<PAGE> 1
As filed with the Securities and Exchange Commission on December 30, 1999
REGISTRATION STATEMENT NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
SUMMIT PROPERTIES INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 56-1857807
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
212 SOUTH TRYON STREET, SUITE 500
CHARLOTTE, NORTH CAROLINA 28281
(704) 334-3000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
-------------------------
WILLIAM F. PAULSEN
CHIEF EXECUTIVE OFFICER
SUMMIT PROPERTIES INC.
212 SOUTH TRYON STREET, SUITE 500
CHARLOTTE, NORTH CAROLINA 28281
(704) 334-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
DAVID W. WATSON, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109
(617) 570-1000
-------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Shares Being Amount to Be Offering Price Per Aggregate Offering Registration
Registered Registered Share(2) Price(2) Fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 2,214,803 $17.5625 $38,897,478 $10,269
$.01 per share(1)
================================================================================================================================
</TABLE>
(1) This Registration Statement also relates to Rights to purchase shares
of Series A Junior Participating Cumulative Preferred Stock of the
Registrant which are attached to all shares of Common Stock issued,
pursuant to the terms of the Registrant's Shareholder Rights Agreement
dated December 14, 1998. Until the occurrence of certain prescribed
events, the Rights are not exercisable, are evidenced by the
certificates for the Common Stock and will be transferred with and
only with such stock. Because no separate consideration is paid for
the Rights, the registration fee therefor is included in the fee for
the Common Stock.
(2) Estimated solely for purposes of determining the registration fee
pursuant to Rule 457(c) based on the average of the high and low sales
prices on the New York Stock Exchange on December 27, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE> 2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 30, 1999
PROSPECTUS
2,214,803 Shares
SUMMIT PROPERTIES INC.
Common Stock
(par value $.01 per share)
------------------
This prospectus is being delivered in connection with:
- the offer and sale by the selling stockholders identified in
this prospectus, and any of their pledgees, donees, transferees
or other successors in interest, of up to an aggregate of
2,036,758 shares of common stock of Summit Properties Inc.; and
- the offer and sale by us of up to an aggregate of 178,045 shares
of our common stock to holders of common units of limited
partnership interest in Summit Properties Partnership, L.P. if
and to the extent that the holders present their common units
for redemption and we exercise our right to issue shares of
common stock to the holders instead of cash.
We will not receive any cash proceeds from the sale of the shares of
common stock offered by this prospectus. In exchange for any shares issued in
connection with the redemption of common units, we will acquire additional
common units of limited partnership interest in Summit Properties Partnership,
L.P. We have agreed to bear the expenses of registration of the shares under
federal and state securities laws.
Our common stock is listed on the New York Stock Exchange under the
symbol "SMT."
----------------
Beginning on page 4, we have listed several "Risk Factors" that you
should consider before you invest in our common stock.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is December 30, 1999.
<PAGE> 3
PROSPECTUS SUMMARY
This summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated by reference in this prospectus.
It may not contain all information that is important to you. You should read
this entire prospectus carefully before deciding whether to invest in shares of
our common stock.
Unless the context otherwise requires, all references to "we," us" or
"our company" in this prospectus refer collectively to Summit Properties Inc.,
a Maryland corporation, and its subsidiaries, including Summit Properties
Partnership, L.P., a Delaware limited partnership, and their respective
predecessor entities for the applicable periods, considered as a single
enterprise.
--------------------
SUMMIT PROPERTIES INC.
- Summit Properties Inc. is one of the largest developers and
operators of luxury garden apartment communities in the
southeastern, southwestern and mid-atlantic United States. We are a
fully integrated organization, which means that we combine
multifamily development, construction, acquisition and management
expertise. As of December 17, 1999, we owned, or held an ownership
interest in, and managed 82 apartment communities with 21,404
apartment homes.
- We are the sole general partner of and conduct all of our principal
operations through Summit Properties Partnership, L.P. As of
December 17, 1999, we held approximately 85.6% of the outstanding
common units in Summit Properties Partnership, L.P. We conduct our
third party management and construction and other businesses through
our indirect subsidiaries, Summit Management Company and Summit
Apartment Builders, Inc.
- Summit Properties Inc. is a Maryland corporation and a self-managed
real estate investment trust. Our common stock is listed on the New
York Stock Exchange under the symbol "SMT."
- Our offices are located at 212 South Tryon Street, Suite 500,
Charlotte, North Carolina 28281 and our telephone number is (704)
334-3000.
THE OFFERING
This prospectus relates to up to an aggregate of:
- 2,036,758 shares of our common stock that may be offered for
sale by the selling stockholders; and
- 178,045 shares of our common stock that we may issue to
unitholders of Summit Properties Partnership, L.P. upon
redemption of their common units.
The shares and common units were issued to the holders in connection with the
acquisition by Summit Properties Partnership, L.P. of a portfolio of apartment
communities located in Texas. In connection with this acquisition, we entered
into a registration rights and lock-up agreement with the selling stockholders
and the unitholders.
We are registering the sale of the 2,036,758 shares to fulfill our
contractual obligations under the registration rights and lock-up agreement.
Registration of the sale of these shares of common stock, however, does not
necessarily mean that all or any portion of the shares will be offered for sale
by the selling stockholders.
We also are registering the 178,045 shares offered by this prospectus
under the terms of the registration rights and lock-up agreement. Registration
of these shares of common stock, however, does not necessarily mean that we
will issue all or any portion of the shares. The Agreement of Limited
Partnership of Summit Properties Partnership, L.P. allows unitholders to tender
their common units to Summit Properties Partnership, L.P. for cash equal to the
value of an equivalent number of shares of our common stock. In lieu of
delivering cash, however,
2
<PAGE> 4
we may, at our option, choose to acquire any common units so tendered by
issuing shares of our common stock in exchange for the common units. The shares
will be exchanged for common units on a one-for-one basis.
We will not receive any cash proceeds from the sale of any shares of
common stock offered by this prospectus. In exchange for any shares issued by
us upon the redemption of common units, we will acquire the common units
tendered by the holder for redemption and, as a result, our economic interest
in Summit Properties Partnership, L.P. will increase. We have agreed to bear
the expenses of registration of the shares under federal and state securities
laws.
TAX STATUS OF SUMMIT PROPERTIES INC.
Summit Properties Inc. has elected to qualify as a real estate
investment trust under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended, commencing with its taxable year ended December 31, 1994. As
long as we qualify for taxation as a real estate investment trust, we generally
will not be subject to federal income tax on that portion of our ordinary
income and capital gains that is currently distributed to our stockholders.
Even if we qualify for taxation as a real estate investment trust, we may be
subject to state and local taxes on our income and property and to federal
income and excise taxes on our undistributed income.
3
<PAGE> 5
RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the information included or
incorporated by reference in this prospectus before you decide to purchase our
common stock or present your common units for redemption. This section includes
or refers to certain forward-looking statements. You should refer to the
explanation of the qualifications and limitations on forward-looking statements
discussed on page 12.
DEVELOPMENT AND CONSTRUCTION RISKS COULD AFFECT OUR PROFITABILITY.
We intend to continue to develop and construct apartment communities.
Our development and construction activities may be exposed to the following
risks:
- We may be unable to obtain, or suffer delays in obtaining,
necessary zoning, land-use, building, occupancy, and other
required governmental permits and authorizations. This could
result in increased costs and could require us to abandon our
activities entirely with respect to the project for which we are
unable to obtain permits or authorizations.
- We may abandon development opportunities that we have already
begun to explore. If we abandon a development opportunity, we
may fail to recover expenses already incurred in exploring that
development opportunity.
- We may incur construction costs for a community which exceed our
original estimates due to increased costs for materials or labor
or other costs that were unexpected. Increased or unexpected
costs could make completion of a community uneconomical because
we may not be able to increase rents to compensate for those
construction costs.
- Because occupancy rates and rents at a newly completed
development may fluctuate, we may not be able to meet our profit
estimates for that community. Fluctuations in occupancy rates or
rents could be caused by a number of factors, including market
and economic conditions.
- We may not be able to obtain financing with favorable terms for
the development of a community, which may make us unable to
proceed with its development.
- We may be unable to complete construction and lease-up of a
community on schedule, resulting in increased debt service
expense and construction or reconstruction costs.
Construction costs have been increasing in our markets, and the cost to
update acquired communities has, in some cases, exceeded our original
estimates. We may experience similar cost increases in the future. If we are
not able to charge rents that will be sufficient to offset the effects of any
increases in construction costs, our profitability could be less than
anticipated.
ACQUISITIONS MAY NOT YIELD ANTICIPATED RESULTS.
We intend to continue to acquire apartment communities on a select
basis. Our acquisition activities and their success may be exposed to the
following risks:
- Before acquiring a community, we estimate the return on our
investment based on expected occupancy and rental rates. If the
community is unable to achieve the expected occupancy and rental
rates, it may fail to perform as we expected in analyzing our
investment.
- When we acquire an apartment community, we often reposition or
redevelop that community with the goal of increasing
profitability. Our estimate of the costs of repositioning or
redeveloping an acquired community may prove inaccurate. If
costs are greater than expected, it may not be possible to meet
our profitability goals.
4
<PAGE> 6
WE COULD CHANGE OUR POLICY OF LIMITING OUR DEBT LEVEL.
Our current policy is not to incur debt that would make our ratio of
debt to gross book value of all of our real estate and other tangible assets,
as adjusted based on our projection of sales of existing real estate assets and
the proceeds of projected sales of preferred stock, exceed 55%. This ratio
was approximately 47% as of September 30, 1999. Our Amended and Restated
Articles of Incorporation, as amended, and Bylaws, however, do not contain any
limitations on the amount of debt that we may incur. Throughout this prospectus
we refer to our Amended and Restated Articles of Incorporation, as amended, as
our "articles of incorporation" and to our Bylaws as our "bylaws." Because we
do not have any debt incurrence restrictions in our articles of incorporation
or bylaws, our board of directors can increase the amount of outstanding debt
at any time. If there were an increase in the gross book value of our real
estate and other tangible assets, we could incur additional debt without
increasing this ratio and without a concurrent increase in our ability to
service that additional debt.
INCURRENCE OF ADDITIONAL DEBT AND RELATED ISSUANCE OF EQUITY MAY DILUTE
EXISTING STOCKHOLDERS' INTERESTS.
The future issuance of additional equity may dilute the interests of
existing stockholders. For example, if we finance future developments and
acquisitions with new equity securities instead of additional debt, the
interests of our existing stockholders could be diluted. Our ability to execute
our business strategy depends on our access to appropriate amounts of debt
financing, including unsecured lines of credit and other forms of secured and
unsecured debt, and equity financing, including common and preferred stock.
Debt or equity financing may not be available to us on favorable terms or at
all.
INSUFFICIENT CASH FLOW COULD AFFECT OUR DEBT FINANCING AND CREATE REFINANCING
RISK.
We are subject to the risks normally associated with debt financing,
including the risk that our cash flow will be insufficient to meet required
payments of principal and interest. Typically we repay only a small portion of
the principal of our debt before it is due at maturity. Although we may be able
to repay a portion of our debt by using our cash flows, we do not expect to
have sufficient cash flows available to make all required principal payments
and still satisfy our distribution requirements to maintain our status as a
real estate investment trust. Therefore, we are likely to need to refinance at
least a portion of our outstanding debt as it matures. There is a risk that we
may not be able to refinance existing debt or that the terms of any refinancing
will not be as favorable as the terms of the existing debt.
RISING INTEREST RATES WOULD INCREASE INTEREST COSTS AND COULD AFFECT THE MARKET
PRICE OF OUR SECURITIES.
We currently have, and may in the future incur, variable interest rate
debt under credit facilities as we acquire, construct and reconstruct apartment
communities, as well as for other purposes. If interest rates increase, our
interest costs will also rise, unless we have made arrangements that hedge the
risk of rising interest rates. In addition, an increase in market interest
rates may lead purchasers of our securities to demand a higher annual yield,
which could adversely affect the market price of our outstanding securities.
INTEREST RATE HEDGING CONTRACTS MAY INVOLVE MATERIAL CHANGES AND MAY NOT
PROVIDE ADEQUATE PROTECTION.
From time to time when we anticipate offerings of debt securities, we
may seek to decrease our exposure to fluctuations in interest rates during the
period before the pricing of the securities by entering into interest rate
hedging contracts. We may do so to increase the predictability of our financing
costs. Also, from time to time, we may rely on interest rate hedging contracts
to offset our exposure to moving interest rates on variable rate debt. The
settlement of interest rate hedging contracts may involve charges to earnings
that may be material in amount. These charges are typically related to the
extent and timing of fluctuations in interest rates. Despite our efforts to
minimize our exposure to interest rate fluctuations, we cannot guarantee that
we will maintain coverage for all of our outstanding indebtedness at any
particular time. If we do not effectively protect ourselves from this risk, we
may be subject to increased interest costs resulting from interest rate
fluctuations.
5
<PAGE> 7
BOND FINANCING COMPLIANCE REQUIREMENTS COULD LIMIT OUR INCOME, RESTRICT THE USE
OF COMMUNITIES AND CAUSE FAVORABLE FINANCING TO BECOME UNAVAILABLE.
We have financed some of our apartment communities with obligations
issued by local government agencies or organizations. Because holders of this
debt financing are generally exempt from federal income taxes on the interest
that we pay on this financing, the interest rate is typically lower than it
would be for other debt financing. These obligations are commonly referred to
as "tax-exempt bonds." The compliance requirements for our current tax-exempt
bonds, and the requirements of any future tax-exempt bond financings, may limit
our income from communities that are subject to this financing. Under the terms
of our current tax-exempt bonds, we must comply with restrictions on the use of
the communities that we financed with these bonds, including a requirement that
we make some of the apartments available to low and middle income households.
In addition, some of our tax-exempt bond financing documents require us
to obtain a guarantee of payment from a financial institution. The guarantee
may take the form of a letter of credit, surety bond, guarantee agreement or
other additional collateral. If the financial institution defaults in its
guarantee obligations, or if we are unable to repay the indebtedness, renew the
applicable guarantee or otherwise post satisfactory collateral, a default will
occur under the applicable tax-exempt bonds and the community could be
foreclosed upon.
FAILURE TO GENERATE SUFFICIENT REVENUE COULD LIMIT CASH FLOW AVAILABLE FOR
DISTRIBUTIONS TO STOCKHOLDERS.
If our communities do not generate revenues sufficient to meet our
operating expenses, including debt service and capital expenditures, our cash
flow will decrease. This could have an adverse effect on our ability to pay
distributions to our stockholders. Insufficient revenues from a community could
result in a loss of that community or other communities. Significant
expenditures associated with our communities, such as debt service payments,
real estate taxes, insurance and maintenance costs, are generally not reduced
when circumstances cause a reduction in revenues from a community. If we
mortgage a community to secure payment of debt and are unable to meet the
mortgage payments, we could sustain a loss as a result of foreclosure on the
community or the exercise of other remedies by the mortgagee.
UNFAVORABLE CHANGES IN MARKET AND ECONOMIC CONDITIONS COULD HURT OCCUPANCY OR
RENTAL RATES.
The market and economic conditions in metropolitan areas of the
southeast, southwest, mid-atlantic and mid-west regions of the United States
may significantly affect apartment home occupancy or rental rates. Occupancy
and rental rates in those markets, in turn, may significantly affect our
profitability and our ability to satisfy our financial obligations. The risks
that may affect conditions in those markets include the following:
- plant closings, industry slowdowns and other factors that
adversely affect the local economy and the demand for apartment
communities;
- an oversupply of apartment homes;
- a decline in household formation that adversely affects
occupancy or rental rates;
- the inability or unwillingness of residents to pay rent
increases; and
- rent control or rent stabilization laws, or other laws
regulating housing, on any of our communities, which could
prevent us from raising rents to offset increases in operating
costs.
Any of these risks could adversely affect:
- our ability to achieve our desired yields on our communities;
- our ability to pay interest or principal on our debt; and
- our ability to make expected distributions to our stockholders.
6
<PAGE> 8
DIFFICULTY OF SELLING APARTMENT COMMUNITIES COULD LIMIT FLEXIBILITY.
Real estate in the metropolitan areas of the southeast, southwest,
mid-atlantic and mid-west regions of the United States can be hard to sell,
especially if market conditions are poor. This may limit our ability to sell
apartment communities in our portfolio promptly in response to changes in
economic or other conditions. In addition, federal tax laws limit our ability
to sell communities that we have owned for fewer than four years, and this may
affect our ability to sell communities without adversely affecting returns to
our stockholders.
ATTRACTIVE INVESTMENT OPPORTUNITIES MAY NOT BE AVAILABLE WHICH COULD ADVERSELY
AFFECT OUR PROFITABILITY.
We expect that other real estate investors will compete with us to
acquire existing properties and to develop new properties. These competitors
include insurance companies, pension and investment funds, partnerships,
investment companies and other apartment real estate investment trusts. This
competition could increase prices for properties of the type we would likely
pursue and our competitors may have greater resources than we do. As a result,
we may not be able or have the opportunity to make suitable investments on
favorable terms in the future, which could adversely affect our profitability.
FAILURE TO SUCCEED IN NEW MARKETS MAY LIMIT GROWTH.
We may make selected acquisitions outside of our current market areas
from time to time, if appropriate opportunities arise. Our historical
experience is in the southeast, southwest, mid-atlantic and mid-west regions of
the United States and we may not be able to operate successfully in other
market areas new to us. We may be exposed to a variety of risks if we choose to
enter into new markets. These risks include, among others:
- a lack of market knowledge and understanding of the local
economies;
- an inability to obtain land for development or to identify
acquisition opportunities;
- an inability to obtain construction tradespeople; and
- an unfamiliarity with local governmental and permitting
procedures.
INCREASED COMPETITION COULD LIMIT OUR ABILITY TO LEASE APARTMENT HOMES OR
INCREASE OR MAINTAIN RENTS.
Our apartment communities compete with other housing alternatives to
attract residents, including other rental apartments, condominiums and
single-family homes that are available for rent, as well as new and existing
single-family homes for sale. Competitive residential housing in a particular
area could adversely affect our ability to lease apartment homes and to
increase or maintain rents.
OUR SHARE OWNERSHIP LIMIT MAY PREVENT TAKEOVERS BENEFICIAL TO STOCKHOLDERS.
For us to maintain our qualification as a real estate investment trust
for federal income tax purposes, not more than 50% in value of our outstanding
capital stock may be owned, directly or indirectly, by five or fewer
individuals. As defined for federal income tax purposes, the term "individuals"
includes a number of specified entities. Our articles of incorporation include
restrictions regarding transfers of our capital stock and ownership limits that
are intended to assist us in satisfying the real estate investment trust
ownership limit. The ownership limit in our articles of incorporation may have
the effect of delaying, deferring or preventing someone from taking control of
us, even though a change of control could involve a premium price for our
stockholders or otherwise could be in our stockholders' best interests. See
"Limits on Ownership of Capital Stock" beginning on page 18.
FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST WOULD CAUSE US TO BE TAXED
AS A CORPORATION, WHICH WOULD SIGNIFICANTLY LOWER CASH AVAILABLE FOR
DISTRIBUTION TO STOCKHOLDERS.
If we fail to qualify as a real estate investment trust for federal
income tax purposes, we will be taxed as a corporation. We believe that we are
organized and qualified as a real estate investment trust, and intend to
operate in a manner that will allow us to continue to qualify as a real estate
investment trust. However, we cannot assure you that we are qualified as a real
estate investment trust, or that we will remain qualified in the future.
7
<PAGE> 9
Qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue Code for which
there are only limited judicial and administrative interpretations. It also
involves the determination of a variety of factual matters and circumstances
not entirely within our control. In addition, future legislation, new
regulations, administrative interpretations or court decisions may
significantly change the requirements for qualification as a real estate
investment trust or the income tax consequences of such qualification.
If, in any taxable year, we fail to qualify as a real estate investment
trust, we will be subject to federal income tax on our taxable income at
regular corporate rates, plus any applicable alternative minimum tax. In
addition, unless we are entitled to relief under applicable law, we would be
disqualified from treatment as a real estate investment trust for the four
taxable years following the year in which we lose our qualification. The
additional tax liability resulting from the failure to qualify as a real estate
investment trust would significantly reduce or eliminate the amount of cash
available for distribution to our stockholders. Furthermore, we would no longer
be required to make distributions to our stockholders. See "Federal Income Tax
Considerations and Consequences of Your Investment" beginning on page 34.
YEAR 2000 ISSUES MAY DISRUPT OUR OPERATIONS.
"Year 2000" issues refer to the problems that may result from the
improper processing by computer systems of dates after 1999. These problems
could result in systems failures or miscalculations causing disruptions of
operations. Our efforts to address our Year 2000 issues are focused on three
areas:
- reviewing and taking any necessary steps to attempt to correct
our computer information systems;
- evaluating and making any necessary modifications to other
computer systems that do not relate to information technology
but include embedded technology, such as telecommunication,
security, elevator, fire and safety, and heating, ventilation
and air conditioning systems; and
- communicating with our important service providers to determine
whether there will be any interruption to their systems which
could affect us.
With respect to our systems, we have not identified any specific
business functions that are likely to suffer material disruptions. Due to the
unique and pervasive nature of Year 2000 issues, however, we are not able to
anticipate every Year 2000 event that might affect us, particularly those
outside of our company. While our efforts to address Year 2000 issues may
involve additional costs, we do not believe that these costs will have a
material impact on our financial results. Our failure to identify or remediate
a Year 2000 issue, however, could adversely affect our financial condition and
results of operations. In addition, the costs and timing of third-party Year
2000 compliance is not within our control and, thus, no assurances can be given
with respect to the efforts of third parties or the potential effects on us of
any failure of their systems to be Year 2000 compliant.
THE ABILITY OF OUR STOCKHOLDERS TO CONTROL OUR POLICIES AND AFFECT A CHANGE OF
CONTROL OF OUR COMPANY IS LIMITED, WHICH MAY NOT BE IN OUR STOCKHOLDERS' BEST
INTERESTS.
ARTICLES OF INCORPORATION AND BYLAW PROVISIONS
There are provisions in our articles of incorporation and bylaws which
may discourage a third party from making a proposal to acquire us, even if some
of our stockholders might consider the proposal to be in their best interests.
These provisions include the following:
- Our articles of incorporation provide for three classes of
directors with the term of office of one class expiring each
year, commonly referred to as a "staggered board." By preventing
stockholders from voting on the election of more than one class
of directors at any annual meeting of stockholders, this
provision may have the effect of keeping the current members of
our board of directors in control for a longer period of time
than stockholders may desire.
- Our articles of incorporation authorize our board of directors
to issue up to 25 million shares of preferred stock without
stockholder approval and to establish the preferences and rights
of any
8
<PAGE> 10
preferred stock issued, which would allow the board to issue one
or more classes or series of preferred stock that could
discourage or delay a tender offer or change in control.
- To maintain our qualification as a real estate investment trust
for federal income tax purposes, not more than 50% in value of
our outstanding capital stock may be owned, directly or
indirectly, by five or fewer individuals at any time during the
last half of any year. Our articles of incorporation generally
prohibit ownership, directly or by virtue of the attribution
provisions of the Internal Revenue Code, by any single
stockholder of more than 9.8% of the issued and outstanding
shares of our stock. In general, pension plans and mutual funds
may actually and beneficially own up to 15% of the outstanding
shares of our stock. Our board of directors may waive or modify
the ownership limit for one or more persons if it is satisfied
that ownership in excess of this limit will not jeopardize our
status as a real estate investment trust for federal income tax
purposes. These ownership limits may prevent or delay a change
in control and, as a result, could adversely affect our
stockholders' ability to realize a premium for their shares of
common stock.
SUMMIT PROPERTIES PARTNERSHIP, L.P.'S PARTNERSHIP AGREEMENT
Summit Properties Partnership, L.P. may not sell or transfer all or
substantially all of its assets:
- or enter into any other similar transaction which would result
in the recognition of significant taxable gain by the holders of
common units, without the approval of holders of 85% of all
outstanding common units; or
- without the approval of holders of two-thirds of each of the
Series B and Series C preferred units if the transaction would
materially and adversely affect the respective rights and
privileges of these unitholders.
As of December 17, 1999, Summit Properties Inc. held approximately 85.6% of the
outstanding common units and none of the outstanding preferred units. These
consent requirements could limit the possibility of an acquisition or change in
control of Summit Properties Partnership, L.P.
SHAREHOLDER RIGHTS PLAN
On December 14, 1998, we adopted a shareholder rights plan. Under the
terms of the shareholder rights plan, our board of directors can in effect
prevent a person or group from acquiring more than 15% of the outstanding
shares of our common stock. Unless our board approves of such person's
purchase, after that person acquires more than 15% of our outstanding common
stock, all other stockholders will have the right to purchase securities from
us at a price that is less than their then fair market value. These purchases
by the other stockholders would substantially reduce the value and influence of
the shares of our common stock owned by the acquiring person. Our board of
directors, however, can prevent the shareholder rights plan from operating in
this manner. This gives our board significant discretion to approve or
disapprove of a person's efforts to acquire a large interest in us.
MARYLAND LAW
As a Maryland corporation, we are subject to the provisions of the
Maryland General Corporation Law. Maryland law imposes restrictions on some
business combinations and requires compliance with statutory procedures before
some mergers and acquisitions can occur. Maryland law may delay or prevent
offers to acquire us or increase the difficulty of completing an acquisition of
us, even if the acquisition is in our stockholders' best interests. See
"Important Provisions of Maryland Law" beginning on page 21.
POTENTIAL LIABILITY FOR ENVIRONMENTAL CONTAMINATION COULD RESULT IN SUBSTANTIAL
COSTS.
We are in the business of acquiring, owning, operating and developing
apartment communities. From time to time we will sell some of our properties to
third parties. Federal, state and local environmental laws may require us,
often regardless of our knowledge or responsibility but solely because of our
current or previous ownership or operation of real estate, to investigate and
remediate the effects of hazardous or toxic substances or
9
<PAGE> 11
petroleum product releases at our properties. We also may be held liable to a
governmental entity or to third parties for property damage and for
investigation and clean-up costs incurred by us in connection with any
contamination. These costs could be substantial. The presence of these
substances or the failure to properly remediate the contamination may
materially and adversely affect our ability to borrow against, sell or rent the
affected property. In addition, environmental laws create liens on contaminated
sites in favor of the government for damages and costs it incurs.
IF YOU REDEEM YOUR COMMON UNITS FOR SHARES OF COMMON STOCK, YOU MAY HAVE
ADVERSE TAX CONSEQUENCES.
If we acquire your common units in exchange for cash or shares of
common stock, the redemption of your common units will be treated for tax
purposes as a sale of your common units. Such a sale will be fully taxable to
you and you will be treated for tax purposes as realizing an amount equal to
the sum of:
- the cash that you receive or the value of the shares of common
stock that you receive; plus
- the amount of any liabilities of Summit Properties Partnership,
L.P. allocable to the exchanged common units at the time of the
redemption or exchange.
It is possible that the amount of gain recognized or even the tax
liability resulting from that gain could exceed the amount of cash and the
value of the shares of common stock which you would receive upon the
disposition of your common units. In addition, your ability to sell shares of
our common stock to raise cash to pay your tax liabilities associated with the
redemption of your common units may be limited due to fluctuations in the
market price of our common stock. The price that you receive for your shares
may not equal the value of your common units at the time of the redemption or
exchange.
If we do not acquire the common units you tender for redemption in
exchange for shares of common stock and Summit Properties Partnership, L.P.
redeems the common units for cash, the tax consequences may differ.
YOUR INVESTMENT WILL CHANGE UPON REDEMPTION OF YOUR COMMON UNITS.
If you exercise your right to require that we redeem all or a portion
of your common units, you may receive cash or, at our option, shares of common
stock in exchange for your common units. If you receive cash, you will no
longer have any interest in Summit Properties Partnership, L.P., except to the
extent that you retain any units. You will not benefit from any subsequent
increases in our share price and you will not receive any future distributions
from us, unless you retain or acquire units or additional shares of common
stock in the future. If you receive common stock, you will become a stockholder
of Summit Properties Inc. rather than a unitholder in Summit Properties
Partnership, L.P. As a stockholder of Summit Properties Inc., you will have
different economic and corporate governance rights than those you had as a
unitholder.
10
<PAGE> 12
ABOUT THIS PROSPECTUS AND WHERE YOU MAY FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended, with respect to the shares of common stock offered under this
prospectus. This prospectus is part of the registration statement. This
prospectus does not contain all of the information contained in the
registration statement because we have omitted parts of the registration
statement in accordance with the rules and regulations of the Securities and
Exchange Commission. For further information, we refer you to the registration
statement, which you may read and copy at the public reference facilities
maintained by the Securities and Exchange Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Securities
and Exchange Commission's Regional Offices at 7 World Trade Center, 13th Floor,
New York, New York 10048, and Citicorp Center, 500 W. Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies at the
prescribed rates from the Public Reference Section of the Securities and
Exchange Commission at its principal office in Washington, D.C. You may call
the Securities and Exchange Commission at 1-800-SEC-0330 for further
information about the public reference rooms. The Securities and Exchange
Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants, including Summit
Properties Inc., that file electronically with the Securities and Exchange
Commission. You may access the Securities and Exchange Commission's web site at
http://www.sec.gov.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and we are required to file reports, proxy
statements and other information with the Securities and Exchange Commission.
Such reports, proxy statements and other information can be inspected and
copied at the locations described above. Our Securities and Exchange Commission
file number is 001-12792. Copies of these materials can be obtained by mail
from the Public Reference Section of the Securities and Exchange Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. Our common stock is listed on the New York Stock Exchange
under the symbol "SMT." You may also read our reports, proxy and other
information statements, and other information which we file at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Securities and Exchange Commission allows us to incorporate by
reference the information that we file with them. Incorporation by reference
means that we can disclose important information to you by referring you to
other documents that are legally considered to be part of this prospectus, and
later information that we file with the Securities and Exchange Commission will
automatically update and supersede the information in this prospectus and the
documents listed below. We incorporate by reference the specific documents
listed below and any future filings made with the Securities and Exchange
Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until all of the shares of common stock offered by this prospectus
are sold.
- Our Annual Report on Form 10-K for the year ended December 31,
1998.
- Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999, June 30, 1999 and September 30, 1999.
- Our Current Report on Form 8-K filed on September 17, 1999.
- The description of our common stock contained in our
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, and all amendments and reports updating the description.
- The description of the rights to purchase shares of our Series A
Junior Participating Cumulative Preferred Stock contained in our
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, and all amendments and reports updating the description.
YOU MAY REQUEST A COPY OF THESE FILINGS, AND ANY EXHIBITS WE HAVE
SPECIFICALLY INCORPORATED BY REFERENCE AS AN EXHIBIT IN THIS PROSPECTUS, AT NO
COST, BY WRITING OR TELEPHONING US AT THE FOLLOWING ADDRESS: MICHAEL G. MALONE,
ESQ., SUMMIT PROPERTIES INC., 212 SOUTH TRYON STREET, SUITE 500, CHARLOTTE,
NORTH CAROLINA 28281. TELEPHONE REQUESTS MAY BE DIRECTED TO MR. MALONE AT (704)
334-3000.
11
<PAGE> 13
FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference in
this prospectus, contains statements that are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. You can identify forward-looking statements by
the use of the words "believe," "expect," "anticipate," "intend," "estimate,"
"assume" and other similar expressions which predict or indicate future events
and trends and which do not relate to historical matters. These statements
include, among other things, statements regarding our intent, belief or
expectations with respect to:
- our declaration or payment of distributions;
- our potential developments or acquisitions or dispositions of
properties, assets or other public or private companies;
- the anticipated operating performance of our communities;
- our policies regarding investments, indebtedness, acquisitions,
dispositions, financings, conflicts of interest and other
matters;
- our qualification as a real estate investment trust under the
Internal Revenue Code;
- the real estate markets in the southeast, southwest,
mid-atlantic and mid-west regions of the United States and in
general;
- the availability of debt and equity financing;
- interest rates;
- general economic conditions;
- trends affecting our financial condition or results of
operations; and
- the implementation of our plan to address Year 2000 issues.
You should not rely on forward-looking statements because they involve
known and unknown risks, uncertainties and other factors, some of which are
beyond our control. These risks, uncertainties and other factors may cause our
actual results, performance or achievements to be materially different from the
anticipated future results, performance or achievements expressed or implied by
the forward-looking statements. Some of the factors that might cause these
differences include, but are not limited to, the following:
- we may fail to secure or may abandon development opportunities;
- construction costs of a community may exceed original estimates;
- construction and lease-up may not be completed on schedule,
resulting in increased debt service expense and construction
costs and reduced rental revenues;
- occupancy rates and market rents may be adversely affected by
local economic and market conditions which are beyond our
control;
- financing may not be available to us, or may not be available on
favorable terms;
- our cash flow may be insufficient to meet required payments of
principal and interest;
- our existing indebtedness may mature in an unfavorable credit
environment, preventing such indebtedness from being refinanced,
or, if refinanced, causing such refinancing to occur on terms
that are not as favorable as the terms of the existing
indebtedness;
12
<PAGE> 14
- legislative or regulatory changes, including changes to laws
governing the taxation of real estate investment trusts;
- we may experience unanticipated delays or expenses in achieving
Year 2000 compliance;
- our business partners, including our primary bank and payroll
processor, vendors of our computer information systems or third
party service providers, may experience unanticipated delays or
expenses in achieving Year 2000 compliance; and
- generally accepted accounting principles, policies and
guidelines applicable to real estate investment trusts.
In addition, the factors described under "Risk Factors" in this prospectus may
result in these differences. You should carefully review all of these factors,
and you should be aware that there may be other factors that could cause these
differences.
We caution you that, while forward-looking statements reflect our
estimates and beliefs, they are not guarantees of future performance. These
forward-looking statements were based on information, plans and estimates at
the date of this prospectus, and we do not promise to update any
forward-looking statements to reflect changes in underlying assumptions or
factors, new information, future events or other changes.
13
<PAGE> 15
OUR COMPANY
SUMMIT PROPERTIES INC.
Summit Properties Inc. is one of the largest developers and operators
of luxury garden apartment communities in the southeastern, southwestern and
mid-atlantic United States. We are a fully integrated organization, which means
that we combine multifamily development, construction, acquisition and
management expertise. As of December 17, 1999, we owned, or held an ownership
interest in, and managed 82 apartment communities with 21,404 apartment homes.
We are the sole general partner of and conduct all of our principal
operations through Summit Properties Partnership, L.P. We conduct our third
party management and construction and other businesses through our indirect
subsidiaries, Summit Management Company and Summit Apartment Builders, Inc.
Summit Properties Inc. is a self-managed real estate investment trust.
Our common stock is listed on the New York Stock Exchange under the symbol
"SMT."
We were originally organized as a real estate investment trust under
the laws of the State of Maryland on December 1, 1993 and later changed to
corporate form on January 13, 1994. On February 15, 1994, we completed our
initial public offering of common stock. Our offices are located at 212 South
Tryon Street, Suite 500, Charlotte, North Carolina 28281 and our telephone
number is (704) 334-3000.
SUMMIT PROPERTIES PARTNERSHIP, L.P.
Limited partnership interests in Summit Properties Partnership, L.P.
are either common units or preferred units. As of December 17, 1999, we held
approximately 85.6% of the outstanding common units and none of the outstanding
preferred units in Summit Properties Partnership, L.P.
A holder of a common unit in Summit Properties Partnership, L.P. may
present the common unit for redemption at any time, subject to agreements upon
the issuance of common units to particular holders that may restrict this right
for a period of time, generally not less than one year. Upon presentation of a
common unit for redemption, Summit Properties Partnership, L.P. must redeem the
common unit for:
- cash equal to the then value of a share of common stock of
Summit Properties Inc.; or
- at our election, for one share of common stock of Summit
Properties Inc.
As of December 17, 1999, Summit Properties Partnership, L.P. had
outstanding 3,400,000 preferred units of limited partnership interest
designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units.
These preferred units are redeemable by Summit Properties Partnership, L.P. on
or after April 29, 2004 for cash, shares of our 8.95% Series B Cumulative
Redeemable Perpetual Preferred Stock, or a combination of cash and stock.
Holders of the Series B preferred units have the right to exchange these
preferred units for shares of preferred stock of Summit Properties Inc. on a
one-for-one basis on or after April 29, 2009 or upon the occurrence of
specified events.
As of December 17, 1999, Summit Properties Partnership, L.P. had
outstanding 2,200,000 preferred units of limited partnership interest
designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units.
These preferred units are redeemable by Summit Properties Partnership, L.P. on
or after September 3, 2004 for cash. Holders of the Series C preferred units
have the right to exchange these preferred units for shares of preferred stock
of Summit Properties Inc. on a one-for-one basis on or after September 3, 2009
or upon the occurrence of specified events.
Summit Properties Partnership, L.P. was organized as a limited
partnership under the laws of the State of Delaware on January 14, 1994. Summit
Properties Partnership, L.P. will continue until December 31, 2093, or until
sooner dissolved in accordance with the terms of Summit Properties Partnership,
L.P.'s partnership agreement or Delaware law.
14
<PAGE> 16
DESCRIPTION OF COMMON STOCK
The following is a description of the material terms and provisions of
our common stock. It may not contain all the information that is important to
you. You can access complete information by referring to our articles of
incorporation and bylaws.
GENERAL
Under our articles of incorporation, we have authority to issue 100
million shares of common stock, par value $.01 per share. Under Maryland law,
stockholders generally are not responsible for a corporation's debts or
obligations. As of December 17, 1999, we had 26,414,446 shares of common stock
issued and outstanding.
DIVIDENDS
Subject to the preferential rights of any other class or series of
stock and to the provisions of our articles of incorporation regarding excess
stock, which are described below, stockholders will be entitled to receive
dividends on shares of common stock out of assets that we can legally use to
pay dividends, when and if, they are authorized and declared by our board of
directors.
VOTING RIGHTS
Subject to the provisions of our articles of incorporation regarding
excess stock, holders of common stock have the exclusive power to vote on all
matters presented to our stockholders, including the election of directors,
unless Maryland law or the terms of any other shares of capital stock provide
otherwise. Holders of common stock are entitled to one vote per share. Our
board of directors is divided into three classes. The members of each class
serve for a term of three years. The terms for the three classes are staggered,
so that the term of only one class of directors expires each year. There is no
cumulative voting in the election of our directors, which means that at any
meeting of our stockholders, the holders of a majority of the outstanding
shares of common stock can elect all of the directors then standing for
election and the votes held by the holders of the remaining shares of common
stock will not be sufficient to elect any director.
LIQUIDATION/DISSOLUTION RIGHTS
Subject to the preferential rights of any other class or series of
stock and to the provisions of our articles of incorporation regarding excess
stock, stockholders share in the same proportion as other stockholders out of
assets that we can legally use to pay distributions in the event we are
liquidated, dissolved or our affairs are wound up after we pay or make adequate
provision for all of our known debts and liabilities.
OTHER RIGHTS
Subject to the provisions of our articles of incorporation regarding
excess stock, all shares of our common stock have equal dividend, distribution,
liquidation and other rights, and have no preference, appraisal or exchange
rights, except for any appraisal rights provided by Maryland law.
Holders of shares of our common stock have no conversion, sinking fund
or redemption rights, or preemptive rights to subscribe for any of our
securities.
Our articles of incorporation prohibit us from merging or selling all
or substantially all of our assets without the approval of a majority of the
outstanding shares that are entitled to vote on such matters. In addition,
Summit Properties Partnership, L.P.'s partnership agreement requires that these
types of transactions be approved by:
- holders of 85% of the common units;
- holders of two-thirds of the Series B preferred units if these
unitholders will be materially and adversely affected by the
transaction; and
15
<PAGE> 17
- holders of two-thirds of the Series C preferred units if these
unitholders will be materially and adversely affected by the
transaction.
RESTRICTIONS ON OWNERSHIP
For us to qualify as a real estate investment trust under the Internal
Revenue Code, no more than 50% in value of our outstanding capital stock may be
owned, directly or indirectly, by five or fewer individuals during the last
half of a taxable year. To assist us in meeting this requirement, we may take
actions such as the automatic exchange of shares in excess of this ownership
restriction into shares of excess stock to limit the beneficial ownership of
our outstanding equity securities, directly or indirectly, by one individual.
See "Limits on Ownership of Capital Stock" beginning on page 18.
TRANSFER AGENT
The transfer agent and registrar for our common stock is First Union
National Bank.
PREFERRED STOCK
Under our articles of incorporation, we have authority to issue up to
25 million shares of preferred stock, par value $.01 per share. As of the date
of this prospectus, we did not have any preferred stock outstanding. A
description of our preferred stock reserved for issuance and its general terms
is set forth below:
- Series A Junior Participating Cumulative Preferred Stock. We
have reserved 350,000 Series A shares for issuance under our
shareholder rights plan. Under the shareholder rights plan, a
preferred stock purchase right is attached to each share of our
common stock. If the preferred stock purchase right becomes
exercisable, the holder of the right will be able to purchase
from us a unit of preferred stock equal to one one-thousandth of
a Series A share. See "Shareholder Rights Plan" on page 20.
- 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock.
We have reserved 3,400,000 Series B shares for issuance upon
exercise by the holders of Summit Properties Partnership, L.P.'s
3,400,000 Series B preferred units of their right to exchange
such Series B preferred units for the Series B shares on a
one-for-one basis. Holders of the Series B preferred units may
exercise their exchange right in whole or in part, in minimum
amounts of 850,000 units, (a) at any time on or after April 29,
2009, (b) at any time if full quarterly distributions are not
made for six quarters, whether or not consecutive, or (c) upon
the occurrence of particular specified events related to the
treatment of Summit Properties Partnership, L.P. or the Series B
preferred units for federal income tax purposes. Distributions on
the Series B preferred units are, and dividends on the Series B
shares, if and when issued, will be, cumulative from the date of
original issuance and are, or will be, payable quarterly at the
rate of 8.95% per annum of the $25.00 original capital
contribution. We may redeem the Series B preferred units and the
Series B shares at any time on or after April 29, 2004 for cash
at a redemption price of $25.00 per unit or share, plus all
accumulated, accrued and unpaid distributions or dividends. At
our option, we may also redeem the Series B preferred units for
Series B shares. The Series B preferred units and the Series B
shares have no stated maturity, are not subject to any sinking
fund or mandatory redemption and are not convertible into any
other securities of Summit Properties Inc., other than excess
stock, or Summit Properties Partnership, L.P.
- 8.75% Series C Cumulative Redeemable Perpetual Preferred Stock.
We have reserved 2,200,000 Series C shares for issuance upon
exercise by the holders of Summit Properties Partnership, L.P.'s
2,200,000 Series C preferred units of their right to exchange
such Series C preferred units for the Series C shares on a
one-for-one basis. Holders of the Series C preferred units may
exercise their exchange right in whole or in part, in minimum
amounts of 550,000 units, (a) at any time on or after September
3, 2009, (b) at any time if full quarterly distributions are not
made for six quarters, whether or not consecutive, (c) upon the
occurrence of particular specified events related to the
treatment of Summit Properties Partnership, L.P. or the Series C
preferred units for federal income tax purposes, or (d) at any
time that the institutional investor's holdings in Summit
Properties
16
<PAGE> 18
Partnership, L.P. exceed 18% of the total profits of or capital
interest in Summit Properties Partnership, L.P. for a taxable
year. Distributions on the Series C preferred units are, and
dividends on the Series C shares, if and when issued, will be,
cumulative from the date of original issuance and are, or will
be, payable quarterly at the rate of 8.75% per annum of the
$25.00 original capital contribution. We may redeem the Series C
preferred units and the Series C shares at any time on or after
September 3, 2004 for cash at a redemption price of $25.00 per
unit or share, plus all accumulated, accrued and unpaid
distributions or dividends. The Series C preferred units and the
Series C shares have no stated maturity, are not subject to any
sinking fund or mandatory redemption and are not convertible into
any other securities of Summit Properties Inc., other than excess
stock, or Summit Properties Partnership, L.P.
We did not have any other preferred stock reserved for issuance as of
the date of this prospectus. We may issue preferred stock from time to time, in
one or more series, as authorized by our board of directors. Prior to issuance
of shares of each series, the board of directors is required by the Maryland
General Corporation Law and our articles of incorporation to fix for each
series, subject to the provisions of our articles of incorporation regarding
excess stock, the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms or conditions of redemption, as are permitted by
Maryland law. When issued, the preferred stock will be fully paid and
nonassessable and will have no preemptive rights. Our board of directors could
authorize the issuance of preferred stock with terms and conditions that could
have the effect of discouraging a takeover or other transaction that holders of
common stock might believe to be in their best interests or in which holders of
some, or a majority, of the common stock might receive a premium for their
shares over the then market price of such common stock.
17
<PAGE> 19
LIMITS ON OWNERSHIP OF CAPITAL STOCK
OWNERSHIP LIMITS
Among the requirements that we must meet to qualify as a real estate
investment trust under the Internal Revenue Code is that not more than 50% in
value of our outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals during the last half of a taxable year. Additionally,
such shares of capital stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year. To protect us against the risk of
losing our status as a real estate investment trust due to a concentration of
ownership among our stockholders, our articles of incorporation provide that no
holder who is an individual may own, or be deemed to own by virtue of the
attribution provisions of the Internal Revenue Code, more than 9.8% of our
capital stock. Notwithstanding the preceding sentence, our board of directors
at its option and in its discretion may approve such ownership by selected
persons. Our board of directors does not expect that it would waive the 9.8%
ownership limit in the absence of evidence satisfactory to the board of
directors that the waiver of the limit will not jeopardize our status as a real
estate investment trust and the board of directors otherwise decides that such
action is in our best interests. Any transfer of shares of capital stock
including any security convertible into shares of capital stock that would
create a direct or indirect ownership of shares of capital stock in excess of
the 9.8% ownership limit or that would result in our disqualification as a real
estate investment trust, including any transfer that results in the shares of
beneficial interest being owned by fewer than 100 persons or that results in us
being "closely held" within the meaning of Section 856(h) of the Internal
Revenue Code, shall be void and have no effect. The intended transferee will
acquire no rights to the shares of capital stock. The foregoing restrictions
will not apply if our board of directors determines that it is no longer in our
best interests to attempt to qualify, or to continue to qualify, as a real
estate investment trust.
Pursuant to the Internal Revenue Code, some types of entities, such as
pension plans described in Section 401(a) of the Internal Revenue Code and
mutual funds registered under the Investment Company Act of 1940, will be
looked-through for purposes of the five or fewer test described above. Our
articles of incorporation limit these entities to holding no more than 15% of
the total value of our shares of capital stock.
SHARES OWNED IN EXCESS OF THE OWNERSHIP LIMIT
Capital stock owned, or deemed to be owned, or transferred to a
stockholder in excess of the applicable ownership limit will be automatically
converted into shares of excess stock that will be transferred, by operation of
law, to us as trustee of a trust for the exclusive benefit of the transferees
to whom such capital stock may be ultimately transferred without violating the
applicable ownership limit. While the shares of excess stock are held in trust:
- they will not be entitled to vote;
- they will not be considered for purposes of any stockholder
vote or the determination of a quorum for such vote; and
- except upon liquidation, they will not be entitled to
participate in dividends or other distributions.
Any dividend or distribution paid on excess stock prior to discovery by
us that capital stock has been transferred in violation of the applicable
ownership limit shall be repaid to us on demand. Shares of excess stock are not
treasury stock, but rather constitute a separate class of issued and
outstanding stock. The original transferee-stockholder may, at any time the
shares of excess stock are held by us in trust, transfer the interest in the
trust representing the excess stock to any individual whose ownership of the
capital stock converted into such excess stock would be permitted under the
applicable ownership limit, at a price per share not in excess of:
- the price per share paid by the original transferee-stockholder
for the capital stock that was converted into excess stock; or
- if the original transferee-stockholder received the shares
through a gift, devise or other transaction in which such
stockholder did not give value, the average closing price per
share for the class of shares
18
<PAGE> 20
from which the shares of excess stock were converted for the 10
days immediately preceding the transfer.
Immediately upon the transfer to the permitted transferee, the excess stock
will automatically be converted into capital stock of the class from which it
was converted. If these transfer restrictions are determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation, then the
intended transferee of any excess stock may be deemed, at our option, to have
acted as an agent on our behalf in acquiring the excess stock and to hold the
excess stock on behalf of us.
RIGHT TO PURCHASE EXCESS STOCK
In addition to the foregoing transfer restrictions, we have the right,
for a period of 90 days during the time any shares of excess stock are held by
us in trust, to purchase all or any portion of the excess stock from the
original transferee-stockholder for a price per share equal to the lesser of:
- the price per share initially paid for the capital stock by the
original transferee-stockholder, or if the original
transferee-stockholder received the shares through a gift,
devise or other transaction in which such stockholder did not
give value, the average of the closing price per share for the
class of shares from which the shares of excess stock were
converted for the 10 days immediately preceding the transfer;
and
- the average closing price per share for the class of shares from
which the shares of excess stock were converted for the 10 days
immediately preceding the date we elect to purchase the shares.
The 90-day period begins on the date of the purported transfer that violated
the applicable ownership limit if the original transferee-stockholder gives
notice to us of the transfer or, if no notice is given, the date our board of
directors determines that such a transfer has been made.
Our stockholders are required upon demand to disclose to us in writing
any information with respect to their direct, indirect and constructive
ownership of capital stock as our board of directors deems necessary to comply
with the provisions of the Internal Revenue Code applicable to real estate
investment trusts, to comply with the requirements of any taxing authority or
governmental agency or to determine any such compliance.
This ownership limitation may have the effect of precluding the
acquisition of control of Summit Properties Inc. unless our board of directors
determines that our maintenance of real estate investment trust status is no
longer in our best interests.
19
<PAGE> 21
SHAREHOLDER RIGHTS PLAN
On December 14, 1998, our board of directors adopted a shareholder
rights plan and entered into a shareholder rights agreement with First Union
National Bank, as rights agent. The purpose of the shareholder rights plan is
to enhance the board of director's ability to protect our stockholders'
interests by encouraging potential acquirors to negotiate with our board of
directors prior to attempting a takeover bid and to provide our board with
leverage in negotiating on behalf of all of our stockholders the terms of any
proposed takeover. The rights may discourage, delay or prevent hostile
takeovers. They are not intended, however, to interfere with any merger or
other business combination approved by our board of directors.
Under the shareholder rights plan, each of our stockholders received a
dividend of one preferred stock purchase right for each outstanding share of
our common stock that the stockholder owned on December 15, 1998, the time of
the rights dividend. We refer to these preferred stock purchase rights as the
"rights." A right is automatically attached to each share of common stock
issued after our stockholders received the rights dividend. The holder of a
right does not have the powers and privileges of a stockholder with respect to
the right. The rights trade with our shares of common stock and become
exercisable only under the circumstances described below.
In general, the rights will separate from the common stock and become
exercisable when the first of the following events happens:
- ten calendar days after a public announcement that a person or
group has acquired beneficial ownership of 15% or more of our
common stock; or
- ten business days, or a later date if determined by our board,
after the beginning of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or
more of our outstanding common stock.
If the rights become exercisable, the holder of a right will be able to
purchase from us a unit of preferred stock equal to one one-thousandth of a
share of our Series A Junior Participating Cumulative Preferred Stock at a
price of $45 per unit, subject to adjustment to prevent dilution.
We may redeem the rights in whole, but not in part, at a price of $.01
per right payable in cash, our common stock or other consideration deemed
appropriate by our board at any time before the earlier of:
- the time at which any person or group has acquired beneficial
ownership of 15% or more of our common stock; or
- the expiration date of the shareholder rights agreement.
The rights will expire at the close of business on December 14, 2008 unless we
redeem or exchange them before that date.
The above description of our shareholder rights plan is not intended to
be a complete description. For a full description of the shareholder rights
plan, you should read the shareholder rights agreement. The shareholder rights
agreement was included as an exhibit to the registration statement of which
this prospectus is a part. You may obtain a copy of this agreement at no charge
by writing to us at the address listed on page 11.
20
<PAGE> 22
IMPORTANT PROVISIONS OF MARYLAND LAW
The following is a summary of important provisions of Maryland law
which affect us and our stockholders. The description below is intended only as
a summary. You can access complete information by referring to the Maryland
General Corporation Law.
MARYLAND BUSINESS COMBINATION STATUTE
Maryland law establishes special requirements with respect to "business
combinations" between Maryland corporations and "interested stockholders"
unless exemptions are applicable. Among other things, the law prohibits for a
period of five years a merger and other specified or similar transactions
between a company and an interested stockholder and requires a supermajority
vote for such transactions after the end of the five-year period.
"Interested stockholders" are all persons owning beneficially, directly
or indirectly, more than 10% of the outstanding voting stock of the Maryland
corporation. "Business combinations" include any merger or similar transaction
subject to a statutory vote and additional transactions involving transfers of
assets or securities in specified amounts to interested stockholders or their
affiliates. Unless an exemption is available, transactions of these types may
not be consummated between a Maryland corporation and an interested stockholder
or its affiliates for a period of five years after the date on which the
stockholder first became an interested stockholder. Thereafter, the transaction
may not be consummated unless recommended by the board of directors and
approved by the affirmative vote of at least 80% of the votes entitled to be
cast by all holders of outstanding voting shares and two-thirds of the votes
entitled to be cast by all holders of outstanding voting shares other than the
interested stockholder. A business combination with an interested stockholder
that is approved by the board of directors of a Maryland corporation at any
time before an interested stockholder first becomes an interested stockholder
is not subject to the special voting requirements. An amendment to a Maryland
corporation's charter electing not to be subject to the foregoing requirements
must be approved by the affirmative vote of at least 80% of the votes entitled
to be cast by all holders of outstanding voting shares and two-thirds of the
votes entitled to be cast by holders of outstanding voting shares who are not
interested stockholders. Any such amendment is not effective until 18 months
after the vote of stockholders and does not apply to any business combination
of a corporation with a stockholder who was an interested stockholder on the
date of the stockholder vote. Our articles of incorporation exempt from the
Maryland business combination statute any business combination with William B.
McGuire, Jr., William F. Paulsen, Raymond V. Jones and David F. Tufaro, or
current or future affiliates, associates or other persons acting in concert as
a group with any of the foregoing persons.
MARYLAND CONTROL SHARE ACQUISITION STATUTE
Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter by stockholders. "Control shares" are voting shares which, if aggregated
with all other shares of stock previously acquired by the acquiring person,
would entitle the acquiring person to exercise voting power in electing
directors within one of the following ranges of voting power:
(1) one-fifth or more but less than one-third;
(2) one-third or more but less than a majority; or
(3) a majority of all voting power.
Control shares do not include shares the acquiring person is then entitled to
vote as a result of having previously obtained stockholder approval. A "control
share acquisition" means the acquisition of control shares, subject to
applicable exceptions.
A person who has made or proposes to make a control share acquisition
may compel the board of directors to call a special meeting of stockholders to
be held within 50 days of demand to consider voting rights for the shares, upon
satisfaction of relevant conditions, including an undertaking to pay expenses.
If no request for a meeting is made, the corporation may itself present the
question at any stockholder meeting.
21
<PAGE> 23
If voting rights for control shares are not approved at the meeting or
if the acquiring person does not deliver an acquiring person statement as
required by the statute with respect to the control shares, then, subject to
applicable conditions and limitations, the corporation may redeem any or all of
the control shares for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition by the acquiring person or of any meeting of stockholders at which
the voting rights of such shares are considered and not approved. If voting
rights for control shares are approved at a stockholder meeting and the
acquiring person becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise 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 acquiring person in the control
share acquisition.
The control share acquisition statute does not apply to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction, or to acquisitions approved or exempted by the articles of
incorporation or bylaws of the corporation. Our articles of incorporation and
bylaws exempt from the Maryland control share acquisition statute any
transactions otherwise subject to the statute by Messrs. McGuire, Paulsen,
Jones and Tufaro or current or future affiliates, associates or other persons
acting in concert or as a group with any of the foregoing persons.
The business combination statute and the control share acquisition
statute could have the effect of discouraging offers to acquire us and of
increasing the difficulty of consummating any such offer.
22
<PAGE> 24
DESCRIPTION OF COMMON UNITS AND REDEMPTION OF COMMON UNITS
GENERAL
Summit Properties Partnership, L.P. may issue preferred and common
units of limited partnership interest. As of December 17, 1999, Summit
Properties Partnership, L.P. had outstanding:
- 30,851,188 common units, including 26,414,446 common units
owned by Summit Properties Inc.;
- 3,400,000 8.95% Series B Cumulative Redeemable Perpetual
Preferred Units; and
- 2,200,000 8.75% Series C Cumulative Redeemable Perpetual
Preferred Units.
Each holder of a common unit generally may require that Summit
Properties Partnership, L.P. redeem all or a portion of such holder's common
units. You may exercise this redemption right by delivering a notice of
redemption to us in accordance with the partnership agreement of Summit
Properties Partnership, L.P. After presentation for redemption, you will receive
for each common unit presented cash in an amount equal to the market value of a
share of our common stock, as determined in accordance with the partnership
agreement of Summit Properties Partnership, L.P. and subject to adjustments to
prevent dilution. In lieu of Summit Properties Partnership, L.P. redeeming your
common units for cash, we may, in our sole discretion, elect to acquire any
common unit so presented to Summit Properties Partnership, L.P. in exchange for
one share of our common stock, subject to the same adjustments to prevent
dilution.
We may elect to acquire any common units presented to Summit Properties
Partnership, L.P. for redemption by issuing shares of our common stock. Such an
acquisition will be treated as a sale by you of your common units for federal
income tax purposes. Upon a redemption for cash, your right to receive
distributions with respect to the common units redeemed will cease. If we elect
to redeem your common units for shares of common stock, you will have rights as
a stockholder of Summit Properties Inc., including the right to receive
dividends, from the time of your acquisition of the shares.
No redemption can occur if the delivery of shares of common stock would
be prohibited under the provisions of our articles of incorporation that protect
our qualification as a real estate investment trust.
TAX CONSEQUENCES OF REDEMPTION OF COMMON UNITS
The following discussion summarizes the federal income tax consequences
that may be relevant to you if you exercise your right to require the redemption
of your common units.
Tax treatment of exchange or redemption of common units. If we elect to
purchase the common units you tender for redemption, the partnership agreement
of Summit Properties Partnership, L.P. provides that each of you, Summit
Properties Inc. and Summit Properties Partnership, L.P. shall treat the
transaction as a sale of common units at the time of redemption. Such sale will
be fully taxable to you and you will be treated as realizing for tax purposes an
amount equal to the sum of:
- the cash value or the value of the common stock received in
the exchange; plus
- the amount of any liabilities of Summit Properties
Partnership, L.P. allocable to the redeemed common units at
the time of redemption.
The determination of the amount of gain or loss is discussed more fully below.
If we do not elect to acquire your common units tendered for redemption
and Summit Properties Partnership, L.P. redeems your common units for cash that
we contribute to effect the redemption, the redemption likely would be treated
for tax purposes as a sale of your common units in a fully taxable transaction,
although the matter is not free from doubt. In that event, you would be treated
as realizing an amount equal to the sum of:
- the cash received in the exchange; plus
23
<PAGE> 25
- the amount of any liabilities of Summit Properties
Partnership, L.P. allocable to the redeemed common units at
the time of redemption.
The determination of the amount and character of gain or loss in the event of
such a sale is discussed more fully below.
If we do not elect to purchase common units you tender for redemption
and Summit Properties Partnership, L.P. redeems your common units for cash that
is not contributed by us to effect the redemption, the tax consequences would be
the same as described in the previous paragraph, although not free from doubt.
If Summit Properties Partnership, L.P. redeems less than all of your common
units, however, you would not be permitted to recognize any loss occurring on
the transaction and would recognize taxable gain only to the extent that the
cash, plus the amount of any liabilities of Summit Properties Partnership, L.P.
allocable to the redeemed common units, exceeded your adjusted basis in all of
your common units immediately before the redemption.
If we contribute cash to Summit Properties Partnership, L.P. to effect
a redemption, and in the unlikely event that the redemption transaction is
treated as the redemption of your common units by Summit Properties Partnership,
L.P. rather than a sale of your common units to us, the income tax consequences
to you would be as described in the preceding paragraph.
Tax treatment of disposition of common units by a unitholder generally.
If you dispose of a common unit in a manner that is treated as a sale of the
common unit, or you otherwise dispose of a common unit, the determination of
gain or loss from the sale or other disposition will be based on the difference
between the amount considered realized for tax purposes and the tax basis in the
common unit. Upon the sale of a common unit, the "amount realized" will be
measured by the sum of the cash and fair market value of other property
received, plus the amount of any liabilities of Summit Properties Partnership,
L.P. allocable to the common units sold. To the extent that the amount of cash
or property received plus the allocable share of any liabilities of Summit
Properties Partnership, L.P. exceeds your basis for the common units disposed
of, you will recognize gain. It is possible that the gain you recognize upon a
disposition of common units, and perhaps even the tax liability resulting from
that gain, could exceed the amount of cash and/or the value of any other
property you receive upon such disposition. Therefore, you should carefully
consider the tax consequences of presenting your common units for redemption and
should consult with professional advisors, such as an accountant or a lawyer,
before doing so.
Except as described below, any gain you recognize upon a sale or other
disposition of your common units will be treated as gain attributable to the
sale or disposition of a capital asset. To the extent, however, that the amount
realized upon the sale of a common unit attributable to your share of
"unrealized receivables" of Summit Properties Partnership, L.P. exceeds the
basis attributed to those assets, such excess will be treated as ordinary
income. "Unrealized receivables" is defined in Section 751 of the Internal
Revenue Code. Unrealized receivables include, to the extent not previously
included in Summit Properties Partnership, L.P.'s income, any rights to payment
for services rendered or to be rendered. Unrealized receivables also include
amounts that would be subject to recapture as ordinary income if Summit
Properties Partnership, L.P. had sold its assets at their fair market value at
the time of the transfer of a common unit.
Basis of common units. In general, a unitholder who acquired its common
units by contribution of property and/or money to Summit Properties Partnership,
L.P. had an initial tax basis in its common units equal to the sum of:
- the amount of money contributed or deemed contributed as
described below; plus
- its adjusted tax basis in any other property contributed in
exchange for the common units; less
- the amount of any money distributed or deemed distributed, as
described below in connection with the acquisition of the
common units.
The initial basis of common units acquired by other means would have been
determined under the general rules of the Internal Revenue Code, including the
partnership provisions, governing the determination of tax basis. Other rules,
including the "disguised sale" rules discussed below, also may affect initial
basis, and a holder of common units is urged to consult its own tax advisors
regarding its initial basis.
24
<PAGE> 26
A unitholder's basis in its common units generally is increased by:
- the unitholder's share of Summit Properties Partnership,
L.P.'s taxable and tax-exempt income; and
- increases in the unitholder's allocable share of liabilities
of Summit Properties Partnership, L.P., including any increase
in its share of liabilities occurring in connection with the
acquisition of its common units.
Generally, a unitholder's basis in its common units is decreased, but
not below zero, by:
- the unitholder's share of Summit Properties Partnership,
L.P.'s distributions;
- decreases in the unitholder's allocable share of liabilities
of Summit Properties Partnership, L.P., including any decrease
in its share of liabilities of Summit Properties Partnership,
L.P. occurring in connection with the acquisition of its
common units;
- the unitholder's share of losses of Summit Properties
Partnership, L.P.; and
- the unitholder's share of nondeductible expenditures of Summit
Properties Partnership, L.P. that are not chargeable to its
capital account.
Potential application of the disguised sale regulations to a redemption
of common units. There is a risk that a redemption by Summit Properties
Partnership, L.P. of common units issued in exchange for a contribution of
property to Summit Properties Partnership, L.P. may cause the original transfer
of property to Summit Properties Partnership, L.P. in exchange for common units
to be treated as a "disguised sale" of property. Section 707 of the Internal
Revenue Code and the Treasury Regulations thereunder, which we refer to
collectively as the "Disguised Sale Regulations," generally provide that, unless
one of the prescribed exceptions is applicable, a partner's contribution of
property to a partnership and a simultaneous or subsequent transfer of money or
other consideration, which may include the assumption of or taking subject to a
liability, from the partnership to the partner will be presumed to be a sale, in
whole or in part, of such property by the partner to the partnership. Further,
the Disguised Sale Regulations provide generally that, in the absence of an
applicable exception, if money or other consideration is transferred by a
partnership to a partner within two years of the partner's contribution of
property, the transactions are presumed to be a sale of the contributed property
unless the facts and circumstances clearly establish that the transfers do not
constitute a sale. The Disguised Sale Regulations also provide that if two years
have passed between the transfer of money or other consideration and the
contribution of property, the transactions will be presumed not to be a sale
unless the facts and circumstances clearly establish that the transfers
constitute a sale.
Accordingly, if a common unit is redeemed by Summit Properties
Partnership, L.P. from a holder of common units that were issued in exchange for
the contribution of property to Summit Properties Partnership, L.P., the
Internal Revenue Service could contend that the Disguised Sale Regulations apply
because the unitholder will thus receive cash subsequent to a previous
contribution of property to Summit Properties Partnership, L.P. In that event,
the Internal Revenue Service could contend that the contribution was taxable as
a disguised sale under the Disguised Sale Regulations. Any gain recognized
thereby may be eligible for installment reporting under Section 453 of the
Internal Revenue Code, subject to limitations. In addition, in that event, the
Disguised Sale Regulations might apply to cause a portion of the proceeds
received by a redeeming unitholder to be characterized as original issue
discount on a deferred obligation which would be taxable as interest income in
accordance with the provisions of Section 1272 of the Internal Revenue Code. A
holder of common units is advised to consult its own tax advisors to determine
whether redemption of its common units could be subject to the Disguised Sale
Regulations.
COMPARISON OF OWNERSHIP OF COMMON UNITS AND COMMON STOCK
Generally, except for differing tax treatment, the nature of any
investment in our common stock is substantially equivalent economically to an
investment in common units in Summit Properties Partnership, L.P. A holder of a
share of Summit Properties Inc. common stock receives a dividend from Summit
Properties Inc. equal in amount to the distribution that a holder of a common
unit receives from Summit Properties Partnership, L.P.,
25
<PAGE> 27
and stockholders and holders of common units generally share in the risks and
rewards of ownership in the enterprise we are conducting. However, there are
some differences between ownership of common units and ownership of common
stock, some of which may be material to investors.
The information below highlights a number of significant differences
between Summit Properties Partnership, L.P. and Summit Properties Inc. relating
to, among other things, form of organization and investor rights. These
comparisons are intended to assist you in understanding how your investment will
change if your common units are acquired for common stock. This discussion is
summary in nature and does not constitute a complete discussion of these
matters. You should carefully review the balance of this prospectus and the
registration statement of which this prospectus is a part for additional
important information about us.
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
Form of organization and assets owned
<TABLE>
<S> <C>
Summit Properties Partnership, L.P. is organized as a Summit Properties Inc. is a Maryland corporation.
Delaware limited partnership. Summit Properties Inc. We elected to be taxed as a real estate investment trust
is the sole general partner of and conducts all of its under the Internal Revenue Code commencing with
principal operations through Summit Properties our taxable year ended December 31, 1994, and
Partnership, L.P. intend to maintain our qualification as a real estate
investment trust. We maintain both a limited partner
interest and a general partner interest in Summit
Properties Partnership, L.P. which gives us an
indirect investment in the properties and other assets
owned by Summit Properties Partnership, L.P. As
of December 17, 1999, we had a 85.6% economic interest
in Summit Properties Partnership, L.P. Our interest in
Summit Properties Partnership, L.P. will increase as
common units are redeemed for cash or acquired by us
and as we issue additional capital stock and contribute
the net proceeds from the issuance to Summit Properties
Partnership, L.P. in exchange for additional units. Our
interest in Summit Properties Partnership, L.P. will
decrease as it issues additional units in exchange for
contributed property.
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Length of investment
Summit Properties Partnership, L.P. has a stated Summit Properties Inc. has a perpetual term and
termination date of December 31, 2093, or until intends to continue its operations for an indefinite time
sooner dissolved upon: period. Under Maryland law, our Board of Directors
must obtain approval of holders of not less than 66
- - withdrawal of Summit Properties Inc. as 2/3% of all outstanding shares of capital stock to
general partner, unless a majority in interest of dissolve Summit Properties Inc.
the remaining partners elect to continue
Summit Properties Partnership, L.P.;
- - an election to dissolve Summit Properties
Partnership, L.P. made on or before December
31, 2053 by Summit Properties Inc. with the
consent of the limited partners, including
Summit Properties Inc., holding 85% of the
outstanding common units;
- - an election to dissolve Summit Properties
Partnership, L.P. made on or after January 1,
2054 by Summit Properties Inc. in its sole
discretion, subject to restrictions in the event of
a change in control of Summit Properties Inc.;
- - entry of a decree of judicial dissolution;
- - the sale of all or substantially all of the assets
of Summit Properties Partnership, L.P.; or
- - a final and non-appealable judgment ruling
Summit Properties Inc. bankrupt or insolvent,
unless the remaining partners elect to continue
Summit Properties Partnership, L.P. prior to
entry of the judgment.
Purpose and permitted investments
The purpose of Summit Properties Partnership, L.P. Under its articles of incorporation, Summit Properties
includes the conduct of any business that may be Inc. may engage in any lawful activity permitted
lawfully conducted by a limited partnership formed under Maryland law. However, under the partnership
under Delaware law, except that the partnership agreement of Summit Properties Partnership, L.P.,
agreement of Summit Properties Partnership, L.P. Summit Properties Inc., as general partner, may not
requires that the business of Summit Properties conduct any business other than the business of
Partnership, L.P. be conducted in a manner that will Summit Properties Partnership, L.P.
permit Summit Properties Inc. to continue to be
classified as a real estate investment trust for federal
income tax purposes. Summit Properties Partnership,
L.P. may, subject to the foregoing limitation, invest
or enter into partnerships, joint ventures or similar
arrangements and may own interests in other entities.
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Additional equity
Summit Properties Partnership, L.P. is authorized to The board of directors of Summit Properties Inc., in
issue preferred and common units and other its discretion, may issue additional equity securities
partnership interests to its partners or to other persons consisting of common stock or preferred stock. The
for such consideration and on such terms and total number of shares issued, however, may not
conditions as Summit Properties Inc., as general exceed the authorized number of shares of capital
partner, may deem appropriate. However, Summit stock set forth in our articles of incorporation. As
Properties Partnership, L.P. may not issue any long as Summit Properties Partnership, L.P. is in
partnership interests which rank on par with or senior existence, the net proceeds of all equity capital raised
to the Series B or Series C preferred units without the by us will be contributed to Summit Properties
approval of the holders of at least two-thirds of each Partnership, L.P. in exchange for common units or
such class outstanding at that time. other interests in Summit Properties Partnership, L.P.
In addition, Summit Properties Inc. may cause Summit
Properties Partnership, L.P. to issue to it additional
partnership interests in different series or classes
which may be senior to the common units, as long as the
issuance is in conjunction with the issuance by Summit
Properties Inc. of securities having substantially similar
rights and in which the proceeds of the offering are
contributed to Summit Properties Partnership, L.P.
Borrowing policies
Summit Properties Partnership, L.P. has no Our organizational documents do not limit the amount
restrictions on borrowing, and Summit Properties of indebtedness that we may incur. Although we
Inc., as general partner, has full power and authority attempt to maintain a balance between our total
to cause Summit Properties Partnership, L.P. to indebtedness and the gross book value of our real
borrow money. estate and other tangibles assets, as adjusted, this
balance could be altered at any time.
Other investment restrictions
Other than restrictions precluding investments by Neither our articles of incorporation nor our bylaws
Summit Properties Partnership, L.P. that would impose any restrictions upon the types of investments
adversely affect the qualification of Summit Properties that we can make.
Inc. as a real estate investment trust, there are no
restrictions upon Summit Properties Partnership,
L.P.'s authority to enter into transactions, including
making investments, lending its funds, or reinvesting
its cash flow and net sale or refinancing proceeds.
</TABLE>
28
<PAGE> 30
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Management control
All management powers over the business and affairs Our board of directors has exclusive control over our
of Summit Properties Partnership, L.P. are vested in business and affairs, subject only to those restrictions
Summit Properties Inc. as general partner and no set forth in our articles of incorporation and bylaws or
limited partner of Summit Properties Partnership, provided by Maryland law. The policies adopted by
L.P. has any right to participate in or exercise control our board of directors may be altered or eliminated
or management power over the ordinary business and without the advice of the stockholders. Accordingly,
affairs of Summit Properties Partnership, L.P. We except for their vote in the elections of directors,
may not be removed as general partner of Summit stockholders have no control over our ordinary
Properties Partnership, L.P. by the limited partners business policies.
with or without cause.
Management liability and indemnification
The partnership agreement of Summit Properties Our articles of incorporation eliminate, to the fullest
Partnership, L.P. generally provides that Summit extent permitted under Maryland law, the personal
Properties Inc., as general partner, will incur no liability of a director for monetary damages for
liability to Summit Properties Partnership, L.P. or any breaches of that director's duty of care or other duties
limited partner for losses sustained or liabilities as a director. The effect of this provision is generally
incurred as a result of errors in judgment or of any act to eliminate the rights of Summit Properties Inc. and
or omission if Summit Properties Inc. acted in good its stockholders, through stockholders' derivative suits
faith. In addition, Summit Properties Inc., as general on Summit Properties Inc.'s behalf, to recover
partner, is not responsible for any misconduct or monetary damages against a director for breach of the
negligence on the part of its agents provided that we fiduciary duty of care as a director. This provision
appointed our agents in good faith. We may consult does not limit or eliminate our rights or any of those
with legal counsel, accountants, appraisers, of our stockholders to seek non-monetary relief, such
management consultants, investment bankers and as an injunction or rescission, in the event of a breach
other consultants and advisors. Any action we take or of a director's duty of care.
omit to take in reliance upon the opinion of such persons,
as to matters which we reasonably believe to be within
their professional or expert competence, shall be
conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
The partnership agreement of Summit Properties
Partnership, L.P. also provides for the indemnification
of Summit Properties Inc., as general partner, of its
directors and officers, and of such other persons as
Summit Properties Inc. may from time to time designate,
against any and all losses, claims, damages, liabilities,
expenses, judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits
or proceedings in which such person may be involved that
relate to the operations of Summit Properties
Partnership, L.P.
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Anti-takeover provisions
Except in limited circumstances, Summit Properties Our articles of incorporation and bylaws and
Inc., as general partner, has exclusive management Maryland law contain a number of provisions that
power over the business and affairs of Summit may have the effect of delaying or discouraging an
Properties Partnership, L.P. We may not be removed unsolicited proposal for the acquisition of us or the
as general partner of Summit Properties Partnership, removal of our management. In addition, we have
L.P. by the limited partners with or without cause. adopted a shareholder rights plan which provides our
board of directors with significant discretion to approve
of a person's efforts to acquire a large interest in us.
Voting rights
Under the partnership agreement of Summit Our stockholders have the right to vote, among other
Properties Partnership, L.P., the limited partners do things, in the election of each class of directors and on
not have voting rights relating to the operation and a merger or sale of substantially all of our assets,
management of Summit Properties Partnership, L.P. specific amendments to our articles of incorporation
except in connection with matters, as described more and the dissolution of our company. Summit
fully in this prospectus, involving specific Properties Inc. is managed and controlled by a board
amendments to the partnership agreement, dissolution of directors consisting of three classes having
of Summit Properties Partnership, L.P. and the sale staggered terms of office. Each class is elected by the
or exchange of all or substantially all of Summit stockholders at annual meetings. Each share of
Properties Partnership, L.P.'s assets, including common stock has one vote. Our articles of
mergers or other combinations. incorporation permit our board of directors to classify
and issue preferred stock in one or more series having voting
powers which may differ from that of our common stock.
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Amendment of partnership agreement or articles of incorporation
Amendments to the partnership agreement of Summit Amendments to our articles of incorporation must be
Properties Partnership, L.P. may be proposed by approved by our board of directors and generally by
Summit Properties Inc., as general partner, or by the vote of a majority of the votes entitled to be cast at
limited partners holding 20% or more of the common a meeting of stockholders. However, some of the
units. Amendments generally require approval of provisions of our articles of incorporation may not be
limited partners, including Summit Properties Inc., amended, altered, changed or repealed without the
holding a majority of the outstanding common units. affirmative vote of the holders of at least 66 2/3% of
Among the amendments that require our approval, as the voting power of all of the shares of capital stock
general partner, and by each holder of common units then entitled to vote, voting as a single class.
that would be adversely affected by the amendment
are:
- - the conversion of a limited partner's interest
into a general partner's interest;
- - the modification of the limited liability of any
holder of common units;
- - the alteration of the interest of any holder of
common units in profits, losses or
distributions;
- - the alteration or modification of the redemption
right described in this prospectus; and
- - the termination of Summit Properties
Partnership, L.P. at a time inconsistent with
the terms of its partnership agreement.
The affirmative vote of limited partners holding at
least two-thirds of each of the Series B and Series C
preferred units outstanding at the time is required for
amendments to the partnership agreement of Summit
Properties Partnership, L.P. that would materially and
adversely affect the powers, special rights,
preferences, privileges or voting powers of these
respective unitholders.
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Vote required to sell assets or merge
Under the partnership agreement of Summit Under Maryland law and our articles of incorporation,
Properties Partnership L.P., Summit Properties the sale of all or substantially all of our assets or any
Partnership, L.P. may not sell, exchange, transfer or merger or consolidation of Summit Properties Inc.
otherwise dispose of all or substantially all of its requires the approval of our board of directors and
assets, including by way of merger or other holders of a majority of our outstanding common
combination, without the consent of unitholders, stock. No approval of the stockholders is required for
including Summit Properties Inc., holding 85% or the sale of less than all or substantially all of our
more of the common units. assets. Under the partnership agreement of Summit
Properties Partnership, L.P., we may not merge,
Without the affirmative vote of limited partners consolidate or engage in any combination with another
holding at least two-thirds of each of the Series B and person or sell all or substantially all of our assets
Series C preferred units outstanding at the time, unless the transaction includes the merger of Summit
Summit Properties Partnership, L.P. may not Properties Partnership, L.P. As described in this
consolidate, merge into or with, convey, transfer or prospectus, a merger of Summit Properties
lease its assets substantially as an entity in a Partnership, L.P. requires the approval of holders of
transaction that would materially and adversely affect common units and may require the approval of holders
the powers, special rights, preferences, privileges or of preferred units. These approval requirements may
voting powers of these respective unitholders. limit the possibility for an acquisition or change in
control of Summit Properties Inc.
Compensation, fees and distributions
Summit Properties Inc. does not receive any Our directors and officers receive compensation for
compensation for its services as general partner of their services.
Summit Properties Partnership, L.P. As a holder of
common units in Summit Properties Partnership,
L.P., however, we have a right to allocations and
distributions from Summit Properties Partnership,
L.P. in respect of the common units we hold. In
addition, Summit Properties Partnership, L.P. will
reimburse Summit Properties Inc., as general partner,
for all expenses incurred relating to our ongoing
operation.
Liability of investor
Under the partnership agreement of Summit Under Maryland law, stockholders generally are not
Properties Partnership, L.P. and applicable Delaware personally liable for the debts or obligations of
law, the liability of the limited partners for Summit Summit Properties Inc.
Properties Partnership, L.P.'s debts and obligations is
generally limited to the amount of their investment in
Summit Properties Partnership, L.P.
</TABLE>
32
<PAGE> 34
<TABLE>
<CAPTION>
SUMMIT PROPERTIES PARTNERSHIP, L.P. SUMMIT PROPERTIES INC.
<S> <C>
Nature of investment
The common units constitute equity interests entitling Our common stock constitutes equity interests in our
each holder of common units to its pro rata share of company. Summit Properties Inc. is entitled to
cash distributions made to holders of common units in receive its pro rata share of distributions made by
Summit Properties Partnership, L.P., which may be Summit Properties Partnership, L.P. with respect to
made in the sole discretion of Summit Properties Inc. its interest in Summit Properties Partnership, L.P.,
as general partner. and each stockholder will be entitled to its pro rata
share of any dividends paid with respect to its shares
of common stock. The dividends payable to the
stockholders are not fixed in amount and are only paid
if, when and as declared by our board of directors. To
qualify as a real estate investment trust, we must
distribute at least 95% of our taxable income, excluding
net capital gains. Any taxable income, including net
capital gains, not distributed by us will be subject to
corporate income tax.
Potential dilution of rights
Summit Properties Inc., as general partner, is Our board of directors may issue, in its discretion,
authorized to cause Summit Properties Partnership, additional shares of common stock or other equity
L.P. to issue additional preferred and common units securities with such powers, preferences and rights as
and other equity securities for any partnership purpose our board of directors may designate at the time. The
at any time to the limited partners or to other persons issuance of additional common stock or other equity
on terms established by Summit Properties Inc. securities may result in the dilution of interests of our
Subject to the approval rights of the holders of the existing stockholders.
outstanding preferred units, Summit Properties Inc.
may issue these additional securities in its sole
discretion and without limited partner approval.
Liquidity
Subject to limited exceptions, or as otherwise set forth The shares of common stock offered by this
in the partnership agreement of Summit Properties prospectus upon the redemption of common units will
Partnership, L.P., a limited partner may transfer all be freely transferable as registered securities under
or any portion of its common units without the consent the Securities Act of 1933. Our common stock is
of Summit Properties Inc. However, Summit listed on the New York Stock Exchange. The breadth
Properties Inc. in its sole and absolute discretion, may and strength of this market will depend upon, among
or may not consent to the admission as a limited other things, the number of shares outstanding, our
partner of any transferee of such common units. If financial results and prospects, the general interest in
we do not consent to the admission of a transferee, the real estate investments, and our dividend yield
transferee shall be considered an assignee of an compared to that of other debt and equity securities.
economic interest in Summit Properties Partnership,
L.P. but will not be a holder of common units for any
other purpose. The assignee, therefore, will not
be permitted to vote on any affairs or issues on which a
holder of common units may vote.
</TABLE>
33
<PAGE> 35
FEDERAL INCOME TAX CONSIDERATIONS AND
CONSEQUENCES OF YOUR INVESTMENT
The following is a general summary of the material federal income tax
considerations and consequences associated with an investment in our common
stock. The following discussion is not exhaustive of all possible tax
considerations and is not tax advice. Moreover, this summary does not deal with
all tax aspects or consequences that might be relevant to you in light of your
personal circumstances; nor does it deal with particular types of stockholders
that are subject to special treatment under the Internal Revenue Code, such as
insurance companies, financial institutions and broker-dealers. The Internal
Revenue Code provisions governing the federal income tax treatment of real
estate investment trusts are highly technical and complex, and this summary and
any other summary in this prospectus is qualified in its entirety by the
applicable Internal Revenue Code provisions, rules and regulations promulgated
thereunder, and administrative and judicial interpretations thereof. The
following discussion is based on current law and on representations from us
concerning our compliance with the requirements for qualification as a real
estate investment trust.
WE URGE YOU, AS A PROSPECTIVE INVESTOR, TO CONSULT YOUR OWN TAX ADVISOR
WITH RESPECT TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO YOU OF THE PURCHASE, HOLDING AND SALE OF OUR COMMON STOCK.
FEDERAL INCOME TAXATION
We believe that we have been organized in conformity with the
requirements for qualification as a real estate investment trust under the
Internal Revenue Code, and our method of operation will enable us to continue to
meet the requirements for qualification and taxation as a real estate investment
trust under the Internal Revenue Code, provided that we have operated and
continue to operate in accordance with various assumptions and factual
representations made by us concerning our business, properties and operations.
We may not, however, have met or continue to meet such requirements.
Qualification as a real estate investment trust depends upon us having met and
continuing to meet the various requirements imposed under the Internal Revenue
Code through actual operating results.
If we have met and continue to meet the requirements for taxation as a
real estate investment trust, including the requirement that we distribute to
our stockholders at least 95% of our real estate investment trust taxable
income, excluding net capital gains, for a taxable year, we generally will not
be subject to federal corporate income taxes on that portion of our ordinary
income or capital gain that is currently distributed to stockholders. The real
estate investment trust provisions of the Internal Revenue Code generally allow
a real estate investment trust to deduct dividends paid to its stockholders.
This deduction for dividends paid to stockholders substantially eliminates the
federal double taxation of investment earnings that C corporations would be
required to pay. When we use the term "double taxation," we refer to taxation of
corporate income at two levels, taxation at the corporate level when the
corporation must pay tax on the income it has earned and taxation again at the
stockholder level when the stockholder pays taxes on the distributions it
receives from the corporation's income in the way of dividends. Additionally, a
real estate investment trust may elect to retain and pay taxes on a designated
amount of its net long-term capital gains, in which case the stockholders of the
real estate investment trust will include their proportionate share of the
undistributed long-term capital gains in income and receive a credit or refund
for their share of the tax paid by the real estate investment trust.
RECENTLY ENACTED LEGISLATION
Recently enacted tax legislation alters the requirements for
qualification as a real estate investment trust. Among others, the newly passed
legislation generally liberalizes, from the perspective of our historic
operations, the asset diversification requirements applicable to real estate
investment trusts. Effective for tax years beginning after December 31, 2000, a
real estate investment trust may own the securities of a "taxable REIT
subsidiary" without limitation on the real estate investment trust's voting
control over the subsidiary, provided that not more than 20% of the value of the
real estate investment trust's total assets is represented by securities of one
or more taxable REIT subsidiaries. A taxable REIT subsidiary of ours would
include a corporation in which we directly or indirectly own stock and which has
elected to be treated as our taxable REIT subsidiary. The definition of taxable
REIT subsidiary in the Internal Revenue Code limits the ability of corporations
whose activities relate to lodging or health care to be taxable REIT
subsidiaries.
34
<PAGE> 36
Under current law, a real estate investment trust must distribute at
least 95% of its real estate investment trust taxable income, excluding net
capital gains, to its stockholders. Effective for tax years beginning after
December 31, 2000, the recently enacted tax legislation reduces the percent of
real estate investment trust taxable income that must be distributed to 90%,
exclusive of net capital gains. Consequently, beginning with our 2001 tax year,
we will have the potential to retain a greater proportion of our real estate
investment trust taxable income than currently.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in
any taxable year and the relief provisions do not apply, we will be subject to
tax on our taxable income at regular corporate rates, including any applicable
alternative minimum tax. Distributions to stockholders in any year in which we
fail to qualify will not be deductible by us nor will they be required to be
made. In such event, to the extent of current or accumulated earnings and
profits, all distributions to stockholders will be dividends, taxable as
ordinary income, and subject to limitations of the Internal Revenue Code,
corporate distributees may be eligible for the dividends-received deduction.
Unless we are entitled to relief under specific statutory provisions, we also
will be disqualified from taxation as a real estate investment trust for the
four taxable years following the year during which qualification was lost. It is
not possible to state whether in all circumstances we would be entitled to such
statutory relief.
TAXATION OF UNITED STATES STOCKHOLDERS AND POTENTIAL TAX CONSEQUENCES OF THEIR
INVESTMENT IN OUR COMMON STOCK
When we refer to a United States stockholder, we mean a holder of
common stock that is for federal income tax purposes
- an individual who is a citizen or resident of the United
States,
- a corporation created or organized in or under the laws of the
United States, any state thereof or the District of Columbia,
or
- a partnership, trust or estate treated as a domestic
partnership, trust or estate.
For any taxable year for which we qualify for taxation as a real estate
investment trust, amounts distributed to taxable United States stockholders will
be taxed as follows.
Distributions generally. Distributions other than capital gain
dividends to United States stockholders will be taxable as dividends to the
extent of our current or accumulated earnings and profits as determined for
federal income tax purposes. For purposes of determining whether distributions
are out of current or accumulated earnings and profits, our earnings and profits
will be allocated first to any outstanding preferred stock and then to our
common stock. Such dividends will be taxable to the holders as ordinary income
and will not be eligible for the dividends-received deduction for corporations.
To the extent that we make a distribution to a United States stockholder in
excess of current or accumulated earnings and profits, the distribution will be
treated first as a tax-free return of capital with respect to the shares,
reducing the United States stockholder's tax basis in the shares, and the
distribution in excess of a United States stockholder's tax basis in the shares
will be taxable as gain realized from the sale of the shares. Dividends declared
by our company in October, November or December of any year payable to a
stockholder of record on a specified date in any such month shall be treated as
both paid by us and received by the stockholder on December 31 of the year,
provided that the dividend is actually paid by us during January of the
following calendar year. United States stockholders may not include on their own
federal income tax returns any of our tax losses.
Capital gain dividends. Dividends to United States stockholders that
are properly designated by us as capital gain dividends will be treated as
long-term capital gains, to the extent they do not exceed our actual net capital
gains, for the taxable year without regard to the period for which the
stockholder has held his common stock. However, corporate stockholders may be
required to treat up to 20% of particular capital gain dividends as ordinary
income. Capital gain dividends are not eligible for the dividends-received
deduction for corporations.
35
<PAGE> 37
Retained capital gains. A real estate investment trust may elect to
retain, rather than distribute, its net long-term capital gains received during
the year. To the extent designated by the real estate investment trust in a
notice to its stockholders, the real estate investment trust will pay the income
tax on such gains, and the real estate investment trust stockholders must
include their proportionate share of the undistributed long-term capital gains
so designated in income. Each real estate investment trust stockholder will be
deemed to have paid its share of the tax paid by the real estate investment
trust, which will be credited or refunded to the stockholder. The basis of each
stockholder's real estate investment trust shares will be increased by its
proportionate amount of the undistributed long-term capital gains, net of the
tax paid by the real estate investment trust, included in such stockholder's
long-term capital gains.
Passive activity loss and investment interest limitations.
Distributions, including deemed distributions of undistributed long-term capital
gains, from our company and gain from the disposition of the common stock will
not be treated as passive activity income, and therefore stockholders may not be
able to apply any passive losses against such income. Dividends from our
company, to the extent they do not constitute a return of capital, will
generally be treated as investment income for purposes of the investment income
limitation on the deductibility of investment interest. However, net capital
gain from the disposition of the common stock or capital gain dividends,
including deemed distributions of undistributed long-term capital gains,
generally will be excluded from investment income.
Sale of the common stock. Upon the sale or exchange of the common
stock, the holder will generally recognize gain or loss equal to the difference
between the amount realized on such sale and the tax basis of such shares of
common stock. Assuming such shares are held as a capital asset, such gain or
loss will be a long-term capital gain or loss if the shares have been held for
more than one year. However, any loss recognized by a holder on the sale of
common stock held for not more than six months and with respect to which capital
gains were required to be included in such holder's income will be treated as a
long-term capital loss to the extent of the amount of such capital gains so
included.
Treatment of tax-exempt stockholders. Distributions, including deemed
distributions of undistributed long-term capital gains, from our company to a
tax-exempt employee pension trust or other domestic tax-exempt stockholder
generally will not constitute unrelated business taxable income unless the
stockholder has borrowed to acquire or carry its common stock. However,
qualified trusts that hold more than 10% by value of the shares of particular
real estate investment trusts may be required to treat a specified percentage of
these distributions, including deemed distributions of undistributed long-term
capital gains, as unrelated business taxable income.
BACKUP WITHHOLDING
Under the backup withholding rules, a United States stockholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
on, and gross proceeds from the sale of, the common stock unless such holder (a)
is a corporation or comes within other specific exempt categories and, when
required, demonstrates this fact or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A United States stockholder who does not provide us with his
current taxpayer identification number may be subject to penalties imposed by
the Commissioner of the Internal Revenue Service. Any amount paid as backup
withholding will be creditable against the stockholder's income tax liability.
We will report to stockholders and the Internal Revenue Service the
amount of any reportable payments, including any dividends paid, and any amount
withheld with respect to the common stock during the calendar year.
STATE AND LOCAL TAX
Summit Properties Inc. and its stockholders may be subject to state and
local tax in various states and localities, including those in which it or they
transact business, own property or reside. The tax treatment of our company and
our stockholders in such jurisdictions may differ from the federal income tax
treatment described above. CONSEQUENTLY, AS A PROSPECTIVE INVESTOR, YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS REGARDING THE EFFECT OF STATE AND LOCAL TAX LAWS
ON AN INVESTMENT IN OUR COMMON STOCK.
36
<PAGE> 38
REGISTRATION RIGHTS OF THE SELLING STOCKHOLDERS
The following is a summary of the material terms and provisions of the
registration rights and lock-up agreement which we entered into in connection
with our acquisition of a portfolio of apartment communities located in Texas.
It may not contain all of the information that is important to you. You can
access complete information by referring to the registration rights and lock-up
agreement which was filed as an exhibit to the registration statement of which
this prospectus is a part.
We are filing this registration statement under the terms of the
registration rights and lock-up agreement. Under the registration rights and
lock-up agreement, we must use our best efforts to cause the registration
statement to be declared effective by the Securities and Exchange Commission,
and we must keep the registration statement continuously effective until the
earlier of:
(1) twelve months after the registration statement is declared
effective; or
(2) the date on which the selling stockholders no longer hold any
shares of common stock covered by this prospectus.
The registration rights and lock-up agreement allows us to suspend the
selling stockholders' use of this prospectus in some circumstances. Any shares
of common stock sold by the selling stockholders pursuant to this prospectus
will no longer be entitled to the benefits of the registration rights and
lock-up agreement. We have agreed to bear the expenses of registering the sale
of the shares of common stock by the selling stockholders.
Under the registration rights and lock-up agreement, we have agreed to
indemnify the following persons against all losses, claims, damages, actions,
liabilities, costs and expenses arising under the securities laws in connection
with the registration statement or this prospectus, subject to limitations
specified in the registration rights and lock-up agreement:
(1) the selling stockholders;
(2) the officers, directors, employees, agents, representatives
and affiliates of the selling stockholders;
(3) any underwriter of an offering registered on a registration
statement; and
(4) any entity or person who controls a selling stockholder or
underwriter.
In addition, the selling stockholders have agreed to indemnify us, our
officers, directors, employees, agents, representatives and affiliates, and any
person who controls our company against all losses, claims, damages, actions,
liabilities, costs and expenses arising under the securities laws which result
from:
- information furnished to us by the selling stockholders for
use in the registration statement or this prospectus; or
- any selling stockholder's failure to deliver or cause to be
delivered the most current prospectus furnished by us to such
stockholder to any purchaser of the shares covered by this
prospectus.
37
<PAGE> 39
THE SELLING STOCKHOLDERS
The following table sets forth the numbers of shares of common stock
and common units beneficially owned by the selling stockholders as of December
3, 1999, the number of shares of common stock covered by this prospectus and the
total number of shares of common stock and common units which the selling
stockholders will beneficially own upon completion of this offering. This table
assumes that the selling stockholders offer for sale all of the shares of common
stock issued by Summit Properties Inc. in connection with our acquisition of a
portfolio of apartment communities located in Texas.
The shares of common stock offered by this prospectus will be offered
from time to time by the selling stockholders named below, or by any of their
pledgees, donees, transferees or other successors in interest. The amounts set
forth below are based upon information provided to us by representatives of the
selling stockholders, or on our records, as of December 3, 1999 and are accurate
to the best of our knowledge. It is possible, however, that the selling
stockholders may acquire or dispose of additional shares of common stock or
common units from time to time after the date of this prospectus.
<TABLE>
<CAPTION>
COMMON STOCK COMMON UNITS COMMON STOCK
BENEFICIALLY BENEFICIALLY AND COMMON UNITS
OWNED AS OF COMMON STOCK OWNED AS OF TO BE OWNED
NAME DECEMBER 3, 1999(1) OFFERED HEREBY DECEMBER 3, 1999(2) AFTER OFFERING(3)
---- ------------------- -------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Mary Frances Clauder 135,784 135,784 0 0
Sharon Williams Frisbie 135,784 135,784 0 0
John B. Grote 113,153 113,153 0 0
Kerry W. Grote 113,153 113,153 0 0
M. Dyer Grote 113,153 113,153 0 0
Thomas D. Grote, Jr. 169,730(4) 84,865 0 0
Timothy J. Grote 84,865 84,865 0 0
Mary G. Hobson 169,730(4) 84,865 0 0
Carol A. Jodar 135,784 135,784 0 0
Patricia W. Niehoff 678,919 678,919 0 0
Lisa Grote Ostevoll
Revocable Trust 84,865 84,865 0 0
Thomas L. Williams 135,784 135,784 18,199(5) 18,199(5)
William J. Williams, Jr. 135,784 135,784 18,199(5) 18,199(5)
--------- --------- ------ ------
TOTAL 2,036,758(6) 2,036,758 18,199(6) 18,199(6)
========= ========= ====== ======
</TABLE>
- ----------
(1) Does not include shares of common stock that may be issued in exchange
for common units beneficially owned as of December 3, 1999.
38
<PAGE> 40
(2) All common units listed in this column may be exchanged, under
circumstances set forth in the partnership agreement of Summit
Properties Partnership, L.P., for an equal number of shares of common
stock. All information is as of December 3, 1999.
(3) Assumes that the selling stockholders will sell all shares of common
stock offered by them under this prospectus. In the case of each
selling stockholder, the percentage of our shares of common stock that
will be held by such selling stockholder (assuming all common units
held by such person are presented for redemption and are exchanged for
shares of common stock) after completion of this offering will be less
than one percent (1%). The total number of shares of common stock
outstanding used in calculating such percentage (a) is based on the
total number of shares of common stock outstanding as of December 17,
1999 (26,414,446 shares) and (b) assumes that none of the common units
held by other persons will be exchanged for shares of common stock.
(4) Includes 84,865 shares of common stock of Summit Properties Inc. held
by the Lisa Grote Ostevoll Revocable Trust with respect to which the
selling stockholder is a trustee.
(5) Includes 18,199 common units of limited partnership interest in Summit
Properties Partnership, L.P. owned by KW Partnership. The selling
stockholder is a general partner of, and holds an equity interest in,
KW Partnership.
(6) Shares of common stock or common units, as the case may be, which are
deemed to be beneficially owned by more than one person are counted
only once in determining the total.
39
<PAGE> 41
NO PROCEEDS TO SUMMIT PROPERTIES INC.
We will not receive any of the proceeds of the sale of the shares of
common stock offered by this prospectus, although we will acquire common units
in Summit Properties Partnership, L.P. in exchange for any shares of common
stock that we may issue. We are paying the fees and expenses associated with
registering the shares of common stock.
PLAN OF DISTRIBUTION
This prospectus relates to the possible issuance by us of up to an
aggregate of 178,045 shares of our common stock if, and to the extent that, the
holders of 178,045 common units issued upon the acquisition of a portfolio of
apartment communities by Summit Properties Partnership, L.P. tender these common
units for redemption and we elect to acquire the tendered common units for
shares of our common stock. We have registered the offer and issuance of the
shares of common stock covered by this prospectus under the terms of a
registration rights and lock-up agreement with the unitholders. The registration
of these shares, however, does not necessarily mean that all or any portion of
the common units will be presented for redemption or that we will issue all or
any portion of the shares. We are paying the fees and expenses associated with
registering such shares of common stock offered by this prospectus.
This prospectus also relates to the sale from time to time of up to an
aggregate of 2,036,758 shares of common stock by the selling stockholders, or
any of their pledgees, donees, transferees or other successors in interest. We
issued these shares of common stock to the selling stockholders in connection
with our acquisition of the same portfolio of apartment communities. We are
registering the sale of the shares to fulfill our contractual obligations under
the registration rights and lock-up agreement. Registration of the sale of these
shares of common stock, however, does not necessarily mean that all or any
portion of the shares will be offered for sale by the selling stockholders.
The distribution of the shares of common stock by the selling
stockholders may be effected from time to time in one or more underwritten
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to prevailing market
prices or at negotiated prices. Any underwritten offering may be on a "best
efforts" or a "firm commitment" basis. In connection with any underwritten
offering, underwriters or agents may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders.
Underwriters may sell the shares of common stock to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.
The selling stockholders and any underwriters, dealers or agents that
participate in the distribution of the shares of common stock may be deemed to
be underwriters under the Securities Act of 1933, and any profit on the sale of
the shares of common stock by them and any discounts, commissions or concessions
received by any underwriters, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act of 1933. At any
time a particular offer of shares of common stock is made by the selling
stockholders, a prospectus supplement, if required, will be distributed that
will, where applicable:
- identify any underwriter, dealer or agent;
- describe any compensation in the form of discounts,
concessions or commissions or otherwise received by each
underwriter, dealer or agent and in the aggregate to all
underwriters, dealers and agents;
- identify the amounts underwritten;
- identify the nature of the underwriter's obligation to take
the shares of common stock; and
- provide any other required information.
40
<PAGE> 42
The sale of shares of common stock by the selling stockholders may also
be effected by selling shares of common stock directly to purchasers or to or
through broker-dealers. In connection with any such sale, any such broker-dealer
may act as agent for the selling stockholders or may purchase from the selling
stockholders all or a portion of the shares of common stock as principal, and
may be made pursuant to any of the methods described below. Such sales may be
made on the New York Stock Exchange or other exchanges on which the shares of
common stock are then traded, in the over-the-counter market, in negotiated
transactions or otherwise at prices and at terms then prevailing or at prices
related to the then current market prices or at prices otherwise negotiated.
Shares of common stock may also be sold by the selling stockholders in
one or more of the following transactions:
- block transactions in which a broker-dealer may sell all or a
portion of such shares as agent but may position and resell
all or a portion of the block as principal to facilitate the
transaction;
- purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to any
supplement to this prospectus;
- a special offering, an exchange distribution or a secondary
distribution in accordance with applicable New York Stock
Exchange or other stock exchange rules;
- ordinary brokerage transactions and transactions in which any
such broker-dealer solicits purchasers;
- sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such
shares; and
- sales in other ways not involving market makers or established
trading markets, including direct sales to purchasers.
In effecting sales, broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or other compensation from the selling stockholders in amounts to be
negotiated immediately prior to the sale that will not exceed those customary in
the types of transactions involved. Broker-dealers may also receive compensation
from purchasers of the shares of common stock which is not expected to exceed
that customary in the types of transactions involved.
To comply with applicable state securities laws, the shares of common
stock will be sold, if necessary, in such jurisdictions only through registered
or licensed brokers or dealers. In addition, shares of common stock may not be
sold in some states unless they have been registered or qualified for sale in
the state or an exemption from such registration or qualification requirement is
available and is complied with.
All expenses relating to the offering and sale of the shares of common
stock will be paid by us, with the exception of commissions, discounts and fees
of underwriters, broker-dealers or agents, taxes of any kind and any legal,
accounting and other expenses incurred by the selling stockholders. Under the
registration rights and lockup agreement, we have agreed to indemnify the
selling stockholders and other persons against specified losses, claims,
damages, actions, liabilities, costs and expenses arising under the securities
laws. See "Registration Rights of the Selling Stockholders" on page 37.
41
<PAGE> 43
LEGAL MATTERS
Particular legal matters, including the validity of the shares of
common stock offered by this prospectus, will be passed upon for us by Goodwin,
Procter & Hoar LLP, Boston, Massachusetts.
EXPERTS
The financial statements incorporated by reference in this prospectus
from Summit Properties Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated in this prospectus by
reference and have been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
42
<PAGE> 44
===============================================================================
You should rely on the information incorporated by reference or contained in
this prospectus or any supplement. We have not authorized anyone else to provide
you with different or additional information. We are not making an offer to sell
the common stock in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................. 2
Risk Factors....................................... 4
About This Prospectus and
Where You May Find More Information.............. 11
Forward-Looking Statements......................... 12
Our Company........................................ 14
Description of Common Stock........................ 15
Limits on Ownership of Capital Stock............... 18
Shareholder Rights Plan............................ 20
Important Provisions of Maryland Law............... 21
Description of Common Units and
Redemption of Common Units....................... 23
Federal Income Tax Considerations and
Consequences of Your Investment.................. 34
Registration Rights of the
Selling Stockholders............................. 37
The Selling Stockholders........................... 38
No Proceeds to Summit Properties Inc............... 40
Plan of Distribution............................... 40
Legal Matters...................................... 42
Experts............................................ 42
</TABLE>
2,214,803 SHARES
SUMMIT PROPERTIES INC.
COMMON STOCK
----------
PROSPECTUS
----------
DECEMBER 30, 1999
===============================================================================
<PAGE> 45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated fees and expenses payable
in connection with the issuance and distribution of the securities registered
hereby. All amounts except the registration fee are estimated.
<TABLE>
<S> <C>
Registration fee...................................................................... $10,269
Legal fees and expenses............................................................... 35,000
Accounting fees and expenses.......................................................... 9,000
Printing and duplicating expenses..................................................... 5,000
Miscellaneous......................................................................... 731
---------
Total .............................................................................. $60,000
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by Summit Properties Inc.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The articles of incorporation and bylaws of Summit Properties Inc.
limit the liability of Summit Properties Inc.'s directors and officers. Summit
Properties Inc.'s articles of incorporation and bylaws require Summit Properties
Inc. to indemnify its directors, officers and, as authorized by the board of
directors, certain other parties to the fullest extent permitted from time to
time by Maryland law. Maryland law presently permits a corporation to indemnify
its directors, officers and certain other parties for judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding, except if it is established that (i) the
indemnified party actually received an improper personal benefit in money,
property or services, (ii) the act or omission of the indemnified party was
committed in bad faith or was the result of active and deliberate dishonesty and
was material to the matter giving rise to the proceeding, or (iii) in the case
of a criminal proceeding, the indemnified party had reasonable cause to believe
that the act or omission was unlawful. This provision does not limit the ability
of Summit Properties Inc. or Summit Properties Inc.'s stockholders to obtain
other relief, such as an injunction or rescission.
Summit Properties Partnership, L.P.'s partnership agreement limits the
liability of the general partner and its officers and directors for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the general partner acted in good faith. The agreement also
requires Summit Properties Partnership, L.P. to indemnify the general partner
and its directors and officers and certain other parties to the fullest extent
permitted from time to time by Delaware law.
Pursuant to the authority granted in Summit Properties Inc.'s articles
of incorporation and bylaws and Summit Properties Partnership, L.P.'s
partnership agreement, Summit Properties Inc. and Summit Properties Partnership,
L.P. have entered into indemnification agreements with Summit Properties Inc.'s
directors and executive officers. The indemnification agreements require, among
other matters, that Summit Properties Inc. and Summit Properties Partnership,
L.P. indemnify Summit Properties Inc.'s executive officers and directors to the
fullest extent permitted by law and advance to such officers and directors all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Summit Properties Inc. and Summit Properties
Partnership, L.P. must also indemnify and pay certain expenses incurred by such
officers and directors seeking to enforce their rights under the indemnification
agreements and, to the extent that Summit Properties Inc. maintains directors'
and officers' liability insurance, must cover such officers and directors under
such insurance policy. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by law, it provides assurance
to directors and officers that indemnification will be available, because, as a
contract, it cannot be modified unilaterally in the future by the board of
directors or the stockholders to eliminate the rights it provides.
II-1
<PAGE> 46
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS.
<S> <C>
4.1 Amended and Restated Articles of Incorporation of Summit
Properties Inc. (incorporated herein by reference to Exhibit 3.1
to Summit Properties Inc.'s Registration Statement on Form S-11,
Registration No. 33-90706).
4.2 Bylaws of Summit Properties Inc. (incorporated herein by reference
to Exhibit 3.2 to Summit Properties Inc.'s Registration Statement
on Form S-11, Registration No. 33-90706).
4.3 Shareholder Rights Agreement, dated as of December 14, 1998,
between Summit Properties Inc. and First Union National Bank,
as Rights Agent (incorporated herein by reference to Exhibit
4.1 to Summit Properties Inc.'s Registration Statement on Form
8-A, filed on December 16, 1998).
4.4 Articles Supplementary to Amended and Restated Articles of
Incorporation of Summit Properties Inc. designating 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock
(incorporated herein by reference to Exhibit 3.1 to Summit
Properties Inc.'s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999, File No. 001-12792).
4.5 Articles Supplementary to Amended and Restated Articles of
Incorporation of Summit Properties Inc. designating 8.75%
Series C Cumulative Redeemable Perpetual Preferred Stock
(incorporated herein by reference to Exhibit 99.1 to Summit
Properties Partnership, L.P.'s Current Report on Form 8-K
filed on September 17, 1999, File No. 000-22411).
4.6 Agreement of Limited Partnership of Summit Properties
Partnership, L.P., as amended (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Registration Statement on Form 10, dated April 21,
1997, File No. 000-22411).
4.7 Tenth Amendment to Agreement of Limited Partnership of Summit
Properties Partnership, L.P. (incorporated herein by reference
to Exhibit 10.1 to Summit Properties Inc.'s Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1997, File
No. 001-12792).
4.8 Eleventh Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998, File No. 000-22411).
4.9 Twelfth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1998, File No. 000-22411).
4.10 Thirteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Summit Properties Inc.'s Current Report on Form
8-K filed on November 13, 1998, File No. 001-12792).
4.11 Fourteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, File No. 000-22411).
4.12 Fifteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.2 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, File No. 000-22411).
4.13 Sixteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.3 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, File No. 000-22411).
</TABLE>
II-2
<PAGE> 47
<TABLE>
<S> <C>
4.14 Seventeenth Amendment, dated as of September 3, 1999, to
Agreement of Limited Partnership of Summit Properties
Partnership, L.P., designating 8.75% Series C Cumulative
Redeemable Perpetual Preferred Units (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Current Report on Form 8-K filed on September 17, 1999,
File No. 000-22411).
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities being registered.
*8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
*23.1 Consent of Deloitte & Touche LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included as part of
Exhibits 5.1 and 8.1 hereto).
24.1 Powers of Attorney (included on signature page of Registration
Statement).
*99.1 Registration Rights and Lock-up Agreement, dated October 31, 1998,
by and between Summit Properties Inc., Summit Properties Partnership,
L.P. and the holders named therein.
</TABLE>
- -----------------
* Filed herewith
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) 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 acts 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 end of the estimated 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 a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(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)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof; and
II-3
<PAGE> 48
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) 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 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described under Item 15 above, 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 respective registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, 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.
II-4
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, the State of North Carolina, on this 30
day of December, 1999.
SUMMIT PROPERTIES INC.
By: /s/ William F. Paulsen
------------------------------
William F. Paulsen
Chief Executive Officer
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints each of William B. McGuire, Jr. and William F.
Paulsen as such person's true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for such person in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement (or any
Registration Statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that any said attorney-in-fact and agent, or any
substitute or substitutes of any of them, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ William B. McGuire, Jr. Chairman of the Board of Directors December 30, 1999
--------------------------------------------
William B. McGuire, Jr.
/s/ William F. Paulsen Chief Executive Officer and December 30, 1999
-------------------------------------------- Director (Principal Executive Officer)
William F. Paulsen
/s/ Steven R. LeBlanc President, Chief Operating Officer December 30, 1999
-------------------------------------------- and Director
Steven R. LeBlanc
/s/ Michael L. Schwarz Executive Vice President and December 30, 1999
-------------------------------------------- Chief Financial Officer (Principal
Michael L. Schwarz Financial Officer)
/s/ James M. Allwin Director December 30, 1999
--------------------------------------------
James M. Allwin
/s/ Henry H. Fishkind Director December 30, 1999
--------------------------------------------
Henry H. Fishkind
/s/ James H. Hance, Jr. Director December 30, 1999
--------------------------------------------
James H. Hance, Jr.
/s/ Nelson Schwab III Director December 30, 1999
--------------------------------------------
Nelson Schwab III
</TABLE>
II-5
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<S> <C>
4.1 Amended and Restated Articles of Incorporation of Summit Properties
Inc. (incorporated herein by reference to Exhibit 3.1 to Summit
Properties Inc.'s Registration Statement on Form S-11, Registration
No. 33-90706).
4.2 Bylaws of Summit Properties Inc. (incorporated herein by reference
to Exhibit 3.2 to Summit Properties Inc.'s Registration Statement on
Form S-11, Registration No. 33-90706).
4.3 Shareholder Rights Agreement, dated as of December 14, 1998,
between Summit Properties Inc. and First Union National Bank,
as Rights Agent (incorporated herein by reference to Exhibit
4.1 to Summit Properties Inc.'s Registration Statement on Form
8-A, filed on December 16, 1998).
4.4 Articles Supplementary to Amended and Restated Articles of
Incorporation of Summit Properties Inc. designating 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock
(incorporated herein by reference to Exhibit 3.1 to Summit
Properties Inc.'s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999, File No. 001-12792).
4.5 Articles Supplementary to Amended and Restated Articles of
Incorporation of Summit Properties Inc. designating 8.75%
Series C Cumulative Redeemable Perpetual Preferred Stock
(incorporated herein by reference to Exhibit 99.1 to Summit
Properties Partnership, L.P.'s Current Report on Form 8-K
filed on September 17, 1999, File No. 000-22411).
4.6 Agreement of Limited Partnership of Summit Properties
Partnership, L.P., as amended (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Registration Statement on Form 10, dated April 21,
1997, File No. 000-22411).
4.7 Tenth Amendment to Agreement of Limited Partnership of Summit
Properties Partnership, L.P. (incorporated herein by reference
to Exhibit 10.1 to Summit Properties Inc.'s Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1997, File
No. 001-12792).
4.8 Eleventh Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998, File No. 000-22411).
4.9 Twelfth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1998, File No. 000-22411).
4.10 Thirteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Summit Properties Inc.'s Current Report on Form
8-K filed on November 13, 1998, File No. 001-12792).
4.11 Fourteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, File No. 000-22411).
4.12 Fifteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.2 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, File No. 000-22411).
4.13 Sixteenth Amendment to Agreement of Limited Partnership of
Summit Properties Partnership, L.P. (incorporated herein by
reference to Exhibit 3.3 to Summit Properties Partnership,
L.P.'s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, File No. 000-22411).
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
4.14 Seventeenth Amendment, dated as of September 3, 1999, to
Agreement of Limited Partnership of Summit Properties
Partnership, L.P., designating 8.75% Series C Cumulative
Redeemable Perpetual Preferred Units (incorporated herein by
reference to Exhibit 3.1 to Summit Properties Partnership,
L.P.'s Current Report on Form 8-K filed on September 17, 1999,
File No. 000-22411).
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered.
*8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
*23.1 Consent of Deloitte & Touche LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included as part of
Exhibits 5.1 and 8.1 hereto).
24.1 Powers of Attorney (included on signature page of Registration
Statement).
*99.1 Registration Rights and Lock-up Agreement, dated October 31, 1998,
by and between Summit Properties Inc., Summit Properties Partnership,
L.P. and the holders named therein.
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 5.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 227-8591
December 30, 1999
Summit Properties Inc.
212 South Tryon Street, Suite 500
Charlotte, North Carolina 28281
Re: Legality of Securities to be Registered Under
Registration Statement on Form S-3
Ladies and Gentlemen:
This opinion is furnished in connection with the registration statement
on Form S-3 (the "Registration Statement") pursuant to the Securities Act of
1933, as amended (the "Securities Act"), relating to the registration of
2,214,803 shares of common stock, par value $.01 per share ("Common Stock"), of
Summit Properties Inc., a Maryland corporation (the "Company"), consisting of
(i) 178,045 shares of Common Stock (the "Redemption Shares") that may be issued
by the Company if and to the extent that the 178,045 common units of limited
partnership interest (the "Units") in Summit Properties Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership"), originally issued to
certain unitholders in connection with the acquisition by the Operating
Partnership of a portfolio of apartment communities located in Texas, are
presented to the Operating Partnership for redemption (which may occur at any
time on or after January 1, 2000) and the Company exercises its rights under the
Operating Partnership's agreement of limited partnership, as amended (the
"Partnership Agreement"), to acquire such Units in exchange for Redemption
Shares; and (ii) 2,036,758 shares of Common Stock (the "Original Shares") that
may be sold for the respective accounts of certain stockholders of the Company.
In connection with rendering this opinion, we have examined (i) the
Amended and Restated Articles of Incorporation of the Company, as amended to
date and on file with the Maryland State Department of Assessments and Taxation,
(ii) the Bylaws of the Company, as amended to date, (iii) such records of the
corporate proceedings of the Company as we deemed material, (iv) the
Registration Statement and the exhibits thereto, and (v) such other
certificates, receipts, records and documents as we considered necessary for the
purposes of this opinion. In our examination, we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as certified, photostatic or facsimile copies, the
authenticity of the originals of such copies and the
<PAGE> 2
GOODWIN, PROCTER & HOAR LLP
Summit Properties Inc.
December 30, 1999
Page 2
authenticity of telephonic confirmations of public officials and others. As to
facts material to our opinion, we have relied upon certificates or telephonic
confirmations of public officials and certificates, documents, statements and
other information of the Company or representatives or officers thereof.
We are attorneys admitted to practice in The Commonwealth of
Massachusetts. We express no opinion concerning the laws of any jurisdictions
other than the laws of the United States of America and The Commonwealth of
Massachusetts and the Maryland General Corporation Law, and also express no
opinion with respect to the blue sky or securities laws of any state, including
Massachusetts and Maryland.
Based upon the foregoing, we are of the opinion that (i) when the
Redemption Shares have been issued in exchange for the Units tendered for
redemption to the Operating Partnership as contemplated by the Partnership
Agreement, the Redemption Shares will be validly issued, fully paid and
nonassessable; and (ii) the Original Shares are validly issued, fully paid and
nonassessable.
The foregoing assumes that all requisite steps will be taken to comply
with the requirements of the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities.
We hereby consent to being named as counsel to the Company in the
Registration Statement, to the reference therein to our firm under the caption
"Legal Matters" and to the inclusion of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 8.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 227-8591
December 30, 1999
Summit Properties Inc.
212 South Tryon Street, Suite 500
Charlotte, NC 21281
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to Summit
Properties Inc., a Maryland corporation (the "Company"), in connection with the
registration statement on Form S-3 (the "Registration Statement") pursuant to
the Securities Act of 1933, as amended, relating to the registration of
2,214,803 shares of common stock, par value $.01 per share ("Common Stock"), of
the Company, consisting of (i) 178,045 shares of Common Stock (the "Redemption
Shares") that may be issued by the Company if and to the extent that the 178,045
common units of limited partnership interest (the "Units") in Summit Properties
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
originally issued to certain unitholders in connection with the acquisition by
the Operating Partnership of a portfolio of apartment communities located in
Texas, are presented to the Operating Partnership for redemption (which may
occur at any time on or after January 1, 2000) and the Company exercises its
rights under the Operating Partnership's agreement of limited partnership, as
amended, to acquire such Units in exchange for Redemption Shares; and (ii)
2,036,758 currently issued and outstanding shares of Common Stock to be sold
pursuant to the Registration Statement for the respective accounts of certain
stockholders of the Company. This opinion relates to the Company's qualification
for federal income tax purposes as a real estate investment trust (a "REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"), and the
accuracy of the statements set forth under the heading "Federal Income Tax
Considerations and Consequences of Your Investment" in the prospectus (the
"Prospectus") contained in the Registration Statement.
In rendering the following opinions, we have reviewed the Prospectus
and the descriptions set forth therein of the Company and its current and
proposed investments and activities. We have also examined the Articles of
Incorporation and Bylaws of the Company, each as amended, the Company's federal
income tax returns for each of its taxable years ended December 1994, December
1995, December 1996, December 1997, and December 1998, as filed on Forms
1120-REIT, and such other records, certificates and documents as we have
<PAGE> 2
GOODWIN, PROCTER & HOAR LLP
Summit Properties Inc.
December 30, 1999
Page 2
deemed necessary or appropriate for purposes of rendering the opinions set forth
herein. The foregoing documents, including the Prospectus, are referred to
herein as the "Documents."
We have relied upon the representations of individuals who are senior
officers of the Company, the Operating Partnership, and Summit Management
Company regarding the manner in which the Company has been and will continue to
be owned and operated and with respect to the Company's continued compliance
with the asset composition, source of income, shareholder diversification,
distribution, and other requirements of the Code necessary for a corporation to
qualify as a REIT. We also have relied upon the statements contained in the
Documents regarding the operation and ownership of the Company, the Operating
Partnership, Summit Management Company, and their affiliates. We have neither
independently investigated nor verified such representations or statements, and
we assume that such representations and statements are true, correct, and
complete and that all representations and statements made "to the best knowledge
and belief" of any person(s) or parties or with similar qualification are and
will be true, correct, and complete as if made without such qualification. We
assume that the Company has been and will be operated in accordance with
applicable laws and the terms and conditions of applicable documents, and that
the descriptions of the Company and its investments, and the proposed
investments, activities, operations and governance of the Company set forth in
the Prospectus and in all prior registration statements filed with the
Securities and Exchange Commission continue to be true. In addition, we have
relied on certain additional facts and assumptions described below.
In rendering the opinions set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us, and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We have
also assumed, without investigation, that all documents, certificates,
warranties and covenants on which we have relied in rendering the opinion set
forth below and that were given or dated earlier than the date of this letter
continue to remain accurate, insofar as relevant to the opinions set forth
herein, from such earlier date through and including the date of this letter.
* * *
<PAGE> 3
GOODWIN, PROCTER & HOAR LLP
Summit Properties Inc.
December 30, 1999
Page 3
Based upon and subject to the foregoing, and provided that the Company
continues to meet the applicable asset composition, source of income,
shareholder diversification, distribution, and other requirements of the Code
necessary for a corporation to qualify as a REIT, we are of the opinion that:
1. For its taxable years ended December 31, 1994, through
December 31, 1998, the Company has been organized in
conformity with the requirements for qualification as a "real
estate investment trust" under the Code, and its method of
operation has enabled it to and will enable it to continue to
meet the requirements for qualification and taxation as a
"real estate investment trust" under the Code.
2. The statements set forth under the headings "Federal Income
Tax Considerations and Consequences of Your Investment" in the
Prospectus, to the extent such information constitutes matters
of law, summaries of legal matters, or legal conclusions, have
been reviewed by us and are accurate in all material respects.
* * *
We express no opinion herein other than the opinions expressly set
forth above. You should recognize that our opinions are not binding on the
Internal Revenue Service and that a court or the Internal Revenue Service may
disagree with the opinions contained herein. Although we believe that our
opinions would be sustained if challenged, there can be no assurance that this
will be the case. The discussion and conclusions set forth above are based upon
current provisions of the Code, the Income Tax Regulations and Procedure and
Administration Regulations promulgated thereunder, and existing administrative
and judicial interpretations thereof, all of which are subject to change.
Changes in applicable law could adversely affect our opinions.
<PAGE> 4
GOODWIN, PROCTER & HOAR LLP
Summit Properties Inc.
December 30, 1999
Page 4
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/S/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Summit Properties Inc. on Form S-3 of our report dated January 21, 1999,
appearing in the Annual Report on Form 10-K of Summit Properties Inc. for the
year ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche
Charlotte, North Carolina
December 29, 1999
<PAGE> 1
EXHIBIT 99.1
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
This Registration Rights and Lock-up Agreement (the "Agreement") is
entered into as of October 31, 1998 by and among Summit Properties, Inc., a
Maryland corporation (the "Company"), Summit Properties Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership"), and the holders
listed on the signature pages hereto (individually, a "Holder" and collectively,
the "Holders").
WHEREAS, each Holder is to receive contemporaneously herewith shares of
common stock (the "Common Stock") of the Company, par value $.01 per share, or
units of limited partnership interest in the Operating Partnership ("Units"), in
each case issued without registration under the Securities Act of 1933, as
amended (the "Securities Act"), in partial consideration for the merger of Ewing
Industries, Inc., an Ohio corporation ("Ewing") with and into the Company and
the contribution to the Operating Partnership of certain limited partnership
interests in certain limited partnerships organized under the laws of Texas and
affiliated with Ewing (collectively, the "Partnerships"), in each case pursuant
to an Agreement and Plan of Reorganization, dated as of October 31, 1998
(together with any amendment thereto, the "Merger Agreement");
WHEREAS, pursuant to the Agreement of Limited Partnership of the
Operating Partnership, such Units may be redeemed for shares of Common Stock,
which may be issued without registration under the Securities Act; and
WHEREAS, it is a condition precedent to the closing of the Corporate
Merger and the Contribution Transaction (as such terms are defined in the Merger
Agreement) that the Company provide the Holders with the registration rights set
forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, each as amended or supplemented
by any prospectus supplement relating to the terms of the offering of any
portion of the Registrable Shares covered by such
1
<PAGE> 2
Registration Statement and by all other amendments and supplements to such
prospectus, and in each case including all material incorporated by reference
therein.
"Registrable Shares" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement (including, without limitation, Shares issued to the
Holders in exchange for Units pursuant to an effective Issuance Registration
Statement), (ii) Shares sold pursuant to Rule 144 under the Securities Act and
(iii) Shares eligible (or which would be eligible in the absence of the Holder's
ownership of Common Stock other than Registrable Shares) for sale pursuant to
Rule 144(k) under the Securities Act.
"Registration Expenses" shall mean any and all expenses incurred by the
Company, the Operating Partnership or any affiliate of the Company incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any Registrable Shares) and
compliance with the rules of the NASD; (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and distributing
any Registration Statement, any Prospectus, certificates and other documents
relating to the performance of and compliance with this Agreement; (iv) all fees
and expenses incurred in connection with the listing, if any, of any of the
Registrable Shares on any securities exchange or exchanges pursuant to Section
3(e) hereof; and (v) the fees and disbursements of counsel for the Company and
of the independent public accountants of the Company, including the expenses of
any special audit or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions relating to the sale or disposition of
Registrable Shares by a selling Holder, the fees and disbursements of counsel
representing a selling Holder, and transfer taxes, if any, relating to the sale
or disposition of Registrable Shares by a selling Holder, all of which shall be
borne by such Holder in all cases.
"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers any of the Registrable Shares on an appropriate form, and all amendments
and supplements to such registration statement, including post-effective
amendments and supplements, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall mean the shares of Common Stock issued to any Holder(s)
pursuant to the Merger Agreement or issued or to be issued to any Holder(s) upon
redemption or in exchange for its or their Units, as appropriately adjusted on
account of any stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization.
2
<PAGE> 3
2. Lock-Up Agreement. Each Holder hereby agrees that for a period
of one (1) year from the earlier of the Rancho Issuance Date (as defined in the
Merger Agreement) and the Rancho Reconveyance Date (as defined in the Merger
Agreement), but in any event for each Share or Unit a period of at least one (1)
year from the date of issuance of such Share or Unit pursuant to the Merger
Agreement (the "Lock-Up Period"), without the prior written consent of the
Company, it will not offer, sell, contract to sell, hypothecate, pledge, seek to
redeem, grant an option, right or warrant to purchase or otherwise dispose of,
directly or indirectly, any Shares or Units (the "Lock-Up").
3. Registration.
(a) Demand Registration. Subject to the conditions set forth
in this Agreement, at any time after the expiration of the Lock-Up Period the
Company shall, at the written request of a Holder, cause to be filed as soon as
practicable after the date of such request by such Holder a Registration
Statement relating to the sale by such Holder (and any other Holder electing to
include Registrable Shares in such Registration Statement in accordance with the
provisions set forth below) pursuant to Rule 415 promulgated under the
Securities Act of all or any integral multiple of 100,000 Registrable Shares
held by such Holder in accordance with the terms hereof, and shall use
reasonable efforts to cause such Registration Statement to be declared effective
by the SEC as soon as practicable thereafter; provided, however, that the
Company shall not be required to effect more than two demand registrations, in
the aggregate for all Holders, pursuant to this Section 3(a). Upon receipt of
any such request, the Company shall promptly give written notice of the proposed
registration to all Holders, and each such Holder shall have the right, by
giving written notice to the Company within fifteen (15) days after receipt of
such notice from the Company, to elect to include in such Registration Statement
all or a portion of such Holder's Registrable Shares. The Company may, in its
sole discretion, elect to file a Registration Statement with respect to any or
all of the Shares before receipt of notice from any Holder, including, without
limitation, an Issuance Registration Statement (as hereinafter defined) relating
to the original issuance by the Company of Shares in connection with the
redemption of Holders' Units pursuant to Section 3(c). The Company agrees to use
reasonable efforts to keep each Registration Statement continuously effective
until the earlier of (i) twelve (12) months after such Registration Statement
was declared effective by the SEC, or (ii) the date on which all Registrable
Shares registered thereby are sold or otherwise disposed of by the Holders;
provided, however, that if the Company elects to file a Registration Statement
with the SEC and such Registration Statement is declared effective by the SEC
prior to the expiration of the Lock-Up Period, the Company shall use reasonable
efforts to keep such Registration Statement continuously effective until the
earlier of (x) twelve (12) months after the expiration of the Lock-Up Period or
(ii) the date on which all Registrable Shares registered thereby are sold or
otherwise disposed of by the Holders. Notwithstanding the foregoing provisions
of this Section 3(a), during any period of time which the Company has a
Registration Statement in effect under the provisions of the Securities Act
relating to Registrable Shares, the Holders will not have the right to request
the registration under the provisions of this Section 3(a) of any Registrable
Shares included in such effective Registration Statement.
3
<PAGE> 4
(b) Piggyback Registration. If at any time while any
Registrable Shares or Units are outstanding and a Registration Statement
applicable to any Holder under Section 3(a) is not effective the Company (in its
sole discretion and without any obligation to do so) proposes to file a primary
registration statement on Form S-11 under the Securities Act in connection with
its offering of Common Stock solely for cash, the Company shall give prompt
written notice of such proposed filing to each Holder at least fifteen (15)
calendar days prior to the proposed filing date. The notice referred to in the
preceding sentence shall offer each Holder the opportunity to register any
amount of Registrable Shares as such Holder may request (a "Piggyback
Registration"). Subject to the provisions of Section 4 below, the Company shall
include in such Piggyback Registration, in any required registration and
qualification for sale under the blue sky or securities laws of the various
states and in any underwriting in connection therewith, all Registrable Shares
for which the Company has received written requests for inclusion therein within
fifteen (15) calendar days after the notice referred to above has been given by
the Company to each Holder. Each Holder of Registrable Shares shall be permitted
to withdraw all or part of its Registrable Shares from a Piggyback Registration
at any time prior to the effective date of such Piggyback Registration. If a
Piggyback Registration is an underwritten registration on behalf of the Company
and the managing underwriter advises the Company that the total number of shares
of Common Stock requested to be included in such registration exceeds the number
of shares of Common Stock which can be sold in such offering without adversely
affecting the price range or probability of success of such offering, the
Company will include in such registration in the following priority: (i) first,
all shares of Common Stock the Company proposes to sell, and (ii) second, up to
the full number of Registrable Shares and shares of Common Stock requested to be
included in such registration by any Holders and other holders of registration
rights, which in the opinion of such managing underwriter, can be sold without
adversely affecting the price range or probability of success of such offering
(with the shares of Common Stock to be registered allocated pro rata among the
Holders and the other holders of registration rights on the basis of the total
number of Registrable Shares and the other shares of the Company's Common Stock
requested to be included in such registration by all such Holders and other
holders of registration rights).
(c) Registration Statement Covering Issuance of Common Stock.
In lieu of the registration rights set forth in Sections 3(a) and 3(b) above
with respect to Shares to be issued upon redemption or in exchange for Units,
the Company may, in its sole discretion, prior to the first date upon which the
Units held by the Holders may be redeemed (or such other date as may be required
under applicable provisions of the Securities Act) file a registration statement
(the "Issuance Registration Statement") under the Securities Act relating to the
issuance to Holders of Common Stock upon the redemption of Units or in exchange
for Units. Thereupon, the Company shall use reasonable efforts to cause such
Registration Statement to be declared effective by the SEC for all shares of
Common Stock covered thereby. The Company agrees to use reasonable efforts to
keep the Issuance Registration Statement continuously effective, with respect to
the Registrable Shares of a particular Holder, until such Holder has redeemed or
exchanged such Holder's Units for Common Stock or cash. In the event that the
Company is unable to cause such Issuance Registration Statement to be declared
effective by the SEC or (except as otherwise permitted by Sections 8(b) and 9)
is unable to keep such Issuance Registration Statement effective until the date
on which each Holder has redeemed or exchanged such Holder's Units for
4
<PAGE> 5
Common Stock or cash, then the rights of each Holder set forth in Sections 3(a)
and 3(b) above shall be restored.
(d) Notification and Distribution of Materials. The Company
shall notify each Holder of the effectiveness of any Registration Statement
applicable to the Shares of such Holder and shall furnish to each such Holder
the number of copies of such Registration Statement (including any amendments
and supplements thereto), the Prospectus contained therein (including each
preliminary prospectus and all related amendments and supplements), and any
document incorporated by reference in such Registration Statement or such other
documents as such Holder may reasonably request in order to facilitate its sale
of the Registrable Shares in the manner described in such Registration
Statement. Each Holder agrees that it will not distribute any preliminary
prospectus included in any Registration Statement unless such Registration
Statement relates to an underwritten public offering by (i) the Company and
(ii), pursuant to the rights set forth in Section 3(b), the Holders.
(e) Amendments and Supplements; Exchange Listing Application.
The Company shall prepare and file with the SEC from time to time such
amendments and supplements to any Registration Statement and Prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all the Registrable Shares until the earlier of (i) such
time as all of the Registrable Shares have been disposed of in accordance with
the intended methods of disposition by the Holders as set forth in such
Registration Statement or (ii) the date on which such Registration Statement
ceases to be effective in accordance with the terms of this Section 3. Upon ten
(10) business days' notice, the Company shall file any supplement or
post-effective amendment to such Registration Statement with respect to the plan
of distribution or such Holder's ownership interests in Registrable Shares that
is reasonably necessary to permit the sale of the Holder's Registrable Shares
pursuant to the Registration Statement. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Shares registered under the Registration Statement to be then listed or quoted
on the primary exchange or quotation system on which the Common Stock is then
listed or quoted.
(f) Notice of Certain Events.
(i) The Company shall promptly notify each Holder of, and
confirm in writing, (a) the receipt by the Company of any request by the SEC for
amendments or supplements to any Registration Statement or Prospectus related
thereto or for additional information, and (b) the filing of any Registration
Statement or any Prospectus, amendment or supplement related thereto or any
post-effective amendment to any Registration Statement and the effectiveness of
any post-effective amendment.
(ii) At any time when a Prospectus relating to a Registration
Statement is required to be delivered under the Securities Act, the Company
shall immediately notify each Holder of the happening of any event as a result
of which the Prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
5
<PAGE> 6
therein, in light of the circumstances under which they were made, not
misleading. In such event, the Company shall promptly prepare and furnish to
each applicable Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Registrable Shares, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Company will, if necessary, amend the Registration Statement of which such
Prospectus is a part to reflect such amendment or supplement.
4. State Securities Laws. Subject to the conditions set forth in
this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary to
register or qualify the Registrable Shares under the securities or "Blue Sky"
laws of such states as any Holder may reasonably request, and the Company shall
use its best efforts to cause such filings to become effective; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such state in which it is not
then qualified or to file any general consent to service of process in any such
state. Once effective, the Company shall use its best efforts to keep such
filings effective until the earlier of (a) such time as all of the Registrable
Shares have been disposed of in accordance with the intended methods of
disposition by the Holder as set forth in the Registration Statement, (b) in the
case of a particular state, a Holder has notified the Company that it no longer
requires an effective filing in such state in accordance with its original
request for filing or (c) the date on which the Registration Statement ceases to
be effective in accordance with Section 3. The Company shall promptly notify
each Holder of, and confirm in writing, the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Shares for sale under the securities or "Blue Sky" laws of any
jurisdiction or the initiation of any threat of any proceeding for such purpose.
5. Expenses. Except as otherwise provided in this Section 5, the
Company shall bear all Registration Expenses incurred by the Company, the
Operating Partnership, or any affiliate of the Company in connection with the
registration of the Registrable Shares pursuant to this Agreement. Each Holder
shall be responsible for any brokerage or underwriting commissions and taxes of
any kind (including, without limitation, transfer taxes) with respect to any
disposition, sale or transfer of Registrable Shares sold by it and for any
legal, accounting and other expenses incurred by it. In the event that the
Company (in its sole discretion and without any obligation to do so) amends a
Registration Statement in response to a request by a Holder for such amendment
or to reflect a change in the plan of distribution or ownership interests with
respect to a Holder's Registrable Shares, the Holder requesting such amendment
or whose actions require such amendment shall bear all fees, costs and expenses
incurred by the Company, the Operating Partnership, or any affiliate of the
Company or by such Holder in connection therewith, including fees related to the
delisting of Shares from any national securities exchange or quotation system on
which such Shares had been listed for trading.
6. Indemnification by the Company. The Company agrees to
indemnify each Holder and its respective officers, directors, employees, agents,
representatives and affiliates, and each person or entity, if any, that controls
such Holder within the meaning of the Securities Act, and
6
<PAGE> 7
any underwriter of an offering registered on a Registration Statement and any
person who controls the underwriter within the meaning of the Securities Act
(each an "Indemnitee"), against any and all losses, claims, damages, actions,
liabilities, costs and expenses (including, without limitation, reasonable fees,
expenses and disbursements of attorneys), joint or several, arising out of or
based upon, any violation by the Company of any rule or regulation promulgated
under the Securities Act applicable to the Company and relating to any action or
inaction required of the Company in connection with any Registration Statement
or Prospectus, or upon any untrue or alleged untrue statement of material fact
contained in the Registration Statement or any Prospectus, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company shall not be
liable to such Indemnitee or any other person to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof), cost or
expense arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with information which was
furnished to the Company for use in connection with the Registration Statement
or the Prospectus contained therein by or on behalf of a Holder or any other
Indemnitee or (ii) such Indemnitee's failure to send or give a copy of the most
current Prospectus furnished to such Indemnitee by the Company at or prior to
the time such action is required by the Securities Act to the person claiming an
untrue statement or alleged untrue statement or omission or alleged omission if
such statement or omission was corrected in such Prospectus.
7. Covenants of the Holders. Each Holder hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and its ownership interests with respect to
its Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in such Registration
Statement (other than an Issuance Registration Statement) to any purchaser of
the shares covered by such Registration Statement from the Holder and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each person, if any, who controls the
Company within the meaning of the Securities Act, against any and all losses,
claims, damages, actions, liabilities, costs and expenses arising out of or
based upon (x) any untrue statement or alleged untrue statement of material fact
contained in either such Registration Statement or the Prospectus contained
therein, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, if and to
the extent that such statement or omission occurs from reliance upon and in
conformity with information regarding such Holder, its plan of distribution or
its ownership interests, which was furnished to the Company by or on behalf of
such Holder for use therein unless such statement or omission was corrected in a
writing delivered to the Company not less than five (5) business days prior to
the date of the final Prospectus (as supplemented or amended, as the case may
be) or (y) the failure by such Holder to deliver or cause to be delivered the
most current Prospectus furnished by the Company to the Holder to any purchaser
of the shares covered by such Registration Statement from such Holder.
7
<PAGE> 8
8. Suspension of Registration Requirement.
(a) The Company shall promptly notify each Holder of, and
confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement with respect to such Holder's
Registrable Shares or the initiation of any proceedings for that purpose. The
Company shall use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such a Registration Statement as soon as
reasonably practicable.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to cause a Registration
Statement and any filings with any state securities commission to become
effective or to amend or supplement a Registration Statement shall be suspended
in the event and during such period as unforeseen circumstances exist (including
without limitation (i) an underwritten primary offering by the Company if the
Company is advised by the underwriters that the sale of Registrable Shares under
the Registration Statement would impair the pricing or commercial practicality
of the primary offering or (ii) pending negotiations relating to, or
consummation of, a transaction or the occurrence of an event that would require
additional disclosure of material information by the Company in the Registration
Statement or such filing, as to which the Company has a bona fide business
purpose for preserving confidentiality or which renders the Company unable to
comply with SEC requirements) (such unforeseen circumstances being hereinafter
referred to as a "Suspension Event") that would (i) make it impractical or
unadvisable to cause the Registration Statement or such filings to become
effective or to amend or supplement the Registration Statement and (ii) cause
the officers and directors of the Company who are obligated to make filings
under Section 16 of the Securities Exchange Act of 1934, as amended, to be
prohibited from trading Common Stock, but such suspension shall continue only
for so long as such event or its effect is continuing and in no event will such
suspension continue for more than ninety (90) days. The twelve-month period
during which an effective Registration Statement is required to remain effective
pursuant to Section 3(a) shall be extended by the period of any Suspension Event
that occurs when such Registration Statement is required to be effective. The
Company shall notify each Holder of the existence and, in the case of
circumstances referred to in clause (i) of this Section 8(b), nature of any
Suspension Event.
(c) Each Holder of Registrable Shares whose Registrable Shares
are covered by a Registration Statement filed pursuant to Section 3 agrees, if
requested by the Company in the case of a Company-initiated nonunderwritten
offering or if requested by the managing underwriter or underwriters in a
Company-initiated underwritten offering, not to effect any public sale or
distribution of any of the securities of the Company of any class included in
such Registration Statement, including a sale pursuant to Rule 144 or Rule 144A
under the Securities Act (except as part of such Company-initiated Registration
Statement), during the 15-day period prior to, and during the 60-day period
beginning on, the date of commencement of each Company-initiated offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or the managing underwriters; provided, however, that
such 60-day period shall be extended by the number of days from and including
the date of the giving of any notice pursuant to Section 3(f)(ii) hereof to and
including the date when each Holder of
8
<PAGE> 9
Registrable Shares covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
3(f)(ii) hereof.
9. Black-Out Period. Each Holder agrees that, following the
effectiveness of any Registration Statement (except an Issuance Registration
Statement) relating to Registrable Shares of such Holder, such Holder will not
effect any sales of the Registrable Shares pursuant to the Registration
Statement or any filings with any state securities commissions at any time after
such Holder has received notice from the Company to suspend sales as a result of
the occurrence or existence of any Suspension Event or so that the Company may
correct or update the Registration Statement or such filing. The Holder may
recommence effecting sales of the Shares pursuant to the Registration Statement
or such filings following further notice to such effect from the Company (an
"Advice"), which notice shall be given by the Company not later than five (5)
business days after the conclusion of any such Suspension Event. Each Holder
further agrees that, following the effectiveness of any Issuance Registration
Statement, as a result of the occurrence or existence of any Suspension Event or
so that the Company may correct or update the Registration Statement or any
filings with any state securities commissions and until issuance of an Advice,
the Company may suspend the issuance of Common Stock pursuant to an Issuance
Registration Statement (but any Common Stock not issued because of any such
suspension must be delivered promptly following issuance of the Advice).
10. Additional Shares. The Company, at its option, may register,
under any Registration Statement and any filings with any state securities
commissions filed pursuant to this Agreement, any number of unissued shares of
Common Stock of the Company or any shares of Common Stock of the Company owned
by any other stockholder(s) of the Company.
11. Contribution. If the indemnification provided for in Sections
6 and 7 is unavailable to an indemnified party with respect to any losses,
claims, damages, actions, liabilities, costs or expenses referred to therein or
is insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any indemnifying
party to contribute under this Section 11 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 6 or 7 hereof had been available
under the circumstances.
9
<PAGE> 10
The Company and each of the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
12. No Other Obligation to Register. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act or any applicable
state securities laws or to take any action that would make available any
exemption from the registration requirements of such laws.
13. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified, or supplemented or waived without the prior written
consent of the Company and the Holders of in excess of fifty percent (50%) of
the aggregate of all Registrable Shares.
14. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof), and further provided that in case of
directions to amend the Registration Statement pursuant to Section 3(e) or
Section 7, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Summit Properties Inc.
212 South Tryon Street
Suite 500
Charlotte, NC
Telecopy: (704) 334-4496
Telephone: (704) 334-9905
Attention: Michael G. Malone, General Counsel
10
<PAGE> 11
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
Telecopy: (617) 523-1231
Telephone: (617) 570-1000
Attention: David W. Watson, P.C.
If to the Holders: As listed on the applicable Holder signature
page.
with a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
Telephone: (310) 201-8900
Telecopy: (310) 201-8922
Attention: Real Estate Notices (LJP)
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 8 and 9 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may not be assigned by any Holder and any
attempted assignment hereof by any Holder will be void and of no effect and
shall terminate all obligations of the Company hereunder; provided, however,
that any Holder may assign its rights to any person to whom such Holder
transfers Registrable Shares in connection with a transaction that does not
require registration under the Securities Act.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland applicable to
contracts made and to be performed wholly within said State.
18. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereof shall be enforceable to the fullest extent permitted by law.
11
<PAGE> 12
19. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY: SUMMIT PROPERTIES INC.
By: /s/ Douglas E. Brout
---------------------------------------
Name: Douglas E. Brout
Title: Vice President
OPERATING PARTNERSHIP: SUMMIT PROPERTIES PARTNERSHIP, L.P.
By: SUMMIT PROPERTIES INC.,
its sole general partner
By: /s/ Douglas E. Brout
---------------------------------------
Name: Douglas E. Brout
Title: Vice President
HOLDERS: /s/ Mary Frances Clauder
------------------------------------------------
MARY FRANCES CLAUDER
Address for Notice:
c/o Thomas L. Williams
North American Properties
212 East Third Street, Suite 300
Cincinnati, OH 45202
Telephone:
-----------------------------
13
<PAGE> 14
/s/ Sharon Williams Frisbie
---------------------------------------------------
SHARON WILLIAMS FRISBIE
Address for Notice:
c/o Thomas L. Williams
North American Properties
212 East Third Street, Suite 300
Cincinnati, OH 45202
Telephone:
-----------------------------------
/s/ John B. Grote
---------------------------------------------------
JOHN B. GROTE
Address for Notice:
c/o Richard W. Grote
Cin-Fab
5240 Lester Road
Cincinnati, OH 45213
Telephone:
-----------------------------------
/s/ Kerry W. Grote
---------------------------------------------------
KERRY W. GROTE
Address for Notice:
c/o Richard W. Grote
Cin-Fab
5240 Lester Road
Cincinnati, OH 45213
Telephone:
-----------------------------------
14
<PAGE> 15
/s/ M. Dyer Grote
------------------------------------------------
M. DYER GROTE
Address for Notice:
c/o Richard W. Grote
Cin-Fab
5240 Lester Road
Cincinnati, OH 45213
Telephone:
-----------------------------------
/s/ Timothy J. Grote
------------------------------------------------
TIMOTHY J. GROTE
Address for Notice:
Grote Enterprises
621 Wilmer Avenue
Cincinnati, OH 45226
Telephone:
/s/ Thomas D. Grote, Jr.
------------------------------------------------
THOMAS D. GROTE, JR.
Address for Notice:
c/o Timothy Grote
Grote Enterprises
621 Wilmer Avenue
Cincinnati, OH 45226
Telephone:
----------------------------------
15
<PAGE> 16
/s/ Mary G. Hobson
-----------------------------------------------
MARY G. HOBSON
Address for Notice:
c/o Timothy Grote
Grote Enterprises
621 Wilmer Avenue
Cincinnati, OH 45226
Telephone:
---------------------------------
/s/ Carol A. Jodar
-----------------------------------------------
CAROL A. JODAR
Address for Notice:
c/o Thomas L. Williams
North American Properties
212 East Third Street, Suite 300
Cincinnati, OH 45202
Telephone:
-------------------------------
/s/ Patricia W. Niehoff
-----------------------------------------------
PATRICIA W. NIEHOFF
Address for Notice:
c/o H.C. Buck Niehoff
Peck Shaffer & Williams LLP
PNC Center
201 East Fifth Street, Suite 900
Cincinnati, OH 45202
Telephone:
---------------------------------
16
<PAGE> 17
LISA GROTE OSTEVOLL REVOCABLE TRUST
By: /s/ Thomas D. Grote, Jr.
--------------------------------------------
Thomas D. Grote, Jr.,
Trustee
By: /s/ Mary G. Hobson
--------------------------------------------
Mary G. Hobson,
Trustee
Address for Notice:
c/o Timothy Grote
Grote Enterprises
621 Wilmer Avenue
Cincinnati, OH 45226
Telephone:
---------------------------
/s/ Thomas L. Williams
----------------------------------------------
THOMAS L. WILLIAMS
Address for Notice:
North American Properties
212 East Third Street, Suite 300
Cincinnati, OH 45202
Telephone:
/s/ William J. Williams, Jr.
----------------------------------------------
WILLIAM J. WILLIAMS, JR.
Address for Notice:
North American Properties
212 East Third Street, Suite 300
Cincinnati, OH 45202
Telephone:
---------------------------
17
<PAGE> 18
KW PARTNERSHIP
By: /s/ Lawrence H. Kyte, Jr.
--------------------------------------
Lawrence H. Kyte, Jr.,
General Partner
By: /s/ Thomas L. Williams
--------------------------------------
Thomas L. Williams,
General Partner
By: /s/ W. J. Williams, Jr.
--------------------------------------
W.J. Williams, Jr.,
General Partner
Address for Notice:
212 E. Third St., Suite 300
Cincinnati, OH 45202
Telephone:
--------------------------
LAD PARTNERSHIP
By: /s/ Dale G. Hafele
--------------------------------------
Dale G. Hafele,
General Partner
By: /s/ Andrew R. Modrall
--------------------------------------
Andrew R. Modrall,
General Partner
By: /s/ Lori D. Wendling
--------------------------------------
Lori D. Wendling,
General Partner
Address for Notice:
212 E. Third St., Suite 300
Cincinnati, OH 45202
Telephone:
----------------------------
18
<PAGE> 19
/s/ Michael L. Pacillio
--------------------------------------------------
MICHAEL L. PACILLIO
Address for Notice:
14990 Landmark Blvd., Suite 300
Dallas, TX 75240
Telephone:
--------------------------------
MILAN INVESTMENT TRUST
By: /s/ Lorrie L. Pacillio
-----------------------------------------------
Lorrie L. Pacillio,
Trustee
Address for Notice:
5316 Stone Falls Lane
Dallas, TX 75287
Telephone:
/s/ S. Joseph Barrett
--------------------------------------------------
S. JOSEPH BARRETT
Address for Notice:
14990 Landmark Blvd., Suite 300
Dallas, TX 75240
Telephone:
----------------------------
19
