As filed with the Securities and Exchange Commission
on April 2, 1997
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
AMLI RESIDENTIAL PROPERTIES TRUST
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Maryland 36-3925916
(State of organization) (I.R.S. Employer
Identification Number)
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
(312) 443-1477
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
------------------------------
Allan J. Sweet
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
(312) 443-1477
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------------
Copy to:
Edward J. Schneidman
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Approximate date of commencement of proposed
sale to the public: From time to time after the
Registration Statement becomes effective.
------------------------------
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 filed 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.
[ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED BE REGISTERED PER SHARE (1) PRICE (1) FEE
- ------------------ ------------- --------------- ------------------ ------------
<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest,
par value $0.01
per share 168,690 shares $23 $3,879,870 $1,176
<FN>
(1) Estimated solely for purposes of determining the registration fee, based on the average of the high and
low sales price on April 1, 1997.
------------------------------
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 Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
</TABLE>
PROSPECTUS
----------
AMLI RESIDENTIAL PROPERTIES TRUST
168,690 Common Shares
This Prospectus relates to 168,690 Common Shares of Beneficial
Interest, par value $.01 per share (the "Common Shares" and such 168,690
Common Shares, the "Shares"), of Amli Residential Properties Trust, a
Maryland real estate investment trust (the "Company"), which may be offered
from time to time by certain selling shareholders (the "Selling
Shareholders"). The Shares may be issued from time to time upon exchange
of 168,690 limited partnership interests ("Units") in Amli Residential
Properties, L.P. (the "Operating Partnership") which were issued to the
Selling Shareholders, as consideration in the acquisition by the Company of
certain assets. See "Selling Shareholders." The Shares are being
registered to permit public secondary trading of the Shares from time to
time after the date of this Prospectus, but the registration of the Shares
does not necessarily mean that any of the Shares will be offered or sold by
the Selling Shareholders.
The Common Shares are listed on the New York Stock Exchange (the
"NYSE") under the symbol "AML." To ensure that the Company maintains its
qualification as a real estate investment trust ("REIT"), ownership by any
person is limited to 5% of the outstanding Common Shares and preferred
shares of beneficial interest of the Company, with certain exceptions. See
"Description of Capital Shares-Description of Common Shares-Restrictions on
Transfer."
The Selling Shareholders may from time to time offer and sell the
Shares on the NYSE or otherwise at market prices then prevailing or at
prices and upon terms then obtainable. Sales may be made in ordinary
brokerage transactions, in block transactions, in privately negotiated
transactions, pursuant to Rule 144 ("Rule 144") under the Securities Act of
1933, as amended (the "Securities Act"), or otherwise. If the Shares are
sold through brokers, customary brokerage commissions and charges are
expected to be paid by the Selling Shareholders.
The Company will not receive any of the proceeds from the sale of any
of the Shares by the Selling Shareholders but has agreed to bear certain
expenses of registration and sale of the Shares.
On March 31, 1997, the last reported sale price of the Common Shares
on the NYSE was $23 per share.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
------------------------------
The date of this Prospectus is April 2, 1997
No person is authorized in connection with any offering made hereby to
give any information or to make any representation not contained in this
Prospectus, and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or the Selling
Shareholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Common Shares
offered hereby, nor does it constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby to any person in
any jurisdiction in which it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstance create any implication
that the information contained herein is correct as of any date subsequent
to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
material and other information concerning the Company can be inspected and
copied at the offices of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its regional offices, Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center,
New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, such material
can also be obtained from the Commission's Web site at http://www.sec.gov.
The Company's outstanding Common Shares are listed on the New York Stock
Exchange (the "NYSE") under the symbol "AML", and all such reports, proxy
material and other information filed by the Company with the NYSE may be
inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered hereby. This prospectus
("Prospectus"), which constitutes a part of the Registration Statement,
does not contain all the information set forth in the Registration
Statement, certain items of which are omitted in accordance with the rules
and regulations of the Commission. Statements made in this Prospectus as
to the content of any contract, agreement or other document referred to are
not necessarily complete. With respect to each such contract, agreement or
other document filed or incorporated by reference as an exhibit to the
Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further
information, reference is hereby made to the Registration Statement which
may be inspected and copied in the manner and at the sources described
above.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-12784) pursuant to the Exchange Act are incorporated by reference in
this Prospectus:
(1) The Company's Annual Report on Form 10-K (filed March 20,
1997), for the fiscal year ended December 31, 1996; and
(2) Description of the Common Shares included in the
Registration Statement on Form 8-A dated February 1, 1994 (filed February
1, 1994).
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering made hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein, modifies or supersedes any such statement. Any such
statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of
such person, a copy of any of the foregoing documents incorporated herein
by reference (other than the exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Amli Residential Properties Trust, 125 South
Wacker Drive, Chicago, Illinois 60606, Attention: Secretary, telephone
(312) 984-5037.
THE COMPANY
The Company and its affiliates constitute a self-administered and
self-managed real estate investment trust (a "REIT") which was organized in
February, 1994 to continue and expand the multifamily property business
conducted by Amli Realty Co. and its affiliates ("Amli") since 1980. The
Company and its affiliates own, manage, lease, acquire and develop
institutional quality apartment communities. The Company's communities
(the "Communities") are located in specific markets in the Southwest,
Southeast and Midwest areas of the United States. The Company also holds
interests in co-investment ventures involving residential apartment
communities (the "Co-Investment Communities"). Additionally, the Company
engages in development activities on its own and through co-investment
joint ventures.
The business of the Company is operated through the Operating
Partnership, Amli Management Company (the "Management Company"), Amli
Institutional Advisors, Inc. ("AIA") and Amli Residential Construction,
Inc. ("Amrescon" and together with the Management Company and AIA, the
"Service Companies"). The Company is the sole general partner of the
Operating Partnership, a Delaware limited partnership, through which it
owns the Communities and its interests in the Co-Investment Communities.
As of March 31, 1997, the Company owned 84% of the partnership interests
("Units") in the Operating Partnership. The Management Company provides
management and leasing services to each of the Communities, the Co-
Investment Communities and several additional properties in which the
Company has no interest. AIA, a "QPAM" (qualified professional asset
manager), renders real estate investment advice to institutional capital
sources, primarily pension plans, endowments, foundations and insurance
companies. The Company actively pursues co-investments through
relationships administered by AIA, in this way seeking to diversify the
sources of its equity capital for investment in apartment communities.
Amrescon provides general contracting, construction management and
landscaping services to the Company and its managed ventures.
The Company was formed as a Maryland real estate investment trust on
December 16, 1993. The Company's executive offices are located at 125
South Wacker Drive, Suite 3100, Chicago, Illinois 60606 and its telephone
number is (312) 984-5037. The Company's principal office is in Chicago,
Illinois with regional offices in Dallas, Texas and Atlanta, Georgia.
USE OF PROCEEDS
The Company will not receive any of the proceeds of the sale of the
Shares offered hereby. All proceeds from the sale of the Shares will be
received by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table provides the name of each Selling Shareholder and,
assuming in each case the conversion into Common Shares of all Units held
by the Selling Shareholder, the total number of Common Shares held by each
Selling Shareholder before the offering, the total number of Common Shares
held by each Selling Shareholder which are offered hereby and the number of
Common Shares (based on the total number of Common Shares and Units held by
the Selling Shareholder as of the date hereof) which will be held by each
Selling Shareholder after the offering assuming that all Common Shares
offered hereby are sold. Since the Selling Shareholders may sell all, some
or none of the Common Shares offered hereby, no estimate can be made of the
aggregate number of Common Shares that are to be offered hereby or that
will be held by each Selling Shareholder upon completion of the offering to
which this Prospectus relates. If, however, all the Common Shares offered
hereby are sold by the Selling Shareholders, no Selling Shareholder (based
on the total number of Common Shares and Units held by the Selling
Shareholders as of the date hereof and assuming conversion into Common
Shares of all Units held by the Selling Shareholders) would hold one
percent or more of the outstanding Common Shares. None of the information
in the following table reflects the total number of Common Shares which any
Selling Shareholder may be deemed to beneficially own.
Number of
Number of Common Shares
Common Shares Number of Held After
Held Prior to Common Shares Completion of
the Offering Offered Hereby the Offering
------------- -------------- -------------
Bristol Chicago
Development
Corp. 0 26,182 26,182
Sharon Walsh(1) 0 39,324 39,324
William Walsh(1) 0 3,188 3,188
David A. Sislen(1) 0 3,720 3,720
G. David Fensterheim
(1) 0 3,188 3,188
Andrew G. New
and Cheryl M. New,
as Joint Tenants
by the Entirety(1) 0 3,720 3,720
JSDP, Inc. 0 2,923 2,923
James E. Sowell 0 34,971 34,971
Donald Pilkinton 0 3,995 3,995
Steven E. Smathers 0 1,930 1,930
J.M. Williams, Jr.
a/k/a
James M. Williams, Jr. 0 45,549 45,549
(1) Received Units from Bristol Oakhurst Development L.L.C.
pursuant to an Assignment and Assumption Agreement, dated December 1, 1996.
The Operating Partnership issued 53,140 Units to Bristol Oakhurst
Development L.L.C. pursuant to the agreement attached hereto as Exhibit
99.2.
DESCRIPTION OF CAPITAL SHARES
SHARES OF BENEFICIAL INTEREST AND SHAREHOLDER LIABILITY
The Declaration of Trust of the Company provides that the Company may
issue up to 150,000,000 shares of beneficial interest, par value $.01 per
share. No holder of any class of shares of beneficial interest of the
Company will have any preemptive right to subscribe for any securities of
the Company except as may be granted by the Board of Trustees in
authorizing the issuance of a class of preferred shares of beneficial
interest. Any class of preferred shares which may be issued in the future,
together with the Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest, par value $.01 per share (the "Series A Preferred
Shares") are referred to herein as "Preferred Shares." The Company's
Declaration of Trust authorizes the Trustees to classify or reclassify any
unissued Common Shares or Preferred Shares by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption.
Both Maryland statutory law governing real estate investment trusts
organized under the laws of that state and the Company's Declaration of
Trust provide that no shareholder of the Company will be personally liable
for any obligations of the Company. The Company's Declaration of Trust
further provides, with certain limited exceptions, that the Company shall
indemnify each shareholder against claims or liabilities to which the
shareholder may become subject by reason of his being or having been a
shareholder and that the Company shall reimburse each shareholder for all
legal and other expenses reasonably incurred by him in connection with any
such claim or liability. In addition, it is the Company's policy to
include a clause in its contracts, including the Partnership Agreement of
the Operating Partnership, which provides that shareholders assume no
personal liability for obligations entered into on behalf of the Company.
However, with respect to tort claims, contractual claims where shareholder
liability is not so negated, claims for taxes and certain statutory
liability, a shareholder may, in some jurisdictions, be personally liable
to the extent that such claims are not satisfied by the Company. Inasmuch
as the Company will carry public liability insurance which it considers
adequate, any risk of personal liability to shareholders is limited to
situations in which the Company's assets plus its insurance coverage would
be insufficient to satisfy the claims against the Company and its
shareholders.
DESCRIPTION OF COMMON SHARES
General
The summary of certain terms and provisions of the Common Shares
contained in this Prospectus does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the terms and provisions
of the Company's Declaration of Trust, as amended, and Bylaws, as amended,
which are incorporated by reference herein.
All outstanding Common Shares issued are duly authorized, fully paid
and, except as described under "--Shares of Beneficial Interest and
Shareholder Liability," non-assessable. Subject to the provisions of the
Company's Declaration of Trust regarding Excess Shares (as defined below),
each outstanding Common Share entitles the holder thereof to one vote on
all matters voted on by shareholders, including the election of Trustees.
Holders of Common Shares do not have the right to cumulate their votes in
the election of Trustees, which means that the holders of a majority of the
outstanding Common Shares can elect all of the Trustees then standing for
election. Distributions may be paid to the holders of Common Shares if and
when declared by the Board of Trustees of the Company out of funds legally
available therefor, subject to the provisions of the Company's Declaration
of Trust regarding Excess Shares. The Company currently pays regular
quarterly dividends. Holders of Common Shares have no conversion,
redemption, preemptive or exchange rights to subscribe to any securities of
the Company. If the Company is liquidated, each outstanding Common Share
will be entitled to participate pro rata in the assets remaining after
payment of, or adequate provision for, all known debts and liabilities of
the Company and the rights of holders of any Preferred Shares. The rights
of holders of Common Shares are subject to the rights and preferences
established by the Board of Trustees for any Preferred Shares which have
been or may be issued by the Company. For a description of the rights and
preferences of the Series A Preferred Shares, see "--Description of
Series A Preferred Shares."
Restrictions on Transfer
The Company's Declaration of Trust contains certain restrictions on
the number of Common Shares and Preferred Shares that individual
shareholders may own. For the Company to qualify as a REIT under the Code,
no more than 50% in value of its shares of beneficial interest (after
taking into account options to acquire shares of beneficial interest) may
be owned, directly or indirectly, by five or fewer individuals (as defined
in the Code to include certain entities and constructive ownership among
specified family members) during the last half of a taxable year (other
than the first taxable year) or during a proportionate part of a shorter
taxable year. The shares of beneficial interest must also be beneficially
owned (other than during the first taxable year) by 100 or more persons
during at least 335 days of a taxable year or during a proportionate part
of a shorter taxable year. Because the Company expects to qualify as a
REIT, the Declaration of Trust of the Company contains restrictions on the
acquisition of Common Shares and Preferred Shares intended to ensure
compliance with these requirements.
Subject to certain exceptions specified in the Company's Declaration
of Trust, no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 5% (the "Ownership Limit") of
the number or value of the issued and outstanding shares of beneficial
interest of the Company. The Company's Board of Trustees, upon receipt of
a ruling from the Internal Revenue Service (the "Service"), an opinion of
counsel or other evidence satisfactory to the Board of Trustees, and upon
such other conditions as the Board of Trustees may direct, may also exempt
a proposed transferee from the Ownership Limit. As a condition of such
exemption, the intended transferee must give written notice to the Company
of the proposed transfer no later than the fifteenth day prior to any
transfer which, if consummated, would result in the intended transferee
owning shares in excess of the Ownership Limit. The Board of Trustees of
the Company may require such opinions of counsel, affidavits, undertakings
or agreements as it may deem necessary or advisable in order to determine
or ensure the Company's status as a REIT. Any transfer of Common Shares or
Preferred Shares that would (i) create a direct or indirect ownership of
shares in excess of the Ownership Limit, (ii) result in the shares being
beneficially owned by fewer than 100 persons as provided in Section 856(a)
of the Code, or (iii) result in the Company being "closely held" within the
meaning of Section 856(h) of the Code, shall be null and void, and the
intended transferee will acquire no rights to the shares. The foregoing
restrictions on transferability and ownership will not apply if the Board
of Trustees determines, which determination must be approved by the
shareholders, that it is no longer in the best interests of the Company to
attempt to qualify, or to continue to qualify, as a REIT.
The Company's Board of Trustees by resolution has excluded from the
foregoing ownership restriction UICI and Gregory T. Mutz who collectively
may own up to 34.9% of the outstanding shares of beneficial interest of the
Company as a group, or, subject to certain limitations, individually
(subject to the group restrictions) up to 29.9% of the outstanding shares
of beneficial interest of the Company in the case of UICI and up to 24.9%
in the case of Gregory T. Mutz. The Company's Declaration of Trust
excludes certain investors (and their transferees) from whom apartment
communities were obtained in exchange for Units or Common Shares in
connection with the formation of the Company and who would exceed the
Ownership Limit as a result of the ownership of such Common Shares or the
exchange of such Units for Common Shares. In no event will such persons be
entitled to acquire additional shares of beneficial interest of the Company
such that the five largest beneficial owners of shares of beneficial
interest of the Company hold more than 50% of the total outstanding shares.
Any purported transfer of shares that would result in a person owning
shares in excess of the Ownership Limit or cause the Company to become
"closely held" under Section 856(h) of the Code that is not otherwise
permitted as provided above will constitute excess shares ("Excess
Shares"), which will be transferred pursuant to the Declaration of Trust to
the Company as trustee for the exclusive benefit of the person or persons
to whom the Excess Shares are ultimately transferred, until such time as
the purported transferee retransfers the Excess Shares. While these Excess
Shares are held in trust, they will not be entitled to vote or to share in
any dividends or other distributions. Subject to the Ownership Limit, the
Excess Shares may be transferred by the purported transferee to any person
(if the Excess Shares would not be Excess Shares in the hands of such
person) at a price not to exceed the price paid by the purported transferee
(or, if no consideration was paid, fair market value), at which point the
Excess Shares will automatically be exchanged for the shares to which the
Excess Shares are attributable. In addition, such Excess Shares held in
trust are subject to purchase by the Company at a purchase price equal to
the lesser of the price paid for the shares by the purported transferee
(or, if no consideration was paid, fair market value) and the fair market
value of the shares of beneficial interest (as reflected in the last
reported sales price reported on the NYSE on the trading day immediately
preceding the relevant date, or if not then traded on the NYSE, the last
reported sales price of such shares on the trading day immediately
preceding the relevant date as reported on any exchange or quotation system
over which such shares may be traded, or if not then traded over any
exchange or quotation system, then the market price of such shares on the
relevant date as determined in good faith by the Board of Trustees of the
Company) on the date the Company elects to purchase.
All certificates representing shares of beneficial interest will bear
a legend referring to the restrictions described above.
Transfer Agent and Registrar
Harris Trust and Savings Bank has been appointed as transfer agent and
registrar for the Common Shares.
DESCRIPTION OF SERIES A PREFERRED SHARES
General
The summary of certain terms and provisions of the Series A Preferred
Shares contained in this Prospectus does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the terms and
provisions of the Articles Supplementary relating to the Series A Preferred
Shares and the Company's Declaration of Trust, as amended, and Bylaws, as
amended, which are incorporated by reference herein.
The Company's Board of Trustees is authorized to issue, from the
authorized but unissued shares of beneficial interest of the Company,
preferred shares in series and to establish from time to time the number of
preferred shares to be included in such series and to fix the designation
and any preferences, conversion and other rights, voting powers,
restrictions, limitations as to distributions, qualifications and terms and
conditions of redemption of the shares of each such series.
The outstanding Series A Preferred Shares are validly issued, fully
paid and, except as set forth under "-Shares of Beneficial Interest and
Shareholder Liability", nonassessable. The holders of the Series A
Preferred Shares have no preemptive rights with respect to any shares of
the capital securities of the Company or any other securities of the
Company convertible into or carrying rights or options to purchase any such
shares. The Series A Preferred Shares are not subject to any sinking fund
or other obligation of the Company to redeem or retire the Series A
Preferred Shares.
Ranking
The Series A Preferred Shares will rank senior to the Common Shares
with respect to payment of dividends and amounts upon liquidation,
dissolution or winding up.
While any Series A Preferred Shares are outstanding, the Company may
not authorize, create or increase the authorized amount of any class or any
security convertible into shares of any class that ranks senior to the
Series A Preferred Shares with respect to the payment of dividends or
amounts upon liquidation, dissolution or winding up without the consent of
the holders of two-thirds of the outstanding Series A Preferred Shares and
all other shares of Voting Preferred Shares (as defined below), voting as a
single class. However, the Company may create additional classes of
shares, increase the authorized number of preferred shares or issue series
of preferred shares ranking on a parity with the Series A Preferred Shares
with respect, in each case, to the payment of dividends and amounts upon
liquidation, dissolution and winding up (a "Parity Share") without the
consent of any holder of Series A Preferred Shares. See "-Voting Rights"
below.
Distributions
Holders of the Series A Preferred Shares shall be entitled to receive,
when and as declared by the Board of Trustees, out of funds legally
available for the payment of distributions, cumulative preferential cash
distributions in an amount per share equal to the greater (i) $1.72 per
annum or (ii) the cash distribution (determined on each of the quarterly
dividend payment dates referred to below) on the number of Common Shares,
or portion thereof, into which a Series A Preferred Share is convertible.
Such distributions shall be cumulative from the date of original issue and
shall be payable quarterly in arrears on the Tuesday which is nearest to
the twenty-first (21st) day of February, May, August and November or, if
not a business day, the next succeeding business day, (each, a "Dividend
Payment Date"). Such distribution and any distribution payable on the
Series A Preferred Shares for any partial distribution period will be
computed on the basis of the actual number of days in such period.
Distributions will be payable to holders of record as they appear in the
records of the Company at the close of business on the applicable record
date, which shall be on such date designated by the Board of Trustees of
the Company for the payment of distributions that is not more than 50 days
prior to such Dividend Payment Date (each, a "Dividend Record Date").
Except as provided in the next sentence, no distributions will be
declared or paid on any Parity Shares unless full cumulative distributions
have been declared and paid or are contemporaneously declared and funds
sufficient for payment set aside on the Series A Preferred Shares for all
prior distribution periods. If accrued dividends on the Series A Preferred
Shares for all prior dividend periods have not been paid in full, then any
dividend declared on the Series A Preferred Shares and on any Parity Shares
for any dividend period will be declared ratably in proportion to accrued
and unpaid dividends on the Series A Preferred Shares and such Parity
Shares.
The Company will not (i) declare, pay or set apart funds for the
payment of any dividend or other distribution with respect to any Junior
Shares (as defined below) or (ii) redeem, purchase or otherwise acquire for
consideration any Junior Shares through a sinking fund or otherwise (other
than a redemption or purchase or other acquisition of Common Shares made
for purposes of any employee incentive or benefit plan of the Company or
any entity in which the Company, either directly or indirectly, owns more
than a 50% economic interest), unless (A) all cumulative dividends with
respect to the Series A Preferred Shares and any Parity Shares at the time
such dividends are payable have been paid or declared and funds have been
set apart for payment of such dividends and (B) sufficient funds have been
paid or declared and set apart for the payment of the dividend for the
current dividend period with respect to the Series A Preferred Shares and
any Parity Shares. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Shares.
As used herein, (i) the term "dividend" does not include dividends or
other distributions payable solely in Fully Junior Shares on Junior Shares,
or in options, warrants or rights to holders of Junior Shares to subscribe
for or purchase any Fully Junior Shares, (ii) the term "Junior Shares"
means the Common Shares and any other class of capital shares of the
Company now or hereafter issued and outstanding that ranks junior to the
Series A Preferred Shares as to the payment of distributions or amounts
upon liquidation, dissolution and winding up and (iii) the term "Fully
Junior Shares" means Junior Shares that rank junior to the Series A
Preferred Shares both as to the payment of dividends and amounts upon
liquidation, dissolution and winding up.
Redemption
Except as required by the limitation on ownership (see "-Restrictions
on Transfer"), the Series A Preferred Shares are not redeemable prior to
January 25, 2001. On and after January 25, 2001 the Company, at its
option, upon not less than 30 nor more than 90 days' written notice, may
redeem the Series A Preferred Shares, in whole or in part, at any time or
from time to time, (i) for one Common Share per Series A Preferred Share
(subject to possible future adjustment in certain circumstances) plus
accumulated, accrued and unpaid distributions, provided that for twenty
(20) consecutive trading days within the thirty (30) trading days ending on
the date on which notice of redemption is given by the Company, the closing
price of the Common Shares on the NYSE equals or exceeds the conversion
price per share (see "-Conversion Rights"), or (ii) cash at a redemption
price equal to $20.00 per share, plus accumulated, accrued and unpaid
distributions thereon to the date fixed for redemption. If fewer than all
of the outstanding Series A Preferred Shares are to be redeemed, the number
of shares to be redeemed will be determined by the Company and such shares
may be redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held by such holders (with
adjustments to avoid redemption of fractional shares) or by lot in a manner
determined by the Company.
Unless full cumulative distributions on all Series A Preferred Shares
shall have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period, no Series A
Preferred Shares shall be redeemed or purchased by the Company except
pursuant to a purchase or exchange offer made on the same terms to holders
of all outstanding Series A Preferred Shares or Parity Shares.
Notice of redemption will be mailed at least 30 days but not more than
90 days before the redemption date to each holder of record of Series A
Preferred Shares at the address shown on the share transfer books of the
Company. Each notice shall state: (i) the redemption date; (ii) the number
of Series A Preferred Shares to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for Series A Preferred Shares
are to be surrendered for payment of the redemption price; and (v) that
distributions on the Series A Preferred Shares will cease to accrue on such
redemption date. If fewer than all Series A Preferred Shares are to be
redeemed, the notice mailed to each such holder thereof shall also specify
the number of Series A Preferred Shares to be redeemed from each such
holder. If notice of redemption of any Series A Preferred Shares has been
given and if the funds necessary for such redemption have been set aside by
the Company in trust for the benefit of the holders of Series A Preferred
Shares so called for redemption, then from and after the redemption date,
distributions will cease to accrue on the Series A Preferred Shares, such
Series A Preferred Shares shall no longer be deemed outstanding and all
rights of the holders of such shares will terminate, except the right to
receive the redemption price.
The holders of Series A Preferred Shares at the close of business on a
Dividend Record Date will be entitled to receive the distribution payable
with respect to such Series A Preferred Shares on the corresponding
Dividend Payment Date notwithstanding the redemption thereof between such
Dividend Record Date and the corresponding Dividend Payment Date or the
Company's default in the payment of the distribution due. Except as
provided above, the Company will make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series A Preferred Shares
which have been called for redemption.
The Series A Preferred Shares have no stated maturity and will not be
subject to any sinking fund or mandatory redemption. However, in order to
preserve the Company's status as a REIT, as defined in the Code, the Series
A Preferred Shares may be subject to redemption or exchange as described
under "-Restrictions on Transfer."
Liquidation Preference
The holders of Series A Preferred Shares are entitled to receive in
the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, $20.00 per Series A Preferred Share plus
an amount per Series A Preferred Share equal to all distributions (whether
or not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders, and no more.
Until the holders of Series A Preferred Shares and Parity Shares have
been paid their liquidation preference in full, no payment will be made to
any holder of Junior Shares upon the liquidation, dissolution or winding up
of the Company. If, upon any liquidation, dissolution or winding up of the
Company, the assets of the Company, or proceeds thereof, distributable
among the holders of the Series A Preferred Shares are insufficient to pay
in full the liquidation preference with respect to the Series A Preferred
Shares and any other Parity Shares, then such assets, or the proceeds
thereof, will be distributed among the holders of Series A Preferred Shares
and any such Parity Shares ratably in accordance with the respective
amounts which would be payable on such Series A Preferred Shares and any
such Parity Shares if all amounts payable thereon were paid in full.
Neither a consolidation or merger of the Company with another corporation,
a statutory share exchange by the Company nor a sale or transfer of all or
substantially all of the Company's assets will be considered a liquidation,
dissolution or winding up, voluntary or involuntary, of the Company.
Voting Rights
Except as indicated below, or except as otherwise from time to time
required by applicable law, the holders of Series A Preferred Shares have
no voting rights.
If six quarterly distributions (whether or not consecutive) payable on
the Series A Preferred Shares or any Parity Shares are in arrears, whether
or not earned or declared, the number of Trustees then constituting the
Board of Trustees of the Company will be increased by two, and the holders
of Series A Preferred Shares, voting together as a class with the holders
of any other series of Parity Shares (any such other series, the "Voting
Preferred Shares"), will have the right to elect two additional Trustees to
serve on the Company's Board of Trustees at any annual meeting of
shareholders or a properly called special meeting of the holders of Series
A Preferred Shares and such Voting Preferred Shares and at each subsequent
annual meeting of shareholders until all such distributions and
distributions for the current quarterly period on the Series A Preferred
Shares and such other Voting Preferred Shares have been paid or declared
and paid or set aside for payment. Such voting right will terminate when
all such accrued and unpaid dividends have been declared and paid or set
aside for payment. The term of office of all Trustees so elected will
terminate with the termination of such voting rights.
The approval of two-thirds of the outstanding Series A Preferred
Shares and all other series of Voting Preferred Shares similarly affected,
voting as a single class, is required in order to (i) amend the Company's
Declaration of Trust to affect materially and adversely the rights,
preferences or voting power of the holders of the Series A Preferred Shares
or the Voting Preferred Shares, (ii) enter into a share exchange that
affects the Series A Preferred Shares, consolidate with or merge into
another entity, or permit another entity to consolidate with or merge into
the Company, unless in each such case each Series A Preferred Share remains
outstanding without a material adverse change to its terms and rights or is
converted into or exchanged for preferred stock of the surviving entity
having preferences, rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms or conditions of redemption thereof
identical to that of a Series A Preferred Share (except for changes that do
not materially and adversely affect the holders of the Series A Preferred
Shares) or (iii) authorize, reclassify, create, or increase the authorized
amount of any class of capital shares having rights senior to the Series A
Preferred Shares with respect to the payment of distributions or amounts
upon liquidation, dissolution or winding up. However, the Company may
create additional classes of Parity Shares and Junior Shares, increase the
authorized number of Parity Shares and Junior Shares and issue additional
series of Parity Shares and Junior Shares without the consent of any holder
of Series A Preferred Shares.
Except as provided above and as required by law, the holders of
Series A Preferred Shares are not entitled to vote on any merger or
consolidation involving the Company or a sale of all or substantially all
of the assets of the Company.
Conversion Rights
The Series A Preferred Shares are convertible, in whole or in part, at
any time, unless previously redeemed, at the option of the holders thereof,
into authorized but previously unissued Common Shares at a conversion price
of $20.00 per Common Share (equivalent to a conversion rate of one Common
Share for each Series A Preferred Share), subject to adjustment as
described below (the "Conversion Price"). See "-Conversion Price
Adjustments." The right to convert Series A Preferred Shares called for
redemption will terminate at the close of business on the fifth business
day prior to the redemption date for such Series A Preferred Shares. For
information as to notices of redemption, see "-Redemption" above. For a
description of the Company's Common Shares, see "-Description of Common
Shares."
Conversion of Series A Preferred Shares, or a specified portion
thereof, may be effected by delivering certificates evidencing such shares,
together with written notice of conversion and a proper assignment of such
certificates to the Company or in blank, to the office or agency to be
maintained by the Company for that purpose. Initially such office will be
the office of the Transfer Agent.
Each conversion will be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for Series A
Preferred Shares shall have been surrendered and notice shall have been
received by the Company as aforesaid (and if applicable, payment of an
amount equal to the dividend payable on such shares shall have been
received by the Company as described below) and the conversion shall be at
the Conversion Price in effect at such time and on such date.
Holders of Series A Preferred Shares at the close of business on a
Dividend Record Date will be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such Dividend Record Date and prior to
such Dividend Payment Date. However, Series A Preferred Shares surrendered
for conversion during the period between the close of business on any
Dividend Record Date and the opening of business on the corresponding
Dividend Payment Date (except shares converted after the issuance of a
notice of redemption with respect to a redemption date during such period,
which will be entitled to such dividend) must be accompanied by payment of
an amount equal to the distribution payable on such shares on such Dividend
Payment Date. A holder of Series A Preferred Shares on a Dividend Record
Date who (or whose transferee) tenders any such shares for conversion into
Common Shares on such Dividend Payment Date will receive the dividend
payable by the Company on such Series A Preferred Shares on such date, and
the converting holder need not include payment of the amount of such
dividend upon surrender of Series A Preferred Shares for conversion. Except
as provided above, the Company will make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends
on the Common Shares issued upon such conversion.
The Company will not issue fractional Common Shares upon conversion
but in lieu thereof will pay cash at the current market price of the Common
Shares on the day prior to the conversion date.
Conversion Price Adjustments
The Conversion Price is subject to adjustment upon certain events,
including without duplication (i) dividends (and other distributions)
payable in Common Shares, (ii) the issuance to all holders of Common Shares
of certain rights or warrants entitling them to subscribe for or purchase
Common Shares at a price per share less than the fair market value per
Common Share (which, as defined, includes an adjustment for underwriting
commissions avoided in rights offerings to shareholders), (iii)
subdivisions, combinations and reclassifications of Common Shares, and (iv)
distributions to all holders of Common Shares of any capital shares of the
Company (other than Common Shares), evidences of indebtedness of the
Company or assets (including securities, but excluding those dividends,
rights, warrants and distributions referred to above and excluding
Permitted Common Share Cash Distributions, as herein defined). "Permitted
Common Share Cash Distributions" are those cumulative cash dividends and
distributions paid with respect to the Common Shares after December 31,
1995 which are not in excess of the following: the sum of (i) the
Company's cumulative undistributed funds from operations at December 31,
1995; plus (ii) the cumulative amount of funds from operations, as
determined by the Board of Trustees of the Company, after December 31,
1995, minus (iii) the cumulative amount of distributions accrued or paid on
the Series A Preferred Shares or any other class of preferred shares after
January 18, 1996. In addition to the foregoing adjustments, the Company
will be permitted to make such reductions in the Conversion Price as it
considers to be advisable in order that any event treated for federal
income tax purposes as a dividend of stock or stock rights will not be
taxable to the holders of the Common Shares.
In the event that the Company shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the Common Shares or
sale of all or substantially all of the Company's assets), in each case as
a result of which all or substantially all Common Shares are converted into
the right to receive stock, securities or other property (including cash or
any combination thereof), each Series A Preferred Share that is not
redeemed or converted prior to such transaction, will thereafter be
convertible into the kind and amount of shares of stock and other
securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that
number of Common Shares or fraction thereof into which one Series A
Preferred Share was convertible immediately prior to such transaction
(assuming such holder of Common Shares failed to exercise any rights of
election and received per share the kind and amount received per share by a
plurality of non-electing shares). The Company may not become a party to
any such transaction unless the terms thereof are consistent with the
foregoing.
No adjustment of the Conversion Price will be required to be made in
any case until cumulative adjustments amount to 1% or more of the
Conversion Price. Any adjustments not so required to be made will be
carried forward and taken into account in subsequent adjustments.
Restrictions on Transfer
For information regarding restrictions on ownership of the shares of
beneficial interest of the Company, see "Description of Common Shares-
Restrictions on Transfer."
Transfer Agent and Registrar
Harris Trust and Savings Bank has been appointed as transfer agent and
registrar for the Series A Preferred Shares.
CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE COMPANY'S DECLARATION OF
TRUST AND BYLAWS
The following paragraphs summarize certain provisions of Maryland law
and the Company's Declaration of Trust and Bylaws. The summary does not
purport to be complete and reference is made to Maryland law as well as the
Company's Declaration of Trust and Bylaws, which are filed as exhibits to
the Registration Statement of which this Prospectus is part.
Board of Trustees
The Company's Declaration of Trust and Bylaws provide that the number
of Trustees of the Company may be established by a majority of the Board of
Trustees but may not be fewer than three nor more than fifteen. The
Declaration of Trust provides that a majority of the Trustees must be
persons who are not affiliated with Amli or its affiliates ("Disinterested
Trustees"). Any vacancy on the Board of Trustees will be filled, at any
regular meeting or at any special meeting called for that purpose, by a
majority of the remaining Trustees (even if less than a quorum), except
that a vacancy resulting from an increase in the number of Trustees will be
filled by a majority of the entire Board of Trustees and, in the event that
a majority of the Board of Trustees are not Disinterested Trustees by
reason of the resignation or removal of one or more Disinterested Trustees
or otherwise, the remaining Disinterested Trustees (or, if there are no
Disinterested Trustees, the remaining members of the Board of Trustees)
shall promptly appoint that number of Disinterested Trustees necessary to
cause the Board of Trustees to include a majority of Disinterested
Trustees.
Pursuant to the terms of the Declaration of Trust, the Trustees are
divided into three classes, holding office initially for one-year, two-year
and three-year terms, respectively. As these initial terms expire,
Trustees in each class are elected for terms of three years and until their
successors are duly elected and qualified. The Company believes that
classification of the Board of Trustees will help to assure the continuity
and stability of the Company's business strategies and policies as
determined by the Board of Trustees.
The classified Trustee provision could have the effect of making the
removal of incumbent Trustees more time-consuming and difficult, which
could discourage a third party from making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt
might be beneficial to the Company and its shareholders. At least two
annual meetings of shareholders, instead of one, will generally be required
to effect a change in a majority of the Board of Trustees.
Holders of Common Shares have no right to cumulative voting for the
election of Trustees. Consequently, at each annual meeting of
shareholders, the holders of a majority of Common Shares voting together as
a single class will be able to elect all of the successors of the class of
Trustees whose term expires at that meeting.
Business Combinations
Under the Maryland General Corporation Law, as amended from time to
time (the "MGCL"), as applicable to Maryland real estate investment trusts,
certain "business combinations" (including a merger, consolidation, share
exchange, or, in certain circumstances, an asset transfer or issuance or
reclassification of equity securities) between a Maryland real estate
investment trust and any person who beneficially owns 10% or more of the
voting power of the shares of the trust or an affiliate of the trust who,
at any time within the two-year period prior to the date in question, was
the beneficial owner of 10% or more of the voting power of the then-
outstanding voting shares of beneficial interest of the trust (an
"Interested Shareholder") or an affiliate thereof are prohibited for five
years after the most recent date on which the Interested Shareholder became
an Interested Shareholder. Thereafter, any such business combination must
be (a) recommended by the Board of Trustees of such trust and (b) approved
by the affirmative vote of at least (i) 80% of the votes entitled to be
cast by holders of outstanding voting shares of the trust and (ii) two-
thirds of the votes entitled to be cast by holders of outstanding voting
shares (other than voting shares held by the Interested Shareholder with
whom the business combination is to be effected or by an affiliate or
associate thereof), voting together as a single group, unless, among other
things, the company's common shareholders receive a minimum price (as
defined in the statute) for their shares and the consideration is received
in cash or in the same form as previously paid by the Interested
Shareholder for his shares. These provisions of Maryland law do not apply,
however, to business combinations with a particular Interested Shareholder
or its existing or future affiliates that are approved or exempted by the
board of trustees of the trust prior to the time that the Interested
Shareholder becomes an Interested Shareholder or if the original
declaration of trust includes a provision electing not to be governed, in
whole or in part, as to business combinations generally, specifically or
generally by types, as to identified or unidentified existing or future
Interested Shareholders or their affiliates. The Company's Declaration of
Trust, in accordance with Maryland law, exempts Mr. Mutz, Baldwin & Lyons
and Amli and their respective affiliates and successors from the foregoing
restrictions. As a result, such persons and entities may be able to enter
into business combinations with the Company, which may not be in the best
interests of the shareholders, without compliance by the Company with the
super-majority voting requirements and the other provisions of the statute.
Control Share Acquisitions
The MGCL, as applicable to Maryland real estate investment trusts,
imposes limitations on the voting rights of shares acquired in a "control
share acquisition" relating to a Maryland real estate investment trust.
The MGCL defines a "control share acquisition" as the acquisition of
"control shares," which is defined as voting shares that would entitle the
acquiror to exercise voting power in electing trustees in excess of the
following levels of voting power: 20%, 33-1/3%, and 50%. The MGCL
requires a two-thirds shareholder vote (excluding shares owned by the
acquiring person and certain members of management) to accord voting rights
to shares acquired in a control share acquisition. The MGCL also requires
a Maryland real estate investment trust to hold a special meeting at the
request of an actual or proposed control share acquiror generally within 50
days after a request is made with the submission of an "acquiring person
statement," but only if the acquiring person (a) delivers a written
undertaking to pay the expenses of such special meeting or, if required by
the Board of Trustees, posts a bond for the cost of the meeting and (b)
submits a definitive financing agreement to the extent that financing is
not provided by the acquiring person. In addition, unless the charter or
bylaws provide otherwise, the MGCL gives a Maryland real estate investment
trust, within certain time limitations, various redemption rights if there
is a shareholder vote on the issue and the grant of voting rights is not
approved, or if an "acquiring person statement" is not delivered to the
target company within 10 days following a control share acquisition.
Moreover, unless the charter or bylaws provide otherwise, the MGCL provides
that if, before a control share acquisition occurs, voting rights are
accorded to the control shares which results in the acquiring person having
a majority of voting power, then minority shareholders are entitled to
appraisal rights. The fair value of the shares 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 (a) to shares acquired in a merger,
consolidation or share exchange if the trust is a party to the transaction
or (b) to acquisitions approved or exempted by the declaration of trust or
bylaws of the trust. The Company's Declaration of Trust, in accordance
with Maryland law, contains a provision exempting acquisitions of shares by
Mr. Mutz, Baldwin & Lyons and Amli and their respective affiliates and
successors from the foregoing provisions.
Amendment to the Declaration of Trust
The Company's Declaration of Trust may be amended only by the
affirmative vote or written consent of the holders of not less than a
majority of all of the shares of beneficial interest entitled to vote on
the matter, except that the Trustees by a two-thirds vote may amend
provisions of the Company's Declaration of Trust from time to time to
qualify as a real estate investment trust under the Code and Maryland law.
Termination of the Company
The Company's Declaration of Trust permits the termination of the
Company and the discontinuation of the operations of the Company by the
affirmative vote or written consent of the holders of not less than a
majority of the outstanding shares of beneficial interest.
Advance Notice of Trustee Nominations and New Business
The Bylaws of the Company provide that (a) with respect to an annual
meeting of shareholders, nominations of persons for election to the Board
of Trustees and the proposal of business to be considered by shareholders
may be made only (i) pursuant to the Company's notice of the meeting, (ii)
by the Board of Trustees, or (iii) by a shareholder who is entitled to vote
at the meeting and has complied with the advance notice procedures set
forth in the Bylaws, and (b) with respect to special meetings of
shareholders, only the business specified in the Company's notice of
meeting may be brought before the meeting of shareholders, and nominations
of persons for election to the Board of Trustees may be made only on terms
similar to those for annual meetings.
Anti-Takeover Effect of Certain Provisions of Maryland Law and of the
Declaration of Trust and Bylaws
The business combination provisions and the control share acquisition
provisions of the MGCL, the provisions of the Declaration of Trust on
classification of the Board of Trustees and the advance notice provisions
of the Bylaws could delay, defer or prevent a transaction or a change in
control of the Company that might involve a premium price for holders of
Common Shares or otherwise be in their best interest.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of the material Federal income tax
consequences to the Company and its shareholders of the treatment of the
Company as a REIT. The discussion is general in nature and not exhaustive
of all possible tax considerations, nor does the discussion give a detailed
description of any state, local, or foreign tax considerations. The
discussion does not discuss all aspects of Federal income tax law that may
be relevant to a prospective shareholder in light of his particular
circumstances or to certain types of shareholders (including insurance
companies, financial institutions or broker-dealers, tax exempt
organizations, foreign corporations and persons who are not citizens or
residents of the United States) subject to special treatment under the
federal income tax laws nor does the discussion address special
considerations, if any, which may relate to the purchase of Preferred
Shares.
THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING, AND EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH ITS TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT OF THE PURCHASE,
OWNERSHIP AND SALE OF THE COMMON SHARES, INCLUDING THE FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP AND
SALE, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
If certain detailed conditions imposed by the REIT provisions of the
Code are met, entities, such as the Company, that invest primarily in real
estate and that otherwise would be treated for Federal income tax purposes
as corporations, are generally not taxed at the corporate level on their
"REIT taxable income" that is currently distributed to shareholders. This
treatment substantially eliminates the "double taxation" (i.e., at both the
corporate and shareholder levels) that generally results from the use of
corporations.
If the Company fails to qualify as a REIT in any year, however, it
will be subject to Federal income taxation as if it were a domestic
corporation, and its shareholders will be taxed in the same manner as
shareholders of ordinary corporations. In this event, the Company could be
subject to potentially significant tax liabilities, and therefore the
amount of cash available for distribution to its shareholders would be
reduced or eliminated.
The Company has elected REIT status effective for the taxable year
ended December 31, 1994, and the Board of Trustees of the Company believes
that the Company has operated and expects that the Company will continue to
operate in a manner that will permit the Company to elect REIT status in
each taxable year thereafter. There can be no assurance, however, that
this belief or expectation will be fulfilled, since qualification as a REIT
depends on the Company continuing to satisfy numerous asset, income and
distribution tests described below, which in turn will be dependent in part
on the Company's operating results.
TAXATION OF THE COMPANY
General. In any year in which the Company qualifies as a REIT it will
not, in general, be subject to Federal income tax on that portion of its
REIT taxable income or capital gain which is distributed to shareholders.
The Company may, however, be subject to tax at normal corporate rates upon
any taxable income or capital gain not distributed.
Notwithstanding its qualification as a REIT, the Company may also be
subject to taxation in certain other circumstances. If the Company should
fail to satisfy either the 75% or the 95% gross income test (as discussed
below), and nonetheless maintains its qualification as a REIT because
certain other requirements are met, it will be subject to a 100% tax on the
greater of the amount by which the Company fails either the 75% or the 95%
test, multiplied by a fraction intended to reflect the Company's
profitability. The Company will also be subject to a tax of 100% on net
income from any "prohibited transaction" as described below, and if the
Company has (i) net income from the sale or other disposition of
"foreclosure property" which is held primarily for sale to customers in the
ordinary course of business or (ii) other non-qualifying income from
foreclosure property, it will be subject to tax on such income from
foreclosure property at the highest corporate rate. In addition, if the
Company should fail to distribute during each calendar year at least the
sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its
REIT capital gain net income for such year, and (iii) any undistributed
taxable income from prior years, the Company would be subject to a 4%
excise tax on the excess of such required distribution over the amounts
actually distributed. The Company may also be subject to the corporate
alternative minimum tax, as well as tax in certain situations not presently
contemplated. Each of the Management Company, Amrescon and AIA will be
taxed on its income at regular corporate rates. The Company will use the
calendar year both for Federal income tax purposes and for financial
reporting purposes.
In order to qualify as a REIT, the Company must meet, among others,
the following requirements:
Share Ownership Tests. The Company's shares of beneficial interest
must be held by a minimum of 100 persons for at least 335 days in each
taxable year (or a proportional number of days in any short taxable year).
In addition, at all times during the second half of each taxable year, no
more than 50% in value of the outstanding shares of beneficial interest of
the Company may be owned, directly or indirectly and by applying certain
constructive ownership rules, by five or fewer individuals, which for this
purpose includes certain tax-exempt entities. However, for purposes of
this test, any shares of beneficial interest held by a qualified domestic
pension or other retirement trust will be treated as held directly by its
beneficiaries in proportion to their actuarial interest in such trust
rather than by such trust.
In order to attempt to ensure compliance with the foregoing share
ownership tests, the Company has placed certain restrictions on the
transfer of its shares of beneficial interest to prevent additional
concentration of share ownership. Moreover, to evidence compliance with
these requirements, under Treasury regulations the Company must maintain
records which disclose the actual ownership of its outstanding shares of
beneficial interest. In fulfilling its obligations to maintain records,
the Company must and will demand written statements each year from the
record holders of designated percentages of its shares of beneficial
interest disclosing the actual owners of such shares of beneficial interest
(as prescribed by Treasury regulations). A list of those persons failing
or refusing to comply with such demand must be maintained as a part of the
Company's records. A shareholder failing or refusing to comply with the
Company's written demand must submit with his tax return a similar
statement disclosing the actual ownership of Company shares of beneficial
interest and certain other information. In addition, the Company's
Declaration of Trust provides restrictions regarding the transfer of its
shares of beneficial interest that are intended to assist the Company in
continuing to satisfy the share ownership requirements. See "Description
of Capital Shares - Description of Common Shares - Restrictions on
Transfer" and "Description of Capital Shares - Description of Preferred
Shares - Restrictions on Transfer."
Asset Tests. At the close of each quarter of the Company's taxable
year, the Company must satisfy two tests relating to the nature of its
assets (with "assets" being determined in accordance with generally
accepted accounting principles). First, at least 75% of the value of the
Company's total assets must be represented by interests in real property,
interests in mortgages on real property, shares in other REITs, cash, cash
items, government securities and qualified temporary investments. Second,
although the remaining 25% of the Company's assets generally may be
invested without restriction, securities in this class may not exceed
(i) in the case of securities of any one non-government issuer, 5% of the
value of the Company's total assets or (ii) 10% of the outstanding voting
securities of any one such issuer. Where the Company invests in a
partnership (such as the Operating Partnership), it will be deemed to own a
proportionate share of the partnership's assets. See "-Tax Aspects of the
Company's Investments in Partnerships-General." Accordingly, the Company's
investment in the Communities and the Co-Investment Communities through its
interest in the Operating Partnership is intended to constitute an
investment in qualified assets for purposes of the 75% asset test.
The Operating Partnership owns 100% of the non-voting preferred stock
of each of the Management Company, Amrescon and AIA and 5% of the voting
common stock of each of the Management Company, Amrescon and AIA. See "The
Company." By virtue of its partnership interest in the Operating
Partnership, the Company is deemed to own its pro rata share of the assets
of the Operating Partnership, including the securities of the Management
Company, Amrescon and AIA, as described above. Because the Operating
Partnership owns only 5% of the voting securities of each of the Management
Company, Amrescon and AIA and the preferred stock's approval right in the
case of each of the Management Company, Amrescon and AIA is limited to
certain fundamental corporate actions that could adversely affect the
preferred stock as a class, the 10% limitation on holdings of voting
securities of any one issuer should not be exceeded.
Based upon its analysis of the total estimated value of the Management
Company stock, Amrescon stock and AIA stock and the subordinated notes of
the Management Company and AIA (each, "Subordinated Note"), respectively,
owned by the Operating Partnership relative to the estimated value of the
total assets owned by the Operating Partnership and the other assets of the
Company, the Company believes that the Company's pro rata share of the
non-voting preferred stock, voting common stock and Subordinated Note of
the Management Company owned by the Operating Partnership does not exceed,
on the date of this Prospectus, 5% of the value of the Company's total
assets, that the Company's pro rata share of the non-voting preferred stock
and voting common stock of Amrescon owned by the Operating Partnership does
not exceed, on the date of this Prospectus, 5% of the value of the
Company's total assets, and that the Company's pro rata share of the
non-voting preferred stock, voting common stock and Subordinated Note of
AIA owned by the Operating Partnership does not exceed, on the date of this
Prospectus, 5% of the value of the Company's total assets. As to the
securities of any Service Company, this 5% limitation must be satisfied not
only as of the date that the Company (directly or through the Operating
Partnership) acquired securities of the Management Company, Amrescon or
AIA, but also at the end of any quarter in which the Company increases its
interest in the Management Company, Amrescon or AIA or so acquires other
property. In this respect, if the holder of a right to exchange Units for
Common Shares exercises such rights, the Company will thereby increase its
proportionate (indirect) ownership interest in the Management Company,
Amrescon and AIA, thus requiring the Company to meet the 5% test in any
quarter in which such conversion option is exercised. Although the Company
plans to take steps to ensure that it satisfies the 5% value test for any
quarter with respect to which retesting is to occur, there can be no
assurance that such steps will always be successful or will not require a
reduction in the Operating Partnership's overall interest in the Management
Company, Amrescon or AIA.
Gross Income Tests. There are three separate percentage tests
relating to the sources of the Company's gross income which must be
satisfied for each taxable year. For purposes of these tests, where the
Company invests in a partnership, the Company will be treated as receiving
its share of the income and loss of the partnership, and the gross income
of the partnership will retain the same character in the hands of the
Company as it has in the hands of the partnership. See "-Tax Aspects of
the Company's Investments in Partnerships-General" below. The three tests
are as follows:
The 75% Test. At least 75% of the Company's gross income for the
taxable year must be "qualifying income." Qualifying income generally
includes (i) rents from real property (except as modified below);
(ii) interest on obligations secured by mortgages on, or interests in, real
property; (iii) gains from the sale or other disposition of interests in
real property and real estate mortgages, other than gain from property held
primarily for sale to customers in the ordinary course of the Company's
trade or business ("dealer property"); (iv) dividends or other
distributions on shares in other REITs, as well as gain from the sale of
such shares; (v) abatements and refunds of real property taxes; (vi) income
from the operation, and gain from the sale, of property acquired at or in
lieu of a foreclosure of the mortgage secured by such property
("foreclosure property"); (vii) commitment fees received for agreeing to
make loans secured by mortgages on real property or to purchase or lease
real property; and (viii) certain qualified temporary investment income
attributable to the investment of new capital received by the Company in
exchange for its shares during the one-year period following the receipt of
such capital.
Rents received from a tenant will not, however, qualify as rents from
real property in satisfying the 75% test (or the 95% gross income test
described below) if the Company, or an owner of 10% or more of the Company,
directly or constructively owns 10% or more of such tenant. In addition,
if rent attributable to personal property leased in connection with a lease
of real property is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will
not qualify as rents from real property. Moreover, an amount received or
accrued will not qualify as rents from real property (or as interest
income) for purposes of the 75% and 95% gross income tests if it is based
in whole or in part on the income or profits of any person, although an
amount received or accrued generally will not be excluded from "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Finally, for rents received to qualify
as rents from real property for purposes of the 75% and 95% gross income
tests, the Company generally must not operate or manage the property or
furnish or render services to tenants, other than through an "independent
contractor" from whom the Company derives no income, except that the
"independent contractor" requirement does not apply to the extent that the
services provided by the Company are "usually or customarily rendered" in
connection with the rental of space for occupancy only, or are not
otherwise considered "rendered to the occupant for his convenience."
The Management Company (which does not satisfy the independent
contractor standard) provides management and leasing services to each of
the Communities and each of the Co-Investment Communities and may provide
certain services on any newly acquired properties of the Operating
Partnership. The Company believes for purposes of the 75% and 95% gross
income tests, that the services provided by the Management Company on the
Operating Partnership's properties and any other services and amenities
provided by the Operating Partnership or its agents with respect to such
properties are and will continue to be of the type usually or customarily
rendered in connection with the rental of space for occupancy only. The
Company intends to monitor the services and amenities provided by the
Management Company as management agent as well as by others, if any, on the
properties of the Operating Partnership. The Company intends that services
that cannot be provided directly by the Operating Partnership, the
Management Company or other agents will be performed by independent
contractors.
The 95% Test. In addition to deriving 75% of its gross income from
the sources listed above, at least 95% of the Company's gross income for
the taxable year must be derived from the above-described qualifying
income, or from dividends, interest, or gains from the sale or other
disposition of stock or other securities that are not dealer property.
Dividends and interest on any obligations not collateralized by an interest
in real property are included for purposes of the 95% test, but not for
purposes of the 75% test.
For purposes of determining whether the Company complies with the 75%
and the 95% gross income tests, gross income does not include income from
prohibited transactions. A "prohibited transaction" is a sale of dealer
property (excluding foreclosure property); however, it does not include a
sale of property if such property is held by the Company for at least four
years and certain other requirements (relating to the number of properties
sold in a year, their tax bases, and the cost of improvements made thereto)
are satisfied. See "-Taxation of the Company-General" and "-Tax Aspects of
the Company's Investments in Partnerships-Sale of the Communities and Co-
Investment Communities."
The Company believes that, for purposes of both the 75% and the 95%
gross income tests, its investment in the Communities and the Co-Investment
Communities through the Operating Partnership will in major part give rise
to qualifying income in the form of rents, and that gains on sales of the
Communities and the Co-Investment Communities, or of the Company's interest
in the Operating Partnership, generally will also constitute qualifying
income.
The Management Company receives and anticipates continuing to receive
fee income in consideration of the performance of property management and
other services with respect to properties not owned by the Company or the
Operating Partnership, Amrescon receives and anticipates continuing to
receive fee income in consideration of the performance of general
contracting and construction management services, and AIA receives and
anticipates continuing to receive fee income for providing investment
advisory services; however, substantially all income derived by the Company
from the Management Company, Amrescon and AIA will be in the form of
dividends on the preferred stock and common stock of each of the Service
Companies owned by the Operating Partnership and interest on the
Subordinated Notes. Such dividends and interest income will satisfy the
95%, but not the 75%, gross income test (as discussed above). In addition,
the Company's share of any income realized on interest rate swap or cap
agreements, including income received at the time of entering into such
agreements, generally will satisfy the 95%, but not the 75%, gross income
test. The Company intends to closely monitor its non-qualifying income and
anticipates that non-qualifying income on its other investments and
activities, including such dividend income, interest income and interest
rate swap or cap income (if any), will not result in the Company failing
either the 75% or 95% gross income test.
Even if the Company fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may still qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will generally be available if: (i) the Company's
failure to comply was due to reasonable cause and not to willful neglect;
(ii) the Company reports the nature and amount of each item of its income
included in the tests on a schedule attached to its tax return; and
(iii) any incorrect information on this schedule is not due to fraud with
intent to evade tax. If these relief provisions apply, however, the
Company will nonetheless be subject to a 100% tax on the greater of the
amount by which it fails either the 75% or 95% gross income test,
multiplied by a fraction intended to reflect the Company's profitability.
The 30% Test. The Company must derive less than 30% of its gross
income for each taxable year from the sale or other disposition of (i) real
property held for less than four years (other than foreclosure property and
involuntary conversions); (ii) stock or securities (including an interest
rate swap or cap agreement) held for less than one year; and (iii) property
in a prohibited transaction. The Company does not anticipate that it will
have difficulty in complying with this test. However, if extraordinary
circumstances were to occur that give rise to dispositions of Communities
or Co-Investment Communities held for less than four years (for example, on
account of the inability to obtain refinancing), the 30% test could become
an issue.
Annual Distribution Requirements. In order to qualify as a REIT, the
Company is required to distribute dividends (other than capital gain
dividends) to its shareholders each year in an amount at least equal to
(A) the sum of (i) 95% of the Company's REIT taxable income (computed
without regard to the dividends paid deduction and the Company's net
capital gain) and (ii) 95% of the net income (after tax), if any, from
foreclosure property, minus (B) the sum of certain items of non-cash
income. Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before the Company
timely files its tax return for such year and if paid on or before the
first regular dividend payment after such declaration. To the extent that
the Company does not distribute all of its net capital gain or distributes
at least 95%, but less than 100%, of its REIT taxable income, as adjusted,
it will be subject to tax on the undistributed amount at regular capital
gains or ordinary corporate tax rates, as the case may be.
The Company intends to make timely distributions sufficient to satisfy
the annual distribution requirements described in the first sentence of the
preceding paragraph. In this regard, the Partnership Agreement authorizes
the Company, as general partner, to take such steps as may be necessary to
cause the Operating Partnership to distribute to its partners an amount
sufficient to permit the Company to meet these distribution requirements.
It is possible that the Company may not have sufficient cash or other
liquid assets to meet the 95% distribution requirement, due to timing
differences between the actual receipt of income and actual payment of
expenses on the one hand, and the inclusion of such income and deduction of
such expenses in computing the Company's REIT taxable income on the other
hand; due to the Operating Partnership's inability to control cash
distributions with respect to any properties as to which it does not have
decision making control; or for other reasons. To avoid a problem with the
95% distribution requirement, the Company will closely monitor the
relationship between its REIT taxable income and cash flow and, if
necessary, intends to borrow funds (or cause the Operating Partnership or
other affiliates to borrow funds) in order to satisfy the distribution
requirement. However, there can be no assurance that such borrowing would
be available at such time.
If the Company fails to meet the 95% distribution requirement as a
result of an adjustment to the Company's tax return by the Service, the
Company may retroactively cure the failure by paying a "deficiency
dividend" (plus applicable penalties and interest) within a specified
period.
Failure to Qualify. If the Company fails to qualify for taxation as a
REIT in any taxable year and the relief provisions do not apply, the
Company will be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates.
Distributions to shareholders in any year in which the Company fails to
qualify as a REIT will not be deductible by the Company, nor generally will
they be required to be made under the Code. In such event, to the extent
of current and accumulated earnings and profits, all distributions to
shareholders will be taxable as ordinary income, and, subject to certain
limitations in the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific
statutory provisions, the Company also will be disqualified from
re-electing taxation as a REIT for the four taxable years following the
year during which qualification was lost.
TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS
General. The Company holds a partnership interest in the Operating
Partnership. See "The Company." In general, a partnership is a
"pass-through" entity which is not subject to Federal income tax. Rather,
partners are allocated their proportionate shares of the items of income,
gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partners receive a
distribution from the partnership. The Company will include its
proportionate share of the foregoing partnership items for purposes of the
various REIT gross income tests and in the computation of its REIT taxable
income. See "-Taxation of the Company-General" and "-Gross Income Tests."
Accordingly, any resultant increase in the Company's REIT taxable
income from its interest in the Operating Partnership (whether or not a
corresponding cash distribution is also received from the Operating
Partnership) will increase its distribution requirements (see "-Taxation of
the Company-Annual Distribution Requirements"), but will not be subject to
Federal income tax in the hands of the Company provided that an amount
equal to such income is distributed by the Company to its shareholders.
Moreover, for purposes of the REIT asset tests (see "-Taxation of the
Company-Asset Tests"), the Company will include its proportionate share of
assets held by the Operating Partnership.
Entity Classification. The Company's interest in the Operating
Partnership involves special tax considerations, including the possibility
of a challenge by the Service of the status of the Operating Partnership as
a partnership (as opposed to an association taxable as a corporation for
Federal income tax purposes). If the Operating Partnership were to be
treated as an association, it would be taxable as a corporation and
therefore subject to an entity-level tax on its income. In such a
situation, the character of the Company's assets and items of gross income
would change, which would preclude the Company from satisfying the REIT
asset tests and the REIT gross income tests (see "-Taxation of the Company-
Asset Tests" and "-Gross Income Tests"), which in turn would prevent the
Company from qualifying as a REIT. (See "-Taxation of the Company-Failure
to Qualify" above, for a discussion of the effect of the Company's failure
to meet such tests.)
Tax Allocations with Respect to the Communities. Pursuant to
Section 704(c) of the Code, income, gain, loss and deduction attributable
to appreciated or depreciated property that is contributed to a partnership
in exchange for an interest in the partnership (such as certain of the
Communities), must be allocated in a manner such that the contributing
partner is charged with, or benefits from, respectively, the unrealized
gain or unrealized loss associated with the property at the time of the
contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of the
contributed property at the time of contribution, and the adjusted tax
basis of such property at the time of contribution (a "Book-Tax
Difference"). Such allocations are solely for Federal income tax purposes
and do not affect the book capital accounts or other economic arrangements
among the partners. The formation of the Operating Partnership included
contributions of appreciated property (including certain Communities or
interests therein). Consequently, the Partnership Agreement requires
certain allocations to be made in a manner consistent with Section 704(c)
of the Code.
In general, certain contributors of certain of the Communities or
interests therein will be allocated lower amounts of depreciation
deductions for tax purposes and increased taxable income and gain on sale
by the Operating Partnership on the contributed assets (including certain
of the Communities). This will tend to eliminate the Book-Tax Difference
over the life of the Operating Partnership. However, the special
allocation rules of Section 704(c) do not always entirely rectify the
Book-Tax Difference on an annual basis or with respect to a specific
taxable transaction such as a sale or a deemed sale, and accordingly
variations from normal Section 704(c) principles may arise, which could
result in the allocation of additional taxable income to the Company in
excess of corresponding cash proceeds in certain circumstances.
Treasury regulations issued under Section 704(c) of the Code provide
partnerships with a choice of several methods of accounting for Book-Tax
Differences, including retention of the method under current law. The
Operating Partnership and the Company will use the remedial method for
making allocations under Section 704(c) with respect to the existing
Communities.
With respect to any property purchased by the Operating Partnership
subsequent to the admission of the Company to the Operating Partnership, in
general, such property will initially have a tax basis equal to its fair
market value and Section 704(c) of the Code will not apply.
Sale of the Communities and Co-Investment Communities. The Company's
share of any gain realized by the Operating Partnership on the sale of any
dealer property generally will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax. See "Taxation of the
Company-General" and "Gross Income Tests-The 95% Test." Under existing
law, whether property is dealer property is a question of fact that depends
on all the facts and circumstances with respect to the particular
transaction. The Operating Partnership intends to hold the Communities and
Co-Investment Communities for investment with a view to long-term
appreciation, to engage in the business of acquiring, owning, operating and
developing the Communities, Co-Investment Communities and other multifamily
residential properties, and to make such occasional sales of the
Communities, Co-Investment Communities and other properties acquired
subsequent to the date hereof as are consistent with the Company's
investment objectives. Based upon the Company's investment objectives, the
Company believes that overall the Communities and Co-Investment Communities
should not be considered dealer property and that the amount of income from
prohibited transactions, if any, will not be material.
TAXATION OF SHAREHOLDERS
Taxation of Taxable Domestic Shareholders. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income and will not be eligible for the dividends received
deduction for corporations. Distributions that are designated as capital
gain dividends will be taxed as long-term capital gains (to the extent they
do not exceed the Company's actual net capital gain for the taxable year)
without regard to the period for which the shareholder has held its shares
of beneficial interest of the Company. However, corporate shareholders may
be required to treat up to 20% of certain capital gain dividends as
ordinary income. To the extent that the Company makes distributions in
excess of current and accumulated earnings and profits, these distributions
are treated first as a tax-free return of capital to the shareholder,
reducing the tax basis of a shareholder's shares of beneficial interest by
the amount of such excess distribution (but not below zero), with
distributions in excess of the shareholder's tax basis being taxed as
capital gains (if the shares of beneficial interest are held as a capital
asset). In addition, any dividend declared by the Company in October,
November or December of any year and payable to a shareholder of record on
a specific date in any such month shall be treated as both paid by the
Company and received by the shareholder on December 31 of such year,
provided that the dividend is actually paid by the Company during
January of the following calendar year. Shareholders may not include in
their individual income tax returns any net operating losses or capital
losses of the Company. Federal income tax rules may also require that
certain minimum tax adjustments and preferences be apportioned to Company
shareholders.
In general, any loss upon a sale or exchange of shares of beneficial
interest by a shareholder who has held such shares of beneficial interest
for six months or less (after applying certain holding period rules) will
be treated as a long-term capital loss, to the extent of distributions from
the Company required to be treated by such shareholder as long-term capital
gains.
Backup Withholding. The Company will report to its domestic
shareholders and to the Service the amount of dividends paid for each
calendar year, and the amount of tax withheld, if any, with respect
thereto. Under the backup withholding rules, a shareholder may be subject
to backup withholding at the rate of 31% with respect to dividends paid
unless such shareholder (i) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or
(ii) provides a 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 shareholder that does not
provide the Company with its correct taxpayer identification number may
also be subject to penalties imposed by the Service. Any amount paid as
backup withholding is available as a credit against the shareholder's
income tax liability. In addition, the Company may be required to withhold
a portion of capital gain distributions made to any shareholders who fail
to certify their non-foreign status to the Company. See "Certain United
States Tax Considerations for Non-U.S. Shareholders-Distributions from the
Company-Capital Gain Dividends" below.
Taxation of Tax-Exempt Shareholders. The Service has issued a revenue
ruling in which it held that amounts distributed by a REIT to a tax-exempt
employees' pension trust do not constitute unrelated business taxable
income ("UBTI"). Subject to the discussion below regarding a "pension-held
REIT," based upon such ruling and the statutory framework of the Code,
distributions by the Company to a shareholder that is a tax-exempt entity
should not constitute UBTI, provided that the tax-exempt entity has not
financed the acquisition of its shares with "acquisition indebtedness"
within the meaning of the Code, that the shares are not otherwise used in
an unrelated trade or business of the tax-exempt entity, and that the
Company, consistent with its present intent, does not hold a residual
interest in a real estate mortgage investment conduit.
However, if any pension or other retirement trust that qualifies under
Section 401(a) of the Code ("qualified pension trust") holds more than 10%
by value of the interests in a "pension-held REIT" at any time during a
taxable year, a portion of the dividends paid to the qualified pension
trust by such REIT may constitute UBTI. For these purposes, a
"pension-held REIT" is defined as a REIT if (i) such REIT would not have
qualified as a REIT but for the provisions of the Code which look through
such a qualified pension trust in determining ownership of shares of the
REIT and (ii) at least one qualified pension trust holds more than 25% by
value of the interests of such REIT or one or more qualified pension trusts
(each owning more than a 10% interest by value in the REIT) hold in the
aggregate more than 50% by value of the interests in such REIT.
Dividend Reinvestment Plan. Shareholders participating in the
dividend reinvestment and share purchase plan adopted by the Company will
be deemed to have received the gross amount of any cash distributions which
would have been paid by the Company to such shareholders had they not
elected to participate. These deemed distributions will be treated as
actual distributions from the Company to the participating shareholders and
will retain the character and tax effects applicable to distributions from
the Company generally. See "-Taxation of Shareholders-Taxation of Taxable
Domestic Shareholders." Participants in the dividend reinvestment and
share purchase plan are subject to Federal income tax on the amount of the
deemed distributions to the extent that such distributions represent
dividends or gains, even though they receive no cash. In addition,
participants in the dividend reinvestment and share purchase plan are
subject to Federal income tax on payment by the Company of brokerage
commissions and bank fees on their behalf. Common Shares received under
the plan will have a holding period beginning with the day after purchase,
and a tax basis equal to their cost (which is the gross amount of the
deemed distribution plus the amount of any brokerage commissions and bank
fees paid on the holder's behalf).
OTHER TAX CONSIDERATIONS
The Management Company, Amrescon and AIA; Other Considerations. A
portion of the cash to be used by the Operating Partnership to fund
distributions to partners, including the Company, is expected to come from
the Management Company, Amrescon and AIA through dividends on the common
and preferred stock of the Management Company, Amrescon and AIA held by the
Operating Partnership and from interest on the Subordinated Notes. In
addition, the Management Company, Amrescon and AIA will each receive income
from the Company, the Operating Partnership and unrelated third parties.
Because the Company, the Operating Partnership, the Management Company,
Amrescon and AIA are related through stock or partnership ownership, income
of the Management Company, Amrescon or AIA from services performed for the
Company and the Operating Partnership may be subject to certain rules under
which additional income may be allocated to the Management Company,
Amrescon or AIA. On account of such ownership relationships, the
allocation of certain expenses and reimbursements thereof among the
Company, the Management Company, the Operating Partnership, Amrescon and
AIA could be subject to additional scrutiny by the Service.
Each of the Management Company, Amrescon and AIA will pay Federal and
state income taxes at the full applicable corporate rates on its income
prior to payment of any dividends. Each of the Management Company,
Amrescon and AIA will attempt to minimize the amount of such taxes, but
there can be no assurance whether or the extent to which measures taken to
minimize taxes will be successful. To the extent that the Management
Company, Amrescon and AIA are required to pay Federal, state, or local
taxes, the cash available for distribution by the Company to shareholders
will be reduced accordingly.
In addition, to the extent that tax exempt entities and foreign
persons hold shares of beneficial interest of the Company, the interest
expense deductions of the Management Company and AIA on the Subordinated
Notes could be reduced.
Possible Legislative or Other Actions Affecting Tax Consequences.
Prospective shareholders should recognize that the present Federal income
tax treatment of investment in the Company may be modified by legislative,
judicial or administrative action at any time and that any such action may
affect investments and commitments previously made. The rules dealing with
Federal income taxation are constantly under review by persons involved in
the legislative process and by the Service and the Treasury Department,
resulting in revisions of regulations and revised interpretations of
established concepts as well as statutory changes. No assurance can be
given as to the form or content (including with respect to effective dates)
of any tax legislation which may be enacted. Revisions in Federal tax laws
and interpretations thereof could adversely affect the tax consequences of
investment in the Company.
State and Local Taxes. The Company and its shareholders may be
subject to state or local taxation, and the Company and the Operating
Partnership may be subject to state or local tax withholding requirements,
in various jurisdictions, including those in which it or they transact
business or reside. The state and local tax treatment of the Company and
its shareholders may not conform to the Federal income tax consequences
discussed above. Consequently, prospective shareholders should consult
their own tax advisors regarding the effect of state and local tax laws on
an investment in shares of beneficial interest of the Company.
CERTAIN UNITED STATES TAX CONSIDERATIONS
FOR NON-U.S. SHAREHOLDERS
The following is a discussion of certain anticipated U.S. Federal
income and U.S. Federal estate tax consequences of the ownership and
disposition of shares of beneficial interest applicable to Non-U.S.
Shareholders of such shares. A "Non-U.S. Shareholder" is (i) any
individual who is neither a citizen nor resident of the United States, (ii)
any corporation or partnership other than a corporation or partnership
created or organized in the United States or under the laws of the United
States or any state thereof or under the laws of the District of Columbia
or (iii) any estate or trust that is not "resident" in the United States.
The discussion is based on current law and is for general information only.
The discussion does not address other aspects of U.S. Federal taxation
other than income and estate taxation or all aspects of U.S. Federal income
and estate taxation. The discussion does not consider any specific facts
or circumstances that may apply to a particular Non-U.S. Shareholder.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND
OTHER TAX CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF BENEFICIAL
INTEREST.
DISTRIBUTIONS FROM THE COMPANY
Ordinary Dividends. The portion of dividends received by Non-U.S.
Shareholders payable out of the Company's earnings and profits that are not
attributable to capital gains of the Company and that are not effectively
connected with a U.S. trade or business of the Non-U.S. Shareholder will be
subject to U.S. withholding tax at the rate of 30% (unless reduced by
treaty or the Non-U.S. Shareholder files an Internal Revenue Service Form
4224 with the Company certifying that the investment to which the
distribution relates is effectively connected to a United States trade or
business of such Non-U.S. Shareholder). Under certain limited
circumstances, the amount of tax withheld may be refundable, in whole or in
part, because of the tax status of certain partners or beneficiaries of
Non-U.S. Shareholders that are either foreign partnerships or foreign
estates or trusts. In general, Non-U.S. Shareholders will not be
considered engaged in a U.S. trade or business solely as a result of their
ownership of shares of beneficial interest. In cases where the dividend
income from a Non-U.S. Shareholder's investment in shares of beneficial
interest is (or is treated as) effectively connected with the Non-U.S.
Shareholder's conduct of a U.S. trade or business, the Non-U.S. Shareholder
generally will be subject to U.S. tax at graduated rates, in the same
manner as U.S. shareholders are taxed with respect to such dividends (and
may also be subject to the 30% branch profits tax (unless reduced by
treaty) in the case of a Non-U.S. Shareholder that is a foreign
corporation).
Under currently applicable Treasury regulations, withholding agents
are required to determine the applicable withholding rate pursuant to the
appropriate tax treaty, and withhold the appropriate amount. Under the
current regulations, dividends paid to an address in a foreign country are
presumed to be paid to a resident of that country (unless the payer has
knowledge to the contrary) for purposes of the withholding discussed above
and, under the current interpretation of the Treasury regulations, for
purposes of determining the applicability of a tax treaty rate. Treasury
regulations proposed in 1996, which have not been adopted, and are,
therefore, not currently effective, would, if and when they become
effective, require Non-U.S. Shareholders to file a form W-8 to obtain the
benefit of any applicable tax treaty providing for a lower rate of
withholding tax on dividends paid after December 31, 1997. Such form would
require a representation by the holder as to foreign status, the holder's
name and permanent residence address, the basis for a reduced withholding
rate (e.g., the relevant tax treaty) and other pertinent information, to be
certified by such holder under penalties of perjury. Such information is
subject to being reported to the Internal Revenue Service. A permanent
resident address for this purpose generally is the address in the country
where the person claims to be a resident for the purpose of the country's
income tax. If the beneficial holder is a corporation, then the address is
where the corporation maintains its principal office in its country of
incorporation.
Capital Gain Dividends. Under the Foreign Investment in Real Property
Tax Act of 1980 ("FIRPTA"), any distribution made by the Company to a Non-
U.S. Shareholder, to the extent attributable to gains from dispositions of
United States Real Property Interests ("USRPIs") by the Company ("USRPI
Capital Gains"), will be considered effectively connected with a U.S. trade
or business of the Non-U.S. Shareholder and subject to U.S. income tax at
the rates applicable to U.S. individuals or corporations, without regard to
whether such distribution is designated as a capital gain dividend. In
addition, the Company will be required to withhold tax equal to 35% of the
amount of such distribution to the extent it constitutes USRPI Capital
Gains. Such distribution may also be subject to the 30% branch profits tax
(unless reduced by treaty) in the case of a Non-U.S. Shareholder that is a
foreign corporation.
Non-Dividend Distributions. Any distributions by the Company that
exceed both current and accumulated earnings and profits of the Company
will not be taxed as either ordinary dividends or capital gain dividends.
See "Federal Income Tax Considerations - Taxation of Shareholders -
Taxation of Taxable Domestic Shareholders." However, if it cannot be
determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and
profits, the distribution will be subject to withholding. Should this
occur, the Non-U.S. Shareholder may seek a refund of over withholding from
the Service once it is subsequently determined that such distribution was,
in fact, in excess of current and accumulated earnings and profits of the
Company.
DISPOSITIONS OF SHARES OF BENEFICIAL INTEREST
Unless the shares of beneficial interest constitute USRPIs, a sale or
exchange of shares of beneficial interest by a Non-U.S. Shareholder
generally will not be subject to U.S. taxation under FIRPTA. The shares of
beneficial interest will not constitute USRPIs if the Company is a
"domestically controlled REIT." A domestically controlled REIT is a REIT
in which, at all times during a specified testing period, less than 50% in
value of its shares is held directly or indirectly by Non-U.S.
Shareholders. It is currently anticipated that the Company will be a
domestically controlled REIT and, therefore, that the sale of shares of
beneficial interest will not be subject to taxation under FIRPTA. No
assurance can be given that the Company will continue to be a domestically
controlled REIT.
If the Company does not constitute a domestically controlled REIT, a
Non-U.S. Shareholder's sale or exchange of shares of beneficial interest
generally will still not be subject to tax under FIRPTA as a sale of USRPIs
provided that (i) the Company's shares of beneficial interest are
"regularly traded" (as defined by applicable Treasury regulations) on an
established securities market (e.g., the NYSE, on which the Common Shares
are listed) and (ii) the selling Non-U.S. Shareholder held 5% or less of
the Company's outstanding shares of beneficial interest at all times during
a specified testing period.
If gain on the sale or exchange of shares of beneficial interest were
subject to taxation under FIRPTA, the Non-U.S. Shareholder would be subject
to U.S. income tax at the rates applicable to U.S. individuals or
corporations, and the purchaser of shares of beneficial interest could be
required to withhold 10% of the purchase price and remit such amount to the
Service. The branch profits tax would not apply to such sales or
exchanges.
Capital gains not subject to FIRPTA will nonetheless be taxable in the
United States to a Non-U.S. Shareholder in two cases: (i) if the Non-U.S.
Shareholder's investment in shares of beneficial interest is effectively
connected with a U.S. trade or business conducted by such Non-U.S.
Shareholder, the Non-U.S. Shareholder will be subject to the same treatment
as U.S. shareholders with respect to such gain, (ii) if the Non-U.S.
Shareholder is a nonresident alien individual who was present in the United
States for 183 days or more during the taxable year and has a "tax home" in
the United States, the nonresident alien individual will be subject to 30%
tax on the individual's capital gain (unless reduced or eliminated by
treaty), or (iii) if the Non-U.S. Shareholder is subject to tax pursuant to
the Code provisions applicable to certain U.S. expatriates.
FEDERAL ESTATE TAX
Shares of beneficial interest owned or treated as owned by an
individual who is not a citizen or "resident" (as specifically defined for
U.S. Federal estate tax purposes) of the United States at the time of death
will be includable in the individual's gross estate for U.S. Federal estate
tax purposes, unless an applicable estate tax treaty provides otherwise.
Such individual's estate may be subject to U.S. Federal estate tax on the
property includable in the estate for U.S. Federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-U.S.
Shareholder the amount of dividends (including any capital gain dividends)
paid to, and the tax withheld with respect to, each Non-U.S. Shareholder.
These reporting requirements apply regardless of whether withholding was
reduced or eliminated by an applicable tax treaty. Copies of these returns
may also be made available under the provisions of a specific treaty or
agreement with the tax authorities in the country in which the Non-U.S.
Shareholder resides.
U.S. backup withholding (which generally is imposed at the rate of 31%
on certain payments to persons that fail to furnish the information
required under the U.S. information reporting requirements) and information
reporting will generally not apply to dividends (including any capital gain
dividends) paid on shares of beneficial interest to a Non-U.S. Shareholder
at an address outside the United States. The proposed Treasury regulations
referred to under "Distributions from the Company-Ordinary Dividends," in
general, would similarly require a Non-U.S. Shareholder to provide the form
W-8 for dividends paid after December 31, 1997 to be exempt from backup
withholding and information reporting.
The payment of the proceeds from the disposition of shares of
beneficial interest to or through a U.S. office of a broker will be subject
to information reporting and backup withholding unless the owner, under
penalties of perjury, certifies, among other things, its status as a Non-
U.S. Shareholder, or otherwise establishes an exemption. The payment of
the proceeds from the disposition of shares of beneficial interest to or
through a non-U.S. office of a non-U.S. broker generally will not be
subject to backup withholding and information reporting, except as noted
below. In the case of a payment of proceeds from the disposition of shares
of beneficial interest to or through a non-U.S. office of a broker which is
(i) a U.S. person, (ii) a "controlled foreign corporation" for U.S. Federal
income tax purposes or (iii) a foreign person 50% or more of whose gross
income for certain periods is derived from a U.S. trade or business (a
"Foreign U.S. Connected Broker"), information reporting (but not backup
withholding) will apply unless the broker has documentary evidence in its
files that the holder is a Non-U.S. Shareholder (and the broker has no
actual knowledge to the contrary) and certain other conditions are met, or
the holder otherwise establishes an exemption. In addition, the Treasury
Department has indicated that it is studying the possible application of
backup withholding in the case of such foreign offices of U.S. and Foreign
U.S. Connected Brokers. Under proposed Treasury regulations, a payment of
the proceeds from the disposition of shares of beneficial interest to or
through such broker will be subject to backup withholding if such broker
has actual knowledge that the holder is a U.S. person.
Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules will be refunded or credited against the
Non-U.S. Shareholder's U.S. Federal income tax liability, provided that
required information is furnished to the Service.
These backup withholding and information reporting rules are currently
under review by the Treasury Department, and their application to shares of
beneficial interest is subject to change.
PLAN OF DISTRIBUTION
The Selling Shareholders may from time to time offer and sell the
Shares on the NYSE or otherwise at market prices then prevailing or at
prices and upon terms then obtainable. Sales may be made in ordinary
brokerage transactions, in block transactions, in privately negotiated
transactions, pursuant to Rule 144 or otherwise. If the Shares are sold
through brokers, customary brokerage commissions and charges are expected
to be paid by the Selling Shareholders. The Shares are being registered to
permit public secondary trading of the Shares from time to time after the
date of this Prospectus. The Company will bear all expenses (other than
selling commissions, underwriting discounts and fees and expenses of
counsel to any Selling Shareholder) to the Selling Shareholders in
connection with the registration and sale of the Shares. The Company is
registering the Shares pursuant to or as required by the provisions of the
agreements between the Operating Partnership and certain of the Selling
Shareholders, which agreements are filed as exhibits to the Registration
Statement of which this Prospectus is a part.
The Selling Shareholders and any dealer, broker or other agent selling
securities offered hereby for a Selling Shareholder or purchasing any such
securities from a Selling Shareholder for purposes of resale may be deemed
to be an underwriter under the Securities Act and any compensation received
by the Selling Shareholder, dealer, broker or other agent may be deemed
underwriting compensation. The amount of such compensation cannot
currently be estimated. The Company knows of no existing arrangements
between any Selling Shareholder and any other dealer, broker or other
agent.
To comply with certain states' securities laws, if applicable, the
Shares offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the Shares may not be sold unless
they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied
with.
EXPERTS
The consolidated financial statements and schedule of Amli Residential
Properties Trust as of December 31, 1996 and 1995, and for each of the
years in the three-year period ended December 31, 1996, have been
incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, which report is incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. To
the extent that KPMG Peat Marwick LLP audits and reports on financial
statements of Amli Residential Properties Trust issued at future dates, and
consents to the use of their report thereon, such financial statements also
will be incorporated by reference in the Registration Statement in reliance
upon their report and said authority.
LEGAL MATTERS
Certain legal matters relating to the validity of the Shares offered
pursuant to this Prospectus will be passed upon for the Company by Mayer,
Brown & Platt. Mayer, Brown & Platt has in the past represented and is
currently representing the Company and certain of its affiliates.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities registered hereby, all
of which will be paid by the Registrant:
SEC registration fee . . . . . . . . . . . . . $ 1,176
Printing and duplicating expenses. . . . . . . 1,000
Legal fees and expenses. . . . . . . . . . . . 10,000
Accounting fees and expenses . . . . . . . . . 3,500
Miscellaneous expenses . . . . . . . . . . . . 1,500
--------
Total. . . . . . . . . . . $ 17,176
========
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
The Registrant's officers and Trustees are and will be indemnified
under the Declaration of Trust and Bylaws of the Registrant, and the
Partnership Agreement of the Operating Partnership against certain
liabilities. The Declaration of Trust requires the Registrant to indemnify
its Trustees and officers, among others, against claims and liabilities and
reasonable expenses actually incurred by them in connection with any claim
or liability by reason of their services in those or other capacities
unless it is established that the act or omission of the Trustee or officer
was material to the matter giving rise to the proceeding and was committed
in bad faith or was the result of active and deliberate dishonesty, or the
Trustee or officer actually received an improper personal benefit, or, in
the case of any criminal proceeding, the Trustee or officer had reasonable
cause to believe that the act or omission was unlawful. Additionally, the
Company has entered into indemnification agreements with the Company's
officers and Trustees providing substantially the same scope of coverage
afforded by provisions in the Declaration of Trust.
As permitted by Maryland Law, the Declaration of Trust provides that a
Trustee or officer of the Registrant shall not be liable for monetary
damages to the Registrant or its shareholders for any act or omission in
the performance of his duties, except to the extent that (1) the person
actually received an improper benefit or (2) the person's action or failure
to act was the result of active and deliberate dishonesty and was material
to the cause of action adjudicated.
The Partnership Agreement of the Operating Partnership also provides
for indemnification of the Registrant and its officers and Trustees to the
same extent indemnification is provided to officers and Trustees of the
Registrant in its Declaration of Trust, and limits the liability of the
Registrant to the Operating Partnership and its partners to the same extent
the liability of the officers and Trustees of the Registrant to the
Registrant and its shareholders is limited under the Registrant's
Declaration of Trust.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See Exhibit Index included herewith which is incorporated herein by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, 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
the Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii)
do not apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and 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 Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(b) 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.
(c) 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant'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
the 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.
The undersigned Registrant hereby undertakes to supplement the
applicable prospectus supplement, after the expiration of the subscription
period, to set forth the results of the subscription offer, the
transactions by the underwriters during the subscription period, the amount
of unsubscribed securities to be purchased by the underwriters, and the
terms of any subsequent reoffering thereof. If any public offering by the
underwriters is to be made on terms differing from those set forth on the
cover page of the applicable prospectus supplement, a post-effective
amendment will be filed to set forth the terms of such offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the provisions set forth
or described in Item 15 of this Registration Statement, or otherwise, the
Registrant 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 the Registrant of expenses incurred or paid by a
Trustee, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the securities being
registered, the Registrant 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.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of Amli Residential
Properties Trust, a Maryland real estate investment trust, and each of the
undersigned Trustees and officers of Amli Residential Properties Trust,
hereby constitutes and appoints Gregory T. Mutz, John E. Allen, Allan J.
Sweet and Charles C. Kraft, its, his or her true and lawful attorneys-in-
fact and agents, for it, him or her and in its, his or her name, place and
stead, in any and all capacities, with full power to act alone, to sign any
and all amendments to this Registration Statement, and to file each such
amendment to this Registration Statement with all exhibits thereto, and any
and all documents in connection therewith, with the Securities and Exchange
Commission, hereby granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform any and all acts
and things required and necessary to be done, as fully and to all intents
and purposes as it, he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them,
may lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets
all 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 Chicago, State of Illinois on
April 2, 1997.
AMLI RESIDENTIAL PROPERTIES TRUST
By: /s/ JOHN E. ALLEN
John E. Allen
Its: Vice Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 2, 1997.
NAME TITLE
---- -----
/s/ GREGORY T. MUTZ
Gregory T. Mutz Chairman of the Board of Trustees
(Principal Executive Officer)
/s/ JOHN E. ALLEN
John E. Allen Vice-Chairman of the Board of Trustees
(Principal Financial Officer)
/s/ ALLAN J. SWEET
Allan J. Sweet Trustee and President
/s/ CHARLES C. KRAFT
Charles C. Kraft Treasurer
(Principal Accounting Officer)
/s/ LAURA D. GATES
Laura D. Gates Trustee
/s/ MARC S. HEILWEIL
Marc S. Heilweil Trustee
/s/ STEPHEN G. MCCONAHEY
Stephen G. McConahey Trustee
/s/ QUINTON E. PRIMO III
Quintin E. Primo III Trustee
/s/ JOHN G. SCHREIBER
John G. Schreiber Trustee
/s/ PHILIP N. TAGUE
Philip N. Tague Trustee
INDEX TO EXHIBITS
Exhibit
Number Document Description
- ------ --------------------
4.1 Amended and Restated Declaration of Trust of the Registrant
(Incorporated by reference to exhibit 3.1 to Registration Statement No. 33-
71566).
4.2 Amended and Restated By-laws of the Registrant (Incorporated by
reference to exhibit 3.2 to Registration Statement No. 33-71566).
4.3 Amended and Restated Agreement of Limited Partnership of Amli
Residential Properties, L.P. (Incorporated by reference to exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994).
4.3(a) First Amendment to the Amended and Restated Agreement of
Limited Partnership of Amli Residential Properties, L.P. (Incorporated by
reference to exhibit 10.1(a) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
4.3(b) Second Amendment to the Amended and Restated Agreement of
Limited Partnership of Amli Residential Properties, L.P. (Incorporated by
reference to exhibit 10.1(b) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
4.3(c) Third Amendment to the Amended and Restated Agreement of
Limited Partnership of Amli Residential Properties, L.P. (Incorporated by
reference to exhibit 10.1(c) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996).
4.4 Form of Common Share Certificate (Incorporated by reference to
exhibit 4.1 to Registration Statement No. 33-71566).
4.5 Articles Supplementary to the Amended and Restated Declaration
of Trust of the Registrant Classifying Unissued Shares of Beneficial
Interest in the Registrant as Series A Cumulative Convertible Preferred
Shares of Beneficial Interest (Incorporated by reference to exhibit 4.9 to
the Registrant's Current Report on Form 8-K dated January 30, 1996).
4.6 Form of Series A Preferred Share Certificate (Incorporated by
reference to exhibit 4.5 to the Registrant's Current Report on Form 8-K
dated January 18, 1996).
5.1 Opinion of Mayer, Brown & Platt.
8.1 Tax Opinion of Mayer, Brown & Platt.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Mayer, Brown & Platt (Included in the opinions filed
as Exhibits 5.1 and 8.1 to this Registration Statement).
INDEX TO EXHIBITS - CONTINUED
Exhibit
Number Document Description
- ------ --------------------
24.1 Power of Attorney (Included on the page of the Registration
Statement immediately preceding the signature page).
99.1 Agreement to Assign Sales Contract and Development Documents,
dated as of January 16, 1996, between Bristol Chicago Development Corp and
Amli Residential Properties, L.P.
99.2 Agreement to Assign Sales Contract and Development Documents,
dated as of July 22, 1996, between Bristol Oakhurst Development L.L.C. and
Amli Residential Properties, L.P, and the First Amendment thereto dated as
of October 2, 1996.
99.3 Agreement Regarding Acquisition of Partnership Interests, dated
as of December 20, 1996, among Amli Residential Properties, L.P., Verandah
Holdings Phase I Inc., JSDP, Inc., M&B Holdings General Partnership,
Fairgrowth International, Inc. and TVA SP Partnership, the First Amendment
thereto dated as of January 16, 1997, and the Second Amendment thereto
dated as of February 28, 1997.
99.4 Assignment of Contract, dated as of March, 1997, by Easlan
Capital of Atlanta, Inc. to Amli Residential Properties, L.P.; Sales
Agreement, dated as of February 29, 1996, among Virgil R. Williams, James
N. Williams, Easlan Capital of Atlanta, Inc., Belkofer and Company, Inc.
and Williams-Adair Realty Corp., the First Amendment thereto dated as of
April 25, 1996, the Second Amendment thereto dated as of September, 1996,
and the Third Amendment thereto.
EXHIBIT 5.1
- -----------
(FORM S-3)
April 2, 1997
The Board of Trustees
Amli Residential Properties Trust
125 South Wacker Drive
Chicago, Illinois 60606
Ladies and Gentlemen:
We have acted as counsel to Amli Residential Properties Trust, a
Maryland real estate investment trust (the "Company"), in connection with
the proceedings (the "Company Proceedings") taken and to be taken relating
to the registration by the Company of an aggregate of 169,690 common shares
of beneficial interest (the "Shares") of the Company, $.01 par value per
share, with the Securities and Exchange Commission (the "SEC") for resale
by certain selling shareholders who may obtain the Shares upon exchange of
limited partnership units in Amli Residential Properties, L.P. We have
also participated in the preparation and filing with the SEC under the
Securities Act of 1933, as amended, of a registration statement on Form S-3
(the "Registration Statement"), relating to such Shares.
As special counsel to the Company, we have examined originals or
copies certified to our satisfaction of the Company's Amended and Restated
Declaration of Trust (the "Declaration of Trust") and Amended and Restated
Bylaws, resolutions of the Board of Trustees, and such other Company
records, instruments, certificates and documents and such questions of law
as we considered necessary or appropriate to enable us to express this
opinion. As to certain facts material to our opinion, we have relied, to
the extent we deem such reliance proper, upon certificates of public
officials and officers of the Company. In rendering this opinion, we have
assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic
original documents of photostatic copies.
Based upon and subject to the foregoing and to the assumptions,
limitations and conditions set forth herein, we are of the opinion that,
upon completion of the Company Proceedings, the Shares will have been duly
authorized for issuance, and when the Shares are issued and delivered in
accordance with the Company Proceedings and the resolutions authorizing
their issuance, the Shares will be validly issued, fully paid and, except
as described below, nonassessable.
Our opinion relating to the nonassessability of the Shares does not
pertain to the potential liability of shareholders of the Company for debts
and liabilities of the Company. Section 5-350 of the Maryland Courts and
Judicial Proceedings Code provides that "a shareholder . . . of a real
estate investment trust . . . is not personally liable for the obligations
of the real estate investment trust." The Declaration of Trust provides
that no shareholder shall be personally liable in connection with the
Company's property or the affairs of the Company. The Declaration of Trust
further provides that the Company shall indemnify and hold harmless
shareholders against all claims and liabilities and related reasonable
expenses to which they become subject by virtue of their status as current
or former shareholders. In addition, we have been advised that the
Company, as a matter of practice, inserts a clause in its business,
management and other contracts that provides that shareholders shall not be
personally liable thereunder. Accordingly, no personal liability should
attach to the Company's shareholders for contract claims under any contract
containing such a clause where adequate notice is given. However, with
respect to tort claims, contract claims where shareholder liability is not
so negated, claims for taxes and certain statutory liability, the
shareholders may, in some jurisdictions, be personally liable for such
claims and liabilities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters".
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
EXHIBIT 8.1
- -----------
(FORM S-3)
April 2, 1997
The Board of Trustees
Amli Residential Properties Trust
125 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Re: Partnership Classification; Status
as a Real Estate Investment Trust ("REIT");
Information in the Registration Statement under
"FEDERAL INCOME TAX CONSIDERATIONS" and
"CERTAIN UNITED STATES TAX CONSIDERATIONS FOR
NON-U.S. SHAREHOLDERS"
--------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Amli Residential Properties
Trust, a Maryland real estate investment trust ("ARPT"), in connection with
the registration of 168,690, common shares of beneficial interest of ARPT
(the "Common Shares"), all of which Common Shares may be offered and sold
by certain selling shareholders from time to time as set forth in the
prospectus (the "Prospectus") which forms a part of the Registration
Statement on Form S-3 filed with the Securities and Exchange Commission on
April 2, 1997, as amended through the date hereof (the "Registration
Statement"). Unless otherwise specifically defined herein, all capitalized
terms have the meanings assigned to them in the Registration Statement.
In connection with the registration of the Common Shares, you have
requested our opinions concerning (i) the treatment of Amli Residential
Properties, L.P. (the "Operating Partnership") as a partnership for Federal
income tax purposes, and not as an association taxable as a corporation;
(ii) the qualification and taxation for Federal income tax purposes of the
Company as a REIT; and (iii) the information in the Registration Statement
under the headings "FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED
STATES TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS."
The Board of Trustees
April 2, 1997
Page 2
In formulating our opinions, we have reviewed and relied upon the
partnership agreement of the Operating Partnership, the Registration
Statement, other documents and information provided by you, and such
applicable provisions of law and other documents as we have considered
necessary or desirable for purposes of the opinions expressed herein.
In addition, we have relied upon the Company's certificate (the
"Officer's Certificate"), executed by a duly appointed officer of the
Company, setting forth certain representations relating to the organization
and actual and proposed operation of the Company, the Operating
Partnership, the Management Company, AIA, Amrescon and each of the
partnerships in which the Operating Partnership will directly or indirectly
hold an interest and which actually owns an interest in real property (the
"Property Partnerships"). For purposes of our opinions, we have not made
an independent investigation of the facts set forth in such documents, the
Officer's Certificate, the partnership agreements for the Operating
Partnership or the Property Partnerships, or the Registration Statement.
We have, consequently, relied upon your representations that the
information presented in such documents or otherwise furnished to us
accurately and completely describes all material facts. No facts have come
to our attention, however, that would cause us to question the accuracy or
completeness of such facts or documents in a material way.
In rendering these opinions, we have assumed that the transactions
contemplated by the foregoing documents will be consummated in accordance
with the operative documents, and that such documents accurately reflect
the material facts of such transactions. In addition, the opinions are
based on the assumption that the Company, the Operating Partnership, the
Management Company, AIA, Amrescon and the Property Partnerships have
operated and will continue to each be operated in the manner described in
the applicable partnership agreement or other organizational documents and
in the Registration Statement, and all terms and provisions of such
agreements and documents have been and will continue to be complied with by
all parties thereto. Our opinions expressed herein are based on the
applicable laws of the States of Maryland and Delaware, the Code, Treasury
regulations promulgated thereunder, and interpretations of the Code and
such regulations by the courts and the Internal Revenue Service, all as
they are in effect and exist at the date of this letter. It should be
noted that statutes, regulations, judicial decisions, and administrative
interpretations are
The Board of Trustees
April 2, 1997
Page 3
subject to change at any time and, in some circumstances, with retroactive
effect. A material change that is made after the date hereof in any of the
foregoing bases for our opinions could adversely affect our conclusions.
Based upon and subject to the foregoing, it is our opinion that:
1. The Operating Partnership will be treated, for Federal income tax
purposes, as a partnership, and not as an association taxable as a
corporation.
2. Beginning with the Company's taxable year ending 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 actual and
proposed method of operation, as described in the Registration Statement
and as represented in the Officer's Certificate, has enabled it and will
continue to enable it to satisfy the requirements for qualification as a
REIT.
3. The information in the Registration Statement under the headings
"FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED STATES TAX
CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS," to the extent that it
constitutes matters of law or legal conclusions, has been reviewed by us
and is correct in all material respects.
Other than as expressly stated above, we express no opinion on any
issue relating to the Company, the Operating Partnership, any Property
Partnership or to any investment therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein and
under the caption "FEDERAL INCOME TAX CONSIDERATIONS" in the Registration
Statement.
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
WAL
EXHIBIT 23.1
- ------------
(FORM S-3)
CONSENT OF KPMG PEAT MARWICK LLP
--------------------------------
The Board of Trustees
Amli Residential Properties Trust:
We consent to the use of our report dated February 28, 1997 on the
consolidated financial statements and schedule of Amli Residential
Properties Trust as of December 31, 1996 and 1995, and for each of the
years in the three-year period ended December 31, 1996, incorporated by
reference herein and to the reference to our Firm under the heading
"EXPERTS".
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Chicago, Illinois
April 1, 1997
EXHIBIT 99.1
- ------------
(Form S-3)
AGREEMENT TO ASSIGN SALES CONTRACT
AND DEVELOPMENT DOCUMENTS
18.22 Acre Parcel, Aurora, Illinois
THIS AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS
(hereinafter this "AGREEMENT"), is made and entered into as of the 16th day
of January, 1996, between BRISTOL CHICAGO DEVELOPMENT CORP. (hereinafter
called "ASSIGNOR") and AMLI RESIDENTIAL PROPERTIES L.P., a Delaware limited
partnership (hereinafter called "ASSIGNEE").
A. Assignor is the purchaser under that certain Real Estate Sales
Contract, dated March 7, 1995, by and among Assignor, Wil-Freds
Developments, Inc. and Harris Bank Naperville, as trustee under Trust
Agreement dated August 9, 1973 a/k/a Trust No. 1689 (herein, Wil-Freds
Developments, Inc. and Harris Bank Trust No. 1689 are collectively referred
to as the "CONTRACT SELLER"), as amended by that certain letter agreement
dated April 4, 1995, that certain letter agreement dated August 15, 1995
and that certain letter agreement dated January 3, 1996 (such agreement, as
amended, being herein called the "SALES CONTRACT" and being attached hereto
as EXHIBIT A).
B. Pursuant to the Sales Contract, and subject to the terms and
conditions therein set forth, Assignor has the right to acquire
approximately 18.22 acres in Aurora, DuPage County, Illinois (the
"PROPERTY") as described in Exhibit A to the Sales Contract. Terms used
herein and not otherwise defined herein shall have the meanings given such
terms in the Sales Contract.
C. Subject to the terms and conditions hereof, Assignor desires to
assign to Assignee all of Assignor's right, title and interest (i) to
purchase the Property including without limitation, Assignor's rights in
and to the Sales Contract (the "PURCHASE RIGHTS") and (ii) in and to all
existing plans, drawings, specifications, permits, licenses, governmental
approvals, development rights, Regulatory Approvals (defined below),
agreements (with governmental bodies, architects, engineers, consultants or
other persons or entities) and other materials related to the development
of the Property (the "DEVELOPMENT RIGHTS"; all written materials evidencing
the Development Rights are called the "DEVELOPMENT DOCUMENTS" and are more
particularly described on EXHIBIT B attached hereto) as a 272-unit luxury
multifamily community known as Aurora Crossing Apartments (the "PROJECT"),
and Assignee desires to accept such assignment and to assume and agree to
perform, subject to the terms and conditions hereof, all of the Purchaser's
duties, obligations and liabilities under the Sales Contract and the
Development Documents.
AGREEMENT:
---------
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged:
1. AGREEMENT TO PURCHASE AND SELL. Assignee agrees to accept and
Assignor agrees to contribute the Purchase Rights and the Development
Rights for the consideration and subject to the terms and conditions set
forth in this Agreement.
2. CONTRIBUTION. The value of the Purchase Rights and the
Development Rights (the "EXCHANGE AMOUNT") is $540,000, to be paid to
Assignor as consideration for the contribution and assignment to Assignee
of the Purchase Rights and the Development Rights. On the Closing Date
(as defined below) the Exchange Amount shall be payable entirely in the
form of operating units of Assignee and the Earnest Money will be refunded
to Assignee at closing. The number of operating units to be delivered to
Assignor will be calculated based upon the closing price on the New York
Stock Exchange of the common shares of Amli Residential Properties Trust on
the first business day prior to the Closing Date. Such operating units
shall be convertible at any time into an equal number of shares of Amli
Residential Properties Trust. In the event, upon conversion, such shares
are "restricted securities" (i.e., unregistered), and remain so for 90 days
after the conversion by Assignor, then Assignor shall have the right to put
such shares to Assignee for cash in an amount based on the number of shares
so put, multiplied by the closing price on the New York Stock Exchange for
such shares as of the first business day prior to the date of exercise of
the put, and the cash shall be paid to Assignor within thirty (30) days of
receipt of written notice to Assignor of such put.
3. REIMBURSEMENT OF COSTS. Upon the closing of this transaction,
Assignee agrees to reimburse Assignor for certain acceptable third party
costs incurred by Assignor related to the development of the Project
through the date hereof. The exact amount of the reimbursement will be
determined by the parties prior to closing and shall be payable in cash.
Prior to and as a condition of such reimbursement, Assignor shall provide
to Assignee an estoppel or letter (substantially in the form of EXHIBIT C-
1, C-2 or C-3 attached hereto, as the case may be) from such third parties
confirming the work performed under their respective agreements, the
amounts paid to such third parties and the amount remaining to be paid to
such third parties.
4. EARNEST MONEY. Assignee shall deposit $50,000 in cash as
earnest money (the "EARNEST MONEY") within three (3) business days
following the later of execution of this Agreement (the "CONTRACT DATE")
and the satisfaction of the conditions set forth in Section 12 hereof, in a
strict joint order escrow account (the "ESCROW") with Chicago Title
Insurance Company (the "TITLE INSURER"), as escrow trustee, with such funds
to be deposited in an insured interest bearing account designated by
Assignee. The Earnest Money shall thereafter be non-refundable to Assignee
provided Assignor fulfills its obligations under this Agreement and all
conditions precedent have been satisfied or waived. Upon closing of the
purchase and sale of the Property to Assignee pursuant to Section 5(e)
below, Assignee will cause the earnest money posted by Assignor as
purchaser under the Sales Contract to be refunded to Assignor, including
any interest accrued thereon.
2
5. CONDITIONS PRECEDENT TO ASSIGNEE'S OBLIGATION TO CLOSE.
Assignee's obligation to purchase the Purchase Rights and the Development
Rights shall be subject to the following conditions precedent (the
"CONDITIONS PRECEDENT"), any of which may be waived by Assignee.
a. FEASIBILITY CONTINGENCY. Assignee shall have until
January 16th, 1996 (the "REVIEW PERIOD"), or such later date as mutually
agreed to by the parties to perform a feasibility analysis of the Property.
During this time Assignee will conduct and review soil tests, engineering,
planning, site planning, utilities, wetlands, environmental risk, title,
survey and other reviews determined to be necessary by the Assignee. In
addition, Assignee shall review the costs proposed to be reimbursed by
Assignee pursuant to SECTION 3 above. If Assignee determines, in its sole
discretion, that the Property is not suitable for development by Assignee,
or Assignor and Assignee are unable to agree upon the costs to be
reimbursed, then Assignee shall have the right to terminate this Agreement
by delivering written notice thereof to Assignor at any time prior to the
end of the Review Period, in which case the Earnest Money shall be promptly
refunded to Assignee and this Agreement shall be terminated. If Assignee
fails to so notify Assignor, then Assignee shall be deemed to have waived
this feasibility contingency and this Agreement shall remain in full force
and effect, subject to the Regulatory Approvals (as defined below)
contingency and other contingencies set forth herein and therein.
b. REGULATORY APPROVALS CONTINGENCY. On or prior to the
Closing Date, Assignee shall ascertain costs and the existence and
transferability of all governmental approvals (the "REGULATORY APPROVALS")
required to develop the Property for the use detailed in the Development
Documents.
The Regulatory Approvals shall include (without limitation) the
following:
i. Evidence of planned unit development, preliminary
plat and preliminary plan, and final plat and final plan approval of the
Project from the City of Aurora (the "CITY") including a copy certified by
the City of the ordinances granting such approvals and of all plans,
agreements and other submissions on which such approval is based;
ii. recordation of a final plat of subdivision for the
Property;
iii. issuance of a building permit for the construction
of (i) all grading, site work, roadwork, utilities, and other
infrastructure serving or required to be built in connection with the
Project, and (ii) pool area, recreation center and first planned
residential buildings, together with evidence satisfactory to Purchaser
(which may be in the form of a letter from the City) that all building,
engineering and other plans for the balance of the Project have been
approved, that the City is ready to issue a building permit for such
construction upon the payment of
3
specified permit fees, and identifying specifically by latest
revision date all plans approved by the City upon which permits have been
or may be issued;
iv. evidence of the amount of DuPage County ("COUNTY")
impact fees which will be assessed against the Project, which evidence may
be in the form of a letter from the County;
v. if any of the roads adjoining or serving the
Property are not City roads, then issuance of a curb cut and other
applicable construction permits by the authority controlling such roads
(e.g., County, IDOT) permitting the construction of all curb cuts, de-
acceleration or acceleration lanes, turn lanes, or other improvements
required to be constructed in connection with the Project;
vi. evidence (which may consist of issuance of the
applicable permit or a letter from the Project's civil engineer SDI
Consultants, Ltd. (the "ENGINEER")) that all permits for tap on and service
of the Project with water and sanitary sewer in sufficient capacities
either have been issued by,or will be available upon payment of specific
permit and tap on fees to, all applicable authorities including the Fox
Metropolitan Water Reclamation District and the IEPA;
vii. an agreement with the school, park, fire, police,
library and any other applicable districts specifying the amount of impact
fees payable to each, or other evidence (such as a letter from the
applicable district) of the amount of or absence of these fees or other
applicable impact fees, land donations or other similar payment or donation
obligations;
viii. written and recorded easement agreements for any
utility lines or improvements (such as storm ponds) not located entirely
within the Property;
ix. a certificate from the Engineer and Bloodgood Sharp
Buster Architects & Planners, Inc. (the "ARCHITECT") in the form of
EXHIBITS C-1 and C-2 attached hereto and additionally addressing other
matters which Assignee may reasonably request.
Such Regulatory Approvals shall be in form and substance acceptable
to Assignee. If Assignee determines, in its sole discretion, that the
Property does not have the appropriate Regulatory Approvals for development
of the Project by Assignee, then Assignee shall have the right to terminate
this Agreement by delivering written notice thereof to Assignor at any time
prior to the Closing Date, in which case the Earnest Money shall be
promptly refunded to Assignee and this Agreement shall be terminated.
4
c. CONSTRUCTION CONTRACT CONTINGENCY. On or prior to the
Closing Date, Assignee shall have received a binding bid to enter into a
construction general contract in form and substance and with a contractor
acceptable to Assignee. It is understood that from and after the date
hereof, Assignee and Assignor shall mutually cooperate in attempting to
achieve such a contract at a mutually agreed upon guaranteed maximum price.
Assignee and Assignor shall be represented by Sonnenschein Nath & Rosenthal
("SNR") in negotiating such a contract and the reasonable attorneys' fees
of SNR in so doing shall be paid equally by Assignee and Assignor. In
addition, to the extent SNR certifies that the work performed by them prior
to the date hereof in connection with the Contract Seller's construction
contract can be utilized in connection with the subsequent contract, their
certified fees with respect to such work shall be deemed a reimbursable
cost pursuant to SECTION 3 hereof. Assignor shall be the principal
negotiator of the contract, but drafts shall be mutually reviewed and to
the maximum extent possible the suggestions of Assignee shall be raised in
the negotiations and covered in such drafts. In the event that this
condition is not satisfied on or prior to the Closing Date, then Assignee
shall have the right to terminate this Agreement by delivering written
notice to Assignor any time on or prior to the Closing Date, in which case
the Earnest Money shall be promptly refunded to Assignee and this Agreement
shall be terminated.
d. INSPECTION. Assignee and its agents and contractors
shall have (and Assignor shall cause the Contract Seller to provide)
unlimited access to the Property prior to the Closing Date, including the
right to take soil tests and borings. Assignee shall repair any damage
caused by its entry and shall indemnify, defend and hold Assignor and
Contract Seller harmless with respect to any damage to the Property or
injury to any person caused by Assignee, its agents, employees or
contractors in connection with its investigations of the Property.
e. CLOSING OF SALES CONTRACT. Assignee and Assignor shall
not be obligated to close this Agreement unless the Contract Seller under
the Sales Contract has performed all of its obligations thereunder and
Assignor is prepared to proceed with the Closing of the Sales Contract in
the manner described in SECTION 8. In the event that this condition is not
satisfied on or prior to the Closing Date then Assignee shall have the
right to terminate this Agreement at any time on or prior to the Closing
Date, in which case the Earnest Money shall be promptly refunded to
Assignee and this Agreement shall be terminated. Notwithstanding the
foregoing, in the event that the reason that the Closing is not occurring
is because of the failure of the Contract Seller to perform under the Sales
Contract, than Assignee shall have the following additional options in lieu
of terminating this Agreement, which options must be exercised by notice to
Assignor within five (5) business days after the scheduled Closing Date.
Assignee may extend this Agreement up to an additional 60 days during which
time Assignor shall use commercially reasonable efforts, excluding the
pursuit of legal action, to enforce the Sales Contract against the Contract
Seller. Alternatively, Assignee may close the exchange by paying the
Exchange Value and receiving assignments of the Purchase
5
Rights and Development Rights, in which event Assignee may pursue
legal remedies against the Contract Seller in the Sales Contract directly,
and Assignor shall have no further interest therein. If Assignee chooses
the extension option and the Sales Contract is not closing at the end of
the extension, then at such time Assignee may choose by notice to Assignor
within five (5) business days after an expiration of the extension period
either to terminate (and receive a refund of the Earnest Money) or to
complete the exchange as set forth in the prior sentence.
6. CONVEYANCE. On the Closing Date, Assignor shall contribute and
assign all the Purchase Rights and the Development Rights to Assignee or
its designee pursuant to an Assignment and Assumption Agreement (the
"ASSIGNMENT") in the form of EXHIBIT D attached hereto. The Assignment of
the Purchase Rights shall be consented to by the Contract Seller. The
Assignment of the Development Rights shall be consented to by consultants
and contractors who are parties to the Development Documents.
7. SURVEY AND TITLE COMMITMENT. Assignor shall deliver to
Assignee within seven (7) business days from the date hereof, a current
ALTA plat of survey of the Property dated no earlier than six months prior
to the Contract Date, certified to Assignee and the Title Insurer and
meeting the minimum standard detail requirements of ALTA/ACSM adopted in
1992 as well as a commitment for an ALTA Owner's Title Insurance Policy
Form B-June, 1987 from the Title Insurer with respect to the Property,
dated after the Contract Date. Assignor shall consult with and obtain
written approval from Assignee, which approval shall not be unreasonably
withheld, of any notice or determination required to be given or made to
Contract Seller with regard to objections to title or survey matters under
the Sales Contract. Assignee shall approve or disapprove all matters of
title and survey within the Review Period. All costs of the survey that
exceed those provided for in the Sales Contract shall be paid by Assignor
and all costs of the title commitment and policy that exceed those provided
for in the Sales Contract shall be paid by Assignee.
8. CLOSING. If the conditions precedent set forth herein are
either satisfied or waived by Assignee as evidenced by written notice to
Assignor, and Assignor is prepared to go forward with the Closing (as
defined in the Sales Contract) with the Contract Seller, then the closing
under this Agreement shall take place on a date (the "CLOSING DATE")
specified by Assignee, which date shall not be less than eleven (11) days
after such notice and shall not be more than twenty-seven (27) days
following the end of the Review Period, provided, however, the Closing Date
shall be no later than March 15, 1996. The closing under this Agreement
and the Sales Contract shall take place simultaneously, and the closing
under this Agreement shall be conditioned upon the Closing under the Sales
Contract. The Assignment shall be delivered to the Contract Seller at the
Closing under the Sales Contract, and all conveyances under the Sales
Contract shall be made directly to Assignee, provided that the delivery of
the Assignment to the Contract Seller shall not be effective unless and
until the Closing under the Sales Contract has taken place, unless Assignee
elects under SECTION 5(e) above to pursue remedies directly against the
Contract Seller. At the request of either party, the transactions shall be
closed through an
6
escrow with the Title Insurer at its downtown Chicago office, with each
party to pay one-half of such escrow fees.
9. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor
represents and warrants to Assignee as of the date hereof and as of the
Closing Date (as defined below) that:
a. a true, accurate and complete copy of the Sales Contract
is attached hereto as EXHIBIT A, and the Sales Contract has not been
modified or amended;
b. a true, accurate and complete list of the Development
Documents is attached hereto as EXHIBIT B;
c. Assignor is the absolute owner of the Purchase Rights and
the Development Rights and has the right to assign the Purchase Rights and
the Development Rights;
d. Assignor has not given or received any notice of default
or breach under the Sales Contract or Development Documents, and to
Assignor's knowledge, no such default or breach exists and no event or
circumstance exists which with the giving of notice or passage of time or
both would constitute a default or breach under the Sales Contract or
Development Documents by any party thereto;
e. The Purchase Rights and the Development Rights are free
of any lien or charge and are not subject to any assignment, transfer, or
hypothecation;
f. Assignor has been duly organized and is validly existing.
Assignor has the full right and authority and has obtained any and all
consents required therefor to enter into the Sales Contract, the
Development Documents and this Agreement and consummate or cause to be
consummated the sale and assignments contemplated therein and herein. The
persons signing the Sales Contract, the Development Documents and this
Agreement on behalf of Assignor are authorized to do so. The Sales
Contract, the Development Documents and this Agreement have been properly
authorized and executed and constitute the valid and binding obligations of
Assignor, enforceable in accordance with their terms;
g. There is no agreement to which Assignor is a party or
binding on Assignor which is in conflict with the Sales Contract, the
Development Documents or this Agreement;
h. There is no action or proceeding pending or, to
Assignor's knowledge, threatened against the Assignor which challenges or
impairs Assignor's ability to execute, deliver or perform this Agreement;
7
i. The Property is zoned to permit the uses contemplated by
the Project and Assignor has obtained the Regulatory Approvals specified in
Section 5(b)(i)-(viii) above, and, to Assignor's knowledge, such approvals
are all those necessary for the construction of the Project other than
issuance of building, construction or curb cut permits, which permits are
available upon payment of the fees listed under clause (k) below.
j. Assignor has delivered to Assignee a true and complete
copy of all plans, agreements, ordinances or other written materials
entered into with, or issued or approved by the City, any utility provider,
local school, park or other district or other governmental body in
connection with the Property and Project and Regulatory Approvals, and at
closing will deliver such permits referred to in Section 5.b.iii;
k. To Assignor's knowledge, based on Assignor's due
investigation and inquiry, a true, accurate and complete list <handwritten
initialed change: in all material respects> of all fees exceeding $300
assessed or likely to be assessed by any governmental entity or utility
provider associated with the Project (including without limitation, all
such permit fees, impact fees, review fees, inspection fees, tap-on fees,
and recapture fees) is attached hereto as EXHIBIT E; and
l. Assignor has deposited $35,000 as Earnest Money under the
Sales Contract with Title Insurer as escrowee.
10. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE: Assignee
represents and warrants to Assignor that:
a. Assignee has been duly organized and is validly existing.
Assignee has the full right and authority and has obtained any and all
consents required to enter into this Agreement and consummate or cause to
be consummated the sale and make or cause to be made transfers and
assignments contemplated herein, subject to completing its due diligence
review and approval of the Property and the Development Documents. The
persons signing this Agreement on behalf of Assignee are authorized to do
so. This Agreement has been authorized and properly executed and will
constitute the valid and binding obligations of Assignee, enforceable
against Assignee in accordance with its terms.
b. There is no agreement to which Assignee is a party or to
Assignee's knowledge binding on Assignee which is in conflict with this
Agreement.
c. There is no action or proceeding pending or, to
Assignee's knowledge, threatened against the Assignee which challenges or
impairs Assignee's ability to execute, deliver or perform this Agreement.
8
d. The operating units of Assignee are free and clear of any
lien or charge, are not subject to any assessments and are readily
convertible to shares of Amli Residential Properties Trust pursuant to
Section 2 of this Agreement.
11. PAYMENT OF REAL ESTATE BROKERS. Each party represents to the
other that no real estate broker has been used in connection with this
transaction and no real estate broker's commissions shall be payable to any
party. Assignee agrees to defend, indemnify and hold Assignor harmless
from and against any claim for a real estate broker's commission, or fee by
any other party claiming by, through or under Assignor. Assignor agrees to
defend, indemnify and hold Assignee harmless from and against any claim for
a real estate broker's commission or fee by any other party claiming by,
through or under Assignee.
12. SALES CONTRACT.
a. EXTENSION. Assignor shall have delivered to Assignee a
true, correct and complete copy of the Sales Contract, extended and in full
force and effect with the following changes each of which must be approved
by Assignee:
i. Section 5 of the Rider shall be modified to provide
a closing date commensurate with the Closing Date set forth herein;
ii. Section 13(B) of the Rider shall be modified to
specifically permit the assignment of the Sales Contract to Assignee;
iii. Section 13(J) of the Rider shall be modified to
delete any obligations of Assignee other than to deposit the Purchase Price
(as defined in the Sales Contract) with an authorized intermediary.
b. AMENDMENTS. Except as set forth in clause a. above, the
Sales Contract shall not be amended or modified without Assignee's prior
written consent.
c. DUE DILIGENCE. Assignor shall cause the Contract Seller
to consent in writing to Assignee's access to the Property pursuant to
Section 5.a. and d. hereof. Assignee shall indemnify, defend and hold the
Contract Seller harmless with respect to any damage to the Property or
injury to any person caused by Assignee, its agents, employees or
contractors in connection with its investigation of the Property.
d. ESTOPPEL. Prior to the expiration of the Review Period
and again on the Closing Date, Assignor shall deliver to Assignee an
estoppel from the Contract Seller confirming that the Sales Contract, as
modified as set forth in this Section, is in full force and effect,
confirming that there are no defaults or other modifications and,
confirming the amount of earnest money on deposit and confirming such other
matters as are reasonably requested by Assignee.
9
13. CONSULTING AGREEMENT WITH ASSIGNOR. As of the Closing Date, as
additional consideration for the exchange herein, Assignor and Assignee
shall enter into a consulting agreement in the form of EXHIBIT F attached
hereto to provide continuing basic services with respect to the Property
and the Project.
14. DEFAULT.
a. ASSIGNOR'S DEFAULT. If this transaction fails to close
as a result of Assignor's default, the Earnest Money shall be returned to
Assignee. In addition, Assignee shall be entitled to such remedies for
Assignor's breach of contract as may be available at law and in equity,
including, without limitation, the remedy of specific performance, which
the parties agree was bargained for because of the unique nature of the
rights to be transferred hereunder and the difficulty of compensating
Assignee with damages, provided, however, if Assignor is in default due to
causes beyond its reasonable control, Assignee shall not be entitled to
pursue Assignor for monetary damages. Assignor shall be deemed to be in
default under this Agreement if it fails to proceed with the Closing under
the Sales Contract on the Closing Date or otherwise defaults under the
Sales Contract.
b. ASSIGNEE'S DEFAULT. If this transaction fails to close
due to the default of Assignee, then Assignor's sole remedy shall be to
terminate this Agreement and to retain the Earnest Money as liquidated
damages, Assignor waiving all other rights or remedies in the event of such
default by Assignee. The parties acknowledge that Assignor's actual
damages in the event of a default by Assignee under this Agreement will be
difficult to ascertain, and that such liquidated damages represent the
parties' best estimate of such damages.
15. NO AMENDMENTS. As long as this Agreement remains in full force
and effect, Assignor shall perform all of its obligations under the Sales
Contract, shall not amend or modify the Sales Contract (except as set forth
in Section 12.a.) and shall not make any elections, issue any approvals,
give any notice, or otherwise take any action with respect to the Sales
Contract or the Property without the prior written consent of Assignee
which consent shall not be unreasonably withheld or delayed.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in this Agreement shall be continuing and shall
survive for a period of nineteen (19) months following the Closing Date.
Each party shall indemnify and hold the other harmless from and against any
loss, cost, liability or expense, including reasonable attorneys fees,
incurred by reason of any breach of any of its representations or
warranties under this Agreement. Notwithstanding anything to the contrary
contained in this Section 16, if Assignee has actual knowledge prior to
closing that a representation or warranty made by Assignor is false,
despite any lack of knowledge on the part of Assignor, and Assignee
proceeds with the
10
closing, then any claims of Assignee for breach of such representation or
warranty shall be deemed waived as of the Closing Date. For purposes of
this Section 16, Assignee's knowledge shall be deemed to mean the actual
knowledge of Stephen C. Ross without inquiry or investigation.
17. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and
assigns, provided that this Agreement may not be assigned by Assignor
without Assignee's consent, which consent may be withheld in Assignee's
sole discretion. Assignee may not assign this Agreement without Assignor's
prior written consent, which consent shall not be unreasonably withheld.
Any assigning party shall remain liable for the obligations of its
assignee.
18. NOTICES. Upon the execution and delivery of this Agreement,
Assignor and Assignee shall deliver a copy of this Agreement to the
Contract Seller, and request that a copy of any notices sent to Assignor
under the Sales Contract also be sent to Assignee.
All notices required or permitted hereunder shall be in writing
and shall be served on the parties at the following addresses:
If to Assignor: Bristol Chicago Development Corp.
Attn: William Walsh
1931 North Meacham Road
Suite 330
Schaumburg, Illinois 60173
Phone: 708/397-7171
Facsimile: 708/397-8597
and
Bristol Capital Corp.
Attn: David Sislen
6116 Executive Boulevard
Suite 430
Rockville, Maryland 20852
Phone: 301/984-2520
Facsimile: 301/984-6099
with a copy to: Sonnenschein, Nath & Rosenthal
Attn: Gerald J. Sherman
8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Phone: 312/876-8000
Facsimile: 312/876-7934
11
If to Assignee: Amli Residential Properties L.P.
Attn: Stephen C. Ross
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
Phone: 312/443-1477
Facsimile: 312/443-0909
with a copy to: Mayer, Brown & Platt
Attn: Paul Meyer
190 South LaSalle Street
Chicago, Illinois 60603
Phone: 312/782-0600
Facsimile: 312/701-7711
Any such notices shall be either (a) sent by certified mail, return receipt
requested, in which case notice shall be deemed delivered three (3) days
after deposit, postage prepaid in the U.S. Mail, (b) sent by overnight
delivery using a nationally recognized overnight courier, in which case it
shall be deemed delivered one business day after deposit with such courier,
(c) sent by facsimile transmission, in which case notice shall be deemed
delivered upon transmission of such notice, or (d) sent by personal
delivery. The above addresses may be changed by written notice to the
other party; provided, however, that no notice of a change of address shall
be effective until actual receipt of such notice.
19. LIMITATION OF LIABILITY. Any obligation or liability
whatsoever of Assignee which may arise at any time under this Agreement or
the Sales Contract shall be satisfied, if at all, out of Assignee's assets
only. No such obligation or liability shall be personally binding upon,
nor shall resort for the enforcement thereof be had to, the property of any
of its partners, shareholders, trustees, officers, employees or agents,
regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise. The negative capital account of any partner in
Assignee or the obligation of any partner in Assignee to make a capital
contribution to Assignee shall not be deemed to be an asset of Assignee.
20. GOVERNING AGREEMENT. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and the
Sales Contract, the terms and provisions of this Agreement shall govern and
control. If any provision of this Agreement shall be deemed unenforceable
as a matter of law, the remainder hereof shall remain in full force and
effect.
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BRISTOL CHICAGO DEVELOPMENT CORP.,
By: /s/ WILLIAM J. WALSH
------------------------------
Name: William J. Walsh
------------------------------
Its: Chairman
------------------------------
AMLI RESIDENTIAL PROPERTIES L.P.,
a Delaware limited partnership
By: Amli Residential Properties Trust, a Maryland
real estate investment trust
By: /s/ STEPHEN C. ROSS
------------------------------
Name: Stephen C. Ross
------------------------------
Title: Executive Vice President
------------------------------
13
EXHIBIT 99.2
- ------------
(Form S-3)
AGREEMENT TO ASSIGN SALES CONTRACT
AND DEVELOPMENT DOCUMENTS
Approximately 29 Acre Parcel, Aurora, Illinois
THIS AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS
(hereinafter this "AGREEMENT"), is made and entered into as of the 22nd day
of July, 1996, between BRISTOL OAKHURST DEVELOPMENT L.L.C., an Illinois
limited liability company (hereinafter called "ASSIGNOR") and AMLI
RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership (hereinafter
called "ASSIGNEE").
RECITALS
A. Bristol Chicago Development Corp., an Illinois corporation
("BRISTOL") is the purchaser under that certain Sales Agreement, dated May
17, 1995, by and between Bristol and Aurora Venture, an Illinois limited
partnership (the "CONTRACT SELLER"), with attached Addendum (such
agreement, as amended in accordance with the terms hereof, being herein
called the "SALES CONTRACT" and being attached hereto as EXHIBIT A). The
Sales Contract was assigned by Bristol to Assignor.
B. Pursuant to the Sales Contract, and subject to the terms and
conditions therein set forth, Assignor has the right to acquire
approximately 29 acres in Aurora, DuPage County, Illinois (the "PROPERTY")
as described in EXHIBIT A-1. Terms used herein and not otherwise defined
herein shall have the meanings given such terms in the Sales Contract.
C. Subject to the terms and conditions hereof, Assignor desires to
assign to Assignee all of Assignor's right, title and interest (i) to
purchase the Property including without limitation, Assignor's rights in
and to the Sales Contract (the "PURCHASE RIGHTS") and (ii) in and to all
existing plans, drawings, specifications, permits, licenses, governmental
approvals, development rights, Regulatory Approvals (defined below),
agreements (with governmental bodies, architects, engineers, consultants or
other persons or entities) and other materials related to the development
of the Property (the "DEVELOPMENT RIGHTS"; all written materials evidencing
the Development Rights are called the "DEVELOPMENT DOCUMENTS" and are more
particularly described on EXHIBIT K which shall be prepared by Assignor
within ten (10) days after the date of this Agreement and submitted to
Assignee for its approval during the Review Period [defined below]) as a
464-unit luxury multifamily community known as The Crossings at Oakhurst
North (the "PROJECT"), and Assignee desires to accept such assignment and
to assume and agree to perform, subject to the terms and conditions hereof,
all of the Purchaser's duties, obligations and liabilities under the Sales
Contract and the Development Documents.
AGREEMENT:
---------
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged:
1. AGREEMENT TO PURCHASE AND SELL. Assignee agrees to accept and
Assignor agrees to contribute the Purchase Rights and the Development
Rights for the consideration and subject to the terms and conditions set
forth in this Agreement.
2. CONTRIBUTION.
a. EXCHANGE AMOUNT. The value of the Purchase Rights and
the Development Rights (the "EXCHANGE AMOUNT") is One Million Five Hundred
Eighty Five Thousand and No/100 Dollars ($1,585,000.00), to be paid to
Assignor in two parts as set forth below in consideration for the
contribution and assignment to Assignee of the Purchase Rights and the
Development Rights. A portion of the Exchange Amount valued at One Million
One Hundred Thousand and No/100 Dollars ($1,100,000.00) (the "INITIAL
EXCHANGE AMOUNT") shall be paid in full in the manner provided herein at
the Closing Date (as defined below). The remainder of the Exchange
Amount, valued at Four Hundred and Eighty Five Thousand and No/100 Dollars
($485,000.00) (the "FINAL EXCHANGE AMOUNT"), shall (subject to Assignee's
offset rights as set forth in SECTION 3 hereof) be paid in full in cash
within ten (10) business days after the date on which all buildings
comprising Project have received a final certificate of occupancy in a form
in which the City of Aurora (the "CITY") customarily issues such
certificates with no conditions other than those which are standard on the
City's customary form of certificate of occupancy. On the Closing Date the
Initial Exchange Amount will, at Assignor's option, either (i) be payable
entirely in the form of units of limited partnership interest ("UNITS") of
Assignee or (ii) up to twenty percent (20%) of the Initial Exchange Amount
will be payable in cash and the remaining portion of the Initial Exchange
Amount will be payable in the form of Units. Not less than five (5) days
prior to the Closing Date, Assignor shall provide written notice to
Assignee identifying what portion of the Initial Exchange Amount will be
payable in cash or Units. The number of Units to be delivered to Assignor
will be equal to the quotient of (i) the difference between the Initial
Exchange Amount less any portions thereof payable in cash and (ii) the
average closing price on the New York Stock Exchange of the common shares
of beneficial interest, par value $.01 per share (the "COMMON SHARES"), of
Amli Residential Properties Trust, a Maryland real estate investment trust
("ARPT") for the five (5) business day period immediately preceding the
first business day prior to the Closing Date.
b. CONVERSION OF UNITS. The Units received by Assignor as
provided above shall have the rights and limitations afforded Units as set
forth in the Partnership Agreement (defined below), including rights with
respect to conversion into Common
2
Shares (herein, such Common Shares given in conversion are referred
to as "SHARES") which conversion right shall be subject to the terms and
provisions set forth in the Partnership Agreement and which right may be
exercised at any time in accordance with such terms. ARPT will endeavor to
file a registration statement for the registration of resales by the
Assignor of such Shares within a reasonable period of time after the
Closing Date. On the Closing Date, Assignor, Assignee and ARPT shall
execute the put agreement in the form attached hereto as EXHIBIT B (the
"PUT AGREEMENT").
c. TRANSFER AND PLEDGE OF UNITS. Assignor acknowledges that
the transfer or pledge of the Units held by it shall be subject to
the restrictions set forth in ARTICLE XI of that certain Amended and
Restated Agreement of Limited Partnership of Amli Residential Properties,
L.P., dated as of February 15, 1994, as amended by that certain First
Amendment to Amended and Restated Agreement of Limited Partnership of Amli
Residential Properties, L.P., dated as of July 3, 1995 and as further
amended by that certain Second Amendment to Amended and Restated Agreement
of Limited Partnership, dated January 30, 1996 (herein, as amended and as
it may hereafter be amended from time to time, the "PARTNERSHIP AGREEMENT")
and to compliance with applicable laws including the Securities Act of
1933, as amended (the "SECURITIES ACT") and all other applicable securities
laws. Subject to the foregoing, to the extent Assignor desires to pledge
the economic interest allocable to the Units to a financial institution in
connection with a loan transaction, Assignee agrees it shall cause ARPT to
execute a consent in the form of EXHIBIT C attached hereto (the "PLEDGE
CONSENT"). Both Assignor and Assignee acknowledge that SECTION 11.4(a) of
the Partnership Agreement makes special provisions to allow transferees of
Units who are an Affiliate (as defined in the Partnership Agreement) or a
member of the Immediate Family (as defined in the Partnership Agreement) of
the transferor to become Substituted Limited Partners (as defined in the
Partnership Agreement).
d. DOCUMENTS EVIDENCING UNITS. On the Closing Date,
Assignor shall execute and deliver, and cause its members (the "MEMBERS")
to execute and deliver, a certificate in the form of EXHIBIT D attached
hereto and Assignor shall execute and deliver a joinder to the Partnership
Agreement in the form of EXHIBIT E attached hereto. Assignee agrees that
it shall, as soon as practicable after the execution of the above
referenced joinder, execute a certificate to Assignor attaching a true and
correct copy of EXHIBIT A to the Partnership Agreement, which EXHIBIT A
will be amended to identify Assignor as a holder of the applicable number
of Units as issued to it in accordance with the terms hereof. In addition,
Assignee shall execute a Unit certificate, substantially in the form of
EXHIBIT F attached hereto, acknowledging the number of Units held by
Assignor.
e. REPRESENTATIONS AND WARRANTIES CONCERNING UNITS.
Assignor covenants and agrees to make, and to cause its Members to make,
such representations and warranties to Assignee and ARPT as either Assignee
or ARPT may deem reasonably necessary to
3
confirm that the issuance of the Units pursuant to the terms hereof
complies with the Securities Act and all applicable securities laws.
Without limiting the foregoing or the representations set forth in SECTION
9 hereof, Assignor represents and warrants as follows:
1) Assignor is duly formed, validly existing and in
good standing under the laws of Illinois; (ii) Assignor has all requisite
power and authority to invest in the Units and the Shares as provided
herein; (iii) such investment will not result in any violation of or
conflict with any term of the charter, by-laws or operating agreement of
Assignor or any other organizational document or instrument by which it is
bound or any law or regulation applicable to it and (iv) such investment
has been duly authorized by all necessary action on behalf of Assignor;
2) Each Member that is a natural person is at least 21
years of age, a citizen of the United States and legally competent to join
in the execution of this Agreement and to make the certifications,
representations and warranties contained herein;
3) The Units and the Shares are being acquired for the
Assignor's or Members' own account and not with any view toward the resale
or distribution thereof, or with any present intention of selling or
distributing any of the Units or the Shares;
4) Assignor and the Members have such knowledge and
experience in financial and business matters that they are capable of
evaluating the merits and risks of an investment in the Units and the
Shares;
5) Assignor and the Members have carefully reviewed
all documents of which they have requested copies, have been furnished with
all other materials that they consider relevant to an investment in the
Units and the Shares (including, without limitation the Partnership
Agreement and the Amended and Restated Declaration of Trust, dated January
31, 1994, and Amended and Restated Bylaws of ARPT) and have had a full
opportunity to ask questions of and receive answers from Assignee or a
person or persons acting on behalf of Assignee concerning the terms and
conditions of an investment in the Units and the Shares;
6) All written information which Assignor and the
Members have provided to Assignee concerning Assignor and the Members,
their financial positions and their knowledge of financial and business
matters, or the knowledge of financial and business matters of the person
making the investment decision on behalf of Assignor or the Members,
including all information contained herein, is correct and complete in all
material respects as of the date hereof and may be
4
relied upon, and if there should be any material change in such
information prior to the Closing Date, Assignor will immediately provide
Assignee with notice of such change;
7) Assignor's and the Members' addresses in Illinois
and Maryland listed herein is Assignor's principal place of business and
are Members' principal residences and Illinois is the only jurisdiction in
which an offer to sell the Units and the Shares was made to Assignor or the
Members;
8) Assignor and each Member is an accredited investor
within the meaning of Rule 501 of Regulation D. Assignor was not formed,
organized or reorganized for the specific purpose, even among other
purposes, of acquiring the Units or the Shares;
9) Each Member is a natural person (i) whose net worth
(either individually or jointly with spouse) exceeds $1,000,000 at the time
of this Certificate or (ii) who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year; and
10) The sole Members of the Assignor are: Sharon E.
Walsh, William J. Walsh and David Sislen and their respective principal
residences are 1149 Blackburn, Inverness, Illinois 60067, 1149 Blackburn,
Inverness, Illinois 60067 and 11509 Cushman Road, Rockville, Maryland
20852.
The representations and warranties set forth above are true and
correct in all material respects as of the date hereof and shall also be
true and correct in all material respects as of the Closing Date.
f. ACKNOWLEDGMENTS CONCERNING UNITS. Assignor and the
Members is aware and understands that:
1) Assignee is relying upon the certifications,
representations, warranties, and agreements of Assignor and the Members
contained in this Agreement in determining the applicability of certain
laws and regulations to the transactions contemplated pursuant to the
Agreement and accordingly such certifications, representations and
warranties shall survive the closing under this Agreement;
2) No federal or state agency has passed upon the
Units or the Shares or made any finding or determination as to the fairness
of Assignor's investment
5
in the Units or the Shares, or the terms of the offer and the
sale of the Units or the Shares;
3) Assignor and the Members must bear the economic
risk of an investment in the Units and the Shares for an indefinite period
of time because (i) the Units and the Shares have not been registered under
the Securities Act, and, therefore, cannot be sold or transferred unless
either they are subsequently registered under the Securities Act or an
exemption from such registration is available and (ii) the Units and the
Shares cannot be sold or transferred unless they are registered under
applicable state securities laws or an exemption from such registration is
available; and
4) There is no market for the Units and no such market
is likely to develop and the Shares, when issued upon exchange of Units,
will be "restricted securities" within the meaning of Rule 144 under the
Securities Act.
3. REIMBURSEMENT OF COSTS. Upon the closing of this transaction,
Assignee agrees to reimburse Assignor for certain acceptable third party
costs incurred and actually paid by Assignor related to the development of
the Project through June 30, 1996. With respect to costs incurred and
actually paid by Assignor from and after July 1, 1996 to the Closing Date,
Assignor shall submit a written statement of such costs and only those
costs pertaining to on-going development activity with respect to the
Project (as opposed to sale or closing activity related to the transaction
described herein) shall be reimbursable, provided that all activity of
Elmer Hamning (EH Consultants) pertaining to the Project shall be
reimbursable. An estimated amount of the reimbursement will be determined
by the parties during the Review Period and will be delivered in writing to
Assignor prior to the expiration of the Review Period. A final
reimbursement statement will be delivered to Assignor on the Closing Date.
Such final reimbursement statement is subject to the reasonable approval of
Assignor. Prior to and as a condition of such reimbursement, Assignor
shall provide to Assignee lien waivers, or partial lien waivers, as the
case may be, each in form and substance reasonably satisfactory to Assignee
and the Title Insurer (defined below) from such third parties confirming
payment for the work performed under their respective agreements and the
amounts paid to such third parties as follows: prior to the Closing Date
Assignor shall (i) provide current lien waivers from the land planner, JEN
Land Design, Inc. (the "PLANNER"), the civil engineer, SDI Consultants,
Ltd. (the "ENGINEER"), the architect, Bloodgood Sharp Buster Architects &
Planners, Inc. (the "ARCHITECT"), (ii) use its best efforts to provide lien
waivers from all other parties doing lienable work with respect to the
Project and (iii) provide such indemnities, cash, escrows, sworn
statements, or other agreements as may be required by the Title Insurer to
provide title insurance coverage to Assignee over liens arising by acts of
Assignor, Bristol or other parties not claiming through Assignee with
respect to the Project. Any amounts still owed to such third parties as of
the Closing Date for work already performed shall be paid on the Closing
Date by Assignee if such costs are identified in the final reimbursement
statement or by Assignor, from its own funds, if such costs are not
identified on the final reimbursement statement. Any reimbursement
6
to Assignor for costs identified in the final reimbursement statement shall
be in an amount equal to the lesser of (i) that portion of such costs
incurred and actually paid by Assignor and (ii) that portion of such costs
confirmed in the lien waivers or partial lien waivers as having been paid
to the applicable service provider. Assignor shall execute and deliver,
and shall cause Bristol to execute and deliver, a general undertaking and
indemnity agreement, in the form of EXHIBIT G attached hereto in order to
indemnify Assignee from any claims of third parties performing services or
work in connection with the Project that did not submit lien waivers as of
the Closing Date. Such general undertaking and indemnity agreement shall
provide that Assignee may off-set unsatisfied claims covered by such
general undertaking and indemnity agreement, which are not insured over by
the Title Insurer to Assignee's reasonable satisfaction, against the Final
Exchange Amount. In addition to lien waivers, Assignor shall provide
Assignee with vendor's certificates substantially in the form of EXHIBIT H
attached hereto (or such other form on which the parties may agree, acting
reasonably) from parties providing on-going services or from parties which
provide professional services on which Assignee will rely.
4. EARNEST MONEY. Assignee shall deposit $50,000 in cash as
earnest money (the "EARNEST MONEY") within three (3) business days
following the later of execution of this Agreement (the "CONTRACT DATE")
and the satisfaction of the conditions set forth in SECTION 12 hereof, in a
strict joint order escrow account (the "ESCROW") with Chicago Title
Insurance Company (the "TITLE INSURER"), as escrow trustee, with such funds
to be deposited in an insured interest bearing account designated by
Assignee. The Earnest Money shall thereafter be non-refundable to Assignee
provided Assignor fulfills its obligations under this Agreement and all
conditions precedent have been satisfied or waived; provided that the
Earnest Money shall, on the Closing Date, be disbursed to Assignee. Upon
closing of the purchase and sale of the Property to Assignee pursuant to
SECTION 5(e) below, Assignee will cause the earnest money posted by
Assignor as purchaser under the Sales Contract to be refunded to Assignor,
including any interest accrued thereon.
5. CONDITIONS PRECEDENT TO ASSIGNEE'S OBLIGATION TO CLOSE.
Assignee's obligation to purchase the Purchase Rights and the Development
Rights shall be subject to the following conditions precedent (the
"CONDITIONS PRECEDENT"), any of which may be waived by Assignee.
a. FEASIBILITY CONTINGENCY. Assignee shall have until the
date that is thirty (30) days after the execution of this Agreement (the
"REVIEW PERIOD"), or such later date as mutually agreed to by the parties
to perform a feasibility analysis of the Property. Within ten (10) days
after the date of this Agreement, Assignor shall prepare for Assignee's
review and approval a true and complete list of all Development Documents,
which list, after it is approved by Assignee, shall supplement the list
attached to this Agreement on the date hereof as EXHIBIT K. During the
Review Period Assignee will conduct and review soil tests, engineering,
planning, site planning, utilities, wetlands, environmental risk, title,
survey, CC&R and other reviews determined to be necessary by the Assignee
and Assignee will review and determine the cost, existence and
transferability of items 1, 4, 6, 7, 9 and 10 of the Regulatory Approvals
(as defined
7
below). In addition, Assignee shall review the costs proposed to be
reimbursed by Assignee pursuant to SECTION 3 above. If Assignee
determines, in its sole discretion, that the Property is not suitable for
development by Assignee, or Assignor and Assignee (each acting reasonably)
are unable to agree upon either (i) the costs to be reimbursed or (ii) the
final list of Development Documents to be attached as EXHIBIT K, then
Assignee shall have the right to terminate this Agreement by delivering
written notice thereof to Assignor at any time prior to the end of the
Review Period, in which case the Earnest Money shall be promptly refunded
to Assignee and this Agreement shall be terminated. If Assignee fails to
so notify Assignor, then Assignee shall be deemed to have waived this
feasibility contingency and this Agreement shall remain in full force and
effect, subject to the Regulatory Approvals contingency and other
contingencies set forth herein and therein. At such time as Assignee has
approved the revised list of Development Documents as provided herein,
EXHIBIT K shall be revised to incorporate such approved list.
The "Regulatory Approvals" shall be all governmental approvals
required to develop the Property for the use detailed in the Development
Documents including (without limitation) the following:
1) Evidence of planned unit development, preliminary
plat and preliminary plan, and final plat and final plan approval of the
Project from the City including a copy certified by the City of the
ordinances granting such approvals and of all plans, agreements and other
submissions on which such approval is based;
2) recordation of a final plat of subdivision for the
Property;
3) issuance of a building permit for the construction
of (i) all grading, site work, roadwork, utilities, and other
infrastructure serving or required to be built in connection with the
Project, and (ii) pool area, recreation center and first planned
residential buildings, together with evidence satisfactory to Purchaser
(which may be in the form of a letter from the City) that all building,
engineering and other plans for the balance of the Project have been
approved, that the City is ready to issue a building permit for such
construction upon the payment of specified permit fees, and identifying
specifically by latest revision date all plans approved by the City upon
which permits have been or may be issued;
8
4) evidence of the amount of DuPage County ("COUNTY")
impact fees which will be assessed against the Project, which evidence may
be in the form of a letter from the County;
5) if any of the roads adjoining or serving the
Property are not City roads, then issuance of a curb cut and
other applicable construction permits by the authority controlling such
roads (e.g., County, IDOT) permitting the construction of all curb cuts,
de-acceleration or acceleration lanes, turn lanes, or other improvements
required to be constructed in connection with the Project;
6) evidence (which may consist of issuance of the
applicable permit or a letter from the Engineer that all permits for tap on
and service of the Project with water and sanitary sewer in sufficient
capacities either have been issued by,or will be available upon payment of
specific permit and tap on fees to, all applicable authorities including
the Fox Valley Metropolitan Water Reclamation District and the IEPA;
7) an agreement with the school, park, fire, police,
library and any other applicable districts specifying the amount of impact
fees payable to each, or other evidence (such as a letter from the
applicable district) of the amount of or absence of these fees or other
applicable impact fees, land donations or other similar payment or donation
obligations;
8) written and recorded easement agreements for any
utility lines or improvements (such as storm ponds) not located entirely
within the Property;
9) a certificate from the Engineer, the Architect and
W-T Engineering in the form of EXHIBITS I-1, I-2 and I-3 attached hereto
and additionally addressing other matters which Assignee may reasonably
request; and
10) evidence reasonably satisfactory to Assignee that
the total fees incurred in connection with obtaining the Regulatory
Approvals, including but not limited to, impact fees, permit fees, plan
review fees and other development fees and costs imposed by governmental or
regulatory agencies, will not exceed $1,500 per apartment unit, in the
aggregate.
b. REGULATORY APPROVALS CONTINGENCY. On or prior to the
Closing Date, Assignee shall ascertain costs and the existence and
transferability of all Regulatory Approvals specified as items 2, 3, 5 and
8 above (the "PERMIT APPROVALS"). The Permit Approvals shall be in form
and substance acceptable to Assignee. If Assignee determines, in its sole
discretion, that the Property does not have the Permit Approvals, then
Assignee shall have the right to terminate this Agreement by delivering
written notice thereof to Assignor at any time prior to the Closing Date,
in which case the
9
Earnest Money shall be promptly refunded to Assignee and this
Agreement shall be terminated.
c. CONSTRUCTION CONTRACT CONTINGENCY. On or prior to the
Closing Date, Assignee shall have received a binding bid to enter into a
construction general contract in form and substance and with a contractor
approved by Assignee in its sole discretion. It is understood that from
and after the date hereof, Assignee and Assignor shall mutually cooperate
in attempting to achieve such a contract in a form entirely acceptable to
Assignee based upon a bid set of plans and specifications which replicate,
in all material respects, the plans and specifications of Amli at Aurora
Crossing, dated June 25, 1996 (except for those items of particular
difference between the two projects such as the newly designed clubhouse
and the snap-on stone facade). Assignee shall submit to the chosen
contractor a list of alternates to the construction contract to be priced
in addition to the basic plans and specifications. Assignee shall be the
sole negotiator of the contract, but drafts shall be mutually reviewed and
to the maximum extent possible the suggestions of Assignor shall be raised
in the negotiations and covered in such drafts. In the event that this
condition is not satisfied on or prior to the Closing Date, then Assignee
shall have the right to terminate this Agreement by delivering written
notice to Assignor any time on or prior to the Closing Date, in which case
the Earnest Money shall be promptly refunded to Assignee and this Agreement
shall be terminated.
d. HOME OWNER'S ASSOCIATION CONTINGENCY. Without limiting
Assignee's right to disapprove title and survey matters during the Review
Period, on or prior to the Closing Date, Assignee shall have received all
approvals required pursuant to that certain Amended and Restated
Declaration of Covenants, Conditions and Restrictions for Oakhurst North
Community Association, recorded May 3, 1996 in the DuPage County Recorder's
Office as Document No. R96-073226 (the "DECLARATION OF COVENANTS"),
including, but not limited to any approvals required pursuant to ARTICLES
XI and XIII thereof. During the Review Period, Assignee must receive
evidence reasonably satisfactory to it that the residents of the Project
will have a vested right to use the community pool and clubhouse described
in the Declaration of Covenants upon the payment of reasonable fees or
dues.
e. INSPECTION. Subject to executing the License Agreement
referred to in SECTION 12(c) hereof, Assignee and its agents and
contractors shall have (and Assignor shall cause the Contract Seller to
provide) unlimited access to the Property prior to the Closing Date,
including the right to take soil tests and borings. Assignee shall repair
any damage caused by its entry and shall indemnify, defend and hold
Assignor and Contract Seller harmless with respect to any damage to the
Property or injury to any person caused by Assignee, its agents, employees
or contractors in connection with its investigations of the Property.
10
f. CLOSING OF SALES CONTRACT. Assignee shall not be
obligated to close this Agreement unless the Contract Seller under
the Sales Contract has performed all of its obligations thereunder and
Assignor is prepared to proceed with the Closing of the Sales Contract in
the manner described in SECTION 8. In the event that this condition is not
satisfied on or prior to the Closing Date then Assignee shall have the
right to terminate this Agreement at any time on or prior to the Closing
Date, in which case the Earnest Money shall be promptly refunded to
Assignee and this Agreement shall be terminated. Notwithstanding the
foregoing, in the event that the reason that the Closing is not occurring
is because of the failure of the Contract Seller to perform under the Sales
Contract, then Assignee shall have the following additional options in lieu
of terminating this Agreement, which options must be exercised by notice to
Assignor within five (5) business days after the scheduled Closing Date.
Assignee may extend this Agreement up to an additional 60 days during which
time Assignor shall use commercially reasonable efforts, excluding the
pursuit of legal action, to enforce the Sales Contract against the Contract
Seller. Alternatively, Assignee may close the exchange by paying the
Initial Exchange Value and receiving assignments of the Purchase Rights and
Development Rights, in which event Assignee may pursue legal remedies
against the Contract Seller in the Sales Contract directly, and Assignor
shall have no further interest therein. If Assignee chooses the extension
option and the Sales Contract is not closing at the end of the extension,
then at such time Assignee may choose by notice to Assignor within five (5)
business days after an expiration of the extension period either to
terminate (and receive a refund of the Earnest Money) or to complete the
exchange as set forth in the prior sentence.
6. CONVEYANCE. On the Closing Date, Assignor shall contribute and
assign all the Purchase Rights and the Development Rights to Assignee or
its designee pursuant to an Assignment and Assumption Agreement (the
"ASSIGNMENT") in the form of EXHIBIT J attached hereto. The Assignment of
the Purchase Rights shall be consented to by the Contract Seller. The
Assignment of the Development Rights shall be consented to by consultants
and contractors who are parties to the Development Documents.
7. SURVEY AND TITLE COMMITMENT. Assignor shall deliver to
Assignee within fifteen (15) business days from the date hereof, a current
ALTA plat of survey of the Property showing the subdivided lot legal
description of the Property, certified to Assignee and the Title Insurer
and meeting the minimum standard detail requirements of ALTA/ACSM adopted
in 1992 as well as a commitment for an ALTA Owner's Title Insurance Policy
Form B-June, 1987 from the Title Insurer with respect to the Property,
dated after the Contract Date. Assignor shall consult with and obtain
written approval from Assignee, which approval shall not be unreasonably
withheld, of any notice or determination required to be given or made to
Contract Seller with regard to objections to title or survey matters under
the Sales Contract. Assignee shall approve or disapprove all matters of
title and survey within the Review Period. All costs of the survey that
exceed those provided for in the Sales Contract shall be paid by Assignor
and all costs of
11
the title commitment and policy that exceed those provided for in the Sales
Contract shall be paid by Assignee.
8. CLOSING. If the conditions precedent set forth herein are
either satisfied or waived by Assignee as evidenced by written notice to
Assignor, then the closing under this Agreement shall take place on a date
(the "CLOSING DATE") specified by Assignee, which date shall not be less
than fifteen (15) days after such notice and shall not be more than thirty
(30) days following the end of the Review Period. The closing under this
Agreement and the Sales Contract shall take place simultaneously, and the
closing under this Agreement shall be conditioned upon the Closing under
the Sales Contract. The Assignment shall be delivered to the Contract
Seller at the Closing under the Sales Contract, and all conveyances under
the Sales Contract shall be made directly to Assignee, provided that the
delivery of the Assignment to the Contract Seller shall not be effective
unless and until the Closing under the Sales Contract has taken place,
unless Assignee elects under SECTION 5(e) above to pursue remedies directly
against the Contract Seller. The transactions described herein shall be
closed through an escrow with the Title Insurer at its Wheaton, Illinois
office, with each party to pay one-half of such escrow fees.
9. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor
represents and warrants to Assignee as of the date hereof and as of the
Closing Date (as defined below) that:
a. a true, accurate and complete copy of the Sales Contract
is attached hereto as EXHIBIT A, and the Sales Contract has not been
modified or amended;
b. a true, accurate and complete list of the Development
Documents will be provided to Assignee within ten (10) days of the date of
this Agreement and, upon approval by Assignee, will be attached hereto as
EXHIBIT K;
c. Assignor is the absolute owner of the Purchase Rights and
the Development Rights and has the right to assign the Purchase Rights and
the Development Rights;
d. Assignor has not given or received any notice of default
or breach under the Sales Contract or Development Documents, and to
Assignor's knowledge, no such default or breach exists and no event or
circumstance exists which with the giving of notice or passage of time or
both would constitute a default or breach under the Sales Contract or
Development Documents by any party thereto;
e. The Purchase Rights and the Development Rights are free
of any lien or charge and are not subject to any assignment, transfer, or
hypothecation;
f. Assignor has been duly organized and is validly existing.
Assignor has the full right and authority and has obtained any and all
consents required therefor to enter into the Sales Contract, the
Development Documents and this Agreement and
12
consummate or cause to be consummated the sale and assignments
contemplated therein and herein. The persons signing the Sales Contract,
the Development Documents and this Agreement on behalf of Assignor are
authorized to do so. The Sales Contract, the Development Documents and
this Agreement have been properly authorized and executed and constitute
the valid and binding obligations of Assignor, enforceable in accordance
with their terms;
g. There is no agreement to which Assignor is a party or
binding on Assignor which is in conflict with the Sales Contract, the
Development Documents or this Agreement;
h. There is no action or proceeding pending or, to
Assignor's knowledge, threatened against the Assignor which challenges or
impairs Assignor's ability to execute, deliver or perform this Agreement;
i. The Property is zoned to permit the uses contemplated by
the Project and to Assignor's knowledge, the Regulatory Approvals are all
those necessary for the construction of the Project other than issuance of
building, construction or curb cut permits, which permits are available
upon payment of the fees listed under clause (k) below.
j. Assignor has delivered to Assignee a true and complete
copy of all plans, agreements, ordinances or other written materials
entered into with, or issued or approved by the City, any utility provider,
local school, park or other district or other governmental body in
connection with the Property and Project and Regulatory Approvals, and at
closing will deliver all of the Regulatory Approvals;
k. To Assignor's knowledge, based on Assignor's due
investigation and inquiry, a true, accurate and complete list of all fees
exceeding $300 assessed or likely to be assessed by any governmental entity
or utility provider associated with the Project (including without
limitation, all such permit fees, impact fees, review fees, inspection
fees, tap-on fees, and recapture fees) is attached hereto as EXHIBIT L; and
l. Assignor has deposited $50,000 as Earnest Money under the
Sales Contract with Title Insurer as escrowee.
10. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE: Assignee
represents and warrants to Assignor that:
a. Assignee has been duly organized and is validly existing.
Assignee has the full right and authority and has obtained any and all
consents required to enter into this Agreement and consummate or cause to
be consummated the sale and make or cause to be made transfers and
assignments contemplated herein, subject to completing its due
13
diligence review and approval of the Property and the Development
Documents. The persons signing this Agreement on behalf of Assignee are
authorized to do so. This Agreement has been authorized and properly
executed and will constitute the valid and binding obligations of Assignee,
enforceable against Assignee in accordance with its terms.
b. There is no agreement to which Assignee is a party or to
Assignee's knowledge binding on Assignee which is in conflict with this
Agreement.
c. There is no action or proceeding pending or, to
Assignee's knowledge, threatened against the Assignee which challenges or
impairs Assignee's ability to execute, deliver or perform this Agreement.
d. The Units of Assignee are free and clear of any lien or
charge, are not subject to any assessments and are convertible to Common
Shares as set forth in and subject to the limitations set forth in SECTION
2 of this Agreement.
11. PAYMENT OF REAL ESTATE BROKERS. Each party represents to the
other that no real estate broker has been used in connection with this
transaction and no real estate broker's commissions shall be payable to any
party. Assignee agrees to defend, indemnify and hold Assignor harmless
from and against any claim for a real estate broker's commission, or fee by
any other party claiming by, through or under Assignor. Assignor agrees to
defend, indemnify and hold Assignee harmless from and against any claim for
a real estate broker's commission or fee by any other party claiming by,
through or under Assignee.
12. SALES CONTRACT.
a. EXTENSION. Assignor shall have delivered to Assignee a
true, correct and complete copy of the Sales Contract, extended and in full
force and effect with the following changes each of which must be approved
by Assignee:
1) The dates which may be chosen for the Closing Date
thereunder shall be amended to be consistent with the Closing Date which
may be specified hereunder.
2) SECTION 4 shall be amended to provided that
Contract Seller shall escrow at closing its pro rata share of accrued but
unpaid real estate taxes allocable to the Property and Contract Buyer
(which shall mean the party holding the purchaser's interest in the Sales
Contract, which is currently Assignor and shall be Assignee if this
transaction closes) shall deposit current year post-closing taxes in the
same escrow, which shall be used only to pay real estate taxes allocable to
the Property. The escrow will be interest bearing and Contract Buyer will
pay all escrow fees.
14
3) SECTION 13.1 shall be amended to provide that
Contract Seller has approved the documents comprising the Final Plan and
Plat (the "FINAL PLAN") which was approved by the City in Resolution PDFKL
96-16 on April 11, 1996 and any updated or additional Project plans which
may currently exist, and that Contract Seller shall have no further rights
to approve such plans or modifications thereof, provided that Contract
Buyer shall still be subject to the approval requirements in the
Declaration of Covenants.
4) SECTION 14.3 shall be amended to provide that all
landscaping "in the landscape easements along Eola and Liberty" shall be
completed by the time required in SECTION 14.3. The landscape easements
shall be identified and provisions for maintenance of such easements
satisfactory to Contract Buyer shall be negotiated.
5) SECTION 14.4 shall provide that (i) Contract Seller
must provide an easement (either through an existing easement or a new
easement) satisfactory to Contract Buyer (acting reasonably) for drainage
into the Facility (as defined in the Sales Contract) and into any other
shared detention areas on the Final Plan, (ii) all work (other than work to
be performed by Contract Buyer on the Property) on the Facility (including
sidewalks, street lighting and landscaping) and such other shared detention
areas must be complete, and (iii) the Facility has been conveyed to the
Association (as defined in the Declaration of Covenants). If any of (i),
(ii) or (iii) are not completed at the closing, then the payment required
by SECTION 14.4 shall be made into an escrow until all of items (i), (ii)
and (iii) are satisfied. SECTION 14.4 shall also be amended to address
maintenance rights and obligations regarding the Facility and other shared
detention areas in a manner satisfactory to Contract Buyer.
6) SECTION 20 shall be modified to set forth Contract
Seller's consent to the assignment of the Sales Contract from Bristol to
Assignor and to the assignment of the Sales Contract to Assignee or to a
permitted assignee as defined in SECTION 17 below.
7) SECTION 34 and EXHIBIT R shall be amended to
provide that the right of first refusal shall not apply to an assignment of
the Sales Contract or the transfer of the Property to Assignee or an
affiliate of Assignee, including subsequent assignments or transfers by
Assignee or an affiliate of Assignee to an entity in which Assignee or an
affiliate of Assignee has a partnership, members or other similar interest.
Contract Seller agrees upon request to issue a release of the right of
first refusal when it terminates. Contract Seller also agrees to issue a
confirmation of the subordination of the right of first refusal to a
construction lender in such form as may be reasonably requested by such
construction lender. EXHIBIT R shall also be amended to add the following
to
15
restriction 2 thereunder: "or modify any development rights or
development approvals affecting the Property."
8) SECTION 38 shall be amended to allow the use of
"Oakhurst North" or "Oakhurst" in the marketing name of the apartment
community to be constructed on the Property.
9) Provision shall be made to permit Contract Buyer to
install a lighted water feature in the Facility.
10) The Sales Contract shall be amended to provide for
the terms and conditions set forth in that certain Amendment to Sales
Agreement, undated and unsigned by Contract Seller, but executed by Bristol
on June 26, 1996.
b. DUE DILIGENCE. Assignor shall cause the Contract Seller
to consent in writing to Assignee's access to the Property pursuant to
SECTION 5.a. and d. hereof. Assignee agrees to enter into a License
Agreement substantially in the form of EXHIBIT D to the Sales Contract if
the Contract Seller requests. Assignee shall indemnify, defend and hold
the Contract Seller harmless with respect to any damage to the Property or
injury to any person caused by Assignee, its agents, employees or
contractors in connection with its investigation of the Property.
c. ESTOPPEL. Prior to the expiration of the Review Period
and again on the Closing Date, Assignor shall deliver to Assignee an
estoppel from the Contract Seller (i) confirming that the Sales Contract,
as modified as set forth in this SECTION, is in full force and effect, (ii)
confirming that there are no defaults or other modifications, (iii)
confirming the amount of earnest money on deposit, (iv) confirming the net
acreage of the Property and the final purchase price, (v) confirming that
Contract Seller's (as required in the Sales Contract) and the Design Review
Committee's approval (as required under the Declaration of Covenants) of
the most current Project plans, including without limitation the landscape
plan and budget, and any signage plans, and (vi) confirming such other
matters as are reasonably requested by Assignee.
13. CONSULTING AGREEMENT WITH ASSIGNOR. As of the Closing Date, as
additional consideration for the exchange herein, Assignor and Assignee
shall enter into a consulting agreement in the form of EXHIBIT M attached
hereto to provide continuing basic services with respect to the Property
and the Project.
14. DEFAULT.
a. ASSIGNOR'S DEFAULT. If this transaction fails to close
as a result of Assignor's default, the Earnest Money shall be returned to
Assignee. In addition, Assignee shall be entitled to such remedies for
Assignor's breach of contract as may be
16
available at law and in equity, including, without limitation, the
remedy of specific performance, which the parties agree was bargained for
because of the unique nature of the rights to be transferred hereunder and
the difficulty of compensating Assignee with damages, provided, however, if
Assignor is in default due to causes beyond its reasonable control,
Assignee shall not be entitled to pursue Assignor for monetary damages.
Assignor shall be deemed to be in default under this Agreement if it fails
to proceed with the Closing under the Sales Contract on the Closing Date or
otherwise defaults under the Sales Contract.
b. ASSIGNEE'S DEFAULT. If this transaction fails to close
due to the default of Assignee, then Assignor's sole remedy shall be to
terminate this Agreement and to retain the Earnest Money as liquidated
damages, Assignor waiving all other rights or remedies in the event of such
default by Assignee. The parties acknowledge that Assignor's actual
damages in the event of a default by Assignee under this Agreement will be
difficult to ascertain, and that such liquidated damages represent the
parties' best estimate of such damages.
15. NO AMENDMENTS. As long as this Agreement remains in full force
and effect, Assignor shall perform all of its obligations under the Sales
Contract, shall not amend or modify the Sales Contract (except as set forth
in SECTION 12.a.) and shall not make any elections, issue any approvals,
give any notice, or otherwise take any action with respect to the Sales
Contract or the Property without the prior written consent of Assignee
which consent shall not be unreasonably withheld or delayed.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in this Agreement shall be continuing and shall
survive for a period of nineteen (19) months following the Closing Date.
Each party shall indemnify and hold the other harmless from and against any
loss, cost, liability or expense, including reasonable attorneys fees,
incurred by reason of any breach of any of its representations or
warranties under this Agreement. Notwithstanding anything to the contrary
contained in this SECTION 16, if Assignee has actual knowledge prior to
closing that a representation or warranty made by Assignor is false,
despite any lack of knowledge on the part of Assignor, and Assignee
proceeds with the closing, then any claims of Assignee for breach of such
representation or warranty shall be deemed waived as of the Closing Date.
For purposes of this SECTION 16, Assignee's knowledge shall be deemed to
mean the actual knowledge of Stephen C. Ross or Gregory T. Mutz without
inquiry or investigation.
17. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and
assigns, provided that this Agreement may not be assigned by Assignor
without Assignee's consent, which consent may be withheld in Assignee's
sole discretion. Assignee may not assign this Agreement, other than to a
"permitted assignee", without Assignor's prior written consent, which
consent shall not be unreasonably withheld. A partnership or limited
liability company having Assignee or ARPT as a general
17
partner or managing member shall be a "permitted assignee". Any assigning
party shall remain liable for the obligations of its assignee.
18. NOTICES. Upon the execution and delivery of this Agreement,
Assignor and Assignee shall deliver a copy of this Agreement to the
Contract Seller, and request that a copy of any notices sent to Assignor
under the Sales Contract also be sent to Assignee.
All notices required or permitted hereunder shall be in writing
and shall be served on the parties at the following addresses:
If to Assignor: Bristol Oakhurst Development L.L.C.
Attn: William Walsh
1931 North Meacham Road
Suite 330
Schaumburg, Illinois 60173
Phone: 708/397-7171
Facsimile: 708/397-8597
and
Bristol Capital Corp.
Attn: David Sislen
6116 Executive Boulevard
Suite 430
Rockville, Maryland 20852
Phone: 301/984-2520
Facsimile: 301/984-6099
with a copy to: Sonnenschein, Nath & Rosenthal
Attn: Gerald J. Sherman
8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Phone: 312/876-8000
Facsimile: 312/876-7934
If to Assignee: Amli Residential Properties L.P.
Attn: Stephen C. Ross
125 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
Phone: 312/443-1477
Facsimile: 312/443-0909
18
with a copy to: Mayer, Brown & Platt
Attn: Paul Meyer
190 South LaSalle Street
Chicago, Illinois 60603
Phone: 312/782-0600
Facsimile: 312/701-7711
Any such notices shall be either (a) sent by certified mail, return receipt
requested, in which case notice shall be deemed delivered three (3) days
after deposit, postage prepaid in the U.S. Mail, (b) sent by overnight
delivery using a nationally recognized overnight courier, in which case it
shall be deemed delivered one business day after deposit with such courier,
(c) sent by facsimile transmission, in which case notice shall be deemed
delivered upon transmission of such notice, or (d) sent by personal
delivery. The above addresses may be changed by written notice to the
other party; provided, however, that no notice of a change of address shall
be effective until actual receipt of such notice.
19. LIMITATION OF LIABILITY. Any obligation or liability
whatsoever of Assignee or ARPT which may arise at any time under this
Agreement or the Sales Contract shall be satisfied, if at all, out of
Assignee's or ARPT's respective assets only. No such obligation or
liability shall be personally binding upon, nor shall resort for the
enforcement thereof be had to, the property of any of their respective
partners, or the shareholders, trustees, officers, employees or agents of
Assignee or ARPT, regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise. The negative capital account of
any partner in Assignee or the obligation of any partner in Assignee to
make a capital contribution to Assignee shall not be deemed to be an asset
of Assignee.
20. GOVERNING AGREEMENT. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and the
Sales Contract, the terms and provisions of this Agreement shall govern and
control. If any provision of this Agreement shall be deemed unenforceable
as a matter of law, the remainder hereof shall remain in full force and
effect.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between Assignor and Assignee concerning the subject matter
hereof and supersedes all prior or contemporaneous agreements of the
parties, including without limitation, that certain letter, dated July 3,
1996 from Assignee to and accepted by Assignor.
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BRISTOL OAKHURST DEVELOPMENT L.L.C.
By: /s/ WILLIAM S. WALSH
------------------------------
Name: William S. Walsh
------------------------------
Its: Manager
------------------------------
AMLI RESIDENTIAL PROPERTIES L.P.,
a Delaware limited partnership
By: Amli Residential Properties Trust, a Maryland
real estate investment trust
By: /s/ CHARLOTTE A. SPARROW
------------------------------
Name: Charlotte A. Sparrow
------------------------------
Title: Vice President
------------------------------
20
JOINDER
The undersigned join in the execution of this Agreement solely for
the purpose of making the representations, warranties and acknowledgments
set forth in SECTION 2 of the Agreement applicable to Members of Assignor.
/s/ SHARON E. WALSH
------------------------------
Sharon E. Walsh
/s/ WILLIAM WALSH
------------------------------
William Walsh
------------------------------
David Sislen
Subject to SECTION 19 of this Agreement, the undersigned joins in the
execution of this Agreement solely for the purpose of agreeing to the
undertakings to be performed by ARPT in accordance with SECTION 2 of this
Agreement.
AMLI RESIDENTIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ CHARLOTTE A. SPARROW
------------------------------
Name: Charlotte A. Sparrow
------------------------------
Title: Vice President
------------------------------
FIRST AMENDMENT TO AGREEMENT TO ASSIGN SALES CONTRACT
AND DEVELOPMENT DOCUMENTS
First Amendment to Agreement to Assign Sales Contract and Development
Documents (the "AMENDMENT"), dated as of October 2, 1996, by and between
BRISTOL OAKHURST DEVELOPMENT L.L.C. ("ASSIGNOR"), and AMLI RESIDENTIAL
PROPERTIES, L.P. ("ASSIGNEE").
R E C I T A L S :
-----------------
A. Assignor and Assignee entered into an Agreement to Assign Sales
Contract and Development Documents dated July 22, 1996 (as amended, the
"AGREEMENT"). All initially-capitalized terms not defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
B. Assignor and Assignee desire to amend the Agreement to reduce
the Exchange Amount to reflect additional impact fees attributable to the
acquisition and development of the Property.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge, the
parties agree as follows:
1. The foregoing recitals are incorporated herein by this
reference.
2. Section 2.a is hereby amended as follows:
a. The value of the Exchange Amount is hereby amended to be
$1,515,000.00; and
b. The Final Exchange Amount is hereby amended to be
$415,000.00.
3. Except as expressly amended hereby, the Purchase Agreement
continues in full force and effect, in accordance with its terms, and
embodies the entire agreement between the parties, and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
Purchase Agreement may be further amended or supplemented only by an
instrument in writing executed by both parties.
4. This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one instrument. To facilitate execution of
this Amendment, the parties may execute and exchange by telephone facsimile
counterparts of the signature pages.
IN WITNESS HEREOF, the parties have caused this Amendment to be
executed as of the date first above written.
BRISTOL OAKHURST DEVELOPMENT L.L.C.
By: /s/ WILLIAM S. WALSH
------------------------------
Name: William S. Walsh
------------------------------
Title: Manager
------------------------------
AMLI RESIDENTIAL PROPERTIES L.P.,
a Delaware limited partnership
By: Amli Residential Properties Trust
By: /s/ CHARLOTTE A. SPARROW
------------------------------
Name: Charlotte A. Sparrow
------------------------------
Title: Vice President
------------------------------
-2-
EXHIBIT 99.3
- ------------
(Form S-3)
AGREEMENT REGARDING ACQUISITION OF
PARTNERSHIP INTERESTS
among
AMLI RESIDENTIAL PROPERTIES, L.P.,
VERANDAH HOLDINGS PHASE I INC.,
JSDP, INC.,
M&B HOLDINGS GENERAL PARTNERSHIP,
FAIRGROWTH INTERNATIONAL, INC.
AND
TVA SP PARTNERSHIP
Dated as of December __, 1996
TABLE OF CONTENTS
-----------------
PAGE
----
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
PURCHASE AND SALE OF PARTNERSHIP INTERESTS . . . . . . . . . 4
1.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . 4
1.2 Payments at Closing. . . . . . . . . . . . . . . . . . . . . 4
1.3 Prorations and Adjustments . . . . . . . . . . . . . . . . . 5
ARTICLE II
GUARANTY OPTION AND REVIEW PERIOD. . . . . . . . . . . . . . 6
2.1 OP Units Sellers' Guaranty Option. . . . . . . . . . . . . . 6
2.2 Review Period. . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Title and Survey Review. . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIESOF THE SELLERS . . . . . . . . 9
3.1 Ownership of Acquired Interests. . . . . . . . . . . . . . . 9
3.2 Due Formation. . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Due Authorization. . . . . . . . . . . . . . . . . . . . . . 11
3.4 No Other Agreement . . . . . . . . . . . . . . . . . . . . . 12
3.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Assets, Liabilities and Activities of the Partnership. . . . 14
3.8 Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 15
3.12 Access/Utilities . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Absence of Bankruptcy Proceedings. . . . . . . . . . . . . . 16
3.14 No Defaults or Violations. . . . . . . . . . . . . . . . . . 16
3.15 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.16 Environmental Laws . . . . . . . . . . . . . . . . . . . . . 16
3.17 Absence of Liens or Assessments. . . . . . . . . . . . . . . 16
3.18 No Unpaid Bills or Claims. . . . . . . . . . . . . . . . . . 17
3.19 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 17
-i-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . 17
4.1 Due Organization.. . . . . . . . . . . . . . . . . . . . . . 17
4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . 18
4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Registration of Shares . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
COVENANTS OF SELLERS . . . . . . . . . . . . . . . . . . . . 18
5.1 Implementing Agreement . . . . . . . . . . . . . . . . . . . 18
5.2 Additional Actions . . . . . . . . . . . . . . . . . . . . . 18
5.3 Preservation of Partnership Interests. . . . . . . . . . . . 19
5.4 Preservation of Ownership of Phase I Property. . . . . . . . 19
5.5 No Default . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 19
5.7 Operation of the Partnership and the Phase I Property. . . . 19
5.8 Accuracy of Representations and Warranties . . . . . . . . . 22
5.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Code Violations. . . . . . . . . . . . . . . . . . . . . . . 22
5.11 Conduct of Verandah Condominiums . . . . . . . . . . . . . . 22
ARTICLE VI
COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . 23
6.1 Implementing Agreement . . . . . . . . . . . . . . . . . . . 23
6.2 Disposition of Phase I Property. . . . . . . . . . . . . . . 23
6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER . . . . . . 23
7.1 Ownership of Phase I Property and the Remainder. . . . . . . 23
7.2 Representations and Warranties True. . . . . . . . . . . . . 24
7.3 Compliance with Agreements and Covenants . . . . . . . . . . 24
7.4 Condition of Property. . . . . . . . . . . . . . . . . . . . 24
7.5 Verandah Apartments Agreement. . . . . . . . . . . . . . . . 24
7.6 Other Closing Documents. . . . . . . . . . . . . . . . . . . 24
7.7 Failure to Close . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS . . . . . 25
-ii-
8.1 Ownership of Phase I Property. . . . . . . . . . . . . . . . 25
8.2 Representations and Warranties True. . . . . . . . . . . . . 25
8.3 Compliance with Agreements and Covenants . . . . . . . . . . 25
8.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . 25
8.5 Verandah Apartments Agreement. . . . . . . . . . . . . . . . 25
8.6 Failure to Close . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IX
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Deliveries by the Sellers. . . . . . . . . . . . . . . . . . 26
9.3 Deliveries by Purchaser. . . . . . . . . . . . . . . . . . . 27
ARTICLE X
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI
SURVIVAL; INDEMNIFICATION. . . . . . . . . . . 28
11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Indemnification by the Cash Sellers. . . . . . . . . . . . . 28
11.3 Indemnification by the OP Units Sellers. . . . . . . . . . . 28
11.4 Limitation on Liability. . . . . . . . . . . . . . . . . . . 29
11.5 Indemnification by Purchaser . . . . . . . . . . . . . . . . 29
ARTICLE XII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 29
12.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.3 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.5 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 31
12.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 32
12.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.10 Other Instruments. . . . . . . . . . . . . . . . . . . . . . 32
12.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 32
12.12 Verandah Apartments Agreement. . . . . . . . . . . . . . . . 32
-iii-
12.13 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 32
SCHEDULES
---------
Schedule 3.1 Partnership Interests Owned by Sellers
EXHIBITS
--------
Exhibit A Description of Land
Exhibit B OP Units Letter
Exhibit C Partnership Interests Assignment
Exhibit D FIRPTA Affidavit and Certificate
-iv-
AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS
THIS AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS, dated
as of the ______ day of December, 1996, by and among AMLI RESIDENTIAL
PROPERTIES, L.P., a Delaware limited partnership ("PURCHASER"); VERANDAH
HOLDINGS PHASE I INC., a Canadian corporation ("PHASE I"), JSDP, INC., a
Texas corporation ("JSDP"), M&B HOLDINGS GENERAL PARTNERSHIP, a Texas
general partnership ("M&B"), FAIRGROWTH INTERNATIONAL, Inc. an Ontario
corporation ("FAIRGROWTH"), and TVA SP PARTNERSHIP, a Texas general
partnership ("TVA SP") (collectively, the "SELLERS").
R E C I T A L S
----------------
WHEREAS, the Verandah Partners Ltd., a Texas Limited Partnership (the
"PARTNERSHIP") is the owner of the Remainder (hereinafter defined), and
either is the owner of, or will acquire ownership of not less than one day
prior to the expiration of the Review Period, the Phase I Property
(hereinafter defined).
WHEREAS, the Partnership is governed by and in accordance with that
certain Amended and Restated Agreement of Limited Partnership dated as of
June 1, 1990, by and among Phase I, JSDP, M&B, Fairgrowth, Donald L.
Pilkinton and James E. Sowell, as amended by the First Amendment to Amended
and Restated Agreement of Limited Partnership dated July 31, 1991 by and
among Phase I, JSDP, M&B and TVA SP (as so amended, the "PARTNERSHIP
AGREEMENT").
WHEREAS, Phase I and JSDP are the sole general partners of the
Partnership, and M&B, Fairgrowth and TVA SP are the sole limited partners
of the Partnership.
WHEREAS, subsequent to the acquisition by the Partnership of the
Phase I Property, Purchaser or an Affiliate of Purchaser desires to
purchase from Sellers and Sellers desire to sell to Purchaser or an
Affiliate of Purchaser all of their Partnership Interests in the
Partnership, so that Purchaser or an Affiliate of Purchaser will own 100%
of the Partnership.
In consideration of the mutual covenants, agreements and warranties
herein contained, it is agreed that Purchaser or an Affiliate of Purchaser
shall acquire from the Sellers all of the Partnership Interests (as defined
herein) upon the terms and conditions hereinafter set forth.
DEFINITIONS
-----------
The following terms shall have the meanings set forth herein for the
purposes of the transactions described in this Agreement:
"ACQUIRED INTERESTS" shall mean the Partnership Interests held by
Sellers and to be transferred to the Purchaser at Closing, which, as of the
date hereof, constitute, and at Closing will constitute, 100% of the
Partnership Interests of the Partnership.
"AFFILIATE" of any person shall mean any corporation, proprietorship,
partnership or business entity which, directly or indirectly, owns or
controls, is under common ownership or control with, or is owned or
controlled by, such person. For purposes of this Agreement, any
corporation, proprietorship, partnership or business entity in which
Purchaser has or owns a ten percent or greater interest shall be deemed to
be an affiliate of Purchaser.
"AGREEMENT" shall mean this Agreement Regarding Acquisition of
Partnership Interests, including all Exhibits and Schedules hereto, as it
may be amended from time to time in accordance with its terms.
"CASH SELLERS" shall have the meaning assigned to it in Section 1.2.1
hereof.
"CLOSING" shall have the meaning assigned to it in Section 1.2 hereof.
"CLOSING DATE" shall have the meaning assigned to it in Section 9.1
hereof.
"COMMITMENT" shall have the meaning assigned to it in Section 2.3
hereof.
"ENCUMBRANCE" shall mean any option, pledge, security interest, lien,
charge, encumbrance, mortgage, trust deed, easement, lease, sublease,
claim, right of way, covenant, condition or restriction (whether on sale,
transfer or disposition or otherwise) whether imposed by agreement, law or
otherwise, whether of record or otherwise.
"ENVIRONMENTAL LAW" shall mean any law, statute, ordinance, rule,
regulation, order or determination of any governmental authority or agency
affecting the Phase I Property or the Remainder and pertaining to health or
the environment including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
and the Resource Conservation and Recovery Act of 1986.
"LOSSES" shall mean all actual liabilities, losses, costs, damages,
penalties or expenses (including, without limitation, attorneys' fees and
expenses and costs of investigation and litigation).
"OP UNITS SELLERS" shall have the meaning assigned to it in
Section 1.2.2 hereof.
-2-
"PARTNERSHIP ASSETS" shall mean all of the assets of the Partnership,
which shall be the Remainder, the Phase I Property and may include an
amount of cash as provided for herein.
"PARTNERSHIP INTERESTS" shall mean the general and limited partnership
interests in the Partnership.
"PARTNERSHIP LIABILITIES" - none.
"PHASE I PROPERTY" shall mean the following:
(a) The term "PHASE I LAND" shall mean that certain
parcel of real property located in the City of Arlington, County of
Tarrant, State of Texas, and being more particularly described in EXHIBIT A
attached hereto and incorporated herein by reference for all purposes,
together with all rights and appurtenances pertaining to such real estate,
including, without limitation, any and all rights of in and to all roads,
alleys, easements, streets and ways adjacent to the same and, strips and
gores and rights of ingress and egress thereto.
(b) All improvements, structures and fixtures placed,
constructed or installed on the Phase I Land shall be referred to herein as
the "PHASE I IMPROVEMENTS."
(c) All equipment, furnishings, materials, inventory,
supplies and other tangible personal property owned by the Partnership,
placed or installed on or about the Phase I Land or Phase I Improvements
and used as part of or in connection therewith, including, without
limitation, all leases or other occupancy agreements, keys, leasing
materials and forms, records relating to tenants, security deposits,
prepaid rentals, service contracts, maintenance agreements, bonds, and
unexpired warranties, guarantees, bonds and the like relating to the Phase
I Property shall be referred to herein as the "PHASE I PERSONAL PROPERTY".
(d) All right, title and interest of the Partnership in
and to (i) the right to the use of the trade name of Verandah Apartments,
and goodwill relating thereto, (ii) all telephone exchange numbers related
to the Phase I Improvements and (iii) all licenses and permits of any kind
related to the use or operation of the Phase I Improvements and any all
right, title and interest of the Partnership in and to and all other
intangible property related to the Phase I Improvements are hereinafter
collectively referred to as the "PHASE I INTANGIBLE PROPERTY."
-3-
(e) The Phase I Land, Phase I Improvements, Phase I
Personal Property, the Phase I Intangible Property and other matters
covered hereby and relating to Phase I shall be referred to collectively
herein as the "PHASE I PROPERTY."
"PHASE II PROPERTY" shall mean the "Property" as defined in Section
1.1 of the Verandah Apartments Agreement.
"PLANNED DONATION" shall mean the planned dedication of the Release
Parcel to the City of Arlington, Texas.
"PURCHASE PRICE" shall mean the cash to be paid and the securities to
be delivered pursuant to Sections 1.2.1 and 1.2.2 hereof.
"REMAINDER" shall mean a portion of a tract of land (the "ADJACENT
LAND") which is shown on Sheet 1 of 3 of that certain survey dated
September 23, 196, prepared by James G. Ferguson and titled "A Land Title
Survey of 27.360 Acres of Land." A portion of the Adjacent Land is
referred to on such survey as the "RELEASE PARCEL" and will be dedicated to
the City of Arlington, Texas as park land, and the remainder thereof is
referred herein to as the "Remainder" and will be retained by the
Partnership. If the Release Parcel has not been so dedicated as of the
Closing Date, then the term "Remainder" shall include the Release Parcel
and Purchaser shall, following the Closing, cause the Partnership to so
dedicate the Release Parcel.
"VERANDAH APARTMENTS AGREEMENT" shall mean the agreement dated as of
even date herewith between Verandah Phase II Limited Partnership, a Texas
limited partnership (the "Phase II Partnership") and Purchaser.
All other capitalized terms used herein without definition shall have
the respective meanings given such terms in the Verandah Apartments
Agreement.
ARTICLE I
---------
PURCHASE AND SALE OF PARTNERSHIP INTERESTS
1.1 PURCHASE AND SALE. Subject to the terms and conditions hereof,
on the Closing Date the Sellers shall sell, transfer and deliver to
Purchaser or an Affiliate of Purchaser, and Purchaser or an Affiliate of
Purchaser shall purchase, acquire and accept delivery of, all of the
Acquired Interests owned by such Sellers, so that Purchaser or an Affiliate
of Purchaser shall thereby acquire 100% of the outstanding Partnership
Interests.
-4-
1.2 PAYMENTS AT CLOSING. Subject to the terms and conditions
hereof, at the closing of the transactions contemplated hereby (the
"CLOSING"):
1.2.1 Purchaser or an Affiliate of Purchaser shall deliver
to Phase I and M&B (together with Fairgrowth, the "CASH SELLERS"), by
cashier's or certified check, or by wire transfer of immediately available
funds to the account designated by such Sellers, an aggregate of
$17,337,000, subject to adjustment as herein provided, which amount shall
be allocated among them as they shall determine. Phase I and M&B shall be
responsible for allocating to Fairgrowth its allocable shares of the such
amount.
1.2.2 Purchaser or an Affiliate of Purchaser shall issue to
JSDP and TVA SP (together, the "OP UNITS SELLERS"), or to such parties as
may be designated by such Sellers, an aggregate number of partnership
interests in Purchaser ("OP UNITS") obtained by dividing (i) $1,053,000 by
(ii) the Average Closing Price. The Average Closing Price shall be equal
to average per share price of a share of beneficial interest (a "Share") of
Amli Residential Properties Trust, a Maryland real estate investment trust
(the "REIT"), at the close of trading on the New York Stock Exchange for
the ten trading days preceding the fifth business day prior to Closing.
Each OP Units Seller's (or OP Units Seller's designee's) acquisition and
ownership of the OP Units shall be subject to the execution of a letter
(the "OP UNITS LETTER") in the form attached hereto as EXHIBIT B.
Purchaser shall also pay to the OP Units Sellers $25,000 in cash, which
shall be remitted at Closing dirctly to the OP Unit Sellers' legal expenses
in payment of legal expenses incurred in connection with this Agreement.
1.3 PRORATIONS AND ADJUSTMENTS. Collected rents, operating
expenses, ad valorem taxes on the Phase I Property and the Remainder for
the current year, charges under the Phase I Approved Service Contracts (as
hereinafter defined) and utility charges and all other income and expense
related to the Phase I Property or the Remainder shall be prorated at the
Closing, effective as of the Closing Date, utilizing the best available
computations of such items. Sellers retain all rights to a refund of any
existing utility deposits. If current ad valorem tax assessments are
unavailable at Closing, said ad valorem taxes shall be adjusted based upon
a ten percent (10%) increase over the prior year's taxes; provided,
however, if for the prior year the Phase I Property was not taxed as a
completed and operating apartment project, then the ad valorem tax
assessment shall be prorated based upon a written estimate of such taxes,
prepared by an independent, local real estate tax consultant, such estimate
to be reasonably acceptable to Purchaser and Sellers; provided further, all
special tax assessments made by any taxing authority with respect to the
Phase I Property prior to Closing shall be the sole responsibility of
Sellers and shall be paid by Sellers at Closing. Such prorations shall be
subject to reprorations at such time as actual numbers are available or in
the event that is determined that any prorated item may not have been
mathematically calculated correctly. Sellers shall be entitled to any and
all cash and cash equivalents owned by the Partnership as of the Closing,
and Purchaser shall cooperate with Sellers after the Closing to distribute
to Sellers any such cash or cash equivalents. Delinquent rents collected
by the Partnership after
-5-
the Closing shall be remitted by Purchaser to the Cash Sellers upon receipt
thereof by the Partnership; provided, however, that the Partnership shall
be under no obligation to collect such rents and all rentals received shall
be applied first to current rents and then to delinquent rents. Purchaser
shall receive a credit against the Purchase Price for tenant security
deposits that are not yet forfeited and the security deposits of all
tenants who have moved out within five (5) business days prior to the
Closing. Purchaser shall assume responsibility for such deposits and shall
determine the amount of such deposits to refund, and any balance not
refunded shall be retained by Purchaser. All adjustments shall be
cumulated for a period of six months after the Closing Date, at which time
a final adjustment shall be made to the Purchase Price, and no adjustments
thereafter shall be made. The prorations shall be made by adjustment to
the cash portion of the Purchase Price.
ARTICLE II
GUARANTY OPTION AND REVIEW PERIOD
2.1 OP UNITS SELLERS' GUARANTY OPTION. Each OP Units Seller, at
such OP Units Seller's option, or one or more of such OP Units Seller's
partners or shareholders, as the case may be, shall have the right, but not
the obligation, to guaranty its pro rata portion (based upon its percentage
interest in the Partnership) of up to an aggregate of Four Million, Eight
Hundred Thousand and No/100 Dollars ($4,800,000) of the indebtedness to be
secured by the Phase I Property, on terms and conditions reasonably
acceptable to Purchaser, each such OP Units Seller and Purchaser's lender.
Each OP Units Seller, or such partners or shareholders, as the case may be,
shall have a period of up to ten (10) days after the date hereof to
negotiate the form of such guaranty. Each OP Units Seller hereby agrees
to, and to cause its respective partners or shareholders to, as the case
may be, use its reasonable best efforts to negotiate such a guaranty. If
any OP Units Seller, or such partners or shareholders, as the case may be,
shall not have negotiated a form of guaranty reasonably acceptable to the
Purchaser within such ten-day period, such OP Units Seller shall have the
right to terminate this Agreement as to itself and all other Sellers by
written notice to the Purchaser on or before the expiration of such ten-day
period, and the parties hereto shall have no further liabilities one to the
other, except obligations which expressly survive any termination hereof.
If no OP Units Seller shall have so terminated this Agreement within such
period, this Section 2.1 shall be deemed deleted from this Agreement. If
any OP Units Seller, or such OP Units Seller's partners or shareholders, as
the case may be, shall negotiate an acceptable form of guaranty, such OP
Units Seller shall so notify Purchaser and provide Purchaser with a copy
thereof and with copies of any amendments thereof or notices related
thereto. Any such guaranty shall confer no rights upon the guarantor,
particularly no right of reimbursement and contribution. The guarantor's
consent shall not be required in connection with any prepayment, sale and
assumption, modification, amendment, extension, refinancing or any other
matter related to such financing; provided, however, any such action
undertaken by Purchaser shall not increase any liability under such
guaranty or amend the terms of the guaranty. Purchaser makes no
representation or warranty of any kind or nature as to such
-6-
guaranty, including no representation or warranty as to tax consequences
and whether Purchaser's lender will permit the same. Purchaser undertakes
no obligations or covenants in connection with the same. During the seven-
year period beginning on the Closing Date, Purchaser may not voluntarily
prepay the debt secured by the Phase I Property (the "PHASE I DEBT") unless
it gives each guarantor the opportunity to guaranty other debt of
Purchaser, if any, of the same character for tax purposes as the Phase I
Debt which guaranty would enable such guarantor to preserve its tax
position; provided, that if Purchaser involuntarily prepays or is required
to prepay the Phase I Debt so that the outstanding balance thereof is less
than $4,800,000, Purchaser will cooperate with each guarantor in enabling
such guarantor to guaranty other debt of Purchaser, if any, of the same
character for tax purposes as the Phase I Debt which guaranty would enable
such guarantor to preserve its tax position.
2.2 REVIEW PERIOD. For a period (the "REVIEW PERIOD") beginning on
the earlier to occur of (i) the date the OP Units Sellers notify Purchaser
that they, or their respective partners or shareholders, as the case may
be, have all negotiated an acceptable form of guaranty pursuant to Section
2.1 above and (ii) the expiration of the ten-day period set forth in
Section 2.1 above (such earlier date is hereby referred to as the "DUE
DILIGENCE PERIOD COMMENCEMENT DATE") and expiring on the later to occur of
(x) forty-five days after the Due Diligence Period Commencement Date and
(y) one business day after the Partnership acquires ownership of the Phase
I Property, Purchaser shall have the right to have performed any and all
inspections or studies of the Phase I Property and the Remainder which
Purchaser may desire, including but not limited to the status of the
ownership thereof any Encumbrances thereon, a physical and mechanical
inspection (including all building and construction plans and
specifications related to the Phase I Improvements as well as those
maintained by municipal building departments or any other governmental
agencies), subject to the rights of tenants, an environmental inspection, a
feasibility study, an inspection of all leasing and maintenance files and
all books and records and financial information pertaining thereto. In
connection therewith, Sellers agree to cause to be made available to
Purchaser for its review, as soon as possible after the date hereof,
similar items as made available pursuant to Section 5.1.3 of the Verandah
Apartments Agreement, pertaining to the Phase I Property and (to the extent
applicable thereto) the Remainder. Purchaser shall coordinate all of
Purchaser's inspections and investigations with Sellers in advance, and at
Sellers' option, shall be accompanied by Sellers or a representative of
Sellers. Purchaser shall have the right to make and retain copies of any
document or item reviewed by Purchaser during its inspection (if Purchaser
terminates this Agreement for any reason, Purchaser shall return all of
such copies to Sellers). On or before the expiration of the Review Period,
Purchaser shall send to Sellers a notice setting forth the service
contracts pertaining to the Phase I Property (the "PHASE I APPROVED SERVICE
CONTRACTS") which Purchaser agrees may remain binding on the Partnership.
If Purchaser shall not notify Sellers of any Phase I Approved Service
Contracts, then it shall be assumed that the Purchaser does not desire any
service contracts to remain binding on the Partnership. Sellers shall be
responsible, at their cost and expense, to cause the Partnership to
terminate all contracts which Purchaser does not desire to remain binding
on the Partnership, with such termination to be effective thirty (30) days
after the Closing. Sellers shall, or shall cause the Partnership to,
terminate, at their cost and expense, effective
-7-
as of the Closing Date, the existing APS security monitoring contract;
provided, however, that if any lease requires that security monitoring be
provided, Purchaser shall be solely responsible for ensuring that such
requirements are satisfied following the Closing. If Purchaser shall find
such inspections or studies to be unsatisfactory, for any reason, or if
Purchaser otherwise determines that the Phase I Property is not suitable to
it, for any reason whatsoever, in Purchaser's sole discretion, Purchaser
shall have the right, at its option, to terminate this Agreement by written
notice delivered to Sellers prior to the expiration of said Review Period
and, upon such termination, the parties hereto shall have no further
liabilities one to the other, except obligations which expressly survive
any termination hereof.
Purchaser shall indemnify and hold Sellers harmless from any
injuries, accidents or damage to or on the Property caused by Purchaser or
Purchaser's inspecting agents during Purchaser's inspections, such
indemnity to survive the termination of this Agreement. Notwithstanding
the foregoing, Purchaser's indemnity shall not cover any loss, claim or
damage to the Property or to any person directly related to environmental
issues or the existence of any hazardous waste or materials on the Phase I
Property or the Remainder, including but not limited to Purchaser's
inspection causing existing hazardous materials to be released or for
causing any existing environmental concern or problem to become
exacerbated, except to the extent any such loss, claim or damage is solely
caused by the negligence of any one or more of Purchaser or its agents or
contractors. With respect to inspecting individual apartment units,
Purchaser shall give Sellers notice (which may be oral or written) of
Purchaser's desire to inspect such units at least one (1) day in advance of
the inspection. Purchaser shall not interfere with any occupants of the
Phase I Property in conducting its inspections. If Purchaser shall not
have terminated this Agreement on or before the expiration of the Review
Period, then Purchaser shall be deemed to have waived its rights to
terminate pursuant to this Section 2.2. Purchaser shall maintain in
confidence all information obtained by Purchaser in connection with the
Phase I Property or the Remainder (provided that Purchaser may share such
information with Purchaser's attorneys, consultants, advisors, prospective
partners, lenders and the like, and as required by requirements of the
Securities and Exchange Commission) and shall not use such information or
permit such information to be used for any purpose other than Purchaser's
decision whether to purchase the Property. Purchaser's obligations under
this Section 2.2 shall survive the termination of this Agreement.
2.3 TITLE AND SURVEY REVIEW. Sellers, at Sellers' sole cost and
expense, shall, within five (5) days after the date hereof, deliver to
Purchaser a commitment for Title Insurance or a Commitment to Insure (the
"COMMITMENT") dated no earlier than the date hereof, issued by Chicago
Title Insurance Company (the "TITLE COMPANY") through its agent American
Title Company, 1330 Summit Avenue, Fort Worth, Texas 76102 (phone: 817-335-
5741, fax: 817-654-9304) (Attn: Ms. JoAnna Cloud) (the "ESCROW AGENT"),
showing (i) title to the Phase I Property to be good and indefeasible and
vested in Verandah Condominiums (hereafter defined) and (ii) title to the
Remainder to be good and indefeasible and vested in the Partnership, both
together with true, correct and legible copies of all items and documents
referred to on Schedule B therein. Seller has delivered to Purchaser a
Survey (the "SURVEY") of the Phase I Property and the Remainder, prepared
by Landes & Associates, Inc., and dated
-8-
October 15, 1996. Purchaser shall have ten (10) business days after
receipt of the Commitment and copies of the exception documents to examine
the condition of title and the Survey and approve or disapprove the same.
Those items listed in the Commitment or shown on the Survey and not
disapproved of by Purchaser or waived by Purchaser's failure to timely
terminate this Agreement as hereinafter provided shall be referred to as
the "PERMITTED EXCEPTIONS". In the event that Purchaser disapproves of all
or any item referred to in the Commitment or shown on the Survey, Sellers
shall have a period of ten (10) business days after receipt of Purchaser's
written notice of title and/or survey objections within which they may, but
without obligation, cure or remove such exceptions provided, however,
Sellers shall, as of the Closing (or at Sellers' expense cause the
Partnership to do the same), pay, discharge, bond around or otherwise cause
to be released any liens which are Cure Items (hereinafter defined). In
the event Sellers fail or refuse to, or at Sellers' expense cause the
Partnership to, cure all of such items within such ten (10) business day
cure period, or in the event that Sellers notify Purchaser (the "CURE
NOTICE") of which items they will cure (the "CURE ITEMS") and which items
they will not cure, Purchaser shall have the right, exercisable within five
(5) days after the earlier of (i) the expiration of said ten (10) business
day cure period or (ii) receipt of Sellers' Cure Notice indicating that
Sellers will not cure all of Purchaser's objections, to terminate this
Agreement, whereupon the parties hereto shall be released from all
obligations hereunder except obligations which expressly survive the
termination hereof. If Purchaser shall not so terminate, Sellers shall
cure, or cause the Partnership to cure, all Cure Items and shall deliver
the Partnership Interests with the Partnership owning title in its existing
condition with the Cure Items having been cured and Purchaser shall, by
failing to timely terminate this Agreement within the time period set forth
above, shall be deemed to have waived any objections to such title which
have not been cured except as to any uncured Cure Item and warranties
contained in the documents of conveyance, and all such waived objections
shall constitute Permitted Exceptions for purposes hereof. In connection
with addressing any of Purchaser's objections as provided for in this
Section 2.3 above, Sellers agree to have the Survey updated to a date not
earlier than the date of Purchaser's comment letter and to correct the
certification so the same is certified in favor of the Partnership,
Purchaser, or any assignee and/or lender of Purchaser identified to Sellers
prior to such time (the Survey currently being certified in favor of
Purchaser's general partner).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
3.1 OWNERSHIP OF ACQUIRED INTERESTS.
3.1.1 Phase I represents and warrants that it owns and has
1% of the Partnership Interests, and at the Closing shall transfer to
Purchaser, good and valid title to the Acquired Interests to be transferred
by it to Purchaser at the Closing, free and clear of all Encumbrances.
None of the Acquired Interests being sold by Phase I is
-9-
subject to any restriction on transfer, except as set forth in the
Partnership Agreement and/or Encumbrances which will be released at
Closing, and no other person or entity has any right, title or interest in
or to such Partnership Interests. Neither Phase I nor any of its
Affiliates has any contract, agreement, arrangement or understanding with
respect to the sale or other disposition of the Partnership Interests to be
transferred by it to Purchaser at the Closing.
3.1.2 M&B represents and warrants that its owns and has an
aggregate of 80.4% of the Partnership Interests, and at the Closing shall
transfer to Purchaser, good and valid title to the Acquired Interests to be
transferred by it to Purchaser at the Closing, free and clear of all
Encumbrances. None of the Acquired Interests being sold by M&B is subject
to any restriction on transfer, except as set forth in the Partnership
Agreement and/or Encumbrances which will be released at Closing, and no
other person or entity has any right, title or interest in or to such
Partnership Interests. Neither M&B nor any of their respective Affiliates
has any contract, agreement, arrangement or understanding with respect to
the sale or other disposition of the Partnership Interests to be
transferred by it to Purchaser at the Closing.
3.1.3. JSDP represents and warrants that it owns and has 1%
of the Partnership Interests, and at the Closing shall transfer to
Purchaser, good and valid title to the Acquired Interests to be transferred
by it to Purchaser at the Closing, free and clear of all Encumbrances.
None of the Acquired Interests being sold by JSDP is subject to any
restriction on transfer, except as set forth in the Partnership Agreement
and/or Encumbrances which will be released at Closing, and no other person
or entity has any right, title or interest in or to such Partnership
Interests. Neither JSDP nor any of its Affiliates has any contract,
agreement, arrangement or understanding with respect to the sale or other
disposition of the Partnership Interests to be transferred by it to
Purchaser at the Closing.
3.1.4 TVA SP represents and warrants that it owns and has
14% of the Partnership Interests, and at the Closing shall transfer to
Purchaser, good and valid title to the Acquired Interests to be transferred
by it to Purchaser at the Closing, free and clear of all Encumbrances.
None of the Acquired Interests being sold by TVA SP is subject to any
restriction on transfer, except as set forth in the Partnership Agreement
and/or Encumbrances which will be released at Closing, and no other person
or entity has any right, title or interest in or to such Partnership
Interests. Neither TVA SP nor any of its Affiliates has any contract,
agreement, arrangement or understanding with respect to the sale or other
disposition of the Partnership Interests to be transferred by it to
Purchaser at the Closing. Donald L. Pilkinton and James E. Sowell are the
sole partners of TVA SP.
3.1.5 Fairgrowth represents and warrants that its owns and
has an aggregate of 3.6% of the Partnership Interests, and at the
-10-
Closing shall transfer to Purchaser, good and valid title to the
Acquired Interests to be transferred by it to Purchaser at the Closing,
free and clear of all Encumbrances. None of the Acquired Interests being
sold by Fairgrowth is subject to any restriction on transfer, except as set
forth in the Partnership Agreement and/or Encumbrances which will be
released at Closing, and no other person or entity has any right, title or
interest in or to such Partnership Interests. Neither M&B nor any of their
respective Affiliates has any contract, agreement, arrangement or
understanding with respect to the sale or other disposition of the
Partnership Interests to be transferred by it to Purchaser at the Closing.
3.2 DUE FORMATION. The OP Unit Sellers represent and warrant as
follows: The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Texas with all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Partnership does not conduct business
or own any property in any jurisdiction other than Texas, the conduct or
ownership of which would require qualification. The Partnership does not
hold any interest in any other security issued by a corporation or other
entity.
3.3 DUE AUTHORIZATION.
3.3.1 Each of the Cash Sellers represents and warrants that
(i) it is a partnership or corporation duly formed or incorporated, validly
existing and in good standing under the laws of the State of its formation
or incorporation and (ii) the execution, delivery and performance of this
Agreement by the Cash Sellers has been duly authorized by all necessary
action on the part of the Cash Sellers, and the Cash Sellers have full
power and authority to execute and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Cash Sellers, and constitutes the legal, valid and binding
obligation of the Cash Sellers, enforceable in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws now or hereafter in
effect relating to creditors' rights generally and (b) general principles
of equity. The execution, delivery and performance of this Agreement and
all other instruments, agreements, certificates and documents contemplated
hereby by the Cash Sellers do not and will not on the Closing Date: (i)
violate or conflict with (A) any term or provision of the partnership
agreement or the certificate of incorporation or bylaws of any Cash Seller;
(B) any decree or judgment of any court or Governmental Authority which may
be applicable to or binding on any Cash Seller or the Partnership Interests
of any Cash Seller, except where any such violation or conflict would not
have a material adverse effect on the Cash Sellers' ability to consummate
the transactions contemplated hereby; (C) any law, statute, rule or
regulation to which any Cash Seller is subject; (ii) violate or conflict
with, or result in a breach of, or constitute a default (or an event of
default) under, or result in the creation of any Encumbrance upon, any of
the Partnership Interests owned by any Cash Seller except for Encumbrances
to be released as of the Closing; or (iii) permit the acceleration of the
maturity of any indebtedness secured by any Partnership
-11-
Interests owned by any Cash Seller, except for Encumbrances which
will be released as of the Closing.
3.3.2 Each of the OP Units Sellers represents and warrants
that (i) it is a partnership or corporation duly formed or incorporated,
validly existing and in good standing under the laws of the State of its
formation or incorporation and (ii) the execution, delivery and performance
of this Agreement by the OP Units Sellers has been duly authorized by all
necessary action on the part of the OP Units Sellers, and the OP Units
Sellers have full power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the OP Units Sellers, and the OP
Units Sellers have not taken any action which would cause this Agreement
not to constitute the legal, valid and binding obligation of the OP Units
Sellers, enforceable in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of
equity. The execution, delivery and performance of this Agreement and all
other instruments, agreements, certificates and documents contemplated
hereby by the OP Units Sellers do not and will not on the Closing Date,
except for Encumbrances which will be released at the Closing: (i) violate
or conflict with (A) any term or provision of the Partnership Agreement of
the Partnership; (B) any term or provision of the partnership agreement or
the certificate of incorporation or bylaws of any OP Units Seller; (C) any
decree or judgment of any court or Governmental Authority which may be
applicable to or binding on any OP Units Seller, the Partnership, the
Partnership Assets or the Partnership Interests, except where any such
violation or conflict would not have a material adverse effect on the OP
Unit Sellers' ability to consummate the transactions contemplated hereby;
(D) any law, statute, rule or regulation to which any OP Units Seller or
the Partnership is subject; (ii) violate or conflict with, or result in a
breach of, or constitute a default (or an event of default) under, or
result in the creation of any Encumbrance upon, any of the Partnership
Assets or the Partnership Interests, except where any such violation or
conflict would not have a material adverse effect on the OP Unit Sellers'
ability to consummate the transactions contemplated hereby; or (iii) permit
the acceleration of the maturity of any indebtedness of the Partnership, or
any indebtedness secured by any of the Partnership Assets or the
Partnership Interests, except for Encumbrances which will be released as of
the Closing.
3.4 NO OTHER AGREEMENT.
3.4.1 The Cash Sellers represent and warrant that neither
the Cash Sellers nor the Partnership nor any of their respective Affiliates
has any contract, agreement, arrangement or understanding, with respect to
the sale or other disposition of the Partnership Interests owned by the
Cash Sellers except as set forth in this Agreement.
-12-
3.4.2 The OP Units Sellers represent and warrant that
neither the OP Units Sellers nor the Partnership nor any of their
respective Affiliates has any contract, agreement, arrangement or
understanding, other than the Verandah Apartments Agreement, with respect
to the sale or other disposition of the Partnership Assets or the
Partnership Interests owned by the OP Units Sellers except as set forth in
this Agreement. No person, firm or corporation or other entity has any
right or option to acquire the Phase I Property, or any part thereof, or
any other Partnership Assets from the Partnership.
3.5 CONSENTS.
3.5.1. The Cash Sellers represent and warrant that as of the
Closing Date, the Cash Sellers shall have obtained all necessary consents
and permissions related to the transfer of the Acquired Interests to be
conveyed by them as herein contemplated and required under any covenant,
agreement, Encumbrance, law or regulation which is applicable to any Cash
Seller, other than consents which would not prevent the transactions from
closing on a timely basis or result in a material liability.
3.5.2 The OP Units Sellers represent and warrant that as of
the Closing Date, the OP Units Sellers shall have obtained all necessary
consents and permissions related to the transfer of the Acquired Interests
to be conveyed by them as herein contemplated and required under any
covenant, agreement, Encumbrance, law or regulation which is applicable to
any OP Units Seller, other than consents which would not prevent the
transactions from closing on a timely basis or result in a material
liability.
3.6 TAXES. As used in this Section 3.6 or in Article XI, "TAX" or
"TAXES" are defined to include all taxes, however denominated, imposed by
any federal, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes
(including any interest, penalties or additions attributable to or imposed
on or with respect to any such taxes), real property gain taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social
security taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes, occupation
taxes, real and personal property taxes, stamp taxes, environmental taxes,
transfer taxes, workers' compensation, Pension Benefit Guaranty Corporation
premiums and other governmental charges, and other obligations of the same
or of a similar nature to any of the foregoing, which the Partnership or
the Sellers are required to pay, withhold or collect, imposed with respect
to the assets or operations of the Partnership. As used in this Section
3.6, "TAX RETURN" is defined as any return, report, information return
schedule or other document (including, without limitation, any related or
supporting information or schedule, such as self-employment schedules and
returns, federal tax Form 1099's for all applicable transactions, property
tax filings, sales and use tax returns, federal and state payroll reports
and federal tax Form 5500's) filed or required to be filed with any
federal, state, local or foreign
-13-
governmental entity or other authority in connection with the
determination, assessment or collection of any Tax or the administration of
any laws, regulations or administrative requirements relating to any Tax.
The OP Units Sellers represent and warrant that:
3.6.1 The Partnership has timely filed (or has had timely
filed on its behalf) or will timely file or cause to be timely filed, all
Tax Returns required by applicable law to be filed by it prior to or as of
the Closing Date. All such Tax Returns and amendments thereto are or will
be true, complete and correct in all respects.
3.6.2 No audit by a Tax authority is pending or threatened
with respect to any Tax Returns filed by, or Taxes due from, the
Partnership. No issue has been raised by any Tax authority in any audit of
the Partnership that if raised with respect to any other period not so
audited could be expected to result in a material proposed deficiency for
any period not so audited. No deficiency or adjustment for any Taxes has
been threatened, proposed, asserted or assessed against the Partnership.
There are no liens for Taxes upon the assets of the Partnership, except
liens for current Taxes not yet due.
3.6.3 The Partnership has not given or been requested to
give any waiver of statutes of limitations relating to the payment of Taxes
or has executed powers of attorney with respect to Tax matters, which will
be outstanding as of the Closing Date.
3.6.4 There are no changes in the tax accounting methods
subject to Section 481(a) of the Internal Revenue Code of 1986, as amended
(the "CODE") which have an ongoing effect on the Partnership.
3.6.5 Each Seller other than Phase I and Fairgrowth is not a
foreign person, foreign corporation, foreign partnership, foreign trust or
foreign estate within the meaning of Section 1445 of the Code.
3.6.6 The Partnership is, and has been since its formation,
classified as a partnership and not as an association taxable as a
corporation for Federal income tax purposes for any and all periods up to
and including the Closing. The IRS has not challenged or threatened to
challenge the status of the Partnership as a partnership and not an
association taxable as a corporation for Federal income tax purposes. All
Tax Returns and other filings have been filed on a basis consistent with
such position for Federal income tax purposes.
3.7 ASSETS, LIABILITIES AND ACTIVITIES OF THE PARTNERSHIP. The OP
Unit Sellers represent and warrant that the Partnership has no liabilities,
contingent or otherwise, other than liabilities which are either (i)
prorated pursuant to Section 1.3 hereof, (ii) otherwise referred to or
dealt with hereunder or under the Verandah Apartments Agreement, (iii) paid
in
-14-
full at the Closing or (iv) which Purchaser would have had or incurred had
it purchased the Phase I Property and the Remainder rather than the
Acquired Interests.
As to Sections 3.8 through 3.19, each of Phase I and the OP Units
Sellers (for purposes of Section Sections 3.8 through 3.19, the term
"Sellers" shall mean only Phase I and the OP Units Sellers"), severally and
not jointly, represents and warrants that:
3.8 ZONING. No Seller has received any written notice or has any
knowledge of any pending or proposed changes or modifications to the
current zoning of the Phase I Property or the Remainder.
3.9 LITIGATION. To each Seller's knowledge, except for the Planned
Donation and except as reflected in the Commitment, there are no existing
or pending litigation, claims, condemnations or sales in lieu thereof, with
respect to any aspect of the Phase I Property or the Remainder or other
Partnership Assets nor, to the knowledge of such Seller, have any such
actions, suits, proceedings or claims been threatened or asserted.
3.10 LEASES. The executed copies of the leases to be made available
for Purchaser's inspection (and to be a Partnership Asset at the Closing)
shall be, to each Seller's knowledge, true and correct, and shall
constitute all leases or occupancy agreements affecting the Phase I
Property. Seller has not received any written notice from any tenant that
the Partnership is in default under any such lease. There are no leases or
occupancy agreements affecting the Remainder. To such Seller's knowledge,
except as set forth on a rent roll for the Phase I Property (the "RENT
ROLL") to be delivered pursuant to Section 2.2, there is not in existence
any condition or fact which with notice or passage of time or both, shall
constitute a material default by either the landlord or by the tenant under
such leases. To each Seller's knowledge: other than as shown on the Rent
Roll, no such tenants shall be entitled to any rebates, rent concessions or
free rent; other than as shown on the Rent Roll, no written commitments
have been made to any tenant for repairs or improvements other than a
general landlord requirement for normal maintenance in the future; no rents
due under any such tenant leases have been assigned, hypothecated or
encumbered other than to the holders of indebtedness to be released at
Closing; and other than as shown on the Rent Roll there are no leasing
fees, leasing commissions, locator fees or similar charges payable to any
person or entity in regard to the Phase I Property.
3.11 COMPLIANCE WITH LAW. No Seller has any knowledge, and has not
received any written notice, of any lack of compliance with applicable
setback requirements and other applicable laws, statutes, ordinances,
codes, covenants, conditions or restrictions of any kind or nature
affecting the Phase I Property or the Remainder, including zoning,
building, health, fire, safety or similar laws and ordinances, orders or
regulations, or the certificate or certificates of occupancy issued or to
be issued for the Phase I Property. Notwithstanding the foregoing, (i) as
to the retaining walls on the Phase I Property, each Seller discloses that
it understands that the same would not be in compliance with applicable
building codes if constructed as of the date hereof in their current
manner; (ii) the Remainder has not, as of this
-15-
date, been platted as a separate lot; and (iii) Sellers make no
representation or warranty as to whether the Phase I Improvements are in
compliance with applicable building codes if constructed as of the date
hereof in their current manner.
3.12 ACCESS/UTILITIES. No Seller has any knowledge of any proposed
termination or reduction of the current access from the Phase I Property to
existing thoroughfares, or of any reduction in or to sewer or other utility
services presently serving the Phase I Property, other than those matters
shown on the Commitment
3.13 ABSENCE OF BANKRUPTCY PROCEEDINGS. There are no attachments,
executions, assignments for the benefit of creditors or voluntary or, to
such Seller's knowledge, involuntary proceedings in bankruptcy pending
against or contemplated by Sellers or the Partnership, and to the knowledge
of each Seller, no such actions have been threatened against it or the
Partnership.
3.14 NO DEFAULTS OR VIOLATIONS. Neither the execution and delivery
of this Agreement by Sellers nor Sellers' performance of their obligations
hereunder will result in a violation or breach of any term or provision or
constitute a default or accelerate the performance required under any other
agreement or document to which any of the Sellers is a party or is
otherwise bound (subject to satisfaction of requirements of any loan
documents evidencing or securing debt which is secured by the Phase I
Property) and to Sellers' knowledge will not constitute a violation of any
law, ruling, regulation or order to which any Seller is subject.
3.15 UTILITIES. No Seller has any knowledge nor has it received any
notice of any proposed reductions or changes to the utilities (including
but not limited to, water, storm and sanitary sewers, gas, electricity and
telephone facilities) currently serving the Phase I Property. Each Seller
has no knowledge of any contingent liabilities, costs, expenses, or
outstanding assessments, including, without limitation, "tap-in fees",
which may be incurred by the Partnership as a condition to the use or
enjoyment of such utilities except for normal fees and expenses, including
deposits, which may become payable in connection with the transfer of
utility services to the Partnership and thereafter to Purchaser.
3.16 ENVIRONMENTAL LAWS. To Seller's knowledge, neither the Phase I
Property, the Remainder, the Partnership nor any Seller are in violation of
any existing, applicable Environmental Law and are not subject to any
existing, pending or threatened investigation or inquiry by any
governmental authority and are not subject to any remedial action or
obligations under any Environmental Law. To Seller's knowledge, no
underground storage tanks are now and were not previously located on the
Phase I Property or the Remainder. To Seller's knowledge, no hazardous
substances or toxic wastes have been disposed of on the Phase I Property or
the Remainder in violation of Environmental Laws. To the knowledge of each
Seller, during the Partnership's ownership of the Phase I Property and
Verandah Condominiums' ownership of the Phase I Property, neither the
Partnership nor Verandah Condominiums have violated any Environmental Law.
-16-
3.17 ABSENCE OF LIENS OR ASSESSMENTS. No Seller has received any
written notice or has any knowledge of any pending improvements, liens or
special assessments to be made against the Phase I Property or the
Remainder by any governmental authority except for any matter set forth in
the Commitment. Neither Sellers, nor to the best of each Seller's
knowledge, any prior owner, have applied for or been granted an
agricultural tax exemption so that the Phase I Property or the Remainder
would be subject to any "roll back" taxes.
3.18 NO UNPAID BILLS OR CLAIMS. As of the Closing Date there will
be no unpaid bills or claims in connection with the construction of or any
repairs to the Phase I Property or the Remainder by or on behalf of the
Partnership.
3.19 CONTRACTS. As of the Closing Date, neither the Partnership nor
the Phase I Property or the Remainder will be obligated under any
employment, maintenance, management or service contract pertaining to the
Phase I Property or the Remainder which cannot be canceled or terminated
upon written notice of thirty (30) days or less, except for the Phase I
Approved Service Contracts and matters reflected in the Commitment.
As used in Sections 3.8 through 3.19, references to a Seller's
knowledge, when used in any context, or in any combination, including where
reference is made to "best" knowledge, shall be limited to the current,
actual knowledge, without investigation or inquiry (except as set forth
below), of Rudy Bratty and Don Pilkinton. Prior to Sellers' execution
hereof, Sellers have provided copies of these representations and
warranties to Mr. Pilkinton, who through his involvement in the original
construction of the Phase I Property and his current involvement as liaison
between Sellers and the current property manager, would be in a position to
have some knowledge regarding the subject of these representations and
warranties. Further, Sellers have provided copies of these representations
and warranties to Sarah Holbrook, the direct property supervisor of the
Phase I Property, and Ms. Holbrook has indicated to Sellers that she
believes these representations and warranties to be true and correct in all
material respects. Neither Mr. Bratty, Mr. Pilkinton nor Ms. Holbrook
shall be deemed to have made any of these representations and warranties in
any personal capacity.
PURCHASER AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE SELLERS DO NOT AND HAVE NOT MADE ANY REPRESENTATIONS OR
WARRANTIES TO PURCHASER REGARDING THE PHASE I PROPERTY.
-17-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Sellers and the Partnership
as follows:
4.1 DUE ORGANIZATION. Purchaser is a limited partnership duly
formed, validly existing and in good standing under the laws of the State
of Delaware, with all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
4.2 DUE AUTHORIZATION. Purchaser represents and warrants that the
execution, delivery and performance of this Agreement by Purchaser has been
duly authorized by all necessary action on the part of Purchaser, and
Purchaser has full power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws now or hereafter in
effect relating to creditors' rights generally and (b) general principles
of equity. The execution, delivery and performance of this Agreement and
all other instruments, agreements, certificates and documents contemplated
hereby by Purchaser do not and will not on the Closing Date: (i) violate or
conflict with (A) any term or provision of the partnership agreement of
Purchaser; (B) any decree or judgment of any court or Governmental
Authority which may be applicable to or binding on Purchaser, the
partnership assets of Purchaser or the partnership interests in Purchaser;
(C) any law, statute, rule or regulation to which Purchaser is subject;
(ii) violate or conflict with, or result in a breach of, or constitute a
default (or an event of default) under, or result in the creation of any
Encumbrance upon, any of the partnership assets of Purchaser or the
partnership interests in Purchaser; or (iii) permit the acceleration of the
maturity of any indebtedness of Purchaser or any indebtedness secured by
any of the partnership assets of Purchaser or the partnership interests in
Purchaser.
4.3 CONSENTS. No notice to, filing with, authorization of,
exemption by, or consent of any person, entity, or public or Governmental
Authority is required in order for Purchaser to consummate the transactions
contemplated hereby.
4.4 REGISTRATION OF SHARES. The Shares which may be issued upon
exchange of OP Units issued pursuant hereto will be issued pursuant to an
effective registration statement under the Securities Act.
-18-
ARTICLE V
COVENANTS OF SELLERS
Each of the Sellers agrees, as to itself only, that from the date
hereof to the Closing Date:
5.1 IMPLEMENTING AGREEMENT. Each of the Sellers will, and shall
cause the Partnership to, take all actions and do all things necessary,
proper, or advisable to fulfill their obligations under this Agreement and
to consummate the transactions contemplated hereby.
5.2 ADDITIONAL ACTIONS. Each of the Sellers will take all
additional steps as may be required to put Purchasers in exclusive
possession and operating control of the assets, properties and business of
the Partnership, including the following actions: if requested by
Purchaser, each Seller will execute and deliver an amendment to, or a
restatement of, the Partnership Agreement, and also amendments, if any, to
the Partnership's fictitious name filings, all as prepared by Purchaser's
legal counsel and in form and substance acceptable to Purchaser and to
Sellers, acting reasonably (it being understood that none of the foregoing
documents will increase Sellers' liabilities beyond the level they would
have been without the execution of such documents).
5.3 PRESERVATION OF PARTNERSHIP INTERESTS. Each Seller agrees that
such Seller will not sell, assign, transfer, pledge or otherwise dispose of
any interest in such Seller's Partnership Interests, except as expressly
contemplated by this Agreement.
5.4 PRESERVATION OF OWNERSHIP OF PHASE I PROPERTY. No Seller
shall, and shall not cause the Partnership to, sell, assign or create any
right, title or interest whatsoever in or to the Phase I Property or the
Remainder or create any lien, Encumbrance or charge thereon, other than
liens or Encumbrances either noted in the Commitment or those which shall
be released at Closing. The foregoing shall not limit or impair the
Partnership's right or ability to enter into leases and service contracts
in the ordinary course of operating the Phase I Property.
5.5 NO DEFAULT. Neither Phase I nor any OP Units Seller shall, and
each of Phase I and the OP Units Sellers shall cause the Partnership not
to, do any act or omit to do any act, or permit any act or omission to act,
which will cause a material breach of any contract, agreement or
understanding to which the Partnership, the Partnership Assets or the
Partnership Interests are subject, the breach of which would have an
adverse effect on the financial condition, operation or prospects of the
Partnership or on any of the Partnership Assets or the Partnership
Interests. M&B shall not take any affitmative action permitting the
Partnership to do any act or omit to do any act, or permit any act or
omission to act, which will cause a material breach of any contract,
agreement or understanding to which the Partnership, the Partnership Assets
or the Partnership Interests are subject, the breach of which would have an
adverse effect on the financial condition, operation or prospects of the
Partnership or on any of the Partnership Assets or the Partnership
Interests.
-19-
5.6 COMPLIANCE WITH LAWS. Phase I and the OP Units Sellers shall
cause the Partnership to, and M&B will not take any affirmative action
which would permit the Partnership to fail to, duly comply with all laws,
statutes, regulations, rules and orders applicable to the business or
operation of the Partnership or as may be required for the valid and
effective transfer and assignment of the Partnership Interests. Each
Seller agrees to promptly notify Purchaser of any fact of which such Seller
becomes aware which would cause the representation set forth in Section
3.16 to become false and of any notice that such Seller receives regarding
the matters set forth in Section 3.16.
5.7 OPERATION OF THE PARTNERSHIP AND THE PHASE I PROPERTY. From
and after the date hereof with respect to the Remainder, and from and after
the time the Partnership acquires ownership of the Phase I Property with
respect to the Phase I Property:
5.7.1 Phase I and the OP Units Sellers shall cause the
Partnership to, and M&B will not take any affirmative action which would
permit the Partnership to fail to, operate and maintain the Phase I
Property through Closing in substantially the same manner as heretofore
operated and maintained, reasonable and ordinary wear and tear and damage
by fire or casualty excepted. Phase I and the OP Units Sellers shall cause
the Partnership to, and M&B will not take any affirmative action which
would permit the Partnership to fail to, make-ready all rental units of the
Phase I Property vacated at least ten (10) days prior to the Closing Date
to a condition consistent with current practices with respect to the Phase
I Property, and as of the Closing all such vacated units shall be ready for
occupancy by a new tenant. In the event any unit vacated at least ten (10)
days prior to the Closing Date has not been made ready for occupancy to a
condition consistent with current practices with respect to the Phase I
Property as of the Closing Date, Purchaser and Sellers shall agree upon an
appropriate amount which shall be credited to the Purchase Price; in the
event Purchaser and Sellers are unable to agree on an appropriate amount,
the Broker (as defined herein) shall determine a fair and reasonable amount
which shall be credited to the Purchase Price. During the term of this
Agreement, Purchaser, or its authorized agents, shall be given reasonable
access to the Phase I Property in order to prepare for an orderly
transition of management thereof.
5.7.2 All permits, licenses and occupancy certificates,
including, but not limited to, all building and use permits and a
certificate of occupancy, which have been obtained on all operations to
date and are currently in effect shall be maintained through Closing, to
the extent required by applicable legal requirements.
5.7.3 Phase I and the OP Unit Sellers shall, and shall cause
the Partnership to, and M&B will not take any affirmative action which
would permit the Partnership to fail to, conduct the Partnership's leasing
activities in the normal course of business and shall execute no new tenant
leases other than on the form of lease currently used with respect to the
Phase I Property or such other form as may be approved by Purchaser, with
such new tenant leases being for a term (including renewals) no longer than
-20-
twelve (12) months past the Closing Date without Purchaser's prior
written approval. Further, none of Phase or the OP Unit Sellers shall, and
shall not permit the Partnership to, nor shall M&B take any affirmative
action which would permit the Partnership to, grant any leasing concessions
which are not currently being offered at the Phase I Property without
Purchaser's prior written consent. Phase I and the OP Units Sellers shall
cause the Partnership to, and M&B will not take any affirmative action
which would permit the Partnership to fail to, quote all rents and leases
without monitored alarms unless the resident contracts individually with
the monitoring service.
5.7.4 Neither Phase I nor any OP Units Seller shall allow
the Partnership to, nor shall M&B take any affirmative action which would
permit the Partnership to, transfer or remove any Phase I Personal
Property or fixtures from the Phase I Property subsequent to the date
hereof, except for purposes of replacement thereof, in which case such
replacements shall be promptly installed prior to Closing and shall be
comparable in quantity and quality to the item(s) being replaced. All
Phase I Personal Property and fixtures, including all HVAC equipment, are
and will be on the Closing Date on the Phase I Property and in
substantially the same condition as currently existing, reasonable and
ordinary wear and tear and damage by fire or casualty excepted.
5.7.5 Phase I and the OP Units Sellers shall satisfy, or
shall cause the Partnership to, and M&B will not take any affirmative
action which would permit the Partnership to fail to, satisfy prior to
Closing, any and all claims for mechanics' or materialmen's liens or other
claims or charges against the Phase I Property or the Remainder or any part
thereof on or prior to Closing; provided, however, Sellers shall have the
right to contest, or cause the Partnership to contest, any such claims so
long as a bond is posted by Sellers and/or other procedures reasonably
acceptable to Purchaser are followed in order to protect the Phase I
Property or the Remainder and so long as no exception therefor appears in
the Phase I Owner's Title Policy described in Section 7.1 herein.
5.7.6 Phase I and the OP Units Sellers shall cause the
Partnership not to, and M&B will not take any affirmative action which
would permit the Partnership to: amend the Partnership Agreement or admit
new partners (except as contemplated herein); incur or assume any long-term
or short-term debt other than long-term or short-term debt discharged at or
prior to Closing; assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person other than obligations discharged at or
prior to Closing; make any loans or advances to any person; mortgage or
pledge any of its assets, tangible or intangible, or create any Encumbrance
thereupon other than Encumbrances; adopt a plan of complete or partial
liquidation, dissolution, consolidation, restructuring, recapitalization or
other reorganization; conduct any business other than as provided in
Section 5.7.1 hereof; sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of business consistent with past
-21-
practices; admit liability, guilt or culpability in connection with
the settlement or compromise of any action, suit or proceeding against or
involving the Partnership or the Phase I Property or the Remainder; or take
any action likely to materially decrease or diminish the value of the Phase
I Property. Nothing herein contained shall limit the ability of the
Partnership to operate the Phase I Property in the ordinary course of
business consistent with past practices.
5.7.7 No Seller shall, Phase I and the OP Units Sellers
shall not permit the Partnership to, and M&B will not take any affirmative
action which would permit the Partnership to, enter into any leases or
agreements with respect to or improve or otherwise physically alter the
Remainder.
5.8 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No Seller shall
intentionally take any action, or intentionally omit to take any action,
which action or omission would have the effect of violating any of the
representations and warranties of such Seller contained in this Agreement.
5.9 NOTICE. Sellers shall provide to Purchaser copies of any
notices of violations referred to in Section 3.16 that the Partnership may
receive following the date hereof.
5.10 CODE VIOLATIONS. Prior to Closing, Phase I and the OP Units
Sellers shall at such Sellers' expense cause the Partnership to make, cure
or correct all violations referred to in Section 3.11 ("CODE VIOLATIONS")
if any such Code Violations were caused by the Partnership or Verandah
Condominiums' actions (the "REQUIREMENTS"). If the cost of the
Requirements (together with similar "Requirements" under the Verandah
Apartments Agreement) exceeds $25,000 (the "MAXIMUM AMOUNT"), then if such
Sellers do not at such Sellers' expense cause the Partnership to cure,
correct or comply with same prior to the Closing Date, Purchaser may either
terminate this Agreement or close this transaction and receive a credit
against the Purchase Price in an amount equal to the difference between the
Maximum Amount and the amount spent by such Sellers or the Partnership (and
the Phase II Partnership) in curing, correcting or complying with the
Requirements. If the cost of correcting, curing or complying with the
Requirements (together with similar "Requirements" under the Verandah
Apartments Agreement) is less than or equal to the Maximum Amount and if
such Sellers or the Partnership (and the Phase II Partnership) shall not at
such Sellers' expense have corrected same prior to Closing, Purchaser shall
be entitled to a credit against of the Purchase Price in an amount equal to
the cost of correcting, curing or complying with the Requirements. The
terms "Code Violations" and "Requirements" as used herein shall not include
or apply to matters referred to in the second sentence of Section 3.11. In
addition, the Maximum Amount shall be the aggregate amount required to be
incurred or otherwise permitted to be charged against such Sellers under
this Agreement and Phase II Partnership under Section 6.2.10 of the
Verandah Apartments Agreement.
5.11 CONDUCT OF VERANDAH CONDOMINIUMS. From the date hereof through
the date the Partnership become the record owner of the Phase I Property,
Phase I and the OP Units
-22-
Phase I and the OP Units Sellers shall cause Verandah Condominiums to
comply with the covenants contained in Section 5.7 hereof.
ARTICLE VI
COVENANTS OF PURCHASER
Purchaser agrees that from the date hereof to the Closing Date:
6.1 IMPLEMENTING AGREEMENT. Purchaser will take all actions and do
all things necessary, proper and advisable to fulfill its obligations under
this Agreement and to consummate the transactions contemplated hereby.
6.2 DISPOSITION OF PHASE I PROPERTY. For a period of five years
from the Closing Date, Purchaser will not, without the written consent of
each of the OP Units Sellers, sell, assign or transfer, other than to an
Affiliate of Purchaser, the Partnership or the Phase I Property. Purchaser
may cause the Partnership to be dissolved and liquidated at Closing, with
the Phase I Property and the Remainder being transferred to Purchaser or an
Affiliate of Purchaser.
6.3 CONFIDENTIALITY. Except as required by any Governmental
Authority, all information supplied to Purchaser pursuant to Section 2.2
shall be maintained in strict confidence by Purchaser, and in the event
that this Agreement is terminated, Purchaser shall make no further use of
such information whatsoever.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF PURCHASER
The obligations of Purchaser under this Agreement are, at the option
of Purchaser, subject to satisfaction of the following conditions on or
before the Closing Date (or such earlier date as may be specified):
7.1 OWNERSHIP OF PHASE I PROPERTY AND THE REMAINDER. The
Partnership shall own the Phase I Property and the Remainder free and clear
of all liens and Encumbrances, other than existing Encumbrances, not less
than one day prior to the expiration of the Review Period. Before the
expiration of the Review Period, Sellers shall provide to Purchaser copies
of all documents evidencing such acquisition. Purchaser shall be
satisfied, in its sole discretion, that the Partnership owns all right,
title and interest to the Phase I Property and the Remainder, subject to
the Permitted Exceptions, and Purchaser shall have received a Commitment,
-23-
updated to the expiration of the Review Period, showing title to the Phase
I Property as vested in the Partnership. Additionally, Sellers shall
deliver to Purchaser a Texas Standard Owner's Policy of Title Insurance
(the "PHASE I OWNER'S TITLE POLICY") at Closing, or the Title Company's
irrevocable commitment to issue the same, in the full amount of the
Purchase Price, subject only to the Permitted Exceptions, insuring the
Partnership as the owner of the Phase I Property and the Remainder.
Purchaser intends to dissolve the Partnership at Closing and transfer the
Phase I Property to Purchaser or an Affiliate of Purchaser. Under the
Verandah Apartments Agreement, Verandah Phase II Partnership, a Texas
limited partnership has committed to furnish Purchaser or its permitted
assignee a policy of title insurance (the "PHASE II OWNER'S TITLE POLICY").
The Phase I Owner's Title Policy and the Phase II Owner's Title Policy
shall be issued as a single policy, insuring that fee simple title to all
of the Phase I Property, the Remainder and the Phase II Property is vested
in Purchaser or its permitted assignee. Sellers shall pay the cost of the
Phase I Owner's Title Policy. In the event that the title company is not
willing to issue the Phase I Owners Title Policy and the Phase II Owners
Title Policy as a single policy, then the Phase I Owners Policy shall be
issued a separate policy at Sellers' expense. If Purchaser elects not to
dissolve the Partnership at Closing, thereby requiring separate issuance of
the Phase I Owners Title Policy and the Phase II Owners Title Policy, then
Purchaser shall be responsible for any incremental premium cause thereby.
Sellers shall, at their sole cost and expense, cause all existing
indebtedness secured by the Phase I Property or the Remainder, to be
released, including the payment of any prepayment premium.
7.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Sellers contained herein shall be true and correct in all
material respects on and as of the date hereof and (except for such changes
as are contemplated herein) on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
7.3 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Each of the Sellers
shall, in all material respects, have performed and complied with all of
their respective obligations, agreements and covenants hereunder prior to
the Closing Date.
7.4 CONDITION OF PROPERTY. The environmental, financial and
physical condition of the Phase I Property and the Remainder shall not
change adversely and materially after the date hereof.
7.5 VERANDAH APARTMENTS AGREEMENT. All conditions precedent to
Purchaser's obligations under the Verandah Apartments Agreement shall have
been satisfied or waived.
7.6 OTHER CLOSING DOCUMENTS. All of the other agreements,
certificates and instruments to be delivered to Purchaser at the Closing
pursuant to Article IX hereof shall have been delivered to Purchaser.
7.7 FAILURE TO CLOSE. In the event that any of the conditions to
Purchaser's obligation to close shall not have been satisfied on or before
the Closing Date (and all of Sellers'
-24-
obligations to close shall have been satisfied on or before the Closing
Date) or in the event that any Seller shall default under this Agreement,
Purchaser may, at its option, and as its sole and exclusive remedy,
terminate this Agreement pursuant to Section 10.1 hereof or seek to enforce
specific performance of this Agreement against any defaulting Seller;
provided however that in the event that as a result of a Seller's voluntary
and intentional actions specific performance is not available as a remedy,
such as if a Seller sells the Acquired Interest to be transferred by it at
the Closing, or any portion thereof, to a third party, Purchaser may seek
damages for breach of this Agreement from such defaulting Seller. If
Purchaser elects to terminate this Agreement as provided above, it is
entitled to a full and immediate refund of all Earnest Money previously
deposited pursuant to the Verandah Apartments Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement are, at the option
of the Sellers, subject to the satisfaction of the following conditions on
or before the Closing Date:
8.1 OWNERSHIP OF PHASE I PROPERTY. The Partnership shall actually
acquire the Phase I Property free and clear of all liens and Encumbrances,
other than the Permitted Exceptions.
8.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Purchaser contained herein shall be true and correct in all
material respects on and as of the date hereof and (except for such changes
as are contemplated herein) on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
8.3 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Purchaser shall have
performed and complied with all of its obligations, agreements and
covenants hereunder in all material respects prior to the Closing Date.
8.4 OTHER AGREEMENTS. All of the other agreements, certificates
and instruments to be delivered to the Sellers at the Closing pursuant to
Article IX hereof shall have been delivered to the Sellers.
8.5 VERANDAH APARTMENTS AGREEMENT. Purchaser shall not be in
default under the Verandah Apartments Agreement.
8.6 FAILURE TO CLOSE. In the event that any of the conditions to
Sellers' obligation to close shall not have been satisfied on or before the
Closing Date (and all of Purchaser's obligations to close shall have been
satisfied on or before the Closing Date), Sellers' sole remedy (subject to
Section 10.2) shall be to terminate this Agreement and Purchaser's
liability shall be limited to the loss of the Earnest Money deposited
pursuant to the Verandah Apartments Agreement, and it shall be the
responsibility of Sellers to enter into such
-25-
agreement with the Phase II Partnership regarding an equitable sharing
thereof. In any event, Purchaser shall pay to Sellers the sum of One
Hundred Dollars ($100.00) as independent consideration for Sellers'
agreement to sell the Partnership Interests to Purchaser. Purchaser and
Sellers acknowledge that such amount shall be liquidated damages with
respect to Purchaser's breach, that Seller's actual damages would be
difficult to ascertain and that such amount is a fair and reasonable
estimate of Seller's damages and is not intended as a penalty.
ARTICLE IX
CLOSING
9.1 CLOSING. The Closing shall be held no later than forty-five
(45) days after the expiration of the Review Period, the actual date being
designated by Purchaser upon at least five (5) business days prior written
notice to Sellers (the "CLOSING DATE"), provided that in any event the
Closing shall be held simultaneously with closing under the Verandah
Apartments Agreement. The Closing shall be held at the Dallas offices of
the Title Company or at such other location as the parties hereto shall
agree.
9.2 DELIVERIES BY THE SELLERS. At the Closing, the Sellers will
deliver to Purchaser the following:
9.2.1 Each Seller will deliver and transfer to Purchaser all
of such Seller's Partnership Interests set forth next to Seller's name on
SCHEDULE 3.1, free and clear of any Encumbrances, adverse claims or
security interests. Each Seller will execute an assignment (the
"PARTNERSHIP INTEREST ASSIGNMENT") in the form of EXHIBIT C attached
hereto, assigning their respective Partnership Interests to Purchaser.
9.2.2 A copy of the Partnership Agreement of the Partnership
certified as of a recent date by the general partners in the Partnership;
9.2.3 The Phase I Owner's Title Policy as described in
Section 7.1 hereof;
9.2.4 An amendment (the "AMENDMENT") to the Certificate of
Limited Partnership of Purchaser evidencing the succession of Purchaser to
the Partnership Interests of Phase I and JSDP;
9.2.5 If a Seller is a partnership, a copy of the
Partnership Agreement of such Seller certified as of a recent date by each
of the parties thereto;
9.2.6 If a Seller is a corporation, (i) a copy of such
Seller's certificate of incorporation certified as of a recent date by the
Secretary of State of the State of such Seller's incorporation, (ii) a copy
of such Seller's bylaws and (iii) a certificate of the
-26-
Secretary of State of the State of such Seller's incorporation as to
the good standing of the corporation; and
9.2.7 Each of the Sellers shall deliver to the Purchaser a
certificate in such form as may be required by the Internal Revenue Service
pursuant to Section 1445 of the Code or the regulations issued pursuant
thereto, certifying as to the nonforeign status of a transferor, with such
certificate to be substantially in the form of EXHIBIT D attached hereto
and made a part hereof for all purposes, or such variation thereof as may
be required by the Internal Revenue Service. In the event that any Seller
fails or refuses to deliver such certificate to Purchaser at the Closing,
such Seller authorizes Purchaser to withhold, and remit to the Internal
Revenue Service, from such Seller's portion of the Purchase Price an amount
equal to ten percent (10%) of such Seller's portion of the Purchase Price.
Notwithstanding the foregoing, if a Seller otherwise delivers a certificate
from the Internal Revenue Service indicating the amount to be withheld and
remitted, Purchaser shall withhold and remit such amount.
9.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser will
deliver to the Sellers the following:
9.3.1 The Purchase Price in the form of cash and OP Units as
described in Section 1.2, as it may be adjusted pursuant to Section 1.3;
9.3.2 The Amendment, duly executed by Purchaser; and
9.3.3 A copy of the Partnership Agreement of Purchaser
certified as of a recent date by the general partners in Purchaser.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time on
or prior to the Closing Date:
(1) With the mutual consent of the Sellers and Purchaser;
(2) By Purchaser, if any Seller has materially breached
this Agreement and Purchaser has not materially breached this Agreement or
if a condition precedent to Purchaser's obligations has failed to be
satisfied; and
(3) By the Sellers, if Purchaser has materially breached
this Agreement and none of the Sellers have materially breached this
Agreement or if a condition precedent to Sellers' obligations has failed to
be satisfied.
-27-
In the event of any termination pursuant to this Section 10.1 (other
than pursuant to Section 10.1(1)), written notice setting forth the reasons
thereof shall forthwith be given by Purchaser, if Purchaser is the
terminating party, to the Sellers, or by the Sellers, if the Sellers are
the terminating party, to Purchaser.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.1 hereof, all obligations of the parties hereunder
shall terminate, except for the obligations and provisions set forth in
Section 2.2, Article XI and Sections 7.7, 8.6 and 12.1 hereof, which shall
survive the termination of this Agreement, and except that no such
termination shall relieve any party from liability for any breach of this
Agreement, except as otherwise provided in Section 7.7 and 8.6.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 SURVIVAL. All warranties, representations, covenants
obligations and agreements contained in this Agreement shall survive the
Closing hereof for a period of six (6) months, and any suit by Purchaser
against Seller with respect to any breach of the foregoing shall be brought
within six (6) months from the Closing Date or any cause of action arising
in connection therewith shall be forever barred; except that with respect
to (i) Sections 3.1, 3.2, 3.3, 3.4, 3.5, 4.1 and 4.2, the representations
and warranties shall survive indefinitely and actions with respect to
breaches thereof may be brought at any time and (ii) Section 3.6 and
Section 3.7, the representations and warranties shall survive, and actions
with respect to breaches thereof may be brought, until 90 days following
the full period of any statute of limitations (as such period may have been
extended by any waiver thereof) applicable to such obligation. In the
event that any Seller becomes aware of any fact that would cause a
representation or warranty to become false or misleading, such Seller shall
give Purchaser notice of the same promptly after becoming aware of such
fact. Unless Purchaser terminates this Agreement within five (5) days of
receiving Sellers' notice, the representations and warranties shall be
deemed modified to reflect such fact.
11.2 INDEMNIFICATION BY THE CASH SELLERS. Subject to the
limitations set forth in Sections 11.1 and 11.4 hereof, each of the Cash
Sellers shall, jointly and severally, indemnify, defend and hold harmless
Purchaser, its officers, directors, Affiliates, successors and assigns
("PURCHASER INDEMNIFIED PARTIES") against any and all Losses incurred or
suffered by any Purchaser Indemnified Party arising out of any of the
following: (a) any breach of or any inaccuracy in any representation or
warranty made by such Cash Seller in Section 3.1, 3.3, 3.4 or 3.5 of this
Agreement, and any breach of or failure by such Cash Seller to perform any
covenant or obligation of such Cash Seller set forth herein; or (b) the
ownership of its Partnership Interests prior to the Closing Date.
-28-
11.3 INDEMNIFICATION BY THE OP UNITS SELLERS. Each of the OP Units
Sellers shall, jointly and severally, indemnify, defend and hold harmless
Purchaser Indemnified Parties against any and all Losses incurred or
suffered by any Purchaser Indemnified Party arising out of any of the
following: (a) any breach of or any inaccuracy in any representation or
warranty made by any OP Units Seller pursuant to this Agreement, and any
breach of or failure by any OP Units Seller to perform any covenant or
obligation of the Sellers set forth in this Agreement; (b) the ownership of
its Partnership Interests prior to the Closing Date or (c) Taxes or
liabilities attributable to taxable income of the Partnership, any Seller
or the Phase I Property otherwise allocable to periods (or any portion
thereof) on or prior to the Closing Date.
11.4 LIMITATION ON LIABILITY. Purchaser agrees that, except with
respect to breaches of the representation and warranties contained in
Section 3.1 through 3.7 hereof (i) Sellers' liability for breaches of
representations, warranties, covenants, obligations and agreements
contained herein and the liability of Phase II Partnership in the Verandah
Apartments Agreement shall be limited to an aggregate amount of $200,000
and (ii) no Seller shall be liable for punitive, special, consequential,
speculative, lost profits or any other damages with respect to breaches of
any representation, warranty, covenant, obligation or agreement of such
Seller contained herein.
11.5 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify,
defend and hold harmless the Sellers from any and all Losses incurred or
suffered by any of the Sellers arising out of any of the following: (a)
any breach of or any inaccuracy in any representation or warranty made by
Purchaser pursuant to this Agreement, and any breach of or failure by
Purchaser to perform any covenant or obligation of Purchaser set out in
this Agreement; or (b) the business or operation of the Partnership from
and after the Closing Date.
ARTICLE XII
MISCELLANEOUS
12.1 EXPENSES. Each party shall bear its own expenses and costs in
connection with this Agreement and the transactions contemplated thereby.
The OP Units Sellers shall pay all taxes, assessments, charges and
fees, if any, imposed by the United States or any state or political
subdivision thereof, required to be paid in connection with the transfer
and assignment of the Partnership Interests.
12.2 AMENDMENT. This Agreement may be amended, modified or
supplemented but only in writing signed by all of the parties hereto.
12.3 BROKERS. Each of the parties hereto represents that, other
than Kendall-Miller Realty Partners, Inc. (the "BROKERS") and Curtis
Walker, no broker or finder has acted for it in connection with this
Agreement or the transactions contemplated hereby and that no broker
-29-
or finder is entitled to any brokerage or finder's fee or other commission
based on agreements, arrangements or understandings made by it. Sellers
will pay all costs and commissions owed to the Broker in connection with
this Agreement and the Verandah Apartments Agreement. The parties
acknowledge that Curtis Walker is an employee of Purchaser, that he
represents the Purchaser only in connection with this transaction and owes
no fiduciary duties to the Sellers.
12.4 NOTICES. All notices, requests, instructions, documents or
other communications hereunder shall be in writing and shall be deemed to
have been given, (i) when received if given in person, (ii) on the date of
acknowledgment of receipt if sent by telex, facsimile or other wire
transmission or (iii) three days after being deposited in the U.S. mail,
certified or registered mail, postage prepaid:
-30-
If to any of the Sellers, addressed as follows:
Bratty & Partners
4950 Yonge Street
Suite 2000
North York, Ontario, Canada M2N 6K1
Attention: Mr. Rudy Bratty
Phone: 416-226-0660
Facsimile: 416-226-6395
and to:
Jim Sowell Company L.P.
3131 McKinney, Suite 200
Dallas Texas 75204
Attention: Keith Martin
With copies to:
Geary, Porter & Donovan, P.C.
16475 North Dallas Parkway
Suite 550
Dallas, Texas 75248
Attention: David Tatum
Phone: 972-733-2207
Facsimile: 972-931-9028
and to:
Steven E. Smathers
3131 McKinney, Suite 200
Dallas, Texas 75204
If to Purchaser:
Amli Residential Properties, L.P.
125 S. Wacker Drive
Suite 3100
Chicago, Illinois 60606
Attention: Mr. Fred Shapiro
Telephone: (312) 984-5039
Facsimile: (312) 443-0909
-31-
With a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Martin G. Rosenstein
Telephone: (312) 701-7159
Facsimile: (312) 701-7711
and to:
Smith, Stern & Friedman, P.C.
8144 Walnut Hill Lane
Suite 1100, LB 103
Dallas, Texas 75231-4337
Attention: Clifford L. Friedman
Telephone: (214) 739-0606
Facsimile: (214) 739-0608
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
12.5 WAIVERS. The failure of a party hereto at any time or times
to require performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No waiver by a party of any
condition or of any breach of any term, covenant, representation or
warranty contained in this Agreement shall be effective unless in writing,
and no waiver in any one or more instances shall be deemed to be a further
or continuing waiver of any such condition or breach in other instances or
a waiver of any other condition or breach of any other term, covenant,
representation or warranty.
12.6 COUNTERPARTS. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.7 HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
12.8 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Texas.
12.9 ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
-32-
No party to this Agreement may assign any of its rights or obligations
under this Agreement without the prior consent of the other parties, except
that the rights and obligations of Purchaser may be assigned by Purchaser
to any of Purchaser's Affiliates; provided, that the rights and obligations
of Purchaser under the Verandah Apartments Agreement are assigned
simultaneously to such Affiliate; provided, further, that no such transfer
shall relieve Purchaser of its obligations hereunder.
12.10 OTHER INSTRUMENTS. Upon the reasonable request of Purchaser,
the Sellers will, on and after the Closing Date, execute and deliver to
Purchaser such other documents, releases, assignments and other instruments
as may be required to effectuate completely the transfer and assignment to
Purchaser of, and to vest fully in Purchaser title to, each of the Acquired
Interests.
12.11 ENTIRE AGREEMENT. This Agreement and the Verandah Apartments
Agreement constitute the entire agreement and understanding of the parties
hereto with respect to subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, with respect to the
subject matter hereof and are not intended to confer upon any other person
any rights or remedies hereunder.
12.12 VERANDAH APARTMENTS AGREEMENT. Pursuant to the Verandah
Apartments Agreement, Purchaser has agreed to acquire the Phase II
Property. Purchaser agrees that any default by Purchaser under the
Verandah Apartments Agreement shall be deemed a default by Purchaser under
this Agreement, and any default by Purchaser under this Agreement shall be
deemed a default by Purchaser under the Verandah Apartments Agreement.
Sellers agrees that any default by the Phase II Partnership under the
Verandah Apartments Agreement shall be deemed a default by Sellers under
this Agreement, and any default by Sellers under this Agreement shall be
deemed a default by the Phase II Partnership under the Verandah Apartments
Agreement. In the event that Verandah Apartments Agreement is terminated
or otherwise fails to close for any reason other than default by the Phase
II Partnership thereunder, Sellers shall have the right to terminate this
Agreement. In the event that the Verandah Apartments Agreement is
terminated for any reason other than default by the Purchaser thereunder,
Purchaser shall have the right to terminate this Agreement.
12.13 RISK OF LOSS. Risk of Loss until the Closing shall be borne
by Sellers. In the event that damage, loss or destruction of the Phase I
Property or the Remainder or any part thereof, in an amount equal to
$250,000 or more, by fire or other casualty, or through condemnation or
sale in lieu thereof, occurs prior to the actual closing of the
transactions contemplated hereby, the Purchaser shall, at its option, elect
one of the following:
12.13.1 To terminate this Agreement.
12.13.2 To close the transactions contemplated hereby
and receive a credit against the cash portion of the Purchase Price due at
Closing in the amount of all insurance or condemnation proceeds payable as
a result of such casualty loss or
-33-
condemnation and any deductible applicable to such insurance coverage. If
the Purchaser elects to proceed under this Section 12.13.2 and the Review
Period has expired, then Purchaser shall have the right to settle any claim
with the applicable insurance company or condemning authority, subject to
Sellers' approval of any proposed settlement, Sellers' approval not to be
unreasonably withheld or delayed. Other than receiving a credit against
the cash portion of the purchase Price due at Closing as provided in this
Section 12.13.2, there shall be no reduction in the Purchase Price by
reason of such damage or condemnation.
Sellers shall cause the Partnership to maintain the current insurance
coverage in force for the Property in full force and effect through the
Closing Date. In the event that the damage, loss or destruction shall be
in an amount of less than $250,000.00, the Purchaser shall be required to
elect option 12.13.2 above. Purchaser shall be deemed to have elected to
proceed under option 12.13.2 above if Purchaser fails to send written
notice of Purchaser's election to Sellers within five (5) business days
after Purchaser learns of the casualty or condemnation.
-34-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
AMLI RESIDENTIAL PROPERTIES, L.P.
By: /s/ FRED SHAPIRO
------------------------------
Name: Fred Shapiro
------------------------------
Title: Vice President
------------------------------
VERANDAH HOLDINGS PHAS I INC.
By: /s/ R.P. BRATTY
------------------------------
Name: R.P. Bratty
------------------------------
Title:
------------------------------
JSDP, INC.
By: /s/ DAN PILKINTON
------------------------------
Name: Dan Pilkinton
------------------------------
Title: President
------------------------------
M&B HOLDINGS GENERAL
PARTNERSHIP
By: /s/ R.P. BRATTY
------------------------------
Name: R.P. Bratty
------------------------------
Title:
------------------------------
FAIRGROWTH INTERNATIONAL
By: /s/ THOMAS WU
------------------------------
Name: Thomas Wu
------------------------------
Title: President
------------------------------
TVA SP PARTNERSHIP
By: /s/ DONALD L. PILKINTON
------------------------------
Name: Donald L. Pilkinton
------------------------------
Title: General Partner
------------------------------
By: /s/ JAMES E. SOWELL
------------------------------
Name: James E. Partner
------------------------------
Title: General Manager
------------------------------
FIRST AMENDMENT TO AGREEMENT REGARDING
ACQUISITION OF PARTNERSHIP INTERESTS
THIS FIRST AMENDMENT is made and entered into by and between AMLI
RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership (hereinafter
referred to as "Purchaser") and Verandah Holdings Phase I, Inc., an
Ontario, Canada corporation, JSDP, Inc., a Texas corporation, M&B Holdings
General Partnership, a Texas general partnership, Fairgrowth International,
Inc., an Ontario, Canada corporation, and TVA SP Partnership, a Texas
general partnership (hereinafter collectively referred to as "Sellers") and
is dated as of the 16th day of January, 1997.
W I T N E S S E T H:
--------------------
Purchaser and Sellers entered into that certain Agreement Regarding
Acquisition of Partnership Interests (the "Agreement") dated as of December
___, 1996 [sic] and are desirous of amending the same (all terms not
defined herein shall have the same meaning as set forth in the Agreement).
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the parties hereinafter set forth, the receipt and
sufficiency of which consideration are hereby acknowledged, it is hereby
agreed as follows:
1. DATE OF AGREEMENT. The date of the Agreement shall be December
20, 1996.
2. THE PROPERTY. The Remainder was conveyed by the Partnership to
Verandah Condominiums by warranty deed dated November 11, 1996 and recorded
at Volume 12611, Page 2173, Real Property Records of Tarrant County, Texas.
The Planned Donation has occurred with the Release Parcel having been
conveyed to the City of Arlington, Texas on November 11, 1996, by warranty
deed of even date and recorded at Volume 12635, Page 1851, Real Property
Records of Tarrant County, Texas. Purchaser hereby consents to such
conveyances. The term "Phase I Land" shall include the Remainder, and all
other references to the Remainder are hereby deleted. Seller commenced the
process of causing the Phase I Land (which definition includes the
Remainder) to be replatted so that the Phase I Land (including the
Remainder) is platted as a single block. As currently platted, the Phase I
Land (including the Remainder) and the Release Parcel are platted as a
single block. Seller may, but is not obligated to, continue such
replatting efforts, or Seller may cease all work in connection therewith.
3. OP UNITS SELLERS' GUARANTY. The form of the guaranty has been
agreed to by the OP Units Sellers, Purchasers and Purchaser's lender.
4. REVIEW PERIOD. The Review Period shall expire on February 28,
1997.
5. CLOSING DATE. The Closing Date shall be held no later than
March 31, 1997, the actual date being designated by Purchaser as provided
in Section 9.1 of the Agreement and in any event simultaneous with the
closing under the Verandah Apartments Agreement.
Page 1
6. EXECUTION. This Amendment may be executed in any number of
counterparts, all of which shall have the effect of a single document. A
copy of an executed counterpart delivered by telecopy transmission shall
have the same effect as an original.
7. FULL FORCE AND EFFECT. Except as amended and modified hereby,
the Agreement is, and shall be, in full force and effect.
PURCHASER:
---------
AMLI RESIDENTIAL PROPERTIES, L.P., a
Delaware limited partnership
By: AMLI RESIDENTIAL PROPERTIES
TRUST, a Maryland real estate
investment trust, its
general partner
By: /s/ FRED SHAPIRO
------------------------------
Printed
Name: Fred Shapiro
------------------------------
Title: Vice President
------------------------------
SELLERS:
-------
VERANDAH HOLDINGS PHASE I, INC., an
Ontario, Canada corporation
By: /s/ R.P. BRATTY
------------------------------
Printed
Name: R.P. Bratty
------------------------------
Title:
------------------------------
JSDP, INC., a Texas corporation
By: /s/ DONALD L. PILKINTON
------------------------------
Printed
Name:
------------------------------
Title:
------------------------------
Page 2
[Sellers' signatures continued on the following page]
[Sellers' signatures continued]
M&B HOLDINGS GENERAL PARTNERSHIP, a
Texas general corporation
By: Authorized Signatory
------------------------------
Printed
Name:
------------------------------
Title:
------------------------------
FAIRGROWTH INTERNATIONAL, INC., an
Ontario, Canada corporation
By: Authorized Signatory
------------------------------
Printed
Name:
------------------------------
Title: President
------------------------------
TVA SP PARTNERSHIP, a Texas general
partnership
By: /s/ DONALD L. PILKINTON
------------------------------
Donald L. Pilkinton
By: /s/ JAMES E. SOWELL
------------------------------
James E. Sowell
Page 3
SECOND AMENDMENT TO AGREEMENT REGARDING
ACQUISITION OF PARTNERSHIP INTERESTS
THIS SECOND AMENDMENT is made and entered into by and between AMLI
RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership (hereinafter
referred to as "Purchaser") and Verandah Holdings Phase I, Inc., an
Ontario, Canada corporation, JSDP, Inc., a Texas corporation, M&B Holdings
General Partnership, a Texas general partnership, Fairgrowth International,
Inc., an Ontario, Canada corporation, and TVA SP Partnership, a Texas
general partnership (hereinafter collectively referred to as "Sellers") and
is dated as of the 28th day of February, 1997.
W I T N E S S E T H:
--------------------
Purchaser and Sellers entered into that certain Agreement Regarding
Acquisition of Partnership Interests dated as of December 20, 1996, as
amended by First Amendment dated as of January 16, 1997 (as amended, the
"Agreement"), and are desirous of further amending the same (all terms not
defined herein shall have the same meaning as set forth in the Agreement).
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the parties hereinafter set forth, the receipt and
sufficiency of which consideration are hereby acknowledged, it is hereby
agreed as follows:
1. REVIEW PERIOD. The Review Period shall expire on March 6,
1997.
2. CREDIT FOR CODE ISSUES. At Closing, Purchaser shall receive a
credit against the Purchase Price in the amount of Twenty Three Thousand,
Seven Hundred and No/100 Dollars ($23,700.00). such credit shall satisfy
in full Sellers' obligations under Section 5.10 of the Agreement and said
Section 5.10 shall be deemed deleted from the Agreement. Such credit shall
be allocated Three Thousand, Five Hundred Fifty Five and No/100 Dollars
($3,555.00) to the OP Units Sellers and Twenty Thousand, One Hundred Forty
Five and No/100 Dollars ($20,125.00) to the Cash Sellers. As to the OP
Units Sellers, the figure of $1,053,000.00 set forth in Section 1.2.2 of
the Agreement shall be reduced by Three Thousand, Five Hundred Fifty Five
and No/100 Dollars ($3,555.00).
3. EXECUTION. This Amendment may be executed in any number of
counterparts, all of which shall have the effect of a single document. A
copy of an executed counterpart delivered by telecopy transmission shall
have the same effect as an original.
4. FULL FORCE AND EFFECT. Except as amended and modified hereby,
the Agreement is, and shall be, in full force and effect.
The rest of this page is intentionally left blank.
Signature pages to follow.
Page 1
PURCHASER: SELLERS CONTINUED:
AMLI RESIDENTIAL PROPERTIES, L.P., M&B HOLDINGS GENERAL PARTNERSHIP,
a Delaware Limited partnership a Texas general partnership
By: AMLI RESIDENTIAL PROPERTIES By: /s/ R.P. BRATTY
TRUST, A Maryland real estate -----------------------
investment trust, its general Printed
partner Name: R.P. Bratty
-----------------------
By: /s/ FRED SHAPIRO Title: Director
----------------------- -----------------------
Printed
Name: Fred Shapiro
----------------------- FAIRGROWTH INTERNATIONAL, INC.
Title: Vice President an Ontario, Canada Corporation
By: /s/ THOMAS WU
-----------------------
VERANDAH HOLDINGS PHASE I, INC., Printed
an Ontario, Canada corporation Name: Thomas Wu
-----------------------
By: /s/ R.P. BRATTY Title: President
----------------------- -----------------------
Printed
Name: R.P. Bratty
----------------------- TVA SP PARTNERSHIP, a Texas
Title: Director general partnership
-----------------------
By: /s/ DONALD L. PILKINTON
-----------------------
Donald L. Pilkinton
JSDP, INC., A Texas corporation
By:
By: /s/ DONALD L. PILKINTON -----------------------
----------------------- James E. Sowell
Printed
Name: Donald L. Pilkinton
-----------------------
Title: President
-----------------------
Page 2
EXHIBIT 99.4
- ------------
(Form S-3)
SALES AGREEMENT
---------------
THIS SALES AGREEMENT, made and entered into on this 29th day of
February, 1996, among Virgil R. Williams and James N. Williams as Seller
(hereinafter referred to as "Seller"), EASLAN CAPITAL OF ATLANTA, INC., as
purchaser (hereinafter referred to a s "Purchaser"), and Belkofer &
Company, Inc. and Williams-Adair Realty Corp. as licensed real estate
brokers in the state of Georgia (hereinafter referred to as "Brokers").
WITNESSETH
FOR AND CONSIDERATION of the sum of Twenty Five Thousand and No/100
Dollars ($25,000) in check paid to an interest bearing account of Belkofer
& Company, Inc. within three (3) business days of Seller's execution, as
Purchaser's Earnest Money and in further consideration of the covenants and
agreements contained in this Agreement, IT IS HEREBY COVENANTED AND AGREED
among the parties hereto as follows:
1. PURCHASE AND SALE. Upon all the terms and conditions
hereinafter set forth, Seller shall sell and Purchaser shall purchase from
Seller all that tract or parcel of land being approximately 21,584 acres
and 40 rental units being more particularly described in Exhibit "A"
attached hereto and incorporated herein by reference, together with any and
all improvements and appurtenances located thereon; said land, together
with such improvements, is hereinafter referred to as "the Property".
2. PURCHASE PRICE. The purchase price of the Property shall be
Four Million Three Hundred Thousand dollars ($4,300,000), subject to
adjustment as hereinafter provided.
3. SURVEY. Purchaser, at Purchaser's sole cost and expense, may
cause a survey of the Property to be prepared by a land surveyor registered
under the laws of Georgia and designated by Purchaser. The survey shall
show the location of the flood plain and the acreage of the Property to the
nearest one-thousandth (1/1000th) of an acre. The description of the
Property used in Seller's Limited Warranty Deed conveying the Property to
Purchaser shall be the legal description contained in Exhibit "A" and, in
addition, Seller shall convey title to the Property to Purchaser pursuant
to a Quitclaim Deed according to such new survey legal description, if
applicable.
4. METHOD OF PAYMENT. The Purchase Price shall be paid in cash,
good funds or cashier's check at closing, or Purchaser agrees that, upon
request by Seller, Purchaser will cooperate with Seller in such a manner as
to permit Seller to convey the Property as part of a tax free exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended;
provided, however, that Purchaser shall not incur any
5. TITLE. Seller warrants that Seller presently has title to the
Property, and, at the time the sale is closed, Seller shall convey good and
marketable title
1
to the Property to Purchaser by Limited Warranty Deed subject
only to the following exceptions (the "Permitted Title Exceptions"); (1)
Zoning ordinances affecting the Property; and (2) general utility easements
serving the Property. Good and marketable title is hereby defined as title
which is insurable by a national title insurance company at its standard
rates and without exception. Thirty (30) days prior to closing, Purchaser
shall furnish Seller with a written statement of objections affecting the
marketability of said title. Seller shall have a reasonable time (not to
exceed twenty (20) days) after receipt of such objections within which to
satisfy all valid objections. Seller shall use Seller's best efforts to
satisfy such valid objections within said time. If Seller fails to satisfy
such valid objections within said time, then, at the option of the
Purchaser, to be exercised by written notice to Seller, Purchaser may (i)
accept the title to the Property with such defects and close, or (ii) all
Earnest Money shall be returned to Purchaser and Purchaser may exercise its
rights as provided in Paragraph 7.
6. CLOSING. This sale shall be closed at the offices of
Purchaser's attorney in Atlanta, Georgia, at a date and time selected by
Purchaser, on or before May 30, 1996 (i.e., "date of Closing" or
"Closing"). Notwithstanding the above, at the option of Purchaser,
exercisable by written notice to Seller, the Closing date may be extended
for thirty (30) calendar days for an additional Twenty Five Thousand
Dollars ($25,000) in non-refundable earnest money. Said money shall be
applied to Purchase Price. At Closing hereunder, the Property shall be
conveyed free and clear of all liens, encumbrances, restrictions,
assessments, and encroachments, except Permitted Title Exceptions. At
Closing hereunder, Seller shall convey the Property to Purchaser by Limited
Warranty Deed, which Deed shall be duly witnessed and notarized for
recording in the State of Georgia. Possession of the Property shall be
granted to Purchaser at Closing. Seller shall pay the Georgia transfer tax
on said Limited Warranty Deed. Seller and Purchaser shall prorate between
themselves as of the date of Closing, all real estate taxes on the
Property, provided, however, that any and all assessments for work
completed prior to Closing shall not be prorated, but shall be paid by
Seller at Closing.
7. DEFAULT. If the purchase and sale of the Property contemplated
hereby is not consummated in accordance with the terms and conditions of
this Agreement due to circumstances or conditions which constitute a
default by Purchaser hereunder, the Earnest Money then, on deposit, shall
be delivered to Seller as full liquidated damages for such default, the
parties acknowledging that Seller's actual damages in the event of a
default by Purchaser hereunder will be difficult or impossible to
accurately estimate, and the parties expressly acknowledge that retention
of the Earnest Money, and any interest earned thereon, is intended not as a
penalty, but as full liquidated damages, and a reasonable pre-estimate of
the probable loss resulting from such a default. The parties expressly
acknowledge that the delivery of the Earnest Money to Seller shall be the
sole and exclusive remedy of Seller by reason of any default by Purchaser
hereunder, and Seller shall not sue Purchaser for specific
2
performance of this Agreement or to prove that Seller's actual
damages exceed the Earnest Money which is herein provided. If sale of the
Property contemplated hereby is not consummated in accordance with the
terms and conditions of this Agreement due to any circumstances or
conditions other than a default by Purchaser hereunder, the Earnest Money
shall be refunded to Purchaser promptly upon request, and Purchaser may
exercise such rights and remedies as may be provided for in this Agreement
or as may be provided for or allowed by law or in equity, including but not
limited to specific performance.
8. AGREEMENTS AFFECTING THE PROPERTY. Seller hereby covenants and
agrees with Purchaser that, so long as this Agreement remains in full force
and effect, Seller shall not sell, rent, lease, convey (absolutely or as
security), grant a security interest in, or otherwise encumber or dispose
of, any portion of the Property or any interest or rights therein, without
the express consent of Purchaser. Said consent not to be unreasonably
withheld.
9. CONDITION OF PROPERTY. Commencing upon the date of this
Agreement and extending through Closing hereunder, the Property shall
remain in the same condition as on the date hereof, except, however, for
natural wear and tear, condemnation, acts of God and occurrences over which
Seller has no control. Except as may be necessary for the examination
provided in Paragraph 10, neither Seller nor Purchaser shall in any manner
disturb, cut or remove any trees, shrubs, bushes or dirt from the Property
during said period, and the risk of loss for any casualty to said Property
shall remain upon Seller.
10. ACCESS TO EXAMINATION OF THE PROPERTY. Subject to the
provision of Paragraph 9 above, Purchaser, personally or through agents,
employees, or contractors, may go upon the Property at any time or from
time to time prior to the Closing to make boundary line or topographical
surveys and to conduct such soil, engineering, environmental, other tests,
investigations, and analyses of the Property as Purchaser deems desirable,
provided, same is done in a reasonable manner consistent with good
engineering, surveying or similar practices. Purchaser hereby indemnifies
and saves Seller harmless from any claim liability, cost, or expenses
(including attorneys fees), that may arise against Seller by reason of
Purchaser's physical access to the Property for such surveys, tests,
analyses and investigations.
11. BROKERAGE DISCLOSURE AND COMMISSION. Seller and Purchaser each
represent and warrant to the other that neither has employed, retained or
consulted any broker, agent or other finder with respect to the Property or
in carrying on negotiations relative to this Agreement except as provided
for below, and Seller and Purchaser shall indemnify and hold the other
harmless from and against any and all claims, demands, causes or action,
debts, liabilities, judgments and damages (including costs and reasonable
attorneys fees incurred in connection with the enforcement of this
indemnity) which may be asserted or recovered against the other on account
of any brokerage fee,
3
commission or other compensation arising in breach of this
representation and warranty. Seller and Purchaser hereby acknowledge that
Williams-Adair Realty Corp. has acted as agent for Seller and Belkofer &
Company, Inc. has acted as agent for Purchaser. Seller hereby agrees that
all commissions due Brokers shall be paid by Seller at Closing. Seller
shall pay a commission of six percent (6%) of the total purchase price and
said commission shall be divided equally between Belkofer & Company, Inc.
and Williams-Adair Realty Corp. Seller acknowledges that Easlan Capital of
Atlanta, Inc. is a licensed real estate broker acting as a principal in
this transaction. The commission shall be earned and paid if and only if
the closing of this sale actually occurs.
12. GENERAL WARRANTIES. Seller warrants and represents that:
(a) Seller knows of no public improvements which have been
ordered to be made and/or which have not hereto been completed, assessed
and paid for;
(b) There is no litigation or proceeding pending, or to
Seller's knowledge threatened, against Seller, or against or relating to
all or any part of the Property, nor does Seller know or have reasonable
grounds to know of any basis for any such action.
(c) Seller has no knowledge of any pending or threatening
condemnation or eminent domain proceedings which would affect any of the
Property; and
(d) Seller is the owner in fee simple of the Property and has
full right, power and authority to enter into this Agreement and to execute
all documents required hereby to be executed by the Seller herein.
13. FEASIBILITY. Notwithstanding anything contained herein, this
Agreement and the obligations of Purchaser hereunder are conditioned upon
Purchaser determining the feasibility of his proposed development or
intended purpose for the property. Purchaser shall have Sixty (60) days
from the date of Contract execution to investigate the feasibility of
utilizing the Property for the intended purpose or proposed development.
If Purchaser determines, in Purchaser's sole discretion, that the Property
is not suitable to his proposed development, or intended purpose, then he
shall notify Seller on or before the expiration of said Sixty (60) day
period and all Earnest Money together with interest earned thereon shall be
refunded to Purchaser and this agreement shall become null and void and
neither of the parties shall thereafter have any further obligation to one
another. Purchaser shall turn over to Seller all surveys, plans, studies
and/or reports that he has in his possession relating to the Property. If
no such notice shall be timely given by Purchaser as provided above, then
Purchaser shall be deemed to have waived his right to terminate this
agreement as provided, in this paragraph, and the Earnest Money shall
become non-refundable except for Seller's default or as otherwise provided
in this agreement. Should Purchaser close on said Property, than all
Earnest Money paid to date shall be credited against the Purchase Price.
4
14. CONDEMNATION. In the event of the institution of any
proceedings, judicial, administrative or otherwise, which shall relate to
the proposed taking of any portion of the Property by eminent domain prior
to Closing, Purchaser shall have the right and option to terminate this
Agreement at any time prior to Closing by giving the Seller notice to such
effect at any time after Purchaser's receipt of any such occurrence or
occurrences. Seller hereby agrees to furnish Purchaser written
notification in respect thereof within forty eight (48) hours from the
Seller's receipt of any such notification. Should Purchaser so terminate
this Agreement, then all Ernest Money paid by Purchaser hereunder shall
immediately be returned to Purchaser and, thereupon, the parties hereto
shall be released from their respective obligations and liabilities
hereunder. In the event Purchaser does not elect to terminate this
agreement because of such taking, at the Closing hereof, Seller shall
assign to Purchaser all of Seller's right, title and interest in any award
arising out of such taking.
15. MISCELLANEOUS DOCUMENTS. contemporaneously with the execution
by Seller, Seller agrees to deliver to Purchaser a copy of any title
policy, survey and any and all letters from municipal or county authorities
concerning or relating to right of ways, zoning, curb cuts, utilities,
assessments, rock and soil tests and taxes affecting the Property which are
in the possession of Seller.
16. HEIRS AND ASSIGNS. The Agreement shall bind and inure to the
benefit of Seller and Purchaser and their respective heirs, executors,
legal representatives, successors, and assigns.
17. NOTICES. Any notice required or permitted to be given
hereunder shall be sufficient if in writing and sent by U.S. Certified
Mail, prepaid postage, to the party being given such notice at the
following addresses:
SELLER: SELLER'S BROKER:
Mr. Virgil R. Williams Forrest Adair Corp.
Mr. James N. Williams Williams-Adair Realty Place
c/o Forrest Adair 2056 West Park
Williams-Adair Realty Corp. Suite A
Suite A Stone Mountain, GA 30087
Stone Mountain, GA 30087 Telecopy No: (404) 469-3089
Telecopy No: (404) 469-3089
PURCHASER: PURCHASER'S BROKER:
Easlan Capital of
Atlanta, Inc. George W. Belkofer
1995 North Park Place Belkofer & Company, Inc.
Suite 100 2700 Delk Road
Atlanta, GA 30339 Suite 100
Attn: Kent S. Levenson Marietta, GA 30067
Telecopy No: (770) 952-4670 Telecopy No: (770) 952-5922
5
Any party may change such address by giving the other parties hereto notice
of such change of address. Notice given as hereinabove provided shall be
deemed received by the party to whom it is addressed on the calendar day
following the date on which said notice is deposited in the mail.
18. MISCELLANEOUS. If all or any portion of any of the provisions of
this Agreement shall be declared invalid by laws applicable thereto, then
the performance of said offending provision shall be excused by the parties
hereto; provided, however, that if the performances of such excused
provision materially affect any aspect of this transaction, then the party
hereto for whose benefit such excused provision was inserted in the
Agreement shall have the right, exercisable by written notice given to the
other party within ten (10) days after such provision is so declared
invalid, to terminate this Agreement; thereupon this Agreement shall be
null and void, and Purchaser's said Earnest Money deposit shall be promptly
refunded to Purchaser.
19. OFFER AND EFFECTIVE DATE. The instrument shall be regarded as an
offer by Purchaser to Seller and is open for acceptance and delivery
thereby until the 29th day of February, 1996, after which date this
Agreement, if unaccepted, shall be null and void and of no force and effect
whatsoever; the date of an acceptance shall be inserted at such time of
acceptance and delivery in the space provided therefore on the first page
of this Agreement.
20. CONDITIONS OF CLOSING. The Closing contemplated by the agreement
shall be subject to Purchaser's verification during the first sixty (60)
days after mutual execution of the Agreement that:
a) The Property can and will be zoned for Buyer's intended use to
develop as a multi-family apartment project having 13 units per acre.
b) All utilities are available in sufficient capacity and at
Closing will be accessible to the Property at the property lines, without
constructing any lift stations, or incurring any other extraordinary costs
or fees associated with Buyer connecting to the utilities. Buyer to
satisfy this condition during (60) day feasibility period as provided in
Paragraph 13.
c) The appropriate authorities will issue building permits for
multi-family apartments.
d) Buyer finds no unrippable rock or non-compatible soils on the
site.
e) Buyer will obtain a Phase I environmental report satisfactory
to Buyer, and a Phase II if Buyer deems necessary based on Phase I.
f) Buyer determines that there are no archeological finds or
endangered species that may affect development.
6
g) Buyer is not restricted by any tree ordinance from removing all
trees necessary for construction of Buyer's development.
h) Buyer obtains an acceptable wetlands delineation showing no
wetlands on the Property.
i) The appropriate authorities will allow Buyer signage rights on
GA Hwy. (78).
j) Seller will convey free and clear fee simple title to the
Property by Limited Warranty Deed.
k) The exact delineation of the 21.58 acres to be agreed upon.
l) Other than existing leases, there are no other contracts
related to the Property that cannot be terminated.
IN WITNESS WHEREOF, the parties hereto have set their hand and seals
hereunder and have caused this Agreement to be executed in their names and
their corporate seals to be affixed by their officers duly authorized
thereunto, the day and year first above written.
"SELLER" "SELLER"
Virgil R. Williams James M. Williams, Jr.
By: /s/ VIRGIL R. WILLIAMS By: /s/ JAMES M. WILLIAMS, JR.
------------------------- ------------------------------
"PURCHASER"
Easlan Capital of Atlanta, Inc.
BY: /s/ KENT S. LEVENSON
-------------------------
TITLE: President
-------------------------
"BROKER" "BROKER"
Belkofer & Company, Inc. Williams-Adair Realty, Inc.
By: /s/ GEORGE BELKOFER, JR. By: /s/ FOREST L. ADAIR
-------------------------- ------------------------------
Title: President By: President
-------------------------- ------------------------------
7
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "First
Amendment") is made and entered into as of this 25th day of April, 1996, by
and between EASLAN CAPITAL OF ATLANTA, INC., a Georgia corporation
(hereinafter referred to as the "Purchaser"), VIRGIL R. WILLIAM and JAMES
N. WILLIAMS, individual residents of the State of Georgia (hereinafter
referred to as the "Seller") and BELKOFER AND COMPANY, INC., a Georgia
corporation, and WILLIAMS-ADAIR REALTY CORP., a Georgia corporation
(hereinafter referred to as the "Brokers").
WITNESSETH:
WHEREAS Seller, Purchaser and Brokers entered into that certain Sales
Agreement having an effective date of February 29, 1996 (the "Agreement")
relating to that certain parcel of real property, containing 21.58 acres of
land and 40 rental units lying in Land Lot 54 of the 6th District of
Gwinnett County, Georgia and being more particularly described on EXHIBIT
"A" attached to the Agreement (the "Property"); and
WHEREAS, the parties desire to amend the Agreement pursuant to the
terms hereinafter provided.
NOW, THEREFORE, for and in consideration of Ten and No/100 ($10.00)
Dollars, and the mutual covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, the parties hereto do agree as follows:
1. DEFINITIONS. Terms which are used herein with an initial
capital letter, shall have the meaning ascribed herein, or if not defined
herein, the meaning ascribed in the Agreement.
2. FIRST AMENDMENT. The Agreement is hereby amended by adding the
following paragraphs at the end of Section 2 of the Agreement:
"it is expressly understood and agreed, however, that the Purchase
price to be paid at Closing shall be reduced as provided in subparagraphs
(a) and (b) below:
(a) The Purchase Price is based on Purchaser's being able to
develop 212 apartment units on the Property. Said capacity to be
determined during feasibility study per Section 13.
(b) The Purchase Price shall be reduced by an amount equal to the
cost of repairs to be made to the existing building in accordance with the
report of Purchaser and Seller to negotiate, in good faith, the cost of
repairs noted on report of Newbanks & Associates. The agreed amount to be
an adjustment of purchase price.
8
3. SECOND AMENDMENT. Section 6 of the Agreement is hereby amended
by deleting the first sentence thereof in its entirety and substituting in
lieu thereof the following:
"This sale shall be closed at the offices of Purchaser's attorney in
Atlanta, Georgia on or before thirty (30) days following the expiration of
the Inspection Period (as hereinafter defined) at a date and time selected
by Purchaser (the "Date of Closing" or "Closing").
4. THIRD AMENDMENT. Section 13 of the Agreement is hereby deleted
in its entirety and the following is substituted in lieu thereof.
"13. FEASIBILITY. Notwithstanding anything contained herein, this
Agreement and the obligations of Purchaser hereunder are conditioned upon
Purchaser determining the feasibility of the proposed development or
intended purpose for the Property. Purchaser shall have ninety (90) days
from the date of Contract execution to investigate the feasibility of
utilizing the Property for the intended purpose or proposed development
(the "Inspection Period"). If Purchaser determines, in Purchaser's sole
discretion, that the Property is not suitable to his proposed development
or intended purpose, then he shall notify Seller on or before the
expiration of the Inspection Period and all Earnest Money together with
interest earned thereon shall be refunded to Purchase and this Agreement
shall become null and void and neither of the parties shall thereafter have
any further obligation to the other. Purchaser shall turn over to Seller
all surveys, plans, studies and/or reports that he has in his possession
relating to the Property. If no such notice shall be timely given by
Purchaser as provided above, then Purchaser shall be deemed to have waived
his right to terminate this Agreement as provided in this paragraph and the
Earnest Money shall become non-refundable except for Seller's default or as
otherwise provided in this Agreement. Should Purchaser close on said
Property, then all Earnest Money paid to date shall be credited against the
Purchase Price."
5. FOURTH AMENDMENT. The Agreement is hereby amended by added an
additional section (Section 21) at the end of the Agreement to read as
follows:
"21. SELLER'S OBLIGATIONS. It is expressly understood and agreed
that the Sellers' and Purchasers' Cost shall endeavor to cause Gwinnett
County to abandon the public road located on the Property. The date of
recordation of the applicable abandonment documentation is herein referred
to as the "Road Abandonment Date". In addition, the Seller shall endeavor
to cause the removal of asbestos from the existing buildings on the
Property. The date of completion of removal of the asbestos from the
existing buildings on the Property is referred to herein as the "Asbestos
Removal date". Notwithstanding anything contained herein to the contrary,
the Closing shall occur on the later of (i) thirty (30) days following the
Road Abandonment Date and the Asbestos Removal Date or (ii) thirty (30)
days following the expiration of the Inspection Period.
9
6. EFFECT. Except as hereby amended, and as so amended, the
Agreement is and shall remain in full force and effect.
7. MISCELLANEOUS. This First Amendment shall be governed by and
construed in accordance with the laws in the State of Georgia and shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors, representatives and assigns. This Amendment
may be executed in one or more counterparts, which when signed by the
parties hereto shall be collectively deemed to be one and the same
Amendment. Original signatures transmitted via facsimile shall be
acceptable for purposes of executing this First Amendment provided that
executed counterpart originals are delivered within five (5) business days
from the date hereof.
IN WITNESS WHEREOF, Seller and Purchaser have caused this First
Amendment to be duly authorized, executed, and delivered as of the day and
year first above written.
SELLER
/s/ VIRGIL R. WILLIAMS
------------------------------
Virgil R. Williams
/s/ JAMES M. WILLIAMS
------------------------------
James M. Williams
PURCHASER:
EASLAN CAPITAL OF ATLANTA, INC.
By: /s/ KENT S. LEVENSON
------------------------------
Kent S. Levenson, President
BROKERS:
BELKOFER AND COMPANY, INC.
By: /s/ GEORGE BELKOFER, JR.
------------------------------
George Belkofer, Jr.
WILLIAMS-ADAIR REALTY CORP.
BY: /s/ FOREST L. ADAIR
------------------------------
Forest L. Adair
10
SECOND AMENDMENT TO SALES AGREEMENT
THIS SECOND AMENDMENT TO SALES AGREEMENT (the "Agreement" or the
"Second Amendment"), is made and entered into as of ______ day of
September, 1996, by and between VIRGIL R. WILLIAMS AND JAMES N. WILLIAMS,
individual residents of the State of Georgia (hereinafter called "Seller"),
and EASLAN CAPITAL OF ATLANTA, INC., a Georgia corporation (hereinafter
called "Buyer").
STATEMENT OF BACKGROUND
Seller and Buyer entered into that certain Sales Agreement dated
February 28, 1996 (the "Original Contract"), concerning the sale and
purchase of certain real property located in Gwinnett County, Georgia,
known as Country Walk Apartments, and certain adjacent unimproved property,
which property is more fully and particularly described in the Original
Contract (the "Property"). Seller and Buyer have previously agreed to
modify and amend the Original Contract pursuant to the terms of that
certain First Amendment to Purchase and Sale Agreement dated April 25, 1996
(the "First Amendment", the Original Contract as amended by the First
Amendment, hereinafter referred to as the "Contract").
Buyer and Seller have agreed to further modify and amend the Contract
in accordance with this Second Amendment.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein and the sum of Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby covenant and agree as
follows:
1. AMENDMENT OF CONTRACT. Seller and Buyer do hereby modify and
amend the Contract to provide the following:
(a) The Contract shall be amended by deleting Section 2 of the
Contract in its entirety and substituting in lieu thereof as follows:
2. PURCHASE PRICE. The Purchase Price of the Property shall be
Three Million Six Hundred Thousand Dollars ($3,600,000), subject to
adjustment as follows:
(a) The Purchase Price is based on Purchaser's development
plan for construction of 200 new apartment units on the Property. If
Purchaser, during the development of its project or at any time during the
five (5) years following Closing (as hereafter defined), constructs any
inhabitable apartment units for which Purchaser receives a certificate of
occupancy in excess of 200 new apartment units (not counting the existing
40 units that Purchaser is acquiring as part of the transaction), then
Purchaser shall be
obligated to pay Seller, as an additional component of the Purchase
Price, an amount equal to the product of $8,000 multiplied by the number of
new units in excess of 200. Such additional Purchase Price shall be
payable upon Purchaser's receipt of a certificate of occupancy for such
units. For purposes of this section, Purchaser shall be deemed to include
Purchaser and any successor-in-interest to Purchaser and shall include any
and all parties owning any interest in the Property during the five (5)
year period described above; and any liability for additional compensation
hereunder shall be joint and several among the parties, if more than one,
owning an interest in the Property at the time the additional compensation
becomes due and payable.
(b) The Purchaser Price shall be increased by fifty (50%)
percent of any amount by which the Adverse Site Reserve (hereafter defined)
exceeds the total costs (subject to the following conditions) associated
with satisfaction of the Adverse Site Conditions (hereafter defined). As
used herein, "Adverse Site Reserve" shall be an amount equal to
$352,402.00, which is Purchaser's estimated amount of costs that it will
incur to satisfy the Adverse Site Conditions. As used herein, "Adverse
Site Conditions" shall mean all conditions that cause the cost incurred by
Purchaser for all site-related elements of its project to be in excess of
the cost that Purchaser would incur if all site-related elements were
hypothetically consistent with the assumptions normally utilized by
contractors in the Atlanta market (e.g., all soils are clean, compatible
and, once stripped and grubbed, free of organic materials; the cuts and
fills balance; topsoil does not exceed 6 inches on average, etc.). Adverse
Site Conditions shall include without limitation areas in need of demucking
or soil stabilization measures, rippable rock, mass rock, undercutting and
an imbalance in available compatible soils. The site-related elements of
the project shall include without limitation the process of clearing,
grubbing, grading, installing all utility lines of any type, constructing
improvements, and landscaping on the Property.
As to Purchaser's use of funds in the Adverse Site Reserve, the
following conditions shall apply:
(i) Purchaser shall use reasonable best efforts to
minimize the costs incurred in performing the work required by Purchaser to
correct any Adverse Soil Conditions (the "Work"). In its efforts to
minimize the costs incurred in performing the Work, Purchaser shall, at a
minimum, solicit bids from at least two contractors suggested by Seller
(such contractors to be qualified to perform the Work both financially and
in terms of quality of work) in addition to any other bids Purchaser shall
choose to solicit. Seller
2
acknowledges that the Work is a portion of other site
work to be performed on the Property and that the cost of the Work will be
only one portion of the overall cost for site work at the Property; Seller
further acknowledges that the bids solicited shall be for the entire site
work. Purchaser agrees that the bids solicited shall set forth by line
item/unit pricing within the overall bid the costs associated with the
Work. Seller shall have the right to review any and all information
available to Purchaser in connection with such work, and shall,
specifically, have the right to review all bids and other proposals
solicited by or otherwise available to Purchaser in connection with the
Work, but Seller shall not have any right to prevent Purchaser from
proceeding with any part of the Work. Purchaser covenants and agrees to
use good faith in soliciting the bids for the Work and the other site work
such that the line item/unit pricing for each portion of the site work,
including the Work, accurately reflects the actual costs for such work in
relation to the costs for all of the site work. Purchaser shall insure
that the Work shall be performed in a good and workmanlike manner and in
substantial compliance with all applicable governmental requirements.
Purchaser acknowledges that in connection with Seller's execution hereof
and Seller's agreement to the terms and provisions hereof with respect to
the Adverse Site Reserve, Seller has reviewed and has relied upon the soil
report dated May 23, 1996, prepared by Atlanta Testing & Engineering.
Purchaser shall obtain lien waivers in connection with such Work.
(ii) Should the costs for the Work exceed the amount in
the Adverse Site Reserve, Purchaser shall be responsible for the excess,
Seller having no obligations whatsoever to expend any funds for such Work.
Notwithstanding the above, Purchaser shall be obligated to complete and pay
for the Work.
(iii) Should the Work be completed at a price less than
the amounts held in the Adverse Site Reserve, fifty (50%) percent of the
balance shall be disbursed to Seller at such time as the Work is completed
in full.
(iv) Documentation reasonably satisfactory to Seller and
Purchaser shall be executed at Closing setting forth the aforementioned
terms.
3
(b) The Contract shall be further amended by deleting Section 21 of
the Contract in its entirety and substituting in lieu thereof the
following:
21. SELLER'S OBLIGATIONS. It is expressly understood and
agreed that the Seller and Purchaser, at Purchaser's cost (not to be
unreasonably incurred by Seller), shall endeavor using reasonable best
efforts to cause Gwinnett County to abandon the public road located on the
Property (the "Road Abandonment"). The date of recordation of the
applicable abandonment documentation is herein referred to as the "Road
Abandonment Date". In addition, Seller shall endeavor using reasonable
best efforts to cause the removal of asbestos from the existing buildings
on the Property. All such asbestos shall have been removed from the
existing buildings on the Property in accordance with all federal, state
and local laws and regulations through an asbestos removal contractor
reasonably satisfactory to Purchaser before Purchaser shall have an
obligation to close the purchase of the Property. the date of the
completion of removal of the asbestos from the existing buildings on the
Property in accordance with all federal, state and local laws and
regulations through an asbestos removal contractor reasonably satisfactory
to Purchaser is referred to herein as the "Asbestos Removal Date".
(c) The Contract shall be further amended to provide that as of the
date of the execution of the Second Amendment all Earnest Money (totaling
$25,000.00) shall be deemed to be and shall be non-refundable to Purchaser
for any reason other than (i) failure of Seller to consummate the
transaction by delivery of a Limited Warranty Deed to Purchaser or any
other closing document required under the Contract or (ii) failure of
Seller to complete the Road Abandonment or the asbestos removal on or
before October 31, 1996, it being agreed and acknowledged by Purchaser that
Purchaser has waived any and all contingencies in connection with the
Contract, including, without limitation, all title matters previously
objected to by Purchaser, any and all survey objections under the Contract,
the feasibility contingency set forth in Section 13 of the Contract and the
contingencies set forth in Section 20 of the Contract. The parties
acknowledge and agree that the intent of the amendment set forth
hereinabove is that all Earnest Money shall be nonrefundable except in the
case of (i) failure of Seller to deliver title (in the status as held by
Seller) to the Property to Purchaser or any other closing document required
under the Contract or (ii) failure of Seller to complete the Road
Abandonment or the asbestos removal on or before October 31, 1996.
(d) The Contract shall be further amended by amending Section 6 of
the Contract to provide that the "date of closing" or "Closing" shall be
the latest of thirty (30) days after the (i) Road Abandonment Date; (ii)
the Asbestos Removal date; or (iii) the date of execution of the Second
Amendment. Time is of the essence hereof.
(e) The Contract shall be further amended by adding a new Section
22 as follows:
4
22. SELLER'S OPTION TO CONVERT SALE CONTRACT INTO
SUBSCRIPTION FOR OWNERSHIP INTEREST. It is contemplated that at or prior
to Closing, Purchaser will assign all of its right, title and interest in
this Contract to Amli Residential Properties, L.P. ("Amli").
Notwithstanding anything to the contrary contained herein, and as
inducement to enter into the Second Amendment, without which inducement
Seller would be unwilling to do so, the parties acknowledge and agree that
Seller shall have the option, exercisable in its sole discretion, which may
be exercised arbitrarily, to convert by November 8, 1996, the purchase and
sale of real estate obligations contained in this Contract into a
subscription agreement to contribute its interest in the Property to Amli
in consideration for operating units ("Units") of Amli upon the following
terms and conditions and subject to the approval of the following by the
board of trustees for Amli Residential Properties Trust (the "Trust"),
which approval shall be obtained by and evidence thereof delivered to
Seller by no later than November 7, 1996:
(a) Seller shall be entitled to contribute the Property,
valued for contribution purposes at $3,600,000, to Amli, and in lieu of
cash, become an owner of units in Amli.
(b) The value of the Property for purposes of determining
Seller's equity participation shall be reduced by (i) any current debt on
the Property, (ii) any costs which would have been the responsibility of
Seller in a sale transaction, e.g., brokerage commission, Georgia real
estate transfer tax, credits for prorations, et al., and shall be increased
by any amounts added to the compensation due Seller pursuant to Section
2(a) and (b) above (the value as adjusted pursuant to this provision herein
referred to as the "Adjusted Value"). All such costs, including the
satisfaction of any existing mortgage on the Property, shall be paid by
Amli at Closing.
(c) In consideration for the contribution of the Property,
Amli shall issue to Seller the number of whole or fractional Units, valued
at the average closing price for Amli Shares (defined below) as reported in
the Wall Street Journal for the five (5) business day period immediately
preceding Closing, necessary to equal the Adjusted Value of the Property.
Seller, as owner of the Units, shall be entitled to a dividend equal in all
respects, including without limitation, amount, payment preference, and
reinvestment rights, to the dividends (prorated for the initial quarter of
Seller's ownership of such Units) payable to owners of common shares of
beneficial interest in the Trust as are currently traded on the New York
Stock Exchange ("Amli Shares"), so long as the Units are outstanding.
(d) Such Units shall be convertible at any time into Amli
Shares. Except as set forth below, the aforesaid conversion right shall be
on a one
5
for one basis and shall be absolute and unconditional upon
notice for Seller. In the event that, upon Seller's request for
conversion, the Amli Shares to be received in conversion of the Units are
"restricted securities" within the meaning of Rule 144 promulgated by the
Securities Act of 1933, as amended (the "Securities Act"), and during the
90 day period after Seller's request for conversion of such Units by Seller
if the Trust does not successfully file a Registration Statement under the
Securities Act for the resale of the Amli Shares to be issued to Seller
upon conversion, the Seller shall have the right, but not the obligation,
to purchase such shares in Purchaser for cash in an amount equal to the
number of shares so put, multiplied by the average closing price on the New
York Stock Exchange for such shares for the five (5) business day period
immediately preceding the first business day prior to the date of Seller's
exercise of the conversion right, and the cash shall be paid to Seller
within thirty (30) days of receipt of written notice to Seller of such put.
Further, should the Amli Shares to be received in conversion of the Units
be "restricted securities" as described above and during the 90 day period
after Seller's request for conversion of such Units by Seller if the Trust
does successfully file a Registration Statement under the Securities Act
for the resale of the Amli Shares to be issued to Seller upon conversion,
then the rate of conversion, instead of being a one for one exchange, will
be calculated such that the number of whole or fractional Amli Shares
received by Purchaser shall be adjusted to reflect any difference in the
average closing price on the New York Stock Exchange for such shares for
the five (5) business day period immediately preceding the first business
day prior to the date of (i) Seller's exercise of the conversion right and
(ii) the successful registration under the Securities Act of the Amli
Shares, it being the intention of the parties that Seller will receive Amli
Shares in total aggregate value equal to the value that would have been
received (on the basis of number of Units owned immediately prior to
conversion multiplied by average closing price for the previous five
business day period) on the date of Seller's exercise of the conversion
right. The Trust will, within 90 days after the Closing Date, endeavor
using reasonable best efforts to file a Registration Statement under the
Securities Act for the resale of the Amli Shares issued to Seller upon
conversion. Seller's conversion and put rights shall be embodied in final
form either in the Contract or in an agreement to be delivered at the
Closing. Seller's put rights shall terminate at such time as the Amli
Shares to be issued to Seller upon conversion have been registered and are
no longer "restricted securities". Seller shall represent and warrant to
Purchaser that it is an "accredited investor" as defined under Regulation D
promulgated under the Securities Act and shall made such additional
representations and warranties to Purchaser as Purchaser may deem
reasonable necessary to confirm that the issuance of the Units pursuant to
the terms hereof complies with the Securities Act and all applicable
securities laws. Any transfer or pledge of the Units by Seller shall be
6
subject to the restrictions set forth in Article XI of the
Partnership Agreement of Amli Residential Properties, L.P. and to
compliance with applicable laws including securities laws.
(e) The Units issued to Seller shall be in form and substance
satisfactory to Seller and its counsel, and written documentation regarding
the conversion right from Units to Amli Shares whether in the form of a
warrant, option or other such document, shall be subject to the approval of
Seller and its counsel. Seller shall be made a party to the partnership
agreement for Amli, which document shall be in form and substance
satisfactory to Seller and its counsel. Amli agrees to make available to
Seller any documentation reasonably necessary in order for Seller to make
an informed decision as to its rights under this Section 22.
(f) Should Purchaser or Amli be unable to comply with the
terms of this Section 22 by Closing for any reason whatsoever, Seller shall
have the right to terminate the Contract by written notice to Purchaser
given at any time prior to Closing.
2. RATIFICATION. Seller and Purchaser do hereby ratify and
confirm their respective obligations under the Contract, as modified and
amended by the Amendment and by this Second Amendment, and agree that
except as modified and amended by the Amendment and this Second Amendment,
the Contract is and shall remain in full force and effect in the form as
previously executed and delivered.
3. MISCELLANEOUS. Time is of the essence of this Agreement, This
Agreement shall be governed by and construed in accordance with the laws of
the State of Georgia. This Agreement amy be executed in several
counterparts, each of which shall be deemed an original and all of which
counterparts together will constitute one and the same instrument. Should
any provision of this Agreement require judicial interpretation, it is
agreed that the court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed against
one party by reason of the rule of construction that a document is to be
construed more strictly against the party who itself or thorough its agents
prepared the same, it being agreed that the agents of all parties have
participated in the preparation hereof. This Agreement may not be modified
or amended unless such amendment is set forth in writing and signed by both
Seller and Purchaser. This Agreement shall apply to, inure to the benefit
of and be binding upon and enforceable against Seller and Purchaser and
their respective heirs, legal representatives, successors and assigns, as
the case may be.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, Seller and Purchaser have caused this Second
Amendment to be executed and delivered under seal by their duly authorized
officers of representatives as of the date set forth hereinabove.
SELLER:
/s/ VIRGIL R. WILLIAMS [SEAL]
------------------------------
Virgil R. Williams
/s/ JAMES M. WILLIAMS [SEAL]
------------------------------
James M. Williams
BUYER:
EASLAND CAPITAL OF ATLANTA, INC.
By: /s/ KENT S. LEVENSON
------------------------------
Kent S. Levenson, President
[ CORPORATE SEAL ]
[SIGNATURES CONTINUE ON NEXT PAGE]
8
Solely for the purpose of acknowledging its
obligations under Section 22 of the Contract, but only effective upon
assignment by Purchaser of its rights under the Contract to the
undersigned.
AMLI RESIDENTIAL PROPERTIES, L.P.
By: Amli Residential Properties Trust,
a real estate investment trust
By: /s/ PHILIP N. TAGUE
------------------------------
Philip N. Tague
Title: Executive Vice President
------------------------------
9
THIRD AMENDMENT TO SALES AGREEMENT
THIS THIRD AMENDMENT TO SALES AGREEMENT (the "Agreement" or the
"Second Amendment"), is made and entered into as of the ______ day of
, 1997, by and between VIRGIL R. WILLIAMS AND JAMES N. WILLIAMS,
individual residents of the State of Georgia (hereinafter called "Seller"),
and EASLAN CAPITAL OF ATLANTA, INC., a Georgia corporation (hereinafter
called "Purchaser").
STATEMENT OF BACKGROUND
Seller and Purchaser entered into that certain Sales Agreement dated
February 28, 1996 (the "Original Contract"), concerning the sale and
purchase of certain real property located in Gwinnett County, Georgia,
known as Country Walk Apartments, and certain adjacent unimproved property,
which property is more fully and particularly described in the Original
Contract (the "Property"). Seller and Purchaser have previously agreed to
modify and amend the Original Contract pursuant to the terms of (i) that
certain First Amendment to Purchase and Sale Agreement dated April 25, 1996
(the "First Amendment") and (ii) that certain Second Amendment to Sales
Agreement dated September 1996, among Seller, Purchaser and (for certain
purposes), Amli Residential Properties, L.P. ("Amli") (the "Second
Amendment"; and together with the First Amendment, the "Prior Amendments";
the Original Contract as amended hereinafter referred to as the
"Contract").
Purchaser, Amli and Seller have agreed to further modify and amend
the Contract in accordance with this Third Amendment.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein and the sum of Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby covenant and agree as
follows:
1. AMENDMENT OF CONTRACT. Seller and Purchaser do hereby modify
and amend the Contract to provide the following:
(a) The Contract shall be amended by deleting Section 2 of the
Contract in its entirety and substituting in lieu thereof the following:
2. PURCHASE PRICE. The Purchase Price of the Property shall
be Three Million Six Hundred Twenty Thousand Dollars ($3,620,000), subject
to adjustment as follows:
(a) The Purchase Price is based on Purchaser's
development plan for construction of 216 new apartment units on the
Property. If Purchaser, during the
1
development of its project or at any time during the five (5)
years following Closing (as hereafter defined), construction any
inhabitable apartment units for which Purchaser receives a certificate of
occupancy in excess of 216 new apartment units (not counting the existing
40 units that Purchaser is acquiring as part of the transaction), then
Purchaser shall be obligated to pay Seller, as an additional component of
the Purchase Price, an amount equal to the Product of $8,000 multiplied by
the number of new units in excess of 216. Such additional Purchase Price
shall be payable upon Purchaser's receipt of a certificate of occupancy for
such units. For purposes of this section, Purchaser shall be deemed to
include Purchaser and any successor-in-interest to Purchaser and shall
include any and all parties owning any interest in the Property during the
five (5) year period described above; and any liability for additional
compensation hereunder shall be joint and several among the parties, if
more than one, owning an interest in the Property at the time the
additional compensation becomes due and payable. This obligation shall be
documented in a manner satisfactory to Seller in its sole discretion.
(b) The Contract shall be amended by deleting Section 4 of the
Contract in its entirety and substituting in lieu thereof the following:
4. METHOD OF PAYMENT. The Purchase Price shall be paid in
cash, good funds or cashier's check at closing, or Purchaser agrees that,
upon request by Seller, Purchaser will cooperate with Seller in such a
manner as to permit Seller to convey the Property or undivided interests
therein as (i) part of a tax-free exchange pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, or (ii) as a capital
contribution to Amli in exchange for partnership units, or both.
(c) The Contract shall be further amended to provide that on or
prior to the date of the execution of the Third Amendment, Purchaser shall
make an additional earnest money deposit of $50,000, and that following
such deposit, all Earnest Money (totaling $75,000.00) shall be deemed to be
and shall be non-refundable to Purchaser for any reason other than
Purchaser's failure to obtain an agreement executed by the Owners and
Mortgagee of Gwinnett Garden Apartments to grant Purchaser an easement
across their Property to Bethany Church Road, in form acceptable to Amli,
or failure of Seller to consummate the transaction by delivery of a Limited
Warranty Deed to Purchaser or any other closing document required under the
Contract. It is agreed and acknowledged by Purchaser that Purchaser has
waived any and all other contingencies in connection with the Contract,
including, without limitation, all title matters previously objected to by
Purchaser (all of which are hereby expressly deemed part of the "Permitted
Title Exceptions" hereunder), any and all survey objections under the
Contract, the feasibility contingency set forth in Section 13 of the
Contract, the contingencies set forth in Section 20 of the Contract, and
the performance of the Seller's Obligations as set forth in Section 21 of
the Contract. The parties acknowledge and agree that the intent of the
amendment set forth hereinabove is that all Earnest Money shall be
nonrefundable except in the case of Purchaser's failure to obtain an
agreement executed by the Owners and Mortgagee of Gwinnett Garden
Apartments to grant Purchaser an easement across their property to Bethany
Church Road, in form acceptable to Amli, or failure of Seller to deliver
title (in the status as held by Seller) to the Property to Purchaser or any
other closing document required under the Contract.
2
(d) The Contract shall be further amended by amending Section 6 of
the Contract to provide that the "date of closing" or "Closing" shall be on
or before March 12, 1997. Time is of the essence hereof.
(e) The Contract shall be further amended by deleting the fourth
sentence of Section 11 of the Contract in its entirety and substituting in
lieu thereof the following: "Seller shall pay a commission in the amount
of $186,000 and said commission shall be divided equally between Belkofer &
Company, Inc. and Williams-Adair Realty Corp."
(f) The Contract shall be further amended Section 22 of the
Contract to provide the following:
(i) Seller has elected, and Purchaser and Amli acknowledge
and accept such election, for James N. Williams to contribute to Amli as
part of the conveyance contemplated by the Contract and in Lieu of receipt
of cash proceeds from Purchaser as to the amount described below, an
undivided 30% interest in the Property valued at $1,100,000 in exchange for
Units in a number to be determined pursuant to Section 22(c) of the
Contract.
(ii) The remainder of the undivided interest in the Property
shall be conveyed by Seller a 50% undivided interest to be conveyed by
Virgil R. Williams and a 20% undivided interest to be conveyed by James N.
Williams) for cash proceeds based on the Purchase Price, less $1,100,000,
as adjusted pursuant to Section 6 of the Contract related to closing costs
and property assessments.
(iii) Amli represents and warrants that such the capital
contribution described above has been approved by the board of trustees for
Amli Residential Properties Trust (the "Trust"), and evidence thereof shall
be delivered to Seller no later than two (2) business days following the
execution of the Third Amendment by all parties.
(iv) Except as modified hereby, all terms of Section 22 shall
remain in full force and effect.
(g) The Contract shall be further amended by adding a new Section
23 as follows:
23. CONVEYANCE BY MULTIPLE LIMITED WARRANTY DEEDS. Purchaser
acknowledges and agrees that in order to effectuate the various tax effects
that Seller desires by use of some combination of cash, Section 1031
exchanges, and capital contributions, Seller may, at its sole option,
convey the Property to Purchaser in one or more limited warranty deeds
conveying undivided interests in the Property so long as Seller shall, in
the aggregate, convey 100% of the undivided interests in the Property and
Purchaser's title insurer will
3
insure to Purchaser that it has a 100% undivided interest in fee
simple to the Property subject only to the Permitted Title Exceptions.
2. RATIFICATION. Seller and Purchaser do hereby ratify and
confirm their respective obligations under the Contract, as modified and
amended by the Prior Amendments and by this Third Amendment, and agree that
except as modified and amended by the Prior Amendments and this Third
Amendment, the Contract is and shall remain in full force and effect in the
form as previously executed and delivered.
3. MISCELLANEOUS. Time is of the essence of this Agreement. This
Agreement shall be governed by and construed in accordance with the laws of
the State of Georgia. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
counterparts together shall constitute one and the same instrument. Should
any provision of this Agreement require judicial interpretation, it is
agreed that the court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed against
one party by reason of the rule of construction that a document is to be
construed more strictly against the party who itself or through its agents
prepared the same, it being agreed that the agents of all parties have
participated in the preparation hereof. This Agreement may not be modified
or amended unless such amendment is set forth in writing and signed by both
Seller and Purchaser. This Agreement shall apply to, inure to the benefit
of and be binding upon and enforceable against Seller and Purchaser and
their respective heirs, legal representatives, successors and assigns, as
the case may be.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Third
Amendment to be executed and delivered under seal by their duly authorized
officers or representatives as of the date set forth hereinabove.
SELLER:
/s/ VIRGIL R. WILLIAMS [SEAL]
------------------------------
Virgil R. Williams
/s/ JAMES M. WILLIAMS [SEAL]
------------------------------
James M. Williams
[SIGNATURES CONTINUE ON NEXT PAGE]
4
PURCHASER:
EASLAND CAPITAL OF ATLANTA, INC.
By: /s/ KENT S. LEVENSON
------------------------------
Kent S. Levenson, President
[ CORPORATE SEAL ]
Solely for the purpose of acknowledging its
obligations under Section 22 of the Contract, but only effective upon
assignment by Purchaser of its rights under the Contract to the
undersigned.
AMLI RESIDENTIAL PROPERTIES, L.P.
By: Amli Residential Properties Trust,
a real estate investment trust
By:
------------------------------
Philip N. Tague
Title:
------------------------------
Solely for the purpose of acknowledging and
agreeing to the amendment of Section 111 of the Contract:
BELKOFER AND COMPANY, INC.
By: /s/ GEORGE BELKOFER, JR.
------------------------------
George Belkofer, Jr.
WILLIAMS-ADAIR REALTY CORP.
BY: /s/ FOREST L. ADAIR
------------------------------
Forest L. Adair
ASSIGNMENT OF CONTRACT
FOR VALUE RECEIVED, Easlan Capital of Atlanta, Inc. ("Purchaser")
hereby transfers and assigns all of its right, title and interest in and to
that certain Sales Agreement for the purchase and sale of real estate
located in Land Lot 54 of the 6th District, Gwinnett County, Georgia dated
as of February 29, 1996 together with any and all amendments and/or
modifications thereto including but not limited to First Amendment to
Purchase and Sale Agreement dated as of April 26, 1996, Second Amendment to
Sales Agreement dated as of September _____, 1996, and Third Amendment to
Sales Agreement dated as of ___________________________, 1997
("Agreement"), by and among Purchaser and Virgil R. Williams and James M.
Williams ("Sellers") to Amli Residential Properties, L.P., a Delaware
limited partnership ("Assignee"). Assignee hereby accepts such assignment
and assumes all of the obligations of Purchaser under the Agreement that
survive the closing or settlement of same.
This ______ day of March, 1997.
PURCHASER:
EASLAN CAPITAL OF ATLANTA, INC.
a Georgia corporation
By: /s/ KENT S. LEVENSON
------------------------------
Kent S. Levenson, President
March 12, 1997
(Corporate Seal)
ASSIGNEE:
AMLI RESIDENTIAL PROPERTIES, L.P.,
a Delaware limited partnership, whose
sole general partner is
Amli Residential Properties Trust,
a Maryland real estate investment trust.
By: Amli Residential Properties Trust,
a Maryland real estate investment
trust, General Partner
By: /s/ PHILIP N. TAGUE
------------------------------
Philip N. Tague
Title: Executive Vice President
------------------------------
