<PAGE> 1
As filed with the Securities and Exchange Commission on November 1, 1996
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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BAY APARTMENT COMMUNITIES, INC.
(Exact name of Registrant as specified in its charter)
Maryland 94-2528309
(State of incorporation) (I.R.S. Employer Identification Number)
4340 STEVENS CREEK BOULEVARD, SUITE 275
SAN JOSE, CALIFORNIA 95129
(408) 983-1500
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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GILBERT M. MEYER
CHAIRMAN OF THE BOARD AND PRESIDENT
BAY APARTMENT COMMUNITIES, INC.
4340 STEVENS CREEK BOULEVARD, SUITE 275
SAN JOSE, CALIFORNIA 95129
(408) 983-1500
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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WITH COPIES TO:
DAVID W. WATSON, ESQ.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Title of Securities Being Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Registered Registered Price Per Unit(1) Offering Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 953,122 shares $29.625 $28,236,239 $8,557
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<FN>
(1) Based upon the average of the high and low sales prices reported on the New York Stock Exchange on October 30, 1996, and
estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as
amended.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
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953,122 SHARES
BAY APARTMENT COMMUNITIES, INC.
COMMON STOCK
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This Prospectus relates to the offer and sale of (i) up to 298,577 shares
(the "Redemption Shares") of common stock, $.01 par value (the "Common Stock"),
of Bay Apartment Communities, Inc. (the "Company"), if and to the extent the
Company elects to issue such shares to the holders of units of limited
partnership interest (the "Units") in Bay Countrybrook L.P., a Delaware limited
partnership (the "Partnership"), the general partner of which is Bay GP, Inc., a
Maryland corporation (the "General Partner"), a wholly-owned subsidiary of the
Company, and (ii) up to 654,545 shares of Common Stock, which were issued in
connection with the corporate reorganization of the Company prior to its initial
public offering (the "Original Shares"), which may be sold by the holders
thereof (the holders of the Redemption Shares and the Original Shares are
collectively referred to herein as the "Selling Stockholders"). Under the terms
of the Agreement of Limited Partnership of the Partnership, holders of Units in
the Partnership have the right to require the Partnership to redeem their Units
for cash, subject to certain conditions. The Company may, however, elect to
deliver an equivalent number of shares of Common Stock to the holders of Units
in satisfaction of the Partnership's obligation to redeem the Units for cash.
The Company is registering the Redemption Shares and the Original Shares
(collectively, the "Shares") pursuant to the Company's obligations under certain
registration rights agreements. The registration of the Shares does not
necessarily mean that any of the Redemption Shares will be issued by the Company
in satisfaction of the Unit holders' redemption rights or that any of the Shares
will be offered or sold by the Selling Stockholders. The Company has been
advised by each Selling Stockholder who is an executive officer of the Company
that, notwithstanding the registration of the Original Shares pursuant to the
Registration Statement of which this Prospectus is a part, such Selling
Stockholder has no present intention to sell any of the Original Shares, but may
determine to do so in the future. See "Plan of Distribution" and "Selling
Stockholders."
Each of the Selling Stockholders, directly or through agents, dealers or
underwriters, may offer and sell all or a portion of the Shares offered hereby
from time to time on terms to be determined at the time of sale. To the extent
required by law, the names of any such agent, dealer or underwriter, any
applicable commissions or discounts and any other required information with
respect to a particular offer will be set forth in an accompanying Prospectus
Supplement. See "Plan of Distribution." Each Selling Stockholder reserves the
right to accept and, together with such Selling Stockholder's agents, dealers or
underwriters, to reject, in whole or in part, any proposed purchase of Shares to
be made directly or through agents, dealers or underwriters. The Selling
Stockholders and any agents, dealers or underwriters that participate with the
Selling Stockholders in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in which case any commissions received by them and any profit
on the resale of the Shares purchased by them may be deemed underwriting
commissions or discounts under the Securities Act. See "Registration Rights" for
indemnification arrangements between the Company and the Selling Stockholders.
The Common Stock is listed on the New York Stock Exchange (the "NYSE") and
the Pacific Stock Exchange (the "PSE") under the symbol "BYA." On October 31,
1996, the last reported sales price for the Common Stock on the NYSE was
$30 per share. The Company will not receive any proceeds from the sale of Shares
by the Selling Stockholders, but has agreed to bear certain expenses of the
registration of such Shares under federal and state securities laws.
SEE "RISK FACTORS" COMMENCING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES OFFERED
HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
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The date of this Prospectus is November 1, 1996.
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC" or "Commission") a Registration Statement on Form S-3 under the Securities
Act with respect to the Securities (the "Registration Statement"). This
Prospectus, which constitutes part of the Registration Statement, omits certain
of the information contained in the Registration Statement and the exhibits
thereto on file with the Commission pursuant to the Securities Act and the rules
and regulations of the Commission thereunder. The Registration Statement,
including exhibits thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
copies may be obtained at the prescribed rates from the Public Reference Section
of the Commission at its principal office in Washington, D.C. In addition, the
Company is required to file electronic versions of these documents with the
Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system, and such electronic versions are available to the
public at the Commission's World-Wide Web Site, http://www.sec.gov. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the locations described above. Copies of such materials
can be reviewed at the Commission's World-Wide Web Site (http://www.sec.gov.) or
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. In
addition, the Common Stock is listed on the NYSE and the PSE, and such materials
can be inspected and copied at the NYSE at 20 Broad Street, New York, New York
10005 and at the PSE at 301 Pine Street, San Francisco, California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, (ii) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1996 and June 30, 1996, (iii) the Company's Current
Report on Form 8-K dated May 6, 1996, (iv) the Company's Current Report on Form
8-K, dated May 23, 1996, as amended by the Company's Current Report on Form
8-K/A, dated May 23, 1996, (v) the Company's Current Report on Form 8-K dated
July 5, 1996, and (vi) the description of the Company's Common Stock contained
in the Company's Registration Statement on Form 8-A dated December 7, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of all Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. The Company will provide, without charge, to
each person, including any beneficial owner, to whom a copy of this Prospectus
is delivered, at the request of such person, a copy of any or all of the
documents incorporated herein by reference (other than exhibits thereto, unless
such exhibits are specifically incorporated by reference into such documents).
Written or oral requests for such copies should be directed to: Chief Financial
Officer, Bay Apartment Communities, Inc., 4340 Stevens Creek Blvd., Suite 275,
San Jose, California 95129, telephone (408) 983-1500.
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Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in an applicable Prospectus Supplement) or in any subsequently filed
document that is incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus or any Prospectus Supplement, except as so
modified or superseded.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere in this Prospectus. Unless the context otherwise
requires, all references in this Prospectus to the "Company" shall also refer to
Bay G.P., Inc., a Maryland corporation. This Prospectus, including the
information incorporated herein by reference, contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. The Company's actual results could differ materially
from those projected in the forward-looking statements set forth in this
Prospectus including the information incorporated herein by reference. Investors
should carefully consider the discussion of risk factors commencing on page 5,
in addition to the other information contained in this Prospectus, in connection
with an investment in the Shares offered hereby.
THE COMPANY
The Company has engaged in apartment community acquisition, development,
construction, reconstruction, marketing, leasing and management since 1978 and
is one of the most experienced developers and operators of upscale apartment
communities in the San Francisco Bay Area. As a self-administered and
self-managed real estate investment trust ("REIT"), the Company owns and manages
apartment communities (the "Communities") located in Northern California
(principally in the San Francisco Bay Area) and in Orange County, California.
The Company is a fully-integrated real estate organization with in-house
development, construction, acquisition, reconstruction, financing, marketing,
leasing and management expertise. This in-house expertise has allowed the
Company to maintain its reputation for developing and constructing apartment
communities on time and on budget. With its experience and in-house
capabilities, the Company is well-positioned to continue to take advantage of
the strong demand for upscale apartment homes and the development and
acquisition opportunities presented by the current economic conditions in
Northern California and Orange County. The Company has elected to qualify as a
REIT for federal income tax purposes. The Company pays regular quarterly
dividends to its shareholders.
The Company was incorporated under the laws of the State of California in
1978 and reincorporated under the laws of the State of Maryland, pursuant to a
reincorporation merger, in July, 1995. Its executive offices are located at 4340
Stevens Creek Boulevard, Suite 275, San Jose, California 95129, and its
telephone number is (408) 983-1500.
RISK FACTORS
An investment in the Shares involves various risks, and prospective
investors should carefully consider the matters discussed under "Risk Factors"
prior to any investment in the Company.
SECURITIES TO BE OFFERED
This Prospectus relates to the offer and sale of (i) up to 298,577
Redemption Shares of the Company, if and to the extent the Company elects to
issue such shares to the holders of Units in the Partnership, and (ii) up to
654,545 Original Shares, which may be sold by the Selling Stockholders. Under
the terms of the Agreement of Limited Partnership of the Partnership, holders of
Units in the Partnership have the right to require the Partnership to redeem
their Units for cash, subject to certain conditions. The Company may, however,
elect to deliver an equivalent number of shares of Common Stock to the holders
of Units in satisfaction of the Partnership's obligation to redeem the Units for
cash. The Company is registering the Shares pursuant to the Company's
obligations under certain registration rights agreements.
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RISK FACTORS
DEVELOPMENT AND ACQUISITION RISKS
The Company intends to continue to pursue the development and construction
of apartment home communities in accordance with the Company's development and
underwriting policies. Risks associated with the Company's development and
construction activities may include: the abandonment of development and
acquisition opportunities explored by the Company; construction costs of a
community may exceed original estimates due to increased materials, labor or
other expenses, which could make completion of the community uneconomical;
occupancy rates and rents at a newly completed community are dependent on a
number of factors, including market and general economic conditions, and may not
be sufficient to make the community profitable; financing may not be available
on favorable terms for the development of a community; and construction and
lease-up may not be completed on schedule, resulting in increased debt service
expense and construction costs. Development activities are also subject to risks
relating to the inability to obtain, or delays in obtaining, all necessary
zoning, land-use, building, occupancy, and other required governmental permits
and authorizations. The occurrence of any of the events described above could
adversely affect the Company's ability to achieve its projected yields on
communities under development or reconstruction and could prevent the Company
from making expected distributions.
Acquisitions entail risks that investments will fail to perform in
accordance with expectations and that judgments with respect to the costs of
improvements to bring an acquired community up to standards established for the
market position intended for that community will prove inaccurate, as well as
general investment risks associated with any new real estate investment.
Although the Company undertakes an evaluation of the physical condition of each
new community before it is acquired, certain defects or necessary repairs may
not be detected until after the community is acquired, which could significantly
increase the Company's total acquisition costs.
REAL ESTATE INVESTMENT RISKS
General Risks. Real property investments are subject to varying degrees of
risk. The yields available from equity investments in real estate depend on the
amount of income generated and expenses incurred. If the Communities do not
generate revenues sufficient to meet operating expenses, including debt service
and capital expenditures, the Company's cash flow and ability to pay
distributions to its stockholders will be adversely affected.
An apartment community's revenues and value may be adversely affected by a
number of factors, including the national economic climate; the local economic
climate (which may be adversely impacted by plant closings, industry slowdowns,
military base closings and other factors); local real estate conditions (such as
an oversupply of or a reduced demand for apartment homes); the perceptions by
prospective residents of the safety, convenience and attractiveness of the
community; the ability of the owner to provide adequate management, maintenance
and insurance; and increased operating costs (including real estate taxes and
utilities). Certain significant expenditures associated with each equity
investment (such as mortgage payments, if any, real estate taxes, insurance and
maintenance costs) are generally not reduced when circumstances cause a
reduction in income from the investment. If a community is mortgaged to secure
payment of indebtedness, and if the Company is unable to meet its mortgage
payments, a loss could be sustained as a result of foreclosure on the community
or the exercise of other remedies by the mortgagee. In addition, real estate
values and income from communities are also affected by such factors as the cost
of compliance with government regulation, including zoning and tax laws,
interest rate levels and the availability of financing.
Operating Risks. Each of the Communities is subject to all operating risks
common to apartment communities in general, any and all of which might adversely
affect unit occupancy or rental rates. Increases in unemployment and a decline
in household formation in the San Francisco Bay Area or in Northern California
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or Orange County generally might adversely affect occupancy or rental rates.
Increases in operating costs due to inflation and other factors may not be
offset by increased rents. Residents may be unable or unwilling to pay rent
increases. Rent control or rent stabilization laws or other laws regulating
housing are applicable in certain of the cities where the Company owns
Communities and may be enacted in the future in other jurisdictions in which one
or more Communities are located or in which additional apartment communities may
be acquired or developed; if enacted, compliance with these laws may increase
the Company's operating costs. If operating expenses increase, the local rental
market may limit the extent to which rents may be increased to meet increased
expenses without decreasing occupancy rates. If any of the above occurs, the
Company's ability to achieve its projected yields on the Communities and to make
distributions to stockholders could be adversely affected.
Market Illiquidity. Equity real estate investments are relatively illiquid.
Such illiquidity will tend to limit the ability of the Company to vary its
portfolio promptly in response to changes in economic or other conditions. In
addition, the Internal Revenue Code of 1986, as amended (the "Code"), limits the
Company's ability to sell properties held for fewer than four years, which may
affect the Company's ability to sell properties without adversely affecting
returns to holders of Common Stock.
Competition. There are numerous housing alternatives that compete with the
Communities in attracting residents. The Communities compete directly with other
rental apartments and single-family homes that are available for rent in the
markets in which the Communities are located. The Communities also compete for
residents with the new and existing home market. The number of competitive
residential properties in a particular area could have a material effect on the
Company's ability to lease apartment homes and on the rents charged. In
addition, competitors for acquisitions and development projects may have greater
resources than the Company.
Affordable Housing Laws or Restrictions. A number of the Communities are,
and additional apartment communities acquired or developed by the Company likely
will be in the future, subject to federal, state and local statutes or other
restrictions requiring that a percentage of apartment homes be made available to
residents satisfying certain income requirements. These laws and restrictions,
as well as any changes thereto making it more difficult to meet such
requirements, or a reduction in or elimination of certain financing advantages
available in some instances to persons satisfying such requirements, could
adversely affect the Company's profitability and its development and acquisition
projects in the future.
DEPENDENCE ON NORTHERN CALIFORNIA
Although the Company may expand further outside of Northern California and
intends to make selective acquisitions in Southern California from time to time
in addition to its recently acquired Communities located in the southern portion
of Orange County, currently most of the Communities are located in the San
Francisco Bay Area where the Company has most of its acquisition, development,
construction and marketing expertise. The Company's performance, therefore, is
dependent upon economic conditions in these markets. A decline in the economy in
these markets may adversely affect the ability of the Company to make expected
distributions to stockholders. The Northern California economy has suffered from
a recession which began in 1990. National trends, such as a decline in demand
for discretionary consumer goods and leisure travel as well as heightened
competition in high technology industries, have had an adverse impact upon
Northern California. Further reductions in the level of government spending in
the defense industry may have an impact upon employment and demand for
residential real estate in the Company's markets.
NEW SOUTHERN CALIFORNIA MARKETS
The Company recently acquired certain Communities located in the southern
portion of Orange County in Southern California. The Company also intends to
make other selective acquisitions in Southern California
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from time to time. The Company's historical experience is in Northern
California, primarily in the San Francisco Bay Area, and it is possible that the
Company's expertise in those markets may not assist it in Southern California.
In such event, the Company may be exposed to, among others, risks associated
with (i) a lack of market knowledge and understanding of the local economy, (ii)
an inability to access land and property acquisition opportunities, (iii) an
inability to obtain construction tradespeople, (iv) sudden adverse shifts in
supply and demand factors and (v) an unfamiliarity with local governmental
procedures.
NATURAL DISASTERS
Many of the Communities are located in the general vicinity of active
earthquake faults. In July, 1996, the Company obtained a seismic risk analysis
from an engineering firm which estimated the probable maximum loss ("PML") for
each of the 27 Communities owned at that time individually and for all of such
Communities combined. To establish a PML, the engineers first define a severe
earthquake event for the applicable geographic area, which is an earthquake that
has only a 10% likelihood of occurring over a 50-year period. The PML is
determined as the structural and architectural damage and business interruption
loss that has a 10% probability of being exceeded in the event of such an
earthquake. Because the Communities are concentrated in the San Francisco Bay
Area, the engineers' analysis defined an earthquake on the San Andreas Fault
with a Richter Scale magnitude of 8.0 as a severe earthquake with a 10%
probability of occurring within a 50-year period, and established an aggregate
PML of $45.9 million for the 27 Communities, which is a PML level that is
expected to be exceeded only 10% of the time in the event of such a severe
earthquake. This aggregate PML could be higher as a result of variations in soil
classifications and structural vulnerabilities. One Community's individual PML
was 30%, while four Communities had PMLs of 25%, and the remaining 22
Communities each had PMLs of 20% or less. However, no assurance can be given
that an earthquake would not cause damage or losses greater than the PML
assessments indicate, or that future acquisitions or developments will not have
PML assessments indicating the possibility of greater damage or losses.
The Company has recently obtained earthquake insurance, both for physical
damage and lost revenues, with respect to the Communities. For any single
occurrence, the Company self-insures the first $20 million of loss, and has in
place $25 million of coverage above this amount, with a 20% deductible. In
addition, the Company's general liability and property casualty insurance
provides coverage for personal liability and fire damage. In the event that an
uninsured disaster or a loss in excess of insured limits were to occur, the
Company could lose its capital invested in the affected Community, as well as
anticipated future revenues from such Community, and would continue to be
obligated to repay any mortgage indebtedness or other obligations related to the
Community. Any such loss could materially and adversely affect the business of
the Company and its financial condition and results of operations.
REAL ESTATE FINANCING RISKS
Risks Relating to the Credit Enhancement. The Company is obligated for
certain mortgage indebtedness funded by tax-exempt bonds (the "Bonds") in the
aggregate principal amount of approximately $225 million on 12 Communities
(Waterford Apartments, Villa Mariposa, Fairway Glen Apartments, Foxchase
Apartments, Barrington Hills, Crossbrook, Rivershore, Canyon Creek, Sea Ridge,
City Heights, Countrybrook and Villa Marguerite). Principal and interest
payments due to holders of the Bonds (the "Bondholders") are secured by a first
deed of trust on the Community associated with the respective Bond issue.
Scheduled principal and interest payments due on the Bonds financing
Foxchase, Fairway Glen, Waterford and Villa Mariposa are guaranteed by an
insurance policy (the "FGIC Credit Enhancement") issued by the Financial
Guaranty Insurance Company ("FGIC"). The FGIC Credit Enhancement will terminate
on March 17, 2004 and, if the FGIC Credit Enhancement is not renewed or
replaced, the 1994 Bond documents may require balloon payments in 2004
aggregating approximately $87.4 million, less any unscheduled principal
amortization. Scheduled interest and principal payments due on the Bonds
financing Barrington Hills,
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Crossbrook, Rivershore, Canyon Creek and Sea Ridge are supported by a 30-year
credit enhancement (the "FNMA Credit Enhancement" and, together with the FGIC
Credit Enhancement, the "Credit Enhancements") provided by the Federal National
Mortgage Association.
Each of the Credit Enhancements contains certain provisions under which a
default of certain payment obligations or covenants would entitle FGIC or FNMA,
as the case may be, to declare a default under its respective Credit Enhancement
documents and exercise its remedies (including foreclosure) under mortgages that
encumber nine of the Bond-financed Communities and eight additional Communities,
with a consequent loss of income and asset value to the Company. In addition,
gross rents collected from the residents of these 17 Communities have been and
will continue to be deposited in cash collateral accounts established with
financial institutions acceptable to FGIC or FNMA, as applicable. The Company
does not have access to these funds until all required monthly debt service
payments due on the Bonds and certain other payments are made. A default under
either of the Credit Enhancements or the Bond documents may adversely affect the
ability of the Company to make distributions to stockholders, including
distributions required to maintain its REIT status.
Bond Compliance Requirements. The Bond-financed Communities are subject to
deed restrictions or restrictive covenants relating to tax-exempt bond
financing. In addition, the Code and the regulations promulgated thereunder
impose various restrictions, conditions and requirements relating to the
exclusion from gross income for federal income tax purposes of interest on
qualified bond obligations, including requirements that at least 20% of
apartment homes be made available to residents with gross incomes that do not
exceed 80% of the median income (50% in the case of the Canyon Creek and Sea
Ridge Communities) in the area, measured annually. Some of the Communities
financed with Bonds are also subject to a requirement that the rental rates for
the 20% of the apartment homes that are subject to the foregoing requirement may
not exceed 30% of one-half of the applicable median income. In addition to
federal requirements, certain state and local authorities may impose rental
restrictions. The Bond compliance requirements and the requirements of any
future tax-exempt bond financing utilized by the Company may have the effect of
limiting the Company's income from the Bond-financed Communities if the Company
is required to lower its rental rates materially to attract residents who
satisfy the median income test. If the required number of apartment homes are
not reserved for residents satisfying these income requirements, the tax-exempt
status of the Bonds may be terminated, the obligations of the Company under the
Bond documents may be accelerated and other contractual remedies against the
Company may be available.
Risk of Rising Interest Rates. The Company had variable rate indebtedness
aggregating approximately $61.3 million outstanding as of September 30, 1996
consisting of $28.5 million of tax-exempt financing and $32.8 million of
borrowings under the Company's $200 million unsecured line of credit (the
"Unsecured Credit Facility"). Additional indebtedness that the Company may incur
under the Unsecured Credit Facility will also bear interest at a variable rate.
To the extent the Company uses variable rate debt for future financings, and
with respect to the portion of the Company's outstanding indebtedness that will
bear interest at a variable rate, increases in these interest rates could
adversely affect the Company's ability to make distributions to stockholders.
Consideration will be given to acquiring interest rate hedging or protection
agreements, if appropriate and cost effective, with respect to future variable
rate indebtedness to reduce exposure to interest rate increases on such debt.
POTENTIAL ENVIRONMENTAL LIABILITIES
Under various federal, state and local environmental laws, a current or
previous owner or operator of real estate may be required (typically regardless
of knowledge or responsibility) to investigate and remediate the effects of
hazardous or toxic substances or petroleum product releases at such property,
and may be held liable to a governmental entity or to third parties for property
damage and for investigation and remediation costs incurred by such parties in
connection with the contamination, which costs may be substantial. The
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presence of such substances (or the failure to properly remediate the
contamination) may adversely affect the owner's ability to borrow against, sell
or rent such property.
Certain federal, state and local laws and regulations govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when such
materials are in poor condition or in the event of construction, remodeling,
renovation or demolition of a building. Such laws may impose liability for
release of ACMs and may provide for third parties to seek recovery from owners
or operators of real properties for personal injury associated with ACMS. In
connection with its ownership and operation of the Communities, the Company
potentially may be liable for such costs. The Company is not aware that any ACMs
were used in connection with (i) the construction of the Communities developed
by the Company, all of which were constructed after 1983, or (ii) the
construction of any of the Communities acquired by the Company other than
Regatta Bay, Sea Ridge, Village Square, Sunset Towers, Mill Creek, Channing
Heights and Martinique Gardens. The Company does not anticipate that it will
incur any material liabilities in connection with the presence of ACMs at the
Communities. The Company currently has in place or intends to implement an
operations and maintenance program for ACMs at the Regatta Bay, Sea Ridge,
Village Square, Sunset Towers, Mill Creek, Channing Heights and Martinique
Gardens Communities.
All of the Communities have been subjected to a Phase I or similar
environmental assessments (which involves general inspections without soil
sampling or groundwater analysis and generally without radon testing). These
assessments have not revealed any environmental liability that the Company
believes would have a material adverse effect on the Company's business, assets
or results of operations. However, one Community and one apartment community
currently under development are subject to soil and groundwater remediation of
contamination from adjacent landowners. In the case of one of the current
development communities, the Lawrence Expressway Site, National Semiconductor
Corporation is causing remediation to occur and has provided an indemnity which
the Company may rely upon for certain environmental liabilities. Additionally,
another apartment community currently under development, The Alameda Site, may
require underground storage tank removal and other environmental cleanup.
Nevertheless, it is possible that the assessments do not reveal all
environmental liabilities or there are material environmental liabilities of
which the Company is unaware. No assurances can be given that (i) future laws,
ordinances or regulations will not impose material environmental liability, or
(ii) the current environmental condition of the Communities or the apartment
communities currently under development will not be affected by the condition of
land or operations in the vicinity of such communities (such as the presence of
underground storage tanks), or by third parties unrelated to the Company.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
The Company intends to operate in a manner that will enable it to qualify
as a REIT under the Code. Although management of the Company believes that the
Company is organized and operates in such a manner, no assurance can be given
that the Company qualifies or will remain qualified as a REIT. Qualification as
a REIT involves the application of highly technical and complex Code provisions
for which there are only limited judicial and administrative interpretations.
The determination of various factual matters and circumstances not entirely
within the Company's control may affect the Company's ability to qualify as a
REIT. If the Company fails to qualify as a REIT, it will be subject to federal
income tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. In addition, unless entitled to relief under
certain statutory provisions, the Company will be disqualified from treatment as
a REIT for the four taxable years following the year during which qualification
is lost. The additional tax would significantly reduce the cash flow available
for distribution to stockholders.
9
<PAGE> 11
DESCRIPTION OF SECURITIES TO BE REGISTERED
The description of the Company's Common Stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Company's Articles of Incorporation and Bylaws, as amended and in effect on the
date hereof.
GENERAL
Under the Articles of Incorporation, the Company has authority to issue 40
million shares of Common Stock, par value $.01 per share. Under Maryland law,
stockholders generally are not responsible for the Company's debts or
obligations. As of October 31, 1996, the Company had outstanding 18,995,326
shares of Common Stock. The Common Stock is listed on the NYSE and the PSE under
the symbol "BYA."
TERMS
Subject to the preferential rights of any other shares or series of stock
and to the provisions of the Company's Articles of Incorporation regarding
Excess Stock, holders of shares of Common Stock will be entitled to receive
dividends on shares of Common Stock if, as and when authorized and declared by
the Board of Directors of the Company out of assets legally available therefor
and to share ratably in the assets of the Company legally available for
distribution to its stockholders in the event of its liquidation, dissolution or
winding-up after payment of, or adequate provision for, all known debts and
liabilities of the Company.
Subject to the provisions of the Company's Articles of Incorporation
regarding Excess Stock, each outstanding share of Common Stock entitles the
holder to one vote on all matters submitted to a vote of stockholders, including
the election of Directors and, except as otherwise required by law or except as
provided with respect to any other class or series of stock, the holders of
Common Stock will possess the exclusive voting power. There is no cumulative
voting in the election of Directors, which means that the holders of a majority
of the outstanding shares of Common Stock can elect all of the Directors then
standing for election, and the holders of the remaining shares of Common Stock
will not be able to elect any Directors.
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm and quarterly reports for the
first three quarters of each fiscal year containing unaudited financial
information.
Subject to the provisions of the Company's Articles of Incorporation
regarding Excess Stock, all shares of Common Stock will have equal dividend,
distribution, liquidation and other rights, and will have no preference,
appraisal or exchange rights.
Pursuant to Maryland law, a corporation generally cannot dissolve, amend
its Articles of Incorporation, merge, sell all or substantially all of its
assets, engage in a share exchange or engage in similar transactions outside the
ordinary course of business unless approved by the affirmative vote of
stockholders holding at least two-thirds of the shares entitled to vote on the
matter unless a lesser percentage is set forth in the Company's Articles of
Incorporation. The Company's Articles of Incorporation do not provide for a
lesser percentage in such situations.
10
<PAGE> 12
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by a single person of the Company's
outstanding equity securities.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company of New York, New York.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year, and such
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 (in each case, other than the first such year). To ensure
that the Company remains a qualified REIT, the Articles of Incorporation,
subject to certain exceptions, provide that no holder may own, or be deemed to
own by virtue of the attribution provisions of the Code, more than nine percent
(9%) (the "Ownership Limit") of the Company's capital stock. The Board of
Directors may waive the Ownership Limit if evidence satisfactory to the Board of
Directors and the Company's tax counsel is presented that the changes in
ownership will not then or in the future jeopardize the Company's status as a
REIT. Any transfer of capital stock or any security convertible into capital
stock that would create a direct or indirect ownership of capital stock in
excess of the Ownership Limit or that would result in the disqualification of
the Company as a REIT, including any transfer that results in the capital stock
being owned by fewer than 100 persons or results in the Company being "closely
held" within the meaning of Section 856(h) of the Code, shall be null and void,
and the intended transferee will acquire no rights to the capital stock. The
foregoing restrictions on transferability and ownership will not apply if the
Board of Directors determines that it is no longer in the best interests of the
Company to attempt to qualify, or to continue to qualify, as a REIT.
Capital stock owned, or deemed to be owned, or transferred to a stockholder
in excess of the Ownership Limit will automatically be exchanged for shares of
Excess Stock that will be transferred, by operation of law, to the Company as
trustee of a trust for the exclusive benefit of the transferees to whom such
capital stock may be ultimately transferred without violating the Ownership
Limit. While the Excess Stock is held in trust, it will not be entitled to vote,
it will not be considered for purposes of any stockholder vote or the
determination of a quorum for such vote and, except upon liquidation, it will
not be entitled to participate in dividends or other distributions. Any dividend
or distribution paid to a proposed transferee of Excess Stock prior to the
discovery by the Company that capital stock has been transferred in violation of
the provisions of the Company's Articles of Incorporation shall be repaid to the
Company upon demand. The Excess Stock is not treasury stock, but rather
constitutes a separate class of issued and outstanding stock of the Company. The
original transferee-stockholder may, at any time the Excess Stock is held by the
Company in trust, transfer the interest in the trust representing the Excess
Stock to any individual whose ownership of the capital stock exchanged into such
Excess Stock would be permitted under the Ownership Limit, at a price not in
excess of the price paid by the original transferee-stockholder for the capital
stock that was exchanged in Excess Stock. Immediately upon the transfer to the
permitted transferee, the Excess Stock will automatically be exchanged for
capital stock of the class from which it was converted. If the foregoing
transfer restrictions are determined to be void or invalid by virtue of any
legal decision, statute, rule or regulation, then the intended transferee of any
Excess Stock may
11
<PAGE> 13
be deemed, at the option of the Company, to have acted as an agent on behalf of
the Company in acquiring the Excess Stock and to hold the Excess Stock on behalf
of the Company.
In addition to the foregoing transfer restrictions, the Company will have
the right, for a period of 90 days during the time any Excess Stock is held by
the Company in trust, to purchase all or any portion of the Excess Stock from
the original transferee-stockholder for the lesser of the price paid for the
capital stock by the original transferee-stockholder or the market price (as
determined in the manner set forth in the Articles of Incorporation) of the
capital stock on the date the Company exercises its option to purchase. The
90-day period begins on the date on which the Company receives written notice of
the transfer or other event resulting in the exchange of capital stock for
Excess Stock.
Each stockholder shall upon demand be required to disclose to the Company
in writing any information with respect to the direct, indirect and constructive
ownership of beneficial interests as the Board of Directors deems necessary to
comply with the provisions of the Code applicable to REITs, 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 acquisition of
control of the Company unless the Board of Directors determines that maintenance
of REIT status is no longer in the best interests of the Company.
REGISTRATION RIGHTS
The registration of the Shares pursuant to the Registration Statement of
which this Prospectus is a part will discharge certain of the Company's
obligations under the terms of (i) a Registration Rights Agreement dated as of
July 12, 1996, which the Company entered into in connection with the
Partnership's acquisition of a multifamily apartment home community from
Countrybrook of Berryessa Associates, a California limited partnership, and (ii)
a Registration Rights Agreement dated as of March 16, 1994, which the Company
entered into in connection with the corporate reorganization of the Company
prior to its initial public offering (collectively, the "Registration Rights
Agreements").
Pursuant to the Registration Rights Agreements, the Company has agreed to
pay all expenses of registering the Shares (other than brokerage and
underwriting commissions, taxes of any kind and any legal, accounting and other
expenses incurred by a holder thereunder). The Company also has agreed under the
Registration Rights Agreements to indemnify each Selling Stockholder and its
officers, directors and other affiliated persons and any person who controls any
Selling Stockholder against losses, claims, damages and expenses arising under
the securities laws in connection with the Registration Statement or this
Prospectus, subject to certain limitations. In addition, each Selling
Stockholder under the Registration Rights Agreements severally agreed to
indemnify the Company and its respective directors, officers and any person who
controls the Company against all losses, claims, damages and expenses arising
under the securities laws insofar as such loss, claim, damage or expense relates
to information furnished to the Company by such Selling Stockholder for use in
the Registration Statement or Prospectus or an amendment or supplement thereto
or the failure by such Selling Stockholder (through no fault of the Company) to
deliver or cause to be delivered this Prospectus or any amendment or supplement
thereto to any purchaser of Shares covered by the Registration Statement from
such Selling Stockholder.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to continue
to operate, in such a manner as to qualify as a REIT under the Code, but no
assurance can be given that it will at all times so qualify.
12
<PAGE> 14
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions that
currently govern the federal income tax treatment of the Company and its
stockholders. For the particular provisions that govern the federal income tax
treatment of the Company and its stockholders, reference is made to Sections 856
through 860 of the Code and the regulations thereunder. The following summary is
qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a REIT
generally will not be subject to federal income tax with respect to income that
it distributes to its stockholders. If the Company fails to qualify during any
taxable year as a REIT, unless certain relief provisions are available, it will
be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, which could have a material adverse
effect upon its stockholders.
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its stockholders out of current or accumulated earnings
and profits will be taxed to stockholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the stockholders. To
the extent that distributions exceed current or accumulated earnings and
profits, they will constitute a return of capital, rather than a dividend or
capital gain income, and will reduce the basis for the stockholder's capital
stock with respect to the distribution paid or, to the extent that they exceed
such basis, will be taxed in the same manner as gain from the sale of such
capital stock.
Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the Common Stock offered hereby and with
respect to the tax consequences arising under federal law and the laws of any
state, municipality or other taxing jurisdiction, including tax consequences
resulting from such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax consequences
of an investment in the Company, including the possibility of United States
income tax withholding on Company distributions.
SELLING STOCKHOLDERS
As used herein, "Selling Stockholders" are those persons listed below who
currently hold the Original Shares and those persons listed below who may, at
the Company's option, receive Redemption Shares upon the exercise of their
rights to require the redemption of their Units.
The following table provides the names of and the number of shares of
Common Stock and Units owned by each Selling Stockholder as of November 1, 1996.
The Shares offered by this Prospectus may be offered from time to time by the
Selling Stockholders. Since the Company is not required to issue Redemption
Shares upon the redemption of Units and the Selling Stockholders may sell all,
some or none of the Original Shares, the Company can only estimate, by assuming
that the Selling Stockholders sell all of the Shares, the number and percentage
of shares of Common Stock that each Selling Stockholder will own upon completion
of the offering to which this Prospectus relates.
The Company has been advised by each Selling Stockholder who is an
executive officer of the Company that, notwithstanding the registration of
their Original Shares pursuant to the Registration Statement of which this
Prospectus is a part, such Selling Stockholder has no present intention to sell
any of the Original Shares, but may in the future determine to do so. Except
for Messrs. Meyer, Baker and Newman, the amounts set forth below are based upon
a review of a list of stockholders of the Company provided by the Company's
transfer agent for the Common Stock. It is possible, however, that those
Selling Stockholders beneficially own additional shares of the Company's
Common Stock through a broker or other nominee. All of the amounts set forth
below are accurate to the Company's knowledge.
13
<PAGE> 15
<TABLE>
<CAPTION>
Shares of Original Units Owned as of Number of Shares
Common Stock Shares November 1, 1996 that may be of Common Stock Owned
Owned as of Offered by Redeemed for Redemption After Offering(3)
Name November 1, 1996(1) This Prospectus Shares at the Company's Option (2) Number(1) Percent(4)
---- ------------------- --------------- ---------------------------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Gilbert M. Meyer............. 943,113 637,013 0 306,100 1.6%
Geoffrey L. Baker............ 44,784 8,784 0 36,000 *
Morton L. Newman............. 19,392 4,392 0 15,000 *
James E. Gunderson........... 4,356 4,356 0 0 0
Richard M. Bennett........... 0 0 762 0 0
James C. & Ruth Ann Benson... 0 0 762 0 0
Norman Berner................ 0 0 762 0 0
Henry A. Blyth............... 0 0 1,525 0 0
Richard P. Boucher........... 0 0 762 0 0
William A. Brennan........... 0 0 1,525 0 0
Majid J. Buyuk, M.D.......... 0 0 1,525 0 0
Peter Chickering............. 0 0 762 0 0
Logan Clarke III............. 0 0 1,525 0 0
David & Linda Clements(5).... 0 0 7620 0 0
John F. Cogan, Jr............ 0 0 1,525 0 0
Robert G. Congdon............ 0 0 1,525 0 0
Paul Dobbins................. 0 0 762 0 0
Kevin L. Dolan............... 0 0 762 0 0
James B. Driscoll............ 0 0 1,525 0 0
Thomas R. Elmblad............ 0 0 762 0 0
Frank B. Falvey.............. 0 0 1,525 0 0
Charles D. Ferris............ 0 0 1,525 0 0
George O. Fontaine, Jr....... 0 0 2,287 0 0
Marshall A. Freedman, M.D.... 0 0 1,525 0 0
Dwight L. Fullerton.......... 0 0 1,525 0 0
Frayda & Aaron Galvin........ 0 0 1,525 0 0
Joseph Giuffrida............. 0 0 1,525 0 0
James J. Glynn............... 0 0 1,525 0 0
Frederic H. Goldstein........ 0 0 762 0 0
Sidney S. Goldstein.......... 0 0 1,525 0 0
Michael J. Greata............ 0 0 1,525 0 0
Steven Grossman.............. 0 0 1,525 0 0
William J. Jacobs............ 0 0 1,525 0 0
Jacob S. Kamborian........... 0 0 1,525 0 0
Robert F. Kibble............. 0 0 381 0 0
Arthur H. Klein Trust........ 0 0 1,525 0 0
Leo M. Klein................. 0 0 1,525 0 0
Nancy Slater Kupchan-Sonis... 0 0 1,525 0 0
Norman W. Lavoie............. 0 0 1,525 0 0
Leeventure Realty Trust...... 0 0 1,525 0 0
Marie K. Marr................ 0 0 1,525 0 0
Robert L. Marr............... 0 0 1,525 0 0
Jess R. Marzak............... 0 0 381 0 0
William J. McGrail, Jr....... 0 0 3,050 0 0
John F. & Ellen C. Miller.... 0 0 3,050 0 0
Edward B. Murphy, Jr., M.D... 0 0 1,525 0 0
Newbury Realty Company....... 0 0 1,525 0 0
Peter A. Pizzarello, M.D..... 0 0 762 0 0
Martin H. Reiss I Trust...... 0 0 762 0 0
Rhea E. Reiss I Trust........ 0 0 762 0 0
Reynolds Revocable Trust..... 0 0 1,525 0 0
RFG Associates............... 0 0 1,525 0 0
Norman H. Ruecker............ 0 0 762 0 0
Albert J. Sandler............ 0 0 1,525 0 0
Raymond B. Shlora............ 0 0 1,525 0 0
Carl S. Sloane............... 0 0 1,525 0 0
Stanley J. Stutz, M.D........ 0 0 762 0 0
Roger A. Swanson............. 0 0 762 0 0
J.F. White Contracting Company 0 0 6,099 0 0
Thomas S. Zocco.............. 0 0 1,525 0 0
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Donald H. Tishman............ 0 0 74,736 0 0
Dr. Thomas Shelton Powers.... 0 0 74,736 0 0
Donald H. Tishman and Dr.
Powers, jointly, pending
direction from both
parties.................... 0 0 69,815 0 0
========= ======= ======= ======= ===
TOTAL........................ 1,011,645 654,545 298,577 357,100 1.9%
- ----------------
<FN>
* Less than 1%
(1) Includes options to purchase Common Stock that are exercisable within 60 days of November 1, 1996.
(2) All Units listed in this column can be redeemed on a one-for-one basis for shares of the Company's Common Stock under
certain conditions. Upon such redemption, all such Redemption Shares may be offered for sale hereby.
(3) Assumes that all Original Shares and all Redemption Shares are sold by the Selling Stockholders.
(4) Options to purchase Common Stock that are exercisable within 60 days of November 1, 1996 are deemed outstanding for
computing the ownership of each Selling Stockholder as a percentage of the total number of shares outstanding, but are
not deemed outstanding for computing the percentage of any other person or group. Percentage of ownership is based on
18,995,326 shares of Common Stock outstanding on October 31, 1996.
(5) These Selling Stockholders own the Units as joint tenants with rights of survivorship.
</TABLE>
The relationships of certain of the Selling Stockholders to the Company are
as follows:
NAME RELATIONSHIP
---- ------------
Gilbert M. Meyer Chairman of the Board of Directors, President and
Chief Executive Officer of the Company
Geoffrey L. Baker Director and Chief Development and Acquisitions
Officer of the Company
Morton L. Newman Vice President--Construction of the Company
James E. Gunderson Former Vice President--Chief Financial Officer of
the Company
With the exception of Messrs. Meyer, Baker, Newman and Gunderson, all of
the Selling Stockholders are holders of Units of the Partnership. The General
Partner of the Partnership is a wholly-owned subsidiary of the Company.
USE OF PROCEEDS
The Company will not receive any of the proceeds of the sale, if any, of
the Shares offered hereby.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time of the
Shares by the Selling Stockholders. The Company has registered the Shares for
sale pursuant to its obligations under the Registration Rights Agreements, but
registration of such Shares does not necessarily mean that all of the Redemption
Shares will be issued by the Company or that any of the Shares will be offered
or sold by the Selling Stockholders.
The Shares offered hereby may be sold from time to time on the NYSE or the
PSE on terms to be determined at the time of such sales. The Selling
Stockholders may also make private sales directly or through a broker or
brokers. Alternatively, the Selling Stockholders may from time to time offer
Shares to or through
15
<PAGE> 17
underwriters, dealers or agents, who may receive consideration in the form of
discounts and commissions; such compensation, which may be in excess of ordinary
brokerage commissions, may be paid by the Selling Stockholders and/or the
purchasers of the Shares offered hereby for whom such underwriters, dealers or
agents may act. The Selling Stockholders and any dealers or agents that
participate in the distribution of the Shares offered hereby may be deemed to be
"underwriters" as defined in the Securities Act, and any profit on the sale of
such Shares offered hereby by them and any discounts, commissions or concessions
received by any such dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. The aggregate proceeds to
the Selling Stockholders from sales of the Shares offered by the Selling
Stockholders hereby will be the purchase price of such Shares less brokers'
commissions.
To the extent required, the specific Shares to be sold, the names of the
Selling Stockholders, the respective purchase prices and public offering prices,
the names of any such agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying Prospectus Supplement
The Shares offered hereby may be sold from time to time in one or more
transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Shares offered hereby will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states Shares may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock offered hereby may not
simultaneously engage in market making activities with respect to the Common
Stock for a period of two business days prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-2, 10b-6 and 10b-7, which may limit the timing of purchases and sales by the
Selling Stockholders.
The Company will pay substantially all of the expenses incurred by the
Selling Stockholders and the Company incident to the offering and sale of the
Shares to the public, but excluding any underwriting discounts, fees,
commissions or transfer taxes.
The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
Certain legal matters, including the legality of the Shares and certain tax
matters, will be passed upon for the Company by Goodwin, Procter & Hoar LLP,
Boston, Massachusetts.
EXPERTS
The financial statements and schedule thereto incorporated by reference in
this Prospectus or elsewhere in the Registration Statement, to the extent and
for the periods indicated in their report have been audited by
16
<PAGE> 18
Coopers & Lybrand L.L.P., independent accountants, and are incorporated herein
in reliance upon the authority of said firm as experts in giving said reports.
17
<PAGE> 19
===================================== =====================================
- ------------------------------------- -------------------------------------
No dealer, salesperson or
other individual has been
authorized to give any information
or make any representations not 953,122 Shares
contained in this Prospectus. If
given or made, such information or
representations must not be relied
upon as having been authorized by
the Company or any other person.
This Prospectus does not constitute
an offer to sell, or a solicitation
of an offer to buy, any of the
Shares offered hereby to any person
or by anyone in any jurisdiction in
which it is unlawful to make such
offer or solicitation. Neither the
delivery of this Prospectus nor any
sale made hereunder shall, under
any circumstances, create any
implication that the information
contained herein is correct as of Bay Apartment Communities, Inc.
any date subsequent to the date
hereof.
----------------
TABLE OF CONTENTS
PAGE
----
COMMON STOCK
Available Information ........... 2
Incorporation of Certain
Documents by Reference ........ 2
------------
Prospectus Summary .............. 4
PROSPECTUS
Risk Factors .................... 5
------------
Description of Securities to be
Registered .................... 10
Restrictions on Transfers of
Capital Stock ................. 11
Registration Rights ............. 12
Federal Income Tax
Considerations ................ 12
Selling Stockholders ............ 13
Use of Proceeds ................. 15
Plan of Distribution ............ 15
Legal Matters ................... 16 NOVEMBER 1, 1996
Experts ......................... 16
- ------------------------------------- -------------------------------------
===================================== =====================================
<PAGE> 20
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee and NASD fee are estimated):
<CAPTION>
<S> <C>
Registration fee $ 8,557
NYSE/PSE fees
Legal fees and expenses 10,000
Blue Sky expenses 2,000
Miscellaneous _______
TOTAL $
=======
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being offered will be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation and Bylaws, each as amended,
provide certain limitations on the liability of the Company's directors and
officers for monetary damages to the Company. The Articles of Incorporation and
Bylaws obligate the Company to indemnify its directors and officers, and permit
the Company to indemnify its employees and other agents, against certain
liabilities incurred in connection with their service in such capacities. The
Company has entered into indemnification agreements with certain of its
executive officers and members of the Board of Directors who are not officers of
the Company, pursuant to which the Company has agreed to indemnify them against
certain liabilities incurred in connection with their service as executive
officers and/or directors. These provisions and contracts could reduce the legal
remedies available to the Company and its stockholders against these
individuals.
ITEM 16. EXHIBITS.
Exhibit No. Description
- ----------- -----------
5.1* Opinion of Goodwin, Procter & Hoar LLP regarding the legality of
the securities being registered.
8.1* Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1* Consent of Coopers & Lybrand L.L.P., Independent Accountants.
23.2* Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Powers of Attorney (included in Part II of this registration
statement).
99.1 Agreement of Limited Partnership of Bay Countrybrook L.P.
(Incorporated by reference to Exhibit 10.5 to Form 8-K/A of the
Company dated May 23, 1996).
99.2 Registration Rights Agreement dated July 12, 1996, by and among the
Company, the General Partner and certain Holders, as defined
therein.
99.3 Registration Rights Agreement dated March 16, 1994, by and among
the Company and certain Holders, as defined therein. (Incorporated
by reference to Exhibit 10.2 to Form 10-Q of the Company dated May
13, 1994).
- -------------------
* To be filed by amendment.
II-1
<PAGE> 21
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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high 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% change
in the maximum aggregate offering price set forth in "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) herein do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the undersigned registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference
in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, 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
(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 registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person
II-2
<PAGE> 22
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 and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act, Bay Apartment
Communities, Inc. 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 San Jose, California, on this 31st day of
October, 1996.
BAY APARTMENT COMMUNITIES, INC.
By: /s/ Gilbert M. Meyer
----------------------------
Gilbert M. Meyer
President
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Bay Apartment Communities, Inc. hereby severally constitute Gilbert
M. Meyer and Max L. Gardner, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement filed
herewith and any and all amendments to said Registration Statement, and
generally to do all such things in our names and in our capacities as officers
and directors to enable Bay Apartment Communities, Inc. to comply with the
provisions of the Securities Act and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Capacity Date
--------- -------- ----
/s/ Gilbert M. Meyer Chairman of the Board, President October 29, 1996
- ----------------------- and Chief Executive Officer
GILBERT M. MEYER (Principal Executive Officer)
/s/ Max L. Gardner Chief Operating Officer October 29, 1996
- ----------------------- and Director
MAX L. GARDNER
/s/ Geoffrey L. Baker Chief Development and October 29, 1996
- ----------------------- Acquisitions Officer and Director
GEOFFREY L. BAKER
/s/ Bruce A. Choate Director October 29, 1996
- -----------------------
BRUCE A. CHOATE
/s/ Brenda J. Mixson Director October 29, 1996
- -----------------------
BRENDA J. MIXSON
/s/ Thomas H. Nielsen Director October 29, 1996
- -----------------------
THOMAS H. NIELSEN
/s/ John J. Healy, Jr. Director October 29, 1996
- -----------------------
JOHN J. HEALY, JR.
/s/ Jeffrey B. Van Horn Chief Financial Officer October 31, 1996
- ----------------------- (Principal Financial and
JEFFREY B. VAN HORN Accounting Officer)
II-4
<PAGE> 24
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
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 Coopers & Lybrand L.L.P., Independent
Accountants.
23.2* Consent of Goodwin, Procter & Hoar LLP (included in
Exhibit 5.1 hereto).
24.1 Powers of Attorney (included in Part II of this
registration statement).
99.1 Agreement of Limited Partnership of Bay Countrybrook L.P.
(Incorporated by reference to Exhibit 10.5 to Form 8-K/A
of the Company dated May 23, 1996).
99.2 Registration Rights Agreement dated July 12, 1996, by and
among the Company, the General Partner and certain
Holders, as defined therein.
99.3 Registration Rights Agreement dated March 16, 1994, by
and among the Company and certain Holders, as defined
therein. (Incorporated by reference to Exhibit 10.2 to
Form 10-Q of the Company dated May 13, 1994).
- -----------------
* To be filed by amendment.
II-5
<PAGE> 1
EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is executed as of
July 12, 1996 by Bay Apartment Communities, Inc., a Maryland corporation (the
"Company") and the persons listed on APPENDIX A (which persons are defined in
Section 15 hereof) (each a "Holder" and collectively, the "Holders"). Unless
otherwise defined, all capitalized terms used herein shall have the meanings
ascribed to such terms in the Agreement of Limited Partnership of Bay
Countrybrook, L.P. (the "Limited Partnership Agreement"), dated July 12, 1996,
by and between the Holders, the Company and Bay GP, Inc., a Maryland corporation
(the "General Partner").
WHEREAS, the Holders are to receive or own units of limited partnership
interests ("Limited Partnership Units") in Bay Countrybrook L.P., a Delaware
limited partnership (the "Partnership") which may be exchanged for shares of the
Company's common stock, $.01 par value ("Common Stock"), issued without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to the terms of the Limited Partnership Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein and in the Limited Partnership Agreement, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Bay
and each Holder hereby agree as follows:
1. (a) SHELF REGISTRATION. Within forty-five (45) days following the first
date with respect to which a Holder receives Registrable Shares following an
exchange of Limited Partnership Units pursuant to the terms of Section 8.5.B of
the Limited Partnership Agreement, the Company shall file a registration
statement (a "Shelf Registration Statement") under Rule 415 under the Securities
Act relating to the sale by such Holders of their Registrable Shares in
accordance with the terms hereof. As used in this Agreement, the term
"Registrable Shares" means shares of Common Stock to be issued or issued to the
Holders in exchange for their Limited Partnership Units pursuant to the terms of
the Limited Partnership Agreement, excluding (A) Common Stock 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 or (B) Common Stock sold by the Holder pursuant to Rule 144 under the
Securities Act. The Company shall use its best efforts to cause such Shelf
Registration Statement to be declared effective by the Securities and Exchange
Commission (the "SEC") as soon as practicable for the total number of
Registrable Shares that the Company could be requested to register if all of the
Limited Partnership Units were exchanged for the Company's Common Stock. The
Company agrees to use its best efforts to keep the Shelf Registration Statement
continuously effective until the earliest of (a) following such time as all
Limited Partnership Units have been exchanged into Registrable Shares or have
been redeemed for cash pursuant to Article 8.5.A of Limited Partnership
Agreement, one year after the date on which all outstanding Registrable Shares
may at such time be sold by the Holders pursuant to Rule 144 promulgated under
the Securities Act or (b) April 1, 2003. The
<PAGE> 2
Company shall not be required to file and effect more than one Shelf
Registration Statement pursuant to this Section 1(a). If the Company fails for
any reason to file a Shelf Registration Statement pursuant to this Section 1(a)
or if a Shelf Registration Statement or Issuance Registration Statement (as
defined below) is not effective and current within forty-five (45) days
following the date in which any Holder receives Registrable Shares from the
Company following an exchange of Limited Partnership Units (pursuant to the
terms of Section 8.5.B of the Limited Partnership Agreement), the Company shall,
upon such Holder's request, redeem such Holder's Registrable Shares for the Cash
Amount in the manner and with the consequences described in Section 8.5.A of the
Limited Partnership Agreement.
(b) REGISTRATION STATEMENT COVERING ISSUANCE OF COMMON STOCK. In lieu of
the registration rights set forth in Section 1(a) above, the Company may, in its
sole discretion, prior to the first date upon which the Limited Partnership
Units issued pursuant to the Limited Partnership Agreement held by the Holders
may be exchanged for shares of Common Stock (or such other date as may be
required under applicable provisions of the Securities Act) file a registration
statement (the "Issuance Registration Statement") under Rule 415 under the
Securities Act relating to the issuance to Holders of shares of Common Stock in
exchange for such Limited Partnership Units. Thereupon, the Company shall use
reasonable efforts to cause such Issuance Registration Statement to be declared
effective by the SEC for all shares of Common Stock covered thereby. The Company
agrees to use its best efforts to keep the Issuance Registration Statement
continuously effective until April 1, 2003. Any Shelf Registration Statement or
Issuance Registration Statement are sometimes referred to as a "Registration
Statement."
(c) CASH OPTION IN LIEU OF REGISTRATION RIGHTS. In lieu of the registration
rights set forth in Section 1(a) and 1(b) above, the Company may elect to
satisfy any Exchange Right (including any call by Bay pursuant to Section 8.6 of
the Limited Partnership Agreement) by electing the Cash Option pursuant to
Section 8.5.A of the Limited Partnership Agreement and making payment pursuant
to such option in the manner and with the consequences described in Section
8.5.A of the Limited Partnership Agreement within forty-five (45) days of the
date of the Specified Exchange Date with respect to the exercise of any Exchange
Right.
2
<PAGE> 3
2. Registration Procedures.
-----------------------
(a) The Company shall notify each Holder of the effectiveness of the
Registration Statement and shall furnish to each Holder such number of copies of
the Registration Statement (including any amendments, supplements and exhibits),
the prospectus contained therein (including each preliminary prospectus), any
documents incorporated by reference in the Registration Statement and such other
documents as the Holder may reasonably request in order to facilitate its sale
of the Registrable Shares in the manner described in the Registration Statement.
(b) The Company shall prepare and file with the SEC from time to time such
amendments and supplements to the Registration Statement and prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the 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 the
Registration Statement or (ii) the date on which the Registration Statement
ceases to be effective in accordance with the terms of Sections 1(a) or (b).
Upon twenty (20) business days' notice, the Company shall file any supplement or
post-effective amendment to the Registration Statement with respect to such
Holder's interests in or plan of distribution of Registrable Shares that is
reasonably necessary to permit the sale of the Holder's Registrable Shares
pursuant to the Registration Statement and the Company shall file any necessary
listing applications or amendments to the existing applications to cause the
shares to be then listed or quoted on the primary exchange or quotation system
on which the Common Stock is then listed or quoted.
(c) The Company shall promptly notify each Holder of, and confirm in
writing, any request by the SEC for amendments or supplements to the
Registration Statement or the prospectus related thereto or for additional
information. In addition, the Company shall promptly notify each Holder of, and
confirm in writing, the filing of the Registration Statement, any prospectus
supplement related thereto or any post-effective amendment to the Registration
Statement and the effectiveness of any post-effective amendment.
(d) The Company shall immediately notify each Holder, at any time when a
prospectus relating to the Registration Statement is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. In such
event and subject to paragraph 7 of this Agreement, the Company shall promptly
prepare and furnish to each Holder with 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
3
<PAGE> 4
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.
3. STATE SECURITIES LAWS. Subject to the conditions set forth in this
Agreement, the Company shall, promptly upon the filing of a Registration
Statement including Registrable Shares, 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 of Registrable Shares 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. The Company shall promptly notify each Holder of, and
confirm in writing, the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Shares for sale under
the securities or "Blue Sky" laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose.
4. EXPENSES. The Company shall bear all expenses incurred in connection
with the registration of the Registrable Shares pursuant to Sections 1(a) or (b)
of this Agreement. Such expenses shall include, without limitation, all
printing, legal and accounting expenses incurred by the Company and all
registration and filing fees imposed by the SEC, any state securities commission
or the New York Stock Exchange or, if the Common Stock is not then listed on the
New York Stock Exchange, the principal national securities exchange or national
market system on which the Common Stock is then traded or quoted; PROVIDED,
HOWEVER, that Holders of Registrable Shares 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 and for any legal, accounting and other expenses incurred by
them.
5. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify each
of the Holders and their respective officers, directors, employees, agents,
representatives and affiliates, and each person or entity, if any, that controls
a Holder within the meaning of the Securities Act, and each other person or
entity, if any, subject to liability because of his, her or its connection with
a Holder, and any underwriter and any person who controls the underwriter within
the meaning of the Securities Act (an "Indemnitee") against any and all losses,
claims, damages, actions, liabilities, costs and expenses (including without
limitation reasonable attorneys' fees, expenses and disbursements documented in
writing), joint or several, arising out of or based upon any untrue or alleged
untrue statement of material fact contained in the Registration Statement or any
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, except insofar as and to the extent that such statement or
omission arose out of or was based upon information regarding the Indemnitee or
its plan of distribution which was furnished to the Company by the Indemnitee
for use therein, provided, further that the
4
<PAGE> 5
Company shall not be liable to any person who participates as an underwriter in
the offering or sale of Registrable Shares or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with information furnished to the Company for use in connection with
the Registration Statement or the prospectus contained therein by such
Indemnitee or (ii) such Indemnitee's failure to send or give a copy of the final
prospectus furnished to it by the Company at or prior to the time such action is
required by the Securities Act to the person claiming an untrue statement or
alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final prospectus.
6. COVENANTS OF HOLDERS. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information in
connection with the preparation of the Registration Statement and any filings
with any state securities commissions as the Company may reasonably request, (b)
to deliver or cause delivery of the prospectus contained in the Registration
Statement to any purchaser of the shares covered by the Registration Statement
from the Holder, (c) to notify the Company of any sale of Registrable Securities
by such Holder, and (d) to indemnify the Company, its officers, directors,
employees, agents, representatives and affiliates, and each person, if any, who
controls the Company within the meaning of the Securities Act, and each other
person, if any, subject to liability because of his connection with the Company,
against any and all losses, claims, damages, actions, liabilities, costs and
expenses arising out of or based upon (i) any untrue statement or alleged untrue
statement of material fact contained in either the 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 arose out
of or was based upon written information regarding the Holder or its plan of
distribution which was furnished to the Company by the Holder expressly for use
therein, or (ii) the failure by the Holder to deliver or cause to be delivered
the prospectus contained in the Registration Statement (as amended or
supplemented, if applicable) furnished by the Company to the Holder to any
purchaser of the shares covered by the Registration Statement from the Holder.
Notwithstanding the foregoing, (i) in no event will a Holder have any obligation
under this Section 6 for amounts the Company pays in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld) and
(ii) the total amount for which a Holder shall be liable under this Section 6
shall not in any event exceed the aggregate proceeds received by him, her or it
from the sale of the Holder's Registrable Shares in such registration.
5
<PAGE> 6
7. 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 the Registration Statement or the initiation of any proceedings for that
purpose. The Company shall use its best reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best efforts
to cause the Registration Statement and any filings with any state securities
commission to be made or to become effective or to amend or supplement the
Registration Statement shall be suspended in the event and during such period
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 circumstances being hereinafter referred to as a "Suspension
Event") that would make it impractical or unadvisable to cause the Registration
Statement or such filings to be made or to become effective or to amend or
supplement the Registration Statement, but such suspension shall continue only
for so long as such event or its effect is continuing but in no event will that
suspension exceed 60 days. The Company agrees not to exercise the rights set
forth in this Section 7(b) more than twice in any twelve month period. The
Company shall notify the Holder of the existence of any Suspension Event.
(c) Each Holder whose Registrable Shares are covered by a Registration
Statement filed pursuant to Sections 1(a) or (b) hereof agrees, if requested by
the Company in the case of a nonunderwritten offering (a "Nonunderwritten
Offering") or if requested by the managing underwriter or underwriters in an
underwritten offering (an "Underwritten Offering," collectively with
Nonunderwritten Offering, the "Offering"), not to effect any public sale or
distribution of any of the securities of the Company of any class included in
such Offering, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act (except as part of such Underwritten Offering), during the 15-day
period prior to, and during the 90-day period beginning on, the date of pricing
of each Offering, to the extent timely notified in writing by the Company or the
managing underwriters; provided, however, the provisions of this Section 7(c)
shall not apply to the extent that the limitations of this Section 7(c) do not
apply to each of the directors and to each of the officers of Bay.
8. BLACK-OUT PERIOD. Following the effectiveness of the Registration
Statement and the filings with any state securities commissions, the Holders
agree that they will not effect any sales of the Registrable Shares pursuant to
the Registration Statement or any such filings at any time after they have
received notice from the Company to suspend sales as a result of the occurrence
or existence of any Suspension Event, during any Offering or so that the Company
may correct or update the Registration Statement or such filing pursuant to
Section 2(c) or 2(d). The Holder may recommence effecting sales of the
Registrable Shares
6
<PAGE> 7
pursuant to the Registration Statement or such filings following further notice
to such effect from the Company, which notice shall be given by the Company as
soon as practicable but in no event later than five (5) days after the
conclusion of any such Suspension Event or Offering.
9. 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
or any shares of Common Stock owned by any other shareholder or shareholders of
the Company.
10. CONTRIBUTION. If the indemnification provided for in Sections 5 and
6 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 Holder, 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
Holder, 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 in writing by the Holder 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 10 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 5 or 6 hereof had been available
under the circumstances.
The Company and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 10 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.
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.
11. 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 or any of the outstanding Limited Partnership
Units under the Securities Act.
7
<PAGE> 8
12. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented without the prior written consent of the
Company and Holders holding in excess of fifty percent (50%) in interest of the
sum of the Limited Partnership Units and the Registrable Shares outstanding.
13. 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,
registered or certified mail (return receipt requested), postage prepaid or
courier or overnight delivery service to the Company at the following address
and to the Holder at the address set forth on his, her or its signature page to
this Agreement (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 2(b) or Section 6, a Holder
must confirm such notice in writing by overnight express delivery with
confirmation of receipt:
If to the Company: Bay Apartment Communities, Inc.
4340 Stevens Creek Blvd., Suite 275
San Jose, CA 95219
Attn: Geoffrey L. Baker
Fax: (408) 984-7060
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
Fax: (617) 523-1231
In addition to the manner of notice permitted above, notices given pursuant to
Sections 1, 7 and 8 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. 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 with respect to such Holder, PROVIDED, HOWEVER, that
any assignment by the Initial Limited Partners to a Holder (as defined below)
shall not constitute an "assignment" pursuant to this Section 14.
15. DEFINITION OF "HOLDERS" OR A "HOLDER". "Holders" or a "Holder"
under this Registration Rights Agreement shall include (i) any Limited Partner,
(ii) any Substituted Limited Partner, (iii) any Qualified Assignee and (iv) any
Family Members who receive Limited Partnership Units pursuant to the terms of
Section 11.3 of the Limited Partnership Agreement. APPENDIX A to this Agreement
shall list the Holders and shall be amended from
8
<PAGE> 9
time to time by the General Partner in accordance with the terms of this
Agreement and the Limited Partnership Agreement to reflect any additional
Holders.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland applicable to contracts made
and to be performed wholly within said State.
18. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
19. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set 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.
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IN WITNESS WHEREOF, this Registration Rights Agreement is executed as of
the date first written above.
BAY APARTMENT COMMUNITIES, INC.
----------------------------------------
Name:
Title:
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APPENDIX A
----------
Registration Rights Agreement
-----------------------------
Thomas S. Zocco Frank B. Falvey
17 Old Colony Drive Falvey Steel Castings
Shrewsburgh, MA 01545 P.O. Box 261
Braintree, MA 02185
Frayda & Aaron Galvin Nancy Slater Kupchan-Sonis
130 Mt. Auburn St. #105 293 Goddard Avenue
Cambridge, MA 02138 Brookline, MA 02146
James B. Driscoll Albert J. Sandler
87 Indian Spring Road 2 Commonwealth Ave. #15A
Milton, MA 02186 Boston, MA 02116
Joseph Giuffrida John F. Cogan, Jr.
22 Crestwood Road 60 State Street, 25th Floor
Marblehead, MA 01945 Boston, MA 02109
Leo M. Klein Edward B. Murphy Jr., M.D.
4319 Bocaire Blvd. 230 Mt. Vernon Street
Boca Raton, FL 33487 West Newton, MA 02165-2519
Arthur H. Klein Trust Henry A. Blyth
Arthur H. Klein, Trustee 100 S. Collier #808
4595 Bocaire Blvd. Marco Island, FL 33737
Boca Raton, FL 33487
Leeventure Realty Trust John F. & Ellen C. Miller
c/o Arthur Klein J.T.W.R.O.S.
4595 Bocaire Blvd. P.O. Box 24022
Boca Raton, FL 33487 San Francisco, CA 94214
RFG Associates Mark K. Marr
Frank M. Resnek, Esq. 19 Father Carney Dr.
57 Wells Avenue Milton, MA 02186
Newton, MA 02159
Roger A. Swanson Carl S. Sloane
6 Thomas Jefferson Drive Sargent Road
Warren, NJ 07060 Marblehead, MA 01945
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Robert L. Marr David and Linda Clements, JTWROS
Marr Scaffolding Company Arthur Anderson & Co.
One D. Street 333 W. San Carlos St., #1500
S. Boston, MA 02127 San Jose, CA 95110-2728
Majid J. I. Buyuk, M.D. Peter Chickering
540 North Woodstock Road P.O. Box 181
Southbridge, MA 01550 Suncook, NH 03275
Logan Clarke, III Marshall A. Freedman, M.D.
11 Wolfe Hill Road 265 South Elm St.
East Sandwich, MA 02563 Denver, CO 80222
Dwight L. Fullerton Jacob S. Kamborian
975 South High Street International Shoe Machine Co.
Columbus, OH 43206 Simon & Ledge Street
Nashua, NH 03060
J.F. White Contracting Company Martin H. Reiss I/Trust
Philip Bonanno c/o GRK & B
One Gateway Center 306 Main Street
Newton, MA 02158 Worchester, MA 01615-0034
Richard M. Bennett Rhea E. Reiss I/Trust
Brown & Brown, CPAS c/o GRK & B
90 Canal Street, 4th Floor 306 Main Street
Boston, MA 02114-2002 Worchester, MA 01615-0034
Reynolds Revocable Trust Robert F. Kibble, Paragon Partners
J.M. Reynolds, Esq., c/o N.A. Mgt Building Two, Suite 190
10 Post Office Square, Suite 300 3000 Sand Hill Road
Boston, MA 02109 Menlo Park, CA 94025
Norman H. Ruecker Trustee/George O. Fontaine, Jr.
37 Mahogany Drive Bank of New England West. N.A.
San Rafael, CA 94903 Acct. No. 3-22490-54
P.O. Box 9003
Springfield, MA 01101
Norman Berner Dr. Peter A. Pizzarello
Millbern Associates, Inc. 868 Admiral Street
2 Mack Road Providence, RI 02904
Woburn, MA 01801
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Dr. Stanley J. Stutz James J. Glynn
868 Admiral Street 203 Melbury Road
Providence, RI 02904 Babylon, NY 11702-3309
William J. Jacobs Raymond B. Shlora
115 Central Park West One Woodside Lande
New York, NY 10023 Rye, NY 10580
Thomas R. Elmblad
250 S. Peak Road
Boulder, CO 80302
Donald H. Tishman
261 Hyde Park Estates
Santa Fe, New Mexico 87501
Dr. Thomas Shelton Powers
c/o David R. Owens
Owens & Cain
1111 Civic Drive, Suite 215
Walnut Creek, CA 94596
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