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As filed with the Securities and Exchange Commission on May 13, 1999
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GABLES RESIDENTIAL TRUST
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 58-2077868
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
2859 PACES FERRY ROAD
OVERLOOK III, SUITE 1450
ATLANTA, GEORGIA 30339
(770) 436-4600
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
CHRIS D. WHEELER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GABLES RESIDENTIAL TRUST
2859 PACES FERRY ROAD
OVERLOOK III, SUITE 1450
ATLANTA, GEORGIA 30339
(770) 436-4600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
GILBERT G. MENNA, P.C.
ETTORE A. SANTUCCI, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X
If this form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.__
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.__
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box.__
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum
Amount to be Offering Price Per Aggregate Offering Amount of
Title of Shares Being Registered Registered Share(1) Price(1) Registration Fee
Common Shares of Beneficial
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<S> <C> <C> <C> <C>
Interest, par value $.01 per 665,191 $23.4375 $15,590,414 $4,334.14
share
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c) based on the average of the high and low sales prices on the
New York Stock Exchange on May 7, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION. DATED MAY 13, 1999.
PROSPECTUS
665,191 SHARES
GABLES RESIDENTIAL TRUST
COMMON SHARES
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The selling shareholders identified in this prospectus, and any of
their pledgees, donees, transferees or other successors in interest, may offer
to sell up to an aggregate of 665,191 common shares of Gables Residential Trust.
The selling shareholders may only offer these shares for sale if they exercise
their right to tender their units of Gables Realty Limited Partnership, our
operating partnership, for cash, and we exercise our right to issue common
shares to them instead of cash. We will not receive any of the proceeds from the
sale of the shares by the selling shareholders, but we have agreed to bear the
expenses of registering such shares.
Our common shares are listed on the New York Stock Exchange under the
symbol "GBP."
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Investing in our common shares involves risk. In considering whether to
invest, you should carefully consider the matters discussed under "Risk Factors"
beginning on page 4 of this prospectus.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL
YOU OTHERWISE.
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The date of this prospectus is May __, 1999.
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PROSPECTUS SUMMARY
This summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. As this is a
summary, it may not contain all information that is important to you. You should
read this entire prospectus carefully before deciding whether to invest in our
common shares.
Unless the context otherwise requires, all references to "we," "us" or
"our company" in this prospectus refer collectively to Gables Residential Trust,
a Maryland real estate investment trust, and its subsidiaries, including Gables
Realty Limited Partnership, a Delaware limited partnership, and their respective
predecessor entities for the applicable periods, considered as a single
enterprise.
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GABLES RESIDENTIAL TRUST
- We are one of the largest owners, operators, developers and
acquirors of multifamily apartment communities in the
southeastern and southwestern regions of the United States. We
have a strategic focus on the ownership of Class AA/A
multifamily apartment communities that are situated in urban
locations or master-planned communities near major employment
centers in these regions.
- We obtain ownership in apartment communities by developing
vacant land into a new community or by acquiring an existing
community which we sometimes reposition or redevelop. In
selecting sites for development, redevelopment or acquisition,
we focus on locations with close proximity to expanding
employment centers and convenience to recreation areas,
entertainment, shopping and dining. As a result, we believe
that the communities we currently own and the land parcels on
which we have the right to develop communities are attractive
to the type of residents we seek.
- We are a real estate investment trust that was organized under
the laws of the State of Maryland in 1993 to continue and
expand the operations of our privately owned predecessor
organization. We have elected to be taxed as a real estate
investment trust for federal income tax purposes and operate
principally through Gables Realty Limited Partnership, a
Delaware limited partnership. We are currently an approximate
81% economic owner of the common equity of Gables Realty
Limited Partnership. We control Gables Realty Limited
Partnership through Gables GP, Inc., a Texas corporation and a
wholly-owned subsidiary, which is the sole general partner of
Gables Realty Limited Partnership.
- Our executive offices are located at 2859 Paces Ferry Road in
Atlanta, Georgia 30339 and our telephone number is (770)
436-4600.
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THE OFFERING
This prospectus relates to up to 665,191 common shares that may be
offered for sale by the selling shareholders if, and to the extent that, they
tender their common units of Gables Realty Limited Partnership for cash, and we
exercise our right to issue common shares to them instead of cash. Gables Realty
Limited Partnership originally issued these units to the selling shareholders in
connection with our April, 1998 acquisitions of four properties in Houston,
Texas. Each selling shareholder is a former owner of one of the four properties.
In connection with each acquisition, we entered into a registration rights and
lock-up agreement with the appropriate selling shareholder. Under the terms of
those agreements, three of the selling shareholders may not tender their units
for redemption until after May 14, 1999, and one of the selling shareholders may
not tender its units for redemption until after May 22, 1999. We are registering
the common shares covered by this prospectus in order to fulfill our contractual
obligations under the registration rights and lock-up agreements. Registration
of these shares does not necessarily mean that all or any portion of such shares
will be offered for sale by the selling shareholders.
Pursuant to the Fourth Amended and Restated Agreement of Limited
Partnership of Gables Realty Limited Partnership, unitholders may tender their
common units of Gables Realty Limited Partnership for cash equal to the value of
an equivalent number of our common shares. In lieu of delivering cash, however,
we may, at our option, choose to acquire any units so tendered by issuing common
shares in exchange for the units. The shares will be exchanged for units on a
one-for-one basis. This one-for-one exchange ratio may be adjusted to prevent
dilution.
We have agreed to bear the expenses of the registration of the common
shares under federal and state securities laws, but we will not receive any
proceeds from the sale of any common shares offered under this prospectus.
TAX STATUS OF GABLES RESIDENTIAL TRUST
We have elected to qualify as a real estate investment trust under
Sections 856 through 860 of the Internal Revenue Code. As long as we qualify for
taxation as a real estate investment trust, we generally will not be subject to
federal income tax on that portion of our ordinary income and capital gains that
is currently distributed to our shareholders. Even if we qualify for taxation as
a real estate investment trust, we may be subject to state and local taxes on
our income and property and to federal income and excise taxes on our
undistributed income.
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RISK FACTORS
Before you invest in our common shares, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the information included or
incorporated by reference in this prospectus before you decide to purchase our
common shares. This section includes or refers to certain forward-looking
statements. You should refer to the explanation of the qualifications and
limitations on forward-looking statements discussed on page 11.
DEVELOPMENT AND CONSTRUCTION RISKS COULD IMPACT OUR PROFITABILITY.
We intend to continue to develop and construct multifamily apartment
home communities. Our development and construction activities may be exposed to
the following risks:
- we may be unable to obtain, or face delays in obtaining,
necessary zoning, land-use, building, occupancy, and other
required governmental permits and authorizations, which could
result in increased costs and could require us to abandon our
activities entirely with respect to the project for which we
are unable to obtain permits or authorizations;
- we may abandon development opportunities that we have already
begun to explore and as a result we may fail to recover
expenses already incurred in connection with exploring such
development opportunities;
- we may incur construction costs for a community which exceed
our original estimates due to increased materials, labor or
other costs, which could make completion of the community
uneconomical and we may not be able to increase rents to
compensate for the increase in construction costs;
- occupancy rates and rents at a newly completed development may
fluctuate depending on a number of factors, including market
and economic conditions, and may result in the community not
being profitable;
- we may not be able to obtain financing with favorable terms
for the development of a community, which may make us unable
to proceed with its development; and
- we may be unable to complete construction and lease-up of a
community on schedule, resulting in increased debt service
expense and construction or reconstruction costs.
Construction costs have been increasing in our target markets, and the
cost to update acquired communities has, in some cases, exceeded our original
estimates. We may experience similar cost increases in the future. Our inability
to charge rents that will be sufficient to offset the effects of any increases
in reconstruction costs may impact our profitability.
ACQUISITIONS MAY NOT YIELD ANTICIPATED RESULTS.
We intend to continue to acquire multifamily apartment home communities
on a select basis. Our acquisition activities and their success may be exposed
to the following risks:
- the acquired property may fail to perform as we expected in
analyzing our investment; and
- our estimate of the costs of repositioning or redeveloping the
acquired property may prove inaccurate.
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POLICY OF LIMITING DEBT LEVEL MAY BE CHANGED.
While our current policy is not to incur debt that would make a ratio
of debt-to-total-market-capitalization greater than 60%, our Amended and
Restated Declaration of Trust, as amended, and Second Amended and Restated
Bylaws, as amended, do not contain any such limitations. Our ratio of
debt-to-total-market-capitalization as of March 31, 1999 was approximately 46%.
Throughout this prospectus we will refer to our Amended and Restated Declaration
of Trust, as amended, as our "declaration of trust" and to our Second Amended
and Restated Bylaws, as amended, as our "bylaws." Because we do not have any
debt incurrence restrictions in our declaration of trust or bylaws, we could
increase the amount of outstanding debt at any time. In the event that the price
of our common shares increases, we could incur additional debt without
increasing the ratio of debt-to-total-market-capitalization and without a
concurrent increase in our ability to service such additional debt.
INCURRENCE OF ADDITIONAL DEBT AND RELATED ISSUANCE OF EQUITY MAY BE DILUTIVE TO
SHAREHOLDERS.
Future issuance of equity may dilute the interest of existing
shareholders. To the extent that additional equity securities are issued to
finance future developments and acquisitions instead of incurring additional
debt, the interests of our existing shareholders could be diluted. Our ability
to execute our business strategy depends on our access to an appropriate blend
of debt financing, including unsecured lines of credit and other forms of
secured and unsecured debt, and equity financing, including common and preferred
equity.
INSUFFICIENT CASH FLOW COULD AFFECT OUR DEBT FINANCING AND CREATE REFINANCING
RISK.
We are subject to the risks normally associated with debt financing,
including the risk that our cash flow will be insufficient to meet required
payments of principal and interest. We anticipate that only a small portion of
the principal of our debt will be repaid prior to maturity. Although we may be
able to use cash flow to make future principal payments, we cannot assure you
that sufficient cash flow will be available to make all required principal
payments. Therefore, we are likely to need to refinance at least a portion of
our outstanding debt as it matures. There is a risk that we may not be able to
refinance existing debt or that the terms of any refinancing will not be as
favorable as the terms of the existing debt.
RISING INTEREST RATES WOULD INCREASE INTEREST COSTS AND COULD AFFECT THE MARKET
PRICE OF OUR COMMON SHARES.
We expect to incur variable rate debt under credit facilities in
connection with the acquisition, construction and reconstruction of multifamily
apartment communities in the future, as well as for other purposes. Accordingly,
if interest rates increase, so will our interest costs to the extent the
variable rate increase is not hedged effectively. In addition, an increase in
market interest rates may lead purchasers of our common shares to demand a
higher annual yield, which could adversely affect the market price of our
outstanding common shares.
INTEREST RATE HEDGING CONTRACTS MAY INVOLVE MATERIAL CHANGES AND MAY NOT PROVIDE
ADEQUATE PROTECTION.
From time to time when we anticipate offerings of debt securities, we
may seek to decrease our exposure to fluctuations in interest rates during the
period prior to the pricing of the securities by entering into interest rate
hedging contracts. We may do so to increase the predictability of our financing
costs. Also, from time to time we rely on interest rate hedging contracts to
offset our exposure to moving interest rates with respect to debt financing
arrangements at variable interest rates. The settlement of interest rate hedging
contracts has in the past and may in the future involve charges to earnings that
may be material in amount. Such charges are typically driven by the extent and
timing of fluctuations in interest rates. Despite our efforts to minimize our
exposure to interest rate fluctuations, there is no guarantee that we will be
able to maintain our hedging contracts at their
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existing levels of coverage or that the amount of coverage maintained will cover
all of our outstanding indebtedness at any such time. If our efforts are
unsuccessful, we may not meet our objective of reducing the extent of our
exposure to interest rate fluctuations.
BOND COMPLIANCE REQUIREMENTS COULD LIMIT INCOME AND RESTRICT USE OF COMMUNITIES
AND CAUSE FAVORABLE FINANCING TO BECOME UNAVAILABLE.
Some of our multifamily apartment communities are financed with
obligations issued by various local government agencies or instrumentalities,
the interest on which is exempt from federal income taxation. These obligations
are commonly referred to as "tax-exempt bonds." The bond compliance requirements
for our current tax-exempt bonds, and the requirements of any future tax-exempt
bond financing, may have the effect of limiting our income from communities
subject to such financing. Under the terms of our tax-exempt bonds, we must
comply with various restrictions on the use of the communities financed by such
bonds, including a requirement that a percentage of apartments be made available
to low and middle income households.
In addition, some of our tax-exempt bond financing documents require
that a financial institution guarantee payment of the principal of, and interest
on, the bonds. The guarantee may take the form of a letter of credit, surety
bond, guarantee agreement or other additional collateral. If the financial
institution defaults in its guarantee obligations, or we are unable to renew the
applicable guarantee or otherwise post satisfactory collateral, a default will
occur under the applicable tax-exempt bonds and the community could be
foreclosed upon.
FAILURE TO GENERATE SUFFICIENT REVENUE COULD LIMIT CASH FLOW AVAILABLE FOR
DISTRIBUTIONS TO SHAREHOLDERS.
If our communities do not generate revenues sufficient to meet our
operating expenses, including debt service and capital expenditures, our cash
flow and ability to pay distributions to our shareholders will be adversely
affected. The following factors, among others, may adversely affect the revenues
generated by our apartment communities:
- the national and local economic climates;
- local real estate market conditions, such as oversupply of
apartment homes;
- the perceptions by prospective residents of the safety,
convenience and attractiveness of our communities and the
neighborhoods where they are located;
- our ability to provide adequate management, maintenance and
insurance; and
- increased operating costs, including real estate taxes and
utilities.
Significant expenditures associated with each investment such as debt
service payments, if any, real estate taxes, insurance and maintenance costs are
generally not reduced when circumstances cause a reduction in income from a
community. For example, if we mortgage a community to secure payment of debt and
are unable to meet the mortgage payments, we could sustain a loss as a result of
foreclosure on the community or the exercise of other remedies by the mortgagee.
UNFAVORABLE CHANGES IN MARKET AND ECONOMIC CONDITIONS COULD HURT OCCUPANCY OR
RENTAL RATES.
The market and economic conditions in metropolitan areas of the
southeastern and southwestern regions of the United States may significantly
affect apartment home occupancy or rental rates. Occupancy and rental rates in
those markets, in turn, may significantly affect our
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profitability and our ability to satisfy our financial obligations. The risks
that may affect conditions in those markets include the following:
- the economic climate which may be adversely impacted by plant
closings, industry slowdowns and other factors;
- real estate conditions such as an oversupply of, or a reduced
demand for, apartment homes;
- a decline in household formation that adversely affects
occupancy or rental rates;
- the inability or unwillingness of residents to pay rent
increases;
- the potential effect of rent control or rent stabilization
laws, or other laws regulating housing, on any of our
communities, which could prevent us from raising rents to
offset increases in operating costs; and
- the rental market which may limit the extent to which rents
may be increased to meet increased expenses without decreasing
occupancy rates.
Any of these risks could adversely affect our ability to achieve our
desired yields on our communities and to make expected distributions to
shareholders.
DIFFICULTY OF SELLING APARTMENT COMMUNITIES COULD LIMIT FLEXIBILITY.
Real estate in the metropolitan areas of the southeastern and
southwestern regions of the United States can be hard to sell, especially if
market conditions are poor. This may limit our ability to change our portfolio
promptly in response to changes in economic or other conditions. In addition,
federal tax laws limit our ability to sell communities that we have owned for
fewer than four years, and this may affect our ability to sell communities
without adversely affecting returns to our shareholders.
INCREASED COMPETITION COULD LIMIT OUR ABILITY TO LEASE APARTMENT HOMES OR
INCREASE OR MAINTAIN RENTS.
Our apartment communities in metropolitan areas compete with numerous
housing alternatives in attracting residents, including other rental apartments
and single-family homes that are available for rent, as well as new and existing
single-family homes for sale. Competitive residential housing in a particular
area could adversely affect our ability to lease apartment homes and to increase
or maintain rents.
SIGNIFICANT NEW OPERATIONS AND ACQUIRED COMMUNITIES UNDER MANAGEMENT REQUIRE
INTEGRATION WITH THE EXISTING BUSINESS AND, IF NOT PROPERLY INTEGRATED, COULD
CREATE INEFFICIENCIES.
Our ability to manage growth effectively will require us, among other
things, to successfully apply our experience in managing our existing portfolio
of multifamily apartment communities to a larger number of properties. In
addition, we must be able to successfully manage the integration of new
management and operations personnel as our organization grows in size and
complexity.
FAILURE TO SUCCEED IN NEW MARKETS MAY LIMIT GROWTH.
We may make selected acquisitions outside of our current market areas
from time to time, if appropriate opportunities arise. Our historical experience
in the southeastern and southwestern regions of the United States does not
ensure that we will be able to operate successfully in other market areas new to
us. We may be exposed to a variety of risks if we choose to enter into new
markets. These risks include, among others:
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- a lack of market knowledge and understanding of the local
economies;
- an inability to obtain land for development or to identify
acquisition opportunities;
- an inability to obtain construction tradespeople; and
- an unfamiliarity with local governmental and permitting
procedures.
DECREASE OF FEE MANAGEMENT BUSINESS WOULD RESULT IN DECREASE IN REVENUES.
We manage properties owned by third parties for a fee. Most of our
management contracts are terminable upon 30-days notice. There is a risk that
the management contracts will be terminated and/or that the rental revenues upon
which management fees are based will decline and management fee income will
decrease accordingly.
SHARE OWNERSHIP LIMIT MAY PREVENT TAKEOVERS BENEFICIAL TO SHAREHOLDERS.
For us to maintain our qualification as a real estate investment trust
for federal income tax purposes, not more than 50% in value of our outstanding
shares of beneficial interest may be owned, directly or indirectly, by five or
fewer individuals. As defined for federal income tax purposes, the term
"individuals" includes a number of specified entities. See "Federal Income Tax
Considerations and Consequences of Your Investment" beginning on page 21. Our
declaration of trust includes restrictions regarding transfers of our shares of
beneficial interest and ownership limits that are intended to assist us in
satisfying such limitations. The ownership limit may have the effect of
delaying, deferring or preventing someone from taking control of us, even though
such a change of control could involve a premium price for our shareholders or
otherwise could be in our shareholders' best interests. See "Limits on Ownership
of Shares of Beneficial Interest" beginning on page 16.
LIMITS ON CHANGES IN CONTROL MAY DISCOURAGE TAKEOVER ATTEMPTS BENEFICIAL TO
SHAREHOLDERS.
Our declaration of trust, our bylaws and Maryland law may have the
effect of discouraging a third party from attempting to acquire us which makes a
change in control more unlikely. The result may be a limitation on the
opportunity for shareholders to receive a premium for their common shares over
then-prevailing market prices. See "Important Provisions of Maryland Law and Our
Declaration of Trust and Bylaws" beginning on page 18.
COMPLIANCE OR FAILURE TO COMPLY WITH AMERICANS WITH DISABILITIES ACT AND OTHER
SIMILAR LAWS COULD RESULT IN SUBSTANTIAL COSTS.
The Americans with Disabilities Act generally requires that public
accommodations, including office buildings and hotels be made accessible to
disabled persons. Noncompliance could result in imposition of fines by the
federal government or the award of damages to private litigants. If, pursuant to
the Americans with Disabilities Act, we are required to make substantial
alterations and capital expenditures in one or more of our properties, including
the removal of access barriers, it could adversely affect our financial
condition and results of operations, as well as the amount of cash available for
distribution to our shareholders.
A number of additional federal, state and local laws exist that impact
our communities with respect to access thereto by disabled persons. For example,
the Fair Housing Act of 1988 requires that apartment communities first occupied
after March 13, 1990 be accessible to the handicapped. Noncompliance with the
Fair Housing Act of 1988 could result in the imposition of fines or an award of
damages to private litigants.
We cannot predict the ultimate cost of compliance with the Americans
with Disabilities Act or other similar legislation. The costs could be
substantial.
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FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST WOULD CAUSE US TO BE TAXED
AS A CORPORATION WHICH WOULD SIGNIFICANTLY LOWER FUNDS AVAILABLE FOR
DISTRIBUTION TO SHAREHOLDERS.
If we fail to qualify as a real estate investment trust for federal
income tax purposes, we will be taxed as a corporation. We believe that we are
organized and qualified as a real estate investment trust, and intend to operate
in a manner that will allow us to continue to qualify as a real estate
investment trust. However, we cannot assure you that we are qualified as such,
or that we will remain qualified as such in the future. This is because
qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue Code as to which
there are only limited judicial and administrative interpretations, and involves
the determination of various factual matters and circumstances not entirely
within our control. In addition, future legislation, new regulations,
administrative interpretations or court decisions may significantly change the
tax laws or the application of the tax laws with respect to qualification as a
real estate investment trust for federal income tax purposes or the federal
income tax consequences of such qualification.
If, in any taxable year, we fail to qualify as a real estate investment
trust, we will be subject to federal income tax on our taxable income at regular
corporate rates, plus any applicable alternative minimum tax. In addition,
unless we are entitled to relief under applicable statutory provisions, we would
be disqualified from treatment as a real estate investment trust for the four
taxable years following the year in which we lose our qualification. The
additional tax liability resulting from the failure to qualify as a real estate
investment trust would significantly reduce or eliminate the amount of funds
available for distribution to our shareholders. Furthermore, we would no longer
be required to make distributions to our shareholders. See "Federal Income Tax
Considerations and Consequences of Your Investment" beginning on page 21.
POTENTIAL LIABILITY FOR ENVIRONMENTAL CONTAMINATION COULD RESULT IN SUBSTANTIAL
COSTS.
We are in the business of acquiring, owning, operating and developing
real estate properties. From time to time we will sell to third parties some of
our properties. Under various federal, state and local environmental laws, we
may be required, often regardless of our knowledge or responsibility but solely
because of our current or previous ownership or operation of real estate, to
investigate and remediate the effects of hazardous or toxic substances or
petroleum product releases at our properties. We may also be held liable to a
governmental entity or to third parties for property damage and for
investigation and clean-up costs incurred by us in connection with any
contamination. These costs could be substantial. The presence of such substances
or the failure to properly remediate the contamination may materially and
adversely affect our ability to borrow against, sell or rent the affected
property. In addition, applicable environmental laws create liens on
contaminated sites in favor of the government for damages and costs it incurs in
connection with the contamination.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information electronically with the Securities and Exchange Commission.
You may read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., Chicago, Illinois, and New York, New York. Please call the
SEC at 1-800-SEC-0330 for further information about the public reference rooms.
Our SEC filings are also available to the public from the SEC's Web site at
http://www.sec.gov. In addition, you may look at our SEC filings at the offices
of the New York Stock Exchange, which is located at 20 Broad Street, New York,
New York 10005. Our SEC filings are available at the New York Stock Exchange
because our common shares are listed and traded on the New York Stock Exchange.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus is part of a registration statement that we have filed
with the SEC to register the common shares offered in this prospectus. This
prospectus does not repeat important information that you can find in our
registration statement and its exhibits or in the reports and other documents
that we file with the SEC. Our SEC file number is 001-12590. The SEC allows us
to "incorporate by reference" the information we file with them. This means that
we can disclose important information to you by referring you to other documents
that are legally considered to be part of this prospectus, and information that
we file later with the SEC will automatically update and supersede the
information in this prospectus and the documents listed below.
We incorporate by reference the documents listed below, which we have
already filed with the SEC, and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the common shares offered in this prospectus are sold:
- our Annual Report on Form 10-K for the year ended December 31,
1998;
- our Proxy Statement dated April 12, 1999 prepared in
connection with our Annual Meeting of Shareholders held on May
25, 1999;
- our Current Reports on Form 8-K dated March 8, 1999 and April
5, 1999; and
- the description of our common shares contained in our
Registration Statement on Form 8-A, including all amendments
and reports updating such description.
YOU MAY REQUEST A COPY OF THESE DOCUMENTS INCORPORATED BY REFERENCE,
AND ANY EXHIBITS WE HAVE SPECIFICALLY INCORPORATED BY REFERENCE TO AN EXHIBIT IN
THIS PROSPECTUS, AT NO COST BY WRITING OR TELEPHONING US AT THE FOLLOWING
ADDRESS: GABLES RESIDENTIAL TRUST, 2859 PACES FERRY ROAD, OVERLOOK III, SUITE
1450, ATLANTA, GEORGIA 30339, ATTENTION: CHIEF FINANCIAL OFFICER. OUR TELEPHONE
NUMBER IS (770) 436-4600.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or the documents incorporated by reference is accurate as of any date
other than the date on the front of this prospectus or those documents.
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FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference
into this prospectus, contains statements that are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When we use the words "believe,"
"expect," "anticipate," "intend," "estimate," "assume" and other similar
expressions, they are generally forward-looking statements. These statements
include, among other things, statements regarding our intent, belief or
expectations with respect to:
- our declaration or payment of distributions;
- our potential developments or acquisitions or dispositions of
properties, assets or other public or private companies;
- our policies regarding investments, indebtedness,
acquisitions, dispositions, financings, conflicts of interest
and other matters;
- our qualification as a real estate investment trust under the
Internal Revenue Code;
- the real estate markets in the southeastern and southwestern
regions of the United States and in general;
- the availability of debt and equity financing;
- interest rates;
- general economic conditions; and
- trends affecting our financial condition or results of
operations.
You should not rely on forward-looking statements, because they involve
known and unknown risks, uncertainties and other factors, some of which are
beyond our control. These risks, uncertainties and other factors may cause our
actual results, performance or achievements to differ materially from the
anticipated future results, performance or achievements expressed or implied by
the forward-looking statements. In addition to the factors discussed under the
preceding "Risk Factors" section, some of the factors that might cause these
differences include, but are not limited to, the following:
- we may fail to secure or may abandon development
opportunities;
- construction costs of a community may exceed original
estimates;
- construction and lease-up may not be completed on schedule,
resulting in increased debt service expense and construction
costs and reduced rental revenues;
- occupancy rates and market rents may be adversely affected by
local economic and market conditions which are beyond our
control;
- financing may not be available to us, or may not be available
on favorable terms;
- our cash flow may be insufficient to meet required payments of
principal and interest; and
- our existing indebtedness may mature in an unfavorable credit
environment, preventing such indebtedness from being
refinanced, or, if refinanced, causing such refinancing to
occur on terms that are not as favorable as the terms of the
existing indebtedness.
We caution you that, while forward-looking statements reflect our good
faith beliefs, they are not guarantees of future performance. In addition, we
disclaim any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
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OUR COMPANY
GABLES RESIDENTIAL TRUST
- We are one of the largest owners, operators, developers and
acquirors of multifamily apartment communities in the
southeastern and southwestern regions of the United States. We
have a strategic focus on the ownership of Class AA/A
multifamily apartment communities that are situated in urban
locations or master-planned communities near major employment
centers in these regions.
- We obtain ownership in apartment communities by developing
vacant land into a new community or by acquiring an existing
community which we sometimes reposition or redevelop. In
selecting sites for development, redevelopment or acquisition,
we focus on locations with close proximity to expanding
employment centers and convenience to recreation areas,
entertainment, shopping and dining. As a result, we believe
that the communities we currently own and the land parcels on
which we have the right to develop communities are attractive
to the type of residents we seek.
- We are a real estate investment trust that was organized under
the laws of the State of Maryland in 1993 to continue and
expand the operations of our privately owned predecessor
organization. We have elected to be taxed as a real estate
investment trust for federal income tax purposes and operate
principally through Gables Realty Limited Partnership, a
Delaware limited partnership. We are currently an approximate
81% economic owner of the common equity of Gables Realty
Limited Partnership. We control Gables Realty Limited
Partnership through Gables GP, Inc., a Texas corporation and a
wholly-owned subsidiary, which is the sole general partner of
Gables Realty Limited Partnership.
- Our executive offices are located at 2859 Paces Ferry Road in
Atlanta, Georgia 30339 and our telephone number is (770)
436-4600.
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DESCRIPTION OF COMMON SHARES
The following is a description of the material terms and provisions of
our common shares. It may not contain all the information that is important to
you. You can access complete information by referring to our declaration of
trust and bylaws.
GENERAL
Under our declaration of trust, we have authority to issue 100,000,000
common shares, par value $.01 per share. As of May 1, 1999, 26,498,495 common
shares were issued and outstanding. In addition, as of May 1, 1999, 6,283,391
common units of Gables Realty Limited Partnership which are exchangeable for
common shares on a one-for-one basis were outstanding. All common shares, when
issued, will be duly authorized, fully paid and nonassessable. This means that
the full price for the outstanding common shares will have been paid at the time
of issuance and that any holder of our common shares will not later be required
to pay us any additional money for such common shares.
DIVIDENDS
Subject to the preferential rights of any other shares of beneficial
interest or the provisions of our declaration of trust regarding excess shares,
holders of common shares may receive distributions out of assets that we can
legally use to pay distributions, when and if, they are authorized and declared
by our Board of Trustees. Each common shareholder shares in the same proportion
as other common shareholders out of assets that we can legally use to pay
distributions after we pay or make adequate provision for all of our known debts
and liabilities in the event we are liquidated, dissolved or our affairs are
wound up.
VOTING RIGHTS
Subject to the provisions of our declaration of trust regarding excess
shares, holders of common shares will have the exclusive power to vote on all
matters presented to our shareholders, including the election of trustees,
except as otherwise provided by Maryland law or as provided with respect to any
other shares of beneficial interest. Holders of common shares are entitled to
one vote per share. There is no cumulative voting in the election of our
trustees, which means that at any meeting of our shareholders, the holders of a
majority of the outstanding common shares can cast all of their votes for each
trustee to be elected at such meeting, elect all of the trustees then standing
for election and the votes held by the holders of the remaining common shares
will not be sufficient to elect any trustee.
OTHER RIGHTS
Subject to the provisions of our declaration of trust regarding excess
shares, all common shares have equal dividend, distribution, liquidation and
other rights, and have no preference, appraisal or exchange rights, except for
any appraisal rights provided by Maryland law.
Holders of common shares have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any of our securities.
Our declaration of trust prohibits us from merging or selling all or
substantially all of our assets without the approval of a majority of the
outstanding shares that are entitled to vote on such matters. In addition,
Gables Realty Limited Partnership's partnership agreement requires that such
actions also be approved by partners holding 75% of the common units of Gables
Realty Limited Partnership.
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RESTRICTIONS ON OWNERSHIP
For us to qualify as a real estate investment trust under the Internal
Revenue Code, no more than 50% in value of our outstanding shares of beneficial
interest may be owned, directly or indirectly, by five or fewer individuals
during the last half of a taxable year. To assist us in meeting this
requirement, we may take actions such as the automatic exchange of shares in
excess of this ownership restriction into excess shares to limit the beneficial
ownership of our outstanding equity securities, directly or indirectly, by one
individual. See "Limits on Ownership of Shares of Beneficial Interest" beginning
on page 16.
TRANSFER AGENT
The transfer agent and registrar for our common shares is BankBoston,
N.A., Boston, Massachusetts.
PREFERRED SHARES
Under our declaration of trust, we have authority to issue up to
20,000,000 preferred shares. At May 1, 1999, we had outstanding 4,600,000 shares
of 8.30% Series A Cumulative Redeemable Preferred Shares and 180,000 shares of
5.00% Series Z Cumulative Redeemable Preferred Shares. Additionally, we have
reserved 2,000,000 shares of 8.625% Series B Cumulative Redeemable Preferred
Shares, none of which are currently outstanding but which may be issued upon
exchange of preferred units of Gables Realty Limited Partnership, as described
below. The general terms of our cumulative redeemable preferred shares are as
follows:
- 8.30% Series A Cumulative Redeemable Preferred Shares. We
currently have outstanding 4,600,000 Series A shares.
Dividends are cumulative from the date of original issuance
and are payable quarterly at the rate of 8.30% per annum of
the $25.00 liquidation preference. The Series A shares rank as
to rights to dividends and in liquidation on a parity with the
Series B shares and senior to the Series Z shares. We may
redeem the Series A shares at any time on or after July 24,
2002 for cash at a redemption price of $25.00 per share, plus
all accrued and unpaid dividends. The Series A shares have no
stated maturity and are not subject to any sinking fund or
mandatory redemption and are not convertible into any other of
our securities.
- 8.625% Series B Cumulative Redeemable Preferred Shares. We
have reserved 2,000,000 Series B shares, none of which are
currently outstanding, for issuance upon exercise by the
holders of Gables Realty Limited Partnership's 2,000,000
Series B preferred units of their right to exchange Series B
preferred units for the Series B shares on a one-for-one
basis. Holders may exercise their exchange right in whole but
not in part (a) at any time on or after November 15, 2008, (b)
at any time if full quarterly distributions are not made for
six quarters, or (c) upon the occurrence of particular
specified events related to the treatment of the Series B
preferred units for federal income tax purposes. Distributions
on the Series B preferred units are, and dividends on the
Series B shares, if, and when issued, will be, cumulative from
the date of original issuance and are, or will be, payable
quarterly at the rate of 8.625% per annum of the $25.00
liquidation preference. The Series B shares rank as to rights
to dividends and in liquidation on a parity with the Series A
shares and senior to the Series Z shares. We may redeem the
Series B preferred units and the Series B shares at any time
on or after November 15, 2003 for cash at a redemption price
of $25.00 per unit or share, plus all accumulated, accrued and
unpaid distributions or dividends. We may redeem the Series B
preferred units before November 15, 2003 if the holders elect
to exchange them for Series B shares. The Series B preferred
units and the Series B shares have no stated maturity, are not
subject to any sinking fund or mandatory redemption, and are
not convertible into any other of our securities.
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- 5.00% Series Z Cumulative Redeemable Preferred Shares. We
currently have outstanding 180,000 Series Z shares. Dividends
on the Series Z shares are cumulative from the date of
original issuance and are payable on June 18 of each year,
commencing June 18, 2008, at the rate of 5.00% per annum of
the $25.00 liquidation preference. We may redeem the Series Z
shares at any time for cash at a redemption price of $25.00
per share, plus all accrued and unpaid dividends. The Series Z
shares are subject to mandatory redemption on June 18, 2018
and are not subject to any sinking fund or convertible into
any other of our securities. With respect to dividends and
liquidation distributions, the Series Z shares currently rank
junior to all other designated preferred shares, including the
Series A shares and the Series B shares.
We do not have any other preferred shares outstanding as of the date of
this prospectus. We may issue preferred shares from time to time, in one or more
series, as authorized by our Board of Trustees. Prior to issuance of shares of
each series, the Board of Trustees is required by the Maryland General
Corporation Law and our declaration of trust to fix for each series, subject to
the provisions of our declaration of trust regarding excess shares, the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption, as are permitted by Maryland law. The preferred shares
will, when issued, be fully paid and nonassessable and will have no preemptive
rights. The Board of Trustees could authorize the issuance of preferred shares
with terms and conditions that could have the effect of discouraging a takeover
or other transaction that holders of common shares might believe to be in their
best interests or in which holders of some, or a majority, of the common shares
might receive a premium for their shares over the then market price of such
common shares.
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LIMITS ON OWNERSHIP OF SHARES OF BENEFICIAL INTEREST
OWNERSHIP LIMIT
For us to qualify as a real estate investment trust under the Internal
Revenue Code, among other things, not more than 50% in value of our outstanding
shares of beneficial interest may be owned, directly or indirectly, by five or
fewer individuals during the last half of a taxable year other than the first
year, and such shares of beneficial interest must be beneficially owned by 100
or more persons during at least 335 days of a taxable year of 12 months other
than the first year or during a proportionate part of a shorter taxable year. In
order to protect us against the risk of losing our status as a real estate
investment trust due to a concentration of ownership among our shareholders, our
declaration of trust provides that no holder may own, or be deemed to own by
virtue of the attribution provisions of the Internal Revenue Code, more than
9.8% of our shares of beneficial interest. Notwithstanding the preceding
sentence, the trustees at their option and in their discretion may approve such
ownership by selected persons. The Board of Trustees does not expect that it
would waive the 9.8% ownership limit in the absence of the ruling from the
Internal Revenue Service or an opinion of counsel satisfactory to it that the
changes in ownership will not, then or in the future, jeopardize our status as a
real estate investment trust. Any transfer of shares of beneficial interest
including warrants or any security convertible into shares of beneficial
interest that would create a direct or indirect ownership of shares of
beneficial interest in excess of the 9.8% ownership limit or that would result
in our disqualification as a real estate investment trust, including any
transfer that results in the shares of beneficial interest being owned by fewer
than 100 persons or that results in us being "closely held" within the meaning
of Section 856(h) of the Internal Revenue Code, shall be void and have no
effect. The intended transferee will acquire no rights to the shares of
beneficial interest. The foregoing restrictions will not apply if our Board of
Trustees determines that it is no longer in our best interests to attempt to
qualify, or to continue to qualify, as a real estate investment trust. In
addition, the foregoing restrictions do not apply with respect to an offeror in
the event of an all cash tender offer by it which has been accepted by at least
two-thirds of our outstanding shares.
SHARES OWNED IN EXCESS OF OWNERSHIP LIMIT
Shares of beneficial interest owned, or deemed to be owned, or
transferred to a shareholder in excess of the 9.8% ownership limit will
automatically be exchanged for excess shares that will be transferred, by
operation of law, to us as trustee of a trust for the exclusive benefit of the
transferees to whom such shares of beneficial interest may be ultimately
transferred without violating the 9.8% ownership limit. While the excess shares
are held in trust:
- they will not be entitled to vote;
- they will not be considered for purposes of any shareholder
vote or the determination of a quorum for such vote; and
- except upon liquidation, they will not be entitled to
participate in dividends or other distributions.
Any dividends or distributions paid to a proposed transferee of excess
shares prior to our discovery that shares of beneficial interest have been
transferred in violation of the provisions of our declaration of trust are
required to be repaid to us upon demand. The excess shares are not treasury
shares, but rather constitute a separate class of our issued and outstanding
shares of beneficial interest. The original transferee-shareholder may, at any
time the excess shares are held by us in trust, transfer the interest in the
trust representing the excess shares to any individual whose ownership of the
shares of beneficial interest exchanged into such excess shares would be
permitted under the 9.8% ownership limit, at a price not in excess of the price
paid by the original transferee-shareholder for the shares of beneficial
interest that were exchanged for excess shares.
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Immediately upon the transfer to the permitted transferee, the excess shares
will automatically be exchanged for shares of beneficial interest of the class
from which they were converted. If the foregoing transfer restrictions are
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the intended transferee of any excess shares may be deemed,
at our option, to have acted as an agent on our behalf in acquiring the excess
shares and to hold the excess shares on our behalf.
RIGHT TO PURCHASE EXCESS SHARES
In addition to the foregoing transfer restrictions, we have the right,
for a period of 90 days during the time any excess shares are held by us in
trust, to purchase all or any portion of the excess shares from the original
transferee-shareholder for the lesser of the price paid for the shares of
beneficial interest by the original transferee-shareholder or the market price
of the shares of beneficial interest on the date we exercise our option to
purchase. The market price will be determined in the manner set forth in our
declaration of trust. The 90-day period begins on the date of the violative
transfer if the original transferee-shareholder gives notice to us of the
transfer or, if no such notice is given, the date on which the Board of Trustees
determines that a violative transfer has been made.
Every owner of more than 5% of the issued and outstanding common shares
must file a written notice with us containing the information specified in our
declaration of trust no later than January 30 of each year. Owners of 5% or less
of the issued and outstanding common shares may be required by the Internal
Revenue Code or regulations thereunder to file such notice. Each shareholder
will upon demand be required to disclose to us in writing any information with
respect to the direct, indirect and constructive ownership of shares of
beneficial interest as the Board of Trustees deems necessary to comply with the
provisions of the Internal Revenue Code applicable to real estate investment
trusts, to comply with the requirements of any taxing authority or governmental
agency or to determine any such compliance.
This ownership limitation may have the effect of precluding the
acquisition of control of Gables Residential Trust unless the Board of Trustees
determines that our maintenance of real estate investment trust status is no
longer in our best interests.
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IMPORTANT PROVISIONS OF MARYLAND LAW AND
OUR DECLARATION OF TRUST AND BYLAWS
The following is a summary of important provisions of Maryland law and
our declaration of trust and bylaws which affect us and our shareholders. The
description below is intended as only a summary. You can access complete
information by referring to Maryland General Corporation Law and our declaration
of trust and bylaws.
MARYLAND BUSINESS COMBINATION STATUTE
Maryland law establishes special requirements with respect to "business
combinations" between Maryland corporations and "interested shareholders" unless
exemptions are applicable. Among other things, the law prohibits for a period of
five years a merger and other specified or similar transactions between a
company and an interested shareholder and requires a supermajority vote for such
transactions after the end of the five-year period.
"Interested shareholders" are all persons owning beneficially, directly
or indirectly, more than 10% of the outstanding voting stock of the Maryland
corporation. "Business combinations" include any merger or similar transaction
subject to a statutory vote and additional transactions involving transfers of
assets or securities in specified amounts to interested shareholders or their
affiliates. Unless an exemption is available, transactions of these types may
not be consummated between a Maryland corporation and an interested shareholder
or its affiliates for a period of five years after the date on which the
shareholder first became an interested shareholder. Thereafter, the transaction
may not be consummated unless recommended by the board of directors and approved
by the affirmative vote of at least 80% of the votes entitled to be cast by all
holders of outstanding voting shares and two-thirds of the votes entitled to be
cast by all holders of outstanding voting shares other than the interested
shareholder. A business combination with an interested shareholder that is
approved by the board of directors of a Maryland corporation at any time before
an interested shareholder first becomes an interested shareholder is not subject
to the special voting requirements. An amendment to a Maryland corporation's
charter electing not to be subject to the foregoing requirements must be
approved by the affirmative vote of at least 80% of the votes entitled to be
cast by all holders of outstanding voting shares and two-thirds of the votes
entitled to be cast by holders of outstanding voting shares who are not
interested shareholders. Any such amendment is not effective until 18 months
after the vote of shareholders and does not apply to any business combination of
a corporation with a shareholder who was an interested shareholder on the date
of the shareholder vote.
MARYLAND CONTROL SHARE ACQUISITION STATUTE
Maryland law provides that "control shares" of a Maryland real estate
investment trust acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of beneficial interest owned by the
acquiror or by officers or trustees who are employees of the trust. "Control
shares" are voting shares of beneficial interest which, if aggregated with all
other such shares of beneficial interest previously acquired by the acquiror or
in respect of which the acquiror is able to exercise or direct the exercise of
voting power except solely by revocable proxy, would entitle the acquiror to
exercise voting power in electing trustees within one of the following ranges of
voting power: (1) one-fifth or more but less than one-third, (2) one-third or
more but less than a majority, or (3) a majority of all voting power. Control
shares do not include shares of beneficial interest the acquiring person is then
entitled to vote as a result of having previously obtained shareholder approval.
A "control share acquisition" means the acquisition of control shares, subject
to applicable exceptions.
A person who has made or proposes to make a control share acquisition
may compel the board of trustees to call a special meeting of shareholders to be
held within 50 days of demand to consider voting rights for the shares, upon
satisfaction of relevant conditions, including an
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undertaking to pay expenses. If no request for a meeting is made, the trust may
itself present the question at any shareholders meeting.
If voting rights for control shares are not approved at the meeting or
if the acquiring person does not deliver an acquiring person statement as
required by the statute with respect to the control shares, then, subject to
applicable conditions and limitations, the trust may redeem any or all of the
control shares for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of shareholders at which the
voting rights of such shares are considered and not approved. If voting rights
for control shares are approved at a shareholders meeting and the acquiror
becomes entitled to vote a majority of the shares of beneficial interest
entitled to vote, all other shareholders may exercise appraisal rights. The fair
value of the shares of beneficial interest as determined for purposes of such
appraisal rights may not be less than the highest price per share paid by the
acquiror in the control share acquisition.
The control share acquisition statute does not apply to shares acquired
in a merger, consolidation or share exchange if the trust is a party to the
transaction, or to acquisitions approved or exempted by the declaration of trust
or bylaws of the trust.
The business combination statute and the control share acquisition
statute could have the effect of discouraging offers to acquire us and of
increasing the difficulty of consummating any such offer.
LIMITATION OF SHAREHOLDERS' LIABILITY
Under Maryland law, shareholders generally are not responsible for the
corporation's debts or obligations, and our declaration of trust specifically
provides that no shareholder of ours will be personally liable for any of our
obligations. Our bylaws further provide that we will indemnify each shareholder
against any claim or liability to which the shareholder may become subject by
reason of his or her being or having been a shareholder, and that we will
reimburse each shareholder for all legal and other expenses reasonably incurred
by him or her in connection with any such claim or liability. However, with
respect to tort claims, contractual claims where shareholder liability is not so
negated, claims for taxes and particular statutory liability, the shareholder
may, in some jurisdictions, including Texas, be personally liable to the extent
that such claims are not satisfied by us. Inasmuch as we will carry public
liability insurance which we consider adequate, any risk of personal liability
to shareholders is limited to situations in which our assets plus our insurance
coverage would be insufficient to satisfy the claims against us and our
shareholders.
LIMITATION OF TRUSTEES' AND OFFICERS' LIABILITY
Under Maryland law, a real estate investment trust formed in Maryland is
permitted to limit, by provision in its declaration of trust, the liability of
trustees and officers so that none of its trustees or officers shall be liable
to it or to any shareholder for money damages except to the extent that:
- the trustee or officer actually received an improper benefit
in money, property, or services, for the amount of the benefit
or profit in money, property, or services actually received,
or
- a judgment or other final adjudication adverse to the trustee
or officer is entered in a proceeding based on a finding in a
proceeding that the trustee's or officer's action was the
result of active and deliberate dishonesty and was material to
the cause of action adjudicated in the proceeding.
Our declaration of trust has incorporated the provisions of such law
limiting the liability of trustees and officers. Gables GP, Inc.'s articles of
incorporation contain similar provisions that are consistent with Texas law.
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Our bylaws require us to indemnify, to the full extent of Maryland law,
any present or former trustee or officer and such person's spouse and children
who is or was a party or threatened to be made a party to any proceeding by
reason of his or her service in that capacity, against all expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her in connection with the proceeding, provided that we have received a written
affirmation by the person to be indemnified that he or she has met the standard
of conduct necessary for indemnification by us as authorized by our bylaws. We
shall not be required to indemnify such person if:
- it is established that (1) such person's act or omission was
committed in bad faith or was the result of active or
deliberate dishonesty, (2) such person actually received an
improper personal benefit in money, property or services or
(3) in the case of a criminal proceeding, such person had
reasonable cause to believe that the Indemnitee's act or
omission was unlawful;
- the proceeding was initiated by such person;
- such person received payment for such expenses pursuant to
insurance or otherwise; or
- the proceeding arises under Section 16 of the Securities
Exchange Act of 1934.
Pursuant to our bylaws, the person to be indemnified is required to
repay the amount paid or reimbursed by us if it shall ultimately be determined
that the standard of conduct was not met. Our bylaws also permit us to provide
such other and further indemnification or payment or reimbursement of expenses
as may be permitted by the Maryland General Corporation Law or to which the
person to be indemnified may be entitled. Gables GP, Inc.'s bylaws contain
similar provisions that are consistent with Texas law.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with each of our
trustees and officers. The indemnification agreements require, among other
things, that we indemnify our trustees and officers to the fullest extent
permitted by law and advance to our trustees and officers all related expenses,
subject to reimbursement if it is subsequently determined that indemnification
is not permitted. Under these agreements, we must also indemnify and advance all
expenses incurred by our trustees and officers seeking to enforce their rights
under the indemnification agreements and cover our trustees and officers under
our directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by our declaration of trust and our bylaws, it provides greater
assurance to our trustees and officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by our
Board of Trustees or by our shareholders to eliminate the rights it provides.
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FEDERAL INCOME TAX CONSIDERATIONS AND CONSEQUENCES OF YOUR INVESTMENT
The following is a general summary of the material federal income tax
considerations and consequences associated with an investment in our common
shares. The following discussion is not exhaustive of all possible tax
considerations and is not tax advice. Moreover, this summary does not deal with
all tax aspects or consequences that might be relevant to you in light of your
personal circumstances; nor does it deal with particular types of shareholders
that are subject to special treatment under the Internal Revenue Code, such as
insurance companies, financial institutions and broker-dealers. The Internal
Revenue Code provisions governing the federal income tax treatment of real
estate investment trusts are highly technical and complex, and this summary is
qualified in its entirety by the applicable Internal Revenue Code provisions,
rules and regulations promulgated thereunder, and administrative and judicial
interpretations thereof. The following discussion is based on current law and on
representations from us concerning our compliance with the requirements for
qualification as a real estate investment trust.
WE URGE YOU, AS A PROSPECTIVE INVESTOR, TO CONSULT YOUR OWN TAX ADVISOR
WITH RESPECT TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO YOU OF THE PURCHASE, HOLDING AND SALE OF OUR COMMON SHARES.
FEDERAL INCOME TAXATION
In the opinion of our tax counsel, Goodwin, Procter & Hoar LLP,
commencing with our first taxable year ended December 31, 1994, we have been
organized in conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code, and our method of operation
will enable us to continue to meet the requirements for qualification and
taxation as a real estate investment trust under the Internal Revenue Code,
provided that we have operated and continue to operate in accordance with
various assumptions and factual representations made by us concerning our
business, properties and operations. We may not, however, have met or continue
to meet such requirements. Qualification as a real estate investment trust
depends upon us having met and continuing to meet the various requirements
imposed under the Internal Revenue Code through actual operating results.
Goodwin, Procter & Hoar LLP has relied on our representations regarding our
operations and has not and will not review these operating results. No assurance
can be given that actual operating results have met or will meet these
requirements.
If we have qualified and continue to qualify for taxation as a real
estate investment trust, we generally will not be subject to federal corporate
income taxes on that portion of our ordinary income or capital gain that is
currently distributed to shareholders. The real estate investment trust
provisions of the Internal Revenue Code generally allow a real estate investment
trust to deduct dividends paid to its shareholders. This deduction for dividends
paid to shareholders substantially eliminates the federal double taxation on
earnings that usually results from investments in a corporation. "Double
taxation" refers to taxation of income once at the corporate level when earned
and once again at the shareholder level when distributed. Additionally, a real
estate investment trust may elect to retain and pay taxes on a designated amount
of its net long-term capital gains, in which case the shareholders of the real
estate investment trust will include their proportionate share of the
undistributed long-term capital gains in income and receive a credit or refund
for their share of the tax paid by the real estate investment trust.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in
any taxable year and the relief provisions do not apply, we will be subject to
tax on our taxable income at regular corporate rates, including any applicable
alternative minimum tax. Distributions to shareholders in any year in which we
fail to qualify will not be deductible by us nor will they be required to be
made. In such event, to the extent of current or accumulated earnings and
profits, all distributions to shareholders will be dividends, taxable as
ordinary income, and subject to limitations of the Internal Revenue Code,
corporate distributees may be eligible for the dividends-received deduction.
Unless we are
21
<PAGE> 23
entitled to relief under specific statutory provisions, we also will be
disqualified from taxation as a real estate investment trust for the four
taxable years following the year during which qualification was lost. It is not
possible to state whether in all circumstances we would be entitled to such
statutory relief. For example, we must derive a minimum percent of our gross
income from specified sources in order to qualify as a real estate investment
trust. If we fail to satisfy these gross income tests because nonqualifying
income that we intentionally incur exceeds the limit on such income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause, which is a condition to qualification for
relief from the four-year disqualification rule.
TAXATION OF UNITED STATES SHAREHOLDERS AND POTENTIAL TAX CONSEQUENCES OF THEIR
INVESTMENT IN THE COMMON SHARES
When we refer to a United States shareholder, we mean a holder of common
shares that is for federal income tax purposes
- an individual who is a citizen or resident of the United
States;
- a corporation created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
or
- a partnership, trust or estate treated as a domestic
partnership, trust or estate.
For any taxable year for which we qualify for taxation as a real estate
investment trust, amounts distributed to taxable United States shareholders will
be taxed as follows.
Distributions generally. Distributions other than capital gain dividends
to United States shareholders will be taxable as dividends to the extent of our
current or accumulated earnings and profits as determined for federal income tax
purposes. For purposes of determining whether distributions are out of current
or accumulated earnings and profits, our earnings and profits will be allocated
first to any of our outstanding preferred shares and then to our common shares.
Such dividends will be taxable to the shareholders as ordinary income and will
not be eligible for the dividends-received deduction for corporations. To the
extent that we make a distribution to a United States shareholder in excess of
current or accumulated earnings and profits, the distribution will be treated
first as a tax-free return of capital with respect to the shares, reducing the
United States shareholder's tax basis in the shares, and the distribution in
excess of a United States shareholder's tax basis in the shares will be taxable
as gain realized from the sale of the shares. Dividends declared by us in
October, November or December of any year payable to a shareholder of record on
a specified date in any such month shall be treated as both paid by us and
received by the shareholder on December 31 of the year, provided that the
dividend is actually paid by us during January of the following calendar year.
United States shareholders may not include on their own federal income tax
returns any of our tax losses.
Capital gain dividends. Dividends to United States shareholders that are
properly designated by us as capital gain dividends will be treated as long-term
capital gains, to the extent they do not exceed our actual net capital gains,
for the taxable year without regard to the period for which the shareholder has
held his common shares. However, corporate shareholders may be required to treat
up to 20% of particular capital gain dividends as ordinary income. Capital gain
dividends are not eligible for the dividends-received deduction for
corporations.
Retained capital gains. A real estate investment trust may elect to
retain, rather than distribute, its net long-term capital gains received during
the year. To the extent designated by the real estate investment trust in a
notice to its shareholders, the real estate investment trust will pay the income
tax on such gains and the real estate investment trust shareholders must include
their proportionate share of the undistributed long-term capital gains so
designated in income. Each real estate investment trust shareholder will be
deemed to have paid his share of the tax paid by the real estate investment
trust, which will be credited or refunded to the shareholder. The basis of each
22
<PAGE> 24
shareholder's real estate investment trust shares will be increased by his
proportionate amount of the undistributed long-term capital gains, net of the
tax paid by the real estate investment trust, included in such shareholder's
long-term capital gains.
Passive activity loss and investment interest limitations.
Distributions, including deemed distributions of undistributed long-term capital
gains, from us and gain from the disposition of the common shares will not be
treated as passive activity income, and therefore shareholders may not be able
to apply any passive losses against such income. Dividends from us, to the
extent they do not constitute a return of capital, will generally be treated as
investment income for purposes of the investment income limitation on the
deductibility of investment interest. However, net capital gain from the
disposition of the common shares or capital gain dividends, including deemed
distributions of undistributed long-term capital gains, generally will be
excluded from investment income.
Sale of the common shares. Upon the sale or exchange of the common
shares, the United States shareholder will generally recognize gain or loss
equal to the difference between the amount realized on such sale and the tax
basis of the common shares sold or exchanged. Assuming such shares are held as a
capital asset, such gain or loss will be a long-term capital gain or loss if the
shares have been held for more than one year. However, any loss recognized by a
United States shareholder on the sale of common shares held for not more than
six months and with respect to which capital gains were required to be included
in such shareholder's income will be treated as a long-term capital loss to the
extent of the amount of such capital gains so included.
Treatment of tax-exempt shareholders. Distributions, including deemed
distributions of undistributed long-term capital gains, from us to a tax-exempt
employee pension trust or other domestic tax-exempt shareholder generally will
not constitute unrelated business taxable income unless the shareholder has
borrowed to acquire or carry his common shares. However, certain qualified
trusts that hold more than 10% by value of the shares of a particular real
estate investment trust may be required to treat a specified percentage of these
distributions, including deemed distributions of undistributed long-term capital
gains, as unrelated business taxable income.
BACKUP WITHHOLDING
Under the backup withholding rules, a United States shareholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
on, and gross proceeds from the sale of, the common shares unless such
shareholder (1) is a corporation or comes within other specific exempt
categories and, when required, demonstrates this fact or (2) provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A United States shareholder who does not provide us with his
current taxpayer identification number may be subject to penalties imposed by
the Commissioner of the Internal Revenue Service. Any amount paid as backup
withholding will be creditable against the shareholder's income tax liability.
We will report to shareholders and the Internal Revenue Service the
amount of any reportable payments, including any dividends paid, and any amount
withheld with respect to the common shares during the calendar year.
STATE AND LOCAL TAX
Gables Residential Trust and our shareholders may be subject to state
and local tax in various states and localities, including those in which we or
our shareholders transact business, own property or reside. The tax treatment of
us and our shareholders in such jurisdictions may differ from the federal income
tax treatment described above. CONSEQUENTLY, AS A PROSPECTIVE INVESTOR, YOU
SHOULD CONSULT YOUR OWN TAX ADVISORS REGARDING THE EFFECT OF STATE AND LOCAL TAX
LAWS ON AN INVESTMENT IN OUR COMMON SHARES.
23
<PAGE> 25
REGISTRATION RIGHTS OF THE SELLING SHAREHOLDERS
The following is a summary of the material terms and provisions of the
registration rights and lock-up agreements, which we entered into in connection
with our April 1998 acquisitions of four properties in Houston, Texas. It may
not contain all the information that is important to you. You can access
complete information by referring to the registration rights and lock-up
agreements.
Under the registration rights and lock-up agreements, we are obligated
to file a registration statement covering the sale by the selling shareholders
of the common shares that they may acquire in exchange for the common units of
Gables Realty Limited Partnership that they received when we acquired the four
properties in April 1998. Under the terms of the registration rights and lock-up
agreements, three of the selling shareholders may not exchange their units for
common shares until after May 14, 1999, and one of the selling shareholders may
not exchange its units for common shares until after May 22, 1999. Under the
registration rights and lock-up agreements, we must use reasonable efforts to
cause the registration statement to be declared effective by the Securities and
Exchange Commission and to keep the registration statement continuously
effective until the earliest of (1) the date on which the selling shareholders
no longer hold any exchanged common shares or any units issued in connection
with the acquisitions or (2) the date on which all of the exchanged common
shares held or acquired in the future by the selling shareholders have become
eligible for sale under Rule 144(k) of the Securities Act of 1933. Any common
shares sold by the selling shareholders pursuant to this prospectus will no
longer be entitled to the benefits of the registration rights and lock-up
agreements.
The registration rights and lock-up agreements require that we bear all
expenses of registering the common shares with the exception of brokerage and
underwriting commissions and taxes of any kind and any legal, accounting and
other expenses incurred by the selling shareholders. We also agreed to indemnify
the selling shareholders and their officers, directors and other affiliated
persons and any person who controls a selling shareholder against all losses,
claims, damages, actions, liabilities, costs and expenses arising under the
securities laws in connection with the registration statement or this
prospectus, subject to limitations specified in the registration rights and
lock-up agreements. In addition, the selling shareholders agreed to indemnify us
and our trustees, officers and any person who controls our company against all
losses, claims, damages, actions, liabilities, costs and expenses arising under
the securities laws if they result from (1) written information furnished to us
by the selling shareholders for use in the registration statement or this
prospectus or any amendments to the registration statement or any prospectus
supplements or (2) the selling shareholders' failure to deliver, or cause to be
delivered, this prospectus or any amendments or prospectus supplements to any
purchaser of common shares covered by this prospectus from the selling
shareholders through no fault of ours.
24
<PAGE> 26
THE SELLING SHAREHOLDERS
The following table sets forth the number of common shares and units
beneficially owned by the selling shareholders as of May 1, 1999, the number of
common shares covered by this prospectus and the total number of common shares
and units which the selling shareholders will beneficially own upon completion
of this offering. This table assumes that the selling shareholders exchange for
common shares all of the units issued by Gables Realty Limited Partnership in
connection with our acquisition of four properties in Houston, Texas, and that
the selling shareholders offer for sale all of those common shares.
The common shares offered by the prospectus will be offered from time to
time by the selling shareholders named below, or by any of their pledges,
donees, transferees or other successors in interest. The amounts set forth below
are based upon information provided to us by representatives of the selling
shareholders, or on our records, as of May 1, 1999 and are accurate to the best
of our knowledge. It is possible, however, that the selling shareholders may
acquire or dispose of additional common shares or units from time to time after
the date of this prospectus.
<TABLE>
<CAPTION>
COMMON SHARES UNITS
BENEFICIALLY BENEFICIALLY COMMON SHARES AND
OWNED AS OF OWNED AS OF COMMON SHARES UNITS TO BE OWNED
NAME MAY 1, 1999(1) MAY 1, 1999(2) OFFERED HEREBY(3) AFTER OFFERING(4)
---- -------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Austin Colony Partners, Ltd. 0 236,770 236,770 0
Lions Head Partners, Ltd. 0 218,220 218,220 0
Rivercrest Partners II, Ltd. 0 98,191 98,191 0
Windmill Landing Partners, Ltd. 0 112,010 112,010 0
- ------- ------- -
TOTAL 0 665,191 665,191 0
= ======= ======= =
</TABLE>
- ----------
(1) Does not include common shares that may be issued in exchange for units
beneficially held as of May 1, 1999.
(2) All units listed in this column may be exchanged, under circumstances
set forth in the partnership agreement of Gables Realty Limited
Partnership, for an equal number of common shares. All information is
as of May 1, 1999.
(3) These common shares represent the common shares that the selling
shareholders may acquire upon presentation of the units for redemption.
Such redemption may occur at any time after May 14, 1999 with respect
to the units held by Austin Colony Partners, Ltd., Lions Head Partners,
Ltd. and Rivercrest Partners II, Ltd., and at any time after May 22,
1999 with respect to the units held by Windmill Landing Partners, Ltd.
(4) Assumes that all common shares issuable upon redemption of the units
will be sold by the selling shareholders. In the case of each selling
shareholder, the percentage of our common shares that will be held by
such selling shareholder (assuming all remaining units held by such
person are presented for redemption and are exchanged for common
shares) after completion of this offering will be less than one percent
(1%). The total number of common shares outstanding used in calculating
such percentage (i) is based on the total number of common shares
outstanding as of May 1, 1999 (26,498,495 shares) and (ii) assumes that
none of the remaining units held by other persons will be exchanged for
common shares.
25
<PAGE> 27
USE OF PROCEEDS
We will not receive any of the proceeds of the sale by the selling
shareholders of the common shares covered by this prospectus.
PLAN OF DISTRIBUTION
This prospectus relates to the possible sale from time to time of up to
an aggregate of 665,191 common shares by the selling shareholders, or any of
their pledgees, donees, transferees or other successors in interest. If the
selling shareholders present units to Gables Realty Limited Partnership for
redemption, we may, at our election, acquire such units in exchange for common
shares in accordance with the terms of Gables Realty Limited Partnership's
agreement of limited partnership, as amended. We are registering the common
shares pursuant to our obligations under the registration rights and lock-up
agreement, but the registration of the common shares does not necessarily mean
that any of the common shares will be offered or sold by the selling
shareholders.
The distribution of the common shares may be effected from time to time
in one or more underwritten transactions at a fixed price or prices, which may
be changed, or at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices. Any underwritten
offering may be on a "best efforts" or a "firm commitment" basis. In connection
with any underwritten offering, underwriters or agents may receive compensation
in the form of discounts, concessions or commissions from the selling
shareholders. Underwriters may sell the common shares to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.
The selling shareholders and any underwriters, dealers or agents that
participate in the distribution of the common shares may be deemed to be
underwriters under the Securities Act of 1933, and any profit on the sale of the
common shares by them and any discounts, commissions or concessions received by
any underwriters, dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. At any time a particular offer
of common shares is made by the selling shareholders, a prospectus supplement,
if required, will be distributed that will, where applicable:
- identify any underwriter, dealer or agent;
- describe any compensation in the form of discounts,
concessions, commissions or otherwise received by each
underwriter, dealer or agent and in the aggregate to all
underwriters, dealers and agents;
- identify the amounts underwritten;
- identify the nature of the underwriter's obligation to take
the common shares; and
- provide any other required information.
The sale of common shares by the selling shareholders may also be
effected by selling common shares directly to purchasers or to or through
broker-dealers. In connection with any such sale, any such broker-dealer may act
as agent for the selling shareholders or may purchase from the selling
shareholders all or a portion of the common shares as principal, and may be made
pursuant to any of the methods described below. Such sales may be made on the
New York Stock Exchange or other exchanges on which the common shares are then
traded, in the over-the-counter market, in negotiated transactions or otherwise
at prices and at terms then prevailing or at prices related to the then-current
market prices or at prices otherwise negotiated.
26
<PAGE> 28
Common shares may also be sold in one or more of the following
transactions:
- block transactions in which a broker-dealer may sell all or a
portion of such shares as agent but may position and resell
all or a portion of the block as principal to facilitate the
transaction;
- purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to any
supplement to this prospectus;
- a special offering, an exchange distribution or a secondary
distribution in accordance with applicable New York Stock
Exchange or other stock exchange rules;
- ordinary brokerage transactions and transactions in which any
such broker-dealer solicits purchasers;
- sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such
shares; and
- sales in other ways not involving market makers or established
trading markets, including direct sales to purchasers.
In effecting sales, broker-dealers engaged by the selling shareholders
may arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or other compensation from the selling shareholders in amounts to be
negotiated immediately prior to the sale that will not exceed those customary in
the types of transactions involved. Broker-dealers may also receive compensation
from purchasers of the common shares which is not expected to exceed that
customary in the types of transactions involved.
To comply with applicable state securities laws, the common shares will
be sold, if necessary, in such jurisdictions only through registered or licensed
brokers or dealers. In addition, common shares may not be sold in some states
unless they have been registered or qualified for sale in the state or an
exemption from such registration or qualification requirement is available and
is complied with.
All expenses relating to the offering and sale of the common shares,
other than commissions, discounts and fees of underwriters, broker-dealers or
agents, will be paid by us. We have agreed to indemnify the selling shareholders
against some losses, claims, damages, actions, liabilities, costs and expenses,
including liabilities under the Securities Act of 1933. See "Registration Rights
of the Selling Shareholders."
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants. These audited financial
statements are incorporated in this prospectus by reference in reliance upon the
authority of Arthur Andersen LLP as experts in accounting and auditing in giving
those reports.
VALIDITY OF COMMON SHARES
The validity of the common shares we are offering will be passed upon
for us by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
27
<PAGE> 29
================================================================================
You should rely only on the information contained in this prospectus,
incorporated herein by reference or contained in a prospectus supplement.
Neither we nor the selling shareholders have authorized anyone else to provide
you with different or additional information. The selling shareholders are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus, or
incorporated herein by reference, or in any prospectus supplement is accurate as
of any date other than the date on the front of those documents.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary............................... 2
Risk Factors..................................... 4
Where You Can Find More Information.............. 10
Incorporation of Documents By Reference.......... 10
Forward-Looking Statements....................... 11
Our Company...................................... 12
Description of Common Shares..................... 13
Limits on Ownership of Shares of
Beneficial Interest........................... 16
Important Provisions of Maryland Law and
Our Declaration of Trust and Bylaws........... 18
Federal Income Tax Considerations and
Consequences of Your Investment............... 21
Registration Rights of the Selling
Shareholders.................................. 24
The Selling Shareholders......................... 25
Use of Proceeds.................................. 26
Plan of Distribution............................. 26
Experts.......................................... 27
Validity of Securities........................... 27
</TABLE>
---------------------------
665,191 SHARES
GABLES RESIDENTIAL TRUST
COMMON SHARES
------------------------
PROSPECTUS
------------------------
MAY __, 1999
================================================================================
<PAGE> 30
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
<TABLE>
<S> <C>
Registration fee -- Securities and Exchange Commission................ $ 4,334
Accountants' fees and expenses........................................ 5,000
Blue Sky fees and expenses............................................ 1,500
Legal fees and expenses (other than Blue Sky)......................... 7,500
Printing expenses..................................................... 2,000
Miscellaneous......................................................... 1,500
-----
TOTAL................................................................. $21,834
=======
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by Gables Residential Trust.
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Gables Residential Trust's declaration of trust and Gables Realty
Limited Partnership's agreement of limited partnership, as amended, provides
limitations on the liability of Gables Residential Trust's trustees and officers
for monetary damages to Gables Residential Trust. The declaration of trust and
the bylaws obligate Gables Residential Trust to indemnify its trustees and
officers, and permit Gables Residential Trust to indemnify its employees and
other agents, against particular liabilities incurred in connection with their
service in such capacities. These provisions could reduce the legal remedies
available to Gables Residential Trust and the shareholders against these
individuals.
Gables Residential Trust's bylaws require it to indemnify, to the full
extent of Maryland law, any present or former trustee or officer (and such
person's spouse and children) (an "Indemnitee") who is or was a party or
threatened to be made a party to any proceeding by reason of his or her service
in that capacity, against all expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with the
proceeding, provided that Gables Residential Trust shall have received a written
affirmation by the Indemnitee that he or she has met the standard of conduct
necessary for indemnification by Gables Residential Trust as authorized by the
bylaws. Gables Residential Trust shall not be required to indemnify an
Indemnitee if (a) it is established that (1) the Indemnitee's act or omission
was committed in bad faith or was the result of active or deliberate dishonesty,
(2) the Indemnitee actually received an improper personal benefit in money,
property or services or (3) in the case of a criminal proceeding, the Indemnitee
had reasonable cause to believe that the Indemnitee's act or omission was
unlawful, (b) the proceeding was initiated by the Indemnitee, (c) the Indemnitee
received payment for such expenses pursuant to insurance or otherwise or (d) the
proceeding arises under Section 16 of the Securities Exchange Act of 1934.
Pursuant to the bylaws, the Indemnitee is required to repay the amount paid or
reimbursed by Gables Residential Trust if it shall ultimately be determined that
the standard of conduct was not met. Gables Residential Trust's bylaws permit
Gables Residential Trust to provide such other and further indemnification or
payment or reimbursement of expenses as may be permitted by the Maryland General
Corporation Law or to which the Indemnitee may be entitled. The bylaws of Gables
GP, Inc., a Texas corporation and wholly-owned subsidiary of Gables Residential
Trust and the general partner of Gables Realty Limited Partnership, contain
similar provisions that are consistent with Texas law.
Each of Gables Residential Trust's executive officers and trustees has
entered into an indemnification agreement with Gables Residential Trust, Gables
Realty Limited Partnership and Gables GP, Inc. The indemnification agreements
require, among other matters, that Gables Residential Trust, Gables Realty
Limited Partnership and Gables GP, Inc. indemnify Gables Residential Trust's
executive officers and trustees to the fullest extent permitted by law and
advance to Gables Residential Trust's executive officers and trustees all
related expenses, subject to
II-1
<PAGE> 31
reimbursement if it is subsequently determined that indemnification is not
permitted. Gables Residential Trust must also indemnify and advance all expenses
incurred by Gables Residential Trust's executive officer and trustees seeking to
enforce their rights under the indemnification agreements and cover them under
Gables Residential Trust's trustees' and officers' liability insurance. Although
the form of indemnification agreement offers substantially the same scope of
coverage afforded by law, it provides assurance to the trustees and executive
officers that indemnification will be available because such contracts cannot be
modified unilaterally in the future by the Board or the shareholders to
eliminate the rights they provide.
The registration rights and lock-up agreement between Gables Residential
Trust and the selling shareholders provides for the indemnification of Gables
Residential Trust, its officers, trustees, and other persons for certain
liabilities, including liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
4.1 Amended and Restated Declaration of Trust of Gables Residential Trust
(incorporated herein by reference to Gables Residential Trust's
Registration Statement on Form S-11 (File No. 33-70570), as amended).
4.2 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 8.30% Series A Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Exhibit 4.1 to Gables Residential Trust's Current Report on Form 8-K
dated July 24, 1997 (File No. 1-12590)).
4.3 Articles of Amendment to Gables Residential Trust's Amended and
Restated Declaration of Trust (incorporated herein by reference to
Gables Residential Trust's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (File No. 1-12590)).
4.4 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 5.00% Series Z Cumulative
Redeemable Preferred Shares (incorporated herein by reference to Gables
Residential Trust's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-12590)).
4.5 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 8.625% Series B Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Exhibit 4.1 to Gables Residential Trust's Current Report on Form 8-K
dated November 12, 1998 (File No. 1-12590)).
4.6 Second Amended and Restated Bylaws of Gables Residential Trust
(incorporated herein by reference to Exhibit 3.1 to Gables Residential
Trust's Registration Statement on Form 8-A/A-2 (File No. 1-12590)).
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities and interests being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Goodwin, Procter & Hoar LLP (included as part of Exhibits
5.1 and 8.1).
24.1 Power of Attorney (included on the signature page hereof).
99.1 Registration Rights and Lock-Up Agreement, dated April 14, 1998, by and
between Gables Residential Trust and Austin Colony Partners, Ltd.
99.2 Registration Rights and Lock-Up Agreement, dated April 14, 1998, by and
between Gables Residential Trust and Lions Head Partners, Ltd.
</TABLE>
II-2
<PAGE> 32
<TABLE>
<S> <C>
99.3 Registration Rights and Lock-Up Agreement, dated April 14, 1998, by and
between Gables Residential Trust and Rivercrest Partners II, Ltd.
99.4 Registration Rights and Lock-Up Agreement, dated April 22, 1998, by and
between Gables Residential Trust and Windmill Landing Partners, Ltd.
99.5 Fourth Amended and Restated Agreement of Limited Partnership of Gables
Realty Limited Partnership (incorporated herein by reference to Exhibit
4.2 to Gables Residential Trust's Current Report on Form 8-K dated
November 12, 1998 (File No. 1-12590)).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) Gables Residential Trust hereby undertakes:
(1) To file, during any period in which offers or sales
are being made pursuant to this Registration Statement, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in
this Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by Gables Residential Trust pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Gables Residential Trust hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
Gables Residential Trust's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of Gables Residential Trust pursuant to the foregoing provisions, or
otherwise, Gables Residential Trust has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by Gables Residential Trust of expenses incurred or paid by a
trustee, officer or controlling person of Gables Residential Trust in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling
II-3
<PAGE> 33
person in connection with the securities being registered, Gables Residential
Trust will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia on May 12, 1999.
GABLES RESIDENTIAL TRUST
By: /s/ Chris D. Wheeler
-----------------------------------------
Chris D. Wheeler
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Gables Residential Trust hereby severally constitute Chris D.
Wheeler and Marcus E. Bromley, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement filed
herewith and any and all amendments to said Registration Statement, and
generally to do all such things in our names and in our capacities as officers
and directors to enable Gables Residential Trust to comply with the provisions
of the Securities Act of 1933 and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Marcus E. Bromley Executive Chairman and Chairman May 12, 1999
- ------------------------------- of the Board of Trustees
Marcus E. Bromley (Principal Executive Officer)
/s/ Chris D. Wheeler President, Chief Executive Officer May 12, 1999
- ------------------------------- and Trustee
Chris D. Wheeler (Principal Executive Officer)
/s/ Marvin R. Banks, Jr. Chief Financial Officer May 12, 1999
- ------------------------------- (Principal Financial Officer and
Marvin R. Banks, Jr. Principal Accounting Officer)
/s/ John T. Rippel Trustee May 12, 1999
- -------------------------------
John T. Rippel
/s/ David M. Holland Trustee May 12, 1999
- -------------------------------
David M. Holland
/s/ Lauralee E. Martin Trustee May 12, 1999
- -------------------------------
Lauralee E. Martin
/s/ John W. McIntyre Trustee May 12, 1999
- -------------------------------
John W. McIntyre
/s/ D. Raymond Riddle Trustee May 12, 1999
- -------------------------------
D. Raymond Riddle
</TABLE>
II-5
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Amended and Restated Declaration of Trust of Gables Residential Trust
(incorporated herein by reference to Gables Residential Trust's
Registration Statement on Form S-11 (File No. 33-70570), as amended).
4.2 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 8.30% Series A Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Exhibit 4.1 to Gables Residential Trust's Current Report on Form 8-K
dated July 24, 1997 (File No. 1-12590)).
4.3 Articles of Amendment to Gables Residential Trust's Amended and
Restated Declaration of Trust (incorporated herein by reference to
Gables Residential Trust's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (File No. 1-12590)).
4.4 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 5.00% Series Z Cumulative
Redeemable Preferred Shares (incorporated herein by reference to Gables
Residential Trust's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-12590)).
4.5 Articles Supplementary to Gables Residential Trust's Amended and
Restated Declaration of Trust creating the 8.625% Series B Cumulative
Redeemable Preferred Shares (incorporated herein by reference to
Exhibit 4.1 to Gables Residential Trust's Current Report on Form 8-K
dated November 12, 1998 (File No. 1-12590)).
4.6 Second Amended and Restated Bylaws of Gables Residential Trust
(incorporated herein by reference to Exhibit 3.1 to Gables Residential
Trust's Registration Statement on Form 8-A/A-2 (File No. 1-12590)).
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities and interests being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Goodwin, Procter & Hoar LLP (included as part of Exhibits
5.1 and 8.1).
24.1 Power of Attorney (included on the signature page hereof).
99.1 Registration Rights and Lock-Up Agreement, dated April 14, 1998, by and
between Gables Residential Trust and Austin Colony Partners, Ltd.
99.2 Registration Rights and Lock-Up Agreement, dated April 14, 1998, by and
between Gables Residential Trust and Lions Head Partners, Ltd.
</TABLE>
II-6
<PAGE> 36
<TABLE>
<S> <C>
99.3 Registration Rights and Lock-Up Agreement, dated April 14, 1998, by and
between Gables Residential Trust and Rivercrest Partners II, Ltd.
99.4 Registration Rights and Lock-Up Agreement, dated April 22, 1998, by and
between Gables Residential Trust and Windmill Landing Partners, Ltd.
99.5 Fourth Amended and Restated Agreement of Limited Partnership of Gables
Realty Limited Partnership (incorporated herein by reference to Exhibit
4.2 to Gables Residential Trust's Current Report on Form 8-K dated
November 12, 1998 (File No. 1-12590)).
</TABLE>
II-7
<PAGE> 1
EXHIBIT 5.1
[GOODWIN, PROCTER & HOAR LLP LETTERHEAD]
May 13, 1999
Gables Residential Trust
2859 Paces Ferry Road
Atlanta, Georgia 30339
Ladies and Gentlemen:
This opinion is furnished in connection with the registration on Form
S-3 (the "Registration Statement") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), of 665,191 common shares of beneficial interest,
par value $.01 per share (the "Redemption Shares"), of Gables Residential Trust,
a Maryland real estate investment trust (the "Company"). The Redemption Shares
may be issued by the Company if and to the extent that certain holders (the
"Selling Shareholders") of units of limited partnership ("Units") in Gables
Realty Limited Partnership (the "Operating Partnership") tender such Units to
the Operating Partnership for redemption and the Company exercises its
contractual right to acquire such tendered Units for Redemption Shares.
In connection with rendering this opinion, we have examined the Amended
and Restated Declaration of Trust and Second Amended and Restated Bylaws of the
Company, each as amended to date; such records of the corporate proceedings of
the Company as we deemed material; and such other certificates, receipts,
records and documents as we considered necessary for the purposes of this
opinion. In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as certified, photostatic or facsimile copies, the authenticity
of the originals of such copies and the authenticity of telephonic confirmations
of public officials and others. As to facts material to our opinion, we have
relied upon certificates or telephonic confirmations of public officials and
certificates, documents, statements and other information of the Company or
representatives or officers thereof.
We are attorneys admitted to practice in The Commonwealth of
Massachusetts. We express no opinion concerning the laws of any jurisdictions
other than the laws of the United States of America and The Commonwealth of
Massachusetts and the Maryland General Corporation Law.
<PAGE> 2
Gables Residential Trust
May 13, 1999
Page 2
Based upon the foregoing, we are of the opinion that when the
Redemption Shares being registered for the account of the Selling Shareholders
have been duly issued and exchanged for Units tendered to the Operating
Partnership for redemption by the Selling Shareholders as contemplated by the
Registration Statement, such Redemption Shares will be validly issued, fully
paid and nonassessable.
The foregoing assumes that all requisite steps were taken to comply
with the requirements of the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us with respect to this opinion
under the heading "Validity of Common Shares" in the Prospectus which is a part
of such Registration Statement. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
---------------------------------
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 8.1
[GOODWIN, PROCTER & HOAR LLP LETTERHEAD]
May 13, 1999
Gables Residential Trust
2859 Paces Ferry Road
Overlook III, Suite 1450
Atlanta, Georgia 30339
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to Gables
Residential Trust, a Maryland real estate investment trust (the "Company"), in
connection with the registration on Form S-3 (the "Registration Statement")
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), of
665,191 common shares of beneficial interest, par value $.01 per share (the
"Redemption Shares"), of the Company. The Redemption Shares may be issued by the
Company if and to the extent that certain holders of units of limited
partnership ("Units") in Gables Realty Limited Partnership (the "Operating
Partnership") tender such Units to the Operating Partnership for redemption and
the Company exercises its contractual right to acquire such tendered Units for
Redemption Shares.
In rendering the following opinion, we have examined the Amended and
Restated Declaration of Trust and Second Amended and Restated Bylaws of the
Company, and such other records, certificates and documents as we have deemed
necessary or appropriate for purposes of rendering the opinion set forth herein.
We have reviewed the Registration Statement and the descriptions set
forth therein of the Company and its investments and activities. We have relied
upon the factual representations of the Company and its affiliates and certain
officers thereof (including, without limitation, factual representations
contained in representation letter dated as of this date) regarding the manner
in which the Company has been and will continue to be owned and operated. We
have neither independently investigated nor verified such representations, and
we assume that such representations are true, correct and complete and that all
representations made "to the best of the knowledge and belief" of any person(s)
or party(ies) or with similar qualification are and will be true, correct and
complete as if made without such qualification. We assume that the Company has
been and will be operated in accordance with applicable laws
<PAGE> 2
Gables Residential Trust
May 13, 1999
Page 2
and the terms and conditions of applicable documents and that the descriptions
of the Company and its investments and the proposed investments, activities,
operations and governance of the Company set forth in the Registration Statement
and all prior registration statements filed with the Securities and Exchange
Commission continue to be true. In addition, we have relied on certain
additional facts and assumptions described below. Capitalized terms not
otherwise defined herein shall have the meaning ascribed to such terms in the
Registration Statement.
In rendering the opinion set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us, and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We also
have assumed, without investigation, that all documents, certificates,
warranties and covenants on which we have relied in rendering the opinion set
forth below and that were given or dated earlier than the date of this letter
continue to remain accurate, insofar as relevant to the opinion set forth
herein, from such earlier date through and including the date of this letter.
The discussion and conclusions set forth below are based upon the Code,
the Income Tax Regulations and Procedure and Administration Regulations
promulgated thereunder and existing administrative and judicial interpretations
thereof, all of which are subject to change. No assurance can therefore be given
that the federal income tax consequences described below will not be altered in
the future.
Based upon and subject to the foregoing and the assumptions,
qualifications and factual matters set forth in the Registration Statement, and
provided that the Company continues to meet the applicable asset composition,
source of income, shareholder diversification, distribution and other
requirements of the Code necessary for a corporation to qualify as a REIT, we:
1. Are of the opinion that commencing with the Company's first
taxable year ended December 31, 1994, the Company has been
organized in conformity with the requirements for
qualification as a REIT under the Code, and the Company's
method of operation, as described in the representations
referred to above, will enable it to continue to meet the
requirements for qualification and taxation as a REIT under
the Code; and
<PAGE> 3
Gables Residential Trust
May 13, 1999
Page 3
2. Hereby confirm the opinions of Goodwin, Procter & Hoar LLP set
forth in the prospectus contained in the Registration
Statement under the heading "Federal Income Tax Considerations
and Consequences of Your Investment."
We express no opinion with respect to the transactions described in the
Registration Statement other than that expressly set forth herein. You should
recognize that our opinion is not binding on the Internal Revenue Service
("IRS") and that the IRS may disagree with the opinion contained herein.
Although we believe that our opinion will be sustained if challenged, there can
be no assurance that this will be the case. Except as specifically discussed
above, the opinion expressed herein is based upon the law as it currently
exists. Consequently, future changes in the law may cause the federal income tax
treatment of the transactions described herein to be materially and adversely
different from that described above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Federal Income Tax Considerations and Consequences of Your Investment" in the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 5, 1999
included in Gables Residential Trust's Form 10-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
-------------------------
Arthur Andersen LLP
Atlanta, Georgia
May 12, 1999
<PAGE> 1
EXHIBIT 99.1
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
(Austin Colony Partners, Ltd.)
This Registration Rights and Lock-Up Agreement (this "Agreement") is
entered into as of April 14, 1998 by and between Gables Residential Trust, a
Maryland real estate investment trust (the "Company"), and Austin Colony
Partners, Ltd., a Texas limited partnership (the "Contributor"), and its
permitted successors and assigns who have executed a signature page to this
Agreement (each, including the Contributor, a "Holder" and collectively the
"Holders").
WHEREAS, the Contributor is to receive units (the "Acquired Units") of
limited partnership interest ("Units") in Gables Realty Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"), issued without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in consideration for its contribution to the Operating Partnership of
certain property pursuant to that certain Asset Contribution Agreement between
the Operating Partnership and the Contributor dated as of the date hereof (the
"Contribution Agreement");
WHEREAS, under the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of July 24, 1997, holders of
Units may present such Units to the Operating Partnership for redemption, and
any Units so presented may be acquired by the Company, at the Company's option,
for cash or common shares of beneficial interest, par value $.01 per share
("Common Shares"), of the Company;
WHEREAS, it is a condition precedent to the closing of the Contribution
Agreement that the Company provide the Contributor with the registration rights
set forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Certain Definitions.
As used in this Agreement, in addition to the other terms defined
herein, the following capitalized defined terms shall have the following
meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by such
<PAGE> 2
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Shares" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement, (ii) Shares sold pursuant to Rule 144 under the
Securities Act or (iii) Shares eligible for sale pursuant to Rule 144(k) under
the Securities Act. All references in this Agreement to Rule 144 and subsections
thereof shall refer to corresponding provisions of future law.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Shares on any
securities exchange or exchanges pursuant to Section 5 hereof; and (v) the fees
and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance and compliance.
Registration Expenses shall specifically exclude underwriting discounts and
commissions relating to the sale or disposition of Registrable Shares by a
selling Holder, the fees and disbursements of counsel representing a selling
Holder, and transfer taxes, if any, relating to the sale or disposition of
Registrable Shares by a selling Holder, all of which shall be borne by such
Holder in all cases.
"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers the issuance or resale of any of the Registrable Shares on an appropriate
form, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all materials incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall mean any Common Shares issued or to be issued to the
Holders by the Company upon acquisition by the Company of any Acquired Units
presented to the Operating Partnership for redemption.
2
<PAGE> 3
2. Lock-up Agreement. Each Holder hereby agrees that (i) for one (1)
year from the date hereof, without the prior written consent of the Company, it
will not offer, pledge, sell, contract to sell, grant any options for the sale
of or otherwise dispose of, directly or indirectly (collectively, "Dispose"),
any Acquired Units and (ii) for thirteen (13) months from the date hereof (the
"Redemption Lock-up Period"), without the prior written consent of the Company,
it will not seek the redemption of Acquired Units.
3. Registration.
(a) Filing of Issuance or Resale Registration Statement. Subject to the
conditions set forth in this Agreement, the Company shall cause to be filed
promptly after [DATE THAT IS 50 WEEKS AFTER SIGNING] a registration statement
(an "Issuance Registration Statement") under Rule 415 under the Securities Act
relating to the issuance to Holders by the Company of Common Shares upon
acquisition by the Company of any Acquired Units presented to the Operating
Partnership for redemption. Thereupon, the Company shall use reasonable efforts
to cause such Registration Statement to be declared effective by the SEC for all
Common Shares covered thereby. The Company agrees to use reasonable efforts to
keep the Issuance Shelf Registration Statement continuously effective, with
respect to the Registrable Shares of a particular Holder, until the date on
which such Holder has redeemed or exchanged such Holder's Acquired Units for
Common Shares.
In the event that the Company is unable to cause such Issuance
Registration Statement to be declared effective by the SEC due to the fact that
Common Shares are being registered on an Issuance Registration Statement or
(except as otherwise permitted by Sections 8(b) and 9) is unable due to such
reason to keep such Issuance Registration Statement effective until the date on
which each Holder has redeemed or exchanged such Holder's Acquired Units for
Common Shares, then, in lieu thereof, the Company shall file a Registration
Statement under Rule 415 under the Securities Act relating to the sale by the
Holders of all of the Registrable Shares in accordance with the terms hereof (a
"Resale Registration Statement"), and shall use reasonable efforts to cause such
Registration Statement to be declared effective by the SEC by the expiration of
the Redemption Lock-up Period.
The Company agrees to use reasonable efforts to keep the Registration
Statement that is filed and declared effective as contemplated in this paragraph
(a) continuously effective until the earliest of (a) the date on which the
Holders no longer hold any Registrable Shares or (b) the date on which all of
the Registrable Shares held or subsequently acquired by the Holders have become
eligible for sale pursuant to Rule 144(k) promulgated under the Securities Act
and the Company has delivered to each such Holder an opinion of counsel to such
effect (hereinafter referred to as the "Shelf Registration Expiration Date").
(b) Demand Registration. Subject to the conditions set forth in this
Agreement, at any time after the Shelf Registration Expiration Date and while
any Registrable Shares are outstanding, the Company shall, at the written
request of any Holder who is unable to sell its
3
<PAGE> 4
Registrable Shares pursuant to Rule 144(k) under the Securities Act, cause to be
filed as soon as practicable after the date of such request by such Holder a
Registration Statement under Rule 415 under the Securities Act relating to the
sale by the Holder of all of the Registrable Shares held by such Holder in
accordance with the terms hereof, and shall use reasonable efforts to cause such
Registration Statement to be declared effective by the SEC as soon as
practicable thereafter. The Company may, in its sole discretion, elect to file
the Registration Statement before receipt of notice from any Holder. The Company
agrees to use reasonable efforts to keep the Registration Statement continuously
effective thereafter until the date on which such Holder no longer holds any
Registrable Shares.
(c) Piggyback Registration. If at any time after the Shelf Registration
Expiration Date and while any Registrable Shares or Acquired Units are
outstanding and a Registration Statement applicable to Holders under Sections
3(a) or 3(b) is not effective, the Company (in its sole discretion and without
any obligation to do so) proposes to file a registration statement under the
Securities Act with respect to an offering solely of Common Shares solely for
cash (other than a registration statement (i) on Form S-8 or any successor form
to such Form or in connection with any employee or director welfare, benefit or
compensation plan, (ii) on Form S-4 or any successor form to such Form or in
connection with an exchange offer, (iii) in connection with a rights offering
exclusively to existing holders of Common Shares, (iv) in connection with an
offering solely to employees of the Company or its subsidiaries, or (v) relating
to a transaction pursuant to Rule 145 of the Securities Act), whether or not for
its own account, the Company shall give prompt written notice of such proposed
filing to the Holders. The notice referred to in the preceding sentence shall
offer Holders the opportunity to register such amount of Registrable Shares as
each Holder may request (a "Piggyback Registration"). Subject to the provisions
of Section 4 below, the Company shall include in such Piggyback Registration, in
the registration and qualification for sale under the blue sky or securities
laws of the various states and in any underwriting in connection therewith, all
Registrable Shares for which the Company has received written requests for
inclusion therein within fifteen (15) calendar days after the notice referred to
above has been given by the Company to the Holders. Holders of Registrable
Shares shall be permitted to withdraw all or part of the Registrable Shares from
a Piggyback Registration at any time prior to the effective date of such
Piggyback Registration. If a Piggyback Registration is an underwritten primary
registration on behalf of the Company and the managing underwriter advises the
Company that the total number of Common Shares requested to be included in such
registration exceeds the number of Common Shares that can be sold in such
offering without impairing the pricing or other commercial practicality of such
offering, the Company will include in such registration in the following
priority: (i) first, all Common Shares the Company proposes to sell, (ii)
second, up to the full number of applicable Common Shares requested to be
included in such registration by holders of Common Shares with prior or superior
piggyback registration rights and (iii) third, up to the full number of
applicable Registrable Shares and Common Shares requested to be included in such
registration by any Holders and other holders of Common Shares with piggyback
registration rights of similar priority which, in the opinion of such managing
underwriter, can be sold without adversely affecting the price range or
probability of
4
<PAGE> 5
success of such offering (with the number of such Registrable Shares and other
Common Shares of each Holder and such other holders, respectively, to be
included in the Piggyback Registration to be allocated pro rata among the
Holders and such other holders on the basis of the total number of shares
requested to be included in such registration by all such Holders of Registrable
Shares and such other holders of Common Shares).
(d) [intentionally omitted]
(e) Notification and Distribution of Materials. The Company shall
notify each Holder of the effectiveness of any Registration Statement applicable
to the Shares of such Holder and shall furnish to each such Holder such number
of copies of the Registration Statement (including any amendments, supplements
and exhibits), the Prospectus contained therein (including each preliminary
prospectus and all related amendments and supplements) and any documents
incorporated by reference in the Registration Statement or such other documents
as such Holder may reasonably request in order to facilitate its sale of the
Registrable Shares in the manner described in the Registration Statement.
(f) Amendments and Supplements. The Company shall prepare and file with
the SEC from time to time such amendments and supplements to the Registration
Statement and Prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the issuance or disposition of all the
Registrable Shares until the earlier of (a) such time as all of the Registrable
Shares have been issued or disposed of in accordance with the intended methods
of disposition by the Holders or issuance by the Company as set forth in the
Registration Statement or (b) the date on which the Registration Statement
ceases to be effective in accordance with the terms of this Section 3. Upon five
(5) business days' notice, the Company shall file any supplement or
post-effective amendment to the Registration Statement with respect to the plan
of distribution or such Holder's ownership interests in Registrable Shares that
is reasonably necessary to permit the sale of the Holder's Registrable Shares
pursuant to the Registration Statement. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Shares registered under any Registration Statement to be then listed or quoted
on the primary exchange or quotation system on which the Common Shares are then
listed or quoted.
(g) Notice of SEC Filings, etc. The Company shall promptly notify each
Holder of, and confirm in writing, the filing of the Registration Statement
applicable to the Shares of such Holder or any Prospectus, amendment or
supplement related thereto or any post-effective amendment to such Registration
Statement and the effectiveness of any post-effective amendment.
(h) Notice of Certain Other Events. At any time when a Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act by a Holder to a transferee, the Company shall immediately notify
each Holder of the happening of any event as
5
<PAGE> 6
a result of which the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In such event, the Company shall promptly prepare and furnish to
each Holder a reasonable number of copies of a supplement to or an amendment of
such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Registrable Shares, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement.
(i) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing any Shares issued
to the Holders under an Issuance Registration Statement or sold to another
person under a Resale Registration Statement or a Registration Statement filed
under Sections 3(b) or 3(c). The Company shall otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the SEC.
(j) In the case of an underwritten offering of Registrable Shares
(other than an offering contemplated by Section 3(c)) in which Holders will
offer at least $10 million worth of Shares, the Company shall permit Holders who
hold a majority of all Shares held by the Holders who are participating in the
Offering to select the investment banker(s) and manager(s) who will administer
such offering, subject to the approval of the Company which will not be
unreasonably withheld. In connection with any such underwritten offering, the
Company (upon reasonable advance notice and to the extent not otherwise
disruptive of the Company's operations) will provide such information and make
available appropriate personnel as may reasonably be requested by the Holders or
the managing underwriters, provided, that (i) Company personnel will not be
required to participate in roadshow presentations and (ii) the Company will be
reimbursed by the Holders participating in the offering (who shall be jointly
and severally liable for such reimbursement) for any out of pocket costs and
expenses in connection with such cooperation.
(k) Holder Information. In connection with any Resale or Issuance
Registration Statement or any Registration Statement contemplated under Sections
3(b) or 3(c), the Company shall deliver to each Holder, at least ten (10)
business days prior to the filing of a Registration Statement, a notice which
sets forth the name and number of Shares proposed to be shown in the
Registration Statement with respect to such Holder, to the extent such Holder is
to be listed in the Registration Statement as a selling stockholder; provided,
that if such Holder provides corrected information for inclusion in the
Registration Statement within four (4) business days after the date the notice
is delivered, the Company shall instead include such corrected information with
respect to such Holder.
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<PAGE> 7
4. State Securities Laws. Subject to the conditions set forth in this
Agreement, the Company shall, in connection with the filing of any Registration
Statement hereunder, file such documents as may be necessary to register or
qualify the Registrable Shares under the securities or "Blue Sky" laws of such
states as any Holder may reasonably request, and the Company shall use its best
efforts to cause such filings to become effective; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such state in which it is not then qualified or
to file any general consent to service of process in any such state. Once
effective, the Company shall use its best efforts to keep such filings effective
until the earlier of (a) such time as all of the Registrable Shares have been
disposed of in accordance with the intended methods of disposition by the Holder
as set forth in the Registration Statement, (b) in the case of a particular
state, a Holder has notified the Company that it no longer requires an effective
filing in such state in accordance with its original request for filing or (c)
the date on which the Registration Statement ceases to be effective. The Company
shall promptly notify each Holder of, and confirm in writing, the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Shares for sale under the securities or "Blue Sky" laws of
any jurisdiction or the initiation or threat of any proceeding for such purpose.
5. Expenses. The Company shall bear all Registration Expenses incurred
in connection with the registration of the Registrable Shares pursuant to this
Agreement, except that each Holder shall be responsible for any brokerage or
underwriting commissions and taxes of any kind (including, without limitation,
transfer taxes) with respect to any disposition, sale or transfer of Registrable
Shares sold by it and for any legal, accounting and other expenses incurred by
it and for any expenses to be paid by it in accordance with Section 3(j).
6. Indemnification by the Company. The Company agrees to indemnify
each of the Holders and their respective officers, directors, employees, agents,
representatives and affiliates, and each person or entity, if any, that controls
a Holder within the meaning of the Securities Act, and each other person or
entity, if any, subject to liability because of his, her or its connection with
a Holder, and any underwriter and any person who controls the underwriter within
the meaning of the Securities Act (each an "Indemnitee") against any and all
losses, claims, damages, actions, liabilities, costs and expenses (including
without limitation reasonable fees, expenses and disbursements of attorneys and
other professionals), joint or several, arising out of or based upon any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any Registration Statement or
Prospectus, or upon any untrue or alleged untrue statement of material fact
contained in the Registration Statement or any Prospectus, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company shall not be
liable to such Indemnitee or any person who participates as an underwriter in
the offering or sale of Registrable Shares or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any
7
<PAGE> 8
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement or in any such Prospectus in reliance upon and in conformity with
information regarding such Indemnitee or its plan of distribution or ownership
interests which was furnished to the Company for use in connection with the
Registration Statement or the Prospectus contained therein by such Indemnitee or
(ii) such Holder's failure to send or give a copy of the final, amended or
supplemented prospectus furnished to the Holder by the Company at or prior to
the time such action is required by the Securities Act to the person claiming an
untrue statement or alleged untrue statement or omission or alleged omission if
such statement or omission was corrected in such final, amended or supplemented
prospectus.
7. Covenants of Holders. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in the Registration
Statement (other than an Issuance Registration Statement) to any purchaser of
the shares covered by such Registration Statement from the Holder and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each person, if any, who controls the
Company within the meaning of the Securities Act, and each other person, if any,
subject to liability because of his connection with the Company, against any and
all losses, claims, damages, actions, liabilities, costs and expenses arising
out of or based upon (i) any untrue statement or alleged untrue statement of
material fact contained in either such Registration Statement or the Prospectus
contained therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, if and to the extent that such statement or omission occurs from
reliance upon and in conformity with written information regarding the Holder,
its plan of distribution or its ownership interests, which was furnished to the
Company by the Holder for use therein unless such statement or omission was
corrected in writing to the Company not less than two (2) business days prior to
the date of the final prospectus (as supplemented or amended, as the case may
be) or (ii) the failure by the Holder to deliver or cause to be delivered the
Prospectus contained in such Registration Statement (as amended or supplemented,
if applicable) furnished by the Company to the Holder to any purchaser of the
shares covered by such Registration Statement from the Holder through no fault
of the Company.
8. Suspension of Registration Requirement.
(a) The Company shall promptly notify each Holder of, and confirm in
writing, the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement with respect to such Holder's Registrable Shares or
the initiation of any proceedings for that
8
<PAGE> 9
purpose. The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of such a Registration Statement at the
earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best efforts
to cause the Registration Statement and any filings with any state securities
commission to become effective or to amend or supplement the Registration
Statement shall be suspended in the event and during such period as unforeseen
circumstances exist (including without limitation (i) an underwritten primary
offering by the Company if the Company is advised by the underwriters that the
sale of Registrable Shares under the Registration Statement would impair the
pricing or other commercial practicality of the primary offering or (ii) pending
negotiations relating to, or consummation of, a transaction or the occurrence of
an event that would require additional disclosure of material information by the
Company in the Registration Statement or such filing, as to which the Company
has a bona fide business purpose for preserving confidentiality or which renders
the Company unable to comply with SEC requirements) (such unforeseen
circumstances being hereinafter referred to as a "Suspension Event") that would
make it impractical or unadvisable to cause the Registration Statement or such
filings to become effective or to amend or supplement the Registration
Statement, but (x) such suspension shall continue only for so long as such event
or its effect is continuing and (y) in no event will any such suspension exceed
ninety (90) days and in no event will such suspensions in any twelve month
period exceed, in the aggregate, one hundred eighty (180) days. The Company
shall notify the Holders of the existence and, in the case of circumstances
referred to in clause (i) of this Section 8(b), nature of any Suspension Event.
(c) Each Holder of Registrable Shares agrees, if requested by the
Company in the case of a Company-initiated nonunderwritten offering or if
requested by the managing underwriter or underwriters in a Company-initiated
underwritten offering, not to effect any public sale or distribution of any of
the securities of the Company of any class included in such Registration
Statement, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act (except as part of such Company-initiated registration), during
the 15-day period prior to, and during the 60-day period beginning on, the date
of effectiveness of each Company-initiated offering made pursuant to such
Registration Statement, to the extent timely notified in writing by the Company
or the managing underwriters; provided, however, that such 60-day period shall
be extended by the number of days from and including the date of the giving of
any notice pursuant to Section 3(g) or (h) hereof to and including the date when
each seller of Registrable Shares covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 3(h) hereof.
9. Black-Out Period. Either Holder agrees that, following the
effectiveness of any Registration Statement (except an Issuance Registration
Statement) relating to the Registrable Shares of such Holder, such Holder will
not effect any sales of the Registrable Shares pursuant to such Registration
Statement or any filings with any state securities commission at any time after
such Holder has received notice from the Company to suspend sales as a result of
the
9
<PAGE> 10
occurrence or existence of any Suspension Event or so that the Company may
correct or update the Registration Statement or such filing (but in no event
will any such Suspension Event exceed ninety (90) days and in no event will all
such Suspension Events in any 12 month period exceed one hundred eighty (180)
days). The Holder may recommence effecting sales of the Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than five
(5) days after the conclusion of any such Suspension Event.
10. Additional Shares. The Company, at its option, may register, under
any Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued Common Shares of the
Company or any Common Shares of the Company owned by any other shareholder or
shareholders of the Company.
11. Contribution. If the indemnification provided for in Sections 6 and
7 is unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or is
insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any indemnifying
party to contribute under this Section 11 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 6 or 7 hereof had been available
under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall
10
<PAGE> 11
be entitled to contribution from any indemnifying party who was not guilty of
such fraudulent misrepresentation.
12. No Other Obligation to Register. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
13. Amendments and Waivers. The provisions of this Agreement may not be
amended, modified, or supplemented or waived without the prior written consent
of the Company and Holders holding in excess of two-thirds of the aggregate of
all Registrable Shares then covered by this Agreement, provided, that no such
amendment will be effective against any Holder who has not consented in writing
thereto (i) if such amendment materially and adversely affects such Holder's
rights to such an extent that the benefit intended hereby (access to public
markets for the sale of Registrable Shares) is effectively eliminated by such
amendment or (ii) if such amendment was obtained as a result of consents given
by persons who are affiliates of the Company or persons who gave such consents
contemporaneously with or in contemplation of the redemption, sale or exchange
of Acquired Units. Neither the waiver by any of the parties hereto of a breach
or a default under any of the provisions of this Agreement, nor the failure of
any of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder shall
thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights or privileges
hereunder.
14. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof), and further provided that in case of
directions to amend the Registration Statement pursuant to Section 3(f) or
Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, GA 30339
Attn: Marcus E. Bromley
Telecopy: (770) 438-5559
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
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<PAGE> 12
Telecopy: (617) 523-1231
If to the Holders: As listed on the applicable Holder
Signature Page
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 8 and 9 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
This Agreement and the rights granted hereunder may not be assigned by any
Holder without the prior written consent of the Company; provided, however, that
(i) a Holder may assign its rights and obligations hereunder, following at least
ten (10) days prior written notice to the Company, to a permitted transferee in
connection with a transfer of the Partnership Units in accordance with the terms
of the Partnership Agreement, if such transferee agrees in writing to be bound
by all of the provisions hereof and (ii) no Holder shall Dispose of any Acquired
Units to any person that is not an "accredited investor" under the Securities
Act if the Company has a reasonable basis for objecting to such transfer (except
that such prohibition shall not apply to Dispositions by the Contributor to
those persons who are constituent partners of Contributor as of the date
hereof). Any attempted assignment hereof by any Holder that is not in accordance
with the foregoing will be void and of no effect and shall terminate all
obligations of the Company hereunder.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland applicable to contracts made
and to be performed wholly within said State.
18. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
19. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set
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<PAGE> 13
forth or referred to herein, with respect to such subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
20. Specific Performance. The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would not be
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to (a)
compel specific performance of the obligations, covenants and agreements of any
other party under this Agreement in accordance with the terms and conditions of
this Agreement and (b) obtain preliminary injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement.
21. Time of Essence. Time is of the essence in the performance of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
-------------------------
Name:
Title:
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<PAGE> 14
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
HOLDER SIGNATURE PAGE
Holder:
AUSTIN COLONY PARTNERS, LTD.,
a Texas limited partnership
By: /s/ Walter B. Eeds
--------------------------------
Walter B. Eeds, General Partner
Address for Notice:
-------------------
c/o Oasis Residential
5215 DTC Parkway, Suite 425
Englewood, Colorado
Attention: Mr. Walter B. Eeds
14
<PAGE> 1
EXHIBIT 99.2
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
(Lions Head Partners, Ltd.)
This Registration Rights and Lock-Up Agreement (this "Agreement") is
entered into as of April 14, 1998 by and between Gables Residential Trust, a
Maryland real estate investment trust (the "Company"), and Lions Head Partners,
Ltd., a Texas limited partnership (the "Contributor"), and its permitted
successors and assigns who have executed a signature page to this Agreement
(each, including the Contributor, a "Holder" and collectively the "Holders").
WHEREAS, the Contributor is to receive units (the "Acquired Units") of
limited partnership interest ("Units") in Gables Realty Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"), issued without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in consideration for its contribution to the Operating Partnership of
certain property pursuant to that certain Asset Contribution Agreement between
the Operating Partnership and the Contributor dated as of the date hereof (the
"Contribution Agreement");
WHEREAS, under the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of July 24, 1997, holders of
Units may present such Units to the Operating Partnership for redemption, and
any Units so presented may be acquired by the Company, at the Company's option,
for cash or common shares of beneficial interest, par value $.01 per share
("Common Shares"), of the Company;
WHEREAS, it is a condition precedent to the closing of the Contribution
Agreement that the Company provide the Contributor with the registration rights
set forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Certain Definitions.
As used in this Agreement, in addition to the other terms defined
herein, the following capitalized defined terms shall have the following
meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by such
<PAGE> 2
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Shares" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement, (ii) Shares sold pursuant to Rule 144 under the
Securities Act or (iii) Shares eligible for sale pursuant to Rule 144(k) under
the Securities Act. All references in this Agreement to Rule 144 and subsections
thereof shall refer to corresponding provisions of future law.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Shares on any
securities exchange or exchanges pursuant to Section 5 hereof; and (v) the fees
and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance and compliance.
Registration Expenses shall specifically exclude underwriting discounts and
commissions relating to the sale or disposition of Registrable Shares by a
selling Holder, the fees and disbursements of counsel representing a selling
Holder, and transfer taxes, if any, relating to the sale or disposition of
Registrable Shares by a selling Holder, all of which shall be borne by such
Holder in all cases.
"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers the issuance or resale of any of the Registrable Shares on an appropriate
form, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all materials incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall mean any Common Shares issued or to be issued to the
Holders by the Company upon acquisition by the Company of any Acquired Units
presented to the Operating Partnership for redemption.
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<PAGE> 3
2. Lock-up Agreement. Each Holder hereby agrees that (i) for one (1)
year from the date hereof, without the prior written consent of the Company, it
will not offer, pledge, sell, contract to sell, grant any options for the sale
of or otherwise dispose of, directly or indirectly (collectively, "Dispose"),
any Acquired Units and (ii) for thirteen (13) months from the date hereof (the
"Redemption Lock-up Period"), without the prior written consent of the Company,
it will not seek the redemption of Acquired Units.
3. Registration.
(a) Filing of Issuance or Resale Registration Statement. Subject to the
conditions set forth in this Agreement, the Company shall cause to be filed
promptly after [DATE THAT IS 50 WEEKS AFTER SIGNING] a registration statement
(an "Issuance Registration Statement") under Rule 415 under the Securities Act
relating to the issuance to Holders by the Company of Common Shares upon
acquisition by the Company of any Acquired Units presented to the Operating
Partnership for redemption. Thereupon, the Company shall use reasonable efforts
to cause such Registration Statement to be declared effective by the SEC for all
Common Shares covered thereby. The Company agrees to use reasonable efforts to
keep the Issuance Shelf Registration Statement continuously effective, with
respect to the Registrable Shares of a particular Holder, until the date on
which such Holder has redeemed or exchanged such Holder's Acquired Units for
Common Shares.
In the event that the Company is unable to cause such Issuance
Registration Statement to be declared effective by the SEC due to the fact that
Common Shares are being registered on an Issuance Registration Statement or
(except as otherwise permitted by Sections 8(b) and 9) is unable due to such
reason to keep such Issuance Registration Statement effective until the date on
which each Holder has redeemed or exchanged such Holder's Acquired Units for
Common Shares, then, in lieu thereof, the Company shall file a Registration
Statement under Rule 415 under the Securities Act relating to the sale by the
Holders of all of the Registrable Shares in accordance with the terms hereof (a
"Resale Registration Statement"), and shall use reasonable efforts to cause such
Registration Statement to be declared effective by the SEC by the expiration of
the Redemption Lock-up Period.
The Company agrees to use reasonable efforts to keep the Registration
Statement that is filed and declared effective as contemplated in this paragraph
(a) continuously effective until the earliest of (a) the date on which the
Holders no longer hold any Registrable Shares or (b) the date on which all of
the Registrable Shares held or subsequently acquired by the Holders have become
eligible for sale pursuant to Rule 144(k) promulgated under the Securities Act
and the Company has delivered to each such Holder an opinion of counsel to such
effect (hereinafter referred to as the "Shelf Registration Expiration Date").
(b) Demand Registration. Subject to the conditions set forth in this
Agreement, at any time after the Shelf Registration Expiration Date and while
any Registrable Shares are outstanding, the Company shall, at the written
request of any Holder who is unable to sell its
3
<PAGE> 4
Registrable Shares pursuant to Rule 144(k) under the Securities Act, cause to be
filed as soon as practicable after the date of such request by such Holder a
Registration Statement under Rule 415 under the Securities Act relating to the
sale by the Holder of all of the Registrable Shares held by such Holder in
accordance with the terms hereof, and shall use reasonable efforts to cause such
Registration Statement to be declared effective by the SEC as soon as
practicable thereafter. The Company may, in its sole discretion, elect to file
the Registration Statement before receipt of notice from any Holder. The Company
agrees to use reasonable efforts to keep the Registration Statement continuously
effective thereafter until the date on which such Holder no longer holds any
Registrable Shares.
(c) Piggyback Registration. If at any time after the Shelf Registration
Expiration Date and while any Registrable Shares or Acquired Units are
outstanding and a Registration Statement applicable to Holders under Sections
3(a) or 3(b) is not effective, the Company (in its sole discretion and without
any obligation to do so) proposes to file a registration statement under the
Securities Act with respect to an offering solely of Common Shares solely for
cash (other than a registration statement (i) on Form S-8 or any successor form
to such Form or in connection with any employee or director welfare, benefit or
compensation plan, (ii) on Form S-4 or any successor form to such Form or in
connection with an exchange offer, (iii) in connection with a rights offering
exclusively to existing holders of Common Shares, (iv) in connection with an
offering solely to employees of the Company or its subsidiaries, or (v) relating
to a transaction pursuant to Rule 145 of the Securities Act), whether or not for
its own account, the Company shall give prompt written notice of such proposed
filing to the Holders. The notice referred to in the preceding sentence shall
offer Holders the opportunity to register such amount of Registrable Shares as
each Holder may request (a "Piggyback Registration"). Subject to the provisions
of Section 4 below, the Company shall include in such Piggyback Registration, in
the registration and qualification for sale under the blue sky or securities
laws of the various states and in any underwriting in connection therewith, all
Registrable Shares for which the Company has received written requests for
inclusion therein within fifteen (15) calendar days after the notice referred to
above has been given by the Company to the Holders. Holders of Registrable
Shares shall be permitted to withdraw all or part of the Registrable Shares from
a Piggyback Registration at any time prior to the effective date of such
Piggyback Registration. If a Piggyback Registration is an underwritten primary
registration on behalf of the Company and the managing underwriter advises the
Company that the total number of Common Shares requested to be included in such
registration exceeds the number of Common Shares that can be sold in such
offering without impairing the pricing or other commercial practicality of such
offering, the Company will include in such registration in the following
priority: (i) first, all Common Shares the Company proposes to sell, (ii)
second, up to the full number of applicable Common Shares requested to be
included in such registration by holders of Common Shares with prior or superior
piggyback registration rights and (iii) third, up to the full number of
applicable Registrable Shares and Common Shares requested to be included in such
registration by any Holders and other holders of Common Shares with piggyback
registration rights of similar priority which, in the opinion of such managing
underwriter, can be sold without adversely affecting the price range or
probability of
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<PAGE> 5
success of such offering (with the number of such Registrable Shares and other
Common Shares of each Holder and such other holders, respectively, to be
included in the Piggyback Registration to be allocated pro rata among the
Holders and such other holders on the basis of the total number of shares
requested to be included in such registration by all such Holders of Registrable
Shares and such other holders of Common Shares).
(d) [intentionally omitted]
(e) Notification and Distribution of Materials. The Company shall
notify each Holder of the effectiveness of any Registration Statement applicable
to the Shares of such Holder and shall furnish to each such Holder such number
of copies of the Registration Statement (including any amendments, supplements
and exhibits), the Prospectus contained therein (including each preliminary
prospectus and all related amendments and supplements) and any documents
incorporated by reference in the Registration Statement or such other documents
as such Holder may reasonably request in order to facilitate its sale of the
Registrable Shares in the manner described in the Registration Statement.
(f) Amendments and Supplements. The Company shall prepare and file with
the SEC from time to time such amendments and supplements to the Registration
Statement and Prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the issuance or disposition of all the
Registrable Shares until the earlier of (a) such time as all of the Registrable
Shares have been issued or disposed of in accordance with the intended methods
of disposition by the Holders or issuance by the Company as set forth in the
Registration Statement or (b) the date on which the Registration Statement
ceases to be effective in accordance with the terms of this Section 3. Upon five
(5) business days' notice, the Company shall file any supplement or
post-effective amendment to the Registration Statement with respect to the plan
of distribution or such Holder's ownership interests in Registrable Shares that
is reasonably necessary to permit the sale of the Holder's Registrable Shares
pursuant to the Registration Statement. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Shares registered under any Registration Statement to be then listed or quoted
on the primary exchange or quotation system on which the Common Shares are then
listed or quoted.
(g) Notice of SEC Filings, etc. The Company shall promptly notify each
Holder of, and confirm in writing, the filing of the Registration Statement
applicable to the Shares of such Holder or any Prospectus, amendment or
supplement related thereto or any post-effective amendment to such Registration
Statement and the effectiveness of any post-effective amendment.
(h) Notice of Certain Other Events. At any time when a Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act by a Holder to a transferee, the Company shall immediately notify
each Holder of the happening of any event as
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<PAGE> 6
a result of which the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In such event, the Company shall promptly prepare and furnish to
each Holder a reasonable number of copies of a supplement to or an amendment of
such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Registrable Shares, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement.
(i) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing any Shares issued
to the Holders under an Issuance Registration Statement or sold to another
person under a Resale Registration Statement or a Registration Statement filed
under Sections 3(b) or 3(c). The Company shall otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the SEC.
(j) In the case of an underwritten offering of Registrable Shares
(other than an offering contemplated by Section 3(c)) in which Holders will
offer at least $10 million worth of Shares, the Company shall permit Holders who
hold a majority of all Shares held by the Holders who are participating in the
Offering to select the investment banker(s) and manager(s) who will administer
such offering, subject to the approval of the Company which will not be
unreasonably withheld. In connection with any such underwritten offering, the
Company (upon reasonable advance notice and to the extent not otherwise
disruptive of the Company's operations) will provide such information and make
available appropriate personnel as may reasonably be requested by the Holders or
the managing underwriters, provided, that (i) Company personnel will not be
required to participate in roadshow presentations and (ii) the Company will be
reimbursed by the Holders participating in the offering (who shall be jointly
and severally liable for such reimbursement) for any out of pocket costs and
expenses in connection with such cooperation.
(k) Holder Information. In connection with any Resale or Issuance
Registration Statement or any Registration Statement contemplated under Sections
3(b) or 3(c), the Company shall deliver to each Holder, at least ten (10)
business days prior to the filing of a Registration Statement, a notice which
sets forth the name and number of Shares proposed to be shown in the
Registration Statement with respect to such Holder, to the extent such Holder is
to be listed in the Registration Statement as a selling stockholder; provided,
that if such Holder provides corrected information for inclusion in the
Registration Statement within four (4) business days after the date the notice
is delivered, the Company shall instead include such corrected information with
respect to such Holder.
6
<PAGE> 7
4. State Securities Laws. Subject to the conditions set forth in this
Agreement, the Company shall, in connection with the filing of any Registration
Statement hereunder, file such documents as may be necessary to register or
qualify the Registrable Shares under the securities or "Blue Sky" laws of such
states as any Holder may reasonably request, and the Company shall use its best
efforts to cause such filings to become effective; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such state in which it is not then qualified or
to file any general consent to service of process in any such state. Once
effective, the Company shall use its best efforts to keep such filings effective
until the earlier of (a) such time as all of the Registrable Shares have been
disposed of in accordance with the intended methods of disposition by the Holder
as set forth in the Registration Statement, (b) in the case of a particular
state, a Holder has notified the Company that it no longer requires an effective
filing in such state in accordance with its original request for filing or (c)
the date on which the Registration Statement ceases to be effective. The Company
shall promptly notify each Holder of, and confirm in writing, the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Shares for sale under the securities or "Blue Sky" laws of
any jurisdiction or the initiation or threat of any proceeding for such purpose.
5. Expenses. The Company shall bear all Registration Expenses incurred
in connection with the registration of the Registrable Shares pursuant to this
Agreement, except that each Holder shall be responsible for any brokerage or
underwriting commissions and taxes of any kind (including, without limitation,
transfer taxes) with respect to any disposition, sale or transfer of Registrable
Shares sold by it and for any legal, accounting and other expenses incurred by
it and for any expenses to be paid by it in accordance with Section 3(j).
6. Indemnification by the Company. The Company agrees to indemnify
each of the Holders and their respective officers, directors, employees, agents,
representatives and affiliates, and each person or entity, if any, that controls
a Holder within the meaning of the Securities Act, and each other person or
entity, if any, subject to liability because of his, her or its connection with
a Holder, and any underwriter and any person who controls the underwriter within
the meaning of the Securities Act (each an "Indemnitee") against any and all
losses, claims, damages, actions, liabilities, costs and expenses (including
without limitation reasonable fees, expenses and disbursements of attorneys and
other professionals), joint or several, arising out of or based upon any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any Registration Statement or
Prospectus, or upon any untrue or alleged untrue statement of material fact
contained in the Registration Statement or any Prospectus, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company shall not be
liable to such Indemnitee or any person who participates as an underwriter in
the offering or sale of Registrable Shares or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any
7
<PAGE> 8
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement or in any such Prospectus in reliance upon and in conformity with
information regarding such Indemnitee or its plan of distribution or ownership
interests which was furnished to the Company for use in connection with the
Registration Statement or the Prospectus contained therein by such Indemnitee or
(ii) such Holder's failure to send or give a copy of the final, amended or
supplemented prospectus furnished to the Holder by the Company at or prior to
the time such action is required by the Securities Act to the person claiming an
untrue statement or alleged untrue statement or omission or alleged omission if
such statement or omission was corrected in such final, amended or supplemented
prospectus.
7. Covenants of Holders. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in the Registration
Statement (other than an Issuance Registration Statement) to any purchaser of
the shares covered by such Registration Statement from the Holder and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each person, if any, who controls the
Company within the meaning of the Securities Act, and each other person, if any,
subject to liability because of his connection with the Company, against any and
all losses, claims, damages, actions, liabilities, costs and expenses arising
out of or based upon (i) any untrue statement or alleged untrue statement of
material fact contained in either such Registration Statement or the Prospectus
contained therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, if and to the extent that such statement or omission occurs from
reliance upon and in conformity with written information regarding the Holder,
its plan of distribution or its ownership interests, which was furnished to the
Company by the Holder for use therein unless such statement or omission was
corrected in writing to the Company not less than two (2) business days prior to
the date of the final prospectus (as supplemented or amended, as the case may
be) or (ii) the failure by the Holder to deliver or cause to be delivered the
Prospectus contained in such Registration Statement (as amended or supplemented,
if applicable) furnished by the Company to the Holder to any purchaser of the
shares covered by such Registration Statement from the Holder through no fault
of the Company.
8. Suspension of Registration Requirement.
(a) The Company shall promptly notify each Holder of, and confirm in
writing, the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement with respect to such Holder's Registrable Shares or
the initiation of any proceedings for that
8
<PAGE> 9
purpose. The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of such a Registration Statement at the
earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best efforts
to cause the Registration Statement and any filings with any state securities
commission to become effective or to amend or supplement the Registration
Statement shall be suspended in the event and during such period as unforeseen
circumstances exist (including without limitation (i) an underwritten primary
offering by the Company if the Company is advised by the underwriters that the
sale of Registrable Shares under the Registration Statement would impair the
pricing or other commercial practicality of the primary offering or (ii) pending
negotiations relating to, or consummation of, a transaction or the occurrence of
an event that would require additional disclosure of material information by the
Company in the Registration Statement or such filing, as to which the Company
has a bona fide business purpose for preserving confidentiality or which renders
the Company unable to comply with SEC requirements) (such unforeseen
circumstances being hereinafter referred to as a "Suspension Event") that would
make it impractical or unadvisable to cause the Registration Statement or such
filings to become effective or to amend or supplement the Registration
Statement, but (x) such suspension shall continue only for so long as such event
or its effect is continuing and (y) in no event will any such suspension exceed
ninety (90) days and in no event will such suspensions in any twelve month
period exceed, in the aggregate, one hundred eighty (180) days. The Company
shall notify the Holders of the existence and, in the case of circumstances
referred to in clause (i) of this Section 8(b), nature of any Suspension Event.
(c) Each Holder of Registrable Shares agrees, if requested by the
Company in the case of a Company-initiated nonunderwritten offering or if
requested by the managing underwriter or underwriters in a Company-initiated
underwritten offering, not to effect any public sale or distribution of any of
the securities of the Company of any class included in such Registration
Statement, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act (except as part of such Company-initiated registration), during
the 15-day period prior to, and during the 60-day period beginning on, the date
of effectiveness of each Company-initiated offering made pursuant to such
Registration Statement, to the extent timely notified in writing by the Company
or the managing underwriters; provided, however, that such 60-day period shall
be extended by the number of days from and including the date of the giving of
any notice pursuant to Section 3(g) or (h) hereof to and including the date when
each seller of Registrable Shares covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 3(h) hereof.
9. Black-Out Period. Either Holder agrees that, following the
effectiveness of any Registration Statement (except an Issuance Registration
Statement) relating to the Registrable Shares of such Holder, such Holder will
not effect any sales of the Registrable Shares pursuant to such Registration
Statement or any filings with any state securities commission at any time after
such Holder has received notice from the Company to suspend sales as a result of
the
9
<PAGE> 10
occurrence or existence of any Suspension Event or so that the Company may
correct or update the Registration Statement or such filing (but in no event
will any such Suspension Event exceed ninety (90) days and in no event will all
such Suspension Events in any 12 month period exceed one hundred eighty (180)
days). The Holder may recommence effecting sales of the Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than five
(5) days after the conclusion of any such Suspension Event.
10. Additional Shares. The Company, at its option, may register, under
any Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued Common Shares of the
Company or any Common Shares of the Company owned by any other shareholder or
shareholders of the Company.
11. Contribution. If the indemnification provided for in Sections 6 and
7 is unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or is
insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any indemnifying
party to contribute under this Section 11 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 6 or 7 hereof had been available
under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall
10
<PAGE> 11
be entitled to contribution from any indemnifying party who was not guilty of
such fraudulent misrepresentation.
12. No Other Obligation to Register. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
13. Amendments and Waivers. The provisions of this Agreement may not be
amended, modified, or supplemented or waived without the prior written consent
of the Company and Holders holding in excess of two-thirds of the aggregate of
all Registrable Shares then covered by this Agreement, provided, that no such
amendment will be effective against any Holder who has not consented in writing
thereto (i) if such amendment materially and adversely affects such Holder's
rights to such an extent that the benefit intended hereby (access to public
markets for the sale of Registrable Shares) is effectively eliminated by such
amendment or (ii) if such amendment was obtained as a result of consents given
by persons who are affiliates of the Company or persons who gave such consents
contemporaneously with or in contemplation of the redemption, sale or exchange
of Acquired Units. Neither the waiver by any of the parties hereto of a breach
or a default under any of the provisions of this Agreement, nor the failure of
any of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder shall
thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights or privileges
hereunder.
14. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof), and further provided that in case of
directions to amend the Registration Statement pursuant to Section 3(f) or
Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, GA 30339
Attn: Marcus E. Bromley
Telecopy: (770) 438-5559
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
11
<PAGE> 12
Telecopy: (617) 523-1231
If to the Holders: As listed on the applicable Holder
Signature Page
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 8 and 9 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
This Agreement and the rights granted hereunder may not be assigned by any
Holder without the prior written consent of the Company; provided, however, that
(i) a Holder may assign its rights and obligations hereunder, following at least
ten (10) days prior written notice to the Company, to a permitted transferee in
connection with a transfer of the Partnership Units in accordance with the terms
of the Partnership Agreement, if such transferee agrees in writing to be bound
by all of the provisions hereof and (ii) no Holder shall Dispose of any Acquired
Units to any person that is not an "accredited investor" under the Securities
Act if the Company has a reasonable basis for objecting to such transfer (except
that such prohibition shall not apply to Dispositions by the Contributor to
those persons who are constituent partners of Contributor as of the date
hereof). Any attempted assignment hereof by any Holder that is not in accordance
with the foregoing will be void and of no effect and shall terminate all
obligations of the Company hereunder.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland applicable to contracts made
and to be performed wholly within said State.
18. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
19. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set
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<PAGE> 13
forth or referred to herein, with respect to such subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
20. Specific Performance. The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would not be
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to (a)
compel specific performance of the obligations, covenants and agreements of any
other party under this Agreement in accordance with the terms and conditions of
this Agreement and (b) obtain preliminary injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement.
21. Time of Essence. Time is of the essence in the performance of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
-------------------------
Name:
Title:
13
<PAGE> 14
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
HOLDER SIGNATURE PAGE
Holder:
LIONS HEAD PARTNERS, LTD.,
a Texas limited partnership
By: /s/ Walter B. Eeds
--------------------------------
Walter B. Eeds, General Partner
Address for Notice:
c/o Oasis Residential
5215 DTC Parkway, Suite 425
Englewood, Colorado
Attention: Mr. Walter B. Eeds
14
<PAGE> 1
EXHIBIT 99.3
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
(Rivercrest Partners II, Ltd.)
This Registration Rights and Lock-Up Agreement (this "Agreement") is
entered into as of April 14, 1998 by and between Gables Residential Trust, a
Maryland real estate investment trust (the "Company"), and Rivercrest Partners
II, Ltd., a Texas limited partnership (the "Contributor"), and its permitted
successors and assigns who have executed a signature page to this Agreement
(each, including the Contributor, a "Holder" and collectively the "Holders").
WHEREAS, the Contributor is to receive units (the "Acquired Units") of
limited partnership interest ("Units") in Gables Realty Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"), issued without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in consideration for its contribution to the Operating Partnership of
certain property pursuant to that certain Asset Contribution Agreement between
the Operating Partnership and the Contributor dated as of the date hereof (the
"Contribution Agreement");
WHEREAS, under the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of July 24, 1997, holders of
Units may present such Units to the Operating Partnership for redemption, and
any Units so presented may be acquired by the Company, at the Company's option,
for cash or common shares of beneficial interest, par value $.01 per share
("Common Shares"), of the Company;
WHEREAS, it is a condition precedent to the closing of the
Contribution Agreement that the Company provide the Contributor with the
registration rights set forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Certain Definitions.
As used in this Agreement, in addition to the other terms defined
herein, the following capitalized defined terms shall have the following
meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by such
<PAGE> 2
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Shares" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement, (ii) Shares sold pursuant to Rule 144 under the
Securities Act or (iii) Shares eligible for sale pursuant to Rule 144(k) under
the Securities Act. All references in this Agreement to Rule 144 and
subsections thereof shall refer to corresponding provisions of future law.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation: (i) all SEC, stock exchange or NASD registration and filing fees;
(ii) all fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualification of any of the Registrable
Shares and the preparation of a Blue Sky Memorandum) and compliance with the
rules of the NASD; (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Shares on any securities exchange or exchanges pursuant to Section 5 hereof;
and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
special audit or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions relating to the sale or disposition of
Registrable Shares by a selling Holder, the fees and disbursements of counsel
representing a selling Holder, and transfer taxes, if any, relating to the sale
or disposition of Registrable Shares by a selling Holder, all of which shall be
borne by such Holder in all cases.
"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers the issuance or resale of any of the Registrable Shares on an
appropriate form, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall mean any Common Shares issued or to be issued to the
Holders by the Company upon acquisition by the Company of any Acquired Units
presented to the Operating Partnership for redemption.
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<PAGE> 3
2. Lock-up Agreement. Each Holder hereby agrees that (i) for one
(1) year from the date hereof, without the prior written consent of the
Company, it will not offer, pledge, sell, contract to sell, grant any options
for the sale of or otherwise dispose of, directly or indirectly (collectively,
"Dispose"), any Acquired Units and (ii) for thirteen (13) months from the date
hereof (the "Redemption Lock-up Period"), without the prior written consent of
the Company, it will not seek the redemption of Acquired Units.
3. Registration.
(a) Filing of Issuance or Resale Registration Statement. Subject
to the conditions set forth in this Agreement, the Company shall cause to be
filed promptly after [DATE THAT IS 50 WEEKS AFTER SIGNING] a registration
statement (an "Issuance Registration Statement") under Rule 415 under the
Securities Act relating to the issuance to Holders by the Company of Common
Shares upon acquisition by the Company of any Acquired Units presented to the
Operating Partnership for redemption. Thereupon, the Company shall use
reasonable efforts to cause such Registration Statement to be declared
effective by the SEC for all Common Shares covered thereby. The Company agrees
to use reasonable efforts to keep the Issuance Shelf Registration Statement
continuously effective, with respect to the Registrable Shares of a particular
Holder, until the date on which such Holder has redeemed or exchanged such
Holder's Acquired Units for Common Shares.
In the event that the Company is unable to cause such Issuance
Registration Statement to be declared effective by the SEC due to the fact that
Common Shares are being registered on an Issuance Registration Statement or
(except as otherwise permitted by Sections 8(b) and 9) is unable due to such
reason to keep such Issuance Registration Statement effective until the date on
which each Holder has redeemed or exchanged such Holder's Acquired Units for
Common Shares, then, in lieu thereof, the Company shall file a Registration
Statement under Rule 415 under the Securities Act relating to the sale by the
Holders of all of the Registrable Shares in accordance with the terms hereof (a
"Resale Registration Statement"), and shall use reasonable efforts to cause
such Registration Statement to be declared effective by the SEC by the
expiration of the Redemption Lock-up Period.
The Company agrees to use reasonable efforts to keep the Registration
Statement that is filed and declared effective as contemplated in this
paragraph (a) continuously effective until the earliest of (a) the date on
which the Holders no longer hold any Registrable Shares or (b) the date on
which all of the Registrable Shares held or subsequently acquired by the
Holders have become eligible for sale pursuant to Rule 144(k) promulgated under
the Securities Act and the Company has delivered to each such Holder an opinion
of counsel to such effect (hereinafter referred to as the "Shelf Registration
Expiration Date").
(b) Demand Registration. Subject to the conditions set forth in
this Agreement, at any time after the Shelf Registration Expiration Date and
while any Registrable Shares are outstanding, the Company shall, at the written
request of any Holder who is unable to sell its
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<PAGE> 4
Registrable Shares pursuant to Rule 144(k) under the Securities Act, cause to
be filed as soon as practicable after the date of such request by such Holder a
Registration Statement under Rule 415 under the Securities Act relating to the
sale by the Holder of all of the Registrable Shares held by such Holder in
accordance with the terms hereof, and shall use reasonable efforts to cause
such Registration Statement to be declared effective by the SEC as soon as
practicable thereafter. The Company may, in its sole discretion, elect to file
the Registration Statement before receipt of notice from any Holder. The
Company agrees to use reasonable efforts to keep the Registration Statement
continuously effective thereafter until the date on which such Holder no longer
holds any Registrable Shares.
(c) Piggyback Registration. If at any time after the Shelf
Registration Expiration Date and while any Registrable Shares or Acquired Units
are outstanding and a Registration Statement applicable to Holders under
Sections 3(a) or 3(b) is not effective, the Company (in its sole discretion and
without any obligation to do so) proposes to file a registration statement
under the Securities Act with respect to an offering solely of Common Shares
solely for cash (other than a registration statement (i) on Form S-8 or any
successor form to such Form or in connection with any employee or director
welfare, benefit or compensation plan, (ii) on Form S-4 or any successor form
to such Form or in connection with an exchange offer, (iii) in connection with
a rights offering exclusively to existing holders of Common Shares, (iv) in
connection with an offering solely to employees of the Company or its
subsidiaries, or (v) relating to a transaction pursuant to Rule 145 of the
Securities Act), whether or not for its own account, the Company shall give
prompt written notice of such proposed filing to the Holders. The notice
referred to in the preceding sentence shall offer Holders the opportunity to
register such amount of Registrable Shares as each Holder may request (a
"Piggyback Registration"). Subject to the provisions of Section 4 below, the
Company shall include in such Piggyback Registration, in the registration and
qualification for sale under the blue sky or securities laws of the various
states and in any underwriting in connection therewith, all Registrable Shares
for which the Company has received written requests for inclusion therein
within fifteen (15) calendar days after the notice referred to above has been
given by the Company to the Holders. Holders of Registrable Shares shall be
permitted to withdraw all or part of the Registrable Shares from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration. If a Piggyback Registration is an underwritten primary
registration on behalf of the Company and the managing underwriter advises the
Company that the total number of Common Shares requested to be included in such
registration exceeds the number of Common Shares that can be sold in such
offering without impairing the pricing or other commercial practicality of such
offering, the Company will include in such registration in the following
priority: (i) first, all Common Shares the Company proposes to sell, (ii)
second, up to the full number of applicable Common Shares requested to be
included in such registration by holders of Common Shares with prior or
superior piggyback registration rights and (iii) third, up to the full number
of applicable Registrable Shares and Common Shares requested to be included in
such registration by any Holders and other holders of Common Shares with
piggyback registration rights of similar priority which, in the opinion of such
managing underwriter, can be sold without adversely affecting the price range
or probability of
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<PAGE> 5
success of such offering (with the number of such Registrable Shares and other
Common Shares of each Holder and such other holders, respectively, to be
included in the Piggyback Registration to be allocated pro rata among the
Holders and such other holders on the basis of the total number of shares
requested to be included in such registration by all such Holders of
Registrable Shares and such other holders of Common Shares).
(d) [intentionally omitted]
(e) Notification and Distribution of Materials. The Company shall
notify each Holder of the effectiveness of any Registration Statement
applicable to the Shares of such Holder and shall furnish to each such Holder
such number of copies of the Registration Statement (including any amendments,
supplements and exhibits), the Prospectus contained therein (including each
preliminary prospectus and all related amendments and supplements) and any
documents incorporated by reference in the Registration Statement or such other
documents as such Holder may reasonably request in order to facilitate its sale
of the Registrable Shares in the manner described in the Registration
Statement.
(f) Amendments and Supplements. The Company shall prepare and file
with the SEC from time to time such amendments and supplements to the
Registration Statement and Prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the issuance or disposition of
all the Registrable Shares until the earlier of (a) such time as all of the
Registrable Shares have been issued or disposed of in accordance with the
intended methods of disposition by the Holders or issuance by the Company as
set forth in the Registration Statement or (b) the date on which the
Registration Statement ceases to be effective in accordance with the terms of
this Section 3. Upon five (5) business days' notice, the Company shall file any
supplement or post-effective amendment to the Registration Statement with
respect to the plan of distribution or such Holder's ownership interests in
Registrable Shares that is reasonably necessary to permit the sale of the
Holder's Registrable Shares pursuant to the Registration Statement. The Company
shall file any necessary listing applications or amendments to the existing
applications to cause the Shares registered under any Registration Statement to
be then listed or quoted on the primary exchange or quotation system on which
the Common Shares are then listed or quoted.
(g) Notice of SEC Filings, etc. The Company shall promptly notify
each Holder of, and confirm in writing, the filing of the Registration
Statement applicable to the Shares of such Holder or any Prospectus, amendment
or supplement related thereto or any post-effective amendment to such
Registration Statement and the effectiveness of any post-effective amendment.
(h) Notice of Certain Other Events. At any time when a Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act by a Holder to a transferee, the Company shall immediately
notify each Holder of the happening of any event as
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<PAGE> 6
a result of which the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In such event, the Company shall promptly prepare and furnish
to each Holder a reasonable number of copies of a supplement to or an amendment
of such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Registrable Shares, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement.
(i) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing any Shares issued
to the Holders under an Issuance Registration Statement or sold to another
person under a Resale Registration Statement or a Registration Statement filed
under Sections 3(b) or 3(c). The Company shall otherwise use its reasonable
best efforts to comply with all applicable rules and regulations of the SEC.
(j) In the case of an underwritten offering of Registrable Shares
(other than an offering contemplated by Section 3(c)) in which Holders will
offer at least $10 million worth of Shares, the Company shall permit Holders
who hold a majority of all Shares held by the Holders who are participating in
the Offering to select the investment banker(s) and manager(s) who will
administer such offering, subject to the approval of the Company which will not
be unreasonably withheld. In connection with any such underwritten offering,
the Company (upon reasonable advance notice and to the extent not otherwise
disruptive of the Company's operations) will provide such information and make
available appropriate personnel as may reasonably be requested by the Holders
or the managing underwriters, provided, that (i) Company personnel will not be
required to participate in roadshow presentations and (ii) the Company will be
reimbursed by the Holders participating in the offering (who shall be jointly
and severally liable for such reimbursement) for any out of pocket costs and
expenses in connection with such cooperation.
(k) Holder Information. In connection with any Resale or Issuance
Registration Statement or any Registration Statement contemplated under
Sections 3(b) or 3(c), the Company shall deliver to each Holder, at least ten
(10) business days prior to the filing of a Registration Statement, a notice
which sets forth the name and number of Shares proposed to be shown in the
Registration Statement with respect to such Holder, to the extent such Holder
is to be listed in the Registration Statement as a selling stockholder;
provided, that if such Holder provides corrected information for inclusion in
the Registration Statement within four (4) business days after the date the
notice is delivered, the Company shall instead include such corrected
information with respect to such Holder.
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<PAGE> 7
4. State Securities Laws. Subject to the conditions set forth in
this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary to
register or qualify the Registrable Shares under the securities or "Blue Sky"
laws of such states as any Holder may reasonably request, and the Company shall
use its best efforts to cause such filings to become effective; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such state in which it is not
then qualified or to file any general consent to service of process in any such
state. Once effective, the Company shall use its best efforts to keep such
filings effective until the earlier of (a) such time as all of the Registrable
Shares have been disposed of in accordance with the intended methods of
disposition by the Holder as set forth in the Registration Statement, (b) in
the case of a particular state, a Holder has notified the Company that it no
longer requires an effective filing in such state in accordance with its
original request for filing or (c) the date on which the Registration Statement
ceases to be effective. The Company shall promptly notify each Holder of, and
confirm in writing, the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Shares for sale under
the securities or "Blue Sky" laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose.
5. Expenses. The Company shall bear all Registration Expenses
incurred in connection with the registration of the Registrable Shares pursuant
to this Agreement, except that each Holder shall be responsible for any
brokerage or underwriting commissions and taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer
of Registrable Shares sold by it and for any legal, accounting and other
expenses incurred by it and for any expenses to be paid by it in accordance
with Section 3(j).
6. Indemnification by the Company. The Company agrees to
indemnify each of the Holders and their respective officers, directors,
employees, agents, representatives and affiliates, and each person or entity,
if any, that controls a Holder within the meaning of the Securities Act, and
each other person or entity, if any, subject to liability because of his, her
or its connection with a Holder, and any underwriter and any person who
controls the underwriter within the meaning of the Securities Act (each an
"Indemnitee") against any and all losses, claims, damages, actions,
liabilities, costs and expenses (including without limitation reasonable fees,
expenses and disbursements of attorneys and other professionals), joint or
several, arising out of or based upon any violation by the Company of any rule
or regulation promulgated under the Securities Act applicable to the Company
and relating to action or inaction required of the Company in connection with
any Registration Statement or Prospectus, or upon any untrue or alleged untrue
statement of material fact contained in the Registration Statement or any
Prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, that the Company shall not be liable to such Indemnitee or any person
who participates as an underwriter in the offering or sale of Registrable
Shares or any other person, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent that any
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<PAGE> 8
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or in any such Prospectus in reliance upon and in
conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished to the Company for use
in connection with the Registration Statement or the Prospectus contained
therein by such Indemnitee or (ii) such Holder's failure to send or give a copy
of the final, amended or supplemented prospectus furnished to the Holder by the
Company at or prior to the time such action is required by the Securities Act
to the person claiming an untrue statement or alleged untrue statement or
omission or alleged omission if such statement or omission was corrected in
such final, amended or supplemented prospectus.
7. Covenants of Holders. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in the Registration
Statement (other than an Issuance Registration Statement) to any purchaser of
the shares covered by such Registration Statement from the Holder and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each person, if any, who controls the
Company within the meaning of the Securities Act, and each other person, if
any, subject to liability because of his connection with the Company, against
any and all losses, claims, damages, actions, liabilities, costs and expenses
arising out of or based upon (i) any untrue statement or alleged untrue
statement of material fact contained in either such Registration Statement or
the Prospectus contained therein, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, if and to the extent that such statement or omission occurs
from reliance upon and in conformity with written information regarding the
Holder, its plan of distribution or its ownership interests, which was
furnished to the Company by the Holder for use therein unless such statement or
omission was corrected in writing to the Company not less than two (2) business
days prior to the date of the final prospectus (as supplemented or amended, as
the case may be) or (ii) the failure by the Holder to deliver or cause to be
delivered the Prospectus contained in such Registration Statement (as amended
or supplemented, if applicable) furnished by the Company to the Holder to any
purchaser of the shares covered by such Registration Statement from the Holder
through no fault of the Company.
8. Suspension of Registration Requirement.
(a) The Company shall promptly notify each Holder of, and confirm
in writing, the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement with respect to such Holder's
Registrable Shares or the initiation of any proceedings for that
8
<PAGE> 9
purpose. The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of such a Registration Statement at the
earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best
efforts to cause the Registration Statement and any filings with any state
securities commission to become effective or to amend or supplement the
Registration Statement shall be suspended in the event and during such period
as unforeseen circumstances exist (including without limitation (i) an
underwritten primary offering by the Company if the Company is advised by the
underwriters that the sale of Registrable Shares under the Registration
Statement would impair the pricing or other commercial practicality of the
primary offering or (ii) pending negotiations relating to, or consummation of,
a transaction or the occurrence of an event that would require additional
disclosure of material information by the Company in the Registration Statement
or such filing, as to which the Company has a bona fide business purpose for
preserving confidentiality or which renders the Company unable to comply with
SEC requirements) (such unforeseen circumstances being hereinafter referred to
as a "Suspension Event") that would make it impractical or unadvisable to cause
the Registration Statement or such filings to become effective or to amend or
supplement the Registration Statement, but (x) such suspension shall continue
only for so long as such event or its effect is continuing and (y) in no event
will any such suspension exceed ninety (90) days and in no event will such
suspensions in any twelve month period exceed, in the aggregate, one hundred
eighty (180) days. The Company shall notify the Holders of the existence and,
in the case of circumstances referred to in clause (i) of this Section 8(b),
nature of any Suspension Event.
(c) Each Holder of Registrable Shares agrees, if requested by the
Company in the case of a Company-initiated nonunderwritten offering or if
requested by the managing underwriter or underwriters in a Company-initiated
underwritten offering, not to effect any public sale or distribution of any of
the securities of the Company of any class included in such Registration
Statement, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act (except as part of such Company-initiated registration), during
the 15-day period prior to, and during the 60-day period beginning on, the date
of effectiveness of each Company-initiated offering made pursuant to such
Registration Statement, to the extent timely notified in writing by the Company
or the managing underwriters; provided, however, that such 60-day period shall
be extended by the number of days from and including the date of the giving of
any notice pursuant to Section 3(g) or (h) hereof to and including the date
when each seller of Registrable Shares covered by such Registration Statement
shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 3(h) hereof.
9. Black-Out Period. Either Holder agrees that, following the
effectiveness of any Registration Statement (except an Issuance Registration
Statement) relating to the Registrable Shares of such Holder, such Holder will
not effect any sales of the Registrable Shares pursuant to such Registration
Statement or any filings with any state securities commission at any time after
such Holder has received notice from the Company to suspend sales as a result
of the
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<PAGE> 10
occurrence or existence of any Suspension Event or so that the Company may
correct or update the Registration Statement or such filing (but in no event
will any such Suspension Event exceed ninety (90) days and in no event will all
such Suspension Events in any 12 month period exceed one hundred eighty (180)
days). The Holder may recommence effecting sales of the Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than
five (5) days after the conclusion of any such Suspension Event.
10. Additional Shares. The Company, at its option, may register,
under any Registration Statement and any filings with any state securities
commissions filed pursuant to this Agreement, any number of unissued Common
Shares of the Company or any Common Shares of the Company owned by any other
shareholder or shareholders of the Company.
11. Contribution. If the indemnification provided for in Sections
6 and 7 is unavailable to an indemnified party with respect to any losses,
claims, damages, actions, liabilities, costs or expenses referred to therein or
is insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims,
damages, actions, liabilities, costs or expenses as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of the Indemnitee, on the other hand, shall be determined by reference to,
among other factors, whether the untrue or alleged untrue statement of a
material fact or omission to state a material fact relates to information
supplied by the Company or by the Indemnitee and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that in no event shall the obligation
of any indemnifying party to contribute under this Section 11 exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections 6 or 7
hereof had been available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall
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<PAGE> 11
be entitled to contribution from any indemnifying party who was not guilty of
such fraudulent misrepresentation.
12. No Other Obligation to Register. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
13. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified, or supplemented or waived without the prior written
consent of the Company and Holders holding in excess of two-thirds of the
aggregate of all Registrable Shares then covered by this Agreement, provided,
that no such amendment will be effective against any Holder who has not
consented in writing thereto (i) if such amendment materially and adversely
affects such Holder's rights to such an extent that the benefit intended hereby
(access to public markets for the sale of Registrable Shares) is effectively
eliminated by such amendment or (ii) if such amendment was obtained as a result
of consents given by persons who are affiliates of the Company or persons who
gave such consents contemporaneously with or in contemplation of the
redemption, sale or exchange of Acquired Units. Neither the waiver by any of
the parties hereto of a breach or a default under any of the provisions of this
Agreement, nor the failure of any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder shall thereafter be construed as a waiver of any subsequent
breach or default of a similar nature, or as a waiver of any such provisions,
rights or privileges hereunder.
14. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
telex or telecopier, registered or certified mail (return receipt requested),
postage prepaid or courier or overnight delivery service to the respective
parties at the following addresses (or at such other address for any party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof), and further provided that in
case of directions to amend the Registration Statement pursuant to Section 3(f)
or Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, GA 30339
Attn: Marcus E. Bromley
Telecopy: (770) 438-5559
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
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<PAGE> 12
Telecopy: (617) 523-1231
If to the Holders: As listed on the applicable Holder Signature Page
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 8 and 9 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement and the rights granted hereunder may not be assigned by
any Holder without the prior written consent of the Company; provided, however,
that (i) a Holder may assign its rights and obligations hereunder, following at
least ten (10) days prior written notice to the Company, to a permitted
transferee in connection with a transfer of the Partnership Units in accordance
with the terms of the Partnership Agreement, if such transferee agrees in
writing to be bound by all of the provisions hereof and (ii) no Holder shall
Dispose of any Acquired Units to any person that is not an "accredited
investor" under the Securities Act if the Company has a reasonable basis for
objecting to such transfer (except that such prohibition shall not apply to
Dispositions by the Contributor to those persons who are constituent partners
of Contributor as of the date hereof). Any attempted assignment hereof by any
Holder that is not in accordance with the foregoing will be void and of no
effect and shall terminate all obligations of the Company hereunder.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland applicable to
contracts made and to be performed wholly within said State.
18. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the parties hereto shall be enforceable to the fullest extent permitted by
law.
19. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set
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<PAGE> 13
forth or referred to herein, with respect to such subject matter. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
20. Specific Performance. The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would not be
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to
(a) compel specific performance of the obligations, covenants and agreements of
any other party under this Agreement in accordance with the terms and
conditions of this Agreement and (b) obtain preliminary injunctive relief to
secure specific performance and to prevent a breach or contemplated breach of
this Agreement.
21. Time of Essence. Time is of the essence in the performance of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
------------------------------
Name:
Title:
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<PAGE> 14
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
HOLDER SIGNATURE PAGE
Holder:
RIVERCREST PARTNERS II, LTD.,
a Texas limited partnership
By: /s/ Walter B. Eeds
----------------------------------------
Walter B. Eeds, General Partner
Address for Notice:
c/o Oasis Residential
5215 DTC Parkway, Suite 425
Englewood, Colorado
Attention: Mr. Walter B. Eeds
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EXHIBIT 99.4
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
(Windmill Landing Partners, Ltd.)
This Registration Rights and Lock-Up Agreement (this "Agreement") is
entered into as of April 14, 1998 by and between Gables Residential Trust, a
Maryland real estate investment trust (the "Company"), and Lions Head Partners,
Ltd., a Texas limited partnership (the "Contributor"), and its permitted
successors and assigns who have executed a signature page to this Agreement
(each, including the Contributor, a "Holder" and collectively the "Holders").
WHEREAS, the Contributor is to receive units (the "Acquired Units") of
limited partnership interest ("Units") in Gables Realty Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"), issued without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in consideration for its contribution to the Operating Partnership of
certain property pursuant to that certain Asset Contribution Agreement between
the Operating Partnership and the Contributor dated as of the date hereof (the
"Contribution Agreement");
WHEREAS, under the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of July 24, 1997, holders of
Units may present such Units to the Operating Partnership for redemption, and
any Units so presented may be acquired by the Company, at the Company's option,
for cash or common shares of beneficial interest, par value $.01 per share
("Common Shares"), of the Company;
WHEREAS, it is a condition precedent to the closing of the
Contribution Agreement that the Company provide the Contributor with the
registration rights set forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Certain Definitions.
As used in this Agreement, in addition to the other terms defined
herein, the following capitalized defined terms shall have the following
meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by such
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Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Shares" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement, (ii) Shares sold pursuant to Rule 144 under the
Securities Act or (iii) Shares eligible for sale pursuant to Rule 144(k) under
the Securities Act. All references in this Agreement to Rule 144 and
subsections thereof shall refer to corresponding provisions of future law.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation: (i) all SEC, stock exchange or NASD registration and filing fees;
(ii) all fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualification of any of the Registrable
Shares and the preparation of a Blue Sky Memorandum) and compliance with the
rules of the NASD; (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Shares on any securities exchange or exchanges pursuant to Section 5 hereof;
and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
special audit or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions relating to the sale or disposition of
Registrable Shares by a selling Holder, the fees and disbursements of counsel
representing a selling Holder, and transfer taxes, if any, relating to the sale
or disposition of Registrable Shares by a selling Holder, all of which shall be
borne by such Holder in all cases.
"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers the issuance or resale of any of the Registrable Shares on an
appropriate form, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall mean any Common Shares issued or to be issued to the
Holders by the Company upon acquisition by the Company of any Acquired Units
presented to the Operating Partnership for redemption.
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2. Lock-up Agreement. Each Holder hereby agrees that (i) for one
(1) year from the date hereof, without the prior written consent of the
Company, it will not offer, pledge, sell, contract to sell, grant any options
for the sale of or otherwise dispose of, directly or indirectly (collectively,
"Dispose"), any Acquired Units and (ii) for thirteen (13) months from the date
hereof (the "Redemption Lock-up Period"), without the prior written consent of
the Company, it will not seek the redemption of Acquired Units.
3. Registration.
(a) Filing of Issuance or Resale Registration Statement. Subject
to the conditions set forth in this Agreement, the Company shall cause to be
filed promptly after [DATE THAT IS 50 WEEKS AFTER SIGNING] a registration
statement (an "Issuance Registration Statement") under Rule 415 under the
Securities Act relating to the issuance to Holders by the Company of Common
Shares upon acquisition by the Company of any Acquired Units presented to the
Operating Partnership for redemption. Thereupon, the Company shall use
reasonable efforts to cause such Registration Statement to be declared
effective by the SEC for all Common Shares covered thereby. The Company agrees
to use reasonable efforts to keep the Issuance Shelf Registration Statement
continuously effective, with respect to the Registrable Shares of a particular
Holder, until the date on which such Holder has redeemed or exchanged such
Holder's Acquired Units for Common Shares.
In the event that the Company is unable to cause such Issuance
Registration Statement to be declared effective by the SEC due to the fact that
Common Shares are being registered on an Issuance Registration Statement or
(except as otherwise permitted by Sections 8(b) and 9) is unable due to such
reason to keep such Issuance Registration Statement effective until the date on
which each Holder has redeemed or exchanged such Holder's Acquired Units for
Common Shares, then, in lieu thereof, the Company shall file a Registration
Statement under Rule 415 under the Securities Act relating to the sale by the
Holders of all of the Registrable Shares in accordance with the terms hereof (a
"Resale Registration Statement"), and shall use reasonable efforts to cause
such Registration Statement to be declared effective by the SEC by the
expiration of the Redemption Lock-up Period.
The Company agrees to use reasonable efforts to keep the Registration
Statement that is filed and declared effective as contemplated in this
paragraph (a) continuously effective until the earliest of (a) the date on
which the Holders no longer hold any Registrable Shares or (b) the date on
which all of the Registrable Shares held or subsequently acquired by the
Holders have become eligible for sale pursuant to Rule 144(k) promulgated under
the Securities Act and the Company has delivered to each such Holder an opinion
of counsel to such effect (hereinafter referred to as the "Shelf Registration
Expiration Date").
(b) Demand Registration. Subject to the conditions set forth in
this Agreement, at any time after the Shelf Registration Expiration Date and
while any Registrable Shares are outstanding, the Company shall, at the written
request of any Holder who is unable to sell its
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Registrable Shares pursuant to Rule 144(k) under the Securities Act, cause to
be filed as soon as practicable after the date of such request by such Holder a
Registration Statement under Rule 415 under the Securities Act relating to the
sale by the Holder of all of the Registrable Shares held by such Holder in
accordance with the terms hereof, and shall use reasonable efforts to cause
such Registration Statement to be declared effective by the SEC as soon as
practicable thereafter. The Company may, in its sole discretion, elect to file
the Registration Statement before receipt of notice from any Holder. The
Company agrees to use reasonable efforts to keep the Registration Statement
continuously effective thereafter until the date on which such Holder no longer
holds any Registrable Shares.
(c) Piggyback Registration. If at any time after the Shelf
Registration Expiration Date and while any Registrable Shares or Acquired Units
are outstanding and a Registration Statement applicable to Holders under
Sections 3(a) or 3(b) is not effective, the Company (in its sole discretion and
without any obligation to do so) proposes to file a registration statement
under the Securities Act with respect to an offering solely of Common Shares
solely for cash (other than a registration statement (i) on Form S-8 or any
successor form to such Form or in connection with any employee or director
welfare, benefit or compensation plan, (ii) on Form S-4 or any successor form
to such Form or in connection with an exchange offer, (iii) in connection with
a rights offering exclusively to existing holders of Common Shares, (iv) in
connection with an offering solely to employees of the Company or its
subsidiaries, or (v) relating to a transaction pursuant to Rule 145 of the
Securities Act), whether or not for its own account, the Company shall give
prompt written notice of such proposed filing to the Holders. The notice
referred to in the preceding sentence shall offer Holders the opportunity to
register such amount of Registrable Shares as each Holder may request (a
"Piggyback Registration"). Subject to the provisions of Section 4 below, the
Company shall include in such Piggyback Registration, in the registration and
qualification for sale under the blue sky or securities laws of the various
states and in any underwriting in connection therewith, all Registrable Shares
for which the Company has received written requests for inclusion therein
within fifteen (15) calendar days after the notice referred to above has been
given by the Company to the Holders. Holders of Registrable Shares shall be
permitted to withdraw all or part of the Registrable Shares from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration. If a Piggyback Registration is an underwritten primary
registration on behalf of the Company and the managing underwriter advises the
Company that the total number of Common Shares requested to be included in such
registration exceeds the number of Common Shares that can be sold in such
offering without impairing the pricing or other commercial practicality of such
offering, the Company will include in such registration in the following
priority: (i) first, all Common Shares the Company proposes to sell, (ii)
second, up to the full number of applicable Common Shares requested to be
included in such registration by holders of Common Shares with prior or
superior piggyback registration rights and (iii) third, up to the full number
of applicable Registrable Shares and Common Shares requested to be included in
such registration by any Holders and other holders of Common Shares with
piggyback registration rights of similar priority which, in the opinion of such
managing underwriter, can be sold without adversely affecting the price range
or probability of
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success of such offering (with the number of such Registrable Shares and other
Common Shares of each Holder and such other holders, respectively, to be
included in the Piggyback Registration to be allocated pro rata among the
Holders and such other holders on the basis of the total number of shares
requested to be included in such registration by all such Holders of
Registrable Shares and such other holders of Common Shares).
(d) [intentionally omitted]
(e) Notification and Distribution of Materials. The Company shall
notify each Holder of the effectiveness of any Registration Statement
applicable to the Shares of such Holder and shall furnish to each such Holder
such number of copies of the Registration Statement (including any amendments,
supplements and exhibits), the Prospectus contained therein (including each
preliminary prospectus and all related amendments and supplements) and any
documents incorporated by reference in the Registration Statement or such other
documents as such Holder may reasonably request in order to facilitate its sale
of the Registrable Shares in the manner described in the Registration
Statement.
(f) Amendments and Supplements. The Company shall prepare and file
with the SEC from time to time such amendments and supplements to the
Registration Statement and Prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the issuance or disposition of
all the Registrable Shares until the earlier of (a) such time as all of the
Registrable Shares have been issued or disposed of in accordance with the
intended methods of disposition by the Holders or issuance by the Company as
set forth in the Registration Statement or (b) the date on which the
Registration Statement ceases to be effective in accordance with the terms of
this Section 3. Upon five (5) business days' notice, the Company shall file any
supplement or post-effective amendment to the Registration Statement with
respect to the plan of distribution or such Holder's ownership interests in
Registrable Shares that is reasonably necessary to permit the sale of the
Holder's Registrable Shares pursuant to the Registration Statement. The Company
shall file any necessary listing applications or amendments to the existing
applications to cause the Shares registered under any Registration Statement to
be then listed or quoted on the primary exchange or quotation system on which
the Common Shares are then listed or quoted.
(g) Notice of SEC Filings, etc. The Company shall promptly notify
each Holder of, and confirm in writing, the filing of the Registration
Statement applicable to the Shares of such Holder or any Prospectus, amendment
or supplement related thereto or any post-effective amendment to such
Registration Statement and the effectiveness of any post-effective amendment.
(h) Notice of Certain Other Events. At any time when a Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act by a Holder to a transferee, the Company shall immediately
notify each Holder of the happening of any event as
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a result of which the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In such event, the Company shall promptly prepare and furnish
to each Holder a reasonable number of copies of a supplement to or an amendment
of such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Registrable Shares, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement.
(i) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing any Shares issued
to the Holders under an Issuance Registration Statement or sold to another
person under a Resale Registration Statement or a Registration Statement filed
under Sections 3(b) or 3(c). The Company shall otherwise use its reasonable
best efforts to comply with all applicable rules and regulations of the SEC.
(j) In the case of an underwritten offering of Registrable Shares
(other than an offering contemplated by Section 3(c)) in which Holders will
offer at least $10 million worth of Shares, the Company shall permit Holders
who hold a majority of all Shares held by the Holders who are participating in
the Offering to select the investment banker(s) and manager(s) who will
administer such offering, subject to the approval of the Company which will not
be unreasonably withheld. In connection with any such underwritten offering,
the Company (upon reasonable advance notice and to the extent not otherwise
disruptive of the Company's operations) will provide such information and make
available appropriate personnel as may reasonably be requested by the Holders
or the managing underwriters, provided, that (i) Company personnel will not be
required to participate in roadshow presentations and (ii) the Company will be
reimbursed by the Holders participating in the offering (who shall be jointly
and severally liable for such reimbursement) for any out of pocket costs and
expenses in connection with such cooperation.
(k) Holder Information. In connection with any Resale or Issuance
Registration Statement or any Registration Statement contemplated under
Sections 3(b) or 3(c), the Company shall deliver to each Holder, at least ten
(10) business days prior to the filing of a Registration Statement, a notice
which sets forth the name and number of Shares proposed to be shown in the
Registration Statement with respect to such Holder, to the extent such Holder
is to be listed in the Registration Statement as a selling stockholder;
provided, that if such Holder provides corrected information for inclusion in
the Registration Statement within four (4) business days after the date the
notice is delivered, the Company shall instead include such corrected
information with respect to such Holder.
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4. State Securities Laws. Subject to the conditions set forth in
this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary to
register or qualify the Registrable Shares under the securities or "Blue Sky"
laws of such states as any Holder may reasonably request, and the Company shall
use its best efforts to cause such filings to become effective; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such state in which it is not
then qualified or to file any general consent to service of process in any such
state. Once effective, the Company shall use its best efforts to keep such
filings effective until the earlier of (a) such time as all of the Registrable
Shares have been disposed of in accordance with the intended methods of
disposition by the Holder as set forth in the Registration Statement, (b) in
the case of a particular state, a Holder has notified the Company that it no
longer requires an effective filing in such state in accordance with its
original request for filing or (c) the date on which the Registration Statement
ceases to be effective. The Company shall promptly notify each Holder of, and
confirm in writing, the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Shares for sale under
the securities or "Blue Sky" laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose.
5. Expenses. The Company shall bear all Registration Expenses
incurred in connection with the registration of the Registrable Shares pursuant
to this Agreement, except that each Holder shall be responsible for any
brokerage or underwriting commissions and taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer
of Registrable Shares sold by it and for any legal, accounting and other
expenses incurred by it and for any expenses to be paid by it in accordance
with Section 3(j).
6. Indemnification by the Company. The Company agrees to
indemnify each of the Holders and their respective officers, directors,
employees, agents, representatives and affiliates, and each person or entity,
if any, that controls a Holder within the meaning of the Securities Act, and
each other person or entity, if any, subject to liability because of his, her
or its connection with a Holder, and any underwriter and any person who
controls the underwriter within the meaning of the Securities Act (each an
"Indemnitee") against any and all losses, claims, damages, actions,
liabilities, costs and expenses (including without limitation reasonable fees,
expenses and disbursements of attorneys and other professionals), joint or
several, arising out of or based upon any violation by the Company of any rule
or regulation promulgated under the Securities Act applicable to the Company
and relating to action or inaction required of the Company in connection with
any Registration Statement or Prospectus, or upon any untrue or alleged untrue
statement of material fact contained in the Registration Statement or any
Prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, that the Company shall not be liable to such Indemnitee or any person
who participates as an underwriter in the offering or sale of Registrable
Shares or any other person, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent that any
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such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or in any such Prospectus in reliance upon and in
conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished to the Company for use
in connection with the Registration Statement or the Prospectus contained
therein by such Indemnitee or (ii) such Holder's failure to send or give a copy
of the final, amended or supplemented prospectus furnished to the Holder by the
Company at or prior to the time such action is required by the Securities Act
to the person claiming an untrue statement or alleged untrue statement or
omission or alleged omission if such statement or omission was corrected in
such final, amended or supplemented prospectus.
7. Covenants of Holders. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in the Registration
Statement (other than an Issuance Registration Statement) to any purchaser of
the shares covered by such Registration Statement from the Holder and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each person, if any, who controls the
Company within the meaning of the Securities Act, and each other person, if
any, subject to liability because of his connection with the Company, against
any and all losses, claims, damages, actions, liabilities, costs and expenses
arising out of or based upon (i) any untrue statement or alleged untrue
statement of material fact contained in either such Registration Statement or
the Prospectus contained therein, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, if and to the extent that such statement or omission occurs
from reliance upon and in conformity with written information regarding the
Holder, its plan of distribution or its ownership interests, which was
furnished to the Company by the Holder for use therein unless such statement or
omission was corrected in writing to the Company not less than two (2) business
days prior to the date of the final prospectus (as supplemented or amended, as
the case may be) or (ii) the failure by the Holder to deliver or cause to be
delivered the Prospectus contained in such Registration Statement (as amended
or supplemented, if applicable) furnished by the Company to the Holder to any
purchaser of the shares covered by such Registration Statement from the Holder
through no fault of the Company.
8. Suspension of Registration Requirement.
(a) The Company shall promptly notify each Holder of, and confirm
in writing, the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement with respect to such Holder's
Registrable Shares or the initiation of any proceedings for that
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purpose. The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of such a Registration Statement at the
earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best
efforts to cause the Registration Statement and any filings with any state
securities commission to become effective or to amend or supplement the
Registration Statement shall be suspended in the event and during such period
as unforeseen circumstances exist (including without limitation (i) an
underwritten primary offering by the Company if the Company is advised by the
underwriters that the sale of Registrable Shares under the Registration
Statement would impair the pricing or other commercial practicality of the
primary offering or (ii) pending negotiations relating to, or consummation of,
a transaction or the occurrence of an event that would require additional
disclosure of material information by the Company in the Registration Statement
or such filing, as to which the Company has a bona fide business purpose for
preserving confidentiality or which renders the Company unable to comply with
SEC requirements) (such unforeseen circumstances being hereinafter referred to
as a "Suspension Event") that would make it impractical or unadvisable to cause
the Registration Statement or such filings to become effective or to amend or
supplement the Registration Statement, but (x) such suspension shall continue
only for so long as such event or its effect is continuing and (y) in no event
will any such suspension exceed ninety (90) days and in no event will such
suspensions in any twelve month period exceed, in the aggregate, one hundred
eighty (180) days. The Company shall notify the Holders of the existence and,
in the case of circumstances referred to in clause (i) of this Section 8(b),
nature of any Suspension Event.
(c) Each Holder of Registrable Shares agrees, if requested by the
Company in the case of a Company-initiated nonunderwritten offering or if
requested by the managing underwriter or underwriters in a Company-initiated
underwritten offering, not to effect any public sale or distribution of any of
the securities of the Company of any class included in such Registration
Statement, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act (except as part of such Company-initiated registration), during
the 15-day period prior to, and during the 60-day period beginning on, the date
of effectiveness of each Company-initiated offering made pursuant to such
Registration Statement, to the extent timely notified in writing by the Company
or the managing underwriters; provided, however, that such 60-day period shall
be extended by the number of days from and including the date of the giving of
any notice pursuant to Section 3(g) or (h) hereof to and including the date
when each seller of Registrable Shares covered by such Registration Statement
shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 3(h) hereof.
9. Black-Out Period. Either Holder agrees that, following the
effectiveness of any Registration Statement (except an Issuance Registration
Statement) relating to the Registrable Shares of such Holder, such Holder will
not effect any sales of the Registrable Shares pursuant to such Registration
Statement or any filings with any state securities commission at any time after
such Holder has received notice from the Company to suspend sales as a result
of the
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occurrence or existence of any Suspension Event or so that the Company may
correct or update the Registration Statement or such filing (but in no event
will any such Suspension Event exceed ninety (90) days and in no event will all
such Suspension Events in any 12 month period exceed one hundred eighty (180)
days). The Holder may recommence effecting sales of the Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than
five (5) days after the conclusion of any such Suspension Event.
10. Additional Shares. The Company, at its option, may register,
under any Registration Statement and any filings with any state securities
commissions filed pursuant to this Agreement, any number of unissued Common
Shares of the Company or any Common Shares of the Company owned by any other
shareholder or shareholders of the Company.
11. Contribution. If the indemnification provided for in Sections
6 and 7 is unavailable to an indemnified party with respect to any losses,
claims, damages, actions, liabilities, costs or expenses referred to therein or
is insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims,
damages, actions, liabilities, costs or expenses as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of the Indemnitee, on the other hand, shall be determined by reference to,
among other factors, whether the untrue or alleged untrue statement of a
material fact or omission to state a material fact relates to information
supplied by the Company or by the Indemnitee and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that in no event shall the obligation
of any indemnifying party to contribute under this Section 11 exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections 6 or 7
hereof had been available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall
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be entitled to contribution from any indemnifying party who was not guilty of
such fraudulent misrepresentation.
12. No Other Obligation to Register. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
13. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified, or supplemented or waived without the prior written
consent of the Company and Holders holding in excess of two-thirds of the
aggregate of all Registrable Shares then covered by this Agreement, provided,
that no such amendment will be effective against any Holder who has not
consented in writing thereto (i) if such amendment materially and adversely
affects such Holder's rights to such an extent that the benefit intended hereby
(access to public markets for the sale of Registrable Shares) is effectively
eliminated by such amendment or (ii) if such amendment was obtained as a result
of consents given by persons who are affiliates of the Company or persons who
gave such consents contemporaneously with or in contemplation of the
redemption, sale or exchange of Acquired Units. Neither the waiver by any of
the parties hereto of a breach or a default under any of the provisions of this
Agreement, nor the failure of any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder shall thereafter be construed as a waiver of any subsequent
breach or default of a similar nature, or as a waiver of any such provisions,
rights or privileges hereunder.
14. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
telex or telecopier, registered or certified mail (return receipt requested),
postage prepaid or courier or overnight delivery service to the respective
parties at the following addresses (or at such other address for any party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof), and further provided that in
case of directions to amend the Registration Statement pursuant to Section 3(f)
or Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, GA 30339
Attn: Marcus E. Bromley
Telecopy: (770) 438-5559
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
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Telecopy: (617) 523-1231
If to the Holders: As listed on the applicable Holder
Signature Page
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 8 and 9 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement and the rights granted hereunder may not be assigned by
any Holder without the prior written consent of the Company; provided, however,
that (i) a Holder may assign its rights and obligations hereunder, following at
least ten (10) days prior written notice to the Company, to a permitted
transferee in connection with a transfer of the Partnership Units in accordance
with the terms of the Partnership Agreement, if such transferee agrees in
writing to be bound by all of the provisions hereof and (ii) no Holder shall
Dispose of any Acquired Units to any person that is not an "accredited
investor" under the Securities Act if the Company has a reasonable basis for
objecting to such transfer (except that such prohibition shall not apply to
Dispositions by the Contributor to those persons who are constituent partners
of Contributor as of the date hereof). Any attempted assignment hereof by any
Holder that is not in accordance with the foregoing will be void and of no
effect and shall terminate all obligations of the Company hereunder.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland applicable to
contracts made and to be performed wholly within said State.
18. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the parties hereto shall be enforceable to the fullest extent permitted by
law.
19. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set
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forth or referred to herein, with respect to such subject matter. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
20. Specific Performance. The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would not be
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to
(a) compel specific performance of the obligations, covenants and agreements of
any other party under this Agreement in accordance with the terms and
conditions of this Agreement and (b) obtain preliminary injunctive relief to
secure specific performance and to prevent a breach or contemplated breach of
this Agreement.
21. Time of Essence. Time is of the essence in the performance of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
-------------------------
Name:
Title:
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REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
HOLDER SIGNATURE PAGE
Holder:
WINDMILL LANDING PARTNERS, LTD.,
a Texas limited partnership
By: /s/ Walter B. Eeds
----------------------------------
Walter B. Eeds, General Partner
Address for Notice:
c/o Oasis Residential
5215 DTC Parkway, Suite 425
Englewood, Colorado
Attention: Mr. Walter B. Eeds
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