifamily Note and Multifamily Mortgage/Deed of
Trust/Deed to Secure Debt, Assignment of Rents and Security Agreement, will not
contain any provisions providing notice of default nor opportunity to cure.
7. Exceptions to Non-Recourse Liability; Indemnification.
Although the Mortgage Loan will generally be non-recourse, there will be certain
exceptions to non-recourse liability and certain indemnification requirements
contained in the FNMA form of "Addendum to Multifamily Note" and in the FNMA
form of "Rider to Multifamily Instrument" which create personal liability and
indemnification obligations for Borrower, its general partners and/or the Key
Principals identified above. By acceptance of this Commitment, Borrower (for
itself and on behalf of its general partners and the Key Principals) expressly
acknowledges and agrees to such provisions.
8. Prepayment of Mortgage Loan. The Mortgage Loan may be
prepared only in accordance with the terms and conditions of the FNMA form of
Addendum to Multifamily Note. (The Yield Maintenance Period applicable to the
Mortgage Loan Term shall be as set forth above and the "Specified U.S. Treasury
Security", if applicable, defined in the FNMA form of Addendum to Multifamily
Note will be determined by FNMA at the time WMF obtains the FNMA Commitment).
9. Restrictions on Transfer of Property and Interests in
Borrower. The Mortgage Loan Documents, including specifically the FNMA form of
"Rider to Multifamily Instrument", provide that the Mortgage Loan may be
accelerated upon the occurrence of certain transfers of the property
<PAGE> 6
(or interests therein) or of "Significant Interests" in Borrower defined
therein. Further, based upon review by WMF and WMF's Counsel of the
organizational documents of the Borrower entity, certain additional restrictions
on transfer may be imposed by WMF. By acceptance of this Commitment, Borrower
expressly acknowledges and agrees to such provisions.
10. Mortgage Loan Closing Date. Upon compliance by Borrower with
all of the terms, conditions and provisions of this Commitment and the MBS/DUS
Program and issuance of the FNMA Commitment, the Mortgage Loan Closing date
shall be established by WMF to occur on a date and time mutually agreed upon by
WMF and Borrower; provided, however, that the Mortgage Loan Closing Date shall
be no later than that set forth on the Rate Setting Form. Closing of the
Mortgage shall be conducted by the Title Insurance Company, an authorized agent
of which shall attend closing, prepare the settlement sheet, and be responsible
for recording the Mortgage Loan Documents and disbursing the proceeds of the
Mortgage Loan pursuant to written instructions to be delivered by WMF's Counsel.
In the event that the person attending closing on behalf of the Title Insurance
Company is an agent rather than an employee of the Title Insurance Company, such
agent shall deliver to WMF at least five (5) Business Days prior to the Rate
Setting Date an insured closing services letter in form and content satisfactory
to WMF and WMF's Counsel.
11. Charges and Fees to be Paid by Borrower.
a. Commitment Issuance Fee. Upon acceptance of this
Commitment, Borrower shall pay WMF the Commitment Issuance Fee set forth above,
which Commitment Issuance Fee shall be deemed earned by WMF upon issuance and
acceptance of this Commitment. In no event shall the Commitment Issuance Fee be
refunded to Borrower unless the FNMA Commitment is not obtained prior to the
Rate Setting Expiration Date due solely to the willful default by SMF of its
obligations under this Commitment, the suspension of WMF's MBS/DUS Program
license or FNMA's suspension or termination of the MBS/DUS Program. WMF shall be
entitled to commingle the Commitment Issuance Fee with other funds and shall
have no obligation to pay to or credit Borrower with any interest on the
Commitment Issuance Fee.
b. Good-Faith Deposit. As a precondition to selection of the
Selected Interest Rage and WMF's obtaining of the FNMA Commitment, Borrower
shall deposit with WMF the Good Faith Deposit set forth above to secure the
performance of Borrower's obligations under this Commitment and the FNMA
Commitment. The Good Faith Deposit must be received by WMF in immediately
available funds no less than 24 hours prior to the Rate Setting Date. WMF shall
deem the Good Faith Deposit earned upon receipt. If for any reason closing and
funding of the Mortgage Loan does not occur and the Mortgage Loan is not
delivered to FNMA for purchase by the expiration date set forth in the FNMA
Commitment, the Good Faith Deposit will be deemed non-refundable.
Within ten (10) Business Days following FNMA's preliminary
review of the Mortgage Loan Documents and purchase of the Mortgage Loan, WMF
will refund the Good Faith Deposit to Borrower, net of any charges, expenses
and/or other amounts then still due and owing to WMF from Borrower pursuant to
this Commitment. Within 90 days of FNMA' s purchase of the Mortgage Loan, FNMA
will complete a detailed review of the Mortgage Loan Documents and either (i)
accept such Mortgage Loan Documents as delivered or (ii) require certain
additional information and/or corrections, additions or revisions to the
Mortgage Loan Documents as FNMA deems necessary and appropriate. By its
acceptance of this Commitment, and its execution of the Agreement to Amend or
Comply at closing, Borrower expressly covenants and agrees to fully
<PAGE> 7
cooperate, and use its best efforts to cause its counsel, surveyor, title
representative and other professionals to cooperate with WMF in satisfying all
such FNMA post-purchase requirements in a timely manner.
c. Discount. On the Mortgage Loan Closing Date, the Discount,
if any, due to WMF as described in subsection 2(c) of this Commitment, shall be
paid to WMF by Borrower in immediately available funds (or an amount equal to
such Discount shall be deducted from the Mortgage Loan proceeds funded by WMF).
d. Loan Fee. On the Mortgage Loan Closing Date, the Loan Fee
set forth above shall be paid to WMF by Borrower in immediately available funds
(or an amount equal to such Loan Fee shall be deducted from the Mortgage Loan
proceeds funded by WMF).
12. Deposits.
a. Replacement Reserve. Unless otherwise waived, on the
Mortgage Loan Closing Date and to assure the future availability of funds to
satisfy the costs of certain replacement items set forth on Exhibit "A" attached
to this Commitment, Borrower shall deposit with WMF the Initial Deposit to
Replacement Reserves set forth above in immediately available funds (or an
amount equal to the Initial Deposit to Replacement Reserve shall be deducted
from the Mortgage Loan proceeds funded by WMF). The Initial Deposit shall be
held and administered by WMF in an interest- bearing account as additional
security for Borrower's obligations with respect to the Mortgage Loan in
accordance with the terms and conditions of the FNMA form of "Replacement
Reserve and Security Agreement". In addition, concurrently with each monthly
payment of principal and Interest due under the Mortgage Loan, Borrower shall be
required to make the Monthly Deposits to Replacement Reserve set forth above,
which Monthly Deposits to Replacement Reserve shall also be held and
administered by WMF as additional security in accordance with the terms and
conditions of the Replacement Reserve may be adjusted for the 11th through last
year of the Mortgage Loan Term). The FNMA form of "Replacement Reserve and
Security Agreement" shall require Borrower to pay to WMF certain periodic
inspection fees with respect to the Replacement Reserve.
b. Completion/Repair Deposit. On the Mortgage Closing Date,
Borrower shall deposit with WMFG the Completion/Repair Deposit set forth above
in immediately available funds (or an amount equal to the Completion/Repair
Deposit shall be deducted from the Mortgage Loan proceeds funded by WMF). The
Completion/Repair Deposit shall be held and administered by WMF as additional
security for Borrower's obligations with respect to the Mortgage Loan in
accordance with the terms and conditions of the FNMA form of "Completion/Repair
and Security Agreement". The Completion/Repair Deposit is equal to one hundred
fifty percent (150%) of WMF's estimate of the cost of certain required repairs
to the Property described on Exhibit "B" attached to this Commitment. The FNMA
form of "Completion/Repair and Security Agreement" shall require Borrower to pay
to WMF certain periodic administrative and inspection fees with respect to the
Completion/Repair Deposit.
13. WMF Counsel. WMF shall be represented by transactional
counsel ("WMF's Counsel") in connection with the preparation and review of the
Mortgage Loan Documents and all matters relating to the Mortgage Loan. Upon
acceptance of this Commitment and WMF's acknowledgment thereof you may contact
Scott Carter of WMF at (703) 610-1308 to obtain the name of WMF's Counsel and to
discuss closing requirements and logistics. On the Mortgage Loan
<PAGE> 8
Closing Date, Borrower shall pay the fees of WMF's Counsel in immediately
available funds (or an amount equal to such fees shall be deducted from the
Mortgage Loan proceeds funded by WMF). Absent the need to seek FNMA waivers or
the presence of unusual circumstances or unanticipated legal issues, WMF's
Counsel fees will be $5,000.00.
14. Special Conditions. In addition to all the other terms,
conditions and provisions of this Commitment, WMF's obligation to make the
Mortgage Loan to Borrower is subject to satisfaction of the following Special
Conditions in a manner acceptable to WMF in its sale and absolute determination,
prior to the Rate Setting Date and WMF obtaining the FNMA Commitment:
1. Receipt and review of all outstanding application documents
in a forth acceptable to WMF in its sole discretion.
2. Receipt and review of a certified rent roll dated five days
prior to the Rate Setting Date, as well as an operating
statement dated within 30 days.
3. O&M for asbestos to remain in-place for the term of the
second mortgage loan.
4. Borrower will be required to sign a repair agreement for
completion of immediate repairs as outlined by the Engineer.
5. Executed management that states a 3.5% management fee.
6. Completion of WMF's site inspection.
7. Assets (Oasis Landings, Rainbow, Vintage and Hills) which
are crossed may not exceed 65% loan-to-value or go below a
1.35x debt service coverage on a combined basis.
8. WMF acknowledges approval of the assumption of the first
mortgage on Oasis Landing. The total Assumption Fee due to
WMF is one percent (1.00%) of the unpaid principal balance
of the Mortgage Loan as of the date of the simultaneous
closing or the assumption and the second mortgage loan
("Assumption Fee"). The $3,000 non-refundable Review Fee is
still due to WMF. Upon acceptance of this commitment, an
Assumption Approval Deposit in the amount of one-half of one
percent (0.5%) of the current unpaid principal balance of
the Mortgage Loan shall be paid to WMF. At the time of
closing, this Assumption Approval Deposit shall be credit
toward the full Assumption Fee. In the event the assumption
does not close, WMF shall return the Assumption Approval
Deposit less any out of pocket costs incurred by WMF in
connection with the Assumption Application including, but
not limited to, WMF's legal fees. WMF shall be entitled to
commingle the Assumption Approval Deposit with other funds
and shall have no obligation to pay or credit any interest
on the Assumption Approval Deposit. On the date of the
closing, the balance of the Assumption Fee set forth above
shall be paid to WMF in immediately available funds.
15. General Conditions and Exhibits. The General Conditions and
Exhibits attached to this Commitment are an integral part of this Commitment,
and are hereby expressly incorporated into, and by this reference made a part
of, this Commitment.
16. Complete Agreement; Amendment and Waiver. This Commitment,
and the General Conditions and Exhibits attached hereto, contain the complete
and entire understanding of the parties hereto of WMF's agreement to provide the
Mortgage Loan as described in this Commitment. No changes or amendments to this
Commitment shall be valid unless made in writing and similarly executed by the
parties hereto. (WMF hereby expressly advised Borrower that only members of
<PAGE> 9
WMF's Loan Commitment have authority to bind WMF to this Commitment shall be
valid unless made in writing and similarly executed by the parties hereto. (WMF
hereby expressly advises Borrower that only members of WMF's Loan Commitment
have authority to bind WMF to amendments to this Commitment). No specific waiver
of any of the terms of this Commitment shall be considered a general waiver.
17. Survival: Conflicting Provisions. The terms and conditions of
this Commitment shall survive the closing and funding of the Mortgage Loan. In
the event of any conflict between the terms and conditions of this Commitment
and the terms and conditions of the Mortgage Loan Documents, the latter shall
control.
18. Applicable Law. The rights and obligations of the parties
with respect to this Commitment shall be determined in accordance with the laws
of the Commonwealth of Virginia.
19. Counterparts. This Commitment may be executed in any number
of counterparts, each of which together shall constitute one and the same
instrument.
Enclosed are two (2) copies of this Commitment. If the terms,
conditions and provisions of this Commitment are satisfactory, please
acknowledge Borrower's acceptance of this Commitment by executing and delivering
to WMF the two (2) copies of this Commitment, together with the Commitment
Issuance Fee. WMF will acknowledge receipt of Borrower's acceptance of this
Commitment and return one (1) copy of this Commitment to Borrower. Borrower's
acceptance of this Commitment, together with the Commitment Issuance Fee, must
be received by WMF no later than 5:00 p.m. Vienna, Virginia time on the
Commitment Acceptance Date set forth above, otherwise, this Commitment shall
automatically terminate without further notice, WMF's offer to make the Mortgage
Loan shall be void and of no further force or effect and WMF shall be relieved
of any further obligations to Borrower hereunder or otherwise. At WMF's sole and
exclusive option and provided Borrower pays to WMF in connection therewith a
nonrefundable extension fee of .125% of the Loan Amount, an extension of the
Commitment Acceptance Date may be granted. The duration of any such extension
shall be as determined by WMF in its sole and exclusive discretion.
Very truly yours,
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.
/s/Joan C. May
Joan C. May
Senior Vice President
<PAGE> 1
Exhibit 99.7
CAMDEN PROPERTY TRUST ANNOUNCES CLOSING OF JOINT VENTURE
Houston, TEXAS (June 30, 1998) -- Camden Property Trust (NYSE: CPT) announced
today the completion of the sale of 19 apartment communities containing 5,119
apartment homes for $248 million to Sierra-Nevada Multifamily Investments, LLC.
Camden is the managing member of the LLC, owning a 20% interest, and will
provide property management and asset management services to the joint venture
for a fee. The remaining 80% is owned by a Fortune 500 company pension fund
represented by Schroder Real Estate Associates. Property financing was provided
by Freddie Mac and Fannie Mae, for a total of approximately $187.0 million of
new debt and the assumption of $9.9 million of existing indebtedness.
Camden's Chairman, Ric Campo said, "The transaction should allow Camden to
continue to enjoy the market dominance of the Oasis brand in Las Vegas. As a
result of this transaction, 13% of Camden's total portfolio will be in Las
Vegas. The $236 million in net proceeds from the joint venture allows Camden to
reduce its debt and provides capital for future investments."
Stephen Hansen, Senior Vice President of Schroder Real Estate Associates,
commented, "This transaction is a good example of how co-investment between
private institutional capital and public REITs can be mutually beneficial."
Camden Property Trust is a fully integrated real estate investment trust (REIT)
engaged in the ownership, development, acquisition, marketing, management, and
disposition of multifamily apartment communities. Camden Property Trust owns and
operates 148 apartment communities containing 49,389 apartment homes in the
Sunbelt and Midwestern markets from Florida to California. Upon completion of
fourteen properties under development, the Company's portfolio will increase to
55,069 apartment homes in 162 communities.
In addition to historical information, this press release contains
forward-looking statements under the federal securities law. These statements
are based on current expectations, estimates and projections about the industry
and markets in which Camden operates, management's beliefs, and assumptions made
by management. Forward-looking statements are not guarantees of future
performance and involve certain credit risks and uncertainties, which are
difficult to predict.
For more information, please contact Richard J. Campo or D. Keith Oden at
1-800-9Camden or 713/964-3555, or visit our web site at
http://www.camdenprop.com.
