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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
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Commission File Number 1-13232
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
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(Exact name of registrant as specified in its charter)
Maryland 84-1259577
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1873 S. Bellaire Street, Suite 1700 Denver, Colorado 80222-4348
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(Address of principal executive offices) (Zip Code)
(303) 757-8101
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period than the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
The number of shares of Class A Common Stock outstanding as of August 8,
1997: 23,147,336
The number of shares of Class B Common Stock outstanding as of August 8,
1997: 325,000
The number of shares of Class B Cumulative Convertible Preferred Stock
outstanding as of August 8, 1997: 750,000
Items 1 and 2 of Part I have been omitted in reliance on Rule 12b-25.
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Part I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
In November 1996, Apartment Investment and Management Company, a
Maryland corporation ("AIMCO" and, together with its subsidiaries and other
controlled entities, the "Company"), acquired (the "English Acquisition")
certain partnership interests, real estate and related assets owned by J.W.
English, a Houston, Texas-based real estate syndicator and developer, and
certain affiliated entities (collectively, the "J.W. English Companies"). In
the English Acquisition, the Company purchased all of the general and limited
partnership interests in 22 limited partnerships which act as the general
partner to 31 limited partnerships (the "English Partnerships") that own 22
multifamily apartment properties and other assets and interests related to the
J.W. English Companies and assumed management of the properties owned by the
English Partnerships. The Company made separate tender offers (the "English
Tender Offers") to the limited partners of 25 of the English Partnerships
(the "Tender Offer English Partnerships").
In November 1996, purported limited partners of certain of the
Tender Offer English Partnerships filed a purported class action lawsuit
against the Company and J.W. English in the U.S. District Court for the
Northern District of California (the "Federal Action"), alleging, among other
things, that the Company conspired with J.W. English to breach his fiduciary
duty to the plaintiffs, and that the offering materials used by the Company
in connection with the English Tender Offers contained misleading statements
or omissions. The plaintiffs in the Federal Action have filed a motion to
voluntarily dismiss the Federal Action, without prejudice, in favor of
another purported class action. In May 1997, limited partners of certain of
the Tender Offer English Partnerships and six additional English Partnerships
filed two complaints in the Superior Court of the State of California (the
"California Actions") against the Company and the J.W. English Companies,
alleging, among other things, that the consideration the Company offered in
the English Tender Offers was inadequate and designed to benefit the J.W.
English Companies at the expense of the limited partners, that certain
misrepresentations and omissions were made in connection with the English
Tender Offers, that the Company receives excessive fees in connection with
its management of the properties owned by the English Partnerships, that the
Company continues to refuse to liquidate the English Partnerships and that
the English Acquisition violated the partnership agreements governing the
English Partnerships and constituted a breach of fiduciary duty. The
California Actions seek monetary damages and injunctive and declarative
relief. In addition to such monetary damages, the complaints seek an
accounting, a constructive trust of the assets and monies acquired by the
J.W. English Companies in connection with the
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English Acquisition, a court order removing the Company from management of
the English Partnerships and/or ordering the sale of the properties and
attorney's fees, expert fees and other costs.
The Company believes all of the foregoing allegations against it are
without merit and intends to vigorously defend itself in connection with
these actions. The Company believes it is entitled to indemnity from the
J.W. English Companies, subject to certain exceptions. On August 4, 1997,
the Company filed demurrers to both complaints in the California Actions. A
hearing on the demurrers is scheduled for October 17, 1997.
Item 2. Change in Securities
On August 4, 1997, AIMCO issued 750,000 shares of its Class B Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Class B Preferred
Stock"), to an institutional investor (the "Preferred Share Investor") for
$75 million in a private transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to
Section 4(2) thereof. The Class B Preferred Stock ranks prior to AIMCO's
Class A Common Stock, par value $.01 per share (the "Common Stock"), with
respect to dividends, liquidation, dissolution, and winding-up, and has an
aggregate liquidation value of $75,000,000. Holders of the Class B Preferred
Stock are entitled to receive, when, as and if declared by AIMCO's Board of
Directors, quarterly cash dividends per share equal to the greater of (i)
$1.78125 (the "Base Rate") and (ii) the cash dividends declared on the number
of shares of Common Stock into which one share of Class B Preferred Stock is
convertible. On or after August 4, 1998, each share of Class B Preferred
Stock may be converted at the option of the holder into the number of shares
of Common Stock determined by dividing the $100 liquidation preference per
share by $30.45, subject to certain anti-dilution adjustments. AIMCO may
redeem any or all of the Class B Preferred Stock on or after August 4, 2002,
at a redemption price of $100 per share, plus unpaid dividends accrued on the
shares redeemed.
Holders of Class B Preferred Stock, voting as a class with the holders
of all AIMCO capital stock that ranks on a parity with the Class B Preferred
Stock with respect to the payment of dividends or upon liquidation,
dissolution, winding up or otherwise ("Parity Stock"), will be entitled to
elect (i) two directors of AIMCO if six quarterly dividends (whether or not
consecutive) on the Class B Preferred Stock or any Parity Stock are in
arrears, and (ii) one director of AIMCO if for two consecutive quarterly
dividend periods AIMCO fails to pay at least $0.4625 in dividends on the
Common Stock. The affirmative vote of the holders of 66-2/3% of the
outstanding shares of Class B Preferred Stock will be required to amend
AIMCO's Charter in any manner that would adversely affect the rights of the
holders of Class B Preferred Stock, and to approve the issuance of any
capital stock that ranks senior to the Class B Preferred Stock with respect
to payment of dividends or upon liquidation, dissolution, winding up or
otherwise. If the Internal Revenue Service were to make a final
determination that AIMCO does not qualify as a real estate investment trust
in accordance with Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"), the Base Rate for quarterly cash dividends on
the Class B Preferred Stock would be increased to $3.03125 per share.
2
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The terms of the Class B Preferred Stock are set forth in AIMCO's
Articles of Incorporation, which is included as Exhibit 3.1 to this Report
and incorporated herein by this reference.
The agreement pursuant to which AIMCO issued the Class B Preferred Stock
(the "Preferred Share Purchase Agreement) provides that the Preferred Share
Investor may require AIMCO to repurchase such investor's Class B Preferred
Stock in whole or in part at a price of $105 per share, plus accrued and
unpaid dividends on the purchased shares, if (i) AIMCO shall fail to continue
to be taxed as a real estate investment trust pursuant to Sections 856
through 860 of the Code, or (ii) upon the occurrence of a change of control
(as defined in the Preferred Share Purchase Agreement). The Preferred Share
Purchase Agreement also provides that, so long as the Preferred Share
Investor owns Class B Preferred Stock with an aggregate liquidation
preference of at least $18.75 million, neither AIMCO, AIMCO Properties, L.P.
nor any subsidiary of AIMCO may issue preferred securities or incur
indebtedness for borrowed money if immediately following such issuance and
after giving effect thereto and the application of the net proceeds
therefrom, AIMCO's ratio of aggregate consolidated earnings before income
taxes, depreciation and amortization to aggregate consolidated fixed charges
(earnings before income taxes depreciation and amortization) for the four
fiscal quarters immediately preceding such issuance would be less than 1.5 to
1.
3
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On May 5, 1997, AIMCO issued 2,142,857 shares of Common Stock to Demeter
Holdings Corporation, a Massachusetts corporation, Phemus Corporation, a
Massachusetts corporation ("Phemus"), Capricorn Investors, L.P., a Delaware
limited partnership ("Capricorn"), and certain of Capricorn's limited
partners as consideration for the purchase of 2,866,073 shares of common
stock, par value $.01 per share, of NHP Incorporated, a Delaware corporation
("NHP"). The shares of Common Stock were issued in a transaction not
involving any public offering in reliance on the exemption from registration
contained in Section 4(2) of the Securities Act.
On June 3, 1997, AIMCO issued warrants (the "Warrants") to purchase
399,999 shares of Common Stock to NHP Partners Limited Partnership, a
Delaware limited partnership, Phemus, Mr. J. Roderick Heller III, Capricorn
and NHP Partners Two LLC, a Delaware limited liability company. The Warrants
were issued as partial consideration for the acquisition by the Company of
all the outstanding capital stock of NHP Partners, Inc. and all of the
outstanding limited partnership interests in NHP Partners Two Limited
Partnership. The Warrants have an exercise price of $36 per share and expire
in June 2002. The Warrants were issued in a transaction not involving any
public offering in reliance on the exemption from registration contained in
Section 4(2) of the Securities Act.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of stockholders on April 24, 1997.
At the meeting, the stockholders approved the four proposals set forth below:
1. Proposal to elect six directors, for a term of one year each, until
the next annual meeting of stockholders and until their successors are
elected and qualify:
Votes Votes
For Withheld
---------- --------
Terry Considine 14,067,058 104,303
Richard S. Ellwood 14,067,058 104,303
Peter K. Kompaniez 14,067,058 104,303
J. Landis Martin 14,067,058 104,303
Thomas L. Rhodes 14,067,058 104,303
John D. Smith 14,067,058 104,303
2. Proposal to ratify the selection of Ernst & Young LLP, to serve as
independent auditors for the Company for the calendar year ending December
31, 1997:
Votes Votes Broker
For Against Abstentions Non Votes
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14,081,325 29,858 60,178 0
3. Proposal to approve the Apartment Investment and Management Company
1997 Stock Award and Incentive Plan:
Votes Votes Broker
For Against Abstentions Non Votes
---------- ------- ----------- ---------
7,521,212 1,767,313 148,935 0
4. Proposal to approve and ratify (i) the Amended and Restated Apartment
Investment and Management Company Non-Qualified Stock Option Plan, and (ii)
the issuance and sale of 515,500 shares of AIMCO Class A Common Stock to
certain of the Company's executive officers:
Votes Votes Broker
For Against Abstentions Non Votes
---------- ------- ----------- ---------
8,421,824 826,523 189,114 0
4
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Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed with this report(1):
Exhibit
Number Description
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2.1 Real Estate Acquisition Agreement, dated as of May 22, 1997, by and
among Apartment Investment and Management Company, AIMCO Properties,
L.P., Demeter Holdings Corporation, Phemus Corporation, Capricorn
Investors, L.P., J. Roderick Heller, III and NHP Partners LLC (2)
2.2 Amendment No. 1 to Real Estate Acquisition Agreement, dated as of
June 13, 1997, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., Demeter Holdings Corporation,
Phemus Corporation, Capricorn Investors, L.P., J. Roderick Heller,
III and NHP Partners LLC
2.3 Amendment No. 2 to Real Estate Acquisition Agreement, dated as of
July 14, 1997, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., Demeter Holdings Corporation,
Phemus Corporation, Capricorn Investors, L.P., J. Roderick Heller,
III and NHP Partners LLC
2.4 Stock Purchase Agreement, dated as of April 16, 1997, by and among
Apartment Investment and Management Company, Demeter Holdings
Coporation and Capricorn Investors, L.P. (3)
3.1 Articles of Incorporation
3.2 Amended and Restated Bylaws
10.1 Agreement and Plan of Merger, dated as of April 21, 1997, by and
among Apartment Investment and Management Company, AIMCO/NHP
Acquisition Corp. and NHP Incorporated (3)
5
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Exhibit
Number Description
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10.2 Amended and Restated Credit Agreement (Secured Revolver-to-Term
Facility), dated May 5, 1997, by and among AIMCO Properties, L.P., a
Delaware limited partnership, Bank of America National Trust and
Savings Association, as Agent, and Bank of America National Trust
and Savings Association, as initial Lender (4)
10.3 Amended and Restated Credit Agreement (Bridge Loan Facility), dated
May 5, 1997, by and among AIMCO Properties, L.P., a Delaware limited
partnership, Bank of America National Trust and Savings Association,
as Agent, and Bank of America National Trust and Savings
Association, as one of the Lenders (4)
10.4 Promissory Note, dated May 5, 1997, by AIMCO Properties, L.P., a
Delaware limited partnership, in favor of Bank of America National
Trust and Savings Association (4)
10.5 Credit Agreement, dated May 5, 1997, by and among AIMCO/NHP
Holdings, Inc., the lenders from time to time party thereto, Bank of
America National Trust and Savings Association, as one of the
Lenders, and Bank of America National Trust and Savings Association,
as Agent (4)
10.6 Promissory Note, dated May 5, 1997, by AIMCO/NHP Holdings, Inc., a
Delaware corporation, in favor of Bank of America National Trust and
Savings Association (4)
10.7 Promissory Note, dated May 5, 1997, by AIMCO/NHP Holdings, Inc., a
Delaware corporation, in favor of Smith Barney Mortgage Capital
Group, Inc. (4)
10.8 Payment Guaranty (Acquisition Sub Facility), dated May 5, 1997, by
Apartment Investment and Management Company, a Maryland corporation
and AIMCO Properties, L.P., a Delaware limited partnership, to Bank
of America National Trust and Savings Association, as Agent, for
benefit of Bank of America National Trust and Savings Association
and Smith Barney Mortgage Capital Group, Inc. (4)
6
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Exhibit
Number Description
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10.9 Pledge Agreement, dated as of May 5, 1997, by AIMCO Properties, L.P.
and Terry Considine and Peter K. Kompaniez and the Bank of America
National Trust and Savings Association, as Agent, for Bank of
America National Trust and Savings Association and Smith Barney
Mortgage Capital Group, Inc. (4)
10.10 Multifamily Note, dated as of April 18, 1997, by Copperfield
Partners, Ltd., a Texas limited partnership ("Copperfield"), payable
to GMAC Commercial Mortgage Corporation, a California corporation
("GMAC"), in the principal sum of $3,577,000
10.11 Multifamily Deed of Trust, Assignment of Rents and Security
Agreement, dated as of April 18, 1997, by Copperfield to J.C. Paxton
for the benefit of GMAC
10.12 Exceptions to Non-Recourse Guaranty, dated as of April 18, 1997, by
Apartment Investment and Management Company, a Maryland corporation
and AIMCO Properties, L.P., with respect to Copperfield
10.13 Exceptions to Non-Recourse Guaranty with Respect to Yield
Maintenance, dated as of April 18, 1997, by AIMCO and AIMCO
Properties, L.P., with respect to Copperfield
10.14 Pledge and Security Agreement, dated as of April 18, 1997, by AIMCO
Properties, L.P. in favor of GMAC
10.15 Purchase Agreement by and among Williamsberry Development
Corporation, Colley Williamsberry Limited Partnership, Williamsberry
Development Corp II, Colley Williamsberry L-2 Limited Partnership,
Colbro Development L-2 B Corp., Colley Williamsberry L-2 Limited
Partnership, AIMCO Bay Club, L.P. and AIMCO Holdings, L.P.
10.16 Acquisition and Contribution Agreement and Joint Escrow
Instructions, dated April 11, 1997, by and between AIMCO Properties,
L.P. and The Morton Towers Partnership
7
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Exhibit
Number Description
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10.17 Second Amended and Restated Agreement of Limited Partnership of
AIMCO Properties, L.P., dated as of July 29, 1994, among AIMCO-GP,
Inc., as general partner, AIMCO-LP, Inc., as special limited
partner, and AIMCO-GP, Inc., as attorney-in-fact for the limited
partners
10.18 First Amendment to the Second Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P., dated as of July 29,
1997, by AIMCO-GP, Inc.
(1) Schedules and supplemental materials to the exhibits have been
omitted but will be provided to the SEC upon request.
(2) Incorporated by reference from the Company's Current Report on Form
8-K, dated June 3, 1997.
(3) Incorporated by reference from the Company's Current Report on Form
8-K, dated April 16, 1997.
(4) Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1997.
(b) Reports on Form 8-K
During the quarter for which this report is filed, the Company
filed the following Reports on Form 8-K:
Current Report on Form 8-K, dated April 16, 1997, and Amendment
1 thereto, relating to the proposed merger of NHP Incorporated
into the Company or one of its subsidiaries; the acquisition of
Stonebrook Apartments by the Company or one of its subsidiaries
and the refinancing of the debt of 23 of the Company's
affiliates, including the following financial statements of NHP
Incorporated: Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994, the Consolidated Balance
Sheets as of December 31, 1996 and 1995, the Consolidated
Statements of Cash Flows for the years ended December 31, 1996,
8
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1995 and 1994 and the Consolidated Statements of Shareholders'
Equity (Deficit) for the years ended December 31, 1996, 1995,
1994.
Current Report on Form 8-K, dated May 5, 1997, relating to the
acquisition by the Company of common stock of NHP Incorporated,
including certain pro forma financial information and the
following financial statements of NHP Incorporated: Consolidated
Statements of Operations for the years ended December 31, 1996,
1995 and 1994, the Consolidated Balance Sheets as of December 31,
1996 and 1995, the Consolidated Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994 and the Consolidated
Statements of Shareholders' Equity (Deficit) for the years ended
December 31, 1996, 1995, 1994.
Current Report on Form 8-K, dated June 3, 1997, and Amendment 1
thereto, relating to the acquisition by the Company of all of the
outstanding common stock of NHP Partners, Inc. and all of the
outstanding partnership interests of NHP Partners Two Limited
Partnership; the acquisition by the Company of the Vinings at the
Waterways; and the acquisition by the Company of two apartment
communities located in Tustin, California, including the Combined
Balance Sheets of NHP Real Estate Companies, as of December 31,
1996 and 1995 and March 31, 1997, the Balance Sheets of NHP
Southwest Partners, L.P. as of December 31, 1996 and 1995, the
Combined Balance Sheets of NHP New LP Entities as of December 31,
1996 and 1995, the Combined Balance Sheets of NHP Borrower
Entities as of December 31, 1996 and 1995, and the Historical
Summary of Gross Income and Certain Expenses (Summary) of The Bay
Club at Aventura for the year ended December 31, 1996 and the
three months ended March 31, 1997 (unaudited).
9
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SCHEDULE 1
Documents substantially identical to Exhibits 10.10 through 10.14,
except as to the loan amount and the subject property, have been omitted in
reliance on Rule 12b-31 under the Securities Exchange Act of 1934. Set forth
below are the material details in which such documents differ from Exhibits
10.10 through 10.14.
SUBJECT PROPERTY LOAN AMOUNT
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Ashford Apartments $7,559,000
Coventry Square Apartments $3,116,000
Crows Nest Apartments $2,958,000
Cypress Landing Apartments $4,433,000
Easton Village Apartments $2,969,000
Fisherman's Wharf Apartments $3,627,000
Greentree Apartments $7,631,000
Hampton Hill Apartments $4,240,000
Hastings Place Apartments $2,723,000
Highland Park Apartments $9,614,000
Las Brisas Apartments $3,425,000
Meadows Apartments $2,138,000
Oak Falls Apartments $2,802,000
Randol Crossing Apartments $2,517,000
Ridgecrest Apartments $2,538,000
Riverwalk Apartments $5,761,000
Signature Point Apartments $7,565,000
Snug Harbor Apartments $2,103,000
10
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Southridge Apartments $2,160,000
Stoney Brook Apartments $750,000
Sunbury Downs $2,523,000
Swiss Village Apartments $4,655,000
The Waterford Apartments $4,120,000
Woodhill Apartments $5,976,000
Woodland Apartments $2,136,000
Woodland-Tyler Apartments $4,310,000
11
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AMENDMENT NO. 1
TO
REAL ESTATE ACQUISITION AGREEMENT
AMENDMENT NO. 1 TO REAL ESTATE ACQUISITION AGREEMENT, dated as of
June 13, 1997 (this "AMENDMENT"), by and among Apartment Investment and
Management Company, a Maryland corporation ("AIMCO"), AIMCO Properties, L.P.,
a Delaware limited partnership ("AIMCO OP" and, together with AIMCO, the
"BUYERS"), Demeter Holdings Corporation, a Massachusetts corporation
("DEMETER"), Phemus Corporation, a Massachusetts corporation ("PHEMUS"),
Capricorn Investors, L.P., a Delaware limited partnership ("CAPRICORN"), J.
Roderick Heller, III, an individual ("HELLER"), and NHP Partners Two LLC, a
Delaware limited liability company ("PARTNERS TWO LLC" and, together with
Demeter, Phemus, Capricorn and Heller, the "SELLERS"). Capitalized terms used,
but not otherwise defined herein, shall have the respective meanings ascribed
to them in the Real Estate Acquisition Agreement, dated as of May 22, 1997
(the "ACQUISITION AGREEMENT"), by and among the Buyers and the Sellers.
WHEREAS, the parties hereto desire to amend the Acquisition Agreement
to extend the date for exercise of the Buyers' Property Put Right for certain
assets and to extend the date for exercise of the HPI Put Right.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AMENDMENT OF SECTION 5.15(b). Section 5.15(b) of the Acquisition
Agreement is hereby amended and restated in its entirety to read as follows:
"(b) The Buyer's Property Put Right may be exercised, at any time
or from time to time, (1) no later than July 16, 1997, with respect to (A)
the 1% general partnership interest and 15.715% limited partnership
interest in each of Lakehaven Associates One and Lakehaven Associates Two,
or (B) the .01% limited partnership interest in River Loft Apartments
Limited Partnership, and the 0.9% general partnership interest, the 0.1%
general partnership interest and the 4% limited partnership interest in
River Loft Associates, and (2) no later than June 16, 1997, with respect to
any other assets, in each case, by AIMCO's delivery of a written notice to
the Sellers specifying (i) the assets that are requested to be repurchased
by the
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Sellers pursuant to the Buyers' Property Put Right, (ii) the basis on which
the Buyers are entitled to exercise the Buyers' Property Put Right, and
(iii) the date and time at which the closing (the "BUYERS' PROPERTY PUT
CLOSING") of the repurchase of such assets is to occur. The date of the
Buyers' Property Put Closing shall be at least 30 days after the date
(the "Notice Date") such notice is given; provided, however, that if (x)
it is not possible for the Sellers to cure, at least 5 Business Days prior
to the 30th day after the Notice Date, the breach, liability or defect that
entitles the Buyers to exercise the Buyers' Property Put Right, or (y)
AIMCO determines, in its reasonable discretion, that it is necessary to
consummate the Buyers' Property Put Closing earlier in order to avoid
jeopardizing AIMCO's REIT Status, then the date of the Buyers' Property Put
Closing may be on an earlier date, but not earlier than 5 Business Days
after the Notice Date."
2. AMENDMENT OF SECTION 5.16(b). Section 5.16(b) of the Acquisition
Agreement is hereby amended and restated in its entirety to read as follows:
"(b) The HPI Put Right may be exercised, no later than July 16,
1997, by AIMCO's delivery of a written notice to the Sellers specifying the
date and time (which shall be at least five Business Days after such notice
is given) at which the closing (the "HPI PUT CLOSING") of the sale of HPI
Stock required by the exercise of the HPI Put Right is to occur."
3. GOVERNING LAW. This Amendment and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
4. ENTIRE AGREEMENT. This Amendment, together with the Acquisition
Agreement, including the exhibits and schedules attached thereto, constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements, understandings, letters of intent,
negotiations and discussions, whether oral or written, of the parties, including
the Letter Agreement, and there are no warranties, representations or other
agreements, express or implied, made to any party by any other party in
connection with the subject matter hereof except as specifically set forth
herein or in the documents delivered pursuant hereto or in connection herewith.
2
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5. ACQUISITION AGREEMENT IN FULL FORCE. Except as expressly
modified hereby, the Acquisition Agreement remains in full force and effect.
6. MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Amendment shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Amendment shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
7. SEVERABILITY. Any provision or part of this Amendment which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
8. COUNTERPARTS. This Amendment may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
9. NEGOTIATION OF AMENDMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Amendment and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Amendment and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Amendment against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Amendment shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Amendment.
[SIGNATURE PAGES FOLLOW]
3
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ PETER KOMPANIEZ
------------------------------------
Name: Peter Kompaniez
Its: Vice Chairman
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, Inc.,
its general partner
By: /s/ PETER KOMPANIEZ
------------------------------------
Name: Peter Kompaniez
Its: Vice President
DEMETER HOLDINGS CORPORATION
By: /s/ MICHAEL R. EISENSON
------------------------------------
Name: Michael R. Eisenson
Its: Authorized Signatory
By: /s/ TIM R. PALMER
------------------------------------
Name: Tim R. Palmer
Its: Authorized Signatory
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PHEMUS CORPORATION
By: /s/ MICHAEL R. EISENSON
------------------------------------
Name: Michael R. Eisenson
Its: Authorized Signatory
By: /s/ TIM R. PALMER
------------------------------------
Name: Tim R. Palmer
Its: Authorized Signatory
CAPRICORN INVESTORS, L.P.
By: Capricorn Holdings, G.P.,
its General Partner
By: Winokur Holdings, Inc.,
its General Partner
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------
Name: Herbert S. Winokur, Jr.
Its: President
/s/ J. RODERICK HELLER, III
------------------------------------
J. Roderick Heller, III
NHP PARTNERS TWO LLC
By: /s/ MICHAEL R. EISENSON
------------------------------------
Name: Michael R. Eisenson
Its: Authorized Signatory
<PAGE>
AMENDMENT NO. 2
TO
REAL ESTATE ACQUISITION AGREEMENT
AMENDMENT NO. 2 TO REAL ESTATE ACQUISITION AGREEMENT, dated as of
July 14, 1997 (this "AMENDMENT"), by and among Apartment Investment and
Management Company, a Maryland corporation ("AIMCO"), AIMCO Properties, L.P.,
a Delaware limited partnership ("AIMCO OP" and, together with AIMCO, the
"BUYERS"), Demeter Holdings Corporation, a Massachusetts corporation
("DEMETER"), Phemus Corporation, a Massachusetts corporation ("PHEMUS"),
Capricorn Investors, L.P., a Delaware limited partnership ("CAPRICORN"), J.
Roderick Heller, III, an individual ("HELLER"), and NHP Partners Two LLC, a
Delaware limited liability company ("PARTNERS TWO LLC" and, together with
Demeter, Phemus, Capricorn and Heller, the "SELLERS"). Capitalized terms
used, but not otherwise defined herein, shall have the respective meanings
ascribed to them in the Real Estate Acquisition Agreement, dated as of May
22, 1997, by and among the Buyers and the Sellers, as amended by Amendment
No. 1 to Real Estate Acquisition Agreement, dated as of June 13, 1997 by and
among the Buyers and the Sellers (as so amended, the "ACQUISITION AGREEMENT").
WHEREAS, the parties hereto desire to amend the Acquisition Agreement
to extend the date for exercise of the Buyers' Property Put Right for certain
assets.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AMENDMENT OF SECTION 5.15(b). Section 5.15(b) of the Acquisition
Agreement is hereby amended and restated in its entirety to read as follows:
"(b) The Buyer's Property Put Right may be exercised, at any time
or from time to time, (1) no later than August 15, 1997, with respect to
(A) the 1% general partnership interest and 15.715% limited partnership
interest in each of Lakehaven Associates One and Lakehaven Associates Two,
or (B) the .01% limited partnership interest in River Loft Apartments
Limited Partnership, and the 0.9% general partnership interest, the 0.1%
general partnership interest and the 4% limited partnership interest in
River Loft Associates, and (2) no later than June 16, 1997, with respect
<PAGE>
to any other assets, in each case, by AIMCO's delivery of a written notice
to the Sellers specifying (i) the assets that are requested to be
repurchased by the Sellers pursuant to the Buyers' Property Put Right,
(ii) the basis on which the Buyers are entitled to exercise the Buyers'
Property Put Right, and (iii) the date and time at which the closing (the
"BUYERS' PROPERTY PUT CLOSING") of the repurchase of such assets is to
occur. The date of the Buyers' Property Put Closing shall be at least 30
days after the date (the "Notice Date") such notice is given; provided,
however, that if (x) it is not possible for the Sellers to cure, at least
5 Business Days prior to the 30th day after the Notice Date, the breach,
liability or defect that entitles the Buyers to exercise the Buyers'
Property Put Right, or (y) AIMCO determines, in its reasonable discretion,
that it is necessary to consummate the Buyers' Property Put Closing earlier
in order to avoid jeopardizing AIMCO's REIT Status, then the date of the
Buyers' Property Put Closing may be on an earlier date, but not earlier
than 5 Business Days after the Notice Date."
2. GOVERNING LAW. This Amendment and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
3. ENTIRE AGREEMENT. This Amendment, together with the Acquisition
Agreement, including the exhibits and schedules attached thereto, constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements, understandings, letters of intent,
negotiations and discussions, whether oral or written, of the parties, including
the Letter Agreement, and there are no warranties, representations or other
agreements, express or implied, made to any party by any other party in
connection with the subject matter hereof except as specifically set forth
herein or in the documents delivered pursuant hereto or in connection herewith.
4. ACQUISITION AGREEMENT IN FULL FORCE. Except as expressly
modified hereby, the Acquisition Agreement remains in full force and effect.
5. MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Amendment shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Amendment shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
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<PAGE>
6. SEVERABILITY. Any provision or part of this Amendment which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
7. COUNTERPARTS. This Amendment may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
8. NEGOTIATION OF AMENDMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Amendment and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Amendment and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Amendment against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Amendment shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Amendment.
[SIGNATURE PAGES FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ PETER KOMPANIEZ
------------------------------------
Name: Peter Kompaniez
Its: Vice Chairman
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, Inc.,
its general partner
By: /s/ PETER KOMPANIEZ
------------------------------------
Name: Peter Kompaniez
Its: Vice President
DEMETER HOLDINGS CORPORATION
By: /s/ MICHAEL R. EISENSON
------------------------------------
Name: Michael R. Eisenson
Its: Authorized Signatory
By: /s/ TIM R. PALMER
------------------------------------
Name: Tim R. Palmer
Its: Authorized Signatory
<PAGE>
PHEMUS CORPORATION
By: /s/ MICHAEL R. EISENSON
------------------------------------
Name: Michael R. Eisenson
Its: Authorized Signatory
By: /s/ TIM R. PALMER
------------------------------------
Name: Tim R. Palmer
Its: Authorized Signatory
CAPRICORN INVESTORS, L.P.
By: Capricorn Holdings, G.P.,
its General Partner
By: Winokur Holdings, Inc.,
its General Partner
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------
Name: Herbert S. Winokur, Jr.
Its: President
/s/ J. RODERICK HELLER, III
------------------------------------
J. Roderick Heller, III
NHP PARTNERS TWO LLC
By: /s/ MICHAEL R. EISENSON
------------------------------------
Name: Michael R. Eisenson
Its: Authorized Signatory
<PAGE>
ARTICLES OF INCORPORATION
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLE I
INCORPORATOR
The undersigned, N. Cris Prince, whose address is 650 Town Center Drive,
20th Floor, Costa Mesa, Orange County, California 92626, being at least 18 years
of age, does hereby form a corporation under the general laws of the State of
Maryland.
ARTICLE II
NAME
The name of the corporation (the "Corporation") is:
Apartment Investment and Management Company
ARTICLE III
PURPOSE
The purpose for which the Corporation is formed is to engage in any lawful
act or activity for which corporations may be organized under the general laws
of the State of Maryland authorizing the formation of corporations as now or
hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Prentice-Hall Corporation System, Maryland, 11 East
Chase Street, Baltimore, Maryland 21202. The name and address of the resident
agent of the Corporation in the State of Maryland is The Prentice-Hall
Corporation System, Maryland, 11 East Chase Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation located in the State of Maryland.
ARTICLE V
STOCK
SECTION 1. AUTHORIZED SHARES. The total number of shares of stock which the
Corporation is authorized to issue is 1,000,000 shares, all of which are $.01
par value per share and are designated as Common Stock. The aggregate par value
of all authorized shares of stock having par value is $10,000.00.
1
<PAGE>
SECTION 2. NO PREEMPTIVE RIGHTS. No holder of shares of stock of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any additional shares of the stock of the Corporation or any other
security of the Corporation which it may issue or sell.
ARTICLE VI
DIRECTORS
The number of directors of the Corporation initially shall be four (4),
which number may be increased or decreased, in accordance with the Bylaws of the
Corporation but shall never be less than the minimum number required by the
Maryland General Corporation Law. The names of the directors who shall serve
effective immediately and until the first annual meeting of stockholders and
until their successors are duly elected and qualify are:
Terry Considine
Peter Kompaniez
Steven D. Ira
Robert P. Lacy
ARTICLE VII
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to time permits
limitation of the liability of directors and officers, no director or officer of
the Corporation shall be liable to the Corporation or its stockholders for money
damages. Neither the amendment nor repeal of this Article VII, nor the adoption
or amendment of any other provision of the charter or Bylaws of the Corporation
inconsistent with this Article VII, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
ARTICLE VIII
BYLAWS
The initial Bylaws of the Corporation shall be adopted by the initial
directors. Thereafter, the power to adopt, alter and repeal the Bylaws of the
corporation shall be vested in the Board of Directors of the Corporation.
ARTICLE IX
AMENDMENTS
The Corporation reserves the right from time to time to make any amendment
to its charter, now or hereafter authorized by law, including any amendment
altering the terms or contract rights, as expressly set forth in this charter,
of any shares of outstanding stock. Any amendment to the charter of the
Corporation shall be valid if such amendment shall have been approved by the
affirmative vote of a majority of all the votes of stockholders entitled to be
cast on the matter after due authorization and advice by the Board of Directors.
All rights and powers conferred by the
2
<PAGE>
charter of the Corporation on stockholders, directors and officers are granted
subject to this reservation.
The undersigned incorporator hereby acknowledges that the foregoing Articles
of Incorporation are her act and deed and that the facts stated therein are
true.
December 29, 1993 /s/ N. Cris Prince
-----------------------------------
N. Cris Prince
Incorporator
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION
Apartment Investment and Management Company, a Maryland corporation
having its principal offices in Denver, Colorado (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland ("State Department") that, pursuant to the advice of the
Board of Directors and with the approval of the stockholders:
The Articles of Incorporation of the Corporation is hereby amended by
changing and reclassifying each of the 1,000,000 shares of Common Stock of the
Corporation, par value $.01 per share, which is authorized, issued and
outstanding at the close of business on the effective date of this amendment
into 0.75 shares of such Common Stock, par value $.01 per share. Upon the
amendment of the Corporation's Charter by this Articles of Amendment, there
shall be 750,000 shares of Common Stock authorized, issued and outstanding, $.01
par value per share.
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused these presents to be signed in its name and on its behalf by its Chairman
of the Board and attested by its Secretary on the 29th day of April, 1994.
ATTEST: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Peter Kompaniez By: /s/ Terry Considine
- ------------------- -------------------
Peter Kompaniez, Terry Considine,
Secretary Chairman of the Board
THE UNDERSIGNED, Chairman of the Board of Apartment Investment and
Management Company, who executed on behalf of said Corporation, the foregoing
Articles of Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles of Amendment to be the corporate act of said corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ Terry Considine
-----------------------------------------
Terry Considine
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Apartment Investment and Management Company, a Maryland corporation,
having its principal office within the State of Maryland at 11 East Chase
Street, Baltimore, Maryland 21202 (hereinafter referred to as the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation desires to and does hereby amend, ratify,
confirm and restate its Charter as currently in effect, consisting of Articles
of Incorporation filed on January 21, 1994 with the State Department of
Assessments and Taxation of the State of Maryland, as hereinafter provided. The
provisions set forth in these Articles of Amendment and Restatement are all of
the provisions of the Charter of the Corporation as currently in effect.
SECOND: The Charter of the Corporation is hereby amended by striking
in their entirety Articles I through IX and by substituting in lieu thereof the
following:
ARTICLE I
NAME
The name of the corporation (the "Corporation") is Apartment Investment and
Management Company.
ARTICLE II
PURPOSE
The purpose for which the Corporation is formed is to engage in any lawful
act or activity for which corporations may be organized under the general laws
of the State of Maryland authorizing the formation of corporations as now or
hereafter in force.
<PAGE>
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Prentice-Hall Corporation System, Maryland, 11 East
Chase Street, Baltimore, Maryland 21202. The name and address of the resident
agent of the Corporation in the State of Maryland is The Prentice-Hall
Corporation System, Maryland, 11 East Chase Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation located in the State of Maryland.
ARTICLE IV
STOCK
SECTION 1. AUTHORIZED SHARES
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of stock
that the Corporation from time to time shall have authority to issue is
160,750,000 shares of capital stock having a par value of $.01 per share,
amounting to an aggregate par value of $1,607,500, consisting of 150,000,000
shares initially classified as Class A Common Stock having a par value of $.01
per share ("Class A Common Stock"), 750,000 shares initially classified as Class
B Common Stock having a par value of $.01 per share (the "Class B Common Stock")
(the Class A Common Stock and Class B Common Stock being referred to
collectively herein as the "Common Stock") and 10,000,000 shares initially
classified as Preferred Stock having a par value of $.01 per share ("Preferred
Stock").
1.2 CHANGES IN CLASSIFICATION AND PREFERENCES. The Board of
Directors by resolution or resolutions from time to time may classify and
reclassify any unissued shares of capital stock by setting or changing in any
one or more respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of such shares of capital stock, including, but not limited to,
ownership restrictions consistent with the Ownership Restrictions with respect
to each such class or subclass of capital stock, and the number of shares
constituting each such class or subclass, and to increase or decrease the number
of shares of any such class or subclass.
SECTION 2. NO PREEMPTIVE RIGHTS. No holder of shares of stock of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any additional shares of the stock of the Corporation or any other
security of the Corporation that it may issue or sell.
SECTION 3. COMMON STOCK
3.1 DIVIDEND RIGHTS. The holders of shares of Class A Common Stock
shall be entitled to receive such dividends as may be declared by the Board of
Directors of the Corporation out of funds legally available therefor.
3.2 RIGHTS UPON LIQUIDATION. Subject to the preferential rights of
Preferred Stock, if any, as may be determined by the Board of Directors pursuant
to Section 1 of this Article IV, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of
the Corporation, each holder of shares of Class A Common Stock shall be entitled
to receive, ratably with each other holder of Class A Common Stock, that portion
of the assets of the Corporation available
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<PAGE>
for distribution to its shareholders as the number of shares of the Class A
Common Stock held by such holder bears to the total number of shares of Class A
Common Stock then outstanding.
3.3 VOTING RIGHTS. The holders of shares of Class A Common Stock
shall be entitled to vote on all matters (on which a holder of shares of Class A
Common Stock shall be entitled to vote) at all meetings of the shareholders of
the Corporation, and shall be entitled to one vote for each share of Class A
Common Stock entitled to vote at such meeting.
3.4 RESTRICTION ON OWNERSHIP AND TRANSFERS. The Beneficial Ownership
and Transfer of Class A Common Stock shall be subject to the restrictions set
forth in this Section 3.4 of this Article IV.
3.4.1 RESTRICTIONS
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided
in Section 3.4.8 of this Article IV, from and after the date of the Initial
Public Offering, no Person (other than the Initial Holder or a Look-Through
Entity) shall Beneficially Own shares of Class A Common Stock in excess of the
Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class A
Common Stock in excess of the Initial Holder Limit and no Look-Through Entity
shall Beneficially Own shares of Class A Common Stock in excess of the
Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as
provided in Section 3.4.8 of this Article IV, from and after the date of the
Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class A Common Stock in excess of the Ownership Limit shall be
void AB INITIO as to the Transfer of such shares of Class A Common Stock that
would be otherwise Beneficially Owned by such Person in excess of the Ownership
Limit, and the intended transferee shall acquire no rights in such shares of
Class A Common Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 3.4.8 of this Article IV, from and after the date of the
Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class A Common Stock in excess of
the Initial Holder Limit shall be void AB INITIO as to the Transfer of such
shares of Class A Common Stock that would be otherwise Beneficially Owned by the
Initial Holder in excess of the Initial Holder Limit, and the Initial Holder
shall acquire no rights in such shares of Class A Common Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 3.4.8 of this Article IV, from and after the date
of the Initial Public Offering (and subject to Section 3.4.12 of this Article
IV), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class A Common Stock in
excess of the Look-Through Ownership Limit shall be void AB INITIO as to the
Transfer of such shares of Class A Common Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit, and such Look-Through Entity shall acquire no rights in such
shares of Class A Common Stock.
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<PAGE>
(E) TRANSFERS RESULTING IN OWNERSHIP BY FEWER THAN 100
PERSONS. Except as provided in Section 3.4.8 of this Article IV, from and after
the date of the Initial Public Offering (and subject to Section 3.4.12 of this
Article IV), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in the Class A Common Stock being Beneficially Owned by less than
100 Persons (determined without reference to any rules of attribution) shall be
void AB INITIO as to the Transfer of such shares of Class A Common Stock that
would be otherwise Beneficially Owned by the transferee, and the intended
transferee shall acquire no rights in such shares of Class A Common Stock.
(F) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the date of the Initial Public Offering, any Transfer that, if effective,
would result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code, or would otherwise result in the Corporation failing
to qualify as a REIT (including, without limitation, a Transfer or other event
that would result in the Corporation owning (directly or constructively) an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the Corporation from such tenant would cause the
Corporation to fail to satisfy any of the gross income requirements of Section
856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of
Class A Common Stock that would cause the Corporation (i) to be "closely held"
within the meaning of Section 856(h) of the Code or (ii) otherwise fail to
qualify as a REIT, as the case may be, and the intended transferee shall acquire
no rights in such shares of Class A Common Stock.
(G) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a
share of Class A Common Stock that is null and void under Sections 3.4.1(B),
(C), (D), (E) or (F) of this Article IV because it could, if effective, result
in (i) the ownership of Class A Common Stock in excess of the Initial Holder
Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Class
A Common Stock being Beneficially Owned by less than 100 Persons (determined
without reference to any rules of attribution), (iii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iv) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class A Common Stock in the
same or any other related transaction.
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a Transfer or
other event has taken place in violation of Section 3.4.1 of this Article IV or
that a Person intends to acquire or has attempted to acquire or may acquire
Beneficial Ownership of any shares of Class A Common Stock in violation of
Section 3.4.1 of this Article IV (whether or not such violation is intended),
the Board of Directors or a committee thereof shall be empowered to take any
action as it deems advisable to refuse to give effect to or to prevent such
Transfer or other event, including, but not limited to, refusing to give effect
to such Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then current Market Price and upon such
other terms and conditions as may be specified by the Board of Directors in its
sole discretion (including, but not limited to, by means of the issuance of
long-term indebtedness for the purpose of such redemption), demanding the
repayment of any distributions received in respect of shares of Class A Common
Stock acquired in violation of Section 3.4.1 of this Article IV or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 3.4.1 of this Article IV, regardless of any action (or non-action) by
the Board of Directors of such committee, (i) shall be void AB INITIO or (ii)
shall automatically result in the transfer described in Section 3.4.3 of this
Article IV; PROVIDED, FURTHER, that the provisions of this Section 3.4.2 shall
be subject to the provisions of Section 3.4.12 of this Article IV.
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<PAGE>
3.4.3 TRANSFER IN TRUST
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article IV, at any time after the date of the
Initial Public Offering there is a purported Transfer (an "EXCESS TRANSFER")
(whether or not such Transfer is the result of transactions entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system) or other change in the capital structure of the
Corporation (including, but not limited to, any redemption of Preferred Stock)
or other event such that (a) any Person (other than the Initial Holder or a
Look-Through Entity) would Beneficially Own shares of Class A Common Stock in
excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own
shares of Class A Common Stock in excess of the Initial Holder Limit, or (c) any
Person that is a Look-Through Entity would Beneficially Own shares of Class A
Common Stock in excess of the Look-Through Ownership Limit (in any such event,
the Person, Initial Holder or Look-Through Entity that would Beneficially Own
shares of Class A Common Stock in excess of the Ownership Limit, the Initial
Holder Limit or the Look-Through Entity Limit is referred to as a "PROHIBITED
TRANSFEREE"), then, except as otherwise provided in Section 3.4.8 of this
Article IV, such shares of Class A Common Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the business day
prior to the date of the Excess Transfer, change in capital structure or other
event giving rise to a potential violation of the Ownership Limit, the Initial
Holder Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed
by the Corporation and shall be a Person unaffiliated with either the
Corporation or any Prohibited Transferee. The Trustee may be an individual or a
bank or trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class
A Common Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
3.4.3(E), the Prohibited Transferee shall have no rights in the Class A Common
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class A Common
Stock held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the
discovery by the Corporation that the shares of Class A Common Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class A Common Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over the Trustee and held
in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class A
Common Stock have been transferred to the Trustee will be rescinded as AB INITIO
and shall be recast in accordance with the desires of the Trustee acting for the
benefit of the Charitable Beneficiary. The owner of the shares at the time of
the Excess Transfer, change in capital structure or other event giving rise to a
potential violation of the Ownership Limit, Initial Holder Limit or Look-Through
Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of Class A Common Stock for the benefit of the
Charitable Beneficiary.
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(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
transfer the shares held in the Trust to a person, designated by the Trustee,
whose ownership of the shares will not violate the Ownership Restrictions. If
such a transfer is made, the interest of the Charitable Beneficiary shall
terminate and proceeds of the sale shall be payable to the Prohibited Transferee
and to the Charitable Beneficiary as provided in this Section 3.4.3(E). The
Prohibited Transferee shall receive the lesser of (1) the price paid by the
Prohibited Transferee for the shares or, if the Prohibited Transferee did not
give value for the shares (through a gift, devise or other transaction), the
Market Price of the shares on the day of the event causing the shares to be held
in the Trust and (2) the price per share received by the Trustee from the sale
or other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 3.4.3(E) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class A Common Stock as to which such restrictions would, by their terms, apply,
and to hold such Class A Common Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE.
Shares of Class A Common Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days after the
later of (i) the date of the Excess Transfer or other event resulting in a
transfer to the Trust and (ii) the date that the Board of Directors determines
in good faith that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class A Common Stock
held in the Trust would not violate the Ownership Restrictions in the hands of
such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
3.4.4 NOTICE OF RESTRICTED TRANSFER. Any Person that
acquires or attempts to acquire shares of Class A Common Stock in violation of
Section 3.4.1 of this Article IV, or any Person that is a Prohibited Transferee
such that stock is transferred to the Trustee under Section 3.4.3 of this
Article IV, shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
Transfer or attempted Transfer or other event on the Corporation's status as a
REIT. Failure to give such notice shall not limit the rights and remedies of
the Board of Directors provided herein in any way.
3.4.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after
the date of the Initial Public Offering certain record and Beneficial Owners and
transferees of shares of Class A Common Stock will be required to provide
certain information as set out below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner
of more than 5% (or such other percentage between 0.5% and 5%, as provided in
the applicable regulations adopted under the Code) of the number of Outstanding
shares of Class A Common Stock shall, within 30 days after January
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1 of each year, give written notice to the Corporation stating the name and
address of such record or Beneficial Owner, the number of shares of Class A
Common Stock Beneficially Owned, and a full description of how such shares are
held. Each such record or Beneficial Owner of Class A Common Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class A
Common Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i)comply with the provisions of the Code regarding
the qualification of the Corporation as a REIT under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each shareholder of record,
including without limitation any Person that holds shares of Class A Common
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 3.4.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any
Person that is a Beneficial Owner of shares of Class A Common Stock and any
Person (including the shareholder of record) that is holding shares of Class A
Common Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply with
the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class A Common Stock already Beneficially Owned by such shareholder or
proposed transferee and any related persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
3.4.6 REMEDIES NOT LIMITED. Nothing contained in this
Article IV shall limit the authority of the Board of Directors to take such
other action as it deems necessary or advisable (subject to the provisions of
Section 3.4.12 of this Article IV) (i) to protect the Corporation and the
interests of its shareholders in the preservation of the Corporation's status as
a REIT and (ii) to insure compliance with the Ownership Limit, the Initial
Holder Limit and the Look-Through Ownership Limit.
3.4.7 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Section 3.4 of this Article IV, or in
the case of an ambiguity in any definition contained in Section 4 of this
Article IV, the Board of Directors shall have the power to determine the
application of the provisions of this Article IV with respect to any situation
based on its reasonable belief, understanding or knowledge of the circumstances.
3.4.8 EXCEPTIONS. The following exceptions shall apply or
may be established with respect to the limitations of Section 3.4.1 of this
Article IV.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors,
upon receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purpose of Section
542(a) of the Code and is a corporation, partnership, estate or trust; PROVIDED,
HOWEVER, that in no event may any such exception cause such Person's ownership,
direct or indirect (without taking into account such Person's ownership of
interests in any partnership of which the Corporation is a partner), to exceed
9.8% of the number of Outstanding shares of Class A Common Stock. In connection
with any such exemption, the Board of Directors may require such representations
and undertakings from such Person and may impose such other conditions as the
Board deems necessary, in its sole discretion, to determine the effect, if any,
of the proposed Transfer on the Corporation's status as a REIT.
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(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article IV, the pledge by the Initial Holder of all or any
portion of the Class A Common Stock directly owned at any time or from time to
time shall not constitute a violation of Section 3.4.1 of this Article IV and
the pledgee shall not be subject to the Ownership Limit with respect to the
Class A Common Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the
purchase of Class A Common Stock by an underwriter that (i) is a corporation or
a partnership and (ii) participates in an offering of the Class A Common Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class A Common Stock purchased by it as a part of or in connection with such
offering and with respect to any Class A Common Stock purchased in connection
with market making activities.
3.4.9 LEGEND. Each certificate for Class A Common Stock
shall bear the following legend:
"The shares of Class A Common Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class A Common Stock in excess of the
Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's Amended and
Restated Certificate of Incorporation ('Certificate'). Any Person
that attempts to Beneficially Own shares of Class A Common Stock in
excess of the applicable limitation must immediately notify the
Corporation. All capitalized terms in this legend have the meanings
ascribed to such terms in the Corporation's Certificate, as the same
may be amended from time to time, a copy of which, including the
restrictions on transfer, will be sent without charge to each
shareholder that so requests. If the restrictions on transfer are
violated, the shares of Class A Common Stock represented hereby will
be either (i) void in accordance with the Certificate or (ii)
automatically transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
3.4.10 SEVERABILITY. If any provision of this Article IV or
any application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
3.4.11 BOARD OF DIRECTORS DISCRETION. Anything in this
Article IV to the contrary notwithstanding, the Board of Directors shall be
entitled to take or omit to take such actions as it in its discretion shall
determine to be advisable in order that the Corporation maintain its status as
and continue to qualify as a REIT, including, but not limited to, reducing the
Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit
in the event of a change in law.
3.4.12 SETTLEMENT. Nothing in this Section 3.4 of this
Article IV shall be interpreted to preclude the settlement of any transaction
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system.
SECTION 4. DEFINITIONS. The terms set forth below shall have the meanings
specified below when used in this Article IV or in Article V of these Articles
of Amendment and Restatement.
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4.1 BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP" shall
mean, with respect to any Person, ownership of shares of Common Stock equal to
the sum of (i) the shares of Common Stock directly owned by such Person,(ii) the
number of shares of Common Stock indirectly owned by such Person (if such Person
is an "individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as modified
by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Common
Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3
under the Exchange Act or that is attributed to such Person pursuant to Section
318 of the Code, as modified by Section 856(d)(5) of the Code, PROVIDED that
when applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (b) of the definition of "Person"
shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and
"BENEFICIALLY OWNED" shall have the correlative meanings.
4.2 CHARITABLE BENEFICIARY. The term "CHARITABLE BENEFICIARY" shall
mean one or more beneficiaries of the Trust as determined pursuant to Section
3.4.3 of this Article IV, each of which shall be an organization described in
Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
4.3 CODE. The term "CODE" shall mean the Internal Revenue Code of
1986, as amended from time to time, or any successor statute thereto. Reference
to any provision of the Code shall mean such provision as in effect from time to
time, as the same may be amended, and any successor thereto, as interpreted by
any applicable regulations or other administrative pronouncements as in effect
from time to time.
4.4 COMMON STOCK. The term "COMMON STOCK" shall mean all shares now
or hereafter authorized of any class of Common Stock of the Corporation and any
other capital stock of the Corporation, however designated, authorized after the
Issue Date, that has the right (subject always to prior rights of any class of
Preferred Stock) to participate in the distribution of the assets and earnings
of the Corporation without limit as to per share amount.
4.5 EXCESS TRANSFER. The term "EXCESS TRANSFER" has the meaning set
forth in Section 3.4.3(A) of this Article IV.
4.6 EXCHANGE ACT. The term "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended.
4.7 INITIAL HOLDER. The term "INITIAL HOLDER" shall mean Terry
Considine.
4.8 INITIAL HOLDER LIMIT. The term "INITIAL HOLDER LIMIT" shall mean
15% of the number of Outstanding shares of Common Stock applied, in the
aggregate, to the Initial Holder. From the date of the Initial Public Offering,
the secretary of the Corporation, or such other person as shall be designated by
the Board of Directors, shall upon request make available to the
representative(s) of the Initial Holder and the Board of Directors, a schedule
that sets forth the then-current Initial Holder Limit applicable to the Initial
Holder.
4.9 INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC OFFERING"
shall mean the first underwritten public offering of Class A Common Stock
registered under the Securities Act of 1933, as amended, on a registration
statement on Form S-11 filed with the Securities and Exchange Commission.
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4.10 LOOK-THROUGH ENTITY. The term "LOOK-THROUGH ENTITY" shall mean
a Person that is either (i) described in Section 401(a) of the Code as provided
under Section 856(h)(3) of the Code or (ii) registered under the Investment
Company Act of 1940.
4.11 LOOK-THROUGH OWNERSHIP LIMIT. The term "LOOK-THROUGH OWNERSHIP
LIMIT" shall mean 15% of the number of Outstanding shares of Common Stock.
4.12 MARKET PRICE. The term "MARKET PRICE" on any date shall mean
the Closing Price on the Trading Day immediately preceding such date. The term
"CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, if the Common Stock is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer in use, the principal other
automated quotations system that may then be in use or, if the Common Stock is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. The term "TRADING DAY"
shall mean a day on which the principal national securities exchange on which
the Common Stock is listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
4.13 NYSE. The term "NYSE" shall mean the New York Stock Exchange,
Inc.
4.14 OUTSTANDING. The term "OUTSTANDING" shall mean issued and
outstanding shares of Common Stock of the Corporation, PROVIDED that for
purposes of the application of the Ownership Limit, the Look-Through Ownership
Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be
deemed to include the number of shares of Common Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible securities.
4.15 OWNERSHIP LIMIT. The term "OWNERSHIP LIMIT" shall mean, for any
Person other than the Initial Holder or a Look-Through Entity, 8.7% of the
number of the Outstanding shares of Common Stock of the Corporation.
4.16 OWNERSHIP RESTRICTIONS. The term "OWNERSHIP RESTRICTIONS" shall
mean collectively the Ownership Limit as applied to Persons other than the
Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to
the Initial Holder and the Look-Through Ownership Limit as applied to
Look-Through Entities.
4.17 PERSON. The term "PERSON" shall mean (A) an individual,
corporation, partnership, estate, trust (including a trust qualifying under
Section 401(a) or 501(c) of the Code), association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity,
and (B)also includes a group as that term is used for purposes of Section
13(d)(3) of the Exchange Act.
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4.18 PROHIBITED TRANSFEREE. The term "PROHIBITED TRANSFEREE" has the
meaning set forth in Section 3.4.3(A) of this Article IV.
4.19 REIT. The term "REIT" shall mean a "real estate investment
trust" as defined in Section 856 of the Code.
4.20 TRANSFER. The term "TRANSFER" shall mean any sale, transfer,
gift, assignment, devise or other disposition of a share of Common Stock
(including (i) the granting of an option or any series of such options or
entering into any agreement for the sale, transfer or other disposition of
Common Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Common Stock), whether
voluntary or involuntary, whether of record or Beneficial Ownership, and whether
by operation of law or otherwise (including, but not limited to, any transfer of
an interest in other entities that results in a change in the Beneficial
Ownership of shares of Common Stock). The term "TRANSFERS" and "TRANSFERRED"
shall have correlative meanings.
4.21 TRUST. The term "TRUST" shall mean the trust created pursuant
to Section 3.4.3 of this Article IV.
4.22 TRUSTEE. The term "TRUSTEE" shall mean the Person unaffiliated
with either the Corporation or the Prohibited Transferee that is appointed by
the Corporation to serve as trustee of the Trust.
ARTICLE V
GENERAL REIT PROVISIONS
SECTION 1. TERMINATION OF REIT STATUS. The Board of Directors shall take
no action to terminate the Corporation's status as a REIT until such time as (i)
the Board of Directors adopts a resolution recommending that the Corporation
terminate its status as a REIT, (ii) the Board of Directors presents the
resolution at an annual or special meeting of the shareholders and (iii) such
resolution is approved by the vote of a majority of the shares entitled to be
cast on the resolution.
SECTION 2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or this
Article V shall preclude the settlement of any transaction entered into through
the facilities of the NYSE or other national securities exchange or an automated
inter-dealer quotation system. The fact that the settlement of any transaction
is permitted shall not negate the effect of any other provision of this Article
V or any provision of Article IV, and the transferee, including but not limited
to any Prohibited Transferee, in such a transaction shall remain subject to all
the provisions and limitations of Article IV and this Article V.
SECTION 3. SEVERABILITY. If any provision of Article IV or this Article V
or any application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
SECTION 4. WAIVER. The Corporation shall have authority at any time to
waive the requirement that the Corporation redeem shares of Preferred Stock if,
in the sole discretion of the Board of Directors, any such redemption would
jeopardize the status of the Corporation as a REIT for federal income tax
purposes.
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ARTICLE VI
BOARD OF DIRECTORS
SECTION 1. MANAGEMENT. The business and the affairs of the Corporation
shall managed under the direction of its Board of Directors.
SECTION 2. NUMBER. The number of directors that will constitute the
entire Board of Directors shall be fixed by, or in the manner provided in, the
Bylaws but shall in no event be less than three. Any increases or decreases in
the size of the board shall be apportioned equally among the classes of
directors to prevent stacking in any one class of directors. There are
currently two directors in office whose names are as follows:
Terry Considine
Peter Kompaniez
SECTION 3. Intentionally deleted.
SECTION 4. VACANCIES. Except as otherwise provided in these Articles of
Amendment and Restatement, newly created directorships resulting from any
increase in the number of directors may be filled by the majority vote of the
Board of Directors, and any vacancies on the Board of Directors resulting from
death, resignation, removal or other cause shall be filled by the affirmative
vote of a majority of the remaining directors then in office, even if less than
a quorum of the Board of Directors, or, if applicable, by a sole remaining
director. Any director elected in accordance with the preceding sentence shall
hold office until the next annual meeting of the Corporation, at which time a
successor shall be elected to fill the remaining term of the position filled by
such director.
SECTION 5. REMOVAL. Except as otherwise provided in these Articles of
Amendment and Restatement, any director may be removed from office only for
cause and only by the affirmative vote of two-thirds of the aggregate number of
votes then entitled to be cast generally in the election of directors. For
purposes of this Section 5, "CAUSE" shall mean the willful and continuous
failure of a director to substantially perform the duties to the Corporation of
such director (other than any such failure resulting from temporary incapacity
due to physical or mental illness) or the willful engaging by a director in
gross misconduct materially and demonstrably injurious to the Corporation.
SECTION 6. BYLAWS. The Board of Directors shall have power to adopt,
amend, alter, change and repeal any Bylaws of the Corporation by vote of the
majority of the Board of Directors then in office. Any adoption, amendment,
alteration, change or repeal of any Bylaws by the shareholders of the
Corporation shall require the affirmative vote of a majority of the aggregate
number of votes then entitled to be cast generally in the election of directors.
Notwithstanding anything in this Section 6 to the contrary, no amendment,
alteration, change or repeal of any provision of the Bylaws relating to the
removal of directors or repeal of the Bylaws shall be effected without the vote
of two-thirds of the aggregate number of votes entitled be cast generally in the
election of Directors.
SECTION 7. POWERS. The enumeration and definition of particular powers of
the Board of Directors included elsewhere in these Articles of Amendment and
Restatement shall in no way be limited or restricted by reference to or
inference from the terms of any other clause of this or any other Article of
these Articles of Amendment and Restatement, or construed as excluding or
limiting, or deemed by inference or otherwise in any manner to exclude or limit,
the powers conferred upon the Board of Directors under the Maryland General
Corporation Law ("MGCL") as now or hereafter in force.
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ARTICLE VII
LIMITATION OF LIABILITY
No director or officer of the Corporation shall be liable to the
Corporation or its shareholders for money damages to the maximum extent that
Maryland law in effect from time to time permits limitation of the liability of
directors and officers. Neither the amendment nor repeal of this Article VII,
nor the adoption or amendment of any other provision of the charter or Bylaws of
the Corporation inconsistent with this Article VII, shall apply to or affect in
any respect the applicability of the preceding sentence with respect to any act
or failure to act that occurred prior to such amendment, repeal or adoption.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
Maryland law, as applicable from time to time, all persons who at any time were
or are directors or officers of the Corporation for any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) relating to any action alleged to have been taken or omitted in
such capacity as a director or an officer. The Corporation shall pay or
reimburse all reasonable expenses incurred by a present or former director or
officer of the Corporation in connection with any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) in which the present or former director or officer is a party, in
advance of the final disposition of the proceeding, to the fullest extent
permitted by, and in accordance with the applicable requirements of, Maryland
law, as applicable from time to time. The Corporation may indemnify any other
persons permitted but not required to be indemnified by Maryland law, as
applicable from time to time, if and to the extent indemnification is authorized
and determined to be appropriate, in each case in accordance with applicable
law, by the Board of Directors, the majority of the shareholders of the
Corporation entitled to vote thereon or special legal counsel appointed by the
Board of Directors. No amendment of these Articles of Amendment and Restatement
of the Corporation or repeal of any of its provisions shall limit or eliminate
any of the benefits provided to directors and officers under this Article VIII
in respect of any act or omission that occurred prior to such amendment or
repeal.
ARTICLE IX
WRITTEN CONSENT OF SHAREHOLDERS
Any corporate action upon which a vote of shareholders is required or
permitted may be taken without a meeting or vote of shareholders with the
unanimous written consent of shareholders entitled to vote thereon.
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ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter or repeal any provision
contained in this charter upon (i) adoption by the Board of Directors of a
resolution recommending such amendment, alteration, or repeal, (ii) presentation
by the Board of Directors to the shareholders of a resolution at an annual or
special meeting of the shareholders and (iii) approval of such resolution by the
affirmative vote of the holders of a majority (or, as applicable, a two-thirds
vote) of the aggregate number of votes entitled to be cast generally in the
election of directors. All rights conferred upon shareholders herein are
subject to this reservation.
ARTICLE XI
EXISTENCE
The Corporation is to have a perpetual existence.
* * * * * *
THIRD: The Board of Directors of the Corporation by a unanimous
consent in writing in lieu of a meeting under Section 2-408 of the Maryland
General Corporation Law, dated as of May ___, 1994, adopted a resolution that
set forth the foregoing amendment to and restatement of the Articles of
Incorporation, declaring that the said amendment to and restatement of the
Articles of Incorporation was advisable and directing that it be submitted for
action thereon by the shareholders by a unanimous consent in writing in lieu of
a meeting under Section 2-505 of the Maryland General Corporation Law.
FOURTH: Notice of a meeting of shareholders to take action on the
Articles of Incorporation was waived by all shareholders of the Corporation.
FIFTH: The Articles of Amendment and Restatement of the Corporation
as hereinabove set forth was approved by the unanimous consent in writing of the
shareholders of the Corporation on May ___, 1994.
SIXTH:
(a) As of immediately before the amendment the total number of shares
of stock of all classes which the Corporation has authority to issue is
1,000,000 shares (par value $.01 per share) all of which were Common Stock.
(b) As amended the total number of shares of stock of all classes
which the Corporation has authority to issue is 160,750,000 shares, of which
150,000,000 shares are Class A Common Stock (par value $.01 per share), 750,000
shares are Class B Common Stock (par value $.01 per share) and 10,000,000 shares
are Preferred Stock (par value $.01 per share).
(c) The aggregate par value of all shares having a par value is
$10,000 before the amendment and $1,607,500 as amended.
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IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused these presents to be signed in its name and on its behalf by its
President and attested by its Secretary on May ____, 1994.
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY
By: /s/ Terry Considine
------------------------------
Terry Considine
President
ATTEST:
By: /s/ Peter K. Kompaniez
-------------------------------
Peter Kompaniez
Secretary
Officer's Certificate
I, Terry Considine, President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, hereby acknowledges the foregoing Articles of Amendment and
Restatement of Apartment Investment and Management Company to be the act of
Apartment Investment and Management Company, and to the best of my knowledge,
information and belief, these matters and facts are true in all material
respects, and my statement is made under penalties of perjury.
By: /s/ Terry Considine
------------------------------
Terry Considine
President
Apartment Investment and
Management Company
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ARTICLES OF AMENDMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Apartment Investment and Management Company, a Maryland corporation, having
its principal office within the State of Maryland at 11 East Chase Street,
Baltimore City, Maryland 21202 (hereinafter referred to as the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Corporation desires to and does hereby amend its Charter as
currently in effect, consisting of Articles of Amendment and Restatement filed
on July 15, 1994 with the State Department of Assessments and Taxation of the
State of Maryland (the "DEPARTMENT") and Articles of Amendment filed with the
Department on July 28, 1994 (together, the "CHARTER"), as hereinafter provided.
SECOND: The Board of Directors of the Corporation by a unanimous consent
in writing in lieu of a meeting under Section 2-408 of the Maryland General
Corporation Law, dated as of July 27, 1994, adopted a resolution that set forth
this amendment to the Articles of Amendment and Restatement declaring that this
amendment to the Articles of Amendment and Restatement was advisable and
directing that it be submitted for action thereon by the shareholders by a
unanimous consent in writing in lieu of a meeting under Section 2-505 of the
Maryland General Corporation Law. Notice of a meeting of shareholders to take
action on the Articles of Amendment was waived by all shareholders of the
Corporation. The Articles of Amendment of the Corporation as herein set forth
was approved by the unanimous consent in writing of the shareholders of the
Corporation on July 27, 1994.
THIRD: The Charter of the Corporation is hereby amended as follows:
A. Section 1.1 is amended to add the following
sentence after the last sentence thereof: "All of the authorized capital stock
of the Corporation, issued and outstanding on July 28, 1994, of 650,000 shares
of Common Stock, are hereby designated Class B Common Stock."
B. A new Article XII (Class B Common Stock) is
hereby added, which shall read in its entirety as follows:
GENERAL. The holders of the Class B Common Stock shall
have the same rights and privileges as, and shall be subject to the same
restrictions and limitations contained in the Charter as apply to, the holders
of the Class A Common Stock, except as set forth below.
SECTION 1. DEFINITIONS
Capitalized terms used in these Articles Supplementary shall have the
meanings ascribed to them in the Charter or elsewhere in these Articles
Supplementary, except that the terms set forth below shall have the meanings
specified below when used in this Article:
"ADJUSTED FUNDS FROM OPERATIONS" shall have the same meaning as the term
"Adjusted Funds from Operations" used in the Prospectus and shall be calculated
in the manner specified in the Prospectus and based on generally accepted
accounting principles. Adjusted Funds from Operations shall be determined from
the Corporation's financial statements audited and certified by an independent
public accountant.
"ADJUSTED FUNDS FROM OPERATIONS PER SHARE" when used with respect to any
period shall mean the Adjusted Funds from Operations for such period DIVIDED BY
the sum of (a) the number of shares of the Class A Common Stock outstanding on
the last day of such period (excluding any shares of the Class
<PAGE>
A Common Stock into which shares of the Class B Common Stock shall have been
converted as a result of the conversion of shares of the Class B Common Stock on
the last day of such period) and (b) the number of shares of the Class A Common
Stock issuable to acquire units of limited partnership that (i) may be tendered
for redemption in any limited partnership in which the Corporation serves as
general partner and (ii) are outstanding on the last day of such period.
"AVERAGE MARKET PRICE" for a period shall mean the average of the Closing
Prices for a share of the Class A Common Stock for the Trading Days in such
period.
"CAUSE" shall mean the termination of employment of an individual with an
Employer as a result of (a) the performance by such individual of any activity
involving fraud or dishonesty, (b) the conviction of the individual of a felony
or a crime involving moral turpitude,(c) the failure or refusal of such
individual to reasonably or satisfactorily perform any material duties or
responsibilities reasonably required of such individual by an Employer, (d) the
gross negligence or willful neglect or malfeasance by the individual in the
performance or non-performance of such individual's duties or responsibilities
to the Employer, or (e) any unauthorized act or omission by such individual that
is injurious in any material respect to the financial condition or business
reputation of any Employer.
"CHANGE IN CONTROL" shall mean the occurrence of any of the following
events:
(a) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (the "VOTING SECURITIES") by any "person"
(as the term "person" is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 ACT")) immediately
after which such person has "beneficial ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) ("BENEFICIAL OWNERSHIP") of 20% or more of
the combined voting power of the Corporation's then outstanding Voting
Securities; PROVIDED, HOWEVER, in determining whether a Change in Control has
occurred, Voting Securities that are acquired in a Non-Control Acquisition (as
hereinafter defined) shall not constitute an acquisition that would cause a
Change in Control. "NON-CONTROL ACQUISITION" shall mean an acquisition by
(1) an employee benefit plan (or a trust forming a part thereof) maintained by
(a) the Corporation or (b) any corporation, partnership or other Person of which
a majority of its voting power or its equity securities or equity interest is
owned directly or indirectly by the Corporation or in which the Corporation
serves as a general partner or manager (a "SUBSIDIARY"), (2) the Corporation or
any Subsidiary, or (3) any Person in connection with a Non-Control Transaction
(as hereinafter defined);
(b) The individuals who are named in the Prospectus as constituting the
Board of Directors of the Corporation following the Initial Public Offering (the
"INCUMBENT BOARD") cease for any reason to constitute at least two-thirds
(2/3rds) of the Board of Directors; PROVIDED, HOWEVER, that if the election, or
nomination for election by the Corporation's stockholders, of any new director
was approved by a vote of at least two-thirds (2/3rds) of the Incumbent Board,
such new director shall be considered as a member of the Incumbent Board;
PROVIDED, FURTHER, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "election contest" (as described in Rule 14a-11
promulgated under the 1934 Act) (an "ELECTION CONTEST") or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors (a "PROXY CONTEST") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or
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<PAGE>
(c) Approval by stockholders of the Corporation of:
(1) A merger, consolidation, share
exchange or reorganization involving the Corporation, unless
(A) the stockholders of the
Corporation, immediately before such merger, consolidation, share
exchange or reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the
outstanding voting securities of the corporation that is the successor
in such merger, consolidation, share exchange or reorganization (the
"SURVIVING CORPORATION") in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
consolidation, share exchange or reorganization,
(B) the individuals who were members of
the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share exchange or
reorganization constitute at least two-thirds (2/3rds) of the members
of the board of directors of the Surviving Corporation, and
(C) no Person (other than the
Corporation or any Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Corporation, the Surviving
Corporation or any Subsidiary, or any Person who, immediately prior to
such merger, consolidation, share exchange or reorganization had
Beneficial Ownership of 15% or more of the then outstanding Voting
Securities has Beneficial Ownership of 15% or more of the combined
voting power of the Surviving Corporation's then outstanding voting
securities (a transaction described in clauses (i) through (iii) is
referred to herein as a "NON-CONTROL TRANSACTION");
(2) A complete liquidation or
dissolution of the Corporation; or
(3) An agreement for the sale or other
disposition of all or substantially all of the assets of the
Corporation to any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (a "SUBJECT PERSON") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Corporation that, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by such Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Corporation, and after
such share acquisition by the Corporation, such Subject Person becomes the
Beneficial Owner of any additional Voting Securities that increases the
percentage of the then outstanding Voting Securities Beneficially Owned by such
Subject Person, then a Change in Control shall occur.
"CLOSING PRICE" on any date shall mean the last sale price, regular way,
or, in case that no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NYSE or, if shares of the Class A Common
Stock are not listed or admitted
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<PAGE>
to trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which shares of the Class A Common Stock are listed or
admitted to trading or, if shares of the Class A Common Stock are not listed or
admitted to trading on any national securities exchange, the last quoted price,
or if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotations system that may then be in use or, if
shares of the Class A Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in shares of the Class A Common Stock selected by
the Board of Directors of the Corporation.
"CONVERTIBLE CLASS B SHARES" shall mean Eligible Class B Shares that shall
have become subject to automatic conversion into shares of the Class A Common
Stock, subject to Article IV, Section 3.4 of the Charter, pursuant to Sections 3
and 4 of this Article.
"DISABILITY" shall mean the mental or physical illness or disability of an
individual that substantially impairs the ability of the individual to perform
substantially all of his duties as an employee of an Employer in a satisfactory
manner for a period in excess of ninety (90) days in any consecutive 12-month
period.
"ELIGIBLE CLASS B SHARES" shall mean the following percentages (subject to
modification as provided in Section 3(c) of this Article) of the Outstanding
Class B Shares as of the Year-End Testing Dates indicated:
PERCENTAGE OF OUTSTANDING
YEAR-END TESTING DATE CLASS B SHARES
December 31, 1994 10.0000%
December 31, 1995 22.2222%
December 31, 1996 28.5714%
December 31, 1997 50.0000%
December 31, 1998 100.0000%
"EMPLOYER" shall mean (a) the Corporation,(b) any partnership in which the
Corporation serves as a general partner, (c) any corporation directly or
indirectly controlled by or under common control with the Corporation,(d) any
partnership or company in which any of the foregoing may own, directly or
indirectly, an equity interest or (e) any limited liability company in which any
of the foregoing may be a member.
"INITIAL HOLDER" shall refer to each person holding Outstanding Class B
Shares on the date of the closing of the Initial Public Offering, whether such
Outstanding Class B Shares result from designation of outstanding common stock
or from new issuance by the Corporation.
"OP UNITS" shall mean units of limited partnership interest in the
Operating Partnership.
"OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware
limited partnership in which the Corporation holds a general partnership
interest.
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<PAGE>
"OUTSTANDING CLASS B SHARES" shall mean issued and outstanding shares of
the Class B Common Stock of the Corporation, excluding any Convertible Class B
Shares that have been converted into shares of the Class A Common Stock.
"PROSPECTUS" shall mean the prospectus that forms a part of the
registration statement filed with the Securities and Exchange Commission in
connection with the Initial Public Offering, in the form included in the
registration statement at the time the registration statement becomes effective;
PROVIDED, HOWEVER, that, if such prospectus is subsequently supplemented or
amended for use in connection with the Initial Public Offering, "PROSPECTUS"
shall refer to such prospectus as so supplemented or amended.
"TRADING DAY" shall mean a day on which the principal national securities
exchange on which shares of the Class A Common Stock are listed or admitted to
trading is open for the transaction of business or, if shares of the Class A
Common Stock are not listed or admitted to trading on any national securities
exchange, "TRADING DAY" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"YEAR-END TESTING DATE" shall mean each of December 31, 1994, December 31,
1995, December 31, 1996, December 31, 1997 and December 31, 1998; PROVIDED,
HOWEVER, that December 31, 1999 shall be substituted in place of December 31,
1998 each place such earlier date appears in this Article if, as of December 31,
1998, either the Annual Growth Target requirement or the Compounded Cumulative
Growth Target requirement set forth in Section 3(a) of this Article in respect
of the Year-End Testing Date of December 31, 1998 is not satisfied as of
December 31, 1998.
SECTION 2. RESTRICTIONS ON DIVIDENDS AND VOTING RIGHTS
(a) NO DIVIDENDS. No dividends shall accrue
or be paid on any shares of the Class B Common Stock.
(b) NO VOTING RIGHTS; EXCEPTION FOR
CONVERTIBLE CLASS B SHARES. Holders of shares of the Class B Common Stock shall
not have the right to vote on any matter, including, but not limited to, the
election of directors, the merger of the Corporation, the sale or other
disposition of the Corporation's assets, or the dissolution or liquidation of
the Corporation; PROVIDED, HOWEVER, that holders of Convertible Class B Shares
shall have the right to one (1) vote per share on all matters for which holders
of shares of the Class A Common Stock shall have the right to vote.
SECTION 3. CONVERTIBILITY OF OUTSTANDING CLASS B SHARES
(a) IN GENERAL. The Eligible Class B Shares
as of a Year-End Testing Date shall automatically become Convertible Class B
Shares according to the Adjusted Funds from Operations Per Share and the Average
Market Values of a share of the Class A Common Stock for the periods indicated,
provided that (i) the "Annual Growth Target" requirement set forth below in this
Section 3(a) is satisfied, (ii) the "Compounded Cumulative Growth Target"
requirement set forth below in this Section 3(a) is satisfied AND (iii) the
"Market Value" requirement set forth in Section 3(b) of this Article is
satisfied; PROVIDED, HOWEVER, that, if in any calendar year an applicable Annual
Growth Target requirement is not satisfied, the Eligible Class B Shares becoming
Convertible Class B Shares in the following calendar year or years shall
include, as a carryforward from year to year, the Eligible Class B Shares
otherwise applicable to the first year provided that in the later year (which
need not immediately
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<PAGE>
follow the first year) the Annual Growth Target requirement, the Cumulative
Compounded Growth Target requirement and the Market Value requirement for such
later year are all satisfied:
YEAR-END TESTING COMPOUNDED CUMULATIVE
DATE ANNUAL GROWTH TARGET GROWTH TARGET
- ------------------- ------------------------- --------------------------
December 31, 1994 Adjusted Funds from Adjusted Funds from
Operations Per Share for Operations Per Share for
the period beginning on the period beginning on
the Initial Public the Initial Public
Offering and ending on Offering and ending on
the YearEnd Testing Date the YearEnd Testing Date
is at least $0.864 is at least $0.864
December 31, 1995 ANNUALIZED Adjusted Funds ANNUALIZED Adjusted Funds
from Operations Per Share from Operations Per Share
for the period beginning for the period beginning
on the Initial Public Of on the Initial Public Of
fering and ending on the fering and ending on the
YearEnd Testing Date is YearEnd Testing Date is
at least $2.161 at least $2.161
December 31, 1996 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for from Operations Per Share
the calendar year ending for the period beginning
on the YearEnd Testing on the Initial Public Of
Date is at least 108.5% fering and ending on the
of the Adjusted Funds YearEnd Testing Date is
from Operations Per Share at least $2.345
for the calendar year
ending on the previous
YearEnd Testing Date
December 31, 1997 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for from Operations Per Share
the calendar year ending for the period beginning
on the YearEnd Testing on the Initial Public Of
Date is at least 108.5% fering and ending on the
of the Adjusted Funds YearEnd Testing Date is
from Operations Per Share at least $2.544
for the calendar year
ending on the previous
YearEnd Testing Date
December 31, 1998 Adjusted Funds from ANNUALIZED Adjusted Funds
1998 Operations Per Share for from Operations Per Share
the calendar year ending for the period beginning
on the YearEnd Testing on the Initial Public Of
Date is at least 108.5% fering and ending on the
of the Adjusted Funds YearEnd Testing Date is
from Operations Per Share at least $2.760
for the calendar year
ending on the previous
YearEnd Testing Date
(b) MARKET VALUE REQUIREMENT. The Market
Value requirement shall be satisfied as to any Year-End Testing Date if the
Average Market Value of a share of the Class A Common Stock shall equal or
exceed the amount set forth in the following table for any 90 calendar day
period (whether or not a calendar quarter or an exact three-month period)
beginning on
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<PAGE>
any day (whether or not a Trading Day) on or after October 1 immediately
preceding the applicable Year-End Testing Date:
YEAR-END TESTING DATE AVERAGE MARKET PRICE
--------------------- --------------------
December 31, 1994 $19.030
December 31, 1995 $20.648
December 31, 1996 $22.403
December 31, 1997 $24.307
December 31, 1998 $26.373
By way of illustration, the Market Value requirement for the Year-End Testing
Date of December 31, 1996 would be satisfied if the Average Market Value of a
share of the Class A Common Stock equalled or exceeded $22.403 for (i) the
90-day period beginning on October 1, 1986 and ending on December 30, 1996, (ii)
the 90-day period beginning on April 17, 1997 and ending on July 16, 1997 OR
(iii) the 90-day period beginning on November 20, 1997 and ending on February
18, 1998.
(c) MODIFICATIONS TO ELIGIBILITY AND
CONVERTIBILITY SCHEDULES. Notwithstanding the provisions of Section 3(a) of
this Article, in or as to any calendar year the Corporation's Board of Directors
shall have the authority, upon consideration of factors and financial
performance criteria that it shall in its sole and absolute discretion consider
relevant, to declare a greater or lesser percentage of (i) Outstanding Class B
Shares as of a Year-End Testing Date to be Eligible Class B Shares and (ii)
Eligible Class B Shares to be Convertible Class B Shares; PROVIDED, HOWEVER,
that no such declaration shall decrease the number of Eligible Class B Shares or
Convertible Class B Shares held by any person without such person's consent.
SECTION 4. CONDITIONAL CONVERSION OF CLASS B COMMON STOCK
(a) CONVERSION OF CONVERTIBLE CLASS B
SHARES. Subject to Section 4(c) of this Article and to the limitations set
forth in Article IV, Section 3.4 of the Charter, upon becoming a Convertible
Class B Share, each Convertible Class B Share shall be converted automatically
into the number of shares of the Class A Common Stock that results from dividing
$18.50 by the Conversion Price in effect at the time of conversion (the
"CONVERSION PRICE"). Subject to the limitations set forth in Article IV,
Section 3.4 of the Charter, such conversion shall occur and be effective as of
the applicable Year-End Testing Date or, if later, the satisfaction of the
Market Price requirement set forth in Section 3(b) of this Article. The initial
Conversion Price shall be $18.50 per share and shall be subject to adjustment as
provided in Section 7 of this Article.
(b) CONVERSION UPON OCCURRENCE OF OTHER
EVENTS. Notwithstanding the foregoing provisions of this Section 4, but
nevertheless subject to the limitations set forth in Article IV, Section 3.4 of
the Charter:
(1) all Outstanding Class B Shares (whether or not Eligible Class B
Shares) that have not previously converted into shares of the Class A Common
Stock shall convert automatically upon any Change in Control of the Corporation,
(2) all Outstanding Class B Shares (whether or not Eligible Class B
Shares) held by an Initial Holder and any transferee of such Initial Holder
shall convert automatically into shares of the Class A
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<PAGE>
Common Stock on the date on which employment of such Initial Holder by an
Employer is terminated by the Employer (and not voluntarily by such Initial
Holder) for any reason other than Cause if following termination such Initial
Holder is no longer employed as an employee by any Employer, and
(3) the Board of Directors of the Corporation may, by resolution duly
adopted by the Board of Directors (and, if there shall be a duly constituted
compensation committee of the Board of Directors at the time, only with the
approval of the compensation committee), accelerate the conversion of
Outstanding Class B Shares (whether or not Eligible Class B Shares) into shares
of the Class A Common Stock at such time and in such amount as it may determine
to be appropriate from time to time.
The conversion of any Outstanding Class B Share pursuant to this Section 4(b)
shall be into the number of shares of the Class A Common Stock that results from
dividing $18.50 by the Conversion Price then in effect.
(c) IDENTIFICATION OF CLASS B COMMON STOCK
CONVERTED. Whenever shares of the Class B Common Stock are converted into
shares of the Class A Common Stock pursuant to Section 4(a), Section 4(b)(1) or
Section 4(b)(3) of this Article, the shares converted shall be allocated among
all the record holders of such shares of the Class B Common Stock in proportion
to their record ownership.
(d) DELAYED CONVERSION. If the conversion
of any shares of Class B Common Stock into shares of the Class A Common Stock
shall be limited or restricted by reason of the provisions of Article IV,
Section 3.4 of the Charter, such shares shall automatically be so converted at
such later time, if any, and to such extent as such limitations and restrictions
do not apply.
(e) NO FRACTIONAL SHARES. No fractional
shares of the Class A Common Stock shall be issued upon conversion of any shares
of the Class B Common Stock. Rather, the Corporation shall pay to the record
holder cash for such fractional shares at a rate equal to the Conversion Price
per share.
SECTION 5. MANDATORY REPURCHASE OR STOCKHOLDER PURCHASE OF OUTSTANDING
CLASS B SHARES
(a) REPURCHASE FOLLOWING THE FIFTH YEAR-END
TESTING DATE. Subject to the limitations set forth in Article IV, Section 3.4
of the Charter, each Outstanding Class B Share (whether or not an Eligible Class
B Share) that has not converted into shares of the Class A Common Stock in
respect of the Year-End Testing Date of December 31, 1998 shall be subject to
mandatory repurchase by the Corporation at a price of $.10 per Outstanding Class
B Share. Such mandatory repurchase shall close upon the determination, no
earlier than March 31, 2000, that such Outstanding Class B Share is not
convertible into shares of the Class A Common Stock pursuant to Section 3 of
this Article.
(b) INITIAL HOLDER PURCHASE UPON CERTAIN
TERMINATIONS OF EMPLOYMENT. Subject to the limitations set forth in Article IV,
Section 3.4 of the Charter, each Outstanding Class B Share (whether or not an
Eligible Class B Share), other than a Convertible Class B Share, held by the
Initial Holder of such Outstanding Class B Share, or by any holder who acquired
such Outstanding Class B Share directly or indirectly from such Initial Holder,
that has neither converted nor become convertible into shares of the Class A
Common Stock on or prior to either (i) the date of termination of employment of
such Initial Holder by an Employer for Cause or (ii) the date of such Initial
Holder's voluntary termination of employment with an Employer shall be subject
to mandatory purchase,
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at the time of such termination of employment, by the other Initial Holders that
are at that time employed by an Employer. The purchase price shall be $.10 per
Outstanding Class B Share. The purchase of such Outstanding Class B Shares
shall be made, by the Initial Holders that are at that time employed by an
Employer, proportionate to the following percentages:
INITIAL HOLDER PERCENTAGE
------------------ --------------
Terry Considine 68.33%
Peter K. Kompaniez 13.50%
Steven D. Ira 13.67%
Robert P. Lacy 4.50%
(c) REPURCHASE UPON CERTAIN TERMINATIONS OF
EMPLOYMENT FOLLOWING CONVERSION. Subject to the limitations set forth in
Article IV, Section 3.4 of the Charter, each share of the Class A Common Stock,
whether held by an Initial Holder or any other person who acquired such share of
the Class A Common Stock directly or indirectly from an Initial Holder, into
which an Outstanding Class B Share was originally converted pursuant to Section
4 of this Article shall be subject to mandatory repurchase by the Corporation,
at a price of $.10 per share of the Class A Common Stock, upon such Initial
Holder's termination of employment with an Employer, other than (i) by reason of
death, disability or a Change in Control or (ii) the involuntary termination of
employment of such Initial Holder by an Employer without Cause, within 12 months
following such conversion of an Outstanding Class B Share into such share of the
Class A Common Stock; PROVIDED, HOWEVER, that nothing in this Section 5(c) shall
be interpreted or applied to preclude the settlement of any transaction entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system.
(d) DELAYED REPURCHASE OR PURCHASE. If
either the limitations or restrictions of Article IV, Section 3.4 of the Charter
shall apply to (i) a mandatory repurchase under Section 5(a) or Section 5(c) of
this Article or (ii) a mandatory purchase by the Initial Holders under Section
5(b) of this Article, or if the Corporation cannot then lawfully effect a
repurchase of its shares, then the repurchase or purchase, as the case may be,
shall be deferred until, and then only to the extent that, such repurchase or
purchase can be lawfully effected within such limitations and restrictions.
(e) PROCEDURES UPON REPURCHASE OR PURCHASE.
Any repurchase of Outstanding Class B Shares as provided by Section 5(a) or
Section 5(c) of this Article shall be effected by delivery by the Corporation to
the record holder of such Outstanding Class B Shares of a certified or cashier's
check in the amount of the aggregate repurchase price. Upon such payment by the
Corporation in repurchase of Outstanding Class B Shares, the certificates
evidencing such repurchased Outstanding Class B Shares shall be cancelled. Any
purchase of Outstanding Class B Shares as provided by Section 5(b) of this
Article shall be effected by delivery by the Initial Holders then employed by an
Employer to the record holder of such Outstanding Class B Shares of a certified
or cashier's check in the amount of the aggregate purchase price.
(f) CHANGE IN CONTROL. The provisions of
Sections 5(a), 5(b) and 5(c) of this Article shall not apply following any
Change in Control.
SECTION 6. REDUCTION IN AUTHORIZED SHARES
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<PAGE>
The number of authorized shares of the Class B Common Stock shall be
reduced automatically by (a) the number of shares of the Class B Common Stock
converted into shares of the Class A Common Stock pursuant to Section 4 of this
Article and (b) the number of shares of the Class B Common Stock repurchased by
the Corporation pursuant to Section 5(a) or Section 5(c) of this Article.
SECTION 7. ADJUSTMENTS
The Conversion Price and the number of shares of the Class A Common Stock
issuable upon the conversion of each share of the Class B Common Stock shall be
subject to adjustment from time to time as provided in this Section 7.
(a) ADJUSTMENT UPON CERTAIN EVENTS. In case
that the Corporation shall at any time after the date of the Initial Public
Offering (i) pay a dividend in shares of the Class A Common Stock or make a
distribution in shares of the Class A Common Stock, (ii) subdivide the
outstanding shares of the Class A Common Stock, (iii) combine the outstanding
Class A Common Stock into a smaller number of shares of the Class A Common
Stock, or (iv) issue any shares of its capital stock or other securities by
reclassification of the Class A Common Stock, the Conversion Price in effect at
the time of the record date for such dividend or distribution or of the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that each holder of shares of the Class B Common
Stock converted after such time shall be entitled to receive the aggregate
number and kind of the Class A Common Stock or other securities of the
Corporation that, if such shares of the Class B Common Stock had been converted
immediately prior to such time, he would have owned upon such conversion and
been entitled to receive by virtue of such dividend, distribution, subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) ISSUANCE OF RIGHTS, OPTIONS OR WARRANTS.
If after the Initial Public Offering the Corporation issues any rights, options
or warrants to all holders of its Class A Common Stock entitling them for a
period expiring within 60 days after the record date mentioned below to purchase
shares of the Class A Common Stock (or securities convertible into or
exchangeable for shares of the Class A Common Stock) at a price per share less
than the current market price per share on that record date, the Conversion
Price shall be adjusted in accordance with the formula:
/ \
| N * P |
| O + ----- |
| M |
\ /
A = C * --------------
(O + N)
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common
Stock outstanding on the record date.
N equals the number of additional shares of the Class
A Common Stock offered or initially issuable
upon conversion or exchange of the
convertible or exchangeable securities
offered.
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<PAGE>
P equals the offering price or conversion price or
exchange price per share of the additional
shares.
M equals the current market price per share of the
Class A Common Stock on the record date.
The adjustment shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights, options or
warrants. If all of the shares of the Class A Common Stock or securities
convertible into or exchangeable for shares of the Class A Common Stock subject
to such rights, options or warrants have not been issued when such rights,
options or warrants expire, then the Conversion Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares of the Class A Common Stock actually issued upon the exercise
of such rights, options or warrants or initially issuable based upon the number
of convertible securities or exchangeable securities actually issued upon the
exercise of such rights or warrants.
(c) DISTRIBUTION OF ASSETS AND DEBT
SECURITIES. If after the Initial Public Offering the Corporation distributes to
all holders of its Class A Common Stock any of its assets or debt securities or
any rights or warrants to purchase debt securities, assets or other securities
of the Corporation (including shares of the Class A Common Stock), the
Conversion Price shall be adjusted in accordance with the formula:
/ \
| M - F |
A = C * | ----- |
| M |
\ /
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
M equals the current market price per share of the
Class A Common Stock on the date of issuance
of such additional shares.
S equals the number of shares outstanding immediately
after the issuance of such additional shares.
M equals the current market price per share of the
Class A Common Stock on the record date
mentioned below.
F equals the fair market value on the record date of
the assets, securities, rights or warrants
applicable to one share of the Class A Common
Stock. The Board of Directors shall
determine, in good faith, such fair market
value, which determination shall be
conclusive.
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<PAGE>
This Section 7(c) does not apply to any rights, options or warrants
referred to in Section 7(b) of this Article.
This Section 7(c) does not apply to cash dividends or cash distributions
paid in respect of the Class A Common Stock for any period if the cash dividends
or cash distributions paid in respect of the Class A Common Stock and OP Units
for that period, when added to the amount of all other cash dividends or cash
distributions paid in respect of the Class A Common Stock and OP Units for the
twelve (12) month period ending on the last day of such period, does not exceed
100% of Cash Available for Distribution for such twelve (12) month period.
"CASH AVAILABLE FOR DISTRIBUTION" shall mean "Funds from Operations" (as that
term is defined in the "Glossary" of the Prospectus but computed at the
Operating Partnership level) minus (i) the amount of any dividend on Preferred
Stock accrued during such twelve (12) month period, whether or not declared or
paid, and (ii) an annual reserve for capital replacements of $300 per apartment
unit for the weighted average number of apartment units owned by the Corporation
during such twelve (12) month period. By way of example, Cash Available for
Distribution for the twelve (12) month period ending June 15, 1995 as set forth
in the Prospectus is projected on a PRO FORMA basis to be $18,476,000.
(d) ISSUANCE OF DISCOUNTED SHARES. If after
the Initial Public Offering the Corporation issues shares of the Class A Common
Stock for a consideration per share less than the current market price per
share, on the date that the Corporation fixes the offering price of such
additional shares, the Conversion Price shall be adjusted in accordance with the
formula:
/ \
| P |
| O + --- |
| M |
\ /
A = C * --------------
S
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common
Stock outstanding immediately prior to the
issuance of such additional shares.
P equals the aggregate consideration received for the
issuance of such additional shares.
M equals the current market price per share of the
Class A Common Stock on the date of issuance
of such additional shares.
S equals the number of shares outstanding immediately
after the issuance of such additional shares.
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<PAGE>
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance.
This Section 7(d) does not apply to (i) any of the transactions described
in Section 7(b) or Section 7(c) of this Article, (ii) the conversion or exchange
of shares of the Class B Common Stock or other securities convertible into or
exchangeable for shares of the Class A Common Stock, (iii) shares of the Class A
Common Stock issued by the Corporation upon, and as consideration for, the
purchase of OP Units, (iv) shares of the Class A Common Stock issued to the
Corporation's employees (other than upon the exercise of options of the type
referred to in clause (v) below) under BONA FIDE employee benefit plans adopted
by the Board of Directors, if such Class A Common Stock would otherwise be
covered by this Section 7(d), (v) the Class A Common Stock issued upon the
exercise of options granted to employees at an exercise price equal to at least
85% of the fair market value of such Class A Common Stock at the time that such
options were granted, (vi) the Class A Common Stock issued to stockholders of
any Person that merges into the Corporation, or with a subsidiary of the
Corporation, in proportion to their stock holdings in such Person immediately
prior to such merger, upon such merger, (vii) the Class A Common Stock issued in
a BONA FIDE public offering pursuant to a firm commitment or best efforts
underwriting, or (viii) the Class A Common Stock issued in a BONA FIDE private
placement through a placement agent that is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any discount
from the current market price attributable to restrictions on transferability of
the Class A Common Stock, as determined in good faith by the Board of Directors,
shall exceed 10% of the then current market price).
(e) ISSUANCE OF CONVERTIBLE DISCOUNTED
SECURITIES. If after the Initial Public Offering the Corporation issues any
securities convertible into or exchangeable for shares of the Class A Common
Stock (other than securities issued in transactions described in Section 7(b) or
Section 7(c)) of this Article for a consideration per share of the Class A
Common Stock initially deliverable upon conversion or exchange of such
securities less than the current market price per share of the Class A Common
Stock on the date of issuance of such securities, the Conversion Price shall be
adjusted in accordance with the formula:
/ \
| P |
| O + --- |
| M |
\ /
A = C * --------------
(O + D)
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common
Stock outstanding immediately prior to the
issuance of such securities.
P equals the aggregate consideration received for the
issuance of such securities.
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<PAGE>
M equals the current market price per share of the
Class A Common Stock on the date of issuance
of such securities.
D equals the maximum number of shares deliverable upon
conversion or in exchange for such securities
at the initial conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance. If all of the Class
A Common Stock deliverable upon conversion or exchange of such securities have
not been issued when such securities are no longer outstanding, then the
Conversion Price shall promptly be readjusted to the conversion price that would
then be in effect had the adjustment upon the issuance of such securities been
made on the basis of the actual number of shares of the Class A Common Stock
issued upon conversion or exchange of such securities.
This Section 7(e) does not apply to (i) convertible securities issued to
stockholders of any Person that merges into the Corporation, or with a
subsidiary of the Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (ii) convertible
securities issued in a BONA FIDE public offering pursuant to a firm commitment
or best efforts underwriting, or (iii) convertible securities issued in a BONA
FIDE private placement through a placement agent that is a member firm of the
National Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of the Class A Common Stock issuable upon conversion, as
determined in good faith by the Board of Directors and described in a Board
resolution, shall exceed 20% of the then current market price).
(f) REORGANIZATIONS, MERGERS, CONSOLIDATIONS
OR SALES OF ASSETS. If at any time or from time to time there is a capital
reorganization of the Corporation (other than a recapitalization, subdivision,
combination, reclassification or exchange of shares provided for elsewhere in
this Section 7 or Section 4 of this Article) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any other person
then, each share of the Class B Common Stock then outstanding shall thereafter
be convertible into, in lieu of the Class A Common Stock issuable upon such
conversion prior to consummation of such reorganization, merger, consolidation
or sale, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such
reorganization, merger, consolidation or sale by a holder of that number of
shares of Class A Common Stock into which one share of the Class B Common Stock
was convertible immediately prior to such reorganization, merger, consolidation
or sale (including, on a PRO RATA basis, the cash, securities or property
received by holders of Class A Common Stock in any tender or exchange offer that
is a step in such transaction). In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section 7 and Section 4 of
this Article with respect to the rights of the holders of the shares of the
Class B Common Stock after the reorganization, merger, consolidation or sale to
the end that the provisions of this Section 7 (including adjustment of the
Conversion Price then in effect and the number of shares issuable upon
conversion of the shares of the Class B Common Stock) shall be applicable after
that event and be as nearly equivalent as may be practicable.
(g) COMPUTATION OF CONSIDERATION. For
purposes of any computation respecting consideration received pursuant to
Sections 7(d) and 7(e) of this Article, the following shall apply:
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<PAGE>
(1) in the case of the issuance of
shares of the Class A Common Stock for cash, the consideration shall
be the amount of such cash, provided that in no case shall any
deduction be made for any commissions, discounts or other expenses
incurred by the Corporation for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of
shares of the Class A Common Stock for a consideration in whole or in
part other than cash, the consideration other than cash shall be
deemed to be the fair market value thereof as determined in good faith
by the Board of Directors (irrespective of the accounting treatment
thereof), whose determination shall be conclusive, and described in a
Board resolution; and
(3) in the case of the issuance of
securities convertible into or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Corporation for the issuance of such
securities plus the additional minimum consideration if any, to be
received by the Corporation upon the conversion for exchange thereof
(the consideration in each case to be determined in the same manner as
provided in Sections 7(g)(1) and 7(g)(2) of this Article.
(h) COMPUTATION OF CURRENT MARKET PRICE.
For the purpose of any computation pursuant to Sections 7(b), 7(c), 7(d) and
7(e) of this Article, the current market price per share of the Class A Common
Stock on any date shall be deemed to be the average of the Closing Prices for 15
consecutive Trading Days commencing 30 Trading Days before that date. However,
if the Class A Common Stock is not publicly listed or publicly traded, current
market price shall mean the fair market value per share of Class A Common Stock,
as determined in good faith by the Board of Directors, based on the opinion of
an independent investment banking firm.
(i) EXCEPTIONS. No adjustment in the
Conversion Price need be made:
(1) unless the adjustment would require
an increase or decrease of at least 1% in the Conversion Price. Any
adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 7 shall be made to the nearest cent or to the nearest one
hundredth (1/100th) of a share, as the case may be. The Conversion
Price shall not be adjusted upward except in the event of a
combination of the outstanding shares of the Class A Common Stock into
a smaller number of shares of Common Stock or in the event of a
readjustment of the Conversion Price pursuant to Section 7(b) or
Section 7(e) of this Article;
(2) for a transaction referred to in
Section 7(a), Section 7(b), Section 7(c), Section 7(d) or Section 7(e)
of this Article if holders of the Class B Common Stock are to
participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of the Class A Common Stock
participate in the transaction;
(3) for rights to purchase shares of
the Class A Common Stock pursuant to a plan for reinvestment of
dividends or interest;
-31-
<PAGE>
(4) for a change in the par value or no
par value of the Class A Common Stock; or
(5) to the extent that the Class B
Common Stock becomes convertible into cash, as to such cash. Interest
will not accrue on any such cash.
(j) NOTICE. Whenever the Conversion Price
is adjusted or reduced, the Corporation shall promptly mail, at least 12 days
prior to the record date of the distribution triggering the adjustment or
reduction, to holders of the Class B Common Stock and file with the transfer
agent therefor a notice of the adjustment or reduction and, in the case of an
adjustment, file with the transfer agent for the Class B Common Stock an
officer's certificate briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence that the
adjustment is correct.
(k) RESERVATION OF STOCK ISSUABLE UPON
CONVERSION. The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of the Class A Common Stock, solely for
the purpose of effecting the conversion of the shares of the Class B Common
Stock, such number of its shares of the Class A Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding shares of the
Class B Common Stock; and if at any time the number of authorized but unissued
shares of the Class A Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Class B Common Stock, the
Corporation will take such corporate and other action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of the
Class A Common Stock to such number of shares as shall be sufficient for such
purpose.
(l) DISCRETIONARY ADJUSTMENTS. The Board of
Directors may (but shall not be required to) make such adjustments in the
Conversion Price, in addition to those required by this Section 7, as shall be
determined by the Board of Directors, as evidenced by a Board resolution, to be
advisable in order that any event that would otherwise be treated for federal
income tax purposes as a dividend of stock or stock rights will, to the extent
practicable, not be so treated or not be taxable to the recipients.
(m) AMBIGUITY. The Board of Directors may
interpret the provisions of this Section 7 to resolve any inconsistency or
ambiguity that may arise or be revealed in connection with the adjustment
procedures provided for herein, and if such inconsistency or ambiguity reflects
an inaccurate provision
-32-
<PAGE>
hereof, the Board of Directors may, in appropriate circumstances, authorize the
filing of additional articles supplementary or a certificate of designation.
SECTION 8. RESTRICTION ON ADDITIONAL ISSUANCES
Upon the filing of these Articles Supplementary, there shall be authorized
750,000 shares and issued and outstanding 650,000 shares of the Class B Common
Stock. No additional shares of the Class B Common Stock shall be issued without
the affirmative consent or vote of a majority of the Corporation's Board of
Directors other than employees of an Employer.
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has caused
these Articles Supplementary to be signed and acknowledged in its name and on
its behalf by its President and attested to by its Secretary on this 27th of
July, 1994. The President acknowledges these Articles Supplementary to be the
act of the Corporation and states that to the best of his knowledge, information
and belief, the matters and facts set forth herein with respect to authorization
and approval hereof are true in all material respects, subject to the penalties
for perjury.
ATTEST:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
/s/ Peter K. Kompaniez /s/ Terry Considine
- ------------------------------- --------------------------------
Peter K. Kompaniez Terry Considine
Secretary President
THE UNDERSIGNED, the President and Chief Executive Officer of Apartment
Investment and Management Company, who executed on behalf of the Corporation
Articles Supplementary of which this Certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/Terry Considine
--------------------------------
President
Attest: /s/ Peter Kompaniez
-----------------------
Peter Kompaniez
Secretary
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<PAGE>
OFFICER'S CERTIFICATION
I, Terry Considine, President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, hereby acknowledge the foregoing Articles of Amendment and Restatement
of Apartment Investment and Management Company to be the act of Apartment
Investment and Management Company, and to the best of my knowledge, information
and belief, these matters and facts are true in all material respects, and my
statement is made under penalties for perjury.
/s/Terry Considine
--------------------------------
Terry Considine
President
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
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<PAGE>
ARTICLES SUPPLEMENTARY
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the
"CORPORATION"), having its principal place of business within the State of
Maryland at 11 East Chase Street, Baltimore City, Maryland 21202, hereby
certifies to the Department of Assessments and Taxation of the State of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Article IV of the Charter of the Corporation, the Board of
Directors has duly divided and classified 966,000 shares of the Preferred Stock
of the Corporation into a class designated 1994 Cumulative Convertible Senior
Preferred Stock ("1994 SENIOR PREFERRED STOCK"), par value $.01 per share, and
has provided for the issuance of that class.
SECOND: The terms of the 1994 Senior Preferred Stock as set by the Board
of Directors are as follows:
1. RANKING. The shares of the 1994 Senior Preferred Stock shall rank
senior to the Corporation's Class A Common Stock, the Corporation's Class B
Common Stock, all other series and classes of Preferred Stock issued by the
Corporation, and all other capital stock of the Corporation with respect to the
payment of dividends and upon liquidation, dissolution, winding-up, redemption
or otherwise.
2. DIVIDENDS. The holders of the shares of the 1994 Senior Preferred
Stock shall be entitled to receive dividends thereon when and as declared by the
Board of Directors of this Corporation, out of funds legally available therefor
at the annual rate of $7.6035 per share. Dividends on the 1994 Senior Preferred
Stock shall be payable quarterly in the amount of $1.900875 per share on the
last day of September, December, March and June of each year commencing
September 30, 1994; PROVIDED, HOWEVER, that the quarterly dividend payable per
share with respect to the quarter ended September 30, 1994 shall be an amount
determined by multiplying $1.900875 by a fraction, the numerator of which shall
be the number of days in the period commencing on the day following the date of
issuance of the 1994 Senior Preferred Stock and ending on September 30, 1994 and
the denominator of which shall be ninety two (92). The period between the date
of issuance of the 1994 Senior Preferred Stock and September 30, 1994 and the
quarterly period between consecutive dates for payment of dividends shall
hereinafter be referred to as a "DIVIDEND PERIOD." The obligations of the
Corporation to pay dividends on the 1994 Senior Preferred Stock pursuant to the
provisions of this paragraph 2 shall accrue (whether or not declared) and be
cumulative from and including the date on which each such share is issued.
Dividends shall be payable to the holders of record as they shall appear on the
stock register of the Corporation on the 15th day of the calendar month
preceding the month in which a dividend is declared (the "RECORD DATE").
If the full amount required to be paid as aforesaid shall not have been
paid, whether or not earned or declared, or a sum sufficient for the payment
thereof set apart, all the dividends required to be so paid but not paid (the
"DEFICIENCY") shall earn and accrue interest, effective as of the first day of
the Dividend Period following the Dividend Period in which the dividend was to
be paid and continuing until the full amount of the Deficiency, plus all accrued
interest thereon, shall have been paid in full, at a per annum rate of 7.6%,
compounded quarterly. All payments of dividends made on the 1994 Senior
Preferred Stock shall be applied first to the reduction of all accrued but
unpaid interest on the Deficiency, second to the reduction of the Deficiency and
third to the payment of all accrued but unpaid dividends on the 1994 Senior
Preferred Stock other than the Deficiency. Reference to accrued or cumulative
dividends
<PAGE>
hereunder shall be deemed for all purposes to include all amounts of Deficiency
and all such accrued but unpaid interest thereon.
3. PRIORITY AS TO DIVIDENDS. No dividends or other distributions (other
than dividends or other distributions payable in Class A Common Stock or in
another stock ranking, with respect to the payment of dividends and upon
liquidation, dissolution, winding-up, redemption or otherwise, junior to the
1994 Senior Preferred Stock) shall be declared or paid or set apart for payment
on the Class A Common Stock, the Class B Common Stock, any other series or class
of Preferred Stock or capital stock of any other class which, in either case,
ranks, as to dividends and upon liquidation, dissolution, winding-up, redemption
or otherwise, junior to the 1994 Senior Preferred Stock ("JUNIOR STOCK") for any
period, unless at the time of such declaration or payment or setting apart for
payment (i) full cumulative dividends have been or simultaneously are declared
and paid (or declared and a sum sufficient for the payment thereof set apart for
such payment) on the 1994 Senior Preferred Stock on or prior to the date of
payment of such dividends on Junior Stock, (ii) an amount equal to the dividends
accrued on the 1994 Senior Preferred Stock as of the date of each proposed
distribution or payment on the Junior Stock has been declared and set apart in
cash for payment on the 1994 Senior Preferred Stock, and (iii) any redemption
payment required to be made pursuant to paragraphs 4, 5, 6 or 7 hereof on or
prior to the date of payment of such dividends on Junior Stock shall have been
paid or a sum sufficient for the payment thereof set apart for such payment.
4. MANDATORY REDEMPTION. On each of June 30, 2000, June 30, 2001 and
June 30, 2002, or if any such day is not a business day, the next succeeding
business day (each a "MANDATORY REDEMPTION DATE") the Corporation shall redeem
an aggregate of 322,000 shares (the "MINIMUM MANDATORY REDEMPTION") of the 1994
Senior Preferred Stock. The per share redemption price shall be $100 plus all
accrued and unpaid cumulative dividends thereon (whether or not declared) to the
date of such redemption; PROVIDED, HOWEVER, that if the redemption price is not
paid on such Mandatory Redemption Date, the unpaid redemption price shall bear
interest thereafter at a rate per annum equal to 9.6035%, until paid in full.
Any shares that are optionally redeemed by the Corporation pursuant to
paragraph 5 hereof prior to June 30, 2001 shall be counted first towards the
Minimum Mandatory Redemption required on June 30, 2001 and second towards the
Minimum Mandatory Redemption required on June 30, 2002 reducing share for share
the Minimum Mandatory Redemption required on each such date. Optional
redemptions done after June 30, 2001 shall be counted towards the Minimum
Mandatory Redemption required on June 30, 2002, reducing share for share the
Minimum Mandatory Redemption required on such date.
5. OPTIONAL REDEMPTIONS. The Corporation shall have the option at any
time on and after (but not before) June 30, 2000 to redeem any or all
outstanding shares of the 1994 Senior Preferred Stock, but only in increments of
1,000 shares, by payment of a redemption price per share of $100, plus all
accrued and unpaid cumulative dividends on the shares so redeemed (whether or
not declared) to the date of such redemption.
6. MANNER AND EFFECT OF REDEMPTIONS.
(a) Notice of any proposed redemption of shares of the 1994 Senior
Preferred Stock shall be given by the Corporation to each holder of the 1994
Senior Preferred Stock by mailing a copy of such notice in the case of a
redemption pursuant to paragraph 4 hereof not less than 30 nor more than 60 days
and, in the event of an optional redemption pursuant to paragraph 5 hereof, not
less than 90 nor more than 135 days prior to the date fixed for such redemption
to each holder of record of the outstanding shares of the 1994 Senior Preferred
Stock at their respective addresses appearing on the books
36
<PAGE>
of the Corporation. Said notice shall specify (i) the number of shares called
for redemption, (ii) the redemption price, (iii) the details of the calculations
used to determine the amount of and the accrued interest payable with respect of
such redemption, if any, and (iv) the place at which and the date on which the
shares called for redemption will, upon presentation and surrender of the
certificates of stock evidencing such shares, be redeemed. Notice of redemption
having been so given, the redemption price per the number of shares specified in
such notice, together with all accrued interest shall be due and payable on the
date fixed for such redemption.
(b) If the funds of the Corporation legally available for the
redemption of all shares of the 1994 Senior Preferred Stock to be redeemed
pursuant to paragraph 4 hereof are insufficient to redeem the total number of
outstanding shares of the 1994 Senior Preferred Stock required to be redeemed,
such funds will be used promptly, and redemptions pursuant to paragraph 4 shall
be made ratably among holders of such shares, and in any event, within 30 days
after sufficient funds become legally available, to redeem the balance of such
required to be redeemed, such funds as are then legally available shall be
applied to the redemption of such shares required to be redeemed and the payment
of interest accrued thereon in accordance herewith until all such shares have
been redeemed and all such accrued and unpaid interest has been paid.
(c) If less than all of the shares of the 1994 Senior Preferred Stock
are to be redeemed on a given date pursuant to the provisions hereof, the
Corporation shall redeem from each holder of 1994 Senior Preferred Stock that
number of whole shares of the 1994 Senior Preferred Stock then held by each
holder of shares of 1994 Senior Preferred Stock that bears the same proportion
to the total number of such shares to be redeemed as the total number of shares
of the 1994 Senior Preferred Stock then held by such holder bears to the total
number of shares of the 1994 Senior Preferred Stock then outstanding.
(d) Notwithstanding anything herein to the contrary, the Corporation
may not at any time redeem, other than pursuant to paragraph 10 hereof, less
than all of the 1994 Senior Preferred Stock outstanding unless all accrued and
unpaid dividends payable on or prior to the date of redemption shall have been
paid (or are paid concurrently with the redemption) on all then outstanding
shares of the 1994 Senior Preferred Stock.
(e) Dividends will cease to accrue on the shares of the 1994 Senior
Preferred Stock on the date fixed for their redemption (unless the Corporation
defaults on the payment of the redemption price). In addition, on and after the
redemption date, all rights of the holders of the shares of the 1994 Senior
Preferred Stock called for redemption shall terminate except the right to
receive the redemption price (unless the Corporation defaults on the payment of
the redemption price).
(f) All shares of the 1994 Senior Preferred Stock which shall have
been redeemed, purchased or otherwise acquired by the Corporation pursuant to
the provisions hereof, shall be cancelled and shall not be reissued as shares of
the 1994 Senior Preferred Stock, but shall have the status of authorized but
unissued shares of Preferred Stock of the Corporation.
7. CONVERSION RIGHTS. The holders of shares of the 1994 Senior Preferred
Stock shall have the following conversion rights (the "CONVERSION RIGHTS").
(A) RIGHT TO CONVERT. Each share of the 1994 Senior Preferred Stock
shall be convertible, at any time or from time to time, at the option of the
holder thereof, into fully paid and nonassessable shares of Class A Common
Stock, at the Conversion Rate in effect at the time of
37
<PAGE>
conversion; PROVIDED, HOWEVER, that the conversion rights provided herein are
limited absolutely and in their entirety by the restrictions on ownership and
transfer of Class A Common Stock as set forth as of the date of issuance of the
1994 Senior Preferred Stock in the Corporation's Charter; PROVIDED, FURTHER,
however, that the conversion rights provided herein expire as to those shares of
the 1994 Senior Preferred Stock to be redeemed pursuant to paragraphs 4 or 5
hereof, fifteen (15) calendar days prior to the applicable redemption date (but
are reinstated if the redemption does not occur).
(B) CONVERSION RATE; PAYMENT OF ACCRUED DIVIDENDS. Each share of the
1994 Senior Preferred Stock shall be convertible into that number of shares of
Class A Common Stock which results from dividing the Redemption Price by the
Conversion Price (as both terms are defined in paragraph 16) in effect at the
time of conversion (the "CONVERSION RATE"). If a holder of 1994 Senior
Preferred Stock shall, upon conversion thereof into Class A Common Stock
pursuant hereto, be entitled to receive an aggregate number of shares that shall
include a fractional share, the Company may elect, at its option, to round that
fractional share up or down to the nearest whole share. The Conversion Price
shall be subject to adjustment from time to time as provided below. Upon
conversion, the Corporation shall pay to the holder thereof, out of legally
available funds therefor, all accrued but unpaid cumulative dividends on the
shares of 1994 Senior Preferred Stock so converted (whether or not declared) to
the date of such conversion. If the funds of the Corporation legally available
for the payment of all such dividends on the 1994 Senior Preferred Stock to be
converted are insufficient to pay all such dividends so required, such funds
will be used promptly, and dividend payments shall be made ratably among such
holders of such shares of the 1994 Senior Preferred Stock and, in any event,
within 30 days after such funds become legally available, to pay the balance of
such dividends, or such portion thereof for which funds are then legally
available on the basis set forth above. All accrued but unpaid dividends on the
shares of 1994 Senior Preferred Stock so converted not paid upon conversion,
shall bear interest thereafter at a rate per annum equal to 9.6035%, until paid
in full.
(C) MECHANICS OF CONVERSION. Before any holder of shares of the 1994
Senior Preferred Stock shall be entitled to convert shares of the 1994 Senior
Preferred Stock into shares of Class A Common Stock, the holder shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the shares of the 1994 Senior Preferred
Stock or Class A Common Stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the shares of the 1994 Senior
Preferred Stock and shall state therein the number of shares of the 1994 Senior
Preferred Stock being converted. Thereupon, the Corporation shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Class A Common Stock to which such holder is
entitled. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of the 1994
Senior Preferred Stock to be converted, and the person entitled to receive the
shares of Class A Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder of such shares of Class A Common Stock on
such date.
(D) ADJUSTMENTS. The Conversion Price and the number of shares of
Class A Common Stock issuable upon the conversion of each share of 1994 Senior
Preferred Stock shall be subject to adjustment from time to time as provided
herein.
(i) ADJUSTMENT UPON DIVIDEND, DISTRIBUTION, SUBDIVISION,
COMBINATION OR RECLASSIFICATION. In case this Corporation shall at any time
after the date of the Initial Public Offering (i) pay a dividend in shares of
Class A Common Stock or make a distribution in shares of Class A Common Stock,
(ii) subdivide the outstanding shares of Class A Common Stock, (iii) combine the
outstanding Class A Common Stock into a smaller number of shares of Class A
Common Stock, or (iv)
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issue any shares of its capital stock or other securities by reclassification of
the Class A Common Stock, the Conversion Price in effect at the time of the
record date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that each holder of shares of 1994 Senior Preferred Stock converted after
such time shall be entitled to receive the aggregate number and kind of Class A
Common Stock or other securities of this Corporation which, if such shares of
1994 Senior Preferred Stock had been converted immediately prior to such time,
he would have owned upon such conversion and been entitled to receive by virtue
of such dividend, distribution, subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed above shall
occur.
(ii) ISSUANCE OF RIGHTS, OPTIONS AND WARRANTS. If after the
Initial Public Offering this Corporation issues any rights, options or warrants
to all holders of its Class A Common Stock entitling them for a period expiring
within 60 days after the record date mentioned below to purchase shares of Class
A Common Stock (or securities convertible into or exchangeable for shares of
Class A Common Stock) at a price per share less than the current market price
per share on that record date, the Conversion Price shall be adjusted in
accordance with the formula:
/ \
| N * P |
| O + ----- |
| M |
\ /
C' = C * --------------
(O + N)
where
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
O = the number of shares of Class A Common Stock outstanding on the
record date.
N = the number of additional shares of Class A Common Stock offered
or initially issuable upon conversion or exchange of the
convertible or exchangeable securities offered.
P = the offering price or conversion price or exchange price per
share of the additional shares.
M = the current market price per share of Class A Common Stock on the
record date. SEE paragraph 7(d)(vii).
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If all of the shares of Class A Common Stock or securities
convertible into or exchangeable for shares of Class A Common Stock subject to
such rights, options or warrants have not been issued when such rights, options
or warrants expire, then the Conversion Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares of Class A Common Stock actually issued upon the exercise of such rights,
options or warrants or initially issuable based upon the number of convertible
securities or exchangeable securities actually issued upon the exercise of such
rights or warrants.
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<PAGE>
(iii) DISTRIBUTION OF ASSETS AND DEBT SECURITIES. If after
the Initial Public Offering this Corporation distributes to all holders of its
Class A Common Stock any of its assets or debt securities or any rights or
warrants to purchase debt securities, assets or other securities of this
Corporation (including shares of Class A Common Stock), the Conversion Price
shall be adjusted in accordance with the formula:
/ \
| M - F |
C'= C * | ----- |
| M |
\ /
where
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
M = the current market price per share of Class A Common Stock on the
record date mentioned below. SEE paragraph 7(d)(vii).
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of Class A
Common Stock. The Board of Directors shall determine, in good
faith, such fair market value, which determination shall be
conclusive.
This subparagraph does not apply to any rights, options or warrants
referred to in paragraph 7(d)(ii).
This subparagraph does not apply to cash dividends or cash distributions
paid in respect of Class A Common Stock for any period if the cash dividends or
cash distributions paid in respect of Class A Common Stock and OP Units for that
period, when added to the amount of all other cash dividends or cash
distributions paid in respect of Class A Common Stock and OP Units for the
twelve (12) month period ending on the last day of such period, does not exceed
100% of Cash Available for Distribution for such twelve (12) month period.
"CASH AVAILABLE FOR DISTRIBUTION" shall mean "Funds from Operations" (as that
term is defined in the "Glossary" of the Prospectus but computed at the
Operating Partnership level) minus (i) the amount of the dividend on the 1994
Senior Preferred Stock accrued during such twelve (12) month period, whether or
not declared or paid, and (ii) an annual reserve for capital replacements of
$300 per apartment unit for the weighted average number of apartment units owned
by the Company during such twelve (12) month period. By way of example, Cash
Available for Distribution for the twelve (12) month period ending June 15, 1995
as set forth in the Prospectus is projected on a PRO FORMA basis to be
$18,476,000.
(iv) ISSUANCE OF DISCOUNTED SHARES. If after the Initial Public
Offering this Corporation issues shares of Class A Common Stock for a
consideration per share less than the current market price per share on the date
this Corporation fixes the offering price of such additional shares, the
Conversion Price shall be adjusted in accordance with the formula:
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<PAGE>
/ \
| P |
| O + --- |
| M |
\ /
C' = C * --------------
A
where
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
O = the number of shares of Class A Common Stock outstanding
immediately prior to the issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share of Class A Common Stock on the
date of issuance of such additional shares. SEE paragraph
7(d)(vii).
A = the number of shares outstanding immediately after the issuance
of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This paragraph does not apply to (i) any of the transactions described in
paragraphs 7(d)(ii) or 7(d)(iii), (ii) the conversion or exchange of Class B
Common Stock, 1994 Senior Preferred Stock, or other securities convertible into
or exchangeable for Class A Common Stock, (iii) Class A Common Stock issued by
this Corporation upon, and as consideration for, the purchase of OP Units, (iv)
Class A Common Stock issued to the Corporation's employees (other than upon the
exercise of options of the type referred to in clause (v) below) under BONA FIDE
employee benefit plans adopted by the Board of Directors, if such Class A Common
Stock would otherwise be covered by this subparagraph, (v) Class A Common Stock
issued upon the exercise of options granted to employees with an exercise price
equal to at least 85% of the fair market value of the Class A Common Stock at
the time that such options were granted, (vi) Class A Common Stock issued to
stockholders of any Person that merges into this Corporation, or with a
subsidiary of this Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (vii) Class A Common
Stock issued in a BONA FIDE public offering pursuant to a firm commitment or
best efforts underwriting, or (viii) Class A Common Stock issued in a BONA FIDE
private placement through a placement agent that is a member firm of the
National Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of the Class A Common Stock, as determined in good faith by the
Board of Directors, shall exceed 10% of the then current market price).
(v) ISSUANCE OF CONVERTIBLE DISCOUNTED SECURITIES. If after the
Initial Public Offering this Corporation issues any securities convertible into
or exchangeable for Class A Common Stock (other than securities issued in
transactions described in paragraphs 7(d)(ii) or 7(d)(iii)) for a consideration
per share of Class A Common Stock initially deliverable upon conversion or
exchange of such securities less than the current market price per share of
Class A Common Stock on the date of issuance of such securities, the Conversion
Price shall be adjusted in accordance with the formula:
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<PAGE>
/ \
| P |
| O + --- |
| M |
\ /
C' = C * --------------
(O + D)
where
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
O = the number of shares of Class A Common Stock outstanding
immediately prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share of Class A Common Stock on the
date of issuance of such securities. SEE paragraph 7(d)(vii).
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. If all of the
Class A Common Stock deliverable upon conversion or exchange of such securities
have not been issued when such securities are no longer outstanding, then the
Conversion Price shall promptly be readjusted to the conversion price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Class A Common Stock
issued upon conversion or exchange of such securities.
This subparagraph does not apply to (i) convertible securities issued to
stockholders of any Person which merges into this Corporation, or with a
subsidiary of this Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (ii) convertible
securities issued in a BONA FIDE public offering pursuant to a firm commitment
or best efforts underwriting, or (iii) convertible securities issued in a BONA
FIDE private placement through a placement agent which is a member firm of the
National Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of Class A Common Stock issuable upon conversion, as determined
in good faith by the Board of Directors and described in a Board resolution,
shall exceed 20% of the then current market price).
(vi) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time there is a capital reorganization
of the Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this paragraph
7) or a merger or consolidation of the Corporation with or into another
corporation, or the sale of all or substantially all of the Corporation's
properties and assets to any other person then, each share of the 1994 Senior
Preferred Stock then outstanding shall thereafter be convertible into, in lieu
of the Class A Common Stock issuable upon such conversion prior to consummation
of such reorganization, merger, consolidation or sale, the kind and amount of
shares of stock and other securities and property receivable (including cash)
upon the consummation of such reorganization, merger, consolidation or sale
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<PAGE>
by a holder of that number of shares of Class A Common Stock into which one
share of the 1994 Senior Preferred Stock was convertible immediately prior to
such reorganization, merger, consolidation or sale (including, on a PRO RATA
basis, the cash, securities or property received by holders of Class A Common
Stock in any tender or exchange offer that is a step in such transaction). In
any such case, appropriate adjustment shall be made in the application of the
provisions of this paragraph 7 with respect to the rights of the holders of the
shares of the 1994 Senior Preferred Stock after the reorganization, merger,
consolidation or sale to the end that the provisions of this paragraph 7
(including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the shares of the 1994 Senior Preferred
Stock) shall be applicable after that event and be as nearly equivalent as may
be practicable.
(vii) COMPUTATION OF CONSIDERATION. For purposes of any
computation respecting consideration received pursuant to paragraphs 7(d)(iv)
and 7(d)(v), the following shall apply:
(1) in the case of the issuance of shares of Class A Common
Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by this Corporation
for any underwriting of the issue or otherwise in connection
therewith;
(2) in the case of the issuance of shares of Class A Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors
(irrespective of the accounting treatment thereof), whose
determination shall be conclusive, and described in a Board
resolution; and
(3) in the case of the issuance of securities convertible
into or exchangeable for shares of Class A Common Stock, the aggregate
consideration received therefor shall be deemed to be the
consideration received by this Corporation for the issuance of such
securities plus the additional minimum consideration if any, to be
received by this Corporation upon the conversion for exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subparagraph).
(viii) COMPUTATION OF CURRENT MARKET PRICE. For the purpose
of any computation hereunder, the current market price per share of Class A
Common Stock on any date shall be deemed to be the average of the Closing Prices
for fifteen (15) consecutive Trading Days commencing thirty (30) Trading Days
before that date. However, if the Class A Common Stock is not publicly listed
or publicly traded, current market price shall mean the fair market value per
share of Class A Common Stock, as determined in good faith by the Board of
Directors, based on the opinion of an independent investment banking firm.
(ix) EXCEPTIONS.
(1) No adjustment in the Conversion Price need be made
unless the adjustment would require an increase or decrease of at least 1% in
the Conversion Price. Any adjustments which are not made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this paragraph 7 shall be made to the nearest cent or to the nearest
1/100th of a share, as the case may be. The Conversion Price shall not be
adjusted upward except in the
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<PAGE>
event of a combination of the outstanding shares of Class A Common Stock into a
smaller number of shares of Common Stock or in the event of a readjustment of
the Conversion Price pursuant to paragraphs 7(d)(ii) or 7(d)(v).
(2) No adjustment need be made for rights to purchase
Class A Common Stock pursuant to a plan for reinvestment of dividends or
interest.
(3) No adjustment need be made for a change in the par
value or no par value of the Class A Common Stock.
(x) NOTICE. Whenever the Conversion Price is adjusted or
reduced, the Corporation shall promptly mail, at least 12 days prior to the
record date of the distribution triggering the adjustment or reduction, to
holders of the 1994 Senior Preferred Stock and file with the transfer agent
therefor a notice of the adjustment or reduction and, in the case of an
adjustment, file with the transfer agent for the 1994 Senior Preferred Stock an
officer's certificate briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence that the
adjustment is correct.
(xi) FRACTIONAL SHARES. No fractional shares of Class A Common
Stock shall be issued upon conversion of the shares of the 1994 Senior Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to the product of such fraction
multiplied by the fair market value of one share of Class A Common Stock on the
date of conversion, as determined in good faith by the Board of Directors.
(xii) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Class A Common Stock, solely for the purpose of effecting
the conversion of the shares of the 1994 Senior Preferred Stock, such number of
its shares of Class A Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the 1994 Senior Preferred
Stock; and if at any time the number of authorized but unissued shares of Class
A Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the 1994 Senior Preferred Stock, the Corporation will take
such corporate and other action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Class A Common Stock
to such number of shares as shall be sufficient for such purpose.
(xii) DISCRETIONARY ADJUSTMENTS. The Board of Directors may
(but shall not be required to) make such adjustments in the Conversion Price, in
addition to those required hereunder, as shall be determined by the Board of
Directors, as evidenced by a Board resolution, to be advisable in order that any
event that would otherwise be treated for federal income tax purposes as a
dividend of stock or stock rights will, to the extent practicable, not be so
treated or not be taxable to the recipients.
(xiv) AMBIGUITY. The Board of Directors may interpret the
provisions of this paragraph to resolve any inconsistency or ambiguity which may
arise or be revealed in connection with the adjustment procedures provided for
herein, and if such inconsistency or ambiguity reflects an inaccurate provision
hereof, the Board of Directors may, in appropriate circumstances, authorize the
filing of additional articles supplementary or a certificate of designation.
8. RESTRICTIONS ON OWNERSHIP AND TRANSFER. The Beneficial Ownership and
Transfer of the 1994 Senior Preferred Stock shall be subject to the restrictions
set forth in this paragraph 8.
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<PAGE>
(a) RESTRICTIONS.
(i) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
paragraph 8(h), from and after the date of the Initial Public Offering, no
Person shall Beneficially Own shares of 1994 Senior Preferred Stock in excess of
the Preferred Stock Ownership Limit.
(ii) TRANSFERS IN EXCESS OF PREFERRED STOCK OWNERSHIP LIMIT.
Except as provided in paragraph 8(h), from and after the date of the Initial
Public Offering (and subject to paragraph 8(k)), any Transfer (whether or not
such Transfer is the result of transactions entered into through the facilities
of the New York Stock Exchange or other securities exchange or an automated
inter-dealer quotation system) that, if effective, would result in any Person
Beneficially Owning shares of 1994 Senior Preferred Stock in excess of the
Preferred Stock Ownership Limit shall be void AB INITIO as to the Transfer of
such shares of 1994 Senior Preferred Stock that would be otherwise Beneficially
Owned by such Person in excess of the Preferred Stock Ownership Limit, and the
intended transferee shall acquire no rights in such shares of 1994 Senior
Preferred Stock.
(iii) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the date of the Initial Public Offering, any Transfer that, if effective,
would result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code, or would otherwise result in the Corporation failing
to qualify as a REIT (including, without limitation, a Transfer or other event
that would result in the Corporation owning (directly or constructively) an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the Corporation from such tenant would cause the
Corporation to fail to satisfy any of the gross income requirements of Section
856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of 1994
Senior Preferred Stock that would cause the Corporation (i) to be "closely held"
within the meaning of Section 856(h) of the Code or (ii) otherwise fail to
qualify as a REIT, as the case may be, and the intended transferee shall acquire
no rights in such shares of 1994 Senior Preferred Stock.
(iv) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of
1994 Senior Preferred Stock that is null and void under subparagraph (i), (ii)
or (iii) because it would, if effective, result in (i) the ownership of 1994
Senior Preferred Stock in excess of the Preferred Stock Ownership Limit, (ii)
the Corporation being "closely held" within the meaning of Section 856(h) of the
Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not
adversely affect the validity of the Transfer of any other share of 1994 Senior
Preferred Stock in the same or any other related transaction.
(b) REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of paragraph 8(a) hereof or that a Person intends
to acquire or has attempted to acquire Beneficial Ownership of any shares of
1994 Senior Preferred Stock in violation of paragraph 8(a) hereof (whether or
not such violation is intended), the Board of Directors or a committee thereof
shall be empowered to take any action as it deems advisable to refuse to give
effect to or to prevent such Transfer or other event, including, but not limited
to, refusing to give effect to such Transfer or other event on the books of the
Corporation, causing the Corporation to redeem such shares at the then current
Market Price and upon such terms and conditions as may be specified by the Board
of Directors in its sole discretion (including, but not limited to, by means of
the issuance of long-term indebtedness for the purpose of such redemption),
demanding the repayment of any distributions received in respect of shares of
1994 Senior Preferred Stock acquired in violation of paragraph 8(a) hereof or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers
(or in the
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<PAGE>
case of events other than a Transfer, Beneficial Ownership) in violation of
paragraph 8(a), regardless of any action (or non-action) by the Board of
Directors of such committee, (a) shall be void AB INITIO or (b) shall
automatically result in the transfer described in paragraph 8(c) hereof;
PROVIDED, FURTHER, that the provisions of this paragraph 8(b) shall be subject
to the provisions of paragraph 8(k) hereof.
(c) TRANSFER IN TRUST.
(i) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this paragraph 8, at any time after the date of the
Initial Public Offering there is a purported Transfer (an "EXCESS TRANSFER")
(whether or not such Transfer is the result of transactions entered into through
the facilities of the New York Stock Exchange or other securities exchange or an
automated inter-dealer quotation system) or other change in the capital
structure of the Corporation (including, but not limited to, any redemption of
1994 Senior Preferred Stock, Class A Common Stock or Class B Common Stock) or
other event such that any Person would Beneficially Own shares of 1994 Senior
Preferred Stock in excess of the Preferred Stock Ownership Limit (in any such
event, the Person that would Beneficially Own shares of 1994 Senior Preferred
Stock in excess of the Preferred Stock Ownership Limit is referred to as a
"PROHIBITED TRANSFEREE"), then, except as otherwise provided in paragraph 8(h)
hereof, such shares of 1994 Senior Preferred Stock in excess of the Preferred
Stock Ownership Limit (rounded up to the nearest whole share) shall be
automatically transferred to a Trustee in his capacity as trustee of a Trust for
the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to
the Trustee shall be deemed to be effective as of the close of business on the
business day prior to the date of the Excess Transfer, change in capital
structure or other event giving rise to a potential violation of the Preferred
Stock Ownership Limit.
(ii) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(iii) STATUS OF SHARES HELD BY TRUSTEE. Shares of 1994
Senior Preferred Stock held by the Trustee shall be issued and outstanding
shares of capital stock of the Corporation. Except to the extent provided in
paragraph 8(c)(v) hereof, the Prohibited Transferee shall have no rights in the
1994 Senior Preferred Stock held by the Trustee, and the Prohibited Transferee
shall not benefit economically from ownership of any shares held in trust by the
Trustee, shall have no rights to dividends and shall not possess any rights to
vote or other rights attributable to the shares held in the Trust.
(iv) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of 1994 Senior
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of 1994 Senior Preferred
Stock have been transferred to the Trustee shall be repaid to the Corporation
upon demand, and any dividend or distribution declared but unpaid shall be
rescinded as void AB INITIO with respect to such shares of 1994 Senior Preferred
Stock. Any dividends or distributions so disgorged or rescinded shall be paid
over the Trustee and held in trust for the Charitable Beneficiary. Any vote
cast by a Prohibited Transferee prior to the discovery by the Corporation that
the shares of 1994 Senior Preferred Stock have been transferred to the Trustee
will be rescinded as AB INITIO and shall be recast in accordance with the
desires of the Trustee acting for the benefit of the Charitable Beneficiary.
The owner of the shares at the time of the Excess Transfer, change in capital
structure or other event giving rise to a potential violation of the Preferred
Stock Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of 1994 Senior Preferred Stock for the benefit of the
Charitable Beneficiary.
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<PAGE>
(V) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
transfer the shares held in the Trust to a person, designated by the Trustee,
whose ownership of the shares will not violate the Preferred Stock Ownership
Limit. If such a transfer is made, the interest of the Charitable Beneficiary
shall terminate and proceeds of the sale shall be payable to the Prohibited
Transferee and to the Charitable Beneficiary as provided in this paragraph
8(c)(v). The Prohibited Transferee shall receive the lesser of (1) the price
paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. If any of the transfer restrictions set
forth in this paragraph 8(c)(v) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the 1994 Senior Preferred Stock as to which such restrictions would,
by their terms, apply, and to hold such 1994 Senior Preferred Stock on behalf of
the Corporation.
(VI) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE.
Shares of 1994 Senior Preferred Stock transferred to the Trustee shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days after the
later of (i) the date of the Excess Transfer or other event resulting in a
transfer to the Trust and (ii) the date that the Board of Directors determines
in good faith that an Excess Transfer or other event occurred.
(VII) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of 1994 Senior
Preferred Stock held in the Trust would not violate the Preferred Stock
Ownership Limit in the hands of such Charitable Beneficiary and (ii) each
Charitable Beneficiary is an organization described in Sections 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
(D) NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of 1994 Senior Preferred Stock in violation of
paragraph 8(a), or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under paragraph 8(c), shall immediately give written
notice to the Corporation of such event and shall provide to the Corporation
such other information as the Corporation may request in order to determine the
effect, if any, of such Transfer or attempted Transfer or other event on the
Corporation's status as a REIT. Failure to give such notice shall not limit the
rights and remedies of the Board of Directors provided herein in any way.
(E) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date
of the Initial Public Offering certain record and Beneficial Owners and
transferees of shares of 1994 Senior Preferred Stock will be required to provide
certain information as set out below.
(I) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of 1994 Senior Preferred Stock shall, within 30 days after January 1 of
each year, give written notice to the Corporation stating the name and address
of such record or Beneficial Owner, the number of shares of 1994 Senior
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record or Beneficial Owner of 1994 Senior Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the 1994
Senior Preferred Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (a) comply with the provisions of the Code regarding
the qualification of the Corporation as a REIT under the Code and (b) ensure
compliance with the Preferred Stock Ownership Limit. Each shareholder of
record, including without limitation any Person that holds shares of 1994 Senior
Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps
to obtain the written notice described in this paragraph 8(e) from the
Beneficial Owner.
(II) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of 1994 Senior Preferred Stock and any
Person (including the shareholder of record) that is holding shares of 1994
Senior Preferred Stock for a Beneficial Owner, and any proposed transferee of
shares, shall provide such information as the Corporation, in its sole
discretion, may request in order to determine the Corporation's status as a
REIT, to comply with the requirements of any taxing authority or other
governmental agency, to determine any such compliance or to ensure compliance
with the Preferred Stock Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of 1994 Senior
Preferred Stock already Beneficially Owned by such shareholder or proposed
transferee and any related persons specified, which statement or affidavit shall
be in the form prescribed by the Corporation for that purpose.
(F) REMEDIES NOT LIMITED. Nothing contained in this paragraph 8
shall limit the authority of the Board of Directors to take such other action as
it deems necessary or advisable (subject to the provisions of paragraph 8(k)
hereof) (i) to protect the Corporation and the interests of its shareholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Preferred Stock Ownership Limit; PROVIDED, HOWEVER, that the
Board of Directors may not exercise such authority in a manner that interferes
with any ownership or transfer of the 1994 Senior Preferred Stock that is
expressly authorized pursuant to paragraph 8(h)(ii) hereof.
(G) AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of this paragraph 8, or in the case of an ambiguity in any
definition contained in paragraph 16 hereof, the Board of Directors shall have
the power to determine the application of the provisions of this paragraph 8
with respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
<PAGE>
(H) WAIVER OF PREFERRED STOCK OWNERSHIP LIMIT.
(I) IN GENERAL. The Board of Directors, upon receipt of a
ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Preferred Stock Ownership Limit to a Person subject to the
Preferred Stock Ownership Limit, if such person is not an individual for purpose
of Section 542(a) of the Code and is a corporation, partnership, estate or
trust. In connection with any such exemption, the Board of Directors may
require such representations and undertakings from such Person and may impose
such other conditions as the Board deems necessary, in its sole discretion, to
determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(II) OWNERSHIP AND TRANSFERS BY THE CMO TRUSTEE. The
Preferred Stock Ownership Limit shall not apply to the initial holding of the
1994 Senior Preferred Stock by the "CMO Trustee" (as that term is defined in the
"Glossary" to the Prospectus) for the benefit of "HF Funding Trust" (as that
term is defined in the "Glossary" to the Prospectus) or to any transfer or
assignment of all or any part of the legal or beneficial interest in the 1994
Senior Preferred Stock to the CMO Trustee, "FSA" (as that term is defined in the
"Glossary" to the Prospectus), any entity controlled by FSA, or any direct or
indirect creditor of HF Funding Trust (including without limitation any
reinsurer of any obligation of HF Funding Trust).
(I) LEGEND. Each certificate for 1994 Senior Preferred Stock shall
bear the following legend:
"The shares of 1994 Senior Preferred Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of 1994 Senior Preferred Stock in excess of
the Preferred Stock Ownership Limit with certain further restrictions
and exceptions set forth in the Articles Supplementary relating to the
1994 Senior Preferred Stock (the `Articles Supplementary'). Any
Person that attempts to Beneficially Own shares of 1994 Senior
Preferred Stock in excess of the Preferred Stock Ownership Limit must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Articles
Supplementary, as the same may be amended from time to time, a copy of
which, including the restrictions on transfer, will be sent without
charge to each shareholder that so requests. If the restrictions on
transfer are violated, the shares of 1994 Senior Preferred Stock
represented hereby will be either (a) void in accordance with the
Articles Supplementary or (b) automatically transferred to a Trustee
of a Trust for the benefit of one or more Charitable Beneficiaries."
(J) SEVERABILITY. If any provision of this paragraph 8 or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
(J) BOARD OF DIRECTORS DISCRETION. Anything in this paragraph 8 to
the contrary notwithstanding, the Board of Directors shall be entitled to take
or omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Preferred Stock
Ownership Limit in the event of a change in law.
(K) SETTLEMENT. Nothing in this paragraph 8 shall be interpreted to
preclude the settlement of any transaction entered into through the facilities
of the New York Stock Exchange or other securities exchange or an automated
inter-dealer quotation system.
9. RIGHT OF FIRST REFUSAL. No holder of shares of 1994 Senior Preferred
Stock shall transfer the shares (other than as contemplated by paragraph
8(h)(ii) hereof) unless the Corporation shall have been given prior written
notice of such proposed transfer and 60 days in which to acquire, or arrange for
another party designated by the Corporation to acquire, the 1994 Senior
Preferred Stock subject to the proposed transfer on the same terms as the
proposed transfer. No holder of shares of 1994 Senior Preferred Stock shall
transfer the shares to any person or entity if, as a result of the transfer to
such person or entity, the Corporation shall fail to qualify as a real estate
investment trust under Sections 856 through 860 (or any successor sections) of
the Code.
<PAGE>
10. VOTING RIGHTS.
(a) In addition to such other rights as may be required by law, the
holders of the issued and outstanding shares of 1994 Senior Preferred Stock
shall at all times have the right, voting together as a separate class at each
annual election of directors, to elect one director on the Board of Directors.
On all matters upon which holders of 1994 Senior Preferred Stock are entitled to
vote, or give their consent, each such holder shall be entitled to one (1) vote
for each share of 1994 Senior Preferred Stock held by such holder.
(b) The Corporation shall not, without the affirmative vote or
written consent of the holders of a majority of the shares of 1994 Senior
Preferred Stock at the time outstanding, voting separately as a class,
(i) amend, modify or supplement the Corporation's Charter in a manner which
would adversely affect the rights, preferences, privileges or powers of, or
limitations on, 1994 Senior Preferred Stock contained in the Corporation's
Charter, including without limitation these Articles Supplementary, or
(ii) issue or sell any capital stock of any series or class of capital stock
which ranks on a parity with, or senior to, the 1994 Senior Preferred Stock with
respect to redemption or the payment of dividends or upon liquidation,
dissolution, winding-up, redemption or otherwise, except the sale of the 1994
Senior Preferred Stock.
(c) Holders of issued and outstanding shares of 1994 Senior Preferred
Stock shall be entitled to the following additional voting rights (each a
"VOTING RIGHT") which shall vest upon the occurrence of the conditions set forth
below: (x) if and so long as dividends on 1994 Senior Preferred Stock for any
Dividend Period shall be in arrears and shall not have been fully paid or shall
not have been declared and a sum sufficient for the payment thereof set aside on
all shares of 1994 Senior Preferred Stock at the time outstanding, then the
holders of 1994 Senior Preferred Stock shall have, in addition to the other
voting rights set forth herein, the right (but not the obligation) voting
separately as a class, to elect one director on the Corporation's Board of
Directors in addition to the director referred to in paragraph 10(a); (y) if and
so long as the Corporation shall have failed to redeem the applicable Minimum
Mandatory Redemption on or before the Mandatory Redemption Dates, as set forth
in paragraph 4, then the holders of 1994 Senior Preferred Stock shall have, in
addition to the other voting rights set forth herein, the right (but not the
obligation) voting separately as a class, to elect a majority of the directors
on the Corporation's Board of Directors.
(i) Whenever such voting right shall have vested, such right
may be exercised initially either at a special meeting of the holders of 1994
Senior Preferred Stock, called as hereinafter provided, by written consent or at
any annual meeting of shareholders held for the purpose of electing directors,
and thereafter at such annual meetings or by the written consent of the holders
of 1994 Senior Preferred Stock pursuant to applicable provisions of Maryland
law.
<PAGE>
(ii) At any time when such voting rights shall have vested in
the holders of 1994 Senior Preferred Stock, and if such right shall not already
have been initially exercised, an officer of the Corporation shall, upon the
written request of any holder of record of 1994 Senior Preferred Stock then
outstanding, addressed to the Secretary of the Corporation, call a special
meeting of the holders of 1994 Senior Preferred Stock and of any other class or
classes of stock having voting power with respect thereto for the purpose of
electing directors. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of shareholders at the place for
holding annual meetings of shareholders of the Corporation or, if none, at a
place designated by the Secretary of the Corporation; PROVIDED, HOWEVER, that
the Secretary shall not be required to call any such special meeting in the case
of any request therefor received less than 90 days prior to the date fixed for
any annual meeting of shareholders of the Corporation, and if in such case such
special meeting is not called, the holders of 1994 Senior Preferred Stock shall
be entitled to exercise the special voting rights provided in this
subparagraph (c) at such annual meeting; PROVIDED, FURTHER, that nothing herein
shall be deemed to prohibit the holders of 1994 Senior Preferred Stock from
exercising their special voting rights by written consent at any time, including
without limitation, during the 90-day period immediately preceding any annual
meeting of shareholders of the Corporation, with the election of such director
by the holders of 1994 Senior Preferred Stock being effective as of the date of
such written consent. If such meeting shall not be called by the proper
officers of the Corporation within 10 days after the personal service of such
written request upon the Secretary of the Corporation, or within 10 days after
mailing the same within the United States, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of record of 10% or more of the shares of 1994 Senior Preferred Stock
then outstanding may designate in writing a holder of 1994 Senior Preferred
Stock to call such meeting at the expense of the Corporation, and such meeting
may be called by such person so designated upon the notice required for annual
meetings of shareholders and shall be held at the same place as is elsewhere
provided in this subparagraph (c)(iv). Any holder of 1994 Senior Preferred
Stock shall have access to the preferred stock books of the Corporation for the
purpose of causing a meeting of holders of 1994 Senior Preferred Stock to be
called pursuant to the provisions of this subparagraph (c).
(iii) At any meeting held for the purpose of electing directors
at which the holders of 1994 Senior Preferred Stock shall have the right to
elect directors as provided herein, the presence in person or by proxy of the
holders of 50% of the then outstanding shares of 1994 Senior Preferred Stock
shall be required and be sufficient to constitute a quorum of such class for the
election of directors by such class. At any such meeting or adjournment
thereof, (A) the absence of a quorum of the holders of 1994 Senior Preferred
Stock shall not prevent the election of directors other than those to be elected
by the holders of stock of such class and the absence of a quorum or quorums of
the holders of capital stock entitled to elect such other directors shall not
prevent the election of directors to be elected by the holders of 1994 Senior
Preferred Stock and (B) in the absence of a quorum of the holders of any class
of stock entitled to vote for the election of the director, a majority of the
holders present in person or by proxy of such class shall have the power to
adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
(iv) The rights of the holders of outstanding shares of 1994
Senior Preferred Stock granted by this subparagraph (c) may be exercised only
until all cumulative dividends in arrears on 1994 Senior Preferred Stock shall
have been paid in full or declared and funds sufficient theretofore set aside,
or until the Corporation has redeemed the Minimum Mandatory Redemption required
to have been redeemed at the last occurring Mandatory Redemption Date and
thereafter such rights of the holders of 1994 Senior Preferred Stock to elect
additional directors to the Board of Directors shall cease and the terms of the
persons so elected as additional directors shall cease and the holders of
outstanding shares of 1994 Preferred Stock shall cause those persons to resign
as directors, but subject always to the same provisions for the vesting of such
rights in the future pursuant to subparagraph (c).
11. PAYMENTS ON LIQUIDATION. In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, after payment or provision for payment of the debts and other
liabilities of the Corporation, the holders of shares of the 1994 Senior
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation, whether such assets are capital or surplus and whether or not any
dividends as such are declared, an amount per share of the 1994 Senior Preferred
Stock equal to the sum of $100 per share plus all accrued and unpaid cumulative
dividends thereon (whether or not declared or earned) to the date of such
distribution.
In the event of any liquidation, dissolution, or winding-up of the affairs
of the Corporation (whether voluntary or involuntary), payment shall be made to
the holders of the 1994 Senior Preferred Stock in the amounts provided herein,
before any payment shall be made or any assets distributed to the holders of any
Class A Common Stock or any other capital stock of the Corporation.
If upon the occurrence of any liquidation, dissolution or winding-up of the
affairs of the Corporation (whether voluntary or involuntary) the assets of the
Corporation available for distribution to the holders of the 1994 Senior
Preferred Stock shall be insufficient to pay the holders of the 1994 Senior
Preferred Stock the full amounts to which they shall be entitled, then the
entire assets of the Corporation available for distribution to the holders of
outstanding shares of the 1994 Senior Preferred Stock shall be distributed among
such holders ratably per share in proportion to the preferential amount per
share to which they are entitled.
<PAGE>
Written notice of any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the Corporation, stating a payment date and the
place where the distributive amounts shall be payable, shall be given by mail,
postage prepaid, not less than thirty (30) days prior to the payment date stated
therein, to the holders of record of the 1994 Senior Preferred Stock at their
respective addresses as the same shall appear on the books of the Corporation.
The voluntary sale, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of its property
or assets to, or a consolidation or merger of the Corporation with, one or more
Persons shall not be deemed to be a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this paragraph 11.
12. LIMITATION ON LEVERAGE.
(a) So long as any shares of 1994 Senior Preferred Stock shall be
outstanding, the Corporation shall not incur any indebtedness for borrowed funds
(including borrowings under existing lines of credit) unless (i) Cash Flow for
the twelve (12) calendar months ending on the last day of the month preceding
the month during which the indebtedness for borrowed funds is to be incurred,
and (ii) Cash Flow reasonably projected by the Corporation for the twelve (12)
calendar months commencing with the month during which the indebtedness for
borrowed funds is to be incurred, each equal or exceed 350% of the Pro Forma
Annual Interest Expense computed for the twelve (12) month period commencing
with the month during which the indebtedness for borrowed funds is to be
incurred, and 200% of the Pro Forma Annual Fixed Charges computed for the twelve
(12) month period commencing with the month during which the indebtedness for
borrowed funds is to be incurred.
(b) The Corporation shall calculate, as of the last day of each
calendar quarter, (i) Cash Flow ("HISTORICAL CASH FLOW") for the twelve (12)
calendar months ended on the last day of such calendar quarter, (ii) Cash Flow
reasonably projected ("PROJECTED CASH FLOW") for the twelve (12) months (the
"SUCCEEDING 12 MONTHS") commencing with the month following the last month of
such calendar quarter, (iii) Pro Forma Annual Interest Expense for the
Succeeding 12 Months, and (iv) Pro Forma Annual Fixed Charges for the Succeeding
12 Months. If either of the Historical Cash Flow or Projected Cash Flow does
not equal or exceed both 350% of the Pro Forma Annual Interest Expense for the
Succeeding 12 Months and 200% of the Pro Forma Annual Fixed Charges for the
Succeeding 12 Months, the Corporation shall thereafter use all available Cash
Flow, other than Cash Flow required to be distributed to shareholders to
maintain the status of the Corporation as a real estate investment trust under
Sections 856 through 860 (or any successor sections) of the Code, to reduce the
amount of the Corporation's indebtedness for borrowed money until such time as
Historical Cash Flow and Projected Cash Flow both equal or exceed the foregoing
amounts, as reflected in the computations under this subparagraph (b) made by
the Corporation hereunder as of the last day of a calendar quarter.
13. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by
law, the shares of 1994 Senior Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in these Articles Supplementary (as such Articles
Supplementary may be amended from time to time) and in the Corporation's
Charter. The share of 1994 Senior Preferred Stock shall have no preemptive or
subscription rights.
14. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
15. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Preferred Stock set forth in these Articles Supplementary (as such Articles
Supplementary may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule of law or public policy, all
other rights, preferences and limitations set forth in these Articles
Supplementary (as so amended) which can be given effect without the invalid,
unlawful or unenforceable, right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
16. DEFINITIONS. As used in these Articles Supplementary the terms
hereinafter set forth shall have the following meanings and the following
definitions shall be equally applicable to both the singular and plural forms of
such terms:
<PAGE>
(a) "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person,
ownership of shares of 1994 Senior Preferred Stock equal to the sum of (i) the
shares of 1994 Senior Preferred Stock directly owned by such Person, (ii) the
number of shares of 1994 Senior Preferred Stock indirectly owned by such Person
(if such Person is an "individual" as defined in Section 542(a)(2) of the Code)
taking into account the constructive ownership rules of Section 544 of the Code,
as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares
of 1994 Senior Preferred Stock that such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such
Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of
the Code. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY
OWNED" shall have the correlative meanings.
(b) "CASH AVAILABLE FOR DISTRIBUTION" shall have the meaning provided
in paragraph 7(d)(iii).
(c) "CASH FLOW" shall mean the Corporation's earnings before
interest, taxes, depreciation and amortization (each determined in accordance
with generally accepted accounting principles, consistently applied), less an
allowance for capital replacements for multifamily apartment projects
beneficially owned by the Corporation of $300 per apartment per year.
(d) "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of
the Trust as determined pursuant paragraph 8(c), each of which shall be an
organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
(e) "CLASS A COMMON STOCK" shall mean the Corporation's Class A
Common Stock, $.01 par value per share.
(f) "CLASS B COMMON STOCK" shall mean the Corporation's Class B
Common Stock, $.01 par value per share.
(g) "CLOSING PRICE" on any date shall mean the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Class A
Common Stock is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Class A Common Stock is listed or admitted to trading or, if the
Class A Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated quotations
system that may then be in use or, if the Class A Common Stock is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Class A Common
Stock selected by the Corporation's Board of Directors.
(h) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute thereto. Reference to any provision
of the Code shall mean such provision as in effect from time to time, as the
same may be amended, and any successor thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
(i) "CONVERSION PRICE" shall mean the price per share of Class A
Common Stock at which the 1994 Senior Preferred Stock is convertible into Class
A Common Stock, which initially shall be an amount equal to 137.5% of the "PRICE
TO PUBLIC" set forth on the cover page of the Prospectus, subject to subsequent
adjustment as provided in paragraph 7.
(j) "CONVERSION RATE" shall have the meaning provided in paragraph
7(b).
(k) "CONVERSION RIGHTS" shall have the meaning provided in paragraph
7.
(l) "CORPORATION'S CHARTER" shall mean the Articles of Amendment and
Restatement and all other organizational documents of the Corporation.
(m) "DEFICIENCY" shall have the meaning provided in paragraph 2.
(n) "DIVIDEND PERIOD" shall have the meaning provided in paragraph 2.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
<PAGE>
(p) "EXCESS TRANSFER" shall have the meaning provided in paragraph
8(c)(i).
(q) "HISTORICAL CASH FLOW" shall have the meaning provided in
paragraph 12(b).
(r) "INITIAL PUBLIC OFFERING" shall mean the first completed
underwritten public offering of Class A Common Stock registered under the
Securities Act of 1933, as amended, on a registration statement on Form S-11
filed with the Securities and Exchange Commission.
(s) "JUNIOR STOCK" shall have the meaning provided in paragraph 3.
(t) "MANDATORY REDEMPTION DATE" shall have the meaning provided in
paragraph 4.
(u) "MARKET PRICE" on any date shall mean the Closing Price on the
Trading Day immediately preceding such date.
(v) "MINIMUM MANDATORY REDEMPTION" shall have the meaning provided in
paragraph 4.
(w) "OP UNITS" shall mean units of limited partnership interest in
the Operating Partnership.
(x) "OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a
Delaware limited partnership in which the Corporation holds a general
partnership interest.
(y) "OUTSTANDING" shall mean issued and outstanding shares of 1994
Senior Preferred Stock of the Corporation, PROVIDED that for purposes of the
application of the Preferred Stock Ownership Limit to any Person, the term
"OUTSTANDING" shall be deemed to include the number of shares of 1994 Senior
Preferred Stock that such Person alone, at that time, could acquire pursuant to
any options or convertible securities.
(z) "PERSON" shall mean (A) an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c) of the
Code), association, private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity, and (B) also includes a group as
that term is used for purposes of Section 13(d)(3) of the Exchange Act.
(aa) "PREFERRED STOCK OWNERSHIP LIMIT" shall mean 9.8% of the number
of the Outstanding shares of 1994 Senior Preferred Stock of the Corporation.
(bb) "PRO FORMA ANNUAL FIXED CHANGES" shall mean the sum of (i) Pro
Forma Annual Interest Expense, and (ii) the aggregate dividends required to be
paid on the 1994 Senior Preferred Stock and all other series of the
Corporation's Preferred Stock outstanding during the twelve (12) month period
for which the Pro Forma Annual Fixed Charges are to be determined.
(cc) "PRO FORMA ANNUAL INTEREST EXPENSE" shall mean the interest that
would be due on the Corporation's actual and projected indebtedness (including
the debt to be incurred) for borrowed money for the twelve (12) month period for
which the calculation is made, calculated using the following rates of interest:
(i) For any fixed-rate indebtedness maturing subsequent to
December 31, 2002, a rate equal to the highest annual rate of interest
specified in the instrument evidencing the indebtedness at which interest
accrued during the twelve (12) month period preceding the commencement of
the period for which the calculation is made, or will accrue at any time
subsequent to the commencement of the period for which the calculation is
made, and
(ii) For all indebtedness for borrowed money other than
indebtedness described in the preceding subparagraph (i), an annual rate
equal to the greater of (aa) ten percent (10%), or (bb) two percent (2%) in
excess of the one-year U.S. Treasury Bill rate in effect on the date of
commencement of the period for which the calculation is made.
(dd) "PROHIBITED TRANSFEREE" shall have the meaning provided in
paragraph 8(c)(i).
(ee) "PROJECTED CASH FLOW" shall have the meaning provided in
paragraph 12(b).
(ff) "PROSPECTUS" shall mean the prospectus which forms a part of the
registration statement filed with the Securities and Exchange Commission in
connection with the Initial Public Offering, in the form included in the
registration statement at the time the registration statement becomes effective;
PROVIDED, HOWEVER, if the prospectus is subsequently supplemented or amended for
use in connection with the Initial Public Offering, the term "PROSPECTUS" shall
mean the prospectus as so supplemented or amended.
(gg) "RECORD DATE" shall have the meaning provided in paragraph 2.
(hh) "REDEMPTION PRICE" shall mean $100 per share of the 1994 Senior
Preferred Stock, the price per share at which the 1994 Senior Preferred Stock
can be redeemed.
(ii) "REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
(jj) "SUCCEEDING 12 MONTHS" shall have the meaning provided in
paragraph 12(b).
(kk) "TRADING DAY" shall mean a day on which the principal national
securities exchange on which the 1994 Senior Preferred Stock or Class A Common
Stock, as the case may be, is listed or admitted to trading is open for the
transaction of business or, if the 1994 Senior Preferred Stock or Class A Common
Stock is not listed or admitted to trading on any national securities exchange,
Trading Day shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(ll) "TRANSFER" shall mean any sale, transfer, gift, assignment,
devise or other disposition of a share of 1994 Senior Preferred Stock (including
(i) the granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of 1994 Senior Preferred
Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for 1994 Senior Preferred
Stock), whether voluntary or involuntary, whether of record or Beneficial
Ownership, and whether by operation of law or otherwise (including, but not
limited to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of 1994 Senior Preferred Stock).
The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings.
<PAGE>
(mm) "TRUST" shall mean the trust created pursuant to paragraph 8(c).
(nn) "TRUSTEE" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the Corporation to
serve as trustee of the Trust.
(oo) "VOTING RIGHT" shall have the meaning provided in paragraph
10(c).
IN WITNESS WHEREOF, Apartment Investment and Management Company has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary this 27th day of July, 1994.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By: /s/ Terry Considine
---------------------------------------------
President and Chief Executive Officer
Witness: /s/ Peter Kompaniez
---------------------------------------------
Secretary
THE UNDERSIGNED, the President and Chief Executive Officer of Apartment
Investment and Management Company, who executed on behalf of the Corporation
Articles Supplementary of which this Certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Terry Considine
--------------------------------
President
<PAGE>
ARTICLES OF AMENDMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Apartment Investment and Management Company, a Maryland corporation, having
its principal office within the State of Maryland at 11 East Chase Street,
Baltimore, Maryland 21202 (hereinafter referred to as the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation desires to and does hereby amend its Charter as
currently in effect, consisting of Articles of Amendment and Restatement filed
on July 15, 1994 with the State Department of Assessments and Taxation of the
State of Maryland, as hereinafter provided.
SECOND: The Charter of the Corporation is hereby amended as follows:
SECTION 1. REFERENCES TO CLASS A COMMON STOCK. The references to
"Class A Common Stock" found in Sections 3.1, 3.2, 3.3, 3.4, 3.4.1(A), 3.4.1(B),
3.4.1(C), 3.4.1(D), 3.4.1(E), 3.4.1(F), 3.4.3(A), 3.4.3(C), 3.4.3(D), 3.4.3(E),
3.4.3(F), 3.4.3(G), 3.4.4, 3.4.5, 3.4.5(A), 3.4.5(B), 3.4.8(A), 3.4.8(B),
3.4.8(C) and 3.4.9 of Article IV of the Charter are amended, each place they
appear, to be references to "Common Stock."
SECTION 2. AMENDMENT TO ARTICLE IV, SECTION 3.4.1(G). Section
3.4.1(G) of Article IV of the Charter is amended to read in full as follows:
(G) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a
share of Common Stock that is null and void under Sections 3.4.1(B),
(C), (D), (E) or (F) of this Article IV because it would, if
effective, result in (i) the ownership of Common Stock in excess of
the Initial Holder Limit, the Ownership Limit, or the Look-Through
Ownership Limit, (ii) the Common Stock being Beneficially Owned by
less than 100 Persons (determined without reference to any rules of
attribution), (iii) the Corporation being "closely held" within the
meaning of Section 856(h) of the Code or (iv) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the
validity of the Transfer of any other share of Common Stock in the
same or any other related transaction.
<PAGE>
SECTION 3. AMENDMENT TO ARTICLE IV, SECTION 3.4.2. Section 3.4.2 of
Article IV of the Charter is amended to read in full as follows:
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place in violation of Section 3.4.1
of this Article IV or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership of any shares of Common
Stock in violation of Section 3.4.1 of this Article IV (whether or not
such violation is intended), the Board of Directors or a committee
thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such
Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then current Market Price and
upon such terms and conditions as may be specified by the Board of
Directors in its sole discretion (including, but not limited to, by
means of the issuance of long-term indebtedness for the purpose of
such redemption), demanding the repayment of any distributions
received in respect of shares of Common Stock acquired in violation of
Section 3.4.1 of this Article IV or instituting proceedings to enjoin
such Transfer or to rescind such Transfer or attempted Transfer;
PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 3.4.1 of this Article IV, regardless of any
action (or non-action) by the Board of Directors of such committee,
(a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 3.4.3 of this Article IV; PROVIDED,
FURTHER, that the provisions of this Section 3.4.2 shall be subject to
the provisions of Section 3.4.12 of this Article IV.
SECTION 4. AMENDMENT TO ARTICLE IV, SECTION 3.4.8. The following
paragraph is added to Section 3.4.8 of Article IV of the Charter:
(D) OWNERSHIP AND TRANSFERS BY THE CMO TRUSTEE. The
Ownership Limit shall not apply to the initial holding of Common Stock
by the "CMO Trustee" (as that term is defined in the "Glossary" to the
Prospectus) for the benefit of "HF Funding Trust" (as that term is
defined in the "Glossary" to the Prospectus) or to any transfer or
assignment of all or any part of the legal or beneficial interest in
the Common Stock to the CMO Trustee, "FSA" (as that term is defined in
the "Glossary" to the Prospectus), any entity controlled by FSA, or
any direct or indirect creditor of HF Funding Trust (including without
limitation any reinsurer of any obligation of HF Funding Trust).
SECTION 5. AMENDMENT TO ARTICLE IV, SECTION 4. The following Section
4.23 is added to Article IV of the Charter:
4.23 PROSPECTUS. The term "PROSPECTUS" shall mean the
prospectus that forms a part of the registration statement filed with
the Securities and Exchange Commission in connection with the Initial
Public Offering, in the form included in the registration statement at
the time the registration statement becomes effective; PROVIDED,
HOWEVER, that, if such prospectus is subsequently supplemented or
amended for use in
2
<PAGE>
connection with the Initial Public Offering, "PROSPECTUS" shall refer to
such prospectus as so supplemented or amended.
* * * * * *
THIRD: The Board of Directors of the Corporation by a unanimous
consent in writing in lieu of a meeting under Section 2-408 of the Maryland
General Corporation Law, dated as of July ___, 1994, adopted a resolution that
set forth the foregoing amendment to the Articles of Amendment and Restatement
declaring that the said amendment to the Articles of Amendment and Restatement
was advisable and directing that it be submitted for action thereon by the
shareholders by a unanimous consent in writing in lieu of a meeting under
Section 2-505 of the Maryland General Corporation Law.
FOURTH: Notice of a meeting of shareholders to take action on the
Articles of Incorporation was waived by all shareholders of the Corporation.
FIFTH: The Articles of Amendment and Restatement of the Corporation
as hereinabove set forth was approved by the unanimous consent in writing of the
shareholders of the Corporation on July 15, 1994.
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused these presents to be signed in its name and on its behalf by its
President and attested by its Secretary on July 15, 1994.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By: /s/ TERRY CONSIDINE
----------------------------------------
Terry Considine
President
Attest:
/s/ PETER KOMPANIEZ
- -------------------------------
Peter Kompaniez
Secretary
3
<PAGE>
OFFICER'S CERTIFICATION
I, Terry Considine, President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, hereby acknowledge the foregoing Articles of Amendment of Apartment
Investment and Management Company to be the act of Apartment Investment and
Management Company, and to the best of my knowledge, information and belief,
these matters and facts are true in all material respects, and my statement
is made under penalties for perjury.
/s/ TERRY CONSIDINE
----------------------------------
Terry Considine
President
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY
4
<PAGE>
ARTICLES OF AMENDMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Apartment Investment and Management Company, a Maryland corporation, having
as principle office within the State of Maryland at 11 East Chase Street,
Baltimore City, Maryland 21202 (hereinafter referred to as the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Corporation desires to and does hereby amend its Charter as
current in effect, consisting of Articles of Amendment and Restatement filed on
July 15, 1994 with the State Department of Assessments and Taxation of the State
of Maryland (the "DEPARTMENT") two Articles of Amendment and one Articles
Supplementary filed with the Department on July 28, 1994 (together, the
"CHARTER"), as hereinafter provided.
SECOND: The Board of Directors of the Corporation by a unanimous consent
in writing in lieu of a meeting under Section 2-408 of the Maryland General
Corporation Law, dated as of July 28, 1994, adopted a resolution that set forth
this amendment to the Articles of Amendment and Restatement declaring that this
amendment to the Articles of Amendment and Restatement was advisable and
directing that it be submitted for action thereon by the shareholders by a
unanimous consent in writing in lieu of a meeting under Section 2.505 of the
Maryland General Corporation Law. Notice of a meeting of shareholders to take
action on the Articles of Amendment was waived by all shareholders of the
Corporation. The Articles of Amendment of the Corporation as herein set forth
was approved by the unanimous consent in writing of the shareholders of the
Corporation on July 28, 1994.
THIRD: The Charter of the Corporation is hereby amended by amending and
restating in their entirety the terms of the 1994 Cumulative Convertible Senior
Preferred Stock ("1994 SENIOR PREFERRED STOCK"), par value $.01 per share, as
set forth in the Articles Supplementary filed July 28, 1994, to read as follows:
1. Ranking. The shares of the 1994 Senior Preferred Stock shall rank
senior to the Corporation's Class A Common Stock, the Corporation's Class B
Common Stock, and all other series and classes of Preferred Stock issued by the
Corporation, and all other capital stock of the Corporation with respect to the
payment of dividends and upon liquidation, dissolution, winding-up, redemption
or otherwise.
2. Dividends. The holders of the Shares of the 1994 Senior Preferred
Stock shall be entitled to receive dividends thereon when and as declared by the
Board of Directors of this Corporation, out of funds legally available therefor
at the annual rate of $7.6035 per share. Dividends on the 1994 Senior Preferred
Stock shall be payable quarterly in the amount of $l.900875 per share on the
last day of September, December, March and June of each year commencing
September 30, 1994, PROVIDED, HOWEVER, that the quarterly dividend payable per
share with respect to the quarter ended September 30, 1994 shall be $1.322350
per share. The period between the date of issuance of the 1994 Senior Preferred
Stock and September 30, 1994 and the quarterly period between consecutive dates
for payment of dividends shall hereinafter be referred to as a "DIVIDEND
PERIOD." The obligations of the Corporation to pay dividends on the 1994 Senior
Preferred Stock pursuant to the provisions of this paragraph 2 shall accrue
(whether or not declared) and be cumulative from and including the date on which
each such share is issued. Dividends shall be payable to the holders of record
as they shall appear on the stock register of the Corporation on the 15th day of
the calendar month preceding the month in which a dividend is declared (the
"RECORD DATE").
<PAGE>
If the full amount required to be paid as aforesaid shall not have been
paid, whether or not earned or declared, or a sum sufficient for the payment
thereof set apart, all the dividends required to be so paid but not paid (the
"DEFICIENCY") shall earn and accrue interest, effective as of the first day of
the Dividend Period following the Dividend Period in which the dividend was to
be paid and continuing until the full amount of the Deficiency, plus all accrued
interest thereon, shall have been paid in full, at a per annum rate of 7.6035%,
compounded quarterly. All payments of dividends made on the 1994 Senior
Preferred Stock shall be applied first to the reduction of all accrued but
unpaid interest on the Deficiency, second to the reduction of the Deficiency and
third to the payment of all accrued but unpaid dividends on the 1994 Senior
Preferred Stock other than the Deficiency. Reference to accrued or cumulative
dividends hereunder shall be deemed for all purposes to include all amounts of
Deficiency and all such accrued but unpaid interest thereon.
3. Priority as to Dividends. No dividends or other distributions (other
than dividends or other distributions payable in Class A Common Stock or in
another stock ranking, with respect to the payment of dividends and upon
liquidation, winding-up, redemption or otherwise, junior to the 1994 Senior
Preferred Stock) shall be declared or paid or set apart for payment on the Class
A Common Stock, the Class B Common Stock, any other series or class of Preferred
Stock or capital stock of any other class which, in either case, ranks, as to
dividends and upon liquidation, dissolution, winding-up, redemption or
otherwise, junior to the 1994 Senior Preferred Stock ("JUNIOR STOCK") for any
period, unless at the time of such declaration or payment or setting apart for
payment (i) full cumulative dividends have been or simultaneously are declared
and paid (or declared and a sum sufficient for the payment thereof set apart for
such payment on the 1994 Senior Preferred Stock on or prior to the date of
payment of such dividends on Junior Stock, (ii) an amount equal to the dividends
accrued on the 1994 Senior Preferred Stock as of the date of each proposed
distribution or payment on the Junior Stock has been declared and set apart in
cash for payment on the 1994 Senior Preferred stock, and (iii) any redemption
payment required to be made pursuant to paragraphs 4, 5 6 or 7 hereof on or
prior to the date of payment of such dividends on Junior Stock shall have been
paid or a sum sufficient for the payment thereof set apart for such payment.
4. Mandatory Redemption. On each of June 30, 2000, June 30, 2001 and
June 30, 2002, or if any such day is not a business day, the next succeeding
business day (each a "MANDATORY REDEMPTION DATE") the Corporation shall redeem
an aggregate of 322,000 shares (the "MINIMUM MANDATORY REDEMPTION") of the 1994
Senior Preferred Stock, The per share redemption price shall be $100 plus all
accrued and unpaid cumulative dividends thereon (whether or not declared) to the
date of such redemption; PROVIDED, HOWEVER, that if the redemption price is not
paid on such Mandatory Redemption Date, the unpaid redemption price shall bear
Interest thereafter at a rate per annum equal to 9.6035%, until paid in full.
Any shares that are optionally redeemed by the Corporation pursuant to paragraph
5 hereof prior to June 30, 2001 shall be counted first towards the Minimum
Mandatory Redemption required on June 30, 2001 and second towards the Minimum
Mandatory Redemption required on June 30, 2002 reducing share for share the
Minimum Mandatory Redemption required on each such date. Optional redemptions
done after June 30, 2001 shall be counted towards the Minimum Mandatory
redemption Required on June 30, 2002, reducing share for share the Minimum
Mandatory Redemption required on such date.
5. Optional Redemptions. The Corporation shall have the option at any
time on and after (but not before) June 30, 2000 to redeem any or all
outstanding shares of the 1994 Senior Preferred Stock, but only in increments of
1,000 shares, by payment of a redemption price per share of $100, plus all
accrued and unpaid cumulative dividends on the shares so redeemed (whether or
not declared) to the date of such redemption.
6. Manner and Effect of Redemptions.
(a) Notice of any proposed redemption of shares of the 1994 Senior
Preferred Stock shall be given by the Corporation to each holder of the 1994
Senior Preferred Stock by mailing a copy of such notice in the case of a
redemption pursuant to paragraph 4 hereof not less than 30 nor more than 60 days
and, in the event of an optional redemption pursuant to paragraph 5 hereof, not
less than 90 nor more than 135 days prior to the date fixed for such redemption
to each holder of record of the outstanding shares of the 1994 Senior Preferred
Stock at their respective addresses appearing on the books of the Corporation.
Said notice shall specify (i) the number of shares called for redemption, (ii)
the redemption price, (iii) the details of the calculations used to determine
the amount of and the accrued interest payable with respect of such redemption,
if any, and (iv) the place at which and the date on which the shares called for
redemption will, upon presentation and surrender of the certificates of stock
evidencing such shares, be redeemed. Notice of redemption having been so given,
the redemption price per the number of shares specified in such notice, together
with all accrued interest shall be due and payable on the date fixed for such
redemption.
<PAGE>
(b) If the funds of the Corporation legally available for the
redemption of all shares of the 1994 Senior Preferred Stock to be redeemed
pursuant to paragraph 4 hereof are insufficient to redeem the total number of
outstanding shares of the 1994 Senior Preferred Stock required to be redeemed,
such funds will be used promptly, and redemptions pursuant to paragraph 4 shall
be made ratably among holders of such shares, and in any event, within 30 days
after sufficient funds become legally available, to redeem the balance of such
required to be redeemed, such funds as are then legally available shall be
applied to the redemption of such shares required to be redeemed and the payment
of interest accrued thereon in accordance herewith until all such shares have
been redeemed and all such accrued and unpaid interest has been paid.
(c) If less than all of the shares of the 1994 Senior Preferred Stock
are to be redeemed on a given date pursuant to the provisions hereof, the
Corporation shall redeem from each holder of 1994 Senior Preferred Stock
required that number of whole shares of the 1994 Senior Preferred stock then
held by each holder of shares of 1994 Senior Preferred Stock that bears the same
proportion to the total number of such shares to be redeemed as the total number
of shares of the 1994 Senior Preferred Stock then held by such holder bears to
the total number of shares of the 1994 Senior Preferred stock then outstanding.
(d) Notwithstanding anything herein to the contrary, the Corporation
may not at any time redeem less than all of the 1994 Senior Preferred Stock
outstanding unless all accrued and unpaid dividends payable on or prior to the
date of redemption shall have been paid (or are paid concurrently with the
redemption) on all then outstanding shares of the 1994 Senior Preferred Stock.
(e) Dividends will cease to accrue on the shares of the 1994 Senior
Preferred Stock on the date fixed for their redemption (unless the Corporation
defaults on the payment of the redemption price). In addition, on and after the
redemption date, all rights of the holders of the shares of the 1994 Senior
Preferred Stock called for redemption shall terminate except the right to
receive the redemption price (unless the Corporation defaults on the payment of
the redemption price).
(f) All shares of the 1994 Senior Preferred Stock which shall have
been redeemed, purchased or otherwise acquired by the Corporation pursuant to
the provisions hereof, shall be cancelled and shall not be reissued at shares of
the 1994 Senior Preferred Stock, but shall have the status of authorized but
unissued shares of Preferred Stock of the Corporation.
7. Conversion Rights. The holders of shares of the 1994 Senior Preferred
Stock shall have the following conversion rights (the "CONVERSION RIGHTS"):
(a) Right to Convert. Each share of the 1994 Senior Preferred Stock
shall be convertible, at any time or from time to time, at the option of the
holder thereof, into fully paid and nonassessable shares of Class A Common
Stock, at the Conversion Rate in effect at the time of conversion; PROVIDED,
HOWEVER, that the conversion rights provided herein are limited absolutely and
in their entirety by the restrictions on ownership and transfer of Class A
Common Stock as set forth as of the date of issuance of the 1994 Senior
Preferred Stock in the Corporation's Charter; PROVIDED, FURTHER, however, that
the conversion rights provided herein expire as to those shares of the 1994
Senior Preferred Stock to be redeemed pursuant to paragraph 4 or 5 hereof,
fifteen (15) calendar days prior to the applicable redemption date (but are
reinstated if the redemption does not occur).
(b) Conversion Rate; Payment of Accrued Dividends. Each share of the
1994 Senior Preferred Stock shall be convertible into that number of shares of
Class A Common Stock which results from dividing the Redemption Price by the
Conversion Price (as both terms are defined in paragraph 16) in effect at the
time of conversion (the "CONVERSION RATE"). If a holder of 1994 Senior
Preferred Stock shall, upon conversion thereof into Class A Common Stock
pursuant hereto, be entitled to receive an aggregate number of shares that shall
include a fractional share, the Company may elect, at its option, to round that
fractional share up or down to the nearest whole share. The Conversion Price
shall be subject to adjustment from time to time as provided below. Upon
conversion, the Corporation shall pay to the holder thereof, out of legally
available funds therefor, all accrued but unpaid cumulative dividends on the
shares of 1994 Senior Preferred Stock so converted (whether or not declared) to
the date of such conversion. If the funds of the corporation legally available
for the payment of all such dividends on the 1994 Senior Preferred Stock to be
converted are insufficient to pay all such dividends so required, such funds
will be used promptly, and dividend payments shall be made ratably among such
holders of such shares of the 1994 Senior Preferred Stock and, in any event,
within 30 days after such funds become legally available, to pay the balance of
such dividends, or such portion thereof for which funds are then legally
available on the basis set forth above. All accrued but unpaid dividends on the
shares of 1994 Senior Preferred Stock so converted not paid upon conversion,
shall bear interest thereafter at a rate per annum equal to 9.6033%, until paid
in full.
(c) Mechanics of Conversion. Before any holder of shares of the 1994
Senior Preferred Stock shall be entitled to convert shares of the 1994 Senior
Preferred Stock into shares of Class A Common Stock, the holder shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the shares of the 1994 Senior Preferred
Stock or Class A Common Stock, and shall give notice to the Corporation at such
office that such holder elects to convert the shares of the 1994 Senior
Preferred Stock and shall state therein the number of shares of the 1994 Senior
Preferred Stock being converted. Thereupon, the Corporation shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Class A Common Stock to which such holder is
entitled. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of the 1994
Senior Preferred Stock to be converted, and the person entitled to receive the
shares of Class A Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder of such shares of Class A Common Stock on
such date.
(d) Adjustments. The Conversion Price and the number of shares of
Class A Common Stock issuable upon the conversion of each share of 1994 Senior
Preferred Stock shall be subject to adjustment from time to time as provided
herein.
<PAGE>
(i) Adjustment Upon Dividend, Distribution, Subdivision,
Combination or Reclassification. In case this Corporation shall at any
time after the date of the Initial Public Offering (i) pay a dividend in
shares of Class A Common Stock or make a distribution in shares of Class A
Common Stock, (ii) subdivide the outstanding shares of Class A Common
Stock, (iii) combine the outstanding shares of Class A Common Stock, or
(iv) issue any shares of its capital stock or other securities by
reclassification of the Class A Common Stock, the Conversion Price in
effect at the time of the record date for such dividend or distribution or
of the effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that each holder of shares of 1994
Senior Preferred Stock converted after such time shall be entitled to
receive the aggregate number and kind of Class A Common Stock or other
securities of this Corporation which, if such shares of 1994 Senior
Preferred Stock had been converted immediately prior to such time, he
would have owned upon such conversion and been entitled to receive by
virtue of such dividend, distribution, subdivision, combination or
reclassification. Such adjustment shall be made successfully whenever any
event listed above shall occur.
(ii) Issuance of Rights, Options and Warrants. If after the
Initial Public Offering this Corporation issues any rights, options or
warrants to all holders of its Class A Common Stock entitling them for a
period expiring within 60 days after the record date mentioned below to
purchase shares of Class A Common Stock (or securities convertible into or
exchangeable for shares of Class A Common Stock) at a price per share less
than the current market price per share on that record date, the Conversion
Price shall be adjusted in accordance with the formula:
where
C = the adjusted Conversion Price
C = the then current Conversion Price
O = the number of shares of Class A Common Stock outstanding on the
record date.
N = the number of additional shares of Class A Common Stock offered
or initially issuable upon conversion or exchange of the
convertible or exchangeable securities offered.
P = the offering price or conversion price or exchange price per
share of the additional shares.
M = the current market price per share of Class A Common Stock on the
record date. SEE paragraph 7(d)(vii).
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after
the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If all of the shares of Class A Common
Stock or securities convertible into or exchangeable for shares of Class A
Common Stock subject to such rights, option or warrants have not been
issued when such rights, option or warrants expire, then the Conversion
Price shall be immediately readjusted to what it would have been if "N" in
the above formula had been the number of shares of Class A Common Stock
actually issued upon the exercise of such rights, options or warrants or
initially issuable based upon the number of convertible securities or
exchangeable securities issued upon the exercise of such rights or
warrants.
(iii) Distribution of Assets and Debt Securities. If after the
Initial Public Offering this Corporation distributes to all holders of its
Class A Common Stock any of its assets or debt securities or any rights or
warrants to purchase debt securities, assets or other securities of this
Corporation (including shares of Class A Common Stock), the Conversion
Price shall be adjusted in accordance with the formula:
C C (M F)
-----
M
where
C1 = the adjusted Conversion Price.
C = the then current Conversion Price.
M = the current market price per share of Class A Common Stock on the
record date mentioned below. SEE paragraph 7(d)(viii).
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of Class A
Common Stock. The Board of Directors shall determine, in good
faith, such fair market value, which determination shall be
conclusive.
This subparagraph does not apply to any rights, options or warrants
referred to in paragraph 7(d)(ii).
This subparagraph does not apply to any cash dividend or cash
distribution paid in respect of Class A Common Stock provided that the sum
of all cash dividends or cash distributions paid in respect of Class A
Common Stock and OP Units during the twelve (12) month period ending on the
day of such distribution, does not exceed 100% of Cash Available for
Distribution for such twelve (12) month period. "CASH AVAILABLE FOR
DISTRIBUTION" shall mean "Funds from Operations" (as that term is defined
in the "Glossary" of the Prospectus but computed at the Operating
Partnership's level) minus (i) the amount of the dividend on the 1994
Senior Preferred Stock accrued during such twelve (12) month period,
whether or not declared or paid, and (ii) an annual reserve for capital
replacements of $300 per apartment unit for the weighted average number of
apartment units owned by the Company during the twelve (12) month period.
By way of example, Cash Available for Distribution for the twelve (12)
month period ending June 15, 1995 as set forth in the Prospectus is
projected on a PRO FORMA basis to be $18,476,000.
(iv) Issuance of Discounted Shares. If after the Initial
Public Offering this Corporation issues shares of Class A Common Stock for
a consideration per share less than the current market price per share on
the date this Corporation fixes the offering price of each additional
shares, the Conversion Price shall be adjusted in accordance with the
formula:
where
C = the adjusted Conversion Price.
C = the then current Conversion Price.
O = the number of shares of Class A Common Stock outstanding
immediately prior to the issuance of each additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share of Class A Common Stock on the
date of issuance of such additional shares. SEE paragraph
7(d)(vii).
A = the number of shares outstanding immediately after the issuance
of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This paragraph does not apply to (i) any of the transactions described in
paragraphs 7(d) (ii) or 7(d)(iii), (ii) the conversion or exchange of Class B
Common Stock, 1994 Senior Preferred Stock, or other securities convertible or
exchangeable for Class A Common Stock, (iii) Class A Common Stock issued by this
Corporation upon, and as consideration for, the purchase of OP Units, (iv) Class
A Common Stock issued to the Corporation's employees (other than upon the
exercise of options of the type referred to in clause (v) below) under BONA FIDE
employee benefit plans adopted by the Board of Directors, if such Class A Common
Stock would otherwise be covered by this subparagraph, (v) Class A Common Stock
issued upon the exercise of options granted to employees with an exercise price
equal to at least 85% of the fair market value of the Class A Common Stock at
the time that such options were granted, (vi) Class A Common Stock issued to
stockholders of any Person that merges into this Corporation, or with a
subsidiary of this Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (vii) Class A Common
Stock issued in a BONA FIDE public offering pursuant to a firm commitment or
best efforts underwriting, or (viii) Class A Common Stock issued in a BONA FIDE
private placement through a placement agent that is a member firm of the
National Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of the Class A Common Stock, as determined in good faith by the
Board of Directors, shall exceed 10% of the then current market price).
<PAGE>
(v) Issuance of Convertible Discounted Securities. If after
the Initial Public Offering this Corporation issues any securities convertible
into or exchangeable for Class A Common Stock (other than securities issued in
transactions described in paragraphs 7(d)(ii) or 7(d)(iii)) for a consideration
per share of Class A Common Stock initially deliverable upon conversion or
exchange of such securities less than the current market price per share of
Class A Common Stock on the date of issuance of such securities, the Conversion
Price shall be adjusted in accordance with the formula:
C C (0 P)
---
M
-------
O D
where
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
O = the number of shares of Class A Common Stock outstanding
immediately prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share of Class A Common Stock on the
date of issuance of such securities. SEE paragraph 7(d)(vii).
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. If all of the
Class A Common Stock deliverable upon conversion or exchange of such securities
have not been issued when such securities are no longer outstanding, then the
Conversion Price shall promptly be readjusted to the conversion price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Class A Common Stock
issued upon conversion or exchange of such securities.
This subparagraph does not apply to (i) convertible securities issued to
stockholders of any Person which merges into this Corporation, or with a
subsidiary of this Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (ii) convertible
securities issued in a BONA FIDE public offering pursuant to a firm commitment
or best efforts underwriting, or (iii) convertible securities issued in a BONA
FIDE private placement through a placement agent which is a member firm of the
National Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of Class A Common Stock issuable upon conversion, as determined
in good faith by the Board of Directors and described in a Board resolution,
shall exceed 10% of the then current market price).
<PAGE>
(vi) Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time or from time to time there is a capital reorganization
of the Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this paragraph
7) or a merger or consolidation of the Corporation with or into another
corporation, or the sale of all or substantially all of the Corporation's
properties and assets to any other person then, each share of the 1994 Senior
Preferred Stock then outstanding shall thereafter be convertible into, in lieu
of the Class A Common Stock issuable upon such conversion prior to consummation
of such reorganization, merger, consolidation or sale, the kind and amount of
shares of stock and other securities and property receivable (including cash)
upon the consummation of such reorganization, merger, consolidation or sale by a
holder of that number of shares of Class A Common Stock into which one share of
the 1994 Senior Preferred Stock was convertible immediately prior to such
reorganization, merger, consolidation or sale (including, on a PRO RATA basis,
the cash, securities or property received by holders of Class A Common Stock in
any tender or exchange offer that is a step in such transaction). In any such
case, appropriate adjustment shall be made in the application of the provisions
of this paragraph 7 with respect to the rights of the holders of the shares of
the 1994 Senior Preferred Stock after the reorganization, merger, consolidation
or sale to the end that the provisions of this paragraph 7 (including adjustment
of the Conversion Price then in effect and the number of shares purchasable upon
conversion of the shares of the 1994 Senior Preferred Stock) shall be applicable
after that event and be as nearly equivalent as may be practicable.
(vii) Computation of Consideration. For purposes of any
computation respecting consideration received pursuant to paragraphs 7(d)(iv)
and 7(d)(v), the following shall apply:
(1) in the case of the issuance of shares of Class A
Common Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by this Corporation
for any underwriting of the issue or otherwise in connection
therewith;
(2) in the case of the issuance of shares of Class A
Common Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors (irrespective of the accounting treatment thereof), whose
determination shall be conclusive, and described in a Board
resolution; and
(3) in the case of the issuance of securities
convertible into or exchangeable for shares of Class A Common Stock,
the aggregate consideration received therefor shall be deemed to be
the consideration received by this Corporation for the issuance of
such securities plus the additional minimum consideration if any, to
be received by this Corporation upon the conversion for exchange
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subparagraph).
(viii) Computation of Current Market Price. For the purpose of
any computation hereunder, the current market price per share of Class A Common
Stock on any date shall be deemed to be the average of the Closing Prices for
fifteen (15) consecutive Trading Days commencing thirty (30) Trading Days before
that date. However, if the Class A Common Stock is not publicly listed or
publicly traded, current market price shall mean the fair market value per share
of Class A Common Stock, as determined in good faith by the Board of Directors,
based on the opinion of an independent investment banking firm.
(ix) Exceptions.
(1) No adjustment in the Conversion Price need be made
unless the adjustment would require an increase or decrease of at least 1% in
the Conversion Price. Any adjustments which are not made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this paragraph 7 shall be made to the nearest cent or to the nearest
1/100th of a share, as the case may be. The Conversion Price shall not be
adjusted upward except in the event of a combination of the outstanding shares
of Class A Common Stock into a smaller number of shares of Common Stock or in
the event of a readjustment of the Conversion Price pursuant to
paragraphs 7(d)(ii) or 7(d)(v).
(2) No adjustment need be made for rights to purchase
Class A Common Stock pursuant to a plan for reinvestment of dividends or
interest.
(3) No adjustment need be made for a change in the par
value or no par value of the Class A Common Stock.
(x) Notice. Whenever the Conversion Price is adjusted or
reduced, the Corporation shall promptly mail, at least 12 days prior to the
record date of the distribution triggering the adjustment or reduction, to
holders of the 1994 Senior Preferred Stock and file with the transfer agent
therefor a notice of the adjustment or reduction and, in the case of an
adjustment, file with the transfer agent for the 1994 Senior Preferred Stock an
officer's certificate briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence that the
adjustment is correct.
<PAGE>
(xi) Fractional Shares. No fractional shares of Class A
Common Stock shall be issued upon conversion of the shares of the 1994 Senior
Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to the product of
such fraction multiplied by the fair market value of one share of Class A Common
Stock on the date of conversion, as determined in good faith by the Board of
Directors.
(xii) Reservation of Stock Issuable upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Class A Common Stock, solely for the purpose of effecting
the conversion of the shares of the 1994 Senior Preferred Stock, such number of
its shares of Class A Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the 1994 Senior Preferred
Stock; and if at any time the number of authorized but unissued shares of Class
A Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the 1994 Senior Preferred Stock, the Corporation will take
such corporate and other action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Class A Common Stock
to such number of shares as shall be sufficient for such purpose.
(xiii) Discretionary Adjustments. The Board of Directors may
(but shall not be required to) make such adjustments in the Conversion Price, in
addition to those required hereunder, as shall be determined by the Board of
Directors, as evidenced by a Board resolution, to be advisable in order that any
event that would otherwise be treated for federal income tax purposes as a
dividend of stock or stock rights will, to the extent practicable, not be so
treated or not be taxable to the recipients.
(xiv) Ambiguity. The Board of Directors may interpret the
provisions of this paragraph to resolve any inconsistency or ambiguity which may
arise or be revealed in connection with the adjustment procedures provided for
herein, and if such inconsistency or ambiguity reflects an inaccurate provision
hereof, the Board of Directors may, in appropriate circumstances, authorize the
filing of additional articles supplementary or a certificate of designation.
8. Restrictions on Ownership and Transfer. The Beneficial Ownership and
Transfer of the 1994 Senior Preferred Stock shall be subject to the restrictions
set forth in this paragraph 8.
(a) Restrictions.
(i) Limitation on Beneficial Ownership. Except as provided
in paragraph 8(h), from and after the date of the Initial Public Offering, no
Person shall Beneficially Own shares of 1994 Senior Preferred Stock in excess of
the Preferred Stock Ownership Limit.
(ii) Transfers in Excess of Preferred Stock Ownership Limit.
Except as provided in paragraph 8(h), from and after the date of the Initial
Public Offering (and subject to paragraph 8(k)), any Transfer (whether or not
such Transfer is the result of transactions entered into through the facilities
of the New York Stock Exchange or other securities exchange or an automated
inter-dealer quotation system) that, if effective, would result in any Person
Beneficially Owning shares of 1994 Senior Preferred Stock in excess of the
Preferred Stock Ownership Limit shall be void AB INITIO as to the Transfer of
such shares of 1994 Senior Preferred Stock that would be otherwise Beneficially
Owned by such Person in excess of the Preferred Stock Ownership Limit, and the
intended transferee shall acquire no rights in such shares of 1994 Senior
Preferred Stock.
(iii) Transfers Resulting in "Closely Held" Status. From and
after the date of the Initial Public Offering, any Transfer that, if effective,
would result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code, or would otherwise result in the Corporation failing
to qualify as a REIT (including, without limitation, a Transfer or other event
that would result in the Corporation owning (directly or constructively) an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the Corporation from such tenant would cause the
Corporation to fail to satisfy any of the gross income requirements of Section
856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of 1994
Senior Preferred Stock that would cause the Corporation (i) to be "closely held"
within the meaning of Section 856(h) of the Code or (ii) otherwise fail to
qualify as a REIT, as the case may be, and the intended transferee shall acquire
no rights in such shares of 1994 Senior Preferred Stock.
<PAGE>
(iv) Severability on Void Transactions. A Transfer of a share
of 1994 Senior Preferred Stock that is null and void under subparagraph (i),
(ii) or (iii) because it would, if effective, result in (i) the ownership of
1994 Senior Preferred Stock in excess of the Preferred Stock Ownership Limit,
(ii) the Corporation being "closely held" within the meaning of Section 856(h)
of the Code or (iii) the Corporation otherwise failing to qualify as a REIT,
shall not adversely affect the validity of the Transfer of any other share of
1994 Senior Preferred Stock in the same or any other related transaction.
(b) Remedies for Breach. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of paragraph 8(a) hereof or that a Person intends
to acquire or has attempted to acquire Beneficial Ownership of any shares of
1994 Senior Preferred Stock in violation of paragraph 8(a) hereof (whether or
not such violation is intended), the Board of Directors or a committee thereof
shall be empowered to take any action as it deems advisable to refuse to give
effect to or to prevent such Transfer or other event, including, but not limited
to, refusing to give effect to such Transfer or other event on the books of the
Corporation, causing the Corporation to redeem such shares at the then current
Market Price and upon such terms and conditions as may be specified by the Board
of Directors in its sole discretion (including, but not limited to, by means of
the issuance of long-term indebtedness for the purpose of such redemption),
demanding the repayment of any distributions received in respect of shares of
1994 Senior Preferred Stock acquired in violation of paragraph 8(a) hereof or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers
(or in the case of events other than a Transfer, Beneficial Ownership) in
violation of paragraph 8(a), regardless of any action (or non action) by the
Board of Directors of such committee, (a) shall be void AB INITIO or (b) shall
automatically result in the transfer described in paragraph 8(c) hereof;
PROVIDED, FURTHER, that the provisions of this paragraph 8(b) shall be subject
to the provisions of paragraph 8(k) hereof.
(c) Transfer in Trust.
<PAGE>
(i) Establishment of Trust. If, notwithstanding the other
provisions contained in this paragraph 8, at any time after the date of the
Initial Public Offering there is a purported Transfer (an "EXCESS TRANSFER")
(whether or not such Transfer is the result of transactions entered into through
the facilities of the New York Stock Exchange or other securities exchange or an
automated inter-dealer quotation system) or other change in the capital
structure of the Corporation (including, but not limited to, any redemption of
1994 Senior Preferred Stock, Class A Common Stock or Class B Common Stock) or
other event such that any Person would Beneficially Own shares of 1994 Senior
Preferred Stock in excess of the Preferred Stock Ownership Limit (in any such
event, the Person that would Beneficially Own shares of 1994 Senior Preferred
Stock in excess of the Preferred Stock Ownership Limit is referred to as a
"PROHIBITED TRANSFEREE"), then, except as otherwise provided in paragraph 8(h)
hereof, such shares of 1994 Senior Preferred Stock in excess of the Preferred
Stock Ownership Limit (rounded up to the nearest whole share) shall be
automatically transferred to a Trustee in his capacity as trustee of a Trust for
the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to
the Trustee shall be deemed to be effective as of the close of business on the
business day prior to the date of the Excess Transfer, change in capital
structure or other event giving rise to a potential violation of the Preferred
Stock Ownership Limit.
(ii) Appointment of Trustee. The Trustee shall be appointed
by the Corporation and shall be a Person unaffiliated with either the
Corporation or any Prohibited Transferee. The Trustee may be an individual or a
bank or trust company duly licensed to conduct a trust business.
(iii) Status of Shares Held by Trustee. Shares of 1994 Senior
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in paragraph
8(c)(v) hereof, the Prohibited Transferee shall have no rights in the 1994
Senior Preferred Stock held by the Trustee, and the Prohibited Transferee shall
not benefit economically from ownership of any shares held in trust by the
Trustee, shall have no rights to dividends and shall not possess any rights to
vote or other rights attributable to the shares held in the Trust.
(iv) Dividend and Voting Rights. The Trustee shall have all
voting rights and rights to dividends with respect to shares of 1994 Senior
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of 1994 Senior Preferred
Stock have been transferred to the Trustee shall be repaid to the Corporation
upon demand, and any dividend or distribution declared but unpaid shall be
rescinded as void AB INITIO with respect to such shares of 1994 Senior Preferred
Stock. Any dividends or distributions so disgorged or rescinded shall be paid
over the Trustee and held in trust for the Charitable Beneficiary. Any vote
cast by a Prohibited Transferee prior to the discovery by the Corporation that
the shares of 1994 Senior Preferred Stock have been transferred to the Trustee
will be rescinded as AB INITIO and shall be recast in accordance with the
desires of the Trustee acting for the benefit of the Charitable Beneficiary.
The owner of the shares at the time of the Excess Transfer, change in capital
structure or other event giving rise to a potential violation of the Preferred
Stock Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of 1994 Senior Preferred Stock for the benefit of the
Charitable Beneficiary.
(v) Restrictions on Transfer. The Trustee of the Trust may
transfer the shares held in the Trust to a person, designated by the Trustee,
whose ownership of the shares will not violate the Preferred Stock Ownership
Limit. If such a transfer is made, the interest of the Charitable Beneficiary
shall terminate and proceeds of the sale shall be payable to the Prohibited
Transferee and to the Charitable Beneficiary as provided in this paragraph
8(c)(v). The Prohibited Transferee shall receive the lesser of (1) the price
paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. If any of the transfer restrictions set
forth in this paragraph 8(c)(v) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the 1994 Senior Preferred Stock as to which such restrictions would,
by their terms, apply, and to hold such 1994 Senior Preferred Stock on behalf of
the Corporation.
<PAGE>
(vi) Purchase Right in Stock Transferred to the Trustee.
Shares of 1994 Senior Preferred Stock transferred to the Trustee shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days after the
later of (i) the date of the Excess Transfer or other event resulting in a
transfer to the Trust and (ii) the date that the Board of Directors determines
in good faith that an Excess Transfer or other event occurred.
(vii) Designation of Charitable Beneficiaries. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of 1994 Senior
Preferred Stock held in the Trust would not violate the Preferred Stock
Ownership Limit in the hands of such Charitable Beneficiary and (ii) each
Charitable Beneficiary is an organization described in Sections 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
(d) Notice of Restricted Transfer. Any Person that acquires or
attempts to acquire shares of 1994 Senior Preferred Stock in violation of
paragraph 8(a), or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under paragraph 8(c), shall immediately give written
notice to the Corporation of such event and shall provide to the Corporation
such other information as the Corporation may request in order to determine the
effect, if any, of such Transfer or attempted Transfer or other event on the
Corporation's status as a REIT. Failure to give such notice shall not limit the
rights and remedies of the Board of Directors provided herein in any way.
(e) Owners Required to Provide Information. From and after the date
of the Initial Public Offering certain record and Beneficial Owners and
transferees of shares of 1994 Senior Preferred Stock will be required to provide
certain information as set out below.
<PAGE>
(i) Annual Disclosure. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of 1994 Senior Preferred Stock shall, within 30 days after January 1 of
each year, give written notice to the Corporation stating the name and address
of such record or Beneficial Owner, the number of shares of 1994 Senior
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record or Beneficial Owner of 1994 Senior Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the 1994
Senior Preferred Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (a) comply with the provisions of the Code regarding
the qualification of the Corporation as a REIT under the Code and (b) ensure
compliance with the Preferred Stock Ownership Limit. Each shareholder of
record, including without limitation any Person that holds shares of 1994 Senior
Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps
to obtain the written notice described in this paragraph 8(e) from the
Beneficial Owner
(ii) Disclosure at the Request of the Corporation. Any Person
that is a Beneficial Owner of shares of 1994 Senior Preferred Stock and any
Person (including the shareholder of record) that is holding shares of 1994
Senior Preferred Stock for a Beneficial Owner, and any proposed transferee of
shares, shall provide such information as the Corporation, in its sole
discretion, may request in order to determine the Corporation's status as a
REIT, to comply with the requirements of any taxing authority or other
governmental agency, to determine any such compliance or to ensure compliance
with the Preferred Stock Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of 1994 Senior
Preferred Stock already Beneficially Owned by such shareholder or proposed
transferee and any related persons specified, which statement or affidavit shall
be in the form prescribed by the Corporation for that purpose.
(f) Remedies Not Limited. Nothing contained in this paragraph 8
shall limit the authority of the Board of Directors to take such other action as
it deems necessary or advisable (subject to the provisions of paragraph 8(k)
hereof) (i) to protect the Corporation and the interests of its shareholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Preferred Stock Ownership Limit: PROVIDED, HOWEVER, that the
Board of Directors may not exercise such authority in a manner that interferes
with any ownership or transfer of the 1994 Senior Preferred Stock that is
expressly authorized pursuant to paragraph 8(h)(ii) hereof.
<PAGE>
(g) Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this paragraph 8, or in the case of an ambiguity in any
definition contained in paragraph 16 hereof, the Board of Directors shall have
the power to determine the application of the provisions of this paragraph 8
with respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
(h) Waiver of Preferred Stock Ownership Limit.
(i) In General. The Board of Directors, upon receipt of a
ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Preferred Stock Ownership Limit to a Person subject to the
Preferred Stock Ownership Limit, if such person is not an individual for purpose
of Section 542(a) of the Code and is a corporation, partnership, estate or
trust. In connection with any such exemption, the Board of Directors may
require such representations and undertakings from such Person and may impose
such other conditions as the Board deems necessary, in its sole discretion, to
determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(ii) Ownership and Transfers by the CMO Trustee. The
Preferred Stock Ownership Limit shall not apply to the initial holding of the
1994 Senior Preferred Stock by the "CMO Trustee" (as that term is defined in the
"Glossary" to the Prospectus) for the benefit of "HF Funding Trust" (as that
term is defined in the "Glossary" to the Prospectus) or to any transfer or
assignment of all or any part of the legal or beneficial interest in the 1994
Senior Preferred Stock to the CMO Trustee, "FSA" (as that term is defined in the
"Glossary" to the Prospectus), any entity controlled by FSA, or any direct or
indirect creditor of HF Funding Trust (including without limitation any
reinsurer of any obligation of HF Funding Trust).
(i) Legend. Each certificate for 1994 Senior Preferred Stock shall
bear the following legend:
"The shares of 1994 Senior Preferred Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of 1994 Senior Preferred Stock in excess of
the Preferred Stock Ownership Limit with certain further restrictions
and exceptions set forth in the Articles Supplementary relating to the
1994 Senior Preferred Stock (the `Articles Supplementary'). Any
Person that attempts to Beneficially Own shares of 1994 Senior
Preferred Stock in excess of the Preferred Stock Ownership Limit must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Articles
Supplementary, as the same may be amended from time to time, a copy of
which, including the restrictions on transfer, will be sent without
charge to each shareholder that so requests. If the restrictions on
transfer are violated, the shares of 1994 Senior Preferred Stock
represented hereby will be either (a) void in accordance with the
Articles Supplementary or (b) automatically transferred to a Trustee
of a Trust for the benefit of one or more Charitable Beneficiaries."
(j) Severability. If any provision of this paragraph 8 or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
(j) Board of Directors Discretion. Anything in this paragraph 8 to
the contrary notwithstanding, the Board of Directors shall be entitled to take
or omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Preferred Stock
Ownership Limit in the event of a change in law.
(k) Settlement. Nothing in this paragraph 8 shall be interpreted to
preclude the settlement of any transaction entered into through the facilities
of the New York Stock Exchange or other securities exchange or an automated
inter-dealer quotation system.
9. Right of First Refusal. No holder of shares of 1994 Senior Preferred
Stock shall transfer the shares (other than as contemplated by paragraph
8(h)(ii) hereof) unless the Corporation shall have been given prior written
notice of such proposed transfer and 60 days in which to acquire, or arrange for
another party designated by the Corporation to acquire, the 1994 Senior
Preferred Stock subject to the proposed transfer on the same terms as the
proposed transfer. No holder of shares of 1994 Senior Preferred Stock shall
transfer the shares to any person or entity if, as a result of the transfer to
such person or entity, the Corporation shall fail to qualify as a real estate
investment trust under Sections 856 through 860 (or any successor sections) of
the Code.
10. Voting Rights.
(a) In addition to such other rights as may be required by law, the
holders of the issued and outstanding shares of 1994 Senior Preferred Stock
shall at all times have the right, voting together as a separate class at each
annual election of directors, to elect one director on the Board of Directors.
On all matters upon which holders of 1994 Senior Preferred Stock are entitled to
vote, or give their consent, each such holder shall be entitled to one (1) vote
for each share of 1994 Senior Preferred Stock held by such holder.
(b) The Corporation shall not, without the affirmative vote or
written consent of the holders of a majority of the shares of 1994 Senior
Preferred Stock at the time outstanding, voting separately as a class,
(i) amend, modify or supplement the Corporation's Charter in a manner which
would adversely affect the rights, preferences, privileges or powers of, or
limitations on, 1994 Senior Preferred Stock contained in the Corporation's
Charter, including without limitation these Articles Supplementary, or
(ii) issue or sell any capital stock of any series or class of capital stock
which ranks on a parity with, or senior to, the 1994 Senior Preferred Stock with
respect to redemption or the payment of dividends or upon liquidation,
dissolution, winding-up, redemption or otherwise, except the sale of the 1994
Senior Preferred Stock.
<PAGE>
(c) Holders of issued and outstanding shares of 1994 Senior Preferred
Stock shall be entitled to the following additional voting rights (each a
"VOTING RIGHT") which shall vest upon the occurrence of the conditions set forth
below: (x) if and so long as dividends on 1994 Senior Preferred Stock for [two
consecutive] [any] Dividend Period[s] shall be in arrears and shall not have
been fully paid or shall not have been declared and a sum sufficient for the
payment thereof set aside on all shares of 1994 Senior Preferred Stock at the
time outstanding, then the holders of 1994 Senior Preferred Stock shall have, in
addition to the other voting rights set forth herein, the right (but not the
obligation) voting separately as a class, to elect one director on the
Corporation's Board of Directors in addition to the director referred to in
paragraph 10(a); (y) if and so long as the Corporation shall have failed to
redeem the applicable Minimum Mandatory Redemption on or before the Mandatory
Redemption Dates, as set forth in paragraph 4, then the holders of 1994 Senior
Preferred Stock shall have, in addition to the other voting rights set forth
herein, the right (but not the obligation) voting separately as a class, to
elect a majority of the directors on the Corporation's Board of Directors.
(i) Whenever such voting right shall have vested, such right
may be exercised initially either at a special meeting of the holders of 1994
Senior Preferred Stock, called as hereinafter provided, by written consent or at
any annual meeting of shareholders held for the purpose of electing directors,
and thereafter at such annual meetings or by the written consent of the holders
of 1994 Senior Preferred Stock pursuant to applicable provisions of Maryland
law.
(ii) At any time when such voting rights shall have vested in
the holders of 1994 Senior Preferred Stock, and if such right shall not already
have been initially exercised, an officer of the Corporation shall, upon the
written request of any holder of record of 1994 Senior Preferred Stock then
outstanding, addressed to the Secretary of the Corporation, call a special
meeting of the holders of 1994 Senior Preferred Stock and of any other class or
classes of stock having voting power with respect thereto for the purpose of
electing directors. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of shareholders at the place for
holding annual meetings of shareholders of the Corporation or, if none, at a
place designated by the Secretary of the Corporation; PROVIDED, HOWEVER, that
the Secretary shall not be required to call any such special meeting in the case
of any request therefor received less than 90 days prior to the date fixed for
any annual meeting of shareholders of the Corporation, and if in such case such
special meeting is not called, the holders of 1994 Senior Preferred Stock shall
be entitled to exercise the special voting rights provided in this
subparagraph (c) at such annual meeting; PROVIDED, FURTHER, that nothing herein
shall be deemed to prohibit the holders of 1994 Senior Preferred Stock from
exercising their special voting rights by written consent at any time, including
without limitation, during the 90-day period immediately preceding any annual
meeting of shareholders of the Corporation, with the election of such director
by the holders of 1994 Senior Preferred Stock being effective as of the date of
such written consent. If such meeting shall not be called by the proper
officers of the Corporation within 10 days after the personal service of such
written request upon the Secretary of the Corporation, or within 10 days after
mailing the same within the United States, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of record of 10% or more of the shares of 1994 Senior Preferred Stock
then outstanding may designate in writing a holder of 1994 Senior Preferred
Stock to call such meeting at the expense of the Corporation, and such meeting
may be called by such person so designated upon the notice required for annual
meetings of shareholders and shall be held at the same place as is elsewhere
provided in this subparagraph (c)(iv). Any holder of 1994 Senior Preferred
Stock shall have access to the preferred stock books of the Corporation for the
purpose of causing a meeting of holders of 1994 Senior Preferred Stock to be
called pursuant to the provisions of this subparagraph (c).
(iii) At any meeting held for the purpose of electing directors
at which the holders of 1994 Senior Preferred Stock shall have the right to
elect directors as provided herein, the presence in person or by proxy of the
holders of 50% of the then outstanding shares of 1994 Senior Preferred Stock
shall be required and be sufficient to constitute a quorum of such class for the
election of directors by such class. At any such meeting or adjournment
thereof, (A) the absence of a quorum of the holders of 1994 Senior Preferred
Stock shall not prevent the election of directors other than those to be elected
by the holders of stock of such class and the absence of a quorum or quorums of
the holders of capital stock entitled to elect such other directors shall not
prevent the election of directors to be elected by the holders of 1994 Senior
Preferred Stock and (B) in the absence of a quorum of the holders of any class
of stock entitled to vote for the election of the director, a majority of the
holders present in person or by proxy of such class shall have the power to
adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
<PAGE>
(iv) The rights of the holders of outstanding shares of 1994
Senior Preferred Stock granted by this subparagraph (c) may be exercised only
until all cumulative dividends in arrears on 1994 Senior Preferred Stock shall
have been paid in full or declared and funds sufficient theretofore set aside,
or until the Corporation has redeemed the Minimum Mandatory Redemption required
to have been redeemed at the last occurring Mandatory Redemption Date and
thereafter such rights of the holders of 1994 Senior Preferred Stock to elect
additional directors to the Board of Directors shall cease and the terms of the
persons so elected as additional directors shall cease and the holders of
outstanding shares of 1994 Preferred Stock shall cause those persons to resign
as directors, but subject always to the same provisions for the vesting of such
rights in the future pursuant to subparagraph (c).
11. Payments on Liquidation. In the event of any liquidation, dissolution
or winding-up of the affairs of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and other
liabilities of the Corporation, the holders of shares of the 1994 Senior
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation, whether such assets are capital or surplus and whether or not any
dividends as such are declared, an amount per share of the 1994 Senior Preferred
Stock equal to the sum of $100 per share plus all accrued and unpaid cumulative
dividends thereon (whether or not declared or earned) to the date of such
distribution.
In the event of any liquidation, dissolution, or winding-up of the affairs
of the Corporation (whether voluntary or involuntary), payment shall be made to
the holders of the 1994 Senior Preferred Stock in the amounts provided herein,
before any payment shall be made or any assets distributed to the holders of any
Class A Common Stock or any other capital stock of the Corporation.
If upon the occurrence of any liquidation, dissolution or winding-up of the
affairs of the Corporation (whether voluntary or involuntary) the assets of the
Corporation available for distribution to the holders of the 1994 Senior
Preferred Stock shall be insufficient to pay the holders of the 1994 Senior
Preferred Stock the full amounts to which they shall be entitled, then the
entire assets of the Corporation available for distribution to the holders of
outstanding shares of the 1994 Senior Preferred Stock shall be distributed among
such holders ratably per share in proportion to the preferential amount per
share to which they are entitled.
Written notice of any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the Corporation, stating a payment date and the
place where the distributive amounts shall be payable, shall be given by mail,
postage prepaid, not less than thirty (30) days prior to the payment date stated
therein, to the holders of record of the 1994 Senior Preferred Stock at their
respective addresses as the same shall appear on the books of the Corporation.
The voluntary sale, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of its property
or assets to, or a consolidation or merger of the Corporation with, one or more
Persons shall not be deemed to be a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this paragraph 11.
12. Limitation on Leverage.
(a) So long as any shares of 1994 Senior Preferred Stock shall be
outstanding, the Corporation shall not incur any indebtedness for borrowed funds
(including borrowings under existing lines of credit) unless (i) Cash Flow for
the twelve (12) calendar months ending on the last day of the month preceding
the month during which the indebtedness for borrowed funds is to be incurred,
and (ii) Cash Flow reasonably projected by the Corporation for the twelve (12)
calendar months commencing with the month during which the indebtedness for
borrowed funds is to be incurred, each equal or exceed 350% of the Pro Forma
Annual Interest Expense computed for the twelve (12) month period commencing
with the month during which the indebtedness for borrowed funds is to be
incurred, and 200% of the Pro Forma Annual Fixed Charges computed for the twelve
(12) month period commencing with the month during which the indebtedness for
borrowed funds is to be incurred.
<PAGE>
(b) The Corporation shall calculate, as of the last day of each
calendar quarter, (i) Cash Flow ("HISTORICAL CASH FLOW") for the twelve (12)
calendar months ended on the last day of such calendar quarter, (ii) Cash Flow
reasonably projected ("PROJECTED CASH FLOW") for the twelve (12) months (the
"SUCCEEDING 12 MONTHS") commencing with the month following the last month of
such calendar quarter, (iii) Pro Forma Annual Interest Expense for the
Succeeding 12 Months, and (iv) Pro Forma Annual Fixed Charges for the Succeeding
12 Months. If either of the Historical Cash Flow or Projected Cash Flow does
not equal or exceed both 350% of the Pro Forma Annual Interest Expense for the
Succeeding 12 Months and 200% of the Pro Forma Annual Fixed Charges for the
Succeeding 12 Months, the Corporation shall thereafter use all available Cash
Flow, other than Cash Flow required to be distributed to shareholders to
maintain the status of the Corporation as a real estate investment trust under
Sections 856 through 860 (or any successor sections) of the Code, to reduce the
amount of the Corporation's indebtedness for borrowed money until such time as
Historical Cash Flow and Projected Cash Flow both equal or exceed the foregoing
amounts, as reflected in the computations under this subparagraph (b) made by
the Corporation hereunder as of the last day of a calendar quarter.
13. Exclusion of Other Rights. Except as may otherwise be required by
law, the shares of 1994 Senior Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in these Articles Supplementary (as such Articles
Supplementary may be amended from time to time) and in the Corporation's
Charter. The share of 1994 Senior Preferred Stock shall have no preemptive or
subscription rights.
14. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
15. Severability of Provisions. If any right, preference or limitation of
the 1994 Senior Preferred Stock set forth in these Articles Supplementary (as
such Articles Supplementary may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other rights, preferences and limitations set forth in these
Articles Supplementary (as so amended) which can be given effect without the
invalid, unlawful or unenforceable, right, preference or limitation shall,
nevertheless, remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
16. Definitions. As used in these Articles Supplementary the terms
hereinafter set forth shall have the following meanings and the following
definitions shall be equally applicable to both the singular and plural forms of
such terms:
<PAGE>
(a) "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person,
ownership of shares of 1994 Senior Preferred Stock equal to the sum of (i) the
shares of 1994 Senior Preferred Stock directly owned by such Person, (ii) the
number of shares of 1994 Senior Preferred Stock indirectly owned by such Person
(if such Person is an "individual" as defined in Section 542(a)(2) of the Code)
taking into account the constructive ownership rules of Section 544 of the Code,
as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares
of 1994 Senior Preferred Stock that such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such
Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of
the Code. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY
OWNED" shall have the correlative meanings.
(b) "CASH AVAILABLE FOR DISTRIBUTION" shall have the meaning provided
in paragraph 7(d)(iii).
(c) "CASH FLOW" shall mean the Corporation's earnings before
interest, taxes, depreciation and amortization (each determined in accordance
with generally accepted accounting principles, consistently applied), less an
allowance for capital replacements for multifamily apartment projects
beneficially owned by the Corporation of $300 per apartment per year.
(d) "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of
the Trust as determined pursuant paragraph 8(c), each of which shall be an
organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
(e) "CLASS A COMMON STOCK" shall mean the Corporation's Class A
Common Stock, $.01 par value per share.
(f) "CLASS B COMMON STOCK" shall mean the Corporation's Class B
Common Stock, $.01 par value per share.
<PAGE>
(g) "CLOSING PRICE" on any date shall mean the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Class A
Common Stock is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Class A Common Stock is listed or admitted to trading or, if the
Class A Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated quotations
system that may then be in use or, if the Class A Common Stock is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Class A Common
Stock selected by the Corporation's Board of Directors.
(h) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute thereto. Reference to any provision
of the Code shall mean such provision as in effect from time to time, as the
same may be amended, and any successor thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
(i) "CONVERSION PRICE" shall mean the price per share of Class A
Common Stock at which the 1994 Senior Preferred Stock is convertible into Class
A Common Stock, which initially shall be $25.4375 per share subject to
subsequent adjustment as provided in paragraph 7.
(j) "CONVERSION RATE" shall have the meaning provided in paragraph
7(b).
(k) "CONVERSION RIGHTS" shall have the meaning provided in paragraph
7.
(l) "CORPORATION'S CHARTER" shall mean the Articles of Amendment and
Restatement and all other organizational documents of the Corporation.
(m) "DEFICIENCY" shall have the meaning provided in paragraph 2.
(n) "DIVIDEND PERIOD" shall have the meaning provided in paragraph 2.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "EXCESS TRANSFER" shall have the meaning provided in paragraph
8(c)(i).
(q) "HISTORICAL CASH FLOW" shall have the meaning provided in
paragraph 12(b).
(r) "INITIAL PUBLIC OFFERING" shall mean the first completed
underwritten public offering of Class A Common Stock registered under the
Securities Act of 1933, as amended, on a registration statement on Form S-11
filed with the Securities and Exchange Commission.
(s) "JUNIOR STOCK" shall have the meaning provided in paragraph 3.
(t) "MANDATORY REDEMPTION DATE" shall have the meaning provided in
paragraph 4.
(u) "MARKET PRICE" on any date shall mean the Closing Price on the
Trading Day immediately preceding such date.
(v) "MINIMUM MANDATORY REDEMPTION" shall have the meaning provided in
paragraph 4.
(w) "OP UNITS" shall mean units of limited partnership interest in
the Operating Partnership.
(x) "OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a
Delaware limited partnership in which the Corporation holds a general
partnership interest.
(y) "OUTSTANDING" shall mean issued and outstanding shares of 1994
Senior Preferred Stock of the Corporation, PROVIDED that for purposes of the
application of the Preferred Stock Ownership Limit to any Person, the term
"OUTSTANDING" shall be deemed to include the number of shares of 1994 Senior
Preferred Stock that such Person alone, at that time, could acquire pursuant to
any options or convertible securities.
<PAGE>
(z) "PERSON" shall mean (A) an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c) of the
Code), association, private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity, and (B) also includes a group as
that term is used for purposes of Section 13(d)(3) of the Exchange Act.
(aa) "PREFERRED STOCK OWNERSHIP LIMIT" shall mean 9.8% of the number
of the Outstanding shares of 1994 Senior Preferred Stock of the Corporation.
(bb) "PRO FORMA ANNUAL FIXED CHANGES" shall mean the sum of (i) Pro
Forma Annual Interest Expense, and (ii) the aggregate dividends required to be
paid on the 1994 Senior Preferred Stock and all other series of the
Corporation's Preferred Stock outstanding during the twelve (12) month period
for which the Pro Forma Annual Fixed Charges are to be determined.
(cc) "PRO FORMA ANNUAL INTEREST EXPENSE" shall mean the interest that
would be due on the Corporation's actual and projected indebtedness (including
the debt to be incurred) for borrowed money for the twelve (12) month period for
which the calculation is made, calculated using the following rates of interest:
(i) For any fixed-rate indebtedness maturing subsequent to
December 31, 2002, a rate equal to the highest annual rate of interest
specified in the instrument evidencing the indebtedness at which interest
accrued during the twelve (12) month period preceding the commencement of
the period for which the calculation is made, or will accrue at any time
subsequent to the commencement of the period for which the calculation is
made, and
(ii) For all indebtedness for borrowed money other than
indebtedness described in the preceding subparagraph (i), an annual rate
equal to the greater of (aa) ten percent (10%), or (bb) two percent (2%) in
excess of the one-year U.S. Treasury Bill rate in effect on the date of
commencement of the period for which the calculation is made.
(dd) "PROHIBITED TRANSFEREE" shall have the meaning provided in
paragraph 8(c)(i).
(ee) "PROJECTED CASH FLOW" shall have the meaning provided in
paragraph 12(b).
(ff) "PROSPECTUS" shall mean the prospectus which forms a part of the
registration statement filed with the Securities and Exchange Commission in
connection with the Initial Public Offering, in the form included in the
registration statement at the time the registration statement becomes effective;
PROVIDED, HOWEVER, if the prospectus is subsequently supplemented or amended for
use in connection with the Initial Public Offering, the term "PROSPECTUS" shall
mean the prospectus as so supplemented or amended.
(gg) "RECORD DATE" shall have the meaning provided in paragraph 2.
(hh) "REDEMPTION PRICE" shall mean $100 per share of the 1994 Senior
Preferred Stock.
(ii) "REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
(jj) "SUCCEEDING 12 MONTHS" shall have the meaning provided in
paragraph 12(b).
(kk) "TRADING DAY" shall mean a day on which the principal national
securities exchange on which the 1994 Senior Preferred Stock or Class A Common
Stock, as the case may be, is listed or admitted to trading is open for the
transaction of business or, if the 1994 Senior Preferred Stock or Class A Common
Stock is not listed or admitted to trading on any national securities exchange,
Trading Day shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(ll) "TRANSFER" shall mean any sale, transfer, gift, assignment,
devise or other disposition of a share of 1994 Senior Preferred Stock (including
(i) the granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of 1994 Senior Preferred
Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for 1994 Senior Preferred
Stock), whether voluntary or involuntary, whether of record or Beneficial
Ownership, and whether by operation of law or otherwise (including, but not
limited to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of 1994 Senior Preferred Stock).
The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings.
(mm) "TRUST" shall mean the trust created pursuant to paragraph 8(c).
(nn) "TRUSTEE" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the Corporation to
serve as trustee of the Trust.
(oo) "VOTING RIGHT" shall have the meaning provided in paragraph
10(c).
<PAGE>
IN WITNESS WHEREOF, Apartment Investment and Management Company has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary this 28th day of July, 1994.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By: /s/ Terry Considine
---------------------------------------------
President and Chief Executive Officer
Witness: /s/ Peter Kompaniez
---------------------------------------------
Secretary
THE UNDERSIGNED, the President and Chief Executive Officer of Apartment
Investment and Management Company, who executed on behalf of the Corporation
Articles Supplementary of which this Certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Terry Considine
---------------------------------------------
President
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation,
having its principal office in Baltimore City, Maryland (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments
and Taxation of Maryland (the "Department") that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Article IV, Section 1.2 of the Charter of the Corporation,
the Board of Directors on May __, 1997 has duly reclassified 966,000 shares of
the 1994 Cumulative Convertible Senior Preferred Stock, par value $0.01 per
share, of the Corporation (the "1994 Senior Preferred Stock") into Preferred
Stock, par value $0.01 per share, of the Corporation (the "Preferred Stock").
SECOND: The terms of the 1994 Senior Preferred Stock contained in
Article SECOND, paragrpah 6(f) of the Articles Supplementary dated July 27,
1994 and filed with the Department on July 28, 1994 (as amended by Article
THIRD, paragraph 6(f) of the Articles of Amendment dated July 28, 1994 and
filed with the Department on July 29, 1994) are as follows:
"(f) All shares of the 1994 Senior Preferred Stock
which shall have been redeemed, purchased or otherwise
acquired by the Corpoation pursuant to the provisions hereof,
shall be canceled and shall not be reissued as shares of the
1994 Senior Preferred Stock, but shall have the status of
authorized but unissued shares of Preferred Stock of the
Corporation."
All of the issued shares of the 1994 Senior Preferred Stock having been since
converted, redeemed, purchased or otherwise acquired by the Corporation, the
Board of Directors has approved the filing these Articles Supplementary to
confirm reclassification of such shares (together any unissued shares of the
1994 Senior Preferred Stock) back into the Preferred Stock.
THIRD: The reclassification increases the number of shares classified as
Preferred Stock from 9,034,000 shares immediately prior to the reclassification
to 10,000,000 shares immediately after the reclassification. The
reclassification decreases the number of shares classified as 1994 Senior
Preferred Stock from 966,000 shares immediately prior to the reclassification
to no shares immediately after the reclassification.
FOURTH: The terms of the Preferred Stock (including, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption) are as
provided in Article IV of the Charter and remain unchanged by these Articles
Supplementary.
-1-
<PAGE>
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has
caused these presents to be signed in its name and on its behalf by its
President and witnessed by its Secretary on May __, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LEEANN MOREIN By: /s/ TERRY CONSIDINE
- ---------------------------------- ----------------------------------
Leeann Morein, Secretary Terry Considine, President
THE UNDERSIGNED, President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/ TERRY CONSIDINE
----------------------------------
Terry Considine, President
-2-
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation,
having its principal office in Baltimore City, Maryland (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments
and Taxation of Maryland (the "Department") that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article IV, Section 1.2 of the Charter of the Corporation,
the Board of Directors on April 23, 1997 has duly reclassified 966,000 shares of
the 1994 Cumulative Convertible Senior Preferred Stock, par value $0.01 per
share, of the Corporation (the "1994 Senior Preferred Stock") into Preferred
Stock, par value $0.01 per share, of the Corporation (the "Preferred Stock").
SECOND: The terms of the 1994 Senior Preferred Stock contained in
Article SECOND, paragrpah 6(f) of the Articles Supplementary dated July 27,
1994 and filed with the Department on July 28, 1994 (as amended by Article
THIRD, paragraph 6(f) of the Articles of Amendment dated July 28, 1994 and
filed with the Department on July 29, 1994) are as follows:
"(f) All shares of the 1994 Senior Preferred Stock
which shall have been redeemed, purchased or otherwise
acquired by the Corpoation pursuant to the provisions hereof,
shall be canceled and shall not be reissued as shares of the
1994 Senior Preferred Stock, but shall have the status of
authorized but unissued shares of Preferred Stock of the
Corporation."
All of the issued shares of the 1994 Senior Preferred Stock having been since
converted, redeemed, purchased or otherwise acquired by the Corporation, the
Board of Directors has approved the filing these Articles Supplementary to
confirm reclassification of such shares (together any unissued shares of the
1994 Senior Preferred Stock) back into the Preferred Stock.
THIRD: The reclassification increases the number of shares classified as
Preferred Stock from 9,034,000 shares immediately prior to the reclassification
to 10,000,000 shares immediately after the reclassification. The
reclassification decreases the number of shares classified as 1994 Senior
Preferred Stock from 966,000 shares immediately prior to the reclassification
to no shares immediately after the reclassification.
FOURTH: The terms of the Preferred Stock (including, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption) are as
provided in Article IV of the Charter and remain unchanged by these Articles
Supplementary.
-1-
<PAGE>
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has
caused these presents to be signed in its name and on its behalf by its
President and witnessed by its Secretary on May 30, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LEEANN MOREIN By: /s/ TERRY CONSIDINE
- ---------------------------------- ----------------------------------
Leeann Morein, Secretary Terry Considine, President
THE UNDERSIGNED, President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/ TERRY CONSIDINE
----------------------------------
Terry Considine, President
-2-
<PAGE>
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS B CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
the Board of Directors has duly divided and classified 750,000 authorized but
unissued shares of the capital stock of the Corporation into a class designated
as Class B Cumulative Convertible Preferred Stock and has provided for the
issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class B Cumulative Convertible Preferred Stock, par value $.01 per share, from
no shares immediately prior to the reclassification to 750,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Preferred Stock, par value $.01 per share, from
10,000,000 shares immediately prior to the reclassification to 9,250,000 shares
immediately after the reclassification. The number of shares classified as
Class B Cumulative Convertible Preferred Stock may be decreased pursuant to
Section 6 of Article Third of these Articles Supplementary upon reacquisition
thereof in any manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class B Cumulative Convertible Preferred Stock
(including the preferences, conversions or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class B Cumulative
Convertible Preferred Stock (the "Class B Preferred Stock") and Seven Hundred
Fifty Thousand (750,000) shall be the authorized number of shares of such Class
B Preferred Stock constituting such class.
<PAGE>
2. DEFINITIONS.
For purposes of the Class B Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock,
the sum of the products of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price of one
share of Equity Stock of such class.
"BASE COMMON STOCK DIVIDEND" shall have the meaning set forth in paragraph
(a) of Section 9 of this Article.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of Equity
Stock directly owned by such Person, (ii) the number of shares of Equity Stock
indirectly owned by such Person (if such Person is an "individual" as defined in
Section 542(a)(2) of the Code) taking into account the constructive ownership
rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code, and (iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is
attributed to such Person pursuant to Section 318 of the Code, as modified by
Section 856(d)(5) of the Code, PROVIDED that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and
clause (ii) of the definition of "Person" shall be disregarded. The terms
"BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the
correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Class B Preferred Stock.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"CALL DATE" shall have the meaning set forth in paragraph (b) of Section 5
of this Article.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 11.3 of this Article, each of which shall be
an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of
the Code.
"CLASS B PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto. Reference to any provision of the
Code shall mean such provision as in effect from time to time, as the same may
be amended, and any successor thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital stock into
which outstanding shares of Common Stock shall be reclassified.
"CONVERSION PRICE" shall mean the conversion price per share of Common
Stock for which each share of Class B Preferred Stock is convertible, as such
Conversion Price may be adjusted pursuant to paragraph (d) of Section 7 of this
Article. The initial Conversion Price shall be $30.45 (equivalent to an initial
conversion rate of 3.28407 shares of Common Stock for each share of Class B
Preferred Stock).
"CURRENT MARKET PRICE" of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation
or of any similar security of any other issuer for any day shall mean the
closing price, regular way on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices regular way
on such day, in either case as reported on the principal national
securities exchange on which such securities are listed or admitted for
trading, or, if such security is not quoted on any national securities
exchange, on the National Market of the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such security
is not quoted on the NASDAQ National Market, the average of the closing bid
and asked prices on such day in the overthecounter market as reported by
NASDAQ or, if bid and asked prices for such security on such day shall not
have been reported through NASDAQ, the average of the bid and asked prices
on such day as furnished by any New York Stock Exchange or National
Association of Securities Dealers, Inc. member firm regularly making a
market in such security selected for such purpose by the Chief Executive
Officer or the Board of Directors or if any class or series of securities
are not publicly traded, the fair value of the shares of such class as
determined reasonably and in good faith by the Board of Directors of the
Corporation.
<PAGE>
"DISTRIBUTION" shall have the meaning set forth in paragraph (d)(iii) of
Section 7 of this Article.
"DIVIDEND PAYMENT DATE" shall mean, with respect to each Dividend Period,
(a) the date that cash dividends are paid on the Common Stock with respect to
such Dividend Period; or (b) if such dividends have not been paid on the Common
Stock by 9:00 a.m., New York City time, on the sixtieth day from and including
the last day of such Dividend Period, then on such day; provided, further, that
if any Dividend Payment Date falls on any day other than a Business Day, the
dividend payment payable on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the first day of the next succeeding Dividend Period, other than the
Dividend Period during which any Class B Preferred Stock shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Call Date with
respect to the Class B Preferred Stock being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 11.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading Days
selected by the Corporation commencing not more than twenty (20) Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex" date with respect to the issuance or distribution requiring
such computation. The term "'ex' date," when used with respect to any issuance
or distribution, means the first day on which the share of Common Stock trades
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"ISSUE DATE" shall mean August 4, 1997.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including September 30, 1997.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class B Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class B Preferred Stock that are Beneficially Owned by the Initial Holder.
From the Issue Date, the secretary of the Corporation, or such other person as
shall be designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of Directors, a
schedule that sets forth the then-current Initial Holder Limit applicable to the
Initial Holder.
"JUNIOR STOCK" shall have the meaning set forth in paragraph (c) of Section
8 of this Article.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or
(ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class B Preferred Stock of the Corporation
having an Aggregate Value not in excess of the excess of (x) 15% of the
Aggregate Value of all Outstanding shares of Equity Stock over (y) by the
Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock
that are Beneficially Owned by the Look-Through Entity.
<PAGE>
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of a share of that class of Equity Stock on the Trading
Day immediately preceding such date. The term "CLOSING PRICE" on any date shall
mean the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Equity Stock is listed or admitted to trading or, if the Equity Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Equity Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Equity Stock selected by the Board of
Directors of the Company.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation, PROVIDED that for purposes of the application of the
Ownership Limit, the Look-Through Ownership Limit or the Initial Holder
Limit to any Person, the term "OUTSTANDING" shall be deemed to include the
number of shares of Equity Stock that such Person alone, at that time,
could acquire pursuant to any options or convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class B
Preferred Stock of the Corporation having an Aggregate Value not in excess of
the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class B Preferred Stock that are Beneficially Owned by the Person.
"OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or LookThrough Entities, the
Initial Holder Limit as applied to the Initial Holder and the LookThrough
Ownership Limit as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
8 of this Article.
"PERSON" shall mean (a) for purposes of Section 11 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and (ii) also includes a group as that term is used for
purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the
remaining Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger or
otherwise) of such entity.
"PROHIBITED TRANSFEREE" has the meaning set forth in Section 11.3(A) of
this Article.
"REIT" shall mean a "real estate investment trust" as defined in Section
856 of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
8 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board
of Directors, the allocation of funds to be so paid on any series or class
of capital stock of the Corporation; provided, however, that if any funds
for any class or series of Junior Stock or any class or series of Parity
Stock are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
with respect to the Class B Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying or
other similar agent.
<PAGE>
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on which
such securities are listed or admitted or, if such securities are not listed or
admitted for trading on any national securities exchange, the NASDAQ National
Market or, if such securities are not listed or admitted for trading on the
NASDAQ National Market, any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"TRANSACTION" shall have the meaning set forth in paragraph (e) of Section
7 of this Article.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class B Preferred Stock (including (i) the granting of
an option or any series of such options or entering into any agreement for the
sale, transfer or other disposition of Class B Preferred Stock or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Class B Preferred Stock), whether voluntary
or involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any transfer of an
interest in other entities that results in a change in the Beneficial Ownership
of shares of Class B Preferred Stock). The term "TRANSFERS" and "TRANSFERRED"
shall have correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the Class B
Preferred Stock; provided, that if the Corporation has not designated a transfer
agent then the Corporation shall act as the transfer agent for the Class B
Preferred Stock.
"TRUST" shall mean the trust created pursuant to Section 11.3 of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 9 of
this Article.
<PAGE>
3. DIVIDENDS.
(a) The holders of Class B Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class B Preferred Stock equal to the greater of (i) the base
dividend of $1.78125 per quarter (the "Base Rate") or (ii) the cash dividends
declared on the number of shares of Common Stock, or portion thereof, into which
a share of Class B Preferred Stock is convertible. The dividends payable with
respect to the Initial Dividend Period shall be determined solely by reference
to the Base Rate. The amount referred to in clause (ii) of this paragraph (a)
with respect to each succeeding Dividend Period shall be determined as of the
applicable Dividend Payment Date by multiplying the number of shares of Common
Stock, or portion thereof calculated to the fourth decimal point, into which a
share of Class B Preferred Stock would be convertible at the opening of business
on such Dividend Payment Date (based on the Conversion Price then in effect) by
the aggregate cash dividends payable or paid for such Dividend Period in respect
of a share of Common Stock outstanding as of the record date for the payment of
dividends on the Common Stock with respect to such Dividend Period. If (A) the
Corporation pays a cash dividend on the Common Stock after the Dividend Payment
Date for the corresponding Dividend Period and (B) the dividend on the Class B
Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of
this paragraph (a), taking into account the Common Stock dividend referenced in
clause (A), exceeds the dividend previously declared on the Class B Preferred
Stock for such Dividend Period, the Corporation shall pay an additional dividend
to the holders of the Class B Preferred Stock on the date that the Common Stock
dividend referenced in clause (A) is paid, in an amount equal to the difference
between the dividend calculated pursuant to clause (B) and the dividends
previously declared on the Class B Preferred Stock with respect to such Dividend
Period. Such dividends shall be cumulative from the Issue Date, whether or not
in any Dividend Period or Periods such dividends shall be declared or there
shall be funds of the Corporation legally available for the payment of such
dividends, and shall be payable quarterly in arrears on the Dividend Payment
Dates, commencing on the first Dividend Payment Date after the Issue Date. Each
such dividend shall be payable in arrears to the holders of record of the Class
B Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on a record date fixed by the Board of Directors which shall
be not more than 60 days prior to the applicable Dividend Payment Date and,
within such 60 day period, shall be the same date as the record date for the
regular quarterly dividend payable with respect to the Common Stock for the
Dividend Period to which such Dividend Payment Date relates (or, if there is no
such record date for Common Stock, then such date as the Board of Directors may
fix). Accumulated, accrued and unpaid dividends for any past Dividend Periods
may be declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, which date shall not precede by
more than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
Upon a final administrative determination by the Internal Revenue
Service that the Corporation does not qualify as a real estate investment trust
in accordance with Section 856 of the Code, the Base Rate set forth in (a)(i)
will be increased to $3.03125 until such time as the Corporation regains its
status as a real estate investment trust; provided, however, that if the
Corporation contests its loss of real estate investment trust status in Federal
Court, following its receipt of an opinion of nationally recognized tax counsel
to the effect that there is a reasonable basis to contest such loss of status,
the Base Rate shall not be increased during the pendency of such judicial
proceeding; provided further, however, that upon a final judicial determination
in Federal Tax Court, Federal District Court or the Federal Claims Court that
the Corporation does not qualify as a real estate investment trust, the Base
Rate will be increased as stated above from the date of such judicial
determination.
(b) The amount of dividends payable per share of Class B Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30day months
and a 360day year. Holders of Class B Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess of
cumulative dividends, as herein provided, on the Class B Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Class B Preferred Stock that may be in
arrears.
<PAGE>
(c) So long as any of the shares of Class B Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class B Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class B Preferred Stock and all
dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class B Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class B Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of or options, warrants or rights to subscribe for or purchase shares of Junior
Stock) shall be declared or paid or set apart for payment by the Corporation and
no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any shares of Junior
Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common Stock
made for purposes of an employee incentive or benefit plan of the Corporation or
any subsidiary) for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
directly or indirectly by the Corporation (except by conversion into or exchange
for Junior Stock), nor shall any other cash or other property otherwise be paid
or distributed to or for the benefit of any holder of shares of Junior Stock in
respect thereof, directly or indirectly, by the Corporation unless in each case
(i) the full cumulative dividends (including all accumulated, accrued and unpaid
dividends) on all outstanding shares of Class B Preferred Stock and any other
Parity Stock of the Corporation shall have been paid or such dividends have been
declared and set apart for payment for all past Dividend Periods with respect to
the Class B Preferred Stock and all past dividend periods with respect to such
Parity Stock and (ii) sufficient funds shall have been paid or set apart for the
payment of the full dividend for the current Dividend Period with respect to the
Class B Preferred Stock and the current dividend period with respect to such
Parity Stock.
<PAGE>
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the Corporation (whether capital or surplus) shall be made to or
set apart for the holders of Junior Stock, the holders of shares of Class B
Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per
share of Class B Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class B Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class B
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Class B Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Class B Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
B Preferred Stock and any Parity Stock, as provided in this Section 4, any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Class B Preferred Stock and any Parity Stock
shall not be entitled to share therein.
<PAGE>
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class B Preferred Stock shall not be redeemable by the
Corporation prior to August 4, 2002. On and after August 4, 2002, the
Corporation, at its option, may redeem shares of Class B Preferred Stock, in
whole or from time to time in part, at a redemption price payable in cash equal
to 100% of the Liquidation Preference thereof, plus all accrued and unpaid
dividends to the Call Date.
(b) Shares of Class B Preferred Stock shall be redeemed by the
Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 5 (the "Call Date"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of redemption and
shall be not less than 30 days nor more than 60 days after the date notice of
redemption is sent by the Corporation.
(c) If full cumulative dividends on all outstanding shares of Class B
Preferred Stock and any other class or series of Parity Stock of the Corporation
have not been paid or declared and set apart for payment, no shares of Class B
Preferred Stock may be redeemed unless all outstanding shares of Class B
Preferred Stock are simultaneously redeemed and neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares of Class B Preferred
Stock, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of shares of Class B Preferred Stock.
(d) If the Corporation shall redeem shares of Class B Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to each holder of record of the shares to be redeemed. Such notice shall
be provided by first class mail, postage prepaid, at such holder's address as
the same appears on the stock records of the Corporation. Neither the failure
to mail any notice required by this paragraph (d), nor any defect therein or in
the mailing thereof to any particular holder, shall affect the sufficiency of
the notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given on the date mailed whether or
not the holder receives the notice. Each such notice shall state, as
appropriate: (1) the Call Date; (2) the number of shares of Class B Preferred
Stock to be redeemed and, if fewer than all such shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder; (3)
the place or places at which certificates for such shares are to be surrendered
for cash; and (4) the thencurrent Conversion Price. Notice having been mailed
as aforesaid, from and after the Call Date (unless the Corporation shall fail to
make available the amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, dividends on the shares of Class B
Preferred Stock so called for redemption shall cease to accumulate or accrue on
the shares of Class B Preferred Stock called for redemption (except that, in the
case of a Call Date after a dividend record date and prior to the related
Dividend Payment Date, holders of Class B Preferred Stock on the dividend record
date will be entitled on such Dividend Payment Date to receive the dividend
payable on such shares), (ii) said shares shall no longer be deemed to be
outstanding, and (iii) all rights of the holders thereof as holders of Class B
Preferred Stock of the Corporation shall cease (except the rights to receive the
cash payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to make available the redemption
price in accordance with the preceding sentence shall be deemed fulfilled if, on
or before the Call Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of the
shares of Class B Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares of Class B Preferred Stock to be
redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call Date
shall revert to the general funds of the Corporation, after which reversion the
holders of shares of Class B Preferred Stock so called for redemption shall look
only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class B Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class B Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class B
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class B Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If
fewer than all the shares of Class B Preferred Stock represented by any
certificate are redeemed, then a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
<PAGE>
6. STATUS OF REACQUIRED STOCK.
All shares of Class B Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (including shares of Class B
Preferred Stock which have been surrendered for conversion into Common Stock)
shall be returned to the status of authorized, but unissued shares of Class B
Preferred Stock.
7. CONVERSION.
At any time on or after August 4, 1998. Holders of shares of Class B
Preferred Stock shall have the right to convert all or a portion of such shares
into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, a holder of shares of Class B Preferred Stock shall have the right,
at such holder's option, at any time on or after August 4, 1998 to convert such
shares, in whole or in part, into the number of fully paid and nonassessable
shares of authorized but previously unissued shares of Common Stock per each
share of Class B Preferred Stock obtained by dividing the Liquidation Preference
(excluding any accumulated, accrued and unpaid dividends) per share of Class B
Preferred Stock by the Conversion Price (as in effect at the time and on the
date provided for in the last subparagraph of paragraph (b) of this Section 7)
and by surrendering such shares to be converted, such surrender to be made in
the manner provided in paragraph (b) of this Section 7; provided, however, that
the right to convert shares of Class B Preferred Stock called for redemption
pursuant to Section 5 shall terminate at the close of business on the Call Date
fixed for such redemption, unless the Corporation shall default in making
payment of cash payable upon such redemption under Section 5 of this Article.
(b) In order to exercise the conversion right, the holder of each
share of Class B Preferred Stock to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof elects to convert such share of Class B
Preferred Stock. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Class B Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
Holders of shares of Class B Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for
shares of Class B Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or send on such holder's written
order, a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such shares of Class B Preferred Stock in
accordance with provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall be settled
as provided in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for shares
of Class B Preferred Stock shall have been surrendered and such notice received
by the Corporation as aforesaid, and the Person or Persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time on
such date unless the stock transfer books of the Corporation shall be closed on
that date, in which event such Person or Persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation. If the dividend
payment record date for the Class B Preferred Stock and Common Stock do not
coincide, and the preceding sentence does not operate to ensure that a holder of
shares of Class B Preferred Stock whose shares are converted into Common Stock
does not receive dividends on both the shares of Class B Preferred Stock and the
Common Stock into which such shares are converted for the same Dividend Period,
then notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
(c) No fractional share of Common Stock or scrip representing
fractions of a share of Common Stock shall be issued upon conversion of the
shares of Class B Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon the conversion of
shares of Class B Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of the Common
Stock on the Trading Day immediately preceding the date of conversion. If more
than one share shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Class B Preferred Stock so surrendered.
<PAGE>
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its capital stock in shares of Common Stock,
(B) subdivide its outstanding Common Stock into a greater number of shares, (C)
combine its outstanding Common Stock into a smaller number of shares or (D)
issue any shares of capital stock by reclassification of its outstanding Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening of business on the day
following the day on which such subdivision, combination or reclassification
becomes effective, as the case may be, shall be adjusted so that the holder of
any share of Class B Preferred Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock (or fraction of a
share of Common Stock) that such holder would have owned or have been entitled
to receive after the happening of any of the events described above had such
share of Class B Preferred Stock been converted immediately prior to the record
date in the case of a dividend or distribution or the effective date in the case
of a subdivision, combination or reclassification. An adjustment made pursuant
to this paragraph (d)(i) of this Section 7 shall become effective immediately
after the opening of business on the day next following the record date (except
as provided in paragraph (h) below) in the case of a dividend or distribution
and shall become effective immediately after the opening of business on the day
next following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Corporation shall issue after the Issue Date
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 days after the record date described below in this
paragraph (d)(ii) of this Section 7) to subscribe for or purchase Common Stock
at a price per share less than the Fair Market Value per share of the Common
Stock on the record date for the determination of stockholders entitled to
receive such rights, options or warrants, then the Conversion Price in effect at
the opening of business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the opening of business on the day following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (X) the number of shares of Common Stock outstanding on the
close of business on the date fixed for such determination and (Y) the number of
shares that could be purchased at such Fair Market Value from the aggregate
proceeds to the Corporation from the exercise of such rights, options or
warrants for Common Stock, and the denominator of which shall be the sum of (XX)
the number of shares of Common Stock outstanding on the close of business on the
date fixed for such determination and (YY) the number of additional shares of
Common Stock offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective immediately after
the opening of business on the day next following such record date (except as
provided in paragraph (h) below). In determining whether any rights, options or
warrants entitle the holders of Common Stock to subscribe for or purchase Common
Stock at less than such Fair Market Value, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if other than
cash, to be determined in good faith by the Board of Directors.
(iii) If the Corporation shall after the Issue Date make a
distribution on its Common Stock other than in cash or shares of Common Stock
(including any distribution in securities (other than rights, options or
warrants referred to in paragraph (d)(ii) of this Section 7)) (each of the
foregoing being referred to herein as a "distribution"), then the Conversion
Price in effect at the opening of business on the next day following the record
date for determination of stockholders entitled to receive such distribution
shall be adjusted to equal the price determined by multiplying (A) the
Conversion Price in effect immediately prior to the opening of business on the
day following the record date by (B) a fraction, the numerator of which shall be
the difference between (X) the number of shares of Common Stock outstanding on
the close of business on the record date and (Y) the number of shares determined
by dividing (aa) the aggregate value of the property being distributed by (bb)
the Fair Market Value per share of Common Stock on the record date, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the close of business on the record date. Such adjustment shall become
effective immediately after the opening of business on the day next following
such record date (except as provided below). The value of the property being
distributed shall be as determined in good faith by the Board of Directors;
provided, however, if the property being distributed is a publicly traded
security, its value shall be calculated in accordance with the procedure for
calculating the Fair Market Value of a share of Common Stock (calculated for a
period of five consecutive Trading Days commencing on the twentieth Trading Day
after the distribution). Neither the issuance by the Corporation of rights,
options or warrants to subscribe for or purchase securities of the Corporation
nor the exercise thereof shall be deemed a distribution under this paragraph.
<PAGE>
(iv) If after the Issue Date the Corporation shall acquire,
pursuant to an issuer or self tender offer, all or any portion of the
outstanding Common Stock and such tender offer involves the payment of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors), at the last time (the
"Expiration Time") tenders may be made pursuant to such offer, that exceeds the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Time, then the Conversion Price in effect on the
opening of business on the day next succeeding the Expiration Time shall be
adjusted to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the Expiration Time by (B) a fraction, the
numerator of which shall be (X) the number of shares of Common Stock outstanding
(including the shares acquired in the tender offer (the "Acquired Shares"))
immediately prior to the Expiration Time, multiplied by (Y) the Current Market
Price per share of Common Stock on the Trading Day next succeeding the
Expiration Time, and the denominator of which shall be the sum of (XX) the fair
market value (determined as aforesaid) of the aggregate consideration paid to
acquire the Acquired Shares and (YY) the product of (I) the number of shares of
Common Stock outstanding (less any Acquired Shares) at the Expiration Time,
multiplied by (II) the Current Market Price per share of Common Stock on the
Trading Day next succeeding the Expiration Time.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of at
least 1% in such price; provided, however, that any adjustments that by reason
of this paragraph (d)(v) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made in accordance with the
provisions of this Section 7 (other than this paragraph (d)(v)) not later than
such time as may be required in order to preserve the taxfree nature of a
distribution to the holders of shares of Common Stock. Notwithstanding any
other provisions of this Section 7, the Corporation shall not be required to
make any adjustment of the Conversion Price for the issuance of (A) any shares
of Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Corporation and the investment of
optional amounts in shares of Common Stock under such plan or (B) any options,
rights or shares of Common Stock pursuant to any stock option, stock purchase or
other stock-based plan maintained by the Corporation. All calculations under
this Section 7 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest onetenth of a share (with .05 of a share being rounded
upward), as the case may be. Anything in this paragraph (d) of this Section 7
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this paragraph (d), as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivision of
shares, reclassification or combination of shares, distribution of rights or
warrants to purchase stock or securities, or a distribution of other assets
(other than cash dividends) hereafter made by the Corporation to its
stockholders shall not be taxable, or if that is not possible, to diminish any
income taxes that are otherwise payable because of such event.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, issuer or
self tender offer for at least 30% of the shares of Common Stock outstanding,
sale of all or substantially all of the Corporation's assets or recapitalization
of the Common Stock, but excluding any transaction as to which paragraph (d)(i)
of this Section 7 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock shall
be converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of Class B Preferred
Stock which is not converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereupon be
convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon such
consummation by a holder of that number of shares of Common Stock into which one
share of Class B Preferred Stock was convertible immediately prior to such
Transaction (without giving effect to any Conversion Price adjustment pursuant
to Section 7(d)(iv) of this Article). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class B Preferred Stock that will contain
provisions enabling the holders of the Class B Preferred Stock that remain
outstanding after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
<PAGE>
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than cash dividends and cash
distributions); or
(ii) the Corporation shall authorize the granting to all
holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or series of capital stock or any other rights or
warrants; or
(iii) there shall be any reclassification of the outstanding
Common Stock or any consolidation or merger to which the Corporation is a party
and for which approval of any stockholders of the Corporation is required, or a
statutory share exchange, an issuer or self tender offer shall have been
commenced for at least 30% of the outstanding shares of Common Stock (or an
amendment thereto changing the maximum number of shares sought or the amount or
type of consideration being offered therefor shall have been adopted), or the
sale or transfer of all or substantially all of the assets of the Corporation as
an entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Class B Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date
on which such tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto).
Failure to give or receive such notice or any defect therein shall not affect
the legality or validity of the proceedings described in this Section 7.
<PAGE>
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to each holder of shares of Class B Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7 provides
that an adjustment shall become effective on the day next following the record
date for an event, the Corporation may defer until the occurrence of such event
(A) issuing to the holder of any share of Class B Preferred Stock converted
after such record date and before the occurrence of such event the additional
Common Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (B) paying to such holder any amount
of cash in lieu of any fraction pursuant to paragraph (c) of this Section 7.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any capital stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 7.
(j) If the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 7, that in the opinion of the
Board of Directors would materially adversely affect the conversion rights of
the holders of Class B Preferred Stock, the Conversion Price for the Class B
Preferred Stock may be adjusted, to the extent permitted by law, in such manner,
if any, and at such time as the Board of Directors, in its sole discretion, may
determine to be equitable under the circumstances.
<PAGE>
(k) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock solely for the purpose of effecting conversion of the Class B
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Class B Preferred Stock not theretofore
converted into Common Stock. For purposes of this paragraph (k), the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Class B Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder
(and without regard to the Ownership Limit set forth in the Charter of the
Corporation).
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Class B Preferred Stock shall be validly issued,
fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Common
Stock required to be delivered upon conversion of the shares of Class B
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding shares of Common Stock are listed at the time
of such delivery.
(l) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion or redemption of
shares of Class B Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock or
other securities or property in a name other than that of the holder of the
shares of Class B Preferred Stock to be converted or redeemed, and no such issue
or delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Corporation the amount of any such tax or established,
to the reasonable satisfaction of the Corporation, that such tax has been paid.
(m) In addition to any other adjustment required hereby, to the
extent permitted by law, the Corporation from time to time may decrease the
Conversion Price by any amount, permanently or for a period of at least twenty
Business Days, if the decrease is irrevocable during the period.
(n) Notwithstanding anything to the contrary contained in this
Section 7, conversion of Class B Preferred Stock pursuant to this Section 7
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter), after
taking into account any waiver of such limitation granted to any holder of the
shares of Class B Preferred Stock.
<PAGE>
8. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class B Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class B Preferred Stock ("Senior Stock");
(b) on a parity with the Class B Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class B Preferred Stock, if the holders of such class of stock or series and
the Class B Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(c) junior to the Class B Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class B Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
<PAGE>
9. VOTING.
(a) If and whenever (i) six quarterly dividends (whether or not
consecutive) payable on the Class B Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Corporation fails to pay dividends on the Common Stock in
an amount per share at least equal to $0.4625 (subject to adjustment consistent
with any adjustment of the Conversion Price pursuant to Section 7(d) of this
Article) (the "Base Common Stock Dividend") the number of directors then
constituting the Board of Directors shall be increased by two (in the case of an
arrearage in dividends described in clause (i)) or one additional director (in
the case of an arrearage in dividends described in clause (ii)) (in each case if
not already increased by reason of similar types of provisions with respect to
Voting Preferred Stock (as defined below)) and the holders of shares of Class B
Preferred Stock, together with the holders of shares of every other series or
class of Parity Stock (any other such series, the "Voting Preferred Stock"),
voting as a single class regardless of series, shall be entitled to elect the
two additional directors (in the case of an arrearage in dividends described in
clause (i)) or one (in the case of an arrearage in dividends described in clause
(ii)) to serve on the Board of Directors at any annual meeting of stockholders
or special meeting held in place thereof, or at a special meeting of the holders
of the Class B Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever (1) in the case of an arrearage in dividends
described in clause (i), all arrears in dividends on the Class B Preferred Stock
and the Voting Preferred Stock then outstanding shall have been paid and
dividends thereon for the current quarterly dividend period shall have been paid
or declared and set apart for payment, or (2) in the case of an arrearage in
dividends described in clause (ii), the Corporation makes a quarterly dividend
payment on the Common Stock in an amount per share equal to or exceeding the
Base Common Stock Dividend, then the right of the holders of the Class B
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors (in the case of an arrearage in dividends described in clause (i)) or
one additional director (in the case of an arrearage in dividends described in
clause (ii)) shall cease (but subject always to the same provision for the
vesting of such voting rights in the case of any similar future arrearages), and
the terms of office of all Persons elected as directors by the holders of the
Class B Preferred Stock and the Voting Preferred Stock shall forthwith terminate
and the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class B Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class B Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class B Preferred Stock and of the Voting Preferred Stock for the
election of the two directors (in the case of an arrearage in dividends
described in clause (i)) or one director (in the case of an arrearage in
dividends described in clause (ii)) to be elected by them as herein provided,
such call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class B Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors or director elected at any such special meeting
shall hold office until the next annual meeting of the stockholders or special
meeting held in lieu thereof if such office shall not have previously terminated
as above provided. If any vacancy shall occur among the directors elected by
the holders of the Class B Preferred Stock and the Voting Preferred Stock, a
successor shall be elected by the Board of Directors, upon the nomination of the
then remaining director elected by the holders of the Class B Preferred Stock
and the Voting Preferred Stock or the successor of such remaining director, to
serve until the next annual meeting of the stockholders or special meeting held
in place thereof if such office shall not have previously terminated as provided
above.
(b) So long as any shares of Class B Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Class B Preferred Stock, given
in Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary, the Charter or the By-Laws of the
Corporation that materially adversely affects the voting powers, rights or
preferences of the holders of the Class B Preferred Stock; provided, however,
that the amendment of the provisions of the Charter so as to authorize or
create, or to increase the authorized amount of, any Junior Stock or any shares
of any class of Parity Stock shall not be deemed to materially adversely affect
the voting powers, rights or preferences of the holders of Class B Preferred
Stock; or
<PAGE>
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of , any shares of any class of Senior Stock
or any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class B Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision is made for the redemption of all
shares of Class B Preferred Stock at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class B Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class B Preferred Stock as a single
class on any matter, then the Class B Preferred Stock and such other class or
series shall have with respect to such matters one (1) vote per $100 of stated
liquidation preference. Except as otherwise required by applicable law or as
set forth herein, the Class B Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class B Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
11.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class B Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class B Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class B Preferred Stock in
excess of the Look-Through Ownership Limit.
<PAGE>
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section
11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer
(whether or not such Transfer is the result of transactions entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system) that, if effective, would result in any Person
(other than the Initial Holder or a Look-Through Entity) Beneficially Owning
shares of Class B Preferred Stock in excess of the Ownership Limit shall be void
AB INITIO as to the Transfer of such shares of Class B Preferred Stock that
would be otherwise Beneficially Owned by such Person in excess of the Ownership
Limit, and the intended transferee shall acquire no rights in such shares of
Class B Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in
Section 11.8, from and after the Issue Date (and subject to Section 11.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class B Preferred Stock in excess
of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such
shares of Class B Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class B Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 11.8 from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class B Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class B Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class B Preferred Stock.
<PAGE>
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class B Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class B
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class B
Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class B Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class B Preferred Stock in the same or any
other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class B Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), the Board of Directors or a
committee thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event, including,
but not limited to, refusing to give effect to such Transfer or other event on
the books of the Corporation, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class B Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; PROVIDED, FURTHER, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class B Preferred Stock that is
expressly authorized pursuant to Section 11.8(d) of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class B Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class B Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class B Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class B Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 11.8 of this Article, such shares of Class B
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the business day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look Through
Entity Ownership Limit.
<PAGE>
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class B Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 11.3(E), the
Prohibited Transferee shall have no rights in the Class B Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights
and rights to dividends with respect to shares of Class B Preferred Stock held
in the Trust, which rights shall be exercised for the benefit of the Charitable
Beneficiary. Any dividend or distribution paid prior to the discovery by the
Corporation that the shares of Class B Preferred Stock have been transferred to
the Trustee shall be repaid to the Corporation upon demand, and any dividend or
distribution declared but unpaid shall be rescinded as void AB INITIO with
respect to such shares of Class B Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class B
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares
at the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class B Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee
shall receive the lesser of (1) the price paid by the Prohibited Transferee for
the shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If
any of the transfer restrictions set forth in this Section 11.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the Prohibited
Transferee may be deemed, at the option of the Corporation, to have acted as the
agent of the Corporation in acquiring the Class B Preferred Stock as to which
such restrictions would, by their terms, apply, and to hold such Class B
Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class B
Preferred Stock transferred to the Trustee shall be deemed to have been offered
for sale to the Corporation, or its designee, at a price per share equal to the
lesser of (i) the price per share in the transaction that resulted in such
transfer to the Trust (or, in the case of a devise or gift, the Market Price at
the time of such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class B Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts
to acquire shares of Class B Preferred Stock in violation of Section 11.1 of
this Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 11.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT. Failure to give such notice shall
not limit the rights and remedies of the Board of Directors provided herein in
any way.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class B
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5%
(or such other percentage between 0.5% and 5%, as provided in the applicable
regulations adopted under the Code) of the number of Outstanding shares of Class
B Preferred Stock shall, within 30 days after January 1 of each year, give
written notice to the Corporation stating the name and address of such record or
Beneficial Owner, the number of shares of Class B Preferred Stock Beneficially
Owned, and a full description of how such shares are held. Each such record or
Beneficial Owner of Class B Preferred Stock shall, upon demand by the
Corporation, disclose to the Corporation in writing such additional information
with respect to the Beneficial Ownership of the Class B Preferred Stock as the
Board of Directors, in its sole discretion, deems appropriate or necessary to
(i) comply with the provisions of the Code regarding the qualification of the
Corporation as a REIT under the Code and (ii) ensure compliance with the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as applicable. Each stockholder of record, including without limitation any
Person that holds shares of Class B Preferred Stock on behalf of a Beneficial
Owner, shall take all reasonable steps to obtain the written notice described in
this Section 11.5 from the Beneficial Owner.
<PAGE>
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a
Beneficial Owner of shares of Class B Preferred Stock and any Person (including
the stockholder of record) that is holding shares of Class B Preferred Stock for
a Beneficial Owner, and any proposed transferee of shares, shall provide such
information as the Corporation, in its sole discretion, may request in order to
determine the Corporation's status as a REIT, to comply with the requirements of
any taxing authority or other governmental agency, to determine any such
compliance or to ensure compliance with the Ownership Limit, the Initial Holder
Limit and the Look-Through Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of Class B
Preferred Stock already Beneficially Owned by such stockholder or proposed
transferee and any related persons specified, which statement or affidavit shall
be in the form prescribed by the Corporation for that purpose.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 11 of this Article, or in the case of an ambiguity in
any definition contained in Section 11 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a
ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Ownership Limit to a Person subject to the Ownership Limit, if
such person is not an individual for purposes of Section 542(a) of the Code and
is a corporation, partnership, estate or trust. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this
Article, the pledge by the Initial Holder of all or any portion of the Class B
Preferred Stock directly owned at any time or from time to time shall not
constitute a violation of Section 11.1 of this Article and the pledgee shall not
be subject to the Ownership Limit with respect to the Class B Preferred Stock so
pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the purchase of
Class B Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class B Preferred Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class B Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class B Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class B Preferred Stock shall bear the
following legend:
"The shares of Class B Preferred Stock represented by this certificate are
subject to restrictions on transfer. No person may Beneficially Own shares of
Class B Preferred Stock in excess of the Ownership Restrictions, as applicable,
with certain further restrictions and exceptions set forth in the Corporation's
Charter (including the Articles Supplementary setting forth the terms of the
Class B Preferred Stock). Any Person that attempts to Beneficially Own shares
of Class B Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this legend have
the meanings ascribed to such terms in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class B Preferred Stock),
as the same may be amended from time to time, a copy of which, including the
restrictions on transfer, will be sent without charge to each stockholder that
so requests. If the restrictions on transfer are violated, the shares of Class
B Preferred Stock represented hereby will be either (i) void in accordance with
the Certificate or (ii) automatically transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
<PAGE>
11.10 SEVERABILITY. If any provision of this Article or any application
of any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class B Cumulative Convertible Preferred Stock
set forth in Article Third hereof shall become Article XIII of the Charter.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Vice President and witnessed by its
Secretary on August 1, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Leeann Morein /s/ Patricia K. Heath
- --------------------------------- ------------------------------
Leeann Morein, Patricia K. Heath,
Secretary Vice President
THE UNDERSIGNED, Vice President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation the Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/ Patricia K. Heath
- ----------------------------------
Patricia K. Heath,
Vice President
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE I OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office. . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices. . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II STOCK . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certificates Representing Stock. . . . . . . . . . . . 1
Section 2. Fractional Share Interests or Scrip. . . . . . . . . . 2
Section 3. Share Transfers. . . . . . . . . . . . . . . . . . . . 2
Section 4. Record Date for Stockholders. . . . . . . . . . . . . . 3
Section 5. Meaning of Certain Terms. . . . . . . . . . . . . . . . 3
ARTICLE III STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Stockholder Meetings. . . . . . . . . . . . . . . . . . 4
Section 2. Informal Action. . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . 7
Section 1. Functions and Definition. . . . . . . . . . . . . . . . 7
Section 2. Qualifications and Number. . . . . . . . . . . . . . . 8
Section 3. Election and Term. . . . . . . . . . . . . . . . . . . 8
Section 4. Meetings. . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5. Removal of Directors. . . . . . . . . . . . . . . . . . 9
Section 6. Committees. . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. Informal Action. . . . . . . . . . . . . . . . . . . . 10
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Officers. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Election of Officers. . . . . . . . . . . . . . . . . . 10
Section 3. Subordinate Officers. . . . . . . . . . . . . . . . . . 11
Section 4. Compensation of Officers. . . . . . . . . . . . . . . . 11
Section 5. Term of Office; Removal and Vacancies. . . . . . . . . 11
Section 6. Chairman of the Board. . . . . . . . . . . . . . . . . 11
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Section 7. Vice Chairman of the Board. . . . . . . . . . . . . . . 11
Section 8. President. . . . . . . . . . . . . . . . . . . . . . . 11
Section 9. Vice President. . . . . . . . . . . . . . . . . . . . . 12
Section 10. Secretary. . . . . . . . . . . . . . . . . . . . . . . 12
Section 11. Assistant Secretaries. . . . . . . . . . . . . . . . . 12
Section 12. Treasurer. . . . . . . . . . . . . . . . . . . . . . . 12
Section 13. Assistant Treasurer. . . . . . . . . . . . . . . . . . 13
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII STOCK LEDGER . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 14
Section 1. Dividends. . . . . . . . . . . . . . . . . . . . . . . 14
Section 2. Payment of Dividends. . . . . . . . . . . . . . . . . . 14
Section 3. Checks. . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . 14
Section 5. Corporate Seal. . . . . . . . . . . . . . . . . . . . . 14
Section 6. Manner of Giving Notice. . . . . . . . . . . . . . . . 15
Section 7. Waiver of Notice. . . . . . . . . . . . . . . . . . . . 15
Section 8. Annual Statement. . . . . . . . . . . . . . . . . . . . 15
Section 9. Record Keeping. . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 15
ii
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The address of the initial
principal office of the corporation in the State of Maryland and the name and
the address of the initial resident agent of the corporation in the State of
Maryland are set forth in the Articles of Incorporation.
Section 2. OTHER OFFICES. The corporation may also have offices
at such other places both within and without the State of Maryland as the Board
of Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
STOCK
Section 1. CERTIFICATES REPRESENTING STOCK. Certificates
representing shares of stock shall set forth thereon the statements prescribed
by Section 2-211 of the Maryland General Corporation Law and by any other
applicable provision of law and shall be signed by the President or the Chairman
of the Board, if any, or a Vice-President and countersigned by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be
sealed with the corporate seal or a facsimile of it or in any other form. The
signatures of any such officers may be either manual or facsimile signatures.
In case any such officer who has signed manually or by facsimile any such
certificate ceases to be such officer before the certificate is issued, it may
nevertheless be issued by the corporation with the same effect as if the officer
had not ceased to be such officer as of the date of its issue.
No certificate representing shares of stock shall be issued for any
share of stock until such share is fully paid, except as otherwise authorized by
the provisions of Section 2-210 of the Maryland General Corporation Law.
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The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may, in its discretion, require the owner
of any such certificate to give bond, with sufficient surety, to the corporation
to indemnify it against any loss or claim that may arise by reason of the
issuance of a new certificate.
Upon compliance with the provisions of Section 2-514 of the Maryland
General Corporation Law, the Board of Directors of the corporation may adopt by
resolution a procedure by which a stockholder of the corporation may certify in
writing to the corporation that any shares registered in the name of the
stockholder are held for the account of a specified person other than the
stockholder.
Section 2. FRACTIONAL SHARE INTERESTS OR SCRIP. The corporation
may, but shall not be obliged to, issue fractional shares of stock, eliminate a
fractional interest by rounding off to a full share of stock, arrange for the
disposition of a fractional interest by the person entitled to it, pay cash for
the fair value of a fractional share of stock determined as of the time when the
person entitled to receive it is determined, or issue scrip or other evidence of
ownership which shall entitle its holder to exchange such scrip or other
evidence of ownership aggregating a full share for a certificate which
represents the share; but such scrip or other evidence of ownership shall not,
unless otherwise provided, entitle the holder to exercise any voting right, or
to receive dividends thereon or to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may impose any
reasonable condition on the issuance of scrip or other evidence of ownership,
and may cause such scrip or evidence of ownership to be issued subject to the
condition that it shall become void if not exchanged for a certificate
representing a full share of stock before a specified date or subject to the
condition that the shares for which such scrip or evidence of ownership is
exchangeable may be sold by the corporation and the proceeds thereof distributed
to the holders of such scrip or evidence of ownership, or subject to a provision
for forfeiture of such proceeds to the corporation if not claimed within a
period of not less than three years from the date the scrip or other evidence of
ownership was originally issued.
Section 3. SHARE TRANSFERS. Upon compliance with provisions
restricting the transferability of shares of stock, if any, transfers of shares
of stock of the corporation shall be made only on the stock transfer books of
the corporation by the record holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation or with a transfer agent or a registrar, if any, and on
surrender of the certificate or certificates
2
<PAGE>
for such shares of stock properly endorsed and the payment of all taxes due
thereon, if any.
Section 4. RECORD DATE FOR STOCKHOLDERS. The Board of Directors
may set a record date or direct that the stock transfer books be closed for a
stated period for the purpose of making any proper determination with respect to
stockholders, including which stockholders are entitled to notice of a meeting,
to vote at a meeting, to receive a dividend, or to be allotted other rights;
provided, that, except as may be otherwise provided herein, any such record date
may not be prior to the close of business on the day the record date is fixed,
shall be not more than ninety days before the date on which the action requiring
the determination will be taken, that any such closing of the transfer books may
not be for a period longer than twenty days, and that, in the case of a meeting
of stockholders, any such record date or any such closing of the transfer books
shall be at least ten days before the date of the meeting. If a record date is
not set, and, if the stock transfer books are not closed, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be the later of either the close of business on the day on
which notice of the meeting is mailed or the thirtieth day before the meeting,
and the record date for determining stockholders entitled to receive payment or
a dividend or an allotment of any rights shall be the close of business on the
date on which the resolution of the Board of Directors declaring the dividend or
allotment of rights is adopted, by any such payment of a dividend or allotment
of rights shall not be made more than sixty days after the date on which the
resolution is adopted; and a meeting of stockholders convened on the date for
which it was called may be adjourned from time to time without further notice to
a date not more than one hundred and twenty days after the original record date.
Section 5. MEANING OF CERTAIN TERMS. As used herein in respect of
the right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share of stock" or "shares of stock" or
"stockholder" or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of stock. Said
reference is also intended to include any outstanding share or shares of stock
and any holder or holders of record of outstanding shares of stock of any class
or series upon which or upon whom the Articles of Incorporation confer such
rights where there are two or more classes or series of shares or upon which or
upon whom the provisions of the Maryland General Corporation Law may confer such
rights or the right of dissent notwithstanding that the Articles of
Incorporation may provide for more than one class or
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<PAGE>
series of shares of stock, one or more of which are limited or denied such
rights thereunder.
ARTICLE III
STOCKHOLDERS
Section 1. STOCKHOLDER MEETINGS.
(a) TIME.
(i) ANNUAL MEETINGS. The corporation shall hold an
annual meeting of its stockholders to elect directors and transact any other
business within its powers, either at 9:00 a.m. on the second Tuesday of May in
each year if not a legal holiday, or at such other time or such other day
falling on or before the 30th day thereafter as shall be set by the Board of
Directors.
(ii) SPECIAL MEETINGS. At any time in the interval
between annual meetings, a special meeting of the stockholders may be called by
the Chairman of the Board or the Vice-Chairman of the Board or the President or
by a majority of the Board of Directors by vote at a meeting or in writing
(addressed to the Secretary of the corporation) with or without a meeting.
Special meetings of the stockholders shall be called as may be required by law.
(b) PLACE. Annual meetings and special meetings shall be held
at such place, either within the State of Maryland or at such other place within
the United States, as the directors may, from time to time, set. Whenever the
directors shall fail to set such place, or, whenever stockholders entitled to
call a special meeting shall call the same, and a place of meeting is not set,
the meeting shall be held at the principal office of the corporation in the
State of Maryland.
(c) CALL. Annual meetings may be called by the directors or
the President or by any officer instructed by the directors or the President to
call the meeting. Except as may be otherwise provided by the provisions of the
Maryland General Corporation Law, special meetings may be called in like manner.
Special meetings shall also be called by the Secretary whenever the holders of
shares entitled to at least twenty-five percent of all the votes entitled to be
cast at such meeting shall make a written request that such meeting be called.
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(d) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE.
Written notice of all meetings shall be given by the Secretary and shall state
the time and place of the meeting. The notice of an annual meeting shall state
that the meeting is called for the election of directors and for the transaction
of other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) contain any additional statements required in a notice of a
special meeting, and shall include a copy of any requisite statements or
provisions prescribed by the provisions of the Maryland General Corporation Law;
provided, however, that any business of the corporation may be transacted at any
annual meeting without being specially noticed unless the provisions of the
Maryland General Corporation Law provide otherwise. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called and shall include a copy of any requisite statements or
provisions prescribed by the provisions of the Maryland General Corporation Law.
Written notice of any meeting shall be given to each stockholder either by mail
at the address as it appears on the records of the corporation or by personal
delivery to such stockholder or by leaving such notice at his residence or usual
place of business not less than ten days and not more than ninety days before
the date of the meeting, unless any provision of the Maryland General
Corporation Law shall prescribe a different period of time. If mailed, notice
shall be deemed to be given when deposited in the United States mail addressed
to the stockholder at his address as it appears on the records of the
corporation with postage thereon prepaid. Whenever any notice of the time,
place or purpose of any meeting of stockholders is required to be given under
the provisions of the Articles of Incorporation, these Bylaws or of the
provisions of the Maryland General Corporation Law, such notice may be waived by
a writing signed by the stockholder and filed with records of the meeting,
whether before or after the holding thereof, or by his presence in person or by
proxy at the meeting. The foregoing requirements of notice shall also apply,
whenever the corporation shall have any class of stock which is not entitled to
vote, to holders of stock who are not entitled to vote at the meeting, but who
are entitled to notice thereof and to dissent from any action taken thereat.
(e) STATEMENT OF AFFAIRS. The President of the corporation,
or, if the Board of Directors shall determine otherwise, some other executive
officer thereof, shall prepare or cause to be prepared annually a full and
correct statement of the affairs of the corporation, including a balance sheet
and a financial statement of operations for the preceding fiscal year, which
shall be submitted at the Annual Meeting and placed on file within twenty days
thereafter at the principal office of the corporation in the State of Maryland.
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(f) CONDUCT OF MEETINGS. Meetings of the stockholders shall
be presided over by one of the following officers in the order of seniority and
if present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice-President, or, if none of the foregoing
is in office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the corporation, or in his absence, an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the Chairman of the meeting shall appoint
a secretary of the meeting.
(g) ADJOURNMENT. Whether or not a quorum is present, a
meeting of stockholders convened on the date for which it was called may be
adjourned from time to time without further notice by a majority vote of the
stockholders present in person or by proxy to a date not more than 120 days
after the original record date. Any business which might have been transacted
at the meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
(h) PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether for the purposes of determining
his presence at a meeting, or whether by waiving notice of any meeting, voting
or participating at a meeting, or expressing consent or dissent without a
meeting, or otherwise. Every proxy shall be executed in writing by the stock-
holder or by his duly authorized attorney in fact, and filed with the Secretary
of the corporation. No proxy shall be valid more than eleven months from the
date of its execution, unless the proxy provides otherwise.
(i) INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting, by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares outstanding and the
voting power of each, the shares presented at the meeting, the existing of a
quorum, the validity and effect of proxies,
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and shall receive votes, ballots or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting or any stockholder, the inspector
or inspectors, if any, shall make a report in writing of any challenge, question
or matter determined by him or them and execute a certificate of any fact found
by him or them.
(j) QUORUM. Except as may otherwise be required by the
provisions of the Maryland General Corporation Law, the Articles of Incorpora-
tion, or these Bylaws, the presence in person or by proxy at a meeting of the
stockholders entitled to cast at least a majority of the votes entitled to be
cast at the meeting shall constitute a quorum.
(k) VOTING. Each share of stock shall entitle the holder
thereof to one vote on each matter submitted to a vote at a meeting of
stockholders except in the election of directors, at which each share of stock
may be voted for as many individuals as there are directors to be elected and
for whose election the share is entitled to be voted may be cast for as many
persons as there are directors to be elected. Except as may otherwise be
provided in the provisions of the Maryland General Corporation Law, the Articles
of Incorporation or these Bylaws, a majority of all the votes cast at a meeting
of stockholders at which a quorum is present shall be sufficient to approve any
matter which may properly come before the meeting. A plurality of all the votes
cast at a meeting of stockholders at which a quorum is present is sufficient to
elect a director.
Section 2. INFORMAL ACTION. Any action required or permitted to
be taken at any meeting of stockholders may be taken without a meeting if the
following are filed with the records of the meeting: an unanimous written
consent which sets forth the action and is signed by each stockholder entitled
to vote on the matter, and, as applicable, a written waiver of any right to
dissent signed by each stockholder entitled to notice of the meeting but not
entitled to vote at it.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. FUNCTIONS AND DEFINITION. The business and affairs of
the corporation shall be managed by or under the direction of its Board of
Directors. All powers of the corporation may be exercised by or under authority
of said Board
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of Directors. The use of the phrase "entire board" herein refers to the total
number of directors which the corporation would have if there were no vacancies.
Section 2. QUALIFICATIONS AND NUMBER. Each director shall be a
natural person at least 18 years of age. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Maryland. The
initial Board of Directors shall consist of the persons set forth in the
Articles of Incorporation. Thereafter the number of directors constituting the
entire board shall consist of not less than three (3) nor more than nine (9)
persons who shall be chosen by the stockholders. Each member of the Board of
Directors shall serve for a period of one (1) year.
Section 3. ELECTION AND TERM. The first Board of Directors shall
consist of the directors named in the Articles of Incorporation and shall hold
office until the first annual meeting of stockholders or until their successors
have been elected and qualified. Thereafter, directors who are elected at an
annual meeting of stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold office until the next
annual meeting of stockholders and until their successors have been elected and
qualified. In the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of directors, newly created
directorships and any vacancies in the Board of Directors, including vacancies
resulting from the removal of directors by the stockholders which have not been
filled by said stockholders, may be filled by the Board of Directors. Newly
created directorships shall be filled by action of a majority of the entire
Board of Directors. All other vacancies to be filled by the Board of Directors
may be filled by a majority of the remaining members of the Board of Directors,
whether or not sufficient to constitute a quorum. A director elected by the
Board of Directors to fill a vacancy serves until the next annual meeting of
stockholders and until his successor is elected and qualified.
Section 4. MEETINGS.
(a) TIME. Meetings shall be held at such time as the Board
shall set, except that the first meeting of a newly elected Board shall be held
as soon after its election as the directors may conveniently assemble.
(b) PLACE. Meetings shall be held at such place within or
without the State of Maryland as shall be set by the Board.
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(c) CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be called by or
at the direction of the Chairman of the Board, if any, of the President, or of a
majority of the directors in office.
(d) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall
be required for regular meetings for which the time and place have been fixed.
Written, oral or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. The notice of any meeting need not specify the business to
be transacted or the purpose of the meeting. Whenever any notice of the time,
place, or purpose of any meeting of directors or any committee thereof is
required to be given under the provisions of the Maryland General Corporation
Law or of these Bylaws, such notice may be waived by a writing signed by the
director or committee member entitled to such notice and filed with the records
of the meeting, whether before or after the meeting, or by presence at the
meeting.
(e) QUORUM AND ACTION. A majority of the entire Board of
Directors shall constitute a quorum except when a vacancy or vacancies prevents
such majority, whereupon a majority of the directors in office shall constitute
a quorum, provided such majority shall constitute at least one-third of the
entire Board and, in no event, less than two directors (provided, that whenever
the entire Board of Directors consists of one director, that one director shall
constitute a quorum). Except as in the Articles of Incorporation and herein
otherwise provided and, except as in provisions of the Maryland General Corpo-
ration Law otherwise provided, the action of a majority of the directors present
at a meeting at which a quorum is present shall be the action of the Board of
Directors. Members of the Board of Directors or of a committee thereof may
participate in a meeting by means of a conference telephone or similar communi-
cations equipment if all persons participating in the meeting can hear each
other at the same time; and participation by such means shall constitute
presence in person at a meeting.
(f) CHAIRMAN OF THE MEETING. The Chairman of the Board, if
any and if present and acting, shall preside at all meetings. Otherwise, the
President, if present and acting, or any other director chosen by the Board,
shall preside.
Section 5. REMOVAL OF DIRECTORS. Any or all of the directors may
be removed, with or without cause by the affirmative vote of a majority of all
the votes entitled to be cast for the election of directors.
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Section 6. COMMITTEES. The Board of Directors may appoint from
among its members an Executive Committee and other committees composed of two or
more directors, and may delegate to such committee or committees any of the
powers of the Board of Directors except such powers as may not be delegated
under the provisions of the Maryland General Corporation Law. In the absence of
any member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the Board of
Directors to act in the place of such absent member.
Section 7. INFORMAL ACTION. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if a written consent to such action is signed by
all members of the Board of Directors or any such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
or any such committee.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The corporation shall have a President, a
Secretary, and a Treasurer, and may have a Chairman of the Board, a Vice-
Chairman of the Board and one or more Vice-Presidents, who shall be elected by
the Board of Directors, and may also have any such other officers, assistant
officers, and agents as the Board of Directors shall authorize from time to
time, each of whom shall be elected or appointed in the manner prescribed by the
Board of Directors. Any two or more offices, except those of President, Vice-
Chairman and Vice-President, may be held by the same person, but no person shall
execute, acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law to be executed, acknowledged or verified by more
than one officer. Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected or appointed or qualified. The officers and agents
of the corporation shall have the authority and perform the duties in the
management of the corporation as determined by the resolution electing or
appointing them.
Section 2. ELECTION OF OFFICERS. The Board of Directors, at its
first meeting after each annual meeting of stockholders, shall choose the
officers of the corporation.
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Section 3. SUBORDINATE OFFICERS. The Board of Directors may
appoint such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board.
Section 4. COMPENSATION OF OFFICERS. The salaries of all officers
and agents of the corporation shall be fixed by the Board of Directors.
Section 5. TERM OF OFFICE; REMOVAL AND VACANCIES. The officers of
the corporation shall hold office until their successors are chosen and qualify
in their stead. Any officer elected or appointed by the Board of Directors may
be removed at any time by the affirmative vote of a majority of the Board of
Directors whenever, in its judgment, the best interests of the corporation will
be served thereby. If the office of any officer or officers becomes vacant for
any reason, the vacancy shall be filled by the Board of Directors.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
be the Chief Executive Officer of the corporation and shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the business and affairs of the corporation. If present, he shall
preside at all meetings of the stockholders and at all meetings of the Board of
Directors. He shall be an ex-officio member of all committees and shall have
the general powers and duties of management usually vested in the office of
President and Chief Executive Officer of the corporation, and shall have such
other powers and duties as may be prescribed by the Board of Directors or these
Bylaws.
Section 7. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board, if such an officer be elected, shall preside in the absence or disability
of the Chairman of the Board at all meetings of the stockholders and at all
meetings of the Board of Directors, and shall exercise and perform such other
powers and duties as may be from time to time assigned to him by the Board of
Directors or prescribed by these Bylaws.
Section 8. PRESIDENT. In the absence or disability of the
Chairman of the Board, the President shall perform all of the duties of the
Chief Executive Officer of the corporation, and when so acting shall have all
the powers of and be subject to all the restrictions upon the Chief Executive
Officer. The President shall have such other duties as from time to time may be
prescribed for him by the Board of Directors.
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Section 9. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President. The Vice President shall have such other duties as from time to time
may be prescribed for them, respectively, by the Board of Directors.
Section 10. SECRETARY. The Secretary shall attend all sessions of
the Board of Directors and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose; and
shall perform like duties for the standing committees when required by the Board
of Directors. He shall give, or cause to be given, notice of all meetings of
the stockholders and of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or these Bylaws. He shall
keep in safe custody the seal of the corporation, and when authorized by the
Board, affix the same to any instrument requiring it, and when so affixed it
shall be attested by his signature or by the signature of an Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest to the seal by his
signature.
Section 11. ASSISTANT SECRETARIES. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors, or if there be no such determination, the Assistant
Secretary designated by the Board of Directors, shall, in the absence or
disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 12. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys, and other valuable effects in the name and to the credit of
the corporation, in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond, in such sum and with such
surety or sureties as shall be satisfactory to the
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Board of Directors, for the faithful performance of the duties of his office and
for the restoration of the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 13. ASSISTANT TREASURER. The Assistant Treasurer, of if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors, or if there be no such determination, the Assistant
Treasurer designated by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
ARTICLE VI
INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS
The corporation shall, to the maximum extent permitted by the Maryland
General Corporation Law indemnify each of its directors and officers against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact any such person is or was a director or officer of the corporation and
shall advance to such director or officer expenses incurred in defending any
such proceeding to the maximum extent permitted by such law. For purposes of
this Article VI, a "director" or "officer" of the corporation includes any
person who is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of another
corporation, or other enterprise, or was a director or officer of a corporation
which was a predecessor corporation of the corporation or of another enterprise
at the request of such predecessor corporation. The Board of Directors may in
its discretion provide by resolution for such indemnification of, or advance of
expenses to, other agents of the corporation, and likewise may refuse to provide
for such indemnification or advance of expenses except to the extent such
indemnification is mandatory under the Maryland General Corporation Law.
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ARTICLE VII
STOCK LEDGER
The corporation shall maintain, at its principal office in the State
of Maryland or at a business office or an agency of the corporation an original
or duplicate stock ledger containing the name and address of each stockholder
and the number of shares of each class held by each stockholder. Such stock
ledger may be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. PAYMENT OF DIVIDENDS. Before payment of any dividend
there may be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive to
the interests of the corporation, and the directors may abolish any such
reserve.
Section 3. CHECKS. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the corporation shall
be fixed by resolution of the Board of Directors.
Section 5. CORPORATE SEAL. The corporate seal shall have in-
scribed thereon the name of the corporation and shall be in such form and
contain such other words and/or figures as the Board of Directors shall
determine or the law require.
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Section 6. MANNER OF GIVING NOTICE. Whenever, under the provi-
sions of the statutes or of the Certificate of Incorporation or of these Bylaws,
notice is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by telegram.
Section 7. WAIVER OF NOTICE. Whenever any notice is required to
be given under the provisions of the statutes or of the Certificate of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed to be equivalent.
Section 8. ANNUAL STATEMENT. The Board of Directors shall present
at each annual meeting, and at any special meeting of the stockholders when
called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
Section 9. RECORD KEEPING. The corporation shall keep at its
principal office in the State of Maryland the original or a certified copy of
the Bylaws, including all amendments thereto, and shall duly file thereat the
annual statements of affairs of the corporation.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the Articles of Incorporation, at any
regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new Bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal Bylaws
is conferred upon the Board of Directors by the Articles of Incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal Bylaws.
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I HEREBY CERTIFY that the foregoing is a full, true and correct copy
of the Amended and Restated Bylaws of Apartment Investment and Management
Company, a Maryland corporation, as in effect on the date hereof.
WITNESS my hand and seal of the corporation.
Date: July 24, 1997.
/s/ Leeann Morein
---------------------------------------
Leeann Morein, Secretary
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MULTIFAMILY NOTE
(Copperfield)
US $3,577,000.00 Houston, Texas
--------------
City
As of April 18, 1997
FOR VALUE RECEIVED, the undersigned promise to pay GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation or order, the principal sum of
THREE MILLION FIVE HUNDRED SEVENTY-SEVEN THOUSAND AND NO/100 ($3,577,000.00)
Dollars, with interest on the unpaid principal balance from the date of this
Note, until paid, at the rate of 7.93 percent per annum. The principal and
interest shall be payable at 65O Dresher Road, P.O. Box 1015, Horsham, PA
19044-8015 in consecutive monthly installments of Twenty-Nine Thousand Seven
Hundred Sixty-Three and 82/100 Dollars (US $29,763.82) on the first day of
each month beginning June 1, 1997, (herein "amortization commencement date"),
until the entire indebtedness evidenced hereby is fully paid, except that any
remaining indebtedness, if not sooner paid, shall be due and payable on May 1,
2017.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default
in the payment of this Note, and if the same is referred to an attorney at
law for collection or any action at law or in equity is brought with respect
hereto, the undersigned shall pay the holder hereof all expenses and costs,
including, but not limited to, attorney's fees.
If any installment under this Note remains past due for ten (10)
calendar days or more, the outstanding principal balance of this Note shall
bear interest during the period in which the undersigned is in default at a
rate of 11.93 percent per annum, or, if such increased rate of interest may
not be collected from the undersigned under applicable law, then at the
maximum increased rate of interest, if any, which may be collected from the
undersigned under applicable law.
From time to time, without affecting the obligation of the undersigned
or the successors or assigns of the undersigned to pay the outstanding
principal balance of this Note and observe the covenants of the undersigned
contained herein, without affecting the guaranty of any person, corporation,
partnership or other entity for payment of the outstanding principal balance
of this Note, without giving notice to or obtaining the consent of the
undersigned, the successors or assigns of the undersigned or guarantors, and
without liability on the part of the holder hereof, the holder hereof may, at
the option of the holder hereof, extend the time for payment of said
outstanding principal balance or any part thereof, reduce the payments
thereon, release anyone liable on any of said outstanding principal balance,
accept a renewal of this Note, modify the terms and time of payment of said
outstanding principal balance, join in any extension or subordination
agreement, release any security given herefor, take or release other or
additional security, and agree in writing with the undersigned to modify the
rate of interest or period of amortization of this Note or change the amount
of the monthly installments payable hereunder.
- --------------
* STRIKE THROUGH BRACKETED CLAUSE(S) IF NOT COMPLETED.
<PAGE>
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the
joint and several obligation of all makers, sureties, guarantors and
endorsers, and shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Deed of Trust
dated as of even date herewith, and reference is made thereto for rights as
to acceleration of the indebtedness evidenced by this Note. This Note shall
be governed by the law of the jurisdiction in which the Property subject to
the Deed of Trust is located.
This Multifamily Note has been amended and supplemented in certain respects as
set forth in the Addendum to Multifamily Note annexed hereto and incorporated
herein by this reference. In the event of any inconsistencies between the
printed portion of this Multifamily Note and the provisions of said Addendum
to the Multifamily Note, the provisions of the Addendum shall control.
* See below.
BORROWER:
WITNESS: COPPERFIELD PARTNERS, LTD., a Texas limited partnership
By: AIMCO COPPERFIELD L.P., a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its General Partner
/s/ Lynn Shapiro By: /s/ Harry Alcock
- --------------------------- ----------------------------
Harry Alcock
Vice President
* The term "maximum increased rate of interest" (the "Maximum Rate") shall
mean the highest lawful rate of interest applicable to this Note. In
determining the Maximum Rate, due regard shall be given to all payments,
fees, charges, deposits, balances and agreements which may constitute
interest or be deducted from principal when calculating interest. For
purposes of determining the Maximum Rate, the Indicated Rate Ceiling
specified in Texas Revised Civil Statutes, Article 5069-1.04 shall be used;
however, if permitted by law, holder hereof may implement any ceiling under
that law used to compute the rate of interest hereunder by notice to the
undersigned as provided in such article. Notwithstanding the foregoing
sentence, if Section 501 of the Depository Institutions Deregulation and
Monetary Control Act of 1980 (as amended) permits a higher Maximum Rate than
article 5069-1.04 or applicable state law, such higher Maximum Rate shall
apply to this Note.
Interest on the unpaid principal balance of this Note at the rate stated
above in the first paragraph of the first page of this Note (the "Stated
Rate") shall be calculated at a daily rate equal to 1/360 times the Stated
Rate (but in no event greater than the Maximum Rate). Notwithstanding the
foregoing, at any time when the interest contracted for, collected, or
charged on the unpaid balance of this Note shall exceed the Stated Rate, such
interest shall be calculated at a daily rate of 1/365 times such rate (but in
no event greater than the Maximum Rate).
It is expressly stipulated and agreed to be the intent of the undersigned and
holder hereof at all times to comply with the applicable law governing the
Maximum Rate or amount of interest payable on or in connection with this Note
and the loan (the "Loan") evidenced thereby (or applicable United States
federal law to the extent that it permits holder hereof to contract for,
charge, take, reserve, or receive a greater amount of interest than under law
of the state in which the Property is located). If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under
this Note or under the Deed of Trust or any other document (collectively, the
"Security Documents") evidencing, securing or executed in connection with the
Loan, or contracted for, charged, taken, reserved or received with respect to
Loan, or if acceleration of the maturity of this Note or if any prepayment by
the undersigned results in the undersigned having paid any interest in excess
of that permitted by law, then it is the undersigned's and the holder
hereof's express intent that all excess amounts theretofore collected by the
holder hereof be credited on the principal balance of this Note (or, if this
Note has been or would thereby be paid in full, refunded to the undersigned),
and the provisions of this Note, the Deed of Trust and the other Security
Documents immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new documents, so as to comply with the applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. The right to accelerate maturity of this Note does
not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and holder hereof does not intend
to collect any unearned interest in the event of acceleration. All sums paid
or agreed to be paid to holder hereof for the use, forbearance or detention
of the indebtedness evidenced hereby shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or
amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling. Notwithstanding any provision contained in this
Note, the Deed of Trust or in any of the other Security Documents that
permits the compounding of interest, including, without limitation, any
provision by which any accrued interest is added to the principal amount of
this Note, the total amount of interest that the undersigned is obligated to
pay and the holder hereof is entitled to receive with respect to this Note
shall not exceed the amount calculated on a simple (i.e. noncompounded)
interest basis at the Maximum Rate on principal amounts actually advanced to
or for the account of the undersigned, including all current and prior
advances and any advances made pursuant to the Deed of Trust or other
Security Documents (such as for the payment of taxes, insurance premiums and
similar expenses and costs).
The undersigned and all other makers, signers, sureties, guarantors and
endorsers of this Note waive demand, presentment, notice of dishonor, notice
of intent to demand or accelerate payment hereof, diligence in the
collecting, grace, notice and protest and agree to one or more extensions for
any period or periods of time and partial payments, before or after maturity,
without prejudice to the holder hereof; and if collection procedures are ever
commenced, by any means, including legal proceedings or through a probate or
bankruptcy court, or if this Note is placed in the hands of any attorney for
collection after default or maturity, the undersigned agrees to pay all costs
of collection or attempted collection, including reasonable attorney's fees.
Pay to the order of
----------------------------
, without recourse.
------------------------------
GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation
By: /s/
----------------------------------
Name:
Title:
<PAGE>
ADDENDUM TO MULTIFAMILY NOTE
(FOR USE WITH EXCEPTIONS TO NON-RECOURSE GUARANTY)
(Copperfield)
THIS ADDENDUM TO MULTIFAMILY NOTE (the "Addendum") is made as of the
18th day of APRIL 1997 and is incorporated into and shall be deemed to amend
and supplement the Multifamily Note (the "Multifamily Note") made by the
undersigned (the "Borrower") to GMAC COMMERCIAL MORTGAGE CORPORATION and its
successors, assigns and transferees (the "Lender"), dated the same date as
this Addendum (the Multifamily Note as amended and supplemented by this
Addendum, any other addendum to the Multifamily Note, and any future
amendments to the Multifamily Note is referred to as the "Note"). The debt
evidenced by the Note is secured by a Multifamily Mortgage, Deed of Trust or
Deed to Secure Debt of the same date (the "Multifamily Instrument"), covering
the property described in the Multifamily Instrument and defined therein as
the "Property," located at:
8255 Sunbury Lane, Houston, Texas
- -------------------------------------------------------------------------------
(Property Address)
This Property is located entirely within the State of Texas
[INSERT NAME OF STATE IN WHICH THE PROPERTY IS LOCATED] (the "Property
Jurisdiction"). The Multifamily Instrument is amended and supplemented by the
Rider to Multifamily Instrument (the "Rider") and any other rider to
Multifamily Instrument given by Borrower to Lender and dated the same date as
the Multifamily Instrument. (The Multifamily Instrument as amended and
supplemented by the Rider and any other rider to the Multifamily Instrument
and any future amendments to the Instrument is referred to as the
"Instrument".)
The term "Loan Documents" when used in this Addendum shall mean,
collectively, the following documents: (i) the Instrument, (ii) the Note, and
(iii) all other documents or agreements, including any Collateral Agreements
(as defined in the Rider) or O&M Agreement (as defined in the Rider), arising
under, related to, or made in connection with, the loan evidenced by the
Note, as such Loan Documents may be amended.
The covenants and agreements of this Addendum, and the covenants and
agreements of any other addendum to the Multifamily Note, shall be
incorporated into and shall amend and supplement the covenants and agreements
of the Multifamily Note as if this Addendum and the other addenda were a part
of the Multifamily Note, and all references to the Note in the Loan Documents
shall mean the Note as so amended and supplemented. Any conflict between the
provisions of the Multifamily Note and this Addendum shall be resolved in
favor of this Addenda.
ADDITIONAL COVENANTS. In addition to the covenants and agreements made in
the Multifamily Note Borrower and Lender further covenant and agree as
follows:
A. PREPAYMENTS
1. YIELD MAINTENANCE PERIOD
During the first .....19.5 .................
[(INSERT APPLICABLE NUMBER OF YEARS] years of the note term beginning with
the date of the Note (the "Yield Maintenance Period") and upon giving Lender
60 days prior written notice, Borrower may prepay the entire unpaid principal
balance of the Note on the last Business Day before a scheduled monthly
payment date by paying, in addition to the entire unpaid principal balance,
accrued interest and any other sums due Lender at the time of repayment, a
prepayment premium equal to the greater of:
(a) l% of the entire unpaid principal balance of the Note, or
(b) The product obtained by multiplying (1) the entire unpaid principal
balance of the Note at the time of prepayment, times (2) the difference
obtained by subtracting from the interest rate on the Note the yield
rate (the "Yield Rate") on the 7.5.% U.S. Treasury Security due
11/15/2016 (the "Specified U.S. Treasury Security"), as the Yield Rate
is reported in the WALL STREET JOURNAL on the fifth Business Day
preceding (x) the date notice of prepayment is given to Lender where
prepayment is voluntary, or (y) the date Lender accelerates the loan,
times (3) the present value factor calculated using the following
formula:
1 - (1+r) -n
------------
r
[r = Yield Rate
n = the number of years, and any fraction thereof, remaining
between the prepayment date and the expiration of the Yield
Maintenance Period]
In the event that no Yield Rate is published for the Specified U.S.
Treasury Security, then the nearest equivalent U.S. Treasury Security shall
be selected at Lender's sole discretion. If the publication of such Yield
Rates in the WALL STREET JOURNAL is discontinued. Lender shall determine such
Yield Rates from another source selected by Lender.
Except as provided in paragraph A3 of this Addendum, no partial
prepayments are permitted. *
2. AFTER YIELD MAINTENANCE PERIOD
After the expiration of the Yield Maintenance Period and upon giving
Lender 60 days prior written notice, Borrower may prepay the entire unpaid
principal balance of the Note on the last Business Day before a scheduled
monthly payment date by paying, in addition to the entire unpaid principal
balance, accrued interest and any other sums due Lender at the time of
prepayment, a prepayment premium equal to 1% of the entire unpaid principal
balance of the Note. No prepayment premium shall be due for any full
prepayment made by Borrower in accordance with the provisions of the
preceding sentence within 90 days of the maturity date of the Note.
Except as provided in paragraph A.3 of this Addendum, no partial
prepayments are permitted.
3. PARTIAL PREPAYMENTS
Borrower shall have no right to make a partial prepayment of the
outstanding indebtedness during the Note term. However, in the event that
Lender shall require a partial prepayment of the outstanding indebtedness
after a default under the Note, the Instrument or any of the other Loan
Documents, by applying funds held by Lender pursuant to any Collateral
Agreement (as defined in Uniform Covenant 2B of the Instrument) against the
indebtedness secured by the Instrument, or, if
* SUCH PREPAYMENT PREMIUM SHALL BE DUE AND PAYABLE IF THE LOAN IS PREPAID FOR
ANY REASON DURING THE FIRST 19.5 YEARS OF THE NOTE, INCLUDING WITHOUT
LIMITATION, A PREPAYMENT ARISING BECAUSE OF AN ACCELERATION OF THE LOAN.
<PAGE>
Lender shall for any other reason accept prepayment by Borrower of the
outstanding indebtedness, except as otherwise provided in paragraph A.4 of
this Addendum, a prepayment premium shall be due and payable to Lender as
follows:
(a) AFTER YIELD MAINTENANCE PERIOD. If Lender shall require or accept a
partial prepayment after the expiration of the Yield Maintenance
Period, the partial prepayment shall be made on the last Business
Day before a scheduled monthly payment date and a prepayment
premium equal to 1% of the partial principal prepayment amount
shall be due and payable to Lender. No prepayment premium shall
be due for any partial prepayment made by Borrower in accordance
with the provisions of the preceding sentence within 90 days of
the maturity date of the Note.
(b) DURING YIELD MAINTENANCE PERIOD. If Lender shall require or accept a
partial prepayment during the Yield Maintenance Period, the partial
prepayment shall be made on the last Business Day before a scheduled
monthly payment date and a prepayment premium shall be due and
payable to Lender equal to the greater of:
(i) 1% of the amount of principal being prepaid, or
(ii) the product obtained by multiplying (A) the amount of the
principal which is being prepaid, times (B) the difference
obtained by subtracting from the interest rate on the Note the
yield rate (the "Partial Prepayment Yield Rate") on the
Specified U.S. Treasury Security, as the Partial Prepayment
Yield Rate is reported in the WALL STREET JOURNAL on the fifth
Business Day preceding (1) the day Lender accelerates the loan
(in connection with any partial prepayment made in connection
with an acceleration of the loan), or (2) the day Lender
applies funds held under any Collateral Agreement (other
than in connection with an acceleration of the loan), times
(C) the present value factor calculated using the following
formula:
-n
1 - (1+y)
-----------
Y
[y = Partial Prepayment Yield Rate
n = the number of years, and any fraction thereof, remaining
between the prepayment date and the expiration of
the Yield Maintenance Period]
When the total amount to be applied toward the unpaid principal balance
of the loan and the prepayment premium is known, but the amounts to be
allocated toward the unpaid principal balance of the loan and the prepayment
premium, respectively, are unknown, the Lender shall determine the allocation
between the prepaid principal amount and the prepayment premium as follows:
GIVEN: a = total amount to be applied
b = prepaid principal amount
c = prepayment premium
N = note rate
-n
F = present value factor = 1 - ( 1 +y)
------------
y
["y" and "n" have the same meanings as set forth in
subparagraph (ii) above]
THEN: a = b + c
b = -a
--------
F (N-y) + 1
c = a-b
Except as provided in the next sentence, any partial prepayment of the
outstanding indebtedness shall not extend the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
shall otherwise agree in writing. Upon any partial prepayment, Lender shall
have the option, in its sole and absolute discretion, to recast the monthly
installments due under the Note so that the maturity date of the Note shall
remain the same.
4. PREMIUM DUE WHETHER VOLUNTARY OR INVOLUNTARY PREPAYMENT;
INSURANCE AND CONDEMNATION PROCEEDS
Borrower shall pay the prepayment premium due under this paragraph A
whether the prepayment is voluntary or involuntary (in connection with
Lender's acceleration of the unpaid principal balance of the Note) or the
Instrument is satisfied or released by foreclosure (whether by power of sale
or judicial proceeding), deed in lieu of foreclosure or by any other means.
Notwithstanding any other provision herein to the contrary. Borrower shall
not be required to pay any prepayment premium in connection with any
prepayment occurring as a result of the application of insurance proceeds or
condemnation awards under the Instrument.
5. NOTICE; BUSINESS DAY
Any notice to Lender provided for in this Addendum shall be given in the
manner provided in the Instrument. The term "Business Day" means any day
other than a Saturday, a Sunday, or any other day on which Lender is not open
for business.
B. BORROWER'S EXCULPATION
Subject to the provisions of paragraph C and notwithstanding any other
provision in the Note or Instrument, the personal liability of Borrower, any
general partner of Borrower (if the Borrower is a partnership), and any "Key
Principal" (collectively, the natural persons defined as Key Principal in
Uniform Covenant 19(a)(1) of the Security Instrument) to pay the principal of
and interest on the debt evidenced by the Note and any other agreement
evidencing Borrower's obligations under the Note and the Instrument shall be
limited to (1) the real and personal property described as the "Property" in
the Instrument. (2) the personal property described in or pledged under any
Collateral Agreement (as defined in Uniform Covenant 2B of the Instrument)
executed in connection with the loan evidenced by the Note, (3) the rents,
profits, issues, products and income of the Property received or collected by
or on behalf of Borrower (the "Rents and Profits") to the extent such
receipts are necessary first, to pay the reasonable expenses of operating,
managing, maintaining and repairing the Property, including but not limited
to real estate taxes, utilities, assessments, insurance premiums, repairs,
replacements and ground rents, if any (the "Operating Expenses") then due and
payable as of the time of receipt of such Rents and Profits, and
<PAGE>
then, to pay the principal and interest due under the Note and any other sums
due under the Instrument or any other Loan Document (including but not
limited to deposits or reserves under any Collateral Agreement), except to
the extent that Borrower did not have the legal right, because of a
bankruptcy, receivership or similar judicial proceedings, to direct the
disbursement of such sums.
Except as provided in paragraph C, Lender shall not seek (a) any
judgement for a deficiency against Borrower, any general partner of Borrower
(if Borrower is a partnership) or any Key Principal, or Borrower's or any
general partner's or Key Principal's heirs, legal representatives, successors
or assigns, in any action to enforce any right or remedy under the
Instrument, or (b) any judgment on the Note except as may be necessary in any
action bright under the Instrument to enforce the lien against the Property
or to exercise any remedies under any Collateral Agreement.
C. EXCEPTIONS TO NON-RECOURSE LIABILITY
If, without obtaining the Lender's prior written consent, (i) a Transfer
shall occur which, pursuant to Uniform Covenant 19 of the Instrument, gives
Lender the right, at its option, to declare all sums secured by the
Instrument immediately due and payable, (ii) Borrower shall encumber the
Property with the lien of any subordinate instrument in connection with any
financing by Borrower, or, (iii) Borrower shall violate the single asset
covenant of paragraph J of the Rider, any of such events shall constitute a
default by Borrower under the Note, the Instrument and the other Loan
Documents, and if such event shall continue for 30 days, paragraph B shall
not apply from and after the date which is 30 days after such event and the
Borrower, any general partner of Borrower (if Borrower is a partnership) and
Key Principal (each individually on a joint or several basis if more than
one) shall be personally liable on a joint and several basis for full
recourse liability under the Note and the other Loan Documents. (except for
certain subordinate debt to AIMCO Properties, L.P., a Delaware limited
partnership, which is the subject of a Subordination Agreement of even date)
Notwithstanding paragraph B, Borrower, any general partner of Borrower
(if Borrower is a partnership) and Key Principal (each individually on a
joint and several basis if more than one) shall be personally liable on a
joint and several basis in the amount of any loss, damage or cost (including
but not limited to attorneys fees) resulting from (A) fraud or material
misrepresentation by Borrower or Borrower's agents or employees or any Key
Principal or general partner or Borrower in connection with obtaining the
loan evidenced by the Note, or in complying with any of Borrower's
obligations under the Loan Documents, (B) insurance proceeds, condemnation
awards, security deposits from tenants or other sums or payments received by
or on behalf of the Borrower in its capacity as owner of the Property and not
applied in accordance with the provisions of the Instrument (except to the
extent that Borrower did not have the legal right because of a bankruptcy,
receivership or similar judicial proceeding, to direct disbursement of such
sums or payments, (C) all Rents and Profits, (except to the extent that
Borrower did not have the legal right, because of a bankruptcy, receivership
or similar judicial proceeding, to direct the disbursement of such sums), and
not applied, first, to the payment of the reasonable Operating Expenses as
such Operating Expenses become due and payable, and then, to the payment of
principal and interest then due and payable under the Note and any other sums
due under the Instrument and all other Loan Document (including but not
limited to deposits or reserves payable under any Collateral Agreement), (D)
Borrower's failure to pay transfer fees and charges due Lender under
paragraph 19(c) of the Instrument, or (E) Borrower's failure following a
default under any of the Loan Documents to deliver to Lender on demand all
Rents and Profits, security deposits (except to the extent that Borrower did
not have the legal right because of a bankruptcy, receivership or similar
judicial proceeding to direct the disbursement of such sums), books and
records relating to the Property, (F) or relating to Hazardous Materials or
compliance with Hazardous Materials Laws to the full extent of any losses or
damages (including those resulting from diminution in value of the Property)
incurred by Lender as a result of the existence of such Hazardous Materials
or failure to comply with Hazardous Materials Laws or the obligations of
Borrower hereunder relating thereto, (G) intentional damage to the Property
or (H) failure of Borrower to pay taxes or other liens with priority over the
Multifamily Instrument.
No provision of paragraphs B or C shall (i) affect any guaranty or
similar agreement executed in connection with the debt evidenced by the Note,
(ii) release or reduce the debt evidenced by the Note, (iii) impair the
right of Lender to enforce the provisions of paragraph D of the Rider, (iv)
impair the lien of the Instrument, or (v) impair the right of Lender to
enforce the provisions of any Collateral Agreement.
D. BUSINESS, COMMERCIAL OR INVESTMENT PURPOSE
Borrower represents that the Loan evidenced by the Note is being made
solely for business, commercial or investment purposes.
E. GOVERNING LAW
1. CHOICE OF LAW
The validity of the Note, and the other Loan Documents, each of their
terms and provisions, and the rights and obligations of Borrower under the
Note, and the other Loan Documents shall be governed by, interpreted,
construed, and enforced pursuant to and in accordance with the laws of the
Property Jurisdiction.
2. CONSENT TO JURISDICTION
Borrower irrevocably consents to the exclusive jurisdiction of any and
all state and federal courts with jurisdiction in the Property Jurisdiction
over Borrower and Borrower's assets. Borrower agrees that such assets shall
be used to first satisfy all claims of creditors organized or domiciled in
the United States of America ("USA") and that no assets of the Borrower in
the USA shall be considered part of any foreign bankruptcy estate.
Borrower agrees that any controversy arising under or in relation to the
Note, the Instrument or any of the other Loan Documents shall be litigated
exclusively in the Property Jurisdiction. The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which may arise under or in
relation to the Note, including without limitation those controversies
relating to the execution, interpretation, breach, enforcement, or
compliance with the Note, the Instrument, or any other issue arising under,
related to, or in connection with any of the Loan Documents. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for
any litigation arising from the Note, the Instrument or any of the other Loan
Documents, and waives any other venue to which it might be entitled by virtue
of domicile, habitual residence, or otherwise.
F. SUCCESSORS AND ASSIGNS
The provisions of the Note, the Instrument, and all other Loan Documents
shall be binding on the successors and assigns, including, but not limited
to, any receiver, trustee, representative or other person appointed under
foreign or domestic bankruptcy, receivership, or similar proceedings of
Borrower and any person having an interest in Borrower.
<PAGE>
G. NO THIRD PARTY BENEFICIARY
Borrower acknowledges and agrees that (i) any loss sharing arrangement or
arrangements for interim advancement of funds that originally is made by the
Lender named in the Note to Federal National Mortgage Association is made
pursuant to a contractual obligation of such Lender to Federal National
Mortgage Association that is independent of, and separate and distinct from,
the obligation of Borrower for the full and prompt payment of the
indebtedness evidenced by the Note. (ii) Borrower shall not be deemed to be
a third party beneficiary of such loss sharing arrangement or arrangement for
interim advancement of funds, and (iii) no such loss sharing or interim
advancement arrangement shall constitute any person or entity making such
payment as a guarantor or surety of the Borrower's obligations,
notwithstanding the fact that the obligations under any such loss sharing or
interim advancement arrangement may be calculated with reference to amounts
payable under the Note or other Loan Documents.
BY SIGNING BELOW, Borrower accepts and agrees to the covenants and
agreements contained in this Addendum.
WITNESS: COPPERFIELD PARTNERS, LTD., a Texas limited partnership
By: AIMCO COPPERFIELD, L.P., a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its General Partner
/s/ Lynn Shapiro By: /s/ Harry Alcock
- ------------------------- --------------------------------
Harry Alcock
Vice President
THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
<PAGE>
When Recorded Return To:
Lolly Avant
Stewart Title Guaranty
1980 Post Oak Blvd, Ste. 610
Houston, Tx 77056
SN# 1002970013
Property: Copperfield
RECORDER'S MEMORANDUM
This memorandum has been posted on a piece
of paper which was posted or stapled over
printed matter on the original instrument at
the time the original instrument was filed.
SPACE ABOVE THIS LINE FOR RECORDER'S USE
- -------------------------------------------------------------------------------
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(Copperfield Apartments)
as of the
THIS DEED OF TRUST (herein "Instrument") is made this 18th day of April,
1997, among the Trustor/Grantor, COPPERFIELD PARTNERS, LTD., a Texas limited
partnership whose address is 1873 South Bellaire Street, 17th Floor, Denver,
Colorado 80222 (herein "Borrower") J. C. PAXTON (herein "Trustee"), and the
Beneficiary GMAC COMMERCIAL MORTGAGE CORPORATION a corporation organized and
existing under the laws of California, whose address is 650 Dresher Road,
P.O. Box 1015, Horsham, PA 19044-8015 (herein "Lender").
BORROWER, in consideration of the indebtedness herein recited and the
trust herein created, irrevocably grants conveys and assigns to Trustee, in
trust, with power of sale, the following described property located in
Houston, Harris County, State of Texas:
* DELETE BRACKETED MATERIAL IF NOT COMPLETED.
See EXHIBIT "A" attached hereto and incorporated herein.
This Instrument has been amended and supplemented in certain respects as set
forth in (i) Rider to Multifamily Instrument and (ii) Supplemental Rider to
Multifamily Instrument (collectively, the "Riders"), annexed hereto and
incorporated herein by this reference. In the event of any inconsistencies
between the printed portions of this Instrument and the provisions of the
Riders, the provisions of the Riders shall control.
(Page 1 of 8 pages)
<PAGE>
TOGETHER with all buildings, improvements, and tenements now or hereafter
erected on the property, and all heretofore or hereafter vacated alleys and
streets abutting the property, and all easements, rights, appurtenances,
rents (subject however to the assignment of rents to Lender herein),
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property, and all fixtures, machinery,
equipment, engines, boilers, incinerators, building materials, appliances and
goods of every nature whatsoever now or hereafter located in, or on, or used,
or intended to be used in connection with the property, including, but not
limited to, those for the purposes of supplying or distributing heating,
cooling, electricity, gas, water, air and light: and all elevators, and
related machinery and equipment, fire prevention and extinguishing apparatus,
security and access control apparatus, plumbing, bath tubs, water heaters,
water closets, sinks, ranges, stoves, refrigerators, dishwashers, disposals,
washers, dryers, awnings, storm windows, storm doors, screens, blinds,
shades, curtains and curtain rods, mirrors, cabinets, panelling, rugs,
attached floor coverings, furniture, pictures, antennas, trees, and plants,
and any and all other additional items of personal property described in
EXHIBIT "B" attached hereto and incorporated herein: all if which, including
replacements and additions thereto, shall be deemed to be and remain a part
of the real property covered by this Instrument: and all of the foregoing,
together with said property (or the leasehold estate in the event this
Instrument is on a leasehold) are herein referred to as the "Property".
TO SECURE TO LENDER (a) the repayment of the indebtedness evidenced by
Borrower's note dated as of even date herewith (herein "Note") in the
principal sum of Three Million Five Hundred Seventy-Seven Thousand and no/100
($3,577,000.00) Dollars, with interest thereon, with the balance of the
indebtedness, if not sooner paid, due and payable on May 1, 2017, and all
renewals, extensions and modifications thereof; hereof: (d) the payment of
all other sums, with interest thereon, advanced in accordance herewith to
protect the security of this Instrument: and (e) the performance of the
covenants and agreements of Borrower herein contained.
Borrower covenants that Borrower is lawfully seized of the estate hereby
conveyed and has the right to grant, convey and assign the Property (and, if
this Instrument is on a leasehold, that the ground lease is in full force and
effect without modification except as noted above and without default on the
part of either lessor or lessee thereunder), that the Property is
unencumbered, and that Borrower will warrant and defend generally the title
to the Property against all claims and demands, subject to any easements and
restrictions listed in a schedule of exceptions to coverage in any title
insurance policy insuring Lender's interest in the Property.
(Page 2 of 8 pages)
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UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due
the principal of and interest on the indebtedness evidenced by the Note, any
prepayment and late charges provided on the Note and all other sums secured
by this Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Subject to applicable law
or to a written waiver by Lender, Borrower shall pay to Lender on the day
monthly installments of principle or interest are payable under the Note (or
on another day designated in writing by Lender), until the Note is paid in
full, a sum (herein "Funds") equal to one-twelfth of (a) the yearly water and
sewer rates and taxes and assessments which may be levied on the Property,
(b) the yearly ground rents, if any, (c) the yearly premium installments
for fire and other hazard insurance, rent loss insurance and such other
insurance covering the Property as Lender may require pursuant to paragraph 5
hereof (d) the yearly premium installments for mortgage insurance, if any,
and (e) if this Instrument is on a leasehold, the yearly fixed rents, if
any, under the ground lease, all as reasonably estimated initially and from
time to time by Lender on the bases of assessments and bills and reasonable
estimates thereof. Any waiver by Lender of a requirement that Borrower pay
such Funds may be revoked by Lender, in Lender's sole discretion, at any time
upon notice in writing to Borrower. Lender may require Borrower to pay to
Lender, in advance, such other Funds for other taxes, charges, premiums,
assessments and impositions in connection with Borrower or the Property which
Lender shall reasonably deem necessary to protect Lender's interests (herein
"Other Impositions"). Unless otherwise provided by applicable law, Lender
may require Funds for Other Impositions to be paid by Borrower in a lump sum
or in periodic installments, at Lender's option.
The Funds shall be held in an institution(s) the deposits or accounts of
which are insured or guaranteed by a Federal or state agency (including
Lender if Lender is such an institution). Lender shall apply the Funds to
pay said rents, taxes, assessments, insurance premiums and Other Impositions
so long as Borrower is not in breach of any covenant or agreement of Borrower
in this Instrument. Lender shall make no charge for so holding and applying
the Funds, analyzing said account or for verifying and compiling said
assessments and bills, unless Lender pays Borrower interest, earnings or
profits on the Funds and applicable law permits Lender to make such a charge.
Borrower and Lender may agree in writing at the time of execution of this
Instrument that interest on the Funds shall be paid to Borrower,and unless
such agreement is made or applicable law requires interest earnings or
profits to be paid. Lender shall not be required to pay Borrower any
interest, earnings or profits on the Funds. Lender shall give to Borrower,
without charge, an annual accounting of the Funds in Lender's normal format
showing credits and debits to the Funds and the purpose for which each debit
to the Funds was made. The Funds are pledged as additional security for the
sums secured by this Instrument.
If the amount of the Funds held by Lender at the time of the annual
accounting thereof shall exceed the amount deemed necessary by Lender to
provide for the payment of water and sewer rates, taxes, assessments,
insurance premiums, rents and Other Impositions, as they fall due, such
excess shall be credited to Borrower on the next monthly installment or
installments of Funds due. If at any time the amount of the Funds held by
Lender shall be less than the amount deemed necessary by Lender to pay water
and sewer rates, taxes, assessments, insurance premiums, rents and Other
Impositions, as they fall due, Borrower shall pay to Lender any amount
necessary to make up the deficiency within thirty days after notice from
Lender to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in
this Instrument, Lender may apply, in any amount and in any order as Lender
shall determine in Lender's sole discretion, any Funds held by Lender at the
time of application (i) to pay rates, rents, taxes, assessments, insurance
premiums, and Other Impositions which are now or will hereafter become due,
or (ii) as a credit against sums secured by this Instrument. Upon payment
in full of all sums secured by this Instrument, Lender shall promptly refund
to Borrower any Funds held by Lender.
3. APPLICATION OF PAYEMENTS, Unless applicable law provides otherwise all
payments received by Lender from Borrower under the Note or this Instrument
shall be applied by Lender in the following order of priority: (i) amounts
payable to Lender by Borrower under paragraph 2 hereof; (ii) interest payable
on the Note; (iii) principal of the Note; (iv) interest payable on advances
made pursuant to paragraph 8 hereof; (v) principal of advances made pursuant
to paragraph 8 hereof; (vi) interest payable on any Future Advance, provided
that if more than one Future Advance is outstanding. Lender may apply
payments received among the amounts of interest payable on the Future
Advances in such order as Lender, in Lender's sole discretion, may determine:
(vii) principal of any Future Advance, provided that if more than one Future
Advance is outstanding. Lender may apply payments received among the
principal balances of the Future Advances in such order as Lender, in Lenders
sole discretion, may determine: and (viii) any other sums secured by this
Instrument in such order as Lender, at Lenders option, may determine;
provided, however, that Lender may, at Lenders option, apply any sums payable
pursuant to paragraph 8 hereof prior to interest on and principle of the
Note, but such application shall not otherwise affect the order of priority
of application specified in this paragraph 3.
4. CHARGES; LIENS. Borrower shall pay all water and sewer rates, rents,
taxes, assessments, premiums, and Other Impositions, attributable to the
Property at Lenders option in the manner provided under paragraph 2 hereof
or, if not paid in such manner, by Borrower making payment, when due,
directly to the payee thereof, or in such other manner as Lender may
designate in writing. Borrower shall promptly furnish to Lender all notices
of amounts due under this paragraph 4, and in the event Borrower shall make
payment directly, Borrower shall promptly furnish receipts evidencing such
payments. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Instrument, and Borrower
shall pay, when due, the claims of all persons supplying labor or materiel to
or in connection with the Property. Without Lenders prior written permission,
Borrower shall not allow any lien inferior to this Instrument to be perfected
against the Property.
5. HAZARD INSURANCE. Borrower shall keep the improvements now existing or
hereafter erected on the Property insured by carriers at all times
satisfactory to Lender against loss by fire, hazards included within the term
"extended coverage", rent loss and such other hazards, casualties,
liabilities and contingencies as Lender (and, if this Instruments is on a
leasehold, the ground lease) shall require in such amounts and for such
periods as Lender shall require. All premiums on insurance policies shall be
paid, at Lender's option, in the manner provided under paragraph 2 hereof, or
by Borrower making payment, when due, directly to the carrier, or in such
other manner as Lender may designate in writing.
All insurance policies and renewals thereof shall be in a form acceptable
to Lender and shall include a standard mortgage clause in favor of and in
form acceptable to Lender. Lender shall have the right to hold the policies,
and Borrower shall promptly furnish to Lender all renewal notices and all
receipts of paid premiums. At least fifteen days prior to the expiration
date of the policy, Borrower shall delivery to Lender a renewal policy in
form satisfactory to Lender. If this Instrument is on a leasehold, Borrower
shall furnish Lender duplicate of all policies, renewal notices, renewal
policies and receipts of paid premiums if, by virtue of the ground lease, the
originals thereof may not be supplied by Borrower to Lender.
In the event of lose, Borrower shall give immediate written notice to the
insurance carrier and to Lender. Borrower hereby authorizes and empowers
Lender as attorney-in-fact for Borrower to make proof of loss, to adjust and
compromise any claim under insurance policies to appear in and prosecute any
action arising from such insurance policies, to collect and receive insurance
proceeds, and to deduct therefrom Lenders expenses incurred in the collection
of such proceeds; provided however that nothing contained in this paragraph 5
shall require Lender to incur any expense or take any action hereunder.
Borrower further authorizes Lender, at Lenders option (a) to hold the balance
of such proceeds to be used to reimburse Borrower for the cost of
reconstruction or repair of the Property or (b) to apply the balance of such
proceeds to the payment of the sums secured by this Instrument, whether or
not then due, in the order of applications set forth in paragraph 3 hereof
(subject, however, to the rights of the lessor under the ground lease if this
Instrument is on a leasehold).
If the insurance proceeds are held by Lender to reimburse Borrower for
the cost of restoration and repair of the Property, the Property shall be
restored to the equivalent of its original condition or such other condition
as Lender may approve in writing. Lender may, at Lenders option, condition
disbursement of said proceeds on Lenders approval of such plans and
specifications of an architect satisfactory to Lender, contractor's cost
estimates, architect's certificates, waivers of liens, sworn statements of
mechanics and materialmen and such other evidence of costs, percentage
completion of construction, application of payments, and satisfaction of
liens as Lender may reasonably require. If the insurance proceeds are applied
to the payment of the sums secured by this Instrument, any such application
of proceeds to principal shall not extend or postpone the due dates of the
monthly installments referred to in paragraphs 1 and 2 hereof or change the
amounts of such installments. If the Property is sold pursuant to paragraph
27 hereof or if Lender acquires title to the Property, Lender shall have all
of the right, title and interest of Borrower in and to any insurance polices
and unearned premiums thereon and in and to the proceeds resulting from any
damage to the Property prior to such sale or acquisition.
6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower (a) shall
not commit waste or permit impairment or deterioration of the Property, (b)
shall not abandon the Property, (c) shall restore or repair promptly and in
a good and workmanlike manner all
(Page 3 of 8 pages)
<PAGE>
or any part of the Property to the equivalent of its original condition, or
such other condition as Lender may approve in writing, in the event of any
damage, injury or loss thereto, whether or not insurance proceeds are
available to cover in whole or in part the costs of such restoration or
repair, (d) shall keep the Property, including improvements, fixtures,
equipment, machinery and appliances thereon in good repair and shall replace
fixtures, equipment, machinery and appliances on the Property when necessary
to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable
to the Property, (f) shall provide for professional management of the
Property by a residential rental property manager satisfactory to Lender
pursuant to a contract approved by Lender in writing, unless, such
requirement shall be waived by Lender in writing, (g) shall generally operate
and maintain the Property in a manner to ensure maximum rentals, and (h)
shall give notice in writing to Lender of and, unless otherwise directed in
writing by Lender, appear in and defend any action or proceeding purporting
to affect the Property, the security of this Instrument or the rights of
powers of Lender. Neither Borrower nor any tenant or other person shall
remove, demolish or alter any improvement now existing of hereafter erected
on the Property of any fixture, equipment, machinery or appliance in or on
the Property except when incident to the replacement of fixtures, equipment,
machinery, and appliances with items of like kind.
If this Instrument is on a leasehold, Borrower (i) shall comply with the
provisions of the ground lease, (ii) shall give immediate written notice to
Lender of any default by lessor under the ground lease or of any notice
received by Borrower from such lessor of any default under the ground lease
by Borrower, (iii) shall exercise any option to renew or extend the ground
lease and give written confirmation thereof to Lender within thirty days
after such option becomes exercisable, (iv) shall give immediate written
notice to Lender of the commencement of any remedial proceedings under the
ground lease by any party thereto and, if required by Lender, shall permit
Lender as Borrower's attorney-in-fact to control and act for Borrower in any
such remedial proceedings and (v) shall within thirty days after request by
Lender obtain from the lessor under the ground lease and deliver to Lender
the lessor's estoppel certificate required thereunder, if any. Borrower
hereby expressly transfers and assigns to Lender the benefit of all covenants
contained in the ground lease, whether or not such covenants run with the
land, but Lender shall have no liability with respect to such covenants nor
any other covenants contained in the ground lease.
Borrower shall not surrender the leasehold estate and interests herein
conveyed nor terminate or cancel the ground lease creating said estate and
interests, and Borrower shall not, without the express written consent of
Lender, alter or amend said ground lease. Borrower covenants and agrees that
there shall not be a merger of the ground lease, or of the leasehold estate
created thereby, with the fee estate covered by the ground lease by reason of
said leasehold estate or said fee estate, or any part of either, coming into
common ownership, unless Lender shall consent in writing to such merger, if
Borrower shall acquire such fee estate, then this Instrument shall
simultaneously and without further action be spread so as to become a lien on
such fee estate.
7. USE OF PROPERTY. Unless required by applicable law or unless Lender has
otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this
Instrument was executed. Borrower shall not initiate or acquiesce in a
change in the zoning classification of the Property without Lender's prior
written consent.
8. PROTECTION OF LENDER'S SECURITY. If borrower fails to perform the
covenants and agreements contained in this Instrument, or if any action or
proceeding is commenced which affects the Property of title thereto or the
interest of Lender therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Lender at Lender's opinion may make such
appearances, disburse such sums and take such actions as Lender deems
necessary, in its sole discretion, to protect Lender's interest, including,
but not limited to, (i) disbursement of attorney's fees, (ii) entry upon the
Property to make repairs, (iii) procurement of satisfactory insurance as
provided in paragraph 5 hereof, and (iv) if this Instrument is on leasehold,
exercise of any option to renew or extend the ground lease on behalf of
Borrower and the curing of any default of Borrower in the terms and
conditions of the ground lease.
Any amounts disbursed by Lender pursuant to this paragraph 8, with
interest thereon, shall become additional indebtedness of Borrower secured
by this Instrument. Unless Borrower and Lender agree to other terms of
payment, such amounts shall be immediately due and payable and shall bear
interest from the date of disbursement at the rate stated in the Note unless
collection from Borrower of interest at such rate would be contrary to
applicable law, in which event such amounts shall bear interest at the
highest rate which may be collected form Borrower under applicable law.
Borrower hereby covenants and agrees that Lender shall be subrogated to the
lien of any mortgage or other lien discharged, in whole or in part, by the
indebtedness secured hereby. Nothing contained in this paragraph 8 shall
require Lender to incur any expense or take any action hereunder.
9. INSPECTION. Lender may make or cause to be made reasonable entries upon
and inspections of the property.
10. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT
11. CONDEMNATION. Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, whether direct or
indirect, of the Property, or part thereof, and Borrower shall appear in and
prosecute any such action or proceeding unless otherwise directed by Lender
in writing. Borrower authorizes Lender, at Lender's option, as
attorney-in-fact for Borrower, to commence, appear in and prosecute, in
Lender's or Borrower's name, any action or proceeding relating to any
condemnation or other taking of the Property, whether direct or indirect, and
to settle or compromise any claim in connection with such condemnation or
other taking. The proceeds of any award, payment or claim for damages,
direct or consequential, in connection with any condemnation or other taking,
whether direct or indirect, of the Property, or part thereof, or for
conveyances in lieu of condemnation, are hereby assigned to and shall be paid
to Lender subject, if this Instrument is on a leasehold, to the rights of
lessor under the ground lease.
Borrower authorizes Lender to apply such awards, payments, proceeds or
damages, after the deduction of Lender's expenses incurred in the collection
of such amounts, at Lender's option, to restoration or repair of the Property
or to payment of the sums secured by this Instrument, whether or not then
due, in the order of application set forth in paragraph 3 hereof, with the
balance, if any, to Borrower. Unless Borrower and Lender otherwise agree in
writing, any application of proceeds to principal shall not extend or
postpone the due date of the monthly installments referred to in paragraphs 1
and 2 hereof or change the amount of such installments. Borrower agrees to
execute such further evidence of assignment of any awards, proceeds, damages,
or claims arising in connection with such condemnation or taking as Lender
may require.
12. BORROWER AND LIEN NOT RELEASED. From time to time, Lender may, at
Lender's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on Lender's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend
the time for payment of said indebtedness or any part thereof, reduce the
payments thereon, release anyone liable on any of said indebtedness, accept a
renewal note or notes therefor, modify the terms and time of payment of said
indebtedness, release from the lien of this Instrument any part of the
Property, take or release other or additional security, reconvey any part of
the Property, consent to any map or plan of the Property, consent to the
granting of any easement, join in any extension or subordination agreement,
and agree in writing with Borrower to modify the rate of interest or period
of amortization of the Note or change the amount of the monthly installments
payable thereunder. Any action taken by Lender pursuant to the terms of this
paragraph 12 shall not affect the obligation of Borrower or Borrower's
successors or assigns to pay the sums secured by this Instrument and to
observe the covenants of Borrower contained herein, shall not affect the
guaranty of any person, corporation, partnership or other entity for payment
of the indebtedness secured hereby, and shall not affect the lien or priority
of lien hereof on the Property. Borrower shall pay Lender a reasonable
service charge, together with such title insurance premiums and attorney's
fees as may be incurred at Lender's option, for any such action if taken at
Borrower's request.
13. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Lender in
excercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any
right or remedy. The acceptance by Lender of payment of any sum secured by
this Instrument after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of
the indebtedness secured by this Instrument, nor shall Lender's receipt of
any awards, proceeds or damages under paragraph 5 and 11 hereof operate to
cure or waive Borrower's default in payment of sums secured by this
Instrument.
(Page 4 of 8 pages)
<PAGE>
14. ESTOPPEL CERTIFICATE. Borrower shall within ten days of a written
request from Lender furnish Lender with a written statement, duly
acknowledged, setting forth the sums secured by this Instrument and any right
of set-off, counterclaim or other defense which exists against such sums and
the obligations of this Instrument.
15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is intended
to be a security agreement pursuant to the Uniform Commercial Code for any of
the items specified above as part of the Property which, under applicable
law, may be subject to a security interest pursuant to the Uniform Commercial
Code, and Borrower hereby grants Lender a security interest in said items.
Borrower agrees that Lender may file this Instrument, or a reproduction
thereof, in the real estate records or other appropriate index, as a
financing statement for any of the items specified above as part of the
Property. Any reproduction of this Instrument or of any other security
agreement or financing statement shall be sufficient as a financing
statement. In addition, Borrower agrees to execute and deliver to Lender,
upon Lender's request, any financing statements, as well as extensions,
renewals and amendments thereof, and reproductions of this Instrument in such
form as Lender may require to perfect a security interest with respect to
said items. Borrower shall pay all costs of filing such financing statements
and any extensions, renewals, amendments and releases thereof, and shall pay
all reasonable costs and expenses of any record searches for financing
statements Lender may reasonably require. Without the prior written consent
of Lender, Borrower shall not create or suffer to be created pursuant to the
Uniform Commercial Code any other security interest in said items, including
replacements and additions thereto. Upon Borrower's breach of any covenant
or agreement of Borrower contained in this Instrument, including the
covenants to pay when due all sums secured by this Instrument, Lender shall
have the remedies of a secured party under the Uniform Commercial Code and,
at Lender's option, may also invoke the remedies provided in paragraph 27 of
this Instrument as to such items. In exercising any of said remedies, Lender
may proceed against the items of real property and any items of personal
property specified above as part of the Property separately or together an in
any order whatsoever, without in any way affecting the availability of
Lender's remedies under the Uniform Commercial Code or of the remedies
provided in paragraph 27 of this Instrument.
16. LEASES OF THE PROPERTY. As used in this paragraph 16, the word "lease"
shall mean "sublease" if this Instrument is on a leasehold Borrower shall
comply with and observe Borrower's obligations as landlord under all leases
of the Property or any part thereof. Borrower will not lease any portion of
the Property for non-residential use except with the prior written approval
of Lender. Borrower, at Lender's request, shall furnish Lender with executed
copies of all leases now existing or hereafter made of all or any part of the
Property, and all leases now or hereafter entered into will be in form and
substance subject to the approval of Lender. All leases of the Property shall
specifically provide that such leases are subordinate to this Instrument;
that the tenant attorns to Lender, such attornment to be effective upon
Lender's acquisition of title so the Property: that the tenant agrees to
execute such further evidences of attornment as Lender may from time to time
request; that the attornment of the tenant shall not be terminated by
foreclosure; and that Lender may, at Lender's option accept or reject such
attornments. Borrower shall not, without Lender's written consent, execute,
modify, surrender or terminate, either orally or in writing, any lease now
existing or hereafter made of all or any part of the Property providing for a
term of three years or more, permit an assignment or sublease of such a lease
without Lender's written consent, or request or consent to the subordination
of any lease of all or any part of the Property to any lien subordinate to
this Instrument. If Borrower becomes aware that any tenant proposes to do,
or is doing any act or thing which may give rise to any right of set-off
against rent, Borrower shall (i) take such steps as shall be reasonably
calculated to prevent the accrual of any right to a set-off against rent,
(ii) notify Lender thereof and of the amount of said set-offs, and (iii)
within ten days after such accrual, reimburse the tenant who shall have
acquired such right to set-off or take such other steps as shall effectively
discharge such set-off and as shall assure that rents thereafter due shall
continue to be payable without set-off or deduction.
Upon Lender's request, Borrower shall assign to Lender, by written
instrument satisfactory to Lender, all leases now existing or hereafter made
of all or any part of the Property and all security deposits made by tenants
in connection with such leases of the Property. Upon assignment by Borrower
to Lender of any leases of the Property, Lender shall have all of the rights
and powers possessed by Borrower prior to such assignment and Lender shall
have the right to modify, extend or terminate such existing leases and to
execute new leases, in Lender's sole discretion.
17. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument
or afforded by law or equity, and may be exercised concurrently,
independently, or successively, in any order whatsoever.
18. ACCELERATION IN CASE OF BORROWER'S INSOLVENCY. If Borrower shall
voluntarily file a petition under the Federal Bankruptcy Act, as such Act may
from time to time be amended, or under any similar or successor Federal
statute relating to bankruptcy, insolvency, arrangements or reorganizations,
or under any state bankruptcy or insolvency act, or file an answer in an
involuntary proceeding admitting insolvency or inability to pay debts, or if
Borrower shall fail to obtain a vacation or stay of involuntary proceedings
brought for the reorganization, dissolution or liquidation of Borrower, or if
Borrower shall be adjudged a bankrupt, or if a trustee or receiver shall be
appointed for Borrower or Borrower's property, or if the Property shall
become subject to the jurisdiction of a Federal bankruptcy court or similar
state court, or if Borrower shall make an assignment for the benefit of
Borrower's creditors, or if there is an attachment, execution or other
judicial seizure of any portion of Borrower's assets and such seizure is not
discharged within ten days, then Lender may, at Lender's option, declare all
of the sums secured by this Instrument to be immediately due and payable
without prior notice to Borrower, and Lender may invoke any remedies
permitted by paragraph 27 of this Instrument. Any attorney's fees and other
expenses incurred by Lender in connection with Borrower's bankruptcy or any
of the other aforesaid events shall be additional indebtedness of Borrower
secured by this Instrument pursuant to paragraph 8 hereof.
19. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT
20. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT
21. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements herein contained shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of
Lender and Borrower, subject to the provisions of paragraph 19 hereof. All
covenants and agreements of Borrower shall be joint and several. In
exercising any rights hereunder or taking any actions provided for herein,
Lender may act through its employees, agents or independent contractors as
authorized by Lender. The captions and headings of the paragraphs of this
Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.
22. UNIFORM MULTIFAMILY INSTRUMENT; GOVERNING LAW; SEVERABILITY. This form
of multifamily instrument combines uniform covenants for national use and
non-uniform covenants with limited variations by jurisdiction to constitute a
uniform security instrument covering real property and related fixtures and
personal property. This Instrument shall be governed by the law of the
jurisdiction in which the Property is located. In the event that any
provision of this Instrument of the Note conflicts with applicable law, such
conflict shall not affect other provisions of this Instrument or the Note
which can be given effect without the conflicting provisions, and to this end
the provisions of this
(Page 5 of 8 pages)
<PAGE>
Instrument and the Note are declared to be severable. In the event that any
applicable law limiting the amount of interest or other charges permitted to
be collected from Borrower is interpreted so that any charge provided for in
this Instrument or in the Note, whether considered separately or together
with other charges levied in connection with this Instrument and the Note,
violates such law, and Borrower is entitled to the benefit of such law, such
charge is hereby reduced to the extent necessary to eliminate such violation.
The amounts, if any, previously paid to Lender in excess of the amounts
payable to Lender pursuant to such charges as reduced shall be applied by
Lender to reduce the principal of the indebtedness evidenced by the Note.
For the purpose of determining whether any applicable law limiting the
amount of interest or other charges permitted to be collected form Borrower
has been violated, all indebtedness which is secured by this Instrument or
evidenced by the Note and which constitutes interest, as well as all other
charges levied in connection with such indebtedness which constitute
interest, shall be deemed to be allocated and spread over the stated term of
the Note. Unless otherwise required by applicable law, such allocation and
spreading shall be effected in such a manner that the rate of interest
computed thereby is uniform throughout the stated term of the Note.
23. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce the Note or any other
obligation secured by this Instrument.
24. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Property held by Lender or by any other party,
Lender shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. Lender shall
have the right to determine the order in which any or all portions of the
indebtedness secured hereby are satisfied form the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents
to this Instrument and any party who now hereafter acquires a security
interest in the Property and who has actual or constructive notice hereof
hereby waives any and all right to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable
law or provided herein.
25.
26. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. As
part of the consideration for the indebtedness evidenced by the Note,
Borrower hereby absolutely and unconditionally assigns and transfers to
Lender all the rents and revenues of the Property, including those now due,
past due, or to become due by virtue of any lease or other agreement for the
occupancy or use of all or any part of the Property, regardless of to whom
the rents and revenues of the Property are payable. Borrower hereby
authorizes Lender or Lender's agents to collect the aforesaid rents and
revenues and hereby directs each tenant of the Property to pay such rents to
Lender or Lender's agents; provided, however, that prior to written notice
given by Lender to Borrower of the breach by Borrower of any covenant or
agreement of Borrower in this Instrument, Borrower shall collect and receive
all rents and revenues of the Property as trustee for the benefit of Lender
and Borrower, to apply the rents and revenues so collected to the sums
secured by this Instrument in the order provided in paragraph 3 hereof with
the balance, so long as no such breach has occurred, to the account of
Borrower, it being intended by Borrower and Lender that this assignment of
rents constitutes an absolute assignment and not an assignment for addition
security only. Upon delivery of written notice by Lender to Borrower of the
breach by Borrower of any covenant or agreement of Borrower in this
Instrument, and without the necessity of Lender entering upon and taking an
maintaining full control of the Property in person, by agent or by
court-appointed receiver, Lender shall immediately be entitled to possession
of all rents and revenues of the Property as specified in this paragraph 26
as the same become date and payable, including but not limited to rents then
due and unpaid, and all such rents shall immediately upon delivery of such
notice be held by Borrower as trustee for the benefit of Lender only;
provided, however, that the written notice by Lender to Borrower of the
breach by Borrower shall contain a statement that Lender exercises its rights
to such rents. Borrower agrees that commencing upon delivery of such written
notice of Borrower's breach by Lender to Borrower, each tenant of the
Property shall make such rents payable to and pay such rents to Lender or
Lender's agents on Lender's written demand to each tenant therefor, delivered
to each tenant personally, by mail or by delivering such demand to each
rental unity, without any liability on the part of said tenant to inquire
further as to the existence of a default by Borrower.
Borrower hereby covenants that Borrower has not executed any prior
assignment of said rents, that Borrower has not performed, and will not
perform, any acts or has not executed, and will not execute, any instrument
which would prevent Lender from exercising its rights under this paragraph
26, and that at the time of execution of this Instrument there has been no
anticipation or prepayment of any of the rents of the Property for more than
two months prior to the due dates of such rents. Borrower covenants that
Borrower will not hereafter collect or accept payment of any rents of the
property more than two months prior to the due dates of such rents. Borrower
further covenants that Borrower will execute and deliver to Lender such
further assignments of rents and revenues of the Property as Lender may from
time to time request.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, Lender may in person, by agent or by a court-appointed receiver,
regardless of the adequacy of Lender's security, enter upon and take an
maintain full control of the Property in order to perform all acts necessary
and appropriate for the operation and maintenance thereof including, but not
limited to, the execution, cancellation or modification of leases, the
collection of all rents and revenues of the Property, the making of repairs
to the Property and the execution or termination of contracts providing for
the management or maintenance of the Property, all on such terms as are
deemed best to protect the security of this Instrument. In the event Lender
elects to seek the appointment of a receiver for the Property upon Borrower's
breach of any covenant or agreement of Borrower in this Instrument, Borrower
hereby expressly consents to the appointment of such receiver. Lender or the
receiver shall be entitled to receive a reasonable fee for so managing the
Property.
All rents and revenues collected subsequent to delivery of written notice
by Lender to Borrower of the breach by Borrower of any covenant of agreement
of Borrower in this Instrument shall be applied first to the costs, if any,
of taking control of and managing the Property and collecting the rents,
including but not limited to, attorney's fees, receiver's fees, premiums on
receiver's bonds, costs of repairs to the Property, premiums on insurance
policies, taxes, assessments, and other charges on the Property, and the
costs of discharging any obligation or liability of Borrower as lessor or
landlord of the Property and then to the sums secured by this Instrument.
Lender or the receiver shall have access to the books and records used in the
operation and maintenance of the Property and shall be liable to account only
for those rents actually received. Lender shall not be liable to Borrower,
anyone claiming under or though Borrower or anyone having an interest in the
Property by reason of anything done or left undone by Lender under this
paragraph 26.
If the rents of the Property are not sufficient to meet the costs, if
any, of taking control of and managing the Property and collecting the rents,
any funds expended by Lender for such purposes shall become indebtedness of
Borrower to Lender secured by this Instrument pursuant to paragraph 8 hereof.
Unless Lender and Borrower agree in writing to other terms of payment, such
amounts shall be payable upon notice from Lender to Borrower requesting
payment thereof and shall bear interest from the date of disbursement at the
rate stated in the Note unless payment of interest at such rate would be
contrary to applicable law, in which even such amounts shall bear interest at
the highest rat which may be collected form Borrower under applicable law.
Any entering upon and taking and maintaining of control of the Property
by Lender or the receiver and any application of rents as provided herein
shall not cure or waive any default hereunder or invalidate any other rights
or remedy of Lender under applicable law or provided herein. This assignment
of rents of the Property shall terminate at such time as this Instrument
ceases to secure indebtedness held by Lender.
(page 6 of 8 pages)
<PAGE>
NON-UNIFORM COVENANTS. BORROWER AND LENDER FURTHER COVENANT AND AGREE AS
FOLLOWS:
27. ACCELERATION; REMEDIES. Upon Borrower's breach of any covenant or
agreement of Borrower in this Instrument, including, but not limited to the
covenants to pay when due any sums secured by this Instrument, Lender at
Lender's option may declare all of the sums secured by this Instrument to be
immediately due and payable without further demand and may invoke the power
of sale and any other remedies permitted by applicable law or provided
herein, Borrower acknowledges that the power of sale herein granted may be
exercised by Lender without prior judicial hearing. Borrower has the right
to bring an action to assert the non-existence of a breach or any other
defense of Borrower to acceleration and sale. Lender shall be entitled to
collect all costs and expenses incurred in pursuing such remedies, including,
but not limited to, attorney's fees and costs of documentary evidence,
abstracts and title reports.
If Lender invokes the power of sale, Lender or Trustee shall give notice
of the time, place and terms of sale by posting written notice at least 21
days prior to the day of sale at the courthouse door in each of the counties
in which the Property is situated. Lender shall mail a copy of the notice of
sale to Borrower in the manner provided by applicable law. Trustee shall
sell the Property according to the laws of Texas. Such sale shall be made at
public vendue between the hours of 10 o'clock a.m. and 4 o'clock p.m. on the
first Tuesday in any month. Borrower authorizes Trustee to sell the Property
to the highest bidder for cash in one or more parcels and in such order as
Trustee may determine. Lender or Lender's designee may purchase the Property
at any sale.
Trustee shall deliver to the purchase Trustee's deed conveying the
Property so sold in fee simple with covenants of general warranty. Borrower
covenants and agrees to defend generally the purchaser's title to the
Property against all claims and demands. The recitals in Trustee's deed
shall be prima facie evidence of the truth of the statements contained
therein. Trustee shall apply the proceeds of the sale in the following
order: (a) to all reasonable costs and expenses of the sale, including, but
not limited to, reasonable Trustee's fees and attorney's fees and costs of
title evidence; (b) to all sums secured by this Instrument in such order as
Lender, in Lender's sole discretion, directs; and (c) the excess, if any, to
the person or the persons legally entitled thereto.
If the Property is sold pursuant to this paragraph 27, Borrower or any
person holding possession of the Property through Borrower shall immediately
surrender possession of the Property to the purchaser at such sale upon the
purchaser's written demand. If possession is not surrendered upon the
purchaser's written demand, Borrower or such person shall be a tenant at
sufferance and may be removed by writ of possession or by an action for
forcible entry and detainer.
28. RELEASE. Upon payment of all sums secured by this Instrument, Lender
shall release this Instrument. Borrower shall pay Lender's reasonable costs
incurred in releasing this Instrument.
29. SUBSTITUTE TRUSTEE. Lender at Lender's option, with or without cause,
may from time to time remove Trustee and appoint a successor trustee to any
Trustee appointed hereunder by an instrument recorded in the county in which
this Instrument is recorded. Without conveyance of the Property, the
successor trustee shall succeed to all the title, power and duties conferred
upon the Trustee herein and by applicable law.
30. SUBROGATION. Any of the proceeds of the Note utilized to take up
outstanding liens against all or nay part of the Property have been advanced
by Lender at Borrower's request and upon Borrower's representation that such
amounts are due and are secured by valid liens against the Property. Lender
shall be subrogated to any and all rights, superior titles, liens and
equities owned or claimed by any owner or holder of any outstanding liens and
debts, however remote, regardless of whether said liens or debts are acquired
by Lender, by assignment or are released by the holder thereof upon payment.
31. PARTIAL INVALIDITY. In the event any portion of the sums intended to be
secured by this Instrument cannot be lawfully secured hereby payments in
reduction of such sums shall be applied first to those portions not secure
hereby.
32.
33.
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.
WITNESS: COPPERFIELD PARTNERS, LTD., a Texas limited partnership
By: AIMCO COPPERFIELD, L.P., a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS, L.P. , a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its General Partner
/s/ Judith E. Mintz By: /s/ Harry Alcock
- -------------------- ---------------------------
Harry Alcock
Vice President
BORROWER'S ADDRESS:
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
(page 7 of 8 pages)
<PAGE>
ACKNOWLEDGMENT
DISTRICT OF COLUMBIA ) to-wit:
BEFORE ME, the undersigned, a Notary Public in and for the jurisdiction
aforesaid, this day personally appeared Harry Alcock, known to me to be the Vice
President of AIMCO HOLDINGS QRS, INC., the corporation that executed the
foregoing instrument, and known to me to be the person who executed the
foregoing instrument on behalf of said corporation, said corporation being known
to me to be general partner of AIMCO HOLDINGS, L.P., a limited partnership,
which limited partnership is general partner of AIMCO COPPERFIELD, L.P., a
limited partnership, and which limited partnership is general partner of
COPPERFIELD PARTNERS, LTD., the limited partnership that executed the foregoing
instrument, and acknowledged to me that such corporation executed the same as
such general partner and that such limited partnerships executed the same for
the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 18th day of April, 1997.
Isabelle Balakit Adams
--------------------------------
[SEAL] Notary Public in and for
the District of Columbia
My Commission Expires:
ISABELLE BALAKIT ADAMS
Notary Public, District of Columbia
- ---------------------- My Commission Expires May 14, 2000
<PAGE>
RIDER TO MULTIFAMILY INSTRUMENT
(FOR USE WITH EXCEPTIONS TO NON-RECOURSE GUARANTY)
(Copperfield)
THIS RIDER TO MULTIFAMILY INSTRUMENT (the "Rider") is made as of the 18th day
of April 1997, and is incorporated into and shall be deemed to amend and
supplement the Multifamily Deed of Trust of the same date ( the "Instrument"),
given by the undersigned COPPERFIELD PARTNERS, LTD., a Texas limited
partnership, (the "Borrower"), to secure Borrower's Multifamily Note of the same
date (the "Note") with Addendum to Multifamily Note of the same date (the
"Addendum") to GMAC COMMERCIAL MORTGAGE CORPORATION, a Calfiornia corporation,
650 Dresher Road, P.O. Box 1015, Borsham, PA 19044-8015 (INSERT ADDRESS OF
LENDER)., and its successors, assigns and transferees (the "Lender"),
covering the property described in the Instrument and defined therein as the
"Property," located at:
8255 Sunbury Lane, Houston, Texas.
(Property Address)
The Property is located entirely within the State of Texas (INSERT THE
NAME OF STATE IN WHICH THE PROPERTY IS LOCATED) (the "Property
Jurisdiction".)
The term "Loan Documents" when used in this Rider shall mean,
collectively, the following documents: (i) the Instrument, as modified by
this Rider and any other riders to the Instrument given by Borrower to Lender
and covering the Property; (ii) the Note, as modified by the Addendum and any
other addendum to the Note; and (iii) all other documents or agreements,
including any Collateral Agreements (as defined below) or O&M Agreements
(as defined below), arising under, related to, or made in connection with,
the loan evidenced by the Note, as such Loan Documents may be amended from
time to time. Any conflict between the provisions of the Instrument and the
Rider shall be resolved in favor of the Rider.
The covenants and agreements of this Rider, and the covenants and
agreements of any other riders to the Instrument given by Borrower to Lender
and covering the Property, shall be incorporated into and shall amend and
supplement the covenants and agreements of the Instrument as if this Rider
and the other riders were a part of the Instrument and all references to the
Instrument in the Loan Documents shall mean the Instrument as so amended and
supplemented.
ADDITIONAL COVENANTS. In addition to the covenants and agreements made in
the Instrument, Borrower and Lender further covenant and agree as follows:
A. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES
Uniform Covenant 2 of the Instrument ("Funds for Taxes, Insurance and
Other Charges") is amended to change the title to "Funds for Taxes, Insurance
and Other Charges; Collateral Agreements." Existing Uniform Covenant 2 is
amended to become Uniform Covenant 2A. The following new Uniform Covenant 2B
is added at the end of Uniform Covenant 2A:
2B REPLACEMENT RESERVE AGREEMENT, COMPLETION/REPAIR AGREEMENT, ACHIEVEMENT
AGREEMENT AND OTHER COLLATERAL AGREEMENTS
(a) REPLACEMENT RESERVE AGREEMENTS
Borrower shall deposit with Lender the amounts required by the Replacement
Reserve and Security Agreement (the "Replacement Reserve Agreement") between
Borrower and Lender, dated the date of the Note, at the times required by the
Replacement Reserve Agreement, and shall perform all other obligations as and
when required pursuant to the Replacement Reserve Agreement.
(b) COMPLETION/REPAIR AGREEMENT
Borrower shall deposit with Lender the amount required by the
Completion/Repair and Security Agreement (the "Completion/Repair Agreement")
between Borrower and Lender (if any), dated the date of the Note, at the time
required by the Completion/Repair Agreement, and shall perform all other
obligations as and when required pursuant to the Completion/Repair
Agreement.
(c) ACHIEVEMENT AGREEMENT
Borrower shall perform all of its obligations as and when required
pursuant to the Achievement Agreement between Borrower and Lender (if any),
dated the date of the Note.
(d) COLLATERAL AGREEMENTS
As used herein, the term "Collateral Agreement" shall mean any of the
Replacement Reserve Agreement, the Completion/Repair Agreement, the
Achievement Agreement and any similar agreement which has been entered into
between Borrower and Lender in connection with the loan evidenced by the
Note.
B. APPLICATION OF PAYMENTS
Uniform Covenant 3 of the Instrument ("Application of Payments") is
amended to add the following sentence at the end thereof:
Notwithstanding the preceding sentence, (i) Lender shall be permitted to
apply any partial payment received from Borrower in any manner determined by
Lender and in any order of priorty of application as determined by Lender, in
Lender's sole discretion , and (ii) upon any breach of any covenant or
agreement of Borrower in the Instrument, the Note of any other Loan Document,
Lender shall be permitted to apply any funds held pursuant to
<PAGE>
any Collateral Agreement in any manner which is permitted pursuant to such
Collateral Agreement and in any order of priorty of application as determined
by Lender, in Lender's sole discretion.
C. HAZARD INSURANCE; RESTORATION OF PROPERTY
Uniform Covenant 5 of the Instrument ("Hazard Insurance") is amended to
add the following sentence at the end thereof:
Lender shall not exercise Lender's'option to apply insurance proceeds to
the payment of the sums secured by the Instrument if all of the following
conditions are met: (i) Borrower is not in breach or default of any provision
of the Instrument, the Note or any other Loan Document (ii) Lender determines
that there will be sufficient funds to restore and repair the Property to a
condition approved by Lender, (iii) Lender determines that the rental income
of the Property, after restoration and repair of the Property to a condition
approved by Lender, will be sufficient to meet all operating costs and other
expenses, payments for reserves and loan repayment obligations relating to
the Property; and (iv) Lender determines that restoration and repair of the
Property to a condition approved by Lender will be completed prior to the
earlier of either (1) the maturity date of the Note or (2) within one year of
the date of the loss or casualty to the Property.
D. ENVIRONMENTAL HAZARDS PROVISION
In addition to Borrower's convenants and agreements under Uniform Covenant
6 of the Instrument ("Preservation and Maintenance of Property;
Leaseholds"). Borrower further covenants and agrees that Borrower shall not:
(a) cause or permit the presence, use, generation, manufacture,
production, processing, installation, release, discharge, storage
(including aboveground and underground storage tanks for petroleum or
petroleum products), treatment, handling, or disposal of any Hazardous
Materials (as defined below) (excluding the safe and lawful use and
storage of quantities of Hazardous Materials customarily used in the
operation and maintenance of comparable multifamily properties or for
normal household purposes) on or under the Property, or in any way
affecting the Property or its value, or which may form the basis for
any present or future demand, claim or liability relating to
contamination, exposure, cleanup or other remediation of the Proerty
or;
(b) cause or permit the transportation to, from or across the Property
of any Hazardous Material (excluding the safe and lawful use and
storage of quantities of Hazardous Materials customarily used in the
operation and maintenance of comparable multifamily properties or for
normal household purposes); or
(c) permit, cause or exacerbate any occurrence or condition on the
Property that is or may be in violation of Hazardous Materials Law (as
defined below).
(The matters described in (a), (b) and (c) above are referred to collectively
below as "Prohibited Activities or Conditions.")
Except with respect to any matters which have been disclosed in writing by
Borrower to Lender prior to the date of the Instrument, or matters which have
been disclosed in an environmental hazard assessment report of the Property
received by Lender prior to the date of the Instrument, Borrower represents
and warrants that it has not at any time caused or permitted any Prohibited
Activities or Conditions and to the best of its knowledge, no Prohibited
Activities or Conditions exist or have existed on or under the Property.
Borrower shall take all appropriate steps (including but not limited to
appropriate lease provisions) to prevent its employees, agents, and
contractors, and all tenants and other occupants on the Property, from
causing, permitting or exacerbating any Prohibited Activities or Conditions.
Borrower shall not lease or allow the sublease of all or any portion of the
Property for non-residential use to any tenant or subtenant that, in the
ordinary course of its business, would cause, permit or exacerbate any
Prohibited Activities or Conditions, and all non-residential leases and
subleases shall provide that tenants and subtenants shall not cause, permit
or exacerbate any Prohibited Activities or Conditions.
If any Prohibited Activites or Conditions exist on the Property, Barrower
shall comply in a timely manners with, and cause all employees, agents, and
contractors of Borrower and any other persons present on the Property to so
comply with, (1) any program of operations and maintenance ("O&M Program")
relating to the Property that is acceptable to Lender with respect to one or
more Hazardous Materials (which O&M Program may be set forth in an agreement
of Borrower (an "O&M Agreement") and all their obligations set forth in any
O&M Agreement, (1) and (2) all Hazardous Materials Laws. Any O&M Program
shall be performed by qualified personnel. All costs and expenses of the O&M
Program shall be paid by Borrower, including without limitation Lender's fees
and costs incurred in connection with the monitoring and review of the O&M
Program and Borrower's performance thereunder. If Borrower fails to timely
commence or diligently continue and complete the O&M Program and comply with
any O&M Agreement, then Lender may, at Lender's option, declare all of the
sums secured by the Instrument to be immediately due and payable, and Lender
may invoke any remedies permitted by paragraph 27 of the Instrument. Without
limiting the foregoing, Borrower shall take prompt remedial action in the
event of the discovery of any Prohibited Activities or Conditions and obtain
Lender's prior written 2
Borrower represents that Borrower has not received, and has no knowledge
of the issuance of, any claim, citation or notice of any pending or
threatened suits, proceedings, orders, or governmental inquiries or opinions
involving the Property that allege the violation of any Hazardous Materials
Law ("Governmental Actions").
Borrower shall promptly notify Lender in writing of: (i) the occurence of
any Prohibited Activity or Condition on the Property; (ii) Borrower's actual
knowledge of the presence on or under any adjoining property of any Hazadous
Materials which can reasonably be expected to have a material adverse impact
on the Property or the value of the Property, discovery of any occurrence or
condition on the Property or any adjoining real property that could cause any
restrictions on the ownership, occupancy, transferaability or use of the
Property under Hazardous Materials
1 or other remedial action requested by Lender.
2 approval of any such remedial action.
<PAGE>
Law. Borrower shall cooperate with any governmental inquiry, and shall
comply with any governmental or judicial order which arises from any alleged
Prohibited Activities or Conditions; (iii) any Governmental Action: and (iv)
any claim made or threatened by any third party against Borrower, Lender, or
the Property relating to loss or injury resulting from any Hazardous
Materials. Any such notice by Borrower shall not relieve Borrower of, or
result in a waiver of any obligation of Borrower under this paragraph D.
Borrower shall pay promptly the costs of any environmental audits, studies
or investigations (including but not limited to advice of legal counsel) and
the removal of any Hazardous Materials from the Property required by Lender
as a condition of its consent to any sale or transfer under paragraph 19 of
the Instrument of all or any part of the Property or any transfer occurring
upon a foreclosure or a deed in lieu of foreclosure or any interest therein,
or required by Lender following a reasonable determination by Lender that
there may be Prohibited Activities or Conditions on or under the Property.
Borrower authorizes Lender and its employees, agents and contractors to enter
onto the Property for the purpose of conducting such environmental audits,
studies and investigations. Any such costs and expenses incurred by Lender
(including but not limited to fees and expenses of attorney and consultants,
whether incurred in connection with any judicial or administrative process or
otherwise) which Borrower fails to pay promptly shall become immediately due
and payable and shall become additional indebtedness secured by the
Instrument pursuant to Uniform Covenant 8 of the Instument.
Borrower shall hold harmless, defend and indemnify Lender and its
officers, directors, trustees, employees, and agents from and against all
proceedings (including but not limited to Government Actions), claims,
damages, penalties, costs and expenses (including without limitation fees and
expenses of attorneys and expert witnesses, investigatory fees, and cleanup
and remediation expenses, whether or not incurred within the context of the
judicial process), arising directly or indirectly from (i) any breach of any
representation, warranty, or obligation of Borrower contained in ths
paragraph D or (ii) the presence or alleged presence of Hazardous Materials
on or under the Property.
The term "Hazardous Materials," for purposes of this paragraph D,
includes petroleum and petroleum products, flammable explosives, radioactive
materials (excluding radioactive materials in smoke detectors),
polychlorinated biphenyls, lead, asbestos in any form that is or could become
friable, hazardous waste, toxic or hazardous substances including, but not
limited to, those materials defined as "hazardous substances," "extremely
hazardous substances," "hazardous chemicals," "hazardous materials," "toxic
substances," "solid waste," "toxic chemicals," "air pollutants," "toxic
pollutants," "hazardous wastes," "extremely hazardous waste," or "restricted
hazardous waste" by Hazardous Materials Law or regulated by Hazardous
Materials Law in any manner whatsoever.
The term "Hazardous Material Laws," for the purposes of this paragraph D,
means all federal, state, and local laws, ordinances and regulations and
standards, rules, policies and other binding governmental requirements and
any court judgments applicable to Borrower or the the Property relating to
industrial hygiene or to environmental or unsafe conditions or to human
health including, but not limited to, those relating to the generation,
manufacture, storage, handling, transportation, disposal, release, emission or
discharge of Hazardous Materials, those in connection with the construction,
fuel supply, power generation and transmission, waste disposal or any other
operations or processes relating to the Property, and those relating to the
atmosphere, soil, surface and ground water, wetlands, stream sediments and
vegetation on, under, in or about Property.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this paragraph D shall be in addition
to any and all other obligations and liabilities that Borrower may have to
Lender under applicable law.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this paragraph D shall continue and
survive nothwithstanding the satisfaction, discharge, release, assignment,
termination, subordination or cancellation of the Instrument or the payment
in full of the princpal of and interest on the Note and all other sums payable
under the Loan Documents or the foreclosure of the Instrument or the tender
or delivery of a deed in lieu of forecloseure or the release of any portion
of the Property from the lien of the Instrument, except with respect to any
Prohibited Activities or Conditions or violation of any of the Hazardous
Material Laws which first commences and occurs after the satisfaction,
discharge, release, assignment, termination or cancellation of the Instrument
following the payment in full of the principal of and interest on the Note
and all other sums payable under the Loan Documents or which first commences
or occurs after the actual dispossession from the entire Property of the
Borrower and all entities which control, are controlled by, or are under
common control with the Borrower (each of the foregoing persons or entities
is hereinafter referred to as a "Responsible Party") following foreclosure of
the Instrument or acquistion of the Property by a deed in lieu of
foreclosure. Nothing in the foregoing sentence shall relieve the Borrower
from any liability with respect to any Prohibited Activities or Conditions or
violation of Hazardous Materials Laws where such Prohibited Activies or
Conditions or violation of Hazardous Materials Laws commences or occurs, or
is present as a result of, any act or omission by any Responsible Party or by
any person or entity acting on behalf of a Responsible Party.
E. BOOKS, RECORDS AND FINANCIAL INFORMATION
Uniform Covenant 10 of the Instrument ("Books of Records") is amended to
read as follows:
Borrower shall keep and maintain at all times and upon Lender's request,
Borrower shall make available at the Property address, complete and accurate
books of accounts and records in sufficient detail to correctly reflect the
results of the operation of the Property and copies of all written contracts,
leases and other instruments which affect the Property (including but not
limited to all bills, invoices and contracts for electrical services, gas
service, water and
Form 4058 6/93 (page 3 of 8 pages)
<PAGE>
water and sewer service, waste management service, telephone service and
management services). These books, records, contracts, leases and other
instruments shall be subject to examination and inspection at any reasonable
time by Lender. Borrower shall furnish to Lender the following: promptly
upon Borrower's reciept, copies of any complaint filed against the Borrower
or the Property management alleging any violation of fair housing law,
handicap access or the Americans with Disabilities Act and any final
administrative or judicial dispoistions of such complaints. If Borrower shall
fail to timely provide the financial statements required by clause (i) above,
Lender shall have the right to have the Borrower's books and records audited
in order to obtain such financial statements, and any such costs and expenses
incurred by Lender which Borrower fails to pay promptly shall become
immediately due and payable and shall become additional indebtedness secured
by the Instrument pursuant to paragraph 8 of the Instrument.
*SEE ATTACHED SUPPLEMENTAL RIDER TO MULTIFAMILY INSTRUMENT.
F. TRANSFERS OF THE PROPERTY OR SIGNIFICANT INTEREST IN BORROWER; TRANSFER FEES
Uniform Covenant 19 of the Instrument ("Transfers of the Property or
Beneficial Interests in Borrower, Assumption") is amended to read as set
forth below:
TRANSFERS OF THE PROPERTY OR SIGNIFICANT INTEREST IN BORROWER; TRANSFER FEES
(a) DEFINITIONS
For purposes of the Instrument (and the Rider), the following terms have
the respective meanings set forth below:
(1) The term "Key Principal" means the entities who execute(s) the
Exceptions to Non-Recourse Guaranty to Lender dated as of the date
of the Note and any persons who subsequently execute an Exceptions
to Non-Recourse Guaranty to Lender in connection with the Note.
** or entities
(2) The term "Transfer" means a sale, assignment, transfer substitution
or other disposition (whether voluntary or by operation of law) of,
or the granting or creating of a lien, encumbrance or security
interest in, the Property or in ownership interests, and the
issuance or other creation of ownership interests in an entity and
the reconstitution of one type of entity to another type of entity.
(3) A "Significant Interest" in any entity shall mean the following:
(i) if the entity is a general partnership or a joint venture, (A)
any partnership interest in the general partnership, or (B) any
interest of a joint venturer in a joint venture;
(ii) if the entity is a limited partnership, (A) any limited
partnership interest in the entity which together with all
other limited partnership interests in the entity Transferred
since the date of the Note, exceeds 49% of all of the limited
partnership interests in the entity, or (B) any general
partnership interest in the entity.
(iii) if the entity is a limited liability company, (A) any
membership interest which, together with all other membership
interests in the limited liability company Transferred since
the date of the Note, exceeds 49% of all of the membership
interests in the limited liability company; ***
(iv) if the entity is a corporation, any voting stock in the
corporation which, together with all other voting stock of the
corporation transferred since the date of the Note, exceeds 49%
of all of the voting stock of the corporation; or
(v) if the entity is a trust, any beneficial interest in such
trust which, together with all other beneficial interests in
the trust Transferred since the date of the Note, exceeds 49%
of all of the beneficial interest in the trust.
SEE ATTACHED SUPPLEMENTAL RIDER TO MULTIFAMILY INSTRUMENT.
(b) ACCELERATION OF THE LOAN UPON TRANSFERS OF THE PROPERTY OR SIGNIFICANT
INTERESTS
Lender may, at Lender's option, declare all sums secured by the
Instrument immediately due and payable and Lender may invoke any remedies
permitted by paragraph 27 of the Instrument if, without the Lender's prior
written consent, any of the following shall occur:
(1) a Transfer of all or any part of the Property or any interest in
the Property;
(2) a Transfer of any Significant Interest in Borrower;
(3) a Transfer of any Significant Interest in a corporation,
partnership, limited liability company, joint venture, or trust
which owns a Significant Interest in the Borrower;
(4) if the Borrower is a trust, or if any trust owns a Significant
Interest in the Borrower, the addition, deletion or substitution
of a trustee of such trust, which addition, deletion or
substitution has not been approved by Lender; or
(B) any manager in the entity;
Form 4058 6/93 (page 4 of 8 pages)
<PAGE>
(5) a Transfer of all or any part of any Key Principal's ownership
interest (other than limited partnership interests) in the
Borrower, or in any other entity which owns, directly or
indirectly, through one or more intermediate entities, and
ownership interest in the Borrower.
SEE ATTACHED SUPPLEMENTAL RIDER TO MULTIFAMILY INSTRUMENT.
(c) TRANSFERS PERMITTED WITH LENDER'S PRIOR CONSENT
LENDER SHALL CONSENT TO A TRANSFER WHICH WOULD OTHERWISE VIOLATE THIS PARAGRAPH
19 IF, PRIOR TO THE TRANSFER:
(1) Borrower causes to be submitted to Lender all information required
by Lender to evaluate the transferee and the Property as if a new
loan were being made to the transferee and secured by the Property,
in the case of a Transfer of all or any part of the Property or an
interest therein, or to the Borrower (as reconstituted after the
proposed Transfer), in the case of a Transfer of Significant
Interests;
(2) The transferee, in the case of a Transfer of all or any part of the
Property or an interest therein, or the Borrower ( as reconstituted
after the proposed Transfer), in the case of a Transfer of
Significant Interests, meet the eligiblity, credit, management and
other standards, and the Property meets the physical maintenance
and replacement reserve requirements, customarily applied by
Lender for approval of new borrowers and properties for loans
secured by liens on multifamily properties;
(3) In the case of a Tranfer of all or any part of the Property, the
proposed transferee (i) executes an agreement acceptable to Lender
pursuant to which the proposed transferee agrees, upon consummation
of the Transfer, to assume and to pay and perform all obligations
of the Borrower under the Note, the Instrument and the other Loan
Documents, (ii) causes one or more individuals acceptable to
Lender to execute and deliver to Lender an Exceptions to
Non-Recourse Guaranty, and (iii) executes such documents and
otherwise provides such documents and information as required by
Lender in connection with the Transfer;
(4) In the case of a Transfer of a Key Principal's ownership interest
pursuant to paragraph 19(b)(5), (i) the Borrower (as reconstituted
after the proposed Transfer) executes an agreement acceptable to
Lender that ratifies and confirms the obligations of Borrower under
the Note, the Instrument and the other Loan Documents, (ii) one or
more individuals acceptable to Lender execute and deliver to Lender
an Exceptions to Non-Recourse Guaranty, and (iii) the Borrower
executes such documents and otherwise provides such documents and
information as required by Lender in connection with the
assumption, to the extent such expenses exceed $3000.
(d) NO ACCELERATION OF THE LOAN FOR TRANSFERS CAUSED BY CERTAIN EVENTS
Notwithstanding the foregoing provisions of this covenant, Lender shall
not be entitled to declare sums secured by the Instrument immediately due and
payable or to invoke any remedy permitted by paragraph 27 of the Instrument
solely upon the occurrence of any of the following:
(1) A Transfer that occurs by inheritance, devise, or bequest or by
operation of law upon the death of a natural person who is an owner
of the Property or the owner of a direct or indirect ownership
interest in the Borrower.
(2) The grant of a leasehold interest in individual dwelling units for
a term of two years or less and leases for commercial uses as long
as commercial leases do not exceed 20 percent of the rentable space
of the Property (measured as required by Lender) and provided that
all such leasehold interests do not contain an option to purchase
the property.
(3) A sale or other disposition of obsolete or worn out personal
property which is contemporaneously replace by comparable personal
property of equal or greater value which is free and clear of
liens, encumbrances and security interest other than those created
by the Loan Documents.
(4) The creation of a mechanic's or materialmen's lien or judgement
lien against the Property which is released of record or otherwise
remedied to Lender's satisfaction, within 30 days of the date of
creation.
(5) The grant of an easement, if prior to the granting of the easement
the Borrower causes to be submitted to Lender all information
required by Lender to evaluate the easement, and if Lender
determines that the easement will not materially affect the
operation of the Property or Lender's interest in the Property and
Borrower pays to Lender, on demand, all costs and expenses
incurred by Lender in connection with reviewing Borrower's request.
(e) OTHER PROVISIONS REGARDING TRANSFERS. SEE ATTACHED SUPPLEMENTAL RIDER TO
MULITFAMILY INSTRUMENT.
G. NOTICE
Uniform Covenant 20 of the Instrument ("Notice") is amended to read as
follows:
Each notice, demand, consent, or other approval (collectively, "notices"
and singly, "notice") given under the Note, the Instrument, and any other
Loan Document, shall be in writing to the other party, and if to Borrower,
at its address set forth below Borrower's signature on the Instrument, and
if to Lender at its address set forth at the beginning of the Rider, or at
such other address as such party may designate by notice to the other party
and shall be deemed given (a) three (3) Business Days after mailing, by
certified or registered U.S. mail, return receipt requested,
Form 4058 6/93 (PAGE 5 OF 8 PAGES)
<PAGE>
postage prepaid, (b) one (1) Business Day after delivery, fee prepaid, to a
national overnight delivery service, or (c) when delivered, if personally
delivered with proof of delivery thereof.
Borrower and Lender each agrees that it will not refuse or reject delivery
of any notice given hereunder, that it will acknowledge, in writing, the
receipt of the same upon request by the other party and that any notice
rejected or refused by it shall be deemed for all purposes of this Agreement
to have been received by the rejecting party on the date so refused or
rejected, as conclusively established by the records of the U.S. Postal
Service or the courier service. As used in the Instrument, the term
"Business Day" means any day other than a Saturday, a Sunday or any other day
on which Lender is not open for business.
Lender shall not be required to deliver notice to Key Principal in
connection with any notice given to Borrower. However, if Lender shall
deliver notice to Key Principal, such notice shall be given in the manner
provided in this Uniform Covenant 20, at Key Principal's address set forth at
the foot of the Rider.
H. GOVERNING LAW
In Addition to the governing law provision of Uniform Covenant 22 of the
Instrument ("Uniform Multifamily Instrument; Governing Law; Severability"),
the Borrower and Lender covenant and agree as follows:
(a) CHOICE OF LAW
The validity of the Instrument and the other Loan Documents, each of their
terms and provisions, and the rights and obligations of Borrower under the
Instrument and the other Loan Documents, shall be governed by, interpreted,
construed, and enforced pursuant to and in accordance with the laws of the
Property Jurisdiction.
(b) CONSENT TO JURISDICTION
Borrower consents to the exclusive jurisdiction of any and all state and
federal courts with jurisdiction in the Property Jurisdiction over Borrower
and the Borrower's assets. Borrower agrees that such assets shall be used
first to satisfy all claims of creditors organized or domiciled in the United
States of America ("USA") and that no assets of the Borrower in the USA shall
be considered part of any foreign bankruptcy estate.
Borrower agrees that any controversy arising under or in relation to the
Note, the Instrument or any of the other Loan Documents shall be litigated
exclusively in the Property Jurisdiction. The estate and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which may arise under or in
relation to the Note, and any security for the debt evidenced by the Note,
including without limitation those controversies relating to the execution,
interpretation, breach, enforcement, or compliance with the Note, the
Instrument, or any other issue arising under, related to, or in connection
with any of the Loan Documents. Borrower irrevocably consents to service,
jurisdiction, and venue of such courts for any litigation arising from the
Note, the Instrument or any of the other Loan Documents, and waives any other
venue to which it might be entitled by virtue of domicile, habitual residence
or otherwise.
I. ACCELERATION; REMEDIES
Covenant 27 of the Instrument ("Acceleration; Remedies") is amended to add
the following at the end of the first paragraph:
Upon the breach of any covenant or agreement by Borrower in the
Instrument, (including, but not limited to, the covenants to pay when due
sums secured by the Instrument) or any other Loan Document, Lender, at
Lender's option may, in addition to any remedies specified in this covenant,
invoke any other remedies provided in any Collateral Agreement.
If Borrower is in default under any promissory note (other than the Note)
evidencing a loan (the "Subordinate Loan") secured by a security instrument
(other than the Instrument) covering all or any portion of the Property (the
"Subordinate Instrument") or under any Subordinate Instrument or other loan
document executed in connection with the Subordinate Loan, (and whether or
not the Borrower has obtained the prior approval of the Lender to the
placement of such Subordinate Instrument on the Property) which defaults
remains uncured after any applicable cure period, Borrower also then will be
in default under the Note and the Instrument. In that event, the entire
unpaid principal balance of the Note, accrued interest and any other sums due
Lender secured by the Instrument then will become due and payable, at
Lender's option. If Lender exercises this option to accelerate, Lender will
do so in accordance with the provisions of the Note and the Instrument, and
the Lender may invoke any and all remedies permitted by applicable law, the
Note, the Instrument, or any of the other Loan Documents.
J. SINGLE ASSET BORROWER
Until the debt evidenced by the Note is paid in full, Borrower shall not
(1) acquire any real or personal property other than the Property and assets
(such as accounts) related to the operation and maintenance of the Property,
or (2) operate any business other than the management and operation of the
Property.
K. NON-RECOURSE LIABILITY
Subject to the provisions of paragraph L, and notwithstanding any other
provisions in the Note or Instrument, the personal liability of Borrower, and
general partner of Borrower (if Borrower is a partnership), and any Key
Principal to pay the principal of and interest on the debt evidenced by the
Note and any other agreement evidencing Borrower's obligations under the Note
and the Instrument shall be limited to (1) the real and personal property
described as the "Property" in the Instrument, (2) the personal property
described in and pledged under any
Form 4058 6/93 (page 6 of 8 pages)
Collateral Agreement executed in connection with the loan evidenced by the
Note, (3) the rents, profits, issues, products and income of the Property
received or collected by or on behalf of Borrower (the "Rents and Profits")
to the extent such receipts are necessary, first. To pay the reasonable
expenses of operating, managing, maintaining and repairing the Property,
including but not limited to real estate taxes, utilities, assessments,
insurance premiums, repairs, replacements and ground rents, if any (the
"Operating Expenses") then due and payable as of the time of receipt of such
Rents and Profits, and then, to pay the principal and interest due under the
Note, and any other sums due under the Instruments or any other Loan Document
(including but not limiting to deposits or reserves due under any Collateral
Agreement), except to the extent that Borrower did not have the legal right,
because of a bankruptcy, receivership or similar judicial proceeding, to
direct the disbursement of such sums.
Except as provided in paragraph L, Lender shall not seek (a) any judgment
for a deficiency against Borrower, any general partner of borrower (if
Borrower is a partnership) of any Key Principal, or Borrower's or any such
general partner's or Key Principal's heirs, legal representatives, successors
or assigns, in any action to enforce any right of remedy under the
Instrument, or (b) any judgment on the Note except as may be necessary in any
action brought under the Instrument to enforce the lien against the Property
or to exercise any remedies under any Collateral Agreement.
L. EXCEPTIONS TO NON-RECOURSE LIABILITY
If, without obtaining Lender's prior written consent, (i) a Transfer shall
occur which, pursuant to Uniform Covenant 19 of the Instrument, gives Lender
the right, at its option, to declare all secured by the Instrument
immediately due and payable, (ii) Borrower shall encumber the Property with
the lien of any Subordinate Instrument in connection with any financing by
borrower, or (iii) Borrower shall violate the single asset covenant in
paragraph J of the Rider, any of such events shall constitute a default by
Borrower under the Note, the Instrument and the other Loan Documents and if
such events shall continue for 30 days, paragraph K shall not apply from and
after the date which is 30 days after such event and the Borrower, any
general partner of borrower (if Borrower is a partnership) and Key Principal
(each individually on a joint and several basis if more than one shall be
personally liable on a joint and several basis for full
recourse liability under the Note and the other Loan Documents.
Notwithstanding paragraph K, Borrower, any general partner of Borrower (if
Borrower is a partnership) and Key Principal (each individually on a joint
and several basis if more than one), shall be personally liable on a joint
and several basis, in the amount of any loss, damage or cost (including but
not limited to attorney's fees) resulting from (A) fraud or material
misrepresentation by Borrower or borrower's agents or employees or any Key
Principal or general partner of Borrower in connection with obtaining the
loan evidenced by the Note, or in complying with any of Borrower's
obligations under the Loan Documents, (B) insurance proceeds, condemnation
awards, security deposits from tenants and other sums or payments received by
or on behalf of Borrower in its capacity as owner of the Property and not
applied in accordance with the provisions of the Instrument (except to the
extent that Borrower did not have the legal right, because of a bankruptcy,
receivership or similar judicial proceeding, to direct disbursement of such
sums or payments), (C) all Rents and Profits (except to the extent that
Borrower did not have the legal right, because of a bankruptcy, receivership
or similar judicial proceeding, to direct the disbursement of such sums), and
not applied, first, to the payment of the reasonable Operating Expenses as
such Operating Expenses become due and payable, and then, to the payment of
principal and interest then due and payable under the Note and all other sums
due under the Instrument and all other Loan Documents (including but not
limited to deposits or reserves payable under any Collateral Agreement), (D)
Borrower's failure to pay transfer fees and charges due under paragraph 19(c)
of the Instrument, (E) Borrower's failure following a default under any of
the Loan Documents to deliver to Lender on demand all Rents and Profits, and
security deposits (except to the extent that Borrower did not have the legal
right because of a bankruptcy, receivership or similar judicial proceeding to
direct disbursement of such sums), books and records relating to the
Property, (F) or relating to Hazardous Materials or compliance*
No provision of paragraphs K or L shall (i) affect any guaranty or similar
agreement executed in connection with the debt evidenced by the Note, (ii)
release or reduce the debt evidenced by the Note, (iii) impair the right of
Lender to enforce the provisions of paragraph D of the Rider, (iv) impair the
lien of the Instrument or (v) impair the right of Lender to enforce the
provisions of any Collateral Agreement.
M. WAIVER OF JURY TRIAL
Borrower and Key Principal (each for himself if more than one) (i)
covenant and agree not to elect a trial by jury with respect to any issue
arising under any of the Loan Documents triable by a jury and (ii) waive any
right to trial by jury to the extent that any such right shall now or
hereafter exist. This waiver of right to trial by jury is separately given,
knowingly and voluntarily with the benefit of competent legal counsel by the
Borrower and Key Principal, and this waiver is intended to encompass
individually each instance and each issue as to which the right to a jury
trial would otherwise accrue. Further, Borrower, and Key Principal hereby
certify that no representative or agent of the Lender (including, but not
limited to, the Lender's counsel) has represented, expressly or otherwise, to
Borrower or Key Principal that Lender will not seek to enforce the provisions
of this Paragraph M.
* with Hazardous Materials Laws to the full extent of any losses or damages
(including those resulting from diminution in value of the Property)
incurred by Lender as a result of the existence of such Hazardous Materials
or failure to comply with Hazardous Materials Laws or the obligations of
Borrower hereunder relating thereto, (G) intentional damage to the Property
or (H) failure of Borrower to pay taxes or other liens with priority over
the Multifamily Instrument.
Form 4058 6/93 (page 7 of 8 pages)
<PAGE>
BY SIGNING BELOW, BORROWER ACCEPTS AND AGREES TO THE COVENANTS AND AGREEMENTS
CONTAINED IN THIS RIDER.
WITNESS: COPPERFIELD PARTNERS, LTD., a Texas limited partnership
By: AIMCO COPPERFIELD, L.P., a Delaware limited
partnership, its General Partner
By: AIMCO HOLDINGS, L.P., a Delaware limited
Partnership, its General Partner
By: AIMCO HOLDINGS QRS, L.P., a Delaware
Corporation, its General Partner
/s/ Judith Z. Mintz By: /s/ Harry Alcock
- ---------------------- -----------------------
Harry Alcock
Vice President
THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Form 4058 6/93 (page 8 of 8 pages)
<PAGE>
ACKNOWLEDGMENT
DISTRICT OF COLUMBIA ) to-wit:
BEFORE ME, the undersigned, a Notary Public in and for the jurisdiction
aforesaid, this day personally appeared Harry Alcock, known to me to be the
Vice President of AIMCO HOLDINGS QRS, INC., the corporation that executed the
foregoing instrument, and known to me to be the person who executed the
foregoing instrument on behalf of said corporation, said corporation being
known to me to be general partner of AIMCO HOLDINGS, L.P., a limited
partnership, which limited partnership is general partner of AIMCO
COPPERFIELD, L.P., a limited partnership, and which limited partnership is
general partner of COPPERFIELD PARTNERS, LTD., the limited partnership that
executed the foregoing instrument, and acknowledged to me that such
corporation executed the same as such general partner and that such limited
partnerships executed the same for the purposes and consideration therein
expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 18th day of April, 1997.
/s/ Isabelle Balakit Adams
----------------------------------------
Notary Public in and for
the District of Columbia
[SEAL]
My Commission Expires:
ISABELLE BALAKIT ADAMS
Notary Public, District of Columbia
My Commision Expires May 14, 2000
<PAGE>
SUPPLEMENTAL RIDER TO MULTIFAMILY INSTRUMENT
(Copperfield)
THIS SUPPLEMENTAL RIDER TO MULTIFAMILY INSTRUMENT (the "Supplemental
Rider") is made as of this 18th day of April, 1997, and is incorporated into and
shall be deemed to amend and supplement the Multifamily Mortgage, Deed of Trust
or Deed to Secure Debt as of the same date (the "Instrument") as modified by the
Rider to Multifamily Instrument dated as of the same date (the "Rider"), given
by the undersigned (the "Borrower"), to secure Borrower's Multifamily Note
as of the same date (the "Note") with Addendum to Multifamily Note as of the
same date to GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation,
whose address is 650 Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-
8015 and its successors, assigns and transferees (the "Lender"), covering the
property described in the Instrument and defined therein as the "Property"
located at:
8255 SUNBURY LANE, HOUSTON, TEXAS
[Property Address]
The Property is located entirely within the State of TEXAS
[Insert name of state in which Property is located] (the "Property
Jurisdiction").
The term "Loan Documents" when used in this Supplemental Rider shall mean,
collectively, the following documents: (i) the Instrument as modified by the
Rider, this Supplemental Rider and any other riders to the Instrument given by
Borrower to Lender and covering the Property; (ii) the Note, as modified by the
Addendum and any other addendum to the Note; and (iii) all other documents or
agreements, including any Collateral Agreements (as defined in the Rider),
or O&M Agreements (as defined in the Rider), arising under, related to, or made
in connection with, the loan evidenced by the Note, as such loan documents may
be amended from time to time. Any conflict between the provisions of this
Instrument, the Rider and the Supplemental Rider shall be resolved in favor of
the Supplemental Rider.
The covenants and agreements of this Supplemental Rider, and the
covenants and agreements of any other riders to the Instrument given by Borrower
to Lender and covering the Property, shall be incorporated into and shall amend
and supplement the covenants and agreements of the Instrument as if this
Supplemental Rider and the other riders were a part of the Instrument and all
reference to the Instrument in the Loan Documents shall mean the Instrument as
so amended and supplemented.
ADDITIONAL COVENANTS. In addition to the covenants and agreements made
in the Instrument and the Rider, Borrower and Lender further covenant and
agree as followss:
A. [INTENTIONALLY DELETED]
B. [INTENTIONALLY DELETED]
C. [INTENTIONALLY DELETED]
D. [INTENTIONALLY DELETED]
E. [INTENTIONALLY DELETED]
F. Lockbox.
(i) Not later than thirty (30) days after the end of each
fiscal quarter of the Borrower (including the fourth fiscal quarter in each
year), Borrower shall deliver to Lender a statement of the Gross Revenues,
Operating Expenses and Net Operating Income for the preceding fiscal quarter
and for the preceding four fiscal quarters for each Property and each
Additional Property. Each such statement shall be in form and substance
reasonably satisfactory to Lender, and shall be certified by the chief
financial officer or comptroller of Borrower to be true, accurate and
complete in material respects.
<PAGE>
(ii) In the event that (a) a default under the Loan Documents or
Additional Loan Documents shall have occurred or (b) Lender shall
determine that the Net Operating Income of the Property and the Additional
Properties was, for the preceding twelve (12) months as reasonably determined
by Lender in accordance with Federal National Mortgage underwriting
guidelines then in effect, less than 1.50 based on a thirty (30) year
amortization schedule (the "Debt Service"), then Borrower shall following
demand by Lender thereafter cause all Gross Revenues from the Property to be
directly deposited in a lockbox (the "Lockbox") established, administered and
controlled solely by Lender. Such test may be performed by Lender no more
frequently than quarterly. Lender shall hold all funds deposited in the
Lockbox as additional security for the indebtedness secured by the
Instrument. All funds on deposit in the Lockbox shall be held by Lender free
of any liens or claims on the part of creditors of Borrower other than
Lender. Borrower shall complete such forms as may be provided by Lender to
Borrower in order to notify the Postal Service of the Lockbox arrangement.
Borrower acknowledges that in such event, Lender shall have exclusive and
unrestricted access to the Lockbox, including all mail which is delivered
thereto. In the event that Lender elects to establish a Lockbox, all tenants
of the Property, and other parties obligated to make any payments to Borrower
with respect to the Property, shall be notified and directed to make such
payments directly into the Lockbox with Lender in accordance with this
Supplemental Rider (such notices are hereinafter referred to collectively as
the "Payment Notices"). The Payment Notices shall also request that such
payments not be made in cash and that such obligors only send payments and
related invoices or statements to the Lockbox (but not other correspondence).
Borrower agrees to execute and deliver to Lender such Payment Notices as may
be requested by Lender to notify such tenants of the Property and such other
parties that may become obligated to make payments to Borrower of the
provisions of this paragraph. Borrower does hereby designate and appoint
Lender its agent and attorney-in-fact for the purpose of executing in the
name of Borrower, addressing and forwarding such notices to such tenants and
such other parties obligated to make any such payments or any
portion thereof, which power of attorney is coupled with an interest and
irrevocable by dissolution or otherwise. After the giving of the Payment
Notices by Lender, Borrower shall not communicate with any such tenant or any
such other party obligated to pay any sums to Borrower for the purpose of
cancelling such notice or directing any such party to make payments other
than in accordance with such notices. Borrower does hereby acknowledge and
agree that the forwarding of such notices by Lender to such tenants and such
other parties constitutes all actions, if any, required to be taken by Lender
to exercise, invoke or perfect its rights to collect the rents, issuee and
profits of the Property. Borrower agrees that, after the establishment of
the Lockbox, any Gross Revenues received by Borrower will be
promptly delivered by Borrower to Lender for deposit in the Lockbox, and
pending such delivery will be held by Borrower in trust for Lender.
(iii) Provided no default or event which, with the giving of
notice or the passage of time or both, would constitute a default under the
Loan Documents or the Additional Loan Documents shall have occurred, Lender
shall remit to Borrower all funds on deposit in the Lockbox at such time as
the funds on deposit in the Lockbox are sufficient to pay for such month (A)
the principal and interest due and payable on the Note and the Additional
Notes, (B) any deposits payable pursuant to Uniform Covenant 2 of the
Instrument, and (C) any monthly deposits required pursuant to any Collateral
Agreement (collectively the "Payments"). Lender shall withdraw from the
Lockbox any amounts on deposit in the Lockbox to pay the Payments. The right
of Lender to cause all Gross Revenues to be deposited into the Lockbox shall
be suspended at such time as the Borrower establishes to the satisfaction of
Lender that the Net Operating Income of the Property and the Additional
Property for the preceding twelve (12) months equals or exceeds 1.50 times
the Debt Service, until such time as the Net Operating Income again falls
below such threshold. The collection of Gross Revenues by Lender under this
Section F is not intended to modify Borrower's obligations under the Loan
Documents or the Additional Loan Documents.
(iv) Upon the occurrence of any default or event of default,
Lender may at any time, without notice or demand, withdraw all or any amount
of funds on deposit in the Lockbox and apply such funds to the payment of the
2
<PAGE>
indebtedness secured hereby in such order as Lender may determine in its sole
discretion.
(v) The forwarding of the Payment Notices to tenants of the
Property and such other parties obligated to make any payments to Borrower
directing such parties to make payments directly into the Lockbox shall not
be deemed or construed to constitute a waiver by Lender or any right or
remedy Lender may have under the Loan Documents to direct such tenants or
other parties to make payments directly to Lender after the occurrence of an
event of default.
(vi) Borrower hereby irrevocably appoints Lender as its true and
lawful agent and attorney-in-fact for purposes of collecting all items from
the Lockbox, making any and all endorsements on such items as are necessary
or appropriate, and withdrawing funds on deposit in the Lockbox to be applied
as provided in this Instrument.
(vii) Borrower agrees that it shall have no right to use any
amounts on deposit from time to time in the Lockbox except as specifically
provided herein, and that none of the funds on deposit in the Lockbox may be
withdrawn by Borrower from the Lockbox without the prior written consent of
Lender. No items or funds on deposit in the Lockbox shall at any time be
deemed to be trust funds. All or any of the Lockboxes created pursuant to
the Loan Documents or the Additional Loan Documents may be maintained by
Lender as a single account, and all funds maintained in such accounts may be
commingled, provided that the amounts credited to and debited from each of
such accounts shall be accounted for separately.
(viii) Borrower agrees to indemnify Lender and its agents from and
against any and all claims, expenses, losses and liabilities growing out of
or resulting from the enforcement of the provisions herein concerning the
Lockbox, except claims, expenses, losses or liabilities resulting from
Lender's gross negligence or wilful misconduct. Borrower upon demand shall
pay to Lender or its agent administering the Lockbox a monthly fee in the
amount of one-quarter of one percent (.25%) of the average deposits to the
Lockbox during the immediately preceding month for the administration of the
Lockbox. Lender or its agent shall be entitled to withdraw from the Lockbox
after ten (10) days prior written notice to Borrower, such amounts as and
when due; provided, however, that Borrower shall remain liable for the
payment of such amounts in the event that the amounts on deposit in the
Lockbox are not sufficient to pay such amounts in full as and when due.
(ix) Lender's election to establish a Lockbox in accordance with
the provisions of this paragraph D shall not be deemed an election in lieu
of any other right or remedy under the Loan Documents and/or the Additional
Loan Documents or otherwise afforded by law or equity but may be exercised
concurrently, independently, or successively, in any order whatsoever, with
any other right or remedy so provided.
G. [INTENTIONALLY DELETED]
H. [INTENTIONALLY DELETED]
I. INSURANCE. Without limitation of the terms and provisions of the
Instrument, Borrower will, at its expense, procure and maintain for the
benefit of Borrower and Lender, insurance policies issued by such insurance
companies, in such amounts, in such form and substance, and with such
coverages, endorsements, deductibles and expiration dates as are acceptable
to Lender, providing the following types of insurance covering the Property:
i) "ALL RISKS" property insurance (including broad form flood,
broad form earthquake and comprehensive boiler and machinery coverages) on
each building and the contents therein of Borrower in an amount not less than
one hundred percent (100%) of the full replacement cost of each building and
the contents therein of Borrower, with deductibles not to exceed $10,000 for
any one occurrence (unless a higher deductible is required by state law),
with a replacement cost coverage endorsement and an agreed amount
endorsement. Full replacement cost as used herein means the cost of
replacing the buildings (exclusive of the cost of excavations, foundations
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and footings below the lowest basement floor) and the contents therein of
Borrower without deduction for physical depreciation thereof;
ii) Flood insurance if at any time any building is located in any
federally designated "special hazard area", in an amount equal to the full
replacement cost or the maximum amount then available under the National
Flood Insurance Program, with deductibles not to exceed $3,000 for any one
occurrence (unless a higher deductible is required by state law);
iii) Rent loss insurance in an amount sufficient to recover at
least the total estimated gross receipts from all sources of income,
including without limitation, rental income, for the Property for a twelve
month period; and
iv) Commercial general liability insurance against claims for
personal injury and property damage liability, all on an occurrence basis,
with such coverage as Lender may reasonably request with a general aggregate
limit of not less than $1,000,000, and a combined single "per occurrence"
limit of not less than $2,000,000 for bodily injury, property damage and
medical payments, with no deductible.
The insurance policies with respect to the property provided for in
clause (iv) above with respect to the Property shall name Lender as an
additional insured. The insurance policies provided for in clauses (i), (ii)
and (iii) above shall name Lender as mortgagee and loss payee, shall be first
payable in case of loss to Lender, and shall contain mortgagee clauses and
lender's loss payable endorsements in form and substance acceptable to
Lender. At least 15 days prior to the expiration date of the policies,
Borrower shall deliver to Lender evidence of continued coverage, including a
certificate of insurance, as may be satisfactory to Lender. All policies of
insurance required by this Instrument shall contain clauses or endorsements
to the effect that such policies shall not be modified, cancelled
or terminated prior to the scheduled expiration date thereof without the
insurer thereunder giving at least 30 days prior written notice to Lender.
All policies of insurance required by the instrument shall be issued by
companies licensed to do business in the State where the policy is issued and
also in the states where the Property is located and having a rating in
Best's Key Rating Guide of at least "A-" and a financial size category of at
least "V".
J. [INTENTIONALLY DELETED]
K. [INTENTIONALLY DELETED]
L. [INTENTIONALLY DELETED]
M. ADDITIONAL REPRESENTATIONS. Borrower represents to Lender that
AIMCO COPPERFIELD, L.P. is the sole general partner of Borrower (the "General
Partner"), that AIMCO HOLDINGS (as defined in Section S below) is the sole
general partner of the General Partner and that AIMCO QRS (as defined in
Section S below) is the sole general partner of AIMCO HOLDINGS. Borrower
further represents that a substantial portion (at least 10%) of the limited
partnership interests of Borrower are held by an entity or entities wholly
unrelated to AIMCO REIT (as defined in Section S below).
N. [INTENTIONALLY DELETED]
0. CONSENT TO RELIEF FROM AUTOMATIC STAY. Borrower hereby agrees that,
in consideration of the making of the loan by Lender to Borrower evidenced by
the Notes and the Additional Notes, and as a material inducement to Lender to
make such loan and to the Federal National Mortgage Association to acquire
such loan from Lender, in the event Borrower shall (i) file with any
bankruptcy court of competent jurisdiction or be the subject of any petition
under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii) be the
subject of any order for relief issued under the Bankruptcy Code, (iii) file
or be the subject of any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under
any present or future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, (iv) have sought or consented to or
acquiesced in the appointment of any trustee, receiver,
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conservator, or liquidator, or (v) be the subject of any order, judgment, or
decree entered by any court of competent jurisdiction approving a petition
filed against such party for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present
or future federal or state act or law relating to bankruptcy, insolvency, or
relief for debtors, then (a) Lender shall thereupon be entitled and Borrower
irrevocably consents to relief from any automatic stay imposed by Section 362
of the Bankruptcy Code, or otherwise, on or against the exercise of the
rights and remedies otherwise available to Lender as provided in the Note
and/or Instrument or any of the Additional Loan Documents, and as otherwise
provided by law, and Borrower hereby irrevocably waives its right to object
to such relief and acknowledges that no reorganization in bankruptcy is
feasible; (b) Borrower waives its exclusive right pursuant to Section 1121(b)
of the Bankruptcy Code to file a plan of reorganization and irrevocably
consents to the Lender filing a plan immediately upon the entry of an order
for relief if any involuntary petition is filed against Borrower or upon the
filing of a voluntary petition by the Borrower; (c) in the event that Lender
shall move pursuant to Section 1121(d) of the Bankruptcy Code for an order
reducing the 120 day exclusive period, Borrower shall not object to any such
motion; and (d) Borrower irrevocably waives its right to demand a turnover of
the Property from a receiver appointed at the request of Lender, and agrees
that it is in the best interest of the creditors pursuant to Section 543(d)
of the Bankruptcy Code for the receiver to continue in possession, custody
and control of the Property.
P. ACCELERATION; REMEDIES. Non-Uniform Covenant 27 of the Instrument
("Acceleration; Remedies") is amended to read as follows:
(a) DEFAULT. Upon Borrower's breach of any covenant or agreement
of Borrower in this Instrument, including, but not limited to, the covenants
to pay when due any sums secured by this Instrument (collectively an "Event
of Default"), Lender may exercise any and all remedies provided under this
Instrument and/or under any of the other Loan Documents or Additional Loan
Documents, or any other remedies available under applicable law, or any one
or more of such remedies.
(b) REMEDIES. Upon the occurrence of any Event of Default and at
any time thereafter:
i) INDEBTEDNESS DUE. All indebtedness secured by this
Instrument in its entirety shall, at the option of Lender, become immediately
due and payable without presentment, demand, notice of intention to
accelerate or notice of acceleration, or other notice of any kind except as
otherwise expressly set forth herein, all of which are hereby expressly
WAIVED, and the liens and security interests created or intended to be
created hereby shall be subject to foreclosure, repossession and sale in any
manner provided for herein or provided for by law, as Lender may elect, and
Lender may exercise any and all of its rights under this Instrument, the
Note, the Loan Documents and any of the Additional Loan Documents.
ii) POWER OF SALE; LEGAL PROCEEDINGS. Lender shall have
the right to invoke the power of sale granted herein, which power of sale
Borrower acknowledges may be exercised without prior judicial hearing.
Trustee and Lender shall also have the right and power to proceed by suit or
suits in equity or at law, whether for the specific performance of any
covenant or agreement of Borrower contained herein or in aid of the execution
of the powers herein granted, including the power of sale, or for the
enforcement of any other appropriate legal or equitable remedy.
iii) TRUSTEE'S SALE. Trustee, upon the written request of
Lender, shall be authorized and empowered and it shall be the Trustee's
special duty to sell the Property or any part thereof. The sale shall be
made in the county in which the Property is situated. If the Property is
situated in more than one county, then notices as hereinafter provided shall
be given in both or all of such counties, the Property may be sold in either
county, and such notices shall designate the county where the Property will
be sold. Notice of such sale shall be given by posting written notice of the
sale at the courthouse door, and by filing a copy of the notice in the county
clerk's office in the county in which the sale is to be made, at least
twenty-one (21) days preceding the date of the sale. If the Property is in
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more than one county, one notice shall be posted at the courthouse door of
each county in which the Property is situated and one notice shall be filed
with the county clerk of each county in which the Property is situated. In
addition, the holder of the indebtedness secured by this Instrument (or any
part thereof) shall at least twenty-one (21) days preceding the date of such
sale serve written notice of the proposed sale by certified mail on each
debtor obligated to pay the indebtedness secured by this Instrument (or any
part thereof) according to the records of such holder. Service of such
notice upon each debtor shall be completed upon deposit of the notice,
enclosed in postage paid wrapper, properly addressed to such debtor at his,
her or its most recent address as shown by the records of such holder of the
indebtedness secured by this Instrument (or any part thereof) in a post
office or official depository under the care and custody of the United States
postal Service. The affidavit of any person having knowledge of the facts to
the effect that such service was completed shall be prima facie evidence of
the fact of service. After such written notice shall have been posted and
filed, as aforesaid, and such notice shall have been served upon such debtor
or debtors, as aforesaid, Trustee acting shall perform its duty to enforce
the trusts granted herein by selling the Property, either as an entirety or
in parcels as the Lender may direct (all rights to a marshalling of assets or
sale in inverse order of alienation being waived and Borrower shall not have
any right to require the Trustee to sell less than all of the Property) at
public venue, in the place designated by the commissioner's court in the
county designated in such notice on the first Tuesday in any month between
the hours of 10:00 A.M. and 4:00 P.M. (and within three (3) hours after a
specific time designated in such notice), to the highest bidder or bidders
for cash, and make due conveyance to the purchaser or purchasers, with
general warranty, and the title to such purchaser or purchasers, when so made
by Trustee acting, Borrower binds itself, its heirs, legal representatives,
successors and assigns, to warrant and forever defend against the claims and
demands of every person whomsoever lawfully claiming to claim the same or any
part thereof. Payment of the purchase price to the Trustee shall satisfy the
obligation of the purchaser at such sale therefor, and such purchaser shall
not be responsible for the application thereof. The sale or sales by the
Trustee of less than the whole of the Property shall not exhaust the power of
sale herein granted, and Trustee is specifically empowered to make successive
sale or sales under such power until the whole of the Property shall be sold;
and if the proceeds of such sale or sales of less than the whole of the
Property shall be less than the aggregate of the indebtedness secured by this
Instrument and the expenses thereof, this Instrument and the lien, security
interest and assignment hereof shall remain in full force and effect as to
the unsold portion of the Property just as though no sale or sales had been
made; provided, however, that Borrower shall never have any right to require
the sale or sales of less than the whole of the Property, but Lender shall
have the right, at its sole election, to request the Trustee to sell less
than the whole of the Property. If an Event of Default occurs, the holder of
the indebtedness secured by this Instrument or any part thereof on which the
payment is delinquent shall have the option to proceed with foreclosure in
satisfaction of such item either through judicial proceedings or by directing
Trustee to proceed as if under a full foreclosure, conducting the sale as
herein provided without declaring the entire indebtedness secured by this
Instrument due, and if sale is made because of default of an installment, or
a part of an installment, such sale may be made subject to the unmatured part
of the indebtedness secured by this Instrument; and it is agreed that such
sale, if so made, shall not in any manner affect the unmatured part of the
indebtedness secured by this Instrument, but as to such unmatured part this
Instrument shall remain in full force and effect as though no sale had been
made under the provisions of this paragraph. Several sales may be made
hereunder without exhausting the right of sale for any unmatured part of the
indebtedness secured by this Instrument. At any such sale (1) Borrower
hereby agrees, in its behalf and in behalf of its heirs, executors,
administrators, successors, personal representatives and assigns, that any
and all recitals made in any deed of conveyance given by Trustee with respect
to the identity of Lender, the occurrence or existence of any default, the
acceleration of the maturity of any of the indebtedness secured by this
Instrument, the request to sell, the notice of sale, the giving of notice to
all debtors legally entitled thereto, the time, place, terms and manner of
sale, and receipt, distribution and application of the money realized
therefrom, or the due and proper appointment of a substitute Trustee, and,
without being limited by the foregoing, with respect to any other act or
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thing having been duly done by Lender or by Trustee hereunder, shall be taken
by all courts of law and equity as prima facie evidence that the statements
or recitals state facts and are without further question to be so accepted,
and Borrower hereby ratifies and confirms every act that Trustee or any
substitute Trustee may lawfully do in the premises by virtue hereof, and (2)
the purchaser may disaffirm any easement granted, or rental, lease or other
contract made in violation of any provision of this Instrument, and may take
immediate possession of the Property free from, and despite the terms of,
such grant of easement and rental or lease contract. Lender may bid and
become the purchaser of all or any part of the Property at any trustee's or
foreclosure sale hereunder, and the amount of Lender's successful bid may be
credited on the indebtedness secured by this Instrument. The provisions
hereof with respect to posting and giving notices of sale are intended to
comply with the provisions of the Texas Property Code, and any
other applicable laws, and in the event the requirements for any notice under
the Texas Property Code or such other applicable laws shall be eliminated or
the prescribed manner of giving same modified by future amendment to, or
adoption of any statute superseding, the Texas Property Code or such other
applicable law, the requirements for such particular notice shall be deemed
stricken from or modified in this Instrument in conformity with such
amendment or superseding statute, effective as of the effective date of same.
The manner herein prescribed for serving or giving any notice, other than
that to be posted or caused to be posted by Trustee, shall not be deemed
exclusive but such notice or notices may be given in any other manner
which may be permitted by applicable law. Said sale shall forever be a bar
against Borrower, its heirs, legal representatives, successors and assigns,
and all other persons claiming under it. It is expressly agreed that the
recitals in each conveyance to the purchaser shall be full evidence of the
truth of the matters therein stated, and all lawful prerequisites to said
sale shall be conclusively presumed to have been performed.
(c) APPLICATION OF PROCEEDS, RENTS, ETC. The proceeds of any sale
of, and any rents and other amounts generated by the holding, leasing,
operation or other use of the Property shall be applied by the Trustee (or
the receiver, if one is appointed) to the extent that funds are so available
therefrom, in the following order of priority:
i) COSTS OF TRUSTEE'S SALE. First, to the payment of all
reasonable costs of the sale by the Trustee or other costs mandated by law
(including the Trustee's commission).
ii) OTHER COSTS. Second, to the payment of the
reasonable costs and expense of taking possession of the Property and of
holding, using, leasing, repairing and selling the same, including without
limitation (1) reasonable attorneys' and accountants' fees, and (2) the
payment of any and all taxes, assessments, liens, security interests or other
rights, titles or interests superior to the lien and security interest of
this Instrument;
iii) INDEBTEDNESS. Third, to the payment of the
indebtedness secured by this Instrument and/or any Additional Security
Instrument in such order as Lender, in Lender's sole discretion, directs; and
iv) BALANCE. Fourth, to Borrower, its heirs, legal
representatives, successors and assigns, or to whomsoever may be lawfully
entitled to receive the same.
(d) LENDER'S FORECLOSURE OPTIONS. Trustee may require minimum
bids at any foreclosure sale and may cancel and abandon the sale if no bid is
received equal to or greater than any such minimum bid. If foreclosure
should be commenced by Trustee, Lender may at any time before the sale direct
Trustee to abandon the sale for any reason, and may at any time or times
thereafter direct Trustee to again commence foreclosure. Irrespective of
whether foreclosure is commenced by Trustee, Lender may at any time after the
occurrence of an Event of Default institute suit for collection of the
indebtedness secured by this Instrument or foreclosure of the lien of this
Instrument. If Lender should institute suit for collection of the
indebtedness secured by this Instrument or foreclosure of the lien of this
Instrument, Lender or such other holder may at any time before the entry of
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final judgment dismiss the same, and require Trustee to sell the Property in
accordance with the provisions of this Instrument.
(e) MULTIPLE SALES AND FORECLOSURES. No single sale or series of
sales by Trustee or by any substitute or successor trustee under this
Instrument, and no judicial foreclosure shall extinguish the lien or security
interest, or exhaust the power of sale under this Instrument except with
respect to the items of property sold, but such lien or security interest and
power shall exist for so long as, and may be exercised in any manner by law
or in this Instrument provided as often as, the circumstances require to give
Lender full relief hereunder.
(f) LENDER MAY BUY. Lender shall have the right to become the
purchaser at any sale made hereunder, being the highest bidder, and credit
upon all or any part of the indebtedness secured by this Instrument shall be
deemed cash paid for the purposes of this paragraph.
(g) COSTS. Lender shall be entitled to collect all costs and
expenses incurred in pursuing its remedies, including, but not limited to,
attorneys' fees and costs of documentary evidence, abstracts and title
reports.
Q. DTPA WAIVER. Borrower waives all rights, remedies, claims, demands
and causes of action based upon or related to the Texas Deceptive Trade
Practices-Consumer Protection Act as described in Section 17.41 et. seq.
(other than Section 17.555) of the Texas Business & Commerce Code, as the
same pertains or may pertain to the Note and the Additional Notes, the
indebtedness secured by this Instrument and any of the other Loan Documents
or Additional Loan Documents or any of the transactions contemplated therein,
to the maximum extent that such rights, remedies, claims, demands, and causes
of action may lawfully and effectively be waived. In furtherance of this
waiver, Borrower hereby represents and warrants to Lender that (a) Borrower
is represented by legal counsel in connection with the negotiation, execution
and delivery of this Instrument, (b) Borrower has a choice other than to
enter into this waiver in that it can obtain the loans evidenced by the Note
and the Additional Notes from another institution and (c) Borrower does not
consider itself to be in a significant disparate bargaining position relative
to Lender with respect to the Note, the Additional Notes and the other Loan
Documents and the Additional Loan Documents.
R. BOOKS AND RECORDS. In addition to the obligations of the Borrower
under paragraph E of the Rider to Multifamily Instrument amending Uniform
Covenant 10 of the Instrument ("Books and Records"), the Borrower shall
provide the Lender the following:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any
event within 120 days after the close of each fiscal year of any Key
Principal during the term of this Agreement, its audited balance sheet as of
the end of such fiscal year, its audited statement of income, partners'
equity and retained earnings for such fiscal year and its audited statement
of cash flows for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period
in the prior fiscal year, prepared in accordance with GAAP, consistently
applied, and accompanied by a certificate of its independent certified public
accountants to the effect that such financial statements have been prepared
in accordance with GAAP, consistently applied, and that such financial
statements fairly present the results of its operations and financial
condition for the periods and dates indicated, with such certification to be
free of exceptions and qualifications as to the scope of the audit or as to
the going concern nature of the business.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in
any event within 45 days after each of the first three fiscal quarters of any
fiscal year of any Key Principal during the term of this Agreement, its
unaudited balance sheet as of the end of such fiscal quarter and its
unaudited statement of income and retained earnings and its unaudited
statement of cash flows for the portion of the fiscal year ended with the
last day of such quarter, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year, accompanied by a certificate of each Key Principal to
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the effect that such financial statements have been prepared in accordance
with GAAP, consistently applied, and that such financial statements fairly
present the results of its operations and financial condition for the periods
and dates indicated.
(iii) MONTHLY PROPERTY STATEMENT. Upon Lender's request, on a
monthly basis within 15 days of the last day of the prior month, a statement
of income and expenses of the Property accompanied by a certificate of
Borrower to the effect that each such statement of income and expenses
fairly, accurately and completely presents the operations of the Property for
the period indicated.
(iv) ANNUAL PROPERTY STATEMENTS. On an annual basis within 15
days of the end of the fiscal year, an annual statement of income and
expenses of the Property accompanied by a certificate of Borrower to the
effect that each such statement of income and expenses fairly, accurately and
completely presents the operations of the Property for the period indicated.
(v) UPDATED RENT ROLLS. Upon Lender's request, a current rent
roll for the Property, showing the name of each tenant, and for each tenant,
the space occupied, the lease expiration date, the rent payable, the rent
paid and any other information requested by Lender and in the form required
by Lender and accompanied by a certificate of Borrower to the effect that
each such rent roll fairly, accurately and completely presents the
information required therein.
(vi) SECURITY DEPOSIT INFORMATION. Upon Lender's request, an
accounting of all security deposits held in connection with any lease of any
part of the Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of
the financial institutions in which such security deposits and held and the
name of the person to contact at such financial institution, along with any
authority or release necessary for Lender to access information regarding
such accounts.
(vii) SECURITY LAW REPORTING INFORMATION. Promptly upon the
mailing thereof to the partners or shareholders of Borrower or any Key
Principal, copies of all financial statements, reports and proxy statements
so mailed and promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
(excluding Form 4, Statement of Changes in Beneficial Ownership, or its
equivalent, unless they reflect a change in control in Owner) which Borrower
or any Key Principal shall have filed with the United States Securities and
Exchange Commission or other Governmental Authorities.
(viii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof,
copies of any reports or management letters submitted to Borrower by its
independent certified public accountants in connection with the examination
of its financial statements made by such accountants (except for reports
otherwise provided pursuant to clause (i) above).
(ix) CONDITION OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY.
Borrower shall promptly notify the Lender of any report, event or condition
known to the Borrower that the status of Apartment Investment and Management
Company as a real estate investment trust under Subchapter M of the Internal
Revenue Code has been terminated or brought into question.
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S. TRANSFERS OF THE PROPERTY.
(a) DEFINITIONS
For purposes of this Instrument, the following terms have the respective
meanings set forth below:
(i) The term "TRANSFER" means (A) a sale, assignment, pledge,
transfer or other disposition (whether voluntary or
by operation of law) of, or the granting or creating of a
lien, encumbrance or security interest in, any of
Borrower's estate, rights, title or interest in the
Property, or any portion thereof, or (B) a sale,
assignment, pledge, transfer or other disposition of any
interest in Borrower, its General Partner, AIMCO HOLDINGS,
AIMCO QRS, AIMCO REIT or in AIMCO OP, or (C) the issuance
or other creation of new ownership interests in Borrower,
its General Partner, AIMCO HOLDINGS, AIMCO QRS, AIMCO REIT
or in AIMCO OP, or (D) a merger or consolidation of
Borrower, its General Partner, AIMCO REIT, AIMCO OP, AIMCO
QRS or AIMCO HOLDINGS or (E) the reconstitution of
Borrower, its General Partner, AIMCO REIT, AIMCO OP, AIMCO
QRS or AIMCO HOLDINGS from one type of entity to another
type of entity.
(ii) A "CHANGE OF CONTROL" shall mean the earliest to occur of:
(A) the date an Acquiring Person becomes (by
acquisition, consolidation, merger or otherwise), directly
or indirectly, the beneficial owner of more than forty
percent (40%) of the total Voting Equity Capital of AIMCO
REIT then outstanding, or (B) the date on which AIMCO REIT
shall cease to hold (whether directly or indirectly through
a wholly owned intermediary entity such as AIMCO-LP, Inc.
or AIMCO-GP, Inc.) less than 50.1% of the limited
partnership interests in AIMCO OP or (C) the date of which
AIMCO REIT shall cease for any reason to own 100% of the
Voting Equity Capital (or any other securities) of AIMCO
QRS, or (D) the date on which AIMCO QRS shall cease for any
reason to be the sole general partner of AIMCO Holdings or
(E) the date on which AIMCO HOLDINGS shall cease for any
reason to be the sole general partner of the General
Partner or (F) the date on which the General Partner shall
cease to be the sole general partner of the Borrower
or (G) the replacement (other than solely by reason of
retirement at age sixty-five or older, death or disability)
of more than 50% (or such lesser percentage as is required
for decision-making by the board of directors or trustees,
if applicable) of the members of the board of directors (or
trustees, if applicable) of AIMCO REIT over a one-year
period where such replacement shall not have been approved
by a vote of at least a majority of the board of directors
(or trustees, if applicable) of AIMCO REIT then still in
office who either were members of such board of directors
(or trustees, if applicable) at the beginning of such
one-year period or whose election as members of the board
of directors (or trustees, if applicable) was previously so
approved.
(iii) An "ACQUIRING PERSON" shall mean a "PERSON" or "GROUP OF
PERSONS" within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended; PROVIDED,
HOWEVER, that notwithstanding the foregoing, "ACQUIRING
PERSON" shall not be deemed to include any member of the
Borrower Control Group unless such member has, directly or
indirectly, disposed of, sold or otherwise transferred to,
or encumbered or restricted (whether by means of voting
trust agreement or otherwise) for the benefit of an
Acquiring Person, all or any portion of the Voting Equity
Capital of AIMCO REIT directly or indirectly owned or
controlled by such member or such member directly or
indirectly votes all or any portion of the Voting Equity
Capital of AIMCO REIT, directly or indirectly, owned or
controlled by such member for the taking of any action
which, directly or indirectly, constitutes or would result
in a Change of Control, in which event such member of the
Borrower Control Group shall be
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deemed to constitute an Acquiring Person to the extent of
the Voting Equity Capital of AIMCO REIT owned or controlled
by such member.
(iv) "BORROWER CONTROL GROUP" shall mean Terry Considine, Peter K.
Kompaniez, Richard S. Ellwood, J. Landis Martin, Thomas L.
Rhodes and John D. Smith.
(v) A "PERSON" shall mean an individual, an estate, a trust, a
corporation, a partnership, a limited liability company or
any other organization or entity (whether governmental or
private).
(vi) "SECURITY" shall have the same meaning as in Section 2(l) of
the Securities Act of 1933, as amended.
(vii) "VOTING EQUITY CAPITAL" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the board of
directors (or Persons performing similar functions).
(viii) "AIMCO REIT" shall mean Apartment Investment and Management
Company, a corporation organized and existing under the laws
of the State of Maryland.
(ix) "AIMCO OP" shall mean AIMCO Properties, L.P., a limited
partnership organized and existing under the laws of the
State of Delaware.
(x) "AIMCO QRS" shall mean AIMCO Holdings QRS, Inc., a corporation
organized and existing under the laws of the State of
Delaware.
(xi) "AIMCO HOLDINGS" shall mean AIMCO Holdings, L.P., a limited
partnership organized and existing under the laws of the State
of Delaware.
(xii) "GENERAL PARTNER" shall be as defined in Section M above.
(b) ACCELERATION OF THE LOAN UPON TRANSFERS OF THE PROPERTY OR
SIGNIFICANT INTERESTS
Subject to clause (c) hereof, Lender may, at Lender's option, declare
all sums secured by this Instrument immediately due and payable and Lender
may invoke any remedies permitted by paragraph 27 of this Instrument if,
without Lender's prior written consent, any of the following shall occur:
(i) a Transfer of all or any part of the Property or any interest
in the Property; or
(ii) a Transfer of any interest in Borrower or the General
Partner; or
(iii) a Change in Control.
(c) NO ACCELERATION OF THE LOAN FOR TRANSFERS CAUSED BY CERTAIN EVENTS
Notwithstanding the foregoing provisions of this covenant, Lender shall
not be entitled to declare sums secured by this Instrument immediately due
and payable or to invoke any remedy permitted by paragraph 27 of this
Instrument solely upon the occurrence of any of the following:
(i) a Transfer that occurs by inheritance, devise, or bequest or
by operation of law upon the death of a natural person who is
an owner of an indirect ownership interest in the Borrower.
(ii) The grant of a leasehold interest in individual dwelling
units for a term of two years or less and leases for
commercial uses provided that (A) commercial leases do not
exceed 5 percent (5%) of (1) the rentable space of the
Property (measured as
11
<PAGE>
required by Lender) or (2) the rental income from the
Property, (B) no such commercial leasehold interest contains
an option to purchase the Property, and (C) all such
commercial leasehold interests, in the aggregate, (1) do not
adversely affect the value of the Property and (2) are
coincidental to the current use of the Property for
multifamily residential purposes.
(iii) A sale or other disposition of obsolete or worn out
personal property which is contemporaneously replaced by
comparable personal property of equal or greater value which
is free and clear of liens, encumbrances and security
interests other than those created by the Loan Documents.
(iv) The creation of a mechanic's or materialmen's lien or
judgment lien against the Property which is released of
record or otherwise remedied to Lender's satisfaction, within
thirty (30) days of the date of creation.
(v) The grant of an easement, if prior to the granting of the
easement Borrower causes to be submitted to Lender all
information required by Lender to evaluate the easement, and
if Lender determines that the easement will not materially
affect the operation of the Property or Lender's interest in
the Property and Borrower pays to Lender on demand, all costs
and expenses incurred by Lender in connection with reviewing
Borrower's request. Lender shall not unreasonably withhold
its consent to (A) the grant of a utility easement serving the
Property to a publicly operated utility, or (B) the grant of
an easement related to expansion or widening of roadways,
provided that such easement is in form and substance
reasonably acceptable to Lender and does not materially and
adversely affect the access, use or marketability of the
Property.
(vi) The transfer of limited partnership interests in Borrower
by parties unrelated to AIMCO REIT provided no Change in
Control occurs as a result of such Transfer.
(vii) The Transfer of shares of common stock, limited
partnership interests or other beneficial or ownership
interests or other forms of securities in AIMCO REIT or AIMCO
OP, and the issuance of all varieties of convertible debt,
equity and other similar securities of AIMCO REIT or AIMCO OP,
and the subsequent Transfer of such securities; provided,
however, that no Change in Control occurs as a result of such
Transfer, either upon such Transfer or upon the subsequent
conversion to equity of such convertible debt or other
securities.
(viii) The issuance by AIMCO REIT or AIMCO OP of additional
common stock, limited partnership interests or other
beneficial or ownership interests, convertible debt, equity
and other similar securities, and the subsequent Transfer of
such convertible debt or securities; provided, however, that
no Change in Control occurs as the result of such Transfer,
either upon such Transfer or upon the subsequent conversion to
equity of such convertible debt or other securities.
(ix) So long as AIMCO REIT owns 100% of the stock of AIMCO-LP, Inc.,
a Transfer of limited partnership interests that results in
AIMCO-LP, Inc. owning not less than 50.1% of the limited
partnership interests in AIMCO OP.
(e) OTHER PROVISIONS REGARDING TRANSFERS. The parties acknowledge and
agree that pursuant to the provisions of the this Instrument, Lender may
permit a transfer of an indirect interest in the Borrower where Lender
approves the transferee's creditworthiness. Lender will approve such proposed
transferee's creditworthiness in connection with a transfer of indirect
interests in the Borrower so long as there is no transfer of a direct
interest in Borrower or its General Partner and so long as no "Change of
12
<PAGE>
Control" occurs. So long as there is no transfer of a direct interest in
Borrower or its General Partner and so long as no Change in Control occurs,
Lender's consent to the transferee's creditworthiness in connection with a
transfer of indirect interests in the Borrower shall be deemed automatic and
Borrower shall not be required to come to Lender for consent. Alternatively,
if a transfer of either a direct interest in Borrower or its General Partner
or a Change in Control is contemplated, Borrower must obtain Lender's prior
written consent. Nothing contained in this paragraph is intended to permit,
authorize or confer consent to a transfer of all or any part of any property
encumbered by the Instrument.
Lender will not unreasonably withhold its consent to a "Change of
Control", provided that Borrower gives Lender not less than forty-five (45)
days prior written notice of such Change of Control. Borrower acknowledges
and agrees that time is of the essence with respect to such notice and that
the remaining provisions of this paragraph shall be null and void unless such
notice is timely given by Borrower. Lender will not withhold its consent
under this paragraph if Lender determines in its discretion that (A) such
acquiring person or entity has a creditworthiness at least equal to that of
Borrower, (B) that such acquiring person or entity is of sufficient size and
sophistication to own, operate and manage the properties securing the
Mortgages and (C) that such acquiring person or entity has experience that is
at least equal to that of Borrower in the ownership, operation and management
of a portfolio of Multifamily Residential Property that is at least equal in
value to the value of the property securing the Instrument. Lender shall
provide Borrower written notice of its decision to consent or refuse to
consent to a Change in Control under this paragraph within thirty (30) days
from the date that Lender determines that it has received all of
the information required by Lender to make the determinations described in
the preceding sentence.
IN WITNESS WHEREOF, the parties hereto have executed this Supplemental
Rider or have caused the same to be executed by their respective
representatives thereunto duly authorized.
BORROWER:
WITNESS: COPPERFIELD PARTNERS, LTD.,
a Texas limited partnership
By: AIMCO COPPERFIELD, L.P.,
a Delaware limited partnership,
its General Partner
By: AIMCO HOLDINGS, L.P., a
Delaware limited partnership,
its General Partner
By: AIMCO HOLDINGS QRS, INC.,
a Delaware corporation,
its General Partner
/s/ Judith E. Mintz By: /s/ Harry Alcock
- -------------------- -----------------------
Harry Alcock
Vice President
13
<PAGE>
ACKNOWLEDGMENT
DISTRICT OF COLUMBIA ) to-wit:
BEFORE ME, the undersigned, a Notary Public in and for the jurisdiction
aforesaid, this day personally appeared Harry Alcock, known to me to be the
Vice President of AIMCO HOLDINGS QRS, INC., the corporation that executed the
foregoing instrument, and known to me to be the person who executed the
foregoing instrument on behalf of said corporation, said corporation being
known to me to be general partner of AIMCO HOLDINGS, L.P., a limited
partnership, which limited partnership is general partner of AIMCO
COPPERFIELD, L.P., a limited partnership, and which limited partnership is
general partner of COPPERFIELD PARTNERS, LTD., the limited partnership that
executed the foregoing instrument, and acknowledged to me that such
corporation executed the same as such general partner and that such limited
partnerships executed the same for the purposes and consideration therein
expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 18th day of April, 1997.
/s/ Isabelle Balakit Adams
----------------------------
Notary Public in and for the
District of Columbia
[Seal]
My commission Expires:
ISABELLE BALAKIT ADAMS
Notary Public, District of Columbia
My Commission Expires May 14, 2000
<PAGE>
EXHIBIT A
Cooperfield
DESCRIPTION Of A TRACT OR PARCEL BEING 7.4489 ACRES OR 324.388 SQUARE FOOT
TRACT OF TRACT OF LAND SITUATED IN THE W.C.R.R. CO. SURVEY ABSTRACT 939 AND
THE J.W. BELL SURVEY ABSTRACT 1150, BEING THE SAME CALLED COPPERFIELD
APARTMENTS RECORDED IN FILM CODE NO. 372029 OF THE HARRIS COUNTY MAP RECORDS
ALSO BEING THE SAME TRACT CALLED PALAIS DE VILLE 7.4429 ACRES APARTMENT
SUBDIVISION RECORDED IN VOLUME 321. PAGE 122 OF THE HARRIS COUNTY MAP
RECORDS, BEING OUT OF UNRESTRICTED RESERVE T OF EASTON COMMONS SECTION TWO
RECORDED IN VOLUME 310, PAGE 80 OF THE HARRIS COUNTY MAP RECORDS, HARRIS
COUNTY, TEXAS, BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS
FOLLOWS:
BEGINNING AT A 3/4 INCH IRON PIPE FOUND MARKING THE SOUTHWEST END OF A 25
FOOT CUTBACK CURVE AT THE INTERSECTION OF THE SOUTHEAST RIGHT OF WAY LINE OF
EASTON COMMONS DRIVE (100 FEET WIDE AT THIS POINT) AND THE SOUTHWEST RIGHT OF
WAY LINE OF SUNBURY LANE (60 FOOT WIDE);
THENCE ALONG A CURVE TO THE RIGHT, HAVING A RADIUS OF 25.00 FEET, A DELTA OF
88 DEGREES 57 MINUTES 30 SECONDS, AND AN ARC LENGTH OF 38.82 FEET TO A 3/4
INCH IRON PIPE FOUND MARKING THE POINT OF TANGENCY ON THE WESTERLY RIGHT OF
WAY LINE OF SAID SUNBURY LANE;
THENCE CONTINUING ALONG THE SAID WESTERLY RIGHT OF WAY LINE OF SUNBURY LANE,
SOUTH 38 DEGREES 13 MINUTES AND 40 MINUTES EAST, 30.76 FEET TO A 3/4 INCH
IRON PIPE FOUND MARKING THE BEGINNING OF A CURVE TO THE RIGHT;
THENCE ALONG THE SAID CURVE TO THE RIGHT, BEING THE WESTERLY RIGHT OF WAY
LINE OF SAID SUNBURY LANE, HAVING A RADIUS OF 1,170.00 FEET, A DELTA OF 36
DEGREES 04 MINUTES 01 SECONDS (CALLED 36 DEGREES 02 MINUTES 30 SECONDS), AND
AN ARC LENGTH OF 736.50 FEET (CALLED 735.99 FEET) TO A 3/4 INCH IRON PIPE
FOUND MARKING THE POINT OF TANGENCY;
THENCE CONTINUING ALONG SAID WESTERLY RIGHT OF WAY LINE OF SUNBURY LANE,
SOUTH 02 DEGREES 09 MINUTES 39 SECONDS EAST (CALLED SOUTH 02 DEGREES 11
MINUTES 10 SECONDS EAST) 287.54 FEET (CALLED 287.31 FEET), TO A 5/8 INCH
IRON ROD FOUND MARKING THE BEGINNING OF A CURVE TO THE LEFT;
THENCE ALONG SAID CURVE TO THE LEFT, BEING ON THE SAID WESTERLY RIGHT OF WAY
LINE OF SUNBURY LANE, HAVING A RADIUS OF 392.17 FEET, A DELTA OF 08 DEGREES
08 MINUTES 15 SECONDS (CALLED 08 DEGREES 08 MINUTES 11 SECONDS), AND AN ARC
LENGTH OF 55.70 FEET (CALLED 55.69 FEET) TO A 3/4 INCH IRON PIPE FOUND
MARKING THE SOUTHEAST CORNER OF SAID PALAIS DE VILLE 7.4429 ACRE TRACT;
THENCE SOUTH 81 DEGREES 00 MINUTES 29 SECONDS WEST (CALLED SOUTH 80 DEGREES
59 MINUTES 07 SECONDS WEST), 96.48 FEET (CALLED 96.66 FEET), TO A 5/8 INCH
IRON ROD FOUND MARKING AN INTERIOR CORNER OF RESTRICTED RESERVE S OF SAID
EASTON COMMONS SECTION TWO, AND ALSO BEING THE SOUTHWEST CORNER OF THE
HEREIN DESCRIBED TRACT AND SAID PALAIS DE VILLE;
THENCE NORTH 18 DEGREES 02 MINUTES 19 SECONDS WEST (CALLED NORTH 18 DEGREES
03 MINUTES 51 SECONDS WEST), 114.51 FEET (CALLED 114.46 FEET), TO A 5/8 INCH
IRON FOUND CAPPED MARKING AN ANGLE POINT IN THE WESTERLY LINE OF SAID PALAIS
DE VILLE AND THE HEREIN DESCRIBED TRACT, BEING IN THE EASTERLY LINE OF SAID
RESTRICTED RESERVE S;
THENCE NORTH 38 DEGREES 53 MINUTES 18 SECONDS WEST (CALLED NORTH 38 DEGREES
54 MINUTES 56 SECONDS WEST), 702.07 FEET (CALLED 701.52 FEET), TO THE
NORTHWEST CORNER OF THE HEREIN DESCRIBED TRACT AND SAID PALAIS DE VILLE,
BEING ON THE NORTHEAST CORNER OF SAID RESTRICTED RESERVE S, ALSO BEING ON THE
SOUTHEASTERLY RIGHT OF WAY LINE OF SAID EASTON COMMONS DRIVE (60 FEET WIDE AT
THIS POINT), FROM WHICH A 5/8 INCH IRON ROD FOUND FOR REFERENCE BEARS NORTH
46 DEGREES 03 MINUTES WEST, 0.40 FEET;
THENCE ALONG THE SAID SOUTHEASTERLY RIGHT OF WAY LINE OF EASTON COMMONS
DRIVE, NORTH 15 DEGREES 38 MINUTES 32 SECONDS EAST, 173.20 FEET TO AN "X"
SET IN DRIVEWAY MARKING BEGINNING OF A CURVE TO THE RIGHT;
THENCE ALONG THE SAID CURVE TO THE RIGHT, BEING ON THE SAID SOUTHEASTERLY
RIGHT OF WAY LINE OF EASTON COMMONS DRIVE, HAVING A RADIUS OF 350.00 FEET,
A DELTA OF 37 DEGREES 10 MINUTES 19 SECONDS, AND AN ARC LENGTH OF 227.07
FEET TO A 5/8 INCH IRON PIPE FOUND MARKING THE POINT OF TANGENCY;
THENCE CONTINUING ALONG THE SAID SOUTHEASTERLY RIGHT OF WAY LINE OF EASTON
COMMONS DRIVE, NORTH 52 DEGREES 48 MINUTES 50 SECONDS EAST, 98.64 FEET TO THE
POINT OF BEGINNING, CONTAINING 7.4469 ACRES OR 324,388 SQUARE FEET OF LAND.
<PAGE>
EXHIBIT "B" TO MULTIFAMILY DEED OF TRUST
AND FINANCING STATEMENTS
(Copperfield Apartments)
As used herein, the term "Debtor" shall mean and include the terms
"Mortgagor", "Grantor" and "Borrower"; and the term "Creditor" shall mean and
include the terms "Lender", "Mortgagee" and "Secured Party".
This Exhibit "B" is attached to, incorporated by reference in, and forms
a part of, certain documents (collectively, the "Security Documents"),
executed and delivered by Debtor in connection with the refinancing of the
Project (as hereinafter defined), including: (i) a Multifamily Deed of Trust,
Assignment of Rents and Security Agreement; and (ii) Financing Statements.
This Exhibit "B" refers to the following collateral, which may be now or
hereafter located on the premises of, relate to, or be used in connection
with, the acquisition or refinancing, construction, equipping, repair,
ownership, management or operation of a multifamily rental housing project
known as Copperfield Apartments (the "Project"), located in Harris County,
Houston, Texas.
1. All materials now owned or hereafter acquired by the Debtor and
intended for construction, reconstruction, alteration and repair of any
building, structure or improvement now or hereafter erected or placed on the
property described on Exhibit "A" (the "Property"), all of which materials
shall be deemed to be included within the Project immediately upon the
delivery thereof to the Project.
2. All of the walks, fences, plants, trees, shrubbery, driveways,
fixtures, machinery, apparatus, equipment, appliances, fittings, and other
goods and other personal property of every kind and description whatsoever,
now owned or hereafter acquired by the Debtor and attached to or contained in
and used or usable in connection with any present or future operation of the
Project, including, by way of example rather than of limitation, all
lighting, laundry, incinerating and power equipment; all engines, boilers,
machines, motors, furnaces, compressors and transformers; all generating
equipment; all pumps, tanks, ducts, conduits, wire, switches, electrical
equipment and fixtures, fans and switchboards; all telephone equipment; all
piping, tubing, plumbing equipment and fixtures; all heating, refrigeration,
air conditioning, cooling, ventilating, sprinkling, water, gas, power and
communications equipment, systems and apparatus; all water coolers, water
heaters and water closets; all fire prevention, alarm and extinguishing
systems and apparatus; all security and access control systems and apparatus;
all cleaning equipment; all lift, elevator and escalator equipment and
apparatus; all partitions, shades, blinds, awnings, screens, screen doors,
storm doors, storm windows, exterior and interior signs, antennas, gas
fixtures, bathtubs, washers, dryers, sinks, stoves, ranges, ovens,
refrigerators, garbage disposals, dishwashers, cabinets, mirrors, mantles,
pictures, panelling, floor coverings, carpets, rugs, curtains, curtain rods,
draperies and other furnishings and furniture installed or to be installed or
used or usable in the operation of any part of the Project or facilities
erected or to be erected in or upon the Property; and every renewal or
replacement thereof or articles in substitution therefor, whether or not the
same are now or hereafter attached to the Property in any manner; all except
for any right, title or interest therein owned by any tenant (it being agreed
that all personal property owned by the Debtor and placed by it on the
Property shall, so far as permitted by law, be deemed to be affixed to the
Property, appropriated to its use, and covered by each of the Security
Documents to which this Exhibit "B" is attached).
<PAGE>
3. All of the Debtor's right, title and interest in and to any and all
judgments, awards of damages (including but not limited to severance and
consequential damages), payments, proceeds, settlements or other compensation
(collectively, the "Awards") heretofore or hereafter made, including interest
thereon, and the right to receive the same, as a result of, in connection
with, or in lieu of (i) any taking of the Property or any part thereof by the
exercise of the power of condemnation or eminent domain, or the police power,
(ii) any change or alteration of the grade of any street, or (iii) any other
injury to or decrease in the value of the Property or any part thereof
(including but not limited to destruction or decrease in value by fire or
other casualty), all of which Awards, rights thereto and shares therein are
hereby assigned to the Creditor, who is hereby authorized to collect and
receive the proceeds thereof and to give proper receipts and acquittances
therefor and to apply, at its option, the net proceeds thereof, after
deducting expenses of collection, as a credit upon any portion, as selected
by the Creditor, of the indebtedness secured by the Security Documents.
4. All of the Debtor's right, title and interest in and to any and all
payments, proceeds, settlements or other compensation heretofore or hereafter
made, including any interest thereon, and the right to receive the same from
any and all insurance policies covering the Property or any portion thereof,
or any of the other property described herein.
5. The interest of the Debtor in and to all of the rents, royalties,
mineral, oil and gas rights and profits, water, water rights and water stock
appurtenant to the Property, issues, profits, revenues, income, tenant
assistance payments, if any, and other benefits of the Property, or arising
from the use or enjoyment of all or any portion thereof, or from any lease,
agreement or tenant assistance payment contract, if any, pertaining thereto,
and all right, title and interest of the Debtor in and to, and remedies
under, all contract rights, accounts receivable and general intangibles
arising out of or in connection with any and all leases and subleases of the
Property, or any part thereof, and of the other property described herein, or
any part thereof, both now in existence or hereafter entered into, together
with all proceeds (cash and non-cash) thereof; and including, without
limitation, to the extent permitted by law, all cash or securities deposited
thereunder to secure performance by the lessees of their obligations
thereunder.
6. All of the Debtor's rights, options, powers and privileges in and
to (but not the Debtor's obligations and burdens under) any construction
contract, architectural and engineering agreements and management contract
pertaining to construction, development, ownership, equipping and management
of the Property and all of the Debtor's right, title and interest in and to
(but not the Debtor's obligations and burdens under) all architectural,
engineering and similar plans, specifications, drawings, reports, surveys,
plats, permits and the like, contracts for construction, operation and
maintenance of, or provision of services to, the Property or any of the other
property described herein, and all sewer taps and allocations, agreements for
utilities, bonds and the like, all relating to the Property.
7. All intangible personal property, accounts, licenses, permits,
instruments, contract rights, and chattel paper of the Debtor derived from,
or generated or required by, the Property, including but not limited to cash;
accounts receivable; bank accounts; certificates of deposit; securities;
promissory notes; rents; tenant assistance payments (if any); rights (if any)
to amounts held in escrow; insurance proceeds; condemnation rights; deposits;
judgments, liens and causes of action; warranties and guarantees (but not
including syndication proceeds generated by sale of interests in the Debtor).
<PAGE>
EXCEPTIONS TO NON-RECOURSE GUARANTY
(Copperfield)
This Exceptions to Non-Recourse Guaranty is entered into as of April 18
1997, by the undersigned (collectively, the "Key Principal" whether one or
more). in order to induce GMAC COHMERCIAL MORTGAGE CORPORATION (the "Lender")
to make a loan to COPPERFIELD PARTNERS, LTD (the "Borrower") in the amount
of $ 3,577,000.00 (the "Loan").
RECITALS
A. The Loan is evidenced by a Multifamily Note from Borrower to Lender of
even date herewith (the "Multifamily Note"), as modified by an Addendum to
Multifamily Note of even date herewith (the "Addendum"). The Loan is secured
by a Multifamily, Deed of Trust Assignment of Rents and Security Agreement of
even date herewith (the "Multifamily Instrument"), covering the property
described in the Multifamily Instrument and located at Houston, Harris
County, Texas (the "Property"). The Multifamily Instrument is amended and
supplemented by a Rider to Multifamily Instrument/* or even date herewith
(the "Rider").
* and a Supplemental Rider to Multifamily Instrument, each as
B. The Multifamily Note, as modified by the Addendum and as further amended
from time to time, shall be referred to in this Exceptions to Non-Recourse
Guaranty as the "Note." The Multifamily Instrument, as modified by the Rider
and as further amended from time to time. shall be referred to in this
Exceptions to Non-Recourse Guaranty as the "Instrument." The term "Loan
Documents" when used in this Exceptions to Non-Recourse Guaranty, shall mean,
collectively, the following documents: (i) the Note, (ii) the Instrument, and
(iii) all other documents or agreements, including any Collateral Agreements
(as defined in the Rider) or O&M Agreement (as defined in the Rider),
executed in connection with the Loan, whether presently existing or
hereinafter entered into, as such Loan Documents may be amended from time to
time.
C. Lender is unwilling to make the Loan unless the undersigned Key
Principal executes this Exceptions to Non-Recourse Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Loan evidenced by the
Note and secured by the Instrument, and in consideration thereof. Key
Principal hereby (i) irrevocably and unconditionally guarantees the full and
prompt payment to Lender of all amounts which may from time to time while the
Note is outstanding and unpaid become due and owing by Borrower, whether
principal, interest or other sums, for which Borrower may from time to time,
or at any time be personally liable for payment to Lender under the Note and
the Instrument (due to the applicability of the exceptions to non-recourse
liability provisions contained in paragraph C of the Addendum and paragraph L
of the Rider) (the "Guaranteed Obligations"), and (ii) agrees to pay, on
demand, all costs and expenses, including reasonable attorneys' fees and
disbursements, incurred by Lender in enforcing its rights under this
Exceptions to Non-Recourse Guaranty. All obligations of Key Principal under
this Exceptions to Non-Recourse Guaranty shall be joint and several among all
persons (if more than one) included as a Key Principal. This Exceptions to
Non-Recourse Guaranty is an unconditional guaranty of payment, and not a
guaranty of collection, and may be enforced by Lender directly against Key
Principal without any requirement that Lender must first exercise its rights
against Borrower or any general partner of Borrower or any collateral or
other security for payment of the Note.
The obligations of Key Principal under this Exceptions to Non-Recourse
Guaranty shall be performed without demand by Lender and shall be
unconditional irrespective of the genuineness, validity, regularity or
enforceability of the Note, the Instrument, or any other circumstance which
might otherwise constitute a legal or equitable discharge of a surety or a
guarantor. Key Principal hereby waives the benefit of all principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Exceptions to Non-Recourse Guaranty, and agrees that
the obligations of Key Principal shall not be affected by any circumstances,
whether or not referred to in this Exceptions to Non-Recourse Guaranty, which
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. Key Principal hereby waives the benefits of any right of discharge
under any and all statutes or other laws relating to guarantors or sureties
and any other rights of sureties and guarantors thereunder. Without limiting
the generality of the foregoing, Key Principal hereby waives diligence,
presentment, demand for payment, protest, all notices which may be required
by statute, rule of law or otherwise to preserve intact Lender's rights
against Key Principal under this Exceptions to Non-Recourse Guaranty,
including, but not limited to, notice of acceptance, notice of any amendment
of the Loan Documents, notice of the occurrence of any default, notice of
intent to accelerate, notice of acceleration, notice of dishonor, notice of
foreclosure, notice of protest, notice of the incurring by Borrower of any of
the Guaranteed Obligations, and, generally, all demands, notices and other
formalities of every kind in connection with this Exceptions to Non-Recourse
Guaranty, and all rights to require Lender to (a) proceed against Borrower
or, if Borrower is a partnership, any general partner of Borrower, (b)
proceed against or exhaust any collateral held by Lender to secure the
payment of the Loan, or (c) pursue any other remedy it may now or hereafter
have against Borrower, or, if Borrower is a partnership, any general partner
of Borrower.
Key Principal hereby agrees that, at any time or from time to time and any
number of times, without notice to Key Principal and without affecting the
liability of Key Principal, (a) the time for payment of the principal of or
interest on the Note may be extended or the Note may be renewed in whole or in
part one or more times; (b) the time for Borrower's performance of or compliance
with any covenant or agreement contained in the Note, the Instrument or any
other Loan Document evidencing, securing or governing the Loan, whether
presently existing or hereinafter entered into, may be extended or such
performance or compliance may be waived; (c) the maturity of the Note may be
accelerated as provided therein or in the Instrument, or any other Loan
Document; (d) the Note, the Instrument, or any other Loan Document, may be
modified or amended by Lender and Borrower in any respect, including, but not
limited to, an increase in the principal
(Page 1 of 2)
<PAGE>
amount; and (e) any security for the Loan may be modified, exchanged,
surrendered or otherwise dealt with or additional security may be pledged or
mortgaged for the Loan.
If any payment by Borrower is held to constitute a preference under any
applicable bankruptcy or similar laws, or if for any reason Lender is
required to refund any sums to Borrower, such amounts shall not constitute a
release of any liability of Key Principal hereunder. It is the intention of
Lender and Key Principal that Key Principal's obligations hereunder shall not
be discharged except by Key Principal's performance of such obligations and
then only to the extent of such performance.
Key Principal agrees that any indebtedness of Borrower now or hereafter
held by Key Principal is hereby and shall be subordinated to all indebtedness
of Borrower to Lender and any such indebtedness of Borrower shall be
collected, enforced and received by Key Principal, as trustee for Lender, but
without reducing or affecting in any manner the liability of Key Principal
under the other provisions of this Exceptions to Non-Recourse Guaranty.
Key Principal agrees that Lender, in its sole and absolute discretion, may
(a) bring suit against Key Principal, or any one or more of the individuals
constituting Key Principal, and any other guarantor of the Note, jointly and
severally, or against any one or more of them: (b) compromise or settle with
any one or more of the individuals constituting Key Principal for such
consideration as Lender may deem proper, (c) release one or more of the
individuals constituting Key Principal, or any other guarantors of the Note,
from liability thereunder, and (d) otherwise deal with Key Principal and any
other guarantor of the Note, or any one or more of them, in any manner
whatsoever, and that no such action shall impair the rights of Lender to
collect the Guaranteed Obligations from Key Principal. Nothing contained in
this paragraph shall in any way affect or impair the rights or obligations of
the Key Principal with respect to any other guarantor of the Note.
Lender may assign its rights under this Exceptions to Non-Recourse Guaranty
in whole or in part and upon any such assignment, all the terms and
provisions of this Exceptions to Non-Recourse Guaranty shall inure to the
benefit of such assignee to the extent so assigned. The terms used to
designate any of the parties herein shall be deemed to include the heirs,
legal representatives, successors and assigns of such parties; and the term
"Lender" shall include, in addition to Lender, any lawful owner, holder or
pledgee of the Note.
Key Principal shall have no right of, and hereby waives any claim for,
subrogation or reimbursement against the Borrower or any general partner of
Borrower by reason of any payment by Key Principal under this Exceptions to
NonRecourse Guaranty, whether such right or claim arises at law or in equity
or under any contract or statute.
Key Principal hereby waives trial by jury in any action or proceeding
commenced by Lender against Key Principal under this Exceptions to
Non-Recourse Guaranty.
THIS EXCEPTIONS TO NON-RECOURSE GUARANTY AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ALL PRIOR OR
CONTEMPORANEOUS AGREEMENTS, UNDERSTANDINGS, REPRESENTATIONS, AND
STATEMENTS, ORAL OR WRITTEN, ARE MERGED INTO THIS EXCEPTIONS TO NON-RECOURSE
GUARANTY AND THE OTHER LOAN DOCUMENTS. NEITHER THIS EXCEPTIONS TO
NON-RECOURSE GUARANTY NOR ANY PROVISION HEREOF MAY BE WAIVED, MODIFIED,
AMENDED, DISCHARGED, OR TERMINATED EXCEPT BY AN AGREEMENT IN WRITING SIGNED
BY THE PARTY AGAINST WHICH THE ENFORCEMENT OF SUCH WAIVER, MODIFICATION,
AMENDMENT, DISCHARGE, OR TERMINATION IS SOUGHT, AND THEN ONLY TO THE EXTENT
SET FORTH IN SUCH AGREEMENT.
KEY PRINCIPAL:
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, a Maryland corporation
By: /s/ Harry Alcock
----------------------------
Harry Alcock
Vice President
ADDRESS: 1873 S. Bellaire Street
17th Floor
Denver, Colorado 80222
AIMCO PROPERTIES, L.P., a
Delaware limited partnership
By: AIMCO-GP, INC., a Delaware
corporation, its General Partner
By: /s/ Harry Alcock
----------------------------
Harry Alcock
Vice President
ADDRESS: 1873 S. Bellaire Street
17th Floor
Denver, Colorado 80222
(Page 2 of 2)
<PAGE>
EXCEPTIONS TO NON-RECOURSE GUARANTY
WITH RESPECT TO YIELD MAINTENANCE
(Copperfield)
This Exceptions to Non-Recourse Guaranty is entered into as of April 18
1997, by the undersigned (collectively, the "Key Principal" whether one or
more), in order to induce GMAC COMMERCIAL MORTGAGE CORPORATION (the "Lender") to
make a loan to COPPERFIELD PARTNERS, LTD. (the "Borrower") in the amount of
$3,577,000.00 (the "Loan").
RECITALS
A. The Loan is evidenced by a Multifamily Note from Borrower to Lender of
even date herewith (the "Multifamily Note"), as modified by an Addendum to
Multifamily Note of even date herewith (the "Addendum"). The Loan is secured
by a Multifamily Deed of Trust, Assignment of Rents and Security Agreement of
even date herewith (the "Multifamily Instrument"), covering the property
described in the Multifamily Instrument and located at Houston, Harris
County, Texas (the "Property"). The Multifamily Instrument is amended and
supplemented by a Rider to Multifamily Instrument * or even date herewith (the
"Rider").
*and a Supplemental Rider to Multifamily Instrument, each as
B. The Multifamily Note, as modified by the Addendum and as further amended
from time to time, shall be referred to in this Exceptions to Non-Recourse
Guaranty as the "Note." The Multifamily Instrument, as modified by the Rider
and as further amended from time to time, shall be referred to in this
Exceptions to Non-Recourse Guaranty as the "Instrument." The term "Loan
Documents" when used in this Exceptions to Non-Recourse Guaranty, shall mean,
collectively, the following documents: (i) the Note, (ii) the Instrument, and
(iii) all other documents or agreements, including any Collateral Agreements
(as defined in the Rider) or O&M Agreement (as defined in the Rider),
executed in connection with the Loan, whether presently existing or
hereinafter entered into, as such Loan Documents may be amended from time to
time.
C. Lender is unwilling to make the Loan unless the undersigned Key
Principal executes this Exceptions to Non-Recourse Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Loan evidenced by the
Note and secured by the Instrument, and in consideration thereof, Key
Principal hereby (i) irrevocably and unconditionally guarantees the full and
prompt payment to Lender of all amounts * which may from time to time while
the Note is outstanding and unpaid become due and owing by Borrower, for
which Borrower may from time to time, or at any time be personally liable for
payment to Lender under the Note and the Instrument, and (ii) agrees to pay,
on demand, all costs and expenses, including reasonable attorneys' fees and
disbursements, incurred by Lender in enforcing its rights under this
Exceptions to Non-Recourse Guaranty. All obligations of Key Principal under
this Exceptions to Non-Recourse Guaranty shall be joint and several among all
persons (if more than one) included as a Key Principal. This Exceptions to
Non-Recourse Guaranty is an unconditional guaranty of payment, and not a
guaranty of collection, and may be enforced by Lender directly against Key
Principal without any requirement that Lender must first exercise its rights
against Borrower or any general partner of Borrower or any collateral or
other security for payment of the Note.
* on account of the prepayment premium due under paragraph A of the Addendum
The obligations of Key Principal under this Exceptions to Non-Recourse
Guaranty shall be performed without demand by Lender and shall be
unconditional irrespective of the genuineness, validity, regularity or
enforceability of the Note, the Instrument, or any other circumstance which
might otherwise constitute a legal or equitable discharge of a surety or a
guarantor. Key Principal hereby waives the benefit of all principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Exceptions to Non-Recourse Guaranty, and agrees that
the obligations of Key Principal shall not be affected by any circumstances,
whether or not referred to in this Exceptions to Non-Recourse Guaranty, which
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. Key Principal hereby waives the benefits of any right of discharge
under any and all statutes or other laws relating to guarantors or sureties
and any other rights of sureties and guarantors thereunder. Without limiting
the generality of the foregoing, Key Principal hereby waives diligence,
presentment, demand for payment, protest, all notices which may be required
by statute, rule of law or otherwise to preserve intact Lender's rights
against Key Principal under this Exceptions to Non-Recourse Guaranty,
including, but not limited to, notice of acceptance, notice of any amendment
of the Loan Documents, notice of the occurrence of any default, notice of
intent to accelerate, notice of acceleration, notice of dishonor, notice of
foreclosure, notice of protest, notice of the incurring by Borrower of any of
the Guaranteed Obligations, and, generally, all demands, notices and other
formalities of every kind in connection with this Exceptions to Non-Recourse
Guaranty, and all rights to require Lender to (a) proceed against Borrower
or, if Borrower is a partnership, any general partner of Borrower, (b)
proceed against or exhaust any collateral held by Lender to secure the
payment of the Loan, or (c) pursue any other remedy it may now or hereafter
have against Borrower, or, if Borrower is a partnership, any general partner
of Borrower.
Key Principal hereby agrees that, at any time or from time to time and any
number of times, without notice to Key Principal and without affecting the
liability of Key Principal, (a) the time for payment of the principal of or
interest on the Note may be extended or the Note may be renewed in whole or
in part one or more times; (b) the time for Borrower's performance of or
compliance with any covenant or agreement contained in the Note, the
Instrument or any other Loan Document evidencing, securing or governing the
Loan, whether presently existing or hereinafter entered into, may be extended
or such performance or compliance may be waived; (c) the maturity of the Note
may be accelerated as provided therein or in the Instrument, or any other
Loan Document; (d) the Note, the Instrument, or any other Loan Document, may
be modified or amended by Lender and Borrower in any respect, including, but
not limited to, an increase in the principle
(PAGE 1 OF 2)
<PAGE>
amount; and (e) any security for the Loan may be modified, exchanged,
surrendered or otherwise dealt with or additional security may be pledged or
mortgaged for the Loan.
If any payment by Borrower is held to constitute a preference under any
applicable bankruptcy or similar laws, or if for any reason Lender is
required to refund any sums to Borrower, such amounts shall not constitute a
release of any liability of Key Principal hereunder. It is the intention of
Lender and Key Principal that Key Principal's obligations hereunder shall not
be discharged except by Key Principal's performance of such obligations and
then only to the extent of such performance.
Key Principal agrees that any indebtedness of Borrower now or hereafter
held by Key Principal is hereby and shall be subordinated to all indebtedness
of Borrower to Lender and any such indebtedness of Borrower shall be
collected, enforced and received by Key Principal, as trustee for Lender, but
without reducing or affecting in any manner the liability of Key Principal
under the other provisions of this Exceptions to Non-Recourse Guaranty.
Key Principal agrees that Lender, in its sole and absolute discretion, may
(a) bring suit against Key Principal, or any one or more of the individuals
constituting Key Principal, and any other guarantor of the Note, jointly and
severally, or against any one or more of them; (b) compromise or settle with
any one or more of the individuals constituting Key Principal for such
consideration as Lender may deem proper; (c) release one or more of the
individuals constituting Key Principal, or any other guarantors of the Note,
from liability thereunder, and (d) otherwise deal with Key Principal and any
other guarantor of the Note, or any one or more of them, in any manner
whatsoever, and that no such action shall impair the rights of Lender to
collect the Guaranteed Obligations from Key Principal. Nothing contained in
this paragraph shall in any way affect or impair the rights or obligations of
the Key Principal with respect to any other guarantor of the Note.
Lender may assign its rights under this Exceptions to Non-Recourse Guaranty
in whole or in part and upon any such assignment, all the terms and
provisions of this Exceptions to Non-Recourse Guaranty shall inure to the
benefit of such assignee to the extent so assigned. The terms used to
designate any of the parties herein shall be deemed to include the heirs,
legal representatives, successors and assigns of such parties; and the term
"Lender" shall include, in addition to Lender, any lawful owner, holder or
pledgee of the Note.
Key Principal shall have no right of, and hereby waives any claim for,
subrogation or reimbursement against the Borrower or any general partner of
Borrower by reason of any payment by Key Principal under this Exceptions to
Non-Recourse Guaranty, whether such right or claim arises at law or in equity
or under any contract or statute.
Key Principal hereby waives trial by jury in any action or proceeding
commenced by Lender against Key Principal under this Exceptions to
Non-Recourse Guaranty.
* THIS EXCEPTIONS TO NON-RECOURSE GUARANTY AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ALL PRIOR OR
CONTEMPORANEOUS AGREEMENTS, UNDERSTANDINGS, REPRESENTATIONS, AND STATEMENTS,
ORAL OR WRITTEN, ARE MERGED INTO THIS EXCEPTIONS TO NON-RECOURSE GUARANTY AND
THE OTHER LOAN DOCUMENTS. NEITHER THIS EXCEPTIONS TO NON-RECOURSE GUARANTY
NOR ANY PROVISION HEREOF MAY BE WAIVED, MODIFIED, AMENDED, DISCHARGED, OR
TERMINATED EXCEPT BY AN AGREEMENT IN WRITING SIGNED BY THE PARTY AGAINST
WHICH THE ENFORCEMENT OF SUCH WAIVER, MODIFICATION, AMENDMENT, DISCHARGE, OR
TERMINATION IS SOUGHT, AND THEN ONLY TO THE EXTENT SET FORTH IN SUCH
AGREEMENT.
* The foregoing Guaranty shall apply during such period of time as (i) the
organizational documents of the Borrower, or (ii) the organizational documents
of any general partner of the Borrower, provide for the expiration of the
term of such entity on a date prior to the final maturity date of the Loan as
provided in the Multifamily Note, as amended.
KEY PRINCIPAL:
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, a Maryland corporation
By: /s/ Harry Alcock
------------------------------------------
Harry Alcock
Vice President
ADDRESS: 1873 S. Bellaire Street
17th Floor
Denver, Colorado 80222
AIMCO PROPERTIES, L.P., a
Delaware limited partnership
By: AIMCO-GP, INC., a Delaware
corporation, its General Partner
By: /s/ Harry Alcock
--------------------------------------
Harry Alcock
Vice President
ADDRESS: 1873 S. Bellaire Street
17th Floor
Denver, Colorado 80222
(PAGE 2 OF 2)
<PAGE>
PLEDGE AND SECURITY AGREEMENT
(Copperfield Apartments)
THIS PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is made as of
the 18th day of April 1997, by AIMCO PROPERTIES, L.P., a Delaware limited
partnership ("PLEDGOR"), with an address at 1873 South Bellaire Street, 17th
Floor, Denver, Colorado 80222, in favor of GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation ("LENDER"), with an address at 650 Dresher Road, P.O.
Box 1015, Horsham, Pennsylvania 19044-8015.
BACKGROUND:
A. Pledgor is the holder of a certain second amended and restated
revolving promissory note (the "NOTE") dated April 18, 1997, by Copperfield
Partners, Ltd., a Texas limited partnership (the "BORROWER"), for the benefit of
Pledgor. Borrower is owner of certain property more fully described in EXHIBIT
A, attached hereto, and the improvements located thereon (the "PROPERTY").
B. Lender has agreed to make a loan to the Borrower in the principal
amount of $3,577,000.00 (the "LOAN"). The Loan will be evidenced by a
Multifamily Note from Borrower to Lender in the principal amount of
$3,577,000.00 and will be secured by, among other things, this Agreement.
C. In connection with the Loan, Pledgor has executed a Subordination
Agreement (the "Subordination Agreement") of even date herewith, in favor of
Lender and subordinating the loan evidenced by the Note to the Loan.
D. Pledgor as an affiliate of the Borrower, a key principal under
that certain Exception to Non-Recourse Guaranty of even date, and as the holder
of the Note will benefit from the making of the Loan to the Borrower. Pledgor
has agreed to pledge the Note and Lender has required such pledge by Pledgor as
a condition to its making of the Loan and to secure Pledgor's performance under
the Subordination Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. ASSIGNMENT AND PLEDGE. Pledgor hereby pledges and grants a
security interest in, and assigns, delivers and grants to Lender all of
Pledgor's right, title and interest in and to the Note. This assignment is made
as security for the full payment and performance by Pledgor of all of its
obligations under the Subordination Agreement.
<PAGE>
2. PERFECTION.
(a) In order to effectuate the foregoing pledge, Pledgor has endorsed
and delivered the Note to Lender.
(b) Lender, as the payee by endorsement of the Note, shall have all
of Pledgor's rights in connection with the Note including, without limitation,
upon the occurrence of a default in the payment of the Note after the expiration
of any applicable notice and grace period set forth therein, the right to
designate further payee by endorsement of the Note.
3. PLEDGOR'S RIGHTS AND COVENANTS.
(a) Except as otherwise provided in subparagraph 3(b) and in
paragraph 7 hereof, Pledgor shall have a license to collect all regular monthly
installments of interest and/or principal due to Pledgor under and with respect
to the Note, and to retain, use and enjoy the same. Pledgor and Lender
acknowledge and agree that the endorsement of the Note is being undertaken
solely in furtherance of the pledge, assignment and granting of a security
interest in the Note, and that, for all other purposes, including, without
limitation, federal income tax purposes, Pledgor shall be the owner of the Note.
(b) Notwithstanding the foregoing, any principal payment other than a
regularly scheduled payment made in accordance with the existing amortization
schedule, if any, under the Note shall be delivered to Lender, to be applied, if
Lender requires, against the obligations of Borrower under the Loan Documents,
in such order as Lender may determine, in its sole and absolute discretion.
(c) Pledgor shall:
(i) fulfill or perform every condition and covenant, if any, of
the Note to be fulfilled or performed by the holder thereof;
(ii) not modify or amend the Note, or permit the Note to be
modified or amended, without Lender's prior written consent;
(iii) to the extent permitted by, and subject to the provisions of
the Subordination Agreement, enforce all material covenants and conditions
of the Note to be performed or observed by the Borrower, and not forgive
any indebtedness evidenced by the Note; provided, that Pledgor shall seek
the prior written approval of Lender before undertaking any such
enforcement, which approval may be withheld by Lender in its sole and
absolute discretion; and
2
<PAGE>
(iv) promptly notify Lender of any default under the Note, and take
such action with respect thereto as Lender shall reasonably direct.
(d) Lender shall not be obligated to perform or discharge any
obligation under the Note, or have any obligation to any of the partners of
Borrower. To that end, Pledgor hereby agrees to indemnify, defend with counsel
reasonably acceptable to Lender and hold Lender and its officers, directors,
agents and employees harmless from and against any and all claims, liabilities,
costs (including, without limitation, reasonable legal fees and court costs),
losses or damages that any of them may incur under or by reason of this
Agreement or any alleged obligation or undertaking on the part of Lender to
perform or discharge any of the terms of the Note.
4. ACCOUNTING. Pledgor shall deliver to Lender within ten days after the
end of each month, a certified statement specifying the payments derived or
received from the Note for the preceding month.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor represents,
warrants and covenants that:
(a) Pledgor has an assignable interest in the Note, free and clear of
all liens and encumbrances and claims of all other parties, and the Note is not
the subject of any present suit, action or other proceeding, or to the best of
Pledgor's knowledge, any threatened suit, action or proceeding, and Pledgor
knows of no grounds for the institution of any such proceeding;
(b) This Agreement has been duly authorized, executed and delivered
by Pledgor and will not conflict with or constitute a breach of or a default
under any agreement, indenture or instrument to which Pledgor is a party or by
which Pledgor or any of Pledgor's properties are bound;
(c) Pledgor has not made any prior pledge or assignment of the Note;
(d) Pledgor shall not make any other assignment or pledge of the
Note;
(e) Pledgor shall defend, at its own expense, Lender's right, title
and interest in and to the Note against the claims of any person, firm,
corporation or other entity;
(f) The outstanding principal balance under the Note is as set forth
in EXHIBIT B, attached hereto;
(g) There is no default existing under the Note, or event which, with
the passage of time or the giving of notice, or both, would become a default;
3
<PAGE>
(h) The copy of the Note previously delivered to Lender by Pledgor is
true, complete and correct and there are no other agreements or understandings
between the obligors thereunder and Pledgor relating to the subject matter
thereof; and
(i) The Note is the legal, valid and binding obligations of the
parties thereto, enforceable in accordance with its terms.
6. COVENANTS OF LENDER. Lender covenants that, upon timely performance
by Pledgor of all obligations arising under the Subordination Agreement in
accordance with the terms thereof, and payment in full of all sums due on the
Loan, Lender shall return to Pledgor the Note endorsed to Pledgor without
recourse or warranty and, at Pledgor's cost, shall execute, and deliver to
Pledgor such documents, instruments and agreements necessary to terminate this
Agreement.
7. LENDER'S RIGHTS AFTER DEFAULT. After the failure by Pledgor to
perform any of its obligations under the Subordination Agreement and failure by
Pledgor to correct, rectify and otherwise cure such failure of performance to
the satisfaction of Lender within ten (10) days of notice of such failure to
perform from Lender (an "Event of Default"), Lender, at its option, either in
person or by agent, may do any one or more of the following:
(a) Give written notice to Borrower authorizing and directing
Borrower to pay all interest and principal under the Note directly to Lender,
and to the extent the Note is payable upon demand, make demand for, and collect,
payment of the principal balance and all unpaid interest under such Note;
(b) Sue for or otherwise collect and receive all proceeds of the
Note, including those past due and unpaid;
(c) Apply proceeds of the Note to any costs, expenses, damages or
other amounts due Lender by Pledgor, in connection with this Pledge, the
Subordination Agreement or otherwise in such amounts and in such order as
determined by Lender, in its sole and absolute discretion;
(d) To the extent permitted by law, take any other actions or
exercise any other rights and powers of a secured party under the Uniform
Commercial Code (the "UCC") or otherwise dispose of any or all of the Note in
any manner permitted under the UCC after default by a debtor under any other
applicable laws;
(e) Record in the appropriate public offices this Agreement; and
4
<PAGE>
(f) To the extent permitted by law, do any other acts that Lender
deems proper to protect its rights hereunder or under the Note.
8. WARRANT OF ATTORNEY. Pledgor hereby irrevocably constitutes and
appoints Lender its true and lawful attorney, with full power of substitution,
at the sole cost and expense of Pledgor, after the occurrence of an Event of
Default, to collect and receive all earnings, proceeds, collections and payments
with respect to the Note, and, whether or not an Event of Default has occurred,
to execute on behalf of Pledgor any documents necessary to perfect and maintain
Lender's interest in the Note or to enforce collection of the earnings,
proceeds, collections and payments due under the Note, either in its own name or
in the name of Pledgor, including but not limited to prosecuting, defending,
compromising or releasing any action relating thereto. Lender shall not be
responsible to Pledgor for any actions taken or omitted to be taken by Lender,
except for its gross negligence or willful misconduct. All power conferred upon
Lender by this Agreement is coupled with an interest and shall be irrevocable.
9. SUBORDINATION. Pledgor hereby acknowledges that the lien, operation
and payment of the Note, and all documents executed and delivered in connection
therewith, are unconditionally subordinated to the lien, operation and payment
of all documents executed and delivered by any of the Obligors to Lender
(collectively, the "GMAC DOCUMENTS"), by the terms of that certain Subordination
Agreement of even date by and among Pledgor, Lender and Borrower. This
paragraph 9 and the requirement that Pledgor obtain Lender's approval before
enforcing the Note shall survive the repayment of the Loan and any reconveyance
pursuant to paragraph 6 hereof.
10. MISCELLANEOUS.
(a) Pledgor will pay all costs of acknowledging, recording and filing
this Agreement and any other documents Lender may reasonably deem necessary in
connection with this Agreement.
(b) If any provision of this Agreement is held to be invalid, the
remainder of this Agreement and its application shall not be affected.
(c) This Agreement shall inure to the benefit of Lender and its
successors and assigns and shall be binding upon Pledgor and its successors and
assigns.
(d) This Agreement shall be construed and enforced in accordance with
the laws of the jurisdiction in which the Property is located.
5
<PAGE>
(e) All notices, directions, certificates or communications hereunder
shall be given by certified or registered mail, return receipt requested, by
hand delivery or by nationally recognized overnight courier addressed to the
appropriate notice address set forth in the heading to this Agreement. Any of
the parties hereto may, by such notice described above, designate any further or
different address to which subsequent notices, directions, certificates or other
communications shall be sent without any requirement of execution of any
amendment to this Agreement. Any such notice, certificate, direction or
communication shall be deemed to have been given (a) three (3) business days
after mailing, if delivered by registered or certified mail, or (b) one business
day after delivery, fee prepaid, to a national overnight delivery service, or
(c) when delivered, if hand delivered with proof of delivery thereof.
(f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute one and the same instrument.
(g) The headings set forth before the text of each paragraph
contained in this Agreement are for convenience only, and shall not affect the
meaning or interpretation of this Agreement in any way.
PLEDGOR:
AIMCO PROPERTIES, L.P., a Delaware
limited partnership
By: AIMCO-GP, INC., a Delaware
corporation, its General Partner
By: /s/ Harry Alcock
------------------------------------
Harry Alcock
Vice President
6
<PAGE>
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation
By: /s/ John M. Cannon
----------------------------------------
John M. Cannon
Vice President
Exhibits
- --------
A - Legal Description
B - Outstanding Principal Balance
7
<PAGE>
EXHIBIT A
Cooperfield
DESCRIPTION OF A TRACT OR PARCEL BEING 7.4469 ACRES OR 324.386 SQUARE FOOT TRACT
OF LAND SITUATED IN THE W.C.R.R. CO. SURVEY ABSTRACT 939 AND THE J. W. BELL
SURVEY ABSTRACT 1150, BEING THE SAME CALLED COPPERFIELD APARTMENTS RECORDED
IN FILM CODE NO. 372029 OF THE HARRIS COUNTY MAP RECORDS ALSO BEING THE SAME
TRACT CALLED PALAIS DE VILLE 7.4429 ACRES APARTMENT SUBDIVISION RECORDED IN
VOLUME 321. PAGE 122 OF THE HARRIS COUNTY MAP RECORDS, BEING OUT OF UNRESTRICTED
RESERVE "I" OF EASTON COMMONS SECTION TWO RECORDED IN VOLUME 310, PAGE 80 OF THE
HARRIS COUNTY MAP RECORDS, HARRIS COUNTY, TEXAS, BEING MORE PARTICULARLY
DESCRIBED BY METES AND BOUNDS AS FOLLOWS:
BEGINNING AT A 3/4 INCH IRON PIPE FOUND MARKING THE SOUTHWEST END OF A 25 FOOT
CUTBACK CURVE AT THE INTERSECTION OF THE SOUTHEAST RIGHT OF WAY LINE OF EASTON
COMMONS DRIVE (100 FEET WIDE AT THIS POINT) AND THE SOUTHWEST RIGHT OF WAY LINE
OF SUNBURY LANE (60 FOOT WIDE);
THENCE ALONG A CURVE TO THE RIGHT, HAVING A RADIUS OF 25.00 FEET, A DELTA OF 88
DEGREES 57 MINUTES 30 SECONDS, AND AN ARC LENGTH OF 38.82 FEET TO A 3/4 INCH
IRON PIPE FOUND MARKING THE POINT OF TANGENCY ON THE WESTERLY RIGHT OF WAY LINE
OF SAID SUNBURY LANE;
THENCE CONTINUING ALONG THE SAID WESTERLY RIGHT OF WAY LINE OF SUNBURY LANE,
SOUTH 38 DEGREES 13 MINUTES AND 40 MINUTES EAST, 30.76 FEET TO A 3/4 INCH IRON
PIPE FOUND MARKING THE BEGINNING OF A CURVE TO THE RIGHT;
THENCE ALONG THE SAID CURVE TO THE RIGHT, BEING THE WESTERLY RIGHT OF WAY LINE
OF SAID SUNBURY LANE, HAVING A RADIUS OF 1,170.00 FEET, A DELTA OF 36 DEGREES
04 MINUTES 01 SECONDS (CALLED 36 DEGREES 02 MINUTES 30 SECONDS), AND AN ARC
LENGTH OF 736.50 FEET (CALLED 735.99 FEET) TO A 3/4 INCH IRON PIPE FOUND
MARKING THE POINT OF TANGENCY;
THENCE CONTINUING ALONG SAID WESTERLY RIGHT OF WAY LINE OF SUNBURY LANE, SOUTH
02 DEGREES 09 MINUTES 39 SECONDS EAST (CALLED SOUTH 02 DEGREES 11 MINUTES 10
SECONDS EAST, 287.54 FEET (CALLED 287.31 FEET), TO A 5/8 INCH IRON ROD FOUND
MARKING THE BEGINNING OF A CURVE TO THE LEFT;
THENCE ALONG SAID CURVE TO THE LEFT, BEING ON THE SAID WESTERLY RIGHT OF WAY
LINE OF SUNBURY LANE, HAVING A RADIUS OF 392.17 FEET, A DELTA OF 08 DEGREES 08
MINUTES 15 SECONDS (CALLED 08 DEGREES 08 MINUTES 11 SECONDS), AND AN ARC LENGTH
OF 55.70 FEET (CALLED 55.69 FEET) TO A 3/4 INCH IRON PIPE FOUND MARKING THE
SOUTHEAST CORNER OF SAID PALAIS DE VILLE 7.4429 ACRE TRACT;
THENCE SOUTH 81 DEGREES 00 MINUTES 29 SECONDS WEST (CALLED SOUTH 80 DEGREES 59
MINUTES 07 SECONDS WEST), 96.48 FEET (CALLED 96.66 FEET), TO A 5/8 INCH IRON
ROD FOUND MARKING AN INTERIOR CORNER OF RESTRICTED RESERVE "J" OF SAID EASTON
COMMONS SECTION TWO, AND ALSO BEING THE SOUTHWEST CORNER OF THE HEREIN
DESCRIBED TRACT AND SAID PALAIS DE VILLE;
THENCE NORTH 18 DEGREES 02 MINUTES 19 SECONDS WEST (CALLED NORTH 18 DEGREES 03
MINUTES 51 SECONDS WEST), 114.51 FEET (CALLED 114.46 FEET), TO A 5/8 INCH IRON
FOUND CAPPED MARKING AN ANGLE POINT IN THE WESTERLY LINE OF SAID PALAIS DE VILLE
AND THE HEREIN DESCRIBED TRACT, BEING IN THE EASTERLY LINE OF SAID RESTRICTED
RESERVE "J"
THENCE NORTH 38 DEGREES 53 MINUTES 18 SECONDS WEST (CALLED NORTH 38 DEGREES 54
MINUTES 56 SECONDS WEST), 702.07 FEET (CALLED 701.52 FEET), TO THE NORTHWEST
CORNER OF THE HEREIN DESCRIBED TRACT AND SAID PALAIS DE VILLE, BEING THE
NORTHEAST CORNER OF SAID RESTRICTED RESERVE "J", ALSO BEING ON THE SOUTHEASTERLY
RIGHT OF WAY LINE OF SAID EASTON COMMONS DRIVE (60 FEET WIDE AT THIS POINT),
FROM WHICH A 5/8 INCH IRON ROD FOUND FOR REFERENCE BEARS NORTH 46 DEGREES 03
MINUTES WEST, 0.40 FEET;
THENCE ALONG THE SAID SOUTHEASTERLY RIGHT OF WAY LINE OF EASTON COMMONS DRIVE,
NORTH 15 DEGREES 38 MINUTES 32 SECONDS EAST, 173.20 FEET TO AN "X" SET IN
DRIVEWAY MARKING THE BEGINNING OF A CURVE TO THE RIGHT;
THENCE ALONG THE SAID CURVE TO THE RIGHT, BEING ON THE SAID SOUTHEASTERLY RIGHT
OF WAY LINE OF EASTON COMMONS DRIVE, HAVING A RADIUS OF 350.00 FEET, A DELTA
OF 37 DEGREES 10 MINUTES 19 SECONDS, AND AN ARC LENGTH OF 227.07 FEET TO A 5/8
INCH IRON PIPE FOUND MARKING THE POINT OF TANGENCY;
THENCE CONTINUING ALONG THE SAID SOUTHEASTERLY RIGHT OF WAY LINE OF EASTON
COMMONS DRIVE, NORTH 52 DEGREES 48 MINUTES 50 SECONDS EAST, 98.64 FEET TO THE
POINT OF BEGINNING, CONTAINING 7.4469 ACRES OR 324,388 SQUARE FEET OF LAND.
<PAGE>
EXHIBIT "B"
PLEDGE AND SECURITY AGREEMENT
OUTSTANDING
NAME OF PROJECT PRINCIPAL BALANCE
- --------------- ------------------
Copperfield Apartments $ 952,281.00
Coventry Square Apartments 2,222,327.00
Crows Nest Apartments 1,518,109.00
Easton Village Apartments 1,807,965.00
Fisherman's Wharf Apartments 2,551,586.00
Hastings Place Apartments 843,955.00
Oak Falls Apartments 843,690.00
Signature Point Apartments 3,991,836.00
Sunbury Downs Apartments 103,755.00
Swiss Village Apartments 3,711,795.00
The Waterford Apartments 775,717.00
<PAGE>
PURCHASE AGREEMENT
BY AND AMONG
THE BAY CLUB PARTNERS
AND
THE AIMCO LIMITED PARTNERSHIPS
DATED AS OF: APRIL 14, 1997
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of the 14th day of April, 1997 by and among
the WILLIAMSBERRY DEVELOPMENT CORPORATION, a Florida corporation,
("Williamsberry") and COLLEY WILLIAMSBERRY LIMITED PARTNERSHIP, a Delaware
limited partnership, ("CWLP"), Williamsberry and CWLP hereinafter
collectively referred to as "Bay Club I Partners"; WILLIAMSBERRY DEVELOPMENT
CORP. II, a Florida corporation, ("Williamsberry II") and COLLEY
WILLIAMSBERRY L-2 C LIMITED PARTNERSHIP, a Florida limited partnership,
("CWLP 2 C"), Williamsberry II and CWLP 2 C hereinafter collectively referred
to as "Bay Club II Partners"; COLBRO DEVELOPMENT L-2 B CORP., a Florida
corporation, ("Colbro") and COLLEY WILLIAMSBERRY L-2 B LIMITED PARTNERSHIP, a
Florida limited partnership, ("CWLP 2 B"), Colbro and CWLP 2 B hereinafter
collectively referred to as "Bay Club III Partners", (Bay Club I, II and III
Partners hereinafter collectively referred to as "Partners"), each having an
address at 3300 Northeast 191st Street, Suite 113, Tower II, Aventura,
Florida 33180 and AIMCO BAY CLUB, L.P. a Delaware limited partnership ("AIMCO
Bay Club") and AIMCO HOLDINGS L.P., a Delaware limited partnership ("AIMCO
Holdings" and together with AIMCO Bay Club, hereinafter collectively referred
to as "Purchaser") having an office at 1873 South Bellaire Street, Denver,
Colorado 80222.
WITNESSETH:
RECITALS
WHEREAS, Williamsberry and CWLP are the managing general partner and non-
managing general partner, respectively, of CB Associates, a Florida general
partnership ("CB Associates");
WHEREAS, CB Associates is the owner of a parcel of land ("Bay Club I Land")
in the County of Dade, State of Florida, more particularly described in EXHIBIT
A-1 annexed hereto and made a part hereof, together with the buildings,
structures and improvements erected thereon known as Tower 1 at Bay Club ("Bay
Club I Buildings"); (Bay Club I Land and Buildings hereinafter collectively
referred to as "Bay Club I");
WHEREAS, AIMCO Bay Cub desires to purchase a 99% interest in CB Associates
by purchasing all of Williamsberry's 33.33% general partnership interest in CB
Associates and all of CWLP's 66.67% general partnership interest in CB
Associates other than a 1% interest and AIMCO Holdings desires to purchase a 1%
interest in CB Associates by purchasing the remaining general partnership
interest of CWLP in CB Associates;
WHEREAS, Williamsberry II and CWLP 2 C are the managing general partner and
non-managing partner, respectively, of CB L-2 C ASSOCIATES, a Florida general
partnership ("CB 2 C Associates");
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WHEREAS, CB 2 C Associates is the owner of a parcel of land ("Bay Club II
Land") in the County of Dade, State of Florida, more particularly described in
EXHIBIT A-2 annexed hereto and made a part hereof, together with the buildings,
structures and improvements erected known as Tower 2 at Bay Club ("Bay Club II
Buildings"); (Bay Club II Land and Buildings hereinafter collectively referred
to as "Bay Club II");
WHEREAS, AIMCO Bay Club desires to purchase a 99% interest in CB 2 C
Associates by purchasing all of Williamsberry II's 33.33% general partnership
interest in CB 2 C Associates and all of CWLP 2 C's 66.67% general partnership
interest in CB 2 C Associates other than a 1% interest and AIMCO Holdings
desires to purchase a 1% interest in CB 2 C Associates by purchasing the
remaining general partnership interest of CWLP 2 C in CB 2 C Associates;
WHEREAS, Colbro and CWLP 2 B are the managing general partner and the non-
managing general partner, respectively, of CB L 2 B Associates, a Florida
general partnership ("CB 2 B Associates");
WHEREAS, CB 2 B Associates is the owner of a parcel of undeveloped land
("Bay Club III Land") in the County of Dade, State of Florida, more particularly
described in EXHIBIT A-3 annexed hereto and made a part hereof, together with
the buildings, structures and improvements, if any, erected thereon ("Bay Club
III Buildings"); (Bay Club III Land and Buildings hereinafter collectively
referred to as "Bay Club III"); and
WHEREAS, AIMCO Bay Club desires to purchase a 99% interest in CB 2 B
Associates by purchasing all of Colbro's 1% general partnership interest in CB 2
B Associates and all of CWLP 2 B's 99% general partnership interest in CB 2 B
Associates other than a 1% interest and AIMCO Holdings desires to purchase a 1%
interest in CB 2 C Associates by purchasing the remaining general partnership
interest of CWLP 2 B in CB 2 B Associates.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
"Accounting Firm" has the meaning assigned in Section 11.2(b).
"Accounts Receivable" means the assets listed on Schedule 2.3.
"Additional Assets" has the meaning assigned in Section 4.1(c).
"Adjustment Items" has the meaning assigned in Section 4.1(b).
"Assets" has the meaning assigned in Section 3.1.
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<PAGE>
"Bay Club" means Bay Club I, Bay Club II and Bay Club III collectively.
"Bay Club I" has the meaning assigned in the Second Recital.
"Bay Club II" has the meaning assigned in the Fifth Recital.
"Bay Club III" has the meaning assigned in the Eighth Recital.
"Bay Club I Partners" means Williamsberry Development Corporation and
Colley Williamsberry Limited Partnership collectively.
"Bay Club II Partners" means Williamsberry Development Corp. II and Galley
Williamsberry L-2 C Limited Partnership collectively.
"Bay Club III Partners" means Colbro Development L-2 B Corp. and Colley
Williamsberry L-2 B Limited Partnership collectively.
"Bay Club Partnerships" means CB Associates, CB 2 C Associates and CB 2 B
Associates collectively.
"Broker" has the meaning assigned in Section 10.1
"Closing" has the meaning assigned in Section 2.4.
"Closing Date" has the meaning assigned in Section 2.4.
"Contracts" has the meaning assigned in Section 3.1(f).
"Excluded Assets" has the meaning assigned in Section 2.3.
"GECC Mortgage" has the meaning assigned in Section 3.2(i).
"Improvement Credit" has the meaning assigned in Section 4.1(d).
"Managing General Partner" shall mean Williamsberry, Williamsberry II and
Colbro of CB Associates, CB 2 C Associates and CB 2 B Associates, respectively.
"Notice Party" shall have the meaning assigned in Section 11.2(b).
"Partners" means the Bay Club I, Bay Club II and Bay Club III Partners.
"Partnership Interests" has the meaning assigned in Section 2.1.
"Permitted Encumbrances" has the meaning assigned in Section 3.2.
"Property Questionnaire" has the meaning assigned in Section 5.15.
"Purchaser" has the meaning assigned in the Preamble.
"Tax Losses" has the meaning assigned in Section 11.1(a).
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<PAGE>
"Tax Return" has the meaning assigned in Section 11.1(f)(ii).
"Taxes" has the meaning assigned in Section 11.1(f)(i).
"Tenant Leases" has the meaning assigned in Section 3.1(c).
"Title Policy" has the meaning assigned in Section 3.2(iv).
ARTICLE II
PURCHASE AND SALE OF PARTNERSHIP INTERESTS
2.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, at the "Closing" (as such term is defined in Section
2.4 hereof), the Partners will sell, assign and transfer to Purchaser (in
accordance with the recitals hereto), and Purchaser will purchase, acquire and
accept from such Partners their respective partnership interests (collectively
the "Partnership Interests") in the Bay Club Partnerships.
2.2 Purchase Price. (a) The purchase price for the Partnership Interests
shall be the sum of SEVENTY MILLION SEVEN HUNDRED SEVENTY-FIVE THOUSAND AND
00/100 ($70,775,000.00) DOLLARS, subject to adjustment as provided in Article IV
hereof, (the "Purchase Price"), payable as follows: (i) TWO MILLION AND 00/100
($2,000,000.00) DOLLARS by Federal funds wire transfer, payable as directed by
the Partners upon execution of this Agreement (the "Deposit"); and (ii) the
balance of the Purchase Price at Closing by Federal funds wire transfer in the
amounts and to the bank accounts as directed in writing by the Partners.
(b) To secure the repayment of the Deposit to Purchaser pursuant to
the terms of this Agreement, Partners shall execute and deliver to Purchaser a
pledge of the Partnership Interests and UCC-1 financing statements
(collectively, the "Pledge").
2.3 Excluded Assets. Purchaser and the Partners agree that the Bay Club
Partnerships shall not retain (and shall distribute, convey, transfer and assign
to the respective Partners) any and all respective interests in the Excluded
Assets; it being agreed that the Purchaser is not acquiring any direct or
indirect interest in any of the Excluded Assets. For the purposes of this
Agreement, "Excluded Assets", shall mean the assets (other than the Assets) of
the Bay Club Partnerships (and any interest therein), including, but not limited
to, (a) cash on hand (b) refunds on previously filed Tax Returns {as such term
is defined in Section 11.1(f)} and (c) Bay Club Partnership accounts receivable,
as such accounts receivable are set forth in Schedule 2.3 annexed hereto and
made a part hereof.
2.4 Closing. The closing of the transfer of the Partnership Interests (the
"Closing") shall take place on or before April 30, 1997 (the "Closing Date") at
10:00 A.M. at the offices of Seller's attorney's or at such location as may be
reasonably agreeable to the parties hereto.
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<PAGE>
ARTICLE III
ASSETS/PERMITTED ENCUMBRANCES
3.1 The Assets. At Closing, the Bay Club Partnerships will hold
respectively the following (collectively, the "Assets"):
(a) Bay Club;
(b) all fixtures, equipment, machinery, furniture, furnishings,
furnishings, art works, appliances, and other tangible personal property owned
by the Bay Club Partnerships and attached or appurtenant to or used in
connection with the Bay Club;
(c) the landlord's interest under those certain tenant leases set
forth on Schedule 3.1(c) annexed hereto and made a part hereof, as supplemented,
modified and amended (collectively "Tenant Leases"), together with any and all
security deposits, and interest accrued thereon, deposited or held pursuant to
such Tenant Leases (collectively, the "Security Deposits");
(d) all trademarks, trademark licenses and trademark registrations
and applications therefor; trade names; and service marks, used or held for use
in connection with the Bay Club;
(e) all promotional literature, catalogs, booklets, manuals and
advertising materials, media advertising or promotional agreements, marketing
plans or and other materials and customer and supplier lists used, held for use
in connection with the Bay Club;
(f) all contracts set forth on Schedule 3.1(f) annexed hereto and
made a part hereof (the "Contracts");
(g) all right, title and interest in any award or payment to be
hereafter made for (x) any taking in condemnation or eminent domain of or (y)
any damage or destruction to all or any part of the Bay Club; and
(h) all the tenements, hereditament and appurtenances belonging to,
or in anywise appertaining to each and all of the aforesaid.
3.2 Permitted Encumbrances. At Closing the Assets held by the Bay Club
Partnerships shall be held free and clear of all liens, encumbrances, covenants,
agreements, reservations and other title matters except for, the following
(collectively, the "Permitted Encumbrances"):
(i) That certain consolidated, Amended and Restated Mortgage,
Security Agreement and Fixture Filing, in the original principal amount of
$49,000,000.00, recorded on November 27, 1996 in Official Records Book 17441 at
Page 2690
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<PAGE>
of the Public Records of Dade County, Florida; together with an Assignment of
Rents and Leases dated November 26, 1996 and recorded on November 27, 1996 in
Official Records Book 17441, at Page 2723 and a UCC-1 Financing Statement
recorded on November 27, 1996 in Official Records Book 17441, at Page 2739
(collectively the "GECC Mortgage");
(ii) The terms and conditions contained in the Tenant Leases;
(iii) General real estate and ad valorem taxes imposed on the Bay
Club, for the fiscal tax year in which the Closing shall occur and subsequent
fiscal tax years not yet due and payable;
(iv) Those certain reservations, restrictions, covenants,
easements and agreements of record affecting the Bay Club as set forth in
Schedule B of that certain Chicago Title Insurance Company Policy No. 10-2691-
02-00000001, (the "Title Policy") dated November 27, 1996 issued to General
Electric Capital Corporation ("GECC");
(v) Such state of facts as shown on that certain survey
described on Schedule 3.2(v) annexed hereto and made a part hereof, and any
other state of facts which a current accurate survey of the Bay Club would show,
provided that such other state of facts would not materially adversely affect
the use of the Bay Club as presently used;
(vi) Any and all present and future zoning restrictions,
requirements, laws, ordinances, resolutions and orders of any city, town or
village in which the Bay Club lies and of all boards, bureaus, commissions,
departments and bodies of any Municipal, County, State or Federal sovereign or
other governmental authority now or hereafter having or acquiring jurisdiction
over any of the Bay Club or the use and improvement thereof;
(vii) Rights in favor of any city, town or village in which the
Bay Club lies to construct sidewalks on the Bay Club; which sidewalks are about
to be so constructed;
(viii) Any state of facts a physical inspection of the Bay Club
would reveal;
(ix) Rights of utility companies;
(x) Any unpaid installments or installments of any assessment or
assessments of any governmental authority having jurisdiction affecting the Bay
Club which are or may become due and payable after the Closing; and
(xi) Water rates and sewer rents.
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<PAGE>
ARTICLE IV
ADJUSTMENTS TO THE PURCHASE PRICE
4.1 Adjustment to the Purchase Price. (a) The Purchase Price shall be
increased by (i) the amount of any Adjustment Items paid by the Bay Club
Partnerships prior to the Closing Date on account of periods from and after the
Closing Date, (ii) rent, additional rent and other charges payable by the
tenants under the Tenant Leases on account of periods prior to the Closing Date
which have not been received prior to the Closing Date by the Bay Club
Partnerships (provided, however, that this portion of the adjustments to the
Purchase Price shall not be payable by the Purchaser unless and until such
amounts are received by the Bay Club Partnerships, subject to Section 4.2
hereof), and (iii) the amount of any Additional Assets retained by the Bay Club
Partnerships at Closing. The Purchase Price shall be decreased by (v) the amount
of any Adjustment Item and any rent, additional rent and other charges payable
by tenants under the Tenant Lease payable to the Bay Club Partnerships and
received by the Partners prior to the Closing Date on account of the period from
and after the Closing Date, (w) the amount of any Adjustment Items payable by
the Bay Club Partnerships on or after the Closing Date on account of periods
prior to the Closing Date, (x) the unpaid principal balance of the note secured
by the GECC Mortgage, (y) the "Improvement Credit", and (z) the balance of the
Security Deposits.
(b) The term "Adjustment Items" shall mean and include the following:
(i) General real estate and ad valorem taxes imposed on the Bay
Club for the fiscal tax year in which the Closing shall occur. If the Closing
shall occur before the tax rate or assessment is fixed, the apportionment of
such real estate or ad valorem taxes shall be upon the basis of the tax rate for
the next preceding year applied to the latest assessed evaluation;
(ii) Utility (including, without limitation, electricity, gas,
steam and telephone), water and sewer charges, if any, relating to the Bay Club.
If there are any meters on the Bay Club measuring any of the foregoing, the
Partners shall furnish to Purchaser a reading of each such meter made by the
party to which such meter charges are payable to a date not more than twenty
(20) days prior to the Closing Date; and the unfixed charges based thereon for
the intervening time between such reading and Closing shall be apportioned on
the basis of such reading, but such charges for such intervening period shall be
readjusted upon the taking of a subsequent actual reading;
(iii) Amounts paid or payable under the Contracts;
(iv) Employees' wages, sick pay, vacation pay, bonuses, social
security taxes and other payroll taxes, workman's compensation insurance, and/or
welfare plans, and other fringe benefits, if any, with respect to any employees
at the Bay Club;
(v) Any gross receipts or other such taxes, if any, payable on
account of any rents under the Tenant Leases;
(vi) Fees for city, county and/or state licenses and permits, if
any;
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<PAGE>
(vii) Premiums with respect to any insurance policies which are,
at the option of the Purchaser, retained by the Bay Club Partnerships and not
canceled at or prior to Closing;
(viii) Accrued and unpaid interest on the note secured by the GECC
Mortgage;
(ix) Amounts paid or payable by customers of the parking
facilities at the Bay Club; and
(x) All other items usually and customarily apportioned in a
transaction where real property is sold and conveyed and are not otherwise
specifically provided for in this Agreement.
(c) The term "Additional Assets" shall include (i) accounts
receivable by the Bay Club Partnerships other than rent, additional rent and
other charges payable under Tenant Leases, but only to the extent such
receivables relate to the period prior to Closing, (ii) all utility (including,
without limitation, gas, electric, water, and telephone) deposits, and (iii) all
escrow and/or impound balances and funds held and to be disbursed by GECC under
the GECC Mortgage on behalf of the Bay Club Partnerships.
(d) The Purchaser shall receive the amount of $84,000.00
("Improvement Credit") from the Partners to perform certain improvements to the
Bay Club which the Purchaser deems desirable to be performed to the Bay Club I
and II Buildings.
4.2 Unpaid Rents. The Purchaser shall pay the Partners on account of the
Purchase Price promptly upon receipt, rent, additional rent or other charges
paid after the Closing Date by the tenants under the Tenant Leases on account of
periods prior to the Closing Date. Purchaser agrees that during the "Post
Closing Period" (as hereinafter defined), the first monies received from such
tenants shall be received by Purchaser as trustee for the Partners on account of
or in payment for past due rent, additional rent and other charges for the
calendar month immediately preceding the calendar month of Closing and the next
monies for Partner's portion of the month of Closing. Monies received thereafter
during the Post Closing Period from tenants in arrears shall then be applied to
current rents, and any rents received by Purchaser from such tenants with
arrearage for periods before the month prior to the month of Closing after such
tenant's rents are current for the period of Purchaser's ownership, shall be
remitted to Partners for periods to which Partners are entitled. For the month
of the Closing and for each of the first six (6) calendar months following the
month of Closing (the "Post Closing Period"), the Purchaser shall provide the
Partners with written monthly reports detailing the amounts of such rent,
additional rent and other charges collected in the preceding month. The
Purchaser agrees to remit to the Partners the amount of such unpaid rentals so
collected to which the Partners are entitled out of such moneys received by the
Purchaser, without claim of set-off, abatement or deduction, other than a
deduction for Purchaser's reasonable out-of-pocket third party costs of
collection. Following the Closing, during the Post Closing Period, the Purchaser
shall use commercially reasonable efforts to collect delinquent amounts due
under Tenant Leases for the pre-Closing period, but shall have no obligation to
bring any legal action to collect such amounts and the Partners shall have no
right to proceed in any manner or make any claim against the tenants of the Bay
Club for rents that were delinquent as of the Closing Date, unless such tenant
no longer occupies any portion of the Bay Club. Purchaser shall have no
obligation to pay any amounts to the Partners with respect to pre-
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<PAGE>
closing rents collected after the Post Closing Period. Partners shall pay to
Purchaser the amount of any Adjustment Items and rent, additional rent and other
charges payable under the Tenant Leases received by Partners after Closing on
account of the period from and after the Closing Date.
4.3 Survival. Any errors or omissions in computing adjustments at Closing
shall be corrected by the parties. The provisions of this Article IV shall
survive the Closing for a period of one (1) year.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each Partner represents and warrants to Purchaser (to the extent and
insofar as the following apply to the Bay Clubs, the Partnerships and the
Partnership Interests in which such Partner has an interest) that as of the
Closing the following will be true and correct in all material respects.
5.1 Title to Partnership Interests. Annexed hereto as Schedule 5.1 and
made a part hereof is a complete and correct list of the ownership interests in
the Bay Club Partnerships. Each of the Partners holds the percentage interest
set forth opposite such Partners' name free and clear of all security interests,
liens, adverse claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other encumbrances of any nature
whatsoever. There are no options, warrants, agreements, conversion or exchange
rights, preemptive rights or other rights to subscribe for, purchase or
otherwise acquire ownership interests in any of the Bay Club Partnerships, or
restrictions on the voting or transfer of such interest. All interests in all of
the Bay Club Partnerships have been issued in compliance with all applicable
laws, including Federal and state securities laws.
5.2 Organization of The Bay Club Partnerships.
(a) CB Associates is a duly organized, validly existing Florida
general partnership. Williamsberry Development Corporation is a duly organized
Florida corporation, existing and in good standing under the laws of the State
of Florida. Colley Williamsberry Limited Partnership is a Delaware limited
partnership duly organized, existing and in good standing under the laws of the
State of Delaware, qualified and in good standing as a foreign limited
partnership under the laws of the State of Florida. The sole general partner of
CWLP is Colley Aventura, Inc., a Delaware corporation, duly organized, existing,
and in good standing under the laws of the State of Delaware and qualified and
in good standing as a foreign corporation under the laws of the State of
Florida. CB Associates has all requisite power and authority to own, operate and
lease Bay Club I. A true and complete copy of the partnership agreement of CB
Associates is annexed hereto as Schedule 5.2(a) and made a part hereof.
(b) CB L-2 C Associates is a duly organized and validly existing
Florida general partnership. Williamsberry Development Corp. II is a duly
organized Florida corporation existing and in good standing under the laws of
the State of Florida. Colley Williamsberry L-2 C Limited Partnership is a
Florida limited partnership duly organized and in good standing under the laws
of the State of Florida. The sole general partner of CWLP 2 C is
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<PAGE>
Colley Aventura L-2 C, Inc., a Florida corporation duly organized, existing and
in good standing under the laws of the State of Florida. CB L-2 C Associates has
all requisite power and authority to own, operate and lease Bay Club II. A true
and complete copy of the partnership agreement of CB L-2 C Associates is annexed
hereto as Schedule 5.2(b) and made a part hereof.
(c) CB L-2 B Associates is a duly organized, validly existing Florida
general partnership. Colbro Development L-2 B Corp. is a duly organized Florida
corporation in good standing under the laws of the State of Florida. Colley
Williamsberry L-2 B Limited Partnership is a Florida limited partnership duly
organized and in good standing under the laws of the State of Florida. The sole
general partner of CWLP 2 B is Colley Aventura L-2 B, Inc., a Florida
corporation, duly organized, existing and in good standing under the laws of the
State of Florida. CB L-2 B Associates has all requisite power and authority to
own, operate and lease Bay Club III. A true and complete copy of the partnership
agreement of CB L-2 B Associates is annexed hereto as Schedule 5.2(c) and made a
part hereof.
5.3 Execution and Binding Effect. Each of the Partners has full right,
power and authority to transfer their respective ownership interests in the Bay
Club Partnerships in accordance with the terms and conditions of this Agreement.
The Partners have the legal power, right and authority to execute this Agreement
and the other documents and instruments to be executed in accordance with the
terms hereof. This Agreement and the other documents and instruments to be
executed and delivered in connection herewith have been duly authorized by all
necessary actions by the Partners and do not require the approval of the
shareholders of the Partners that are corporations nor the limited partners of
the Partners that are limited partnerships and have been duly and validly
executed and delivered by each Partner and upon the execution and delivery by
the Purchasers will constitute legal, valid and binding agreements of the
Partners enforceable against them in accordance with their respective terms,
except as enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting enforcement of creditors' rights generally.
5.4 Consents and Approvals; No Violation. Except for the consent of GECC
to the transfer of the Partnership Interests, no permit, authorization, consent
or approval of any governmental or regulatory authority is required of any
Partner, as a condition to the lawful consummation of the transactions
contemplated by this Agreement. Neither the execution, delivery and performance
of this Agreement, the other documents and instruments to be executed and
delivered pursuant hereto by the Partners, nor the sale by the Partners of their
Partnership interests pursuant to this Agreement will (i) violate any provisions
of the articles of incorporation or bylaws of any corporate Partner or the
agreements of limited partnership or certificates of limited partnership of any
Partner that is a limited partnership, (ii) violate, conflict with or result in
the breach or termination of, or otherwise give any other contracting party the
right to terminate or constitute a default under, any of the terms, of any bond,
mortgage (other than the GECC Mortgage), indenture or material agreement to
which any Partner is a party or by which any Partner or any of its property or
assets may be bound or materially affected, (iii) violate any judgment, order,
injunction, decree or award of any court, administrative agency or governmental
body against, or binding upon, any Partner or upon the securities, property or
business of any Partner, (iv) constitute a violation by any Partner of any
applicable law or regulation of any jurisdiction as such law or regulation
relates to any Partner or to the property or business of any Partner, or (v)
cause the dissolution of any Partner or the Bay Club Partnerships.
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5.5 Financial Statements. Each of the respective Bay Club Partners
represents and warrants as to its Bay Club Partnership that the audited balance
sheets (together with any notes thereon) of the Bay Club I and II Partnerships
as of December 31, 1995, together with the related statements of operations,
retained earnings and cash flows for the period then ended, together in each
case with the unqualified (other than a going concern qualification) report
thereon of their respective independent public accountants; and the unaudited
balance sheets (together with any notes thereon) of the Bay Club I and II
Partnerships as of December 31, 1996, together with the related statements of
operations, retained earnings and cash flows for the period then ended, both of
which are annexed hereto as Schedule 5.5A and made a part hereof (the "Financial
Statements"), (a) are true, complete and correct in all material respects, (b)
are in accordance with the books and records of the respective Partnership, and
(c) present fairly the financial position of such Partnership as of the dates
indicated and the results of its operations for the periods then ended in
conformity with GAAP. CB 2 B Associates, for which there are no financial
statements, has no liabilities other than for certain Adjustment Items and the
GECC Mortgage. Annexed hereto as Schedule 5.5B is an analysis of amounts due to
and due from the Bay Club Partnerships and their affiliates as of December 31,
1996.
5.6 Tax Matters.
(a) The Bay Club Partnerships have timely filed (or have had timely
filed on their behalf) or will timely file or will cause to be timely filed, all
Tax Returns (as defined in Section 11.1(f) hereof) required by applicable law to
be filed by any of them prior to or as of the Closing Date. All such Tax Returns
and amendments thereto are or will be true, complete and correct in all material
respects.
(b) The Bay Club Partnerships have paid (or have caused to be paid on
their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all Taxes (as defined in Section 11.1(f) hereof) due
with respect to any period or portion thereof ending prior to or as of the
Closing Date.
(c) No audit by a tax authority is pending with respect to any Tax
Returns filed by, or Taxes due from, the Bay Club Partnerships. No issue has
been raised by any Tax Authority in any audit of the Bay Club Partnerships that
if raised with respect to any other period not so audited could be expected to
result in a material proposed deficiency for any period not so audited. No
deficiency or adjustment for any Taxes has been proposed, asserted or assessed
against the Bay Club Partnerships. There are no liens for Taxes upon the Assets
of the Bay Club Partnerships, except liens for current Taxes not due yet.
(d) None of the Bay Club Partnerships has given or been requested to
give any waiver of statutes of limitations relating to the payment of Taxes or
have executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) None of the Bay Club Partnerships is a party to, is bound by, or
has any obligation to Partners for Taxes under any tax sharing, cost sharing, or
similar agreement or policy.
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(f) There are no changes in the tax accounting methods subject in
Section 481(a) of the Internal Revenue Code of 1986, as amended, which have an
ongoing effect on the Bay Club Partnerships.
(g) Each of the Bay Club Partnerships is, and has been since its
formation, classified as a partnership and not as an association taxable as a
corporation for Federal income tax purposes for any and all periods up to and
including the Closing; and the Internal Revenue Service has not challenged the
status of any of the Bay Club Partnerships for Federal income tax purposes. All
Tax Returns and other filings have been filed on a basis consistent with such
position for Federal income tax purposes.
5.7 Employee Relations. (a) Annexed hereto and made a part hereof as
Schedule 5. 7(a) is a true and complete payroll roster of all employees of CB
Associates as of the last payroll prior to the date of this Agreement showing
the (i) name of each employee, and (ii) rate of pay for each such person
entitled to receive compensation. No increases in such salaries, bonuses,
vacation allowances, severance benefits, commissions or other employee benefits
have been given or promised as of the date hereof except as disclosed in
Schedule 5.7(a) or in any other Schedule annexed hereto. CB Associates employs
all the employees working at the Bay Club.
(b) Employee Contractual Matters. Except as set forth on Schedule
5.7(a) or 5.7(g), there are no employment contracts, bonus plans or agreements,
commission agreements, severance agreements, or any other contracts or
agreements with any of the employees of CB Associates. CB Associates is not a
party to or bound by any collective bargaining agreement or work rules or
practices agreed to with any labor organization or employee association
applicable to the employees of CB Associates.
(c) Severance Pay. CB Associates has not promulgated any policy or
entered into any agreements relating to the payment of severance pay to its
employees whose employment is terminated or suspended, voluntarily or otherwise,
except as set forth in Schedule 5.7(g).
(d) Vacation Pay. CB Associates has not promulgated any policy or
entered into any agreements relating to the payment of vacation pay to its
employees and does not have any obligation to provide them with pay for vacation
time, except as stated in Schedule 5.7(a) annexed hereto and made a part hereof.
(e) Employment and Working Conditions. CB Associates is not engaged
or involved, as the case may be, in any of the following: (i) there is no labor
strike, dispute, slowdown, work stoppage or lockout actually pending or, to the
Partners' knowledge, threatened against or affecting CB Associates and, during
the past five years, there has not been any such action; (ii) to the Partners'
knowledge, no union claims to represent the employees of CB Associates; (iii)
none of the employees of CB Associates are represented by any labor organization
and, to the Partners' knowledge, there are no current union organizing
activities among the employees of CB Associates, nor does any question
concerning representation exist concerning such employees; (iv) there are no
written personnel policies, rules or procedures applicable to the employees of
CB Associates; (v) CB Associates is, and has at all times been, in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and immigration, and is not engaged in any
unfair labor
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practices as defined in the National Labor Relations Act or other applicable
law, or ordinance or regulation; (vi) there is no unfair labor practice, charge
or complaint against CB Associates pending or, to the Partners' knowledge,
threatened before the National Labor Relations Board or any similar state
agency; (vii) to the Partners' knowledge, there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other grievance
procedure relating to the employees of CB Associates; (viii) to Partners'
knowledge, no charges or complaints with respect to or relating to CB Associates
are pending before the Equal Employment Opportunity Commission or any
corresponding state agency; (ix) to the Partners' knowledge, no federal, state,
or local agency responsible for the enforcement of labor, employment, or
immigration laws intends to conduct an investigation with respect to or relating
to CB Associates and no such investigation is in progress; (x) to the Partners'
knowledge, there are no pending or, threatened wage and hour claims filed
against CB Associates with the United States Department of Labor or any
corresponding state agency; (xi) to the Partners' knowledge, neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations relating
to CB Associates; and (xii) to the Partner's knowledge, there are no complaints,
controversies, lawsuits or other proceedings pending against CB Associates
brought on behalf of any applicant for employment, or current or former
employees, or classes of the foregoing, alleging breach of any express or
implied contract of employment, any violation of law or regulation governing
employment or the termination thereof, or any other discriminatory, wrongful or
tortious conduct in connection with the employment relationship.
(f) WARN Act. Since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), the Bay Club Partnerships have
not ever employed (i) 100 or more employees, excluding part-time employees (as
defined in the WARN Act), or (ii) 100 or more employees who in the aggregate
work at least 4,000 hours per week (exclusive of hours of overtime).
(g) Employee Benefits. Except as set forth in Schedules 5.7(a) or
5.7(g), there are no "Plans" (as hereinafter defined) with respect to any
employees at the Bay Club. "Plans" shall mean any bonus, deferred compensation,
incentive compensation, stock purchase, stock option, employment, consulting,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program,
agreement or arrangement, and each other "employee benefit plan" [within the
meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder ("ERISA")],
whether formal or informal, written or oral and whether legally binding or not,
that is maintained or contributed to or was maintained or contributed to at any
time by CB Associates or by any trade or business, whether or not incorporated
which together with CB Associates would be deemed a "single employer" within the
meaning of Section 4001 of ERISA (an "ERISA Affiliate"), within the last six
years, for the benefit of any employee or former employee of CB Associates.
5.8 No Employees. Neither CB 2 C Associates or CB 2 B Associates employs
any employees; to the extent CB Associates employees provide services to Bay
Club II or Bay Club III, the Bay Club II and III Partnerships reimburse CB
Associates for the costs of such services provided.
5.9 Tenant Leases. Schedule 3. 1(c) is a materially complete and accurate
schedule, as of the date thereon, of all of the leases, licenses, tenancies and
other occupancy agreements (whether written or oral) in effect at the Bay Club
as of such date, other than rights
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relating to the use of the parking facilities. At Closing, Partners shall
deliver an updated Schedule 3.1(c) dated not earlier than ten (10) days prior to
Closing. There have been no material changes to Schedule 3.1(c) between the date
such schedule was prepared and the Closing Date. Schedule 3.1(c) sets forth with
respect to each such lease, in a materially complete and accurate manner, (i)
the date of such lease, (ii) the name of the tenant, (iii) the designation of
the leased premises, (iv) the monthly rental and other charges payable by the
tenant, (v) the amount of any security deposits held under the lease and
interest thereon, if any, and (vi) the lease expiration date. Except as set
forth on Schedule 3.1(c) there are no other leases, letting or tenancies
affecting any part of the Bay Club (other than relating to the parking
facilities); and, except as otherwise noted in the schedule of delinquencies
annexed to Schedule 3.1(c), the tenant under each Tenant Lease has, to the best
of Partners knowledge, paid and is not in default in the payment of rent. No
tenant under a Tenant Lease has prepaid rent for more than the current month, or
is entitled to receive a rent concession in connection with its tenancy unless
noted otherwise in Schedule 3.1(c). At Closing, all unpaid commissions, if any,
due on account of any Tenant Lease will have been paid by Partners.
5.10 Contracts. The Contracts set forth in Schedule 3.1(f) is an accurate
description of all of the service, maintenance, repair, management supply and
other contracts affecting the Bay Club as of the date of this Agreement.
Schedule 3.1(f) sets forth with respect to each Contract (i) the date of such
Contract, (ii) the name of the vendor, (iii) the nature and type of the services
or goods provided; (iv) the costs or charges payable thereunder, and (v) the
expiration date. Except as set forth on Schedule 3.1(f), there are no other
material contracts affecting the Bay Club not cancelable on thirty (30) days'
notice.
5.11 Tax Reduction Proceeding. No proceedings have been commenced which are
pending for the reduction of the assessed valuation of the Bay Club or any
portion thereof.
5.12 Litigation. Except as set forth in Schedule 5.12 annexed hereto and
made a part hereof, the Bay Club Partnerships are not a party to any litigation,
action or proceeding, and to the best of Partners' knowledge no such litigation,
action, or proceeding is threatened by any organization, person, individual or
governmental agency against the Bay Club Partnerships or which would affect the
use or occupancy of the Bay Club or any part thereof.
5.13 FIRPTA. None of the Partners is a "foreign person" as defined in
section 1445 of the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder.
5.14 Conduct of Business Since the Balance Sheet Date. Since December 31,
1996 there have been no material adverse changes in the financial condition,
assets, or liabilities, of the Bay Club Partnerships, as reflected in the
Financial Statements.
5.15 Property Questionnaires. Prior to the Closing, the Partners shall
complete and deliver to Purchaser questionnaires with respect to Bay Club I and
II, in the form provided by Purchaser (each a "Property Questionnaire") and each
such Property Questionnaire is true, complete and correct in all material
respects.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Partners as follows:
6.1 Organization, Power and Authority. Each Purchaser is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware. AIMCO HOLDING QRS, Inc. ("AIMCO Inc.") is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Purchaser and AIMCO Inc. have the corporate power and
authority to execute and deliver this Agreement, and any other agreement or
instrument contemplated by this Agreement, and to consummate the transactions
and to perform its obligations contemplated hereby and thereby.
6.2 Execution and Binding Effect. The execution and delivery by Purchaser
of this Agreement, and any other agreement or instrument contemplated by this
Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary action by Purchaser and do
not require the approval of its limited partners. This Agreement, and any such
other agreement or instrument, upon execution and delivery by Purchaser (and
assuming due execution and delivery hereof and thereof by the other parties
hereto and thereto), will constitute the legal, valid and binding obligation of
Purchaser, in each case enforceable against Purchaser in accordance with its
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws from time to time in
effect which affect creditors' rights generally). Neither the execution and
delivery of this Agreement, or any such other agreement or instrument by
Purchaser, nor the consummation of the transaction contemplated hereby or
thereby, will (i) violate any provisions of the agreements of limited
partnership or certificates of limited partnership agreement of Purchaser, (ii)
violate, conflict with or result in the breach or termination of, or otherwise
give any other contracting party the right to terminate, or constitute a default
under the terms of, any mortgage, bond, indenture or material agreement to which
Purchaser is a party or by which Purchaser or any of its property or assets may
be bound or materially affected, (iii) violate any judgment, order, injunction,
decree or award of any court, administrative agency or governmental body
against, or binding upon, Purchaser or upon the securities, property or business
of Purchaser, or (iv) constitute a violation by Purchaser of any applicable law
or regulation of any jurisdiction as such law or regulation relates to Purchaser
or to the property or business of Purchaser.
6.3 Organizational Documents. Attached hereto as Schedule 6.3 and made a
part hereof is a true and complete copy of the agreements of limited partnership
or certificates of limited partnership of Purchaser in effect on the date
hereof, certified by a duly authorized signatory of Purchaser in the case of the
agreement of limited partnership and by the Delaware Secretary of State in the
case of the certificate.
6.4 Government Approval. No consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any governmental
authority not already obtained is required in connection with the execution and
delivery of this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated hereby.
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ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser to purchase the Partnership Interests from
the Bay Club Partners is subject to satisfaction on or before the Closing of the
following conditions, any of which may be waived in whole or in part by
Purchaser:
7.1 Representations and Warranties True. The representations and
warranties in Article V of this Agreement, and the statements contained in the
Schedules annexed to this Agreement (other than Schedule 6.3), shall be true and
correct in all material respects as of the Closing Date. On or before the
Closing, Purchaser shall have approved each of the Schedules annexed hereto.
7.2 Authorization of Sale of Assets; Consents. The Bay Club
Partnerships shall have received from GECC, the holder of the Mortgage, its
consent to the transfer of the Bay Club Partnership Interests to the Purchaser.
7.3 Title Insurance. Each of the Bay Club Partnerships shall obtain
at Closing an Owners Policy of Title Insurance (ALTA. Form B-1970, Extended
Coverage or equivalent) covering the fee title to the respective Bay Club,
satisfactory in all respects to Purchaser. Partners shall be under no obligation
to cause title to be acceptable to Purchaser except to satisfy from the closing
proceeds monetary encumbrances other than the GECC Mortgage.
7.4 Property Questionnaires. Purchaser shall have received Property
Questionnaires with respect to Bay Club I and II, completed to the reasonable
satisfaction of Purchaser.
7.5 Discharge of Affiliate Obligations. At Closing each Bay Club
Partnership shall have been released from all obligations to the other Bay Club
Partnerships and the affiliates and shall have released the other Bay Club
Partnerships and the affiliates from all obligations, in each instance as said
obligations and affiliates are set forth in Schedule 5.5B.
7.6 Employee Matters..
(a) At or prior to the Closing Date but effective as of the
Closing Date, the Purchasers in their sole discretion may offer employment to
some or all of the full-time employees of CB Associates (each such employee who
accepts such offer of employment, if any, shall be hereinafter referred to as a
"Transferred Employee" and each present and former employee of CB Associates who
either is not offered or does not accept such employment shall be hereinafter
referred to as a "Non-Transferred Employee").
(b) The Partners acknowledge and agree that (i) no
representations or commitments concerning the terms or conditions of employment
with the Bay Club Partnerships following the Closing has or will be given by the
Partners or CB Associates to any of the Transferred Employees, (ii) the post-
Closing employment of the Transferred Employees will be at-will, and (iii) the
terms and conditions of the Transferred Employees' employment with
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the Bay Club Partnerships following the Closing are subject to change at any
time in accordance with its policies. Partners agree to indemnify, defend and
hold Purchaser harmless with respect to the commitments to certain persons set
forth in Schedule 5.7(g).
(c) From the date hereof through the Closing Date, the Bay
Club Partnerships shall not employ (i) 100 or more employees, excluding part-
time employees (as defined in the WARN Act), or (ii) 100 or more employees who
in the aggregate work at least 4,000 hours per week (exclusive of hours of
overtime).
7.7 Continuing Operations. From the date hereof through the
Closing, Partners shall have operated the Bay Club in the usual, regular and
ordinary course of business.
7.8 Material Change. There shall have been no material adverse
change to the Bay Club.
7.9 Documents. Partners shall have delivered each of the documents
set forth in Section 8.1.
ARTICLE VIII
DOCUMENTS
8.1 Partner Closing Documents. At the Closing, the Partners shall
deliver or cause to be delivered to Purchaser with respect to the respective Bay
Club and Partnership Interest, as the case may be, the following:
(a) Assignment of Partnership Interest. An assignment of the
99% Partnership Interests to AIMCO Bay Club and the 1% Partnership Interests to
AIMCO Holdings in each Bay Club Partnership, in form and substance acceptable to
the parties hereto.
(b) Original Copies. Originals of the Tenant Leases, the
Contracts, and licenses or permits held by the Bay Club Partnerships.
(c) FIRPTA Certificates. A certificate of the each Bay Club
Partner stating that the Partner is not a "Foreign Person" within the meaning of
IRC Section 1445(f)(3).
(d) Supplemental Documents. Such other documents, executed,
acknowledged and delivered, as may be reasonably required to consummate the
transactions herein contemplated.
8.2 Purchaser Closing Documents. At Closing, Purchaser shall
deliver to the Partners the following:
(a) Purchase Price: Full payment of the Purchase Price in the
manner provided in Section 2.2.
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(b) Assumption of Partnership Interest: An assumption of the
99% Partnership Interests by AIMCO Bay Club and the 1% Partnership Interests by
AIMCO Holdings in each Bay Club Partnership, in form and substance acceptable to
the parties hereto.
(c) Amended Certificate: For each Bay Club Partnership an
amendment to the partnership certificates filed in Dade County and with the
Florida Secretary of State, identifying the Purchaser as the general partners.
(d) Guarantee. A guarantee by Apartment Investment and
Management Company, a Maryland real estate investment trust, and the Purchaser
of the obligations of Paul F. Wallace under the GECC Mortgage, Joinder and other
loan documents in the form acceptable to Purchaser and GECC.
(e) Supplemental Documents: Such other documents, executed,
acknowledged and delivered as may be reasonably required to consummate the
transactions herein contemplated.
ARTICLE IX
COSTS
9.1 Costs. Each of the Bay Club Partners and Purchaser will bear
and pay all of their own costs in connection with the transactions contemplated
herein, except that the Purchaser shall pay (i) any and all State, County or
other recording taxes or fees, transfer taxes, sales taxes and fees which may be
due and payable as a result of the sale, transfer and conveyance of the
Partnership Interests and the Assets by the Bay Club Partners to the Purchaser
(ii) any and all fees and charges payable to GECC in connection with obtaining
GECC's consent to the transfer of the Partnership Interests to Purchaser
including, without limitation, the 1% transfer fee and (iii) any and all
premiums for surveys and title insurance which may be obtained at Closing.
ARTICLE X
BROKERAGE
10.1 Brokerage Commission. The Bay Club Partners represent and
warrant to Purchaser, and Purchaser represents and warrants to the Bay Club
Partners, that it has not dealt with any broker, realtor, finder or the like in
connection with the transactions herein contemplated, except that the Purchaser
has dealt with The Aztec Group ("Broker") and Purchaser shall be solely
responsible for any real estate commissions, fees, other compensation and
expenses that may be due Broker relating to the transactions contemplated by
this Agreement. The Partners, jointly and severally, agree for the benefit of
Purchaser, and Purchaser hereby agrees for the benefit of the Partners, to
indemnify, defend and hold harmless the other from and against any and all
costs, expenses, claims, liabilities and/or damages, including reasonable
attorneys' fees and the cost of enforcing this indemnification, arising out of
any brokerage commission, fee or other compensation or expenses due or
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alleged to be due to any person in connection with any of the transactions
contemplated by this Agreement based upon an agreement alleged to have been made
or other action alleged to have been taken by the indemnifying party. The
foregoing indemnity by Purchaser shall include any claims made against any of
the Partners by Broker. The provisions of this Article X shall survive the
Closing.
ARTICLE XI
CERTAIN TAX MATTERS
11.1 Tax Returns, Payments of Taxes, Refunds and Withholding. (a)
Each Managing General Partner shall prepare and file, or shall cause to be
prepared and filed, all Tax Returns of its Bay Club Partnership (including any
amendment thereto), which are due with respect to all taxable periods ending on
or prior to the Closing Date. The respective Partners shall pay, or shall cause
to be paid within the time, as may be extended, and in the manner prescribed by
law, and shall indemnify and hold the Purchaser harmless against any claims for
unpaid taxes, interest and penalties ("Tax Losses") relating to Taxes, as
defined in Section 11.1(d) below, with respect to their Bay Club Partnership for
all taxable periods ending on or prior to the Closing Date, including the
taxable period ending as of the close of business on the Closing Date (each a
"Pre-Closing Period"). Purchaser shall pay, or cause to be paid, and shall
indemnify and hold each General Partner harmless against any Tax Losses relating
to Taxes with respect to a Bay Club Partnership for all taxable periods which do
not constitute Pre-Closing Periods.
(b) Except as otherwise provided in this Agreement: (i) any
refund of Taxes with respect to a Partnership that is received with respect to
any Pre-Closing Period shall be for the account of the Partners, and to the
extent that the Purchaser receives any such refund after the Closing Date with
respect to any such Pre-Closing Period, the amount of such refund shall be paid
to the respective Partners of the Bay Club Partnerships.
If the Partners of a Bay Club Partnership receive any refund of
Taxes attributable to any taxable period that is not a Pre-Closing Period, then
such Partners shall pay to the Purchaser the amount of such refund received
within 30 calendar days after the receipt thereof. The Managing General Partner
and the Purchaser shall assist one another in preparing, filing, obtaining and
defending any refund payable pursuant to this Section 11.1(b).
(c) The Partners and Purchaser agree that for all income tax
purposes, the taxable period of the Partnership which began on January 1 of the
calendar year in which the Closing Date occurs shall be terminated as of the
close of business on the day preceding the Closing Date. The Partners and
Purchaser further agree to file all Tax Returns (including, without limitation,
all State Income Tax returns), handle the contest of any audit and otherwise act
for all Tax purposes consistent with the provisions of this Section 11.1(c).
(d) For the purposes of this Agreement:
(i) "Taxes" means each and all taxes, levies, imposts, duties,
assessments, charges, and withholding imposed or required to be collected by any
federal, state, local or foreign governmental entity or by any political
subdivision thereof or any
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combination thereof imposed on or with respect to, gross or net income, gross
receipts, minimum or alternative minimum tax, franchise, estimated withholding
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever), plus any interest, penalties, fines, assessments or additions to
tax imposed in respect of any of the foregoing, or in respect of any failure to
comply with any requirement regarding Tax Returns.
(ii) "Tax Return" means a report, return, information return,
payee statement or other information required to be retained, or filed or
otherwise provided to any federal, state, or local entity with respect to Taxes,
including any reports, returns or information required to be retained, or filed
or otherwise provided to any governmental entity pursuant to 31 U.S.C. Sections
5311-5328 and regulations promulgated thereunder.
11.2 Control of Contest and Carrybacks. (a) Each of the Managing
General Partner and the Purchaser shall have the right, at its own expense, to
control any audit or determination by any governmental entity, and to contest,
resolve and defend against any assessment, notice of deficiency, or other
adjustment or proposed adjustment of Taxes for any taxable period for which it
may be obligated to indemnify the other party under this Agreement; provided,
however, that no party shall have the right to agree to any assessment,
deficiency, settlement, or other adjustment or proposed adjustment of Taxes that
would adversely affect another party without such other party's written consent.
(b) Each Managing General Partner shall promptly forward to
the Purchaser, and the Purchaser shall promptly forward to the Managing General
Partner, all written notifications and other written communications received by
the Managing General Partner or the Purchaser, respectively, relating to any
liability for Taxes for any taxable period, for a Bay Club Partnership for which
the Partners or the Purchaser, as the case may be, are charged with payment
responsibility under this Agreement. Each Managing General Partner and the
Purchaser shall each assist the other in taking any and all reasonable actions
with respect to any proceeding for any taxable period for which the Partners or
Purchaser is charged with payment responsibility under this Agreement. The
failure by a Managing General Partner or the Purchaser to provide any such
notice or other written communication to the other party in accordance with this
Section 11.2(b) within 20 business days of receipt shall relieve the other party
from its obligations with respect to the subject matter of any notification not
forwarded if, and only to the extent that, such failure materially prejudices
the other party in the defense of such Tax liability claim.
11.3 Access to Information and Records. Each of the Managing General
Partners and the Purchaser will provide the other (and the other's attorneys,
accountants and agents) with, and the Purchaser, after the Closing Date, shall
cause the Partnership to provide the Managing General Partners (and the Managing
General Partners' attorneys, accountants and agents) with, the right, at
reasonable times and upon reasonable notice, to have access to, and to copy and
use, any records or information and personnel which may be relevant for the
taxable period for which the requesting party is charged with payment
responsibility for Taxes under this Agreement in connection with the preparation
of any Tax Returns, the determination of amounts due under Article XI hereof,
any audit or other examination by any governmental entity, the filing of any
claim for refund of Tax or for the allowance of any Tax credit, or any judicial
or administrative proceedings relating to liability for Taxes. The party
requesting assistance hereunder shall reimburse the other party for reasonable
out-of-pocket expenses incurred in providing such assistance. Any information
obtained pursuant to this Section 11.3
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shall be held in strict confidence and shall be used solely in connection with
the reason for which it was requested.
11.4 Resolution of Disagreements Among Parties. If a Managing
General Partner or the Purchaser disagree as to any matter governed by this
Article XI the parties shall promptly consult with each other in an effort to
resolve such dispute. Any amounts not in dispute shall be paid promptly, and any
amounts payable upon the resolution of a dispute shall be made to a bank account
designated by the payee no later than 10 business days after such resolution. If
any such disagreement cannot be resolved within 30 days after such Managing
General Partner or Purchaser asserts in writing that such dispute cannot be
resolved, the Managing General Partner and the Purchaser shall jointly select an
independent accounting firm to act as an arbitrator to resolve the disagreement
(the "Accounting Firm"). The Accounting Firm's determination shall be final and
binding upon the parties, and any fees and expenses relating to the engagement
of the Accounting Firm shall be shared equally by the Partners of the affected
Bay Club Partnership and the Purchaser. Upon the resolution of such dispute by
the Accounting Firm, any amounts payable by such General Partners or the
Purchaser, as the case may be, shall be made to a bank account designated by the
payee no later than 10 business days after such resolution. Simple interest will
be paid with respect to any such amounts at the Federal Funds Rate from the date
of the assertion in writing that the dispute cannot be resolved to the date of
payment.
11.5 Payments To or From the General Partners. Whenever a payment is
required to be made to or from the Partners pursuant to this Article XI, the
right to receive such amount, or the obligation to make such payment among the
Partners, shall be several and not joint, except for any Tax imposed on a
particular Bay Club Partnership itself in which case the liability of such Bay
Club Partners shall be joint. The Managing General Partner shall have no
obligation hereunder for any Tax, except as a Partner.
11.6 Survival. The provisions of this Article XI shall survive
Closing.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification of Purchaser. Subject to the provisions of this
Article XII, from and after the Closing Date, the Partners of the respective Bay
Club Partnerships agree to defend, indemnify, and hold harmless the Purchaser,
their respective officers, directors, partners, employees, representatives, and
agents, (individually and collectively the "Purchaser Indemnitees") against and
in respect of any and all losses, liabilities, damages, actions, suits,
proceedings, claims, demands, orders, assessments, amounts paid, in settlement
if approved by such Partners as provided below, fines, costs or deficiencies,
including without limitation, interest, penalties, and attorneys' fees and
costs, including the cost of seeking to enforce this indemnity to the extent
such enforcement is successful ("Purchaser, Losses"), caused by or resulting or
arising from, or otherwise with respect to, (w) any inaccuracy in or breach in
any material respect of any of the Partners' representations and warranties
contained in Article V of this Agreement, (x) any failure to perform or comply
with any of the Partners' covenants contained in this Agreement, (y) any breach
by the Bay Club Partnerships arising prior to the Closing Date under the
Contracts or Tenant Leases (including Security Deposits but excluding
21
<PAGE>
claims relating to maintenance obligations), and, (z) any litigation described
in Schedule 5.12 or any uninsured claims asserted by third parties against the
Bay Club Partnerships after Closing to the extent such claims relate to matters
preceding the Closing.
12.2 Indemnification of Partners. Purchaser agrees to defend,
indemnify, and hold harmless the Partners and their respective officers,
directors, stockholders', employees, representatives and agents (individually
and collectively, the "Partner Indemnitees") against and in respect of any and
all losses, liabilities, damages, actions, suits, proceedings, claims, demands,
orders, assessments, amounts paid in settlement if approved by the Purchaser as
provided below, fines, costs or deficiencies, including, without limitation,
interest, penalties and attorneys' fees and costs, including the cost of seeking
enforcement of this indemnity to the extent that such enforcement is successful
("Partner Losses"), caused by or resulting or arising from, or otherwise with
respect to, (w) any inaccuracy in or breach in any material respect of any of
Purchaser's representations and warranties contained in Article VI of this
Agreement, (x) any failure to perform or comply with any of Purchaser's
covenants contained in this Agreement (y) any claims arising from the Tenant
Leases (including Security Deposits) and the Contracts arising from and after
Closing, or (z) any sales, transfer, documentary stamp or intangibles tax that
may be due and payable in connection with the transactions contemplated by this
Agreement.
12.3 Limitations on Indemnification.
(a) Notwithstanding any provision to the contrary contained in
this Agreement, the liability of the Partners for breaches of any
representations or warranties under Article V and the indemnifications in favor
of the Purchaser Indemnities contained in Section 12.1 herein (i) shall not be
effective until the aggregate dollar amount of all Purchaser Losses exceeds the
sum of $100,000, which amount is intended to be a threshold and shall not limit
the Partners' liability under this Article XII for amounts below $100,000 once
such threshold is met, and (ii) shall terminate once the dollar amount of all
Purchaser Losses paid under such Section aggregates an amount in excess of the
net cash proceeds received by the Partners at Closing, and the Partners shall
thereafter have no further obligations or liabilities with respect to any such
representations and warranties or Purchaser Losses.
(b) Notwithstanding any provision to the contrary contained in
this Agreement, the liabilities of the Purchaser for breaches of any
representations or warranties under Article VI and the indemnifications in favor
of the Partners' Indemnitees contained in Section 12.2 herein (i) shall not be
effective until the aggregate dollar amount of all Partner Losses indemnified
against under such Section exceeds the sum of $100,000, which amount is intended
to be a threshold and not limit the Purchaser's liability under this Article XII
for amounts below $100,000 once such threshold is met; and (ii) shall terminate
once the dollar amount of all Partner Losses paid under such Section aggregates
an amount in excess of the net cash proceeds received by the Partners at
Closing, and the Purchaser shall thereafter have no further obligations or
liabilities with respect to any such representations and warranties or Partner
Losses.
12.4 Survival. The provisions of this Article XII shall survive
Closing for a period of one (1) year, within which period the party seeking
indemnification under this Article XII must notify the indemnifying parties (in
the manner prescribed herein for the delivery of notice) of its intent to seek
indemnification, specifying both the nature of the claim and the amount sought,
to the extent such amount is then determinable.
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ARTICLE XIII
SURVIVAL; FURTHER ASSURANCES
13.1 Survival. All warranties and representations in Articles V and
VI shall survive the execution and delivery of this Agreement for a period of
six (6) months, within which period a notice of a claim specifying in detail the
breach of the representation or warranty must be received by the party alleged
to have breached a representation and warranty.
13.2 Further Assurances. The parties shall after the Closing, and
without further consideration, execute, acknowledge and deliver to the other
such documents and instruments, and take such other actions, as shall reasonably
requested or as may be necessary more effectively to consummate the transactions
herein contemplated in accordance with this Agreement.
ARTICLE XIV
NOTICES
14.1 Notices. All notices, demands, consents, approvals and other
communications which are required or desired to be given hereunder shall be in
writing and shall be sent by United States registered or certified mail, postage
prepaid, return receipt requested, or by nationally recognized over-night
courier against signed receipt (i) if to the Bay Club Partners at the address
first above stated to the attention of Michael A. Mollod with a copy to Donovan
Leisure Newton & Irvine, 30 Rockefeller Plaza, New York, New York 10112,
Attention: Frank W. Cuiffo, Esq.; (ii) if to Purchaser at the address first
above stated, with a copy to Skadden Arps Slate Meagher & Flom, 300 South Grand
Avenue, Suite 3400, Los Angeles, California 90071, Attention: Rand S. April,
Esq., or at such other address as such parties shall have last designated by
notice to the other.
ARTICLE XV
FUTURE COOPERATION
15.1 Records. The Parties agree for a period of two (2) years
subsequent to the Closing Date, upon request of the other, to deliver to or
otherwise make available all information and statements with regard to any
period prior to the Closing Date which may be reasonably required in connection
with the ownership of the Assets or the operation thereof.
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ARTICLE XVI
PARTNERS' CLOSING CONDITION
16.1 Closing Conditions. It shall be a condition to the Partners'
obligation to close that (i) GECC releases the Partners from their obligations
under the GECC Mortgage and the loan documents delivered in connection therewith
and that Paul F. Wallace is released from all his obligations under the Joinder
Agreement dated November 25, 1996 executed by him and delivered to GECC, and
(ii) Purchaser pays the Purchase Price and delivers each of the documents set
forth in Section 8.2.
ARTICLE XVII
CONDITION "AS IS"; NO FURTHER REPRESENTATIONS
17.1 "As Is"/Representations. Purchaser represents that it has
inspected the Bay Club or caused an inspection thereof to be made on the
Purchaser's behalf and is thoroughly acquainted with its condition, and it is
agreed and understood that neither the Partners nor any person purporting to act
for the Partners has made or now makes any representations as to the physical
condition (including without limitation the presence of any environmentally
hazardous material or any condition which would violate any laws regarding
environmental matters), layout, leases, footage, rents, income, expense,
operation or any other matter or thing affecting or relating to the Bay Club or
to this Agreement, except as specifically set forth in this Agreement and that
no party hereto is relying on any statement or representation made by any other
which is not embodied in this Agreement. Purchaser hereby expressly acknowledges
that no representation has been made which is not expressly set forth in this
Agreement, and the Purchaser further agrees to take and accept the Bay Club "as
is" and in its condition at Closing. Purchaser agrees that the Partners are not
liable or bound in any manner by any financial statements or written agreements
or statements or representations which have been made, any real estate brokers'
"set-ups" or information pertaining to the Bay Club or any other matter or thing
furnished by any real estate broker, agent or employee, servant or other person,
unless the same are specifically stated herein. The provisions of this Section
shall survive the Closing.
ARTICLE XVIIII
MISCELLANEOUS
18.1 Written Changes. This Agreement may not be changed or
terminated orally.
18.2 Interpretations. This Agreement shall be construed, interpreted
and applied in accordance with the internal laws of the State of Florida without
giving effect to doctrines relating to conflicts of laws.
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18.3 Title. The titles of the Articles and the Sections in this
Agreement are for convenience only, are not definitive, and shall not be
considered or referred to in resolving questions of interpretation or
construction.
18.4 Construction. This Agreement shall be construed without regard
to any presumption or other rule requiring construction against the party
causing this Agreement to be drafted. If any words or phrases in this Agreement
shall have been stricken out or otherwise eliminated, whether or not any other
words or phrases have been added, this Agreement shall be construed as if the
words or phrases so stricken out or otherwise eliminated were never included in
this Agreement and no implication or inference shall be drawn from the fact that
said words or phrases were so stricken out or otherwise eliminated. All terms
and words used in this Agreement, regardless of the number or gender in which
they are used, shall be deemed to include any other number and any other gender
as the context may require. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, and the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
18.5 Merger; Amendments. This Agreement and the exhibits and
schedules thereto contain the entire understanding and agreement by and among
the parties hereto, and all prior or contemporaneous oral or written agreements
or instruments, including, without limitation, a certain memorandum dated March
14, 1997 by Michael A. Mollod to Rand S. April, Esq., are merged herein. No
amendment to this Agreement shall be effective unless the same is in writing and
signed by all of the parties hereto.
18.6 Assignment. Purchaser shall not assign any of its right, title
or interest in and to this Agreement, the Deposit or the Pledge without the
prior written consent of the Partners, which consent may be withheld by the
Partners in their sole and absolute discretion. Notwithstanding the foregoing,
the Pledge may be assigned to an affiliate of Purchaser.
18.7 Termination. In the event Purchaser elects not to proceed with
the Closing pursuant to the terms of this Agreement for any reason whatsoever,
Purchaser shall so notify Partners of its election to terminate this Agreement
and of its demand for the return of the Deposit. Within five (5) days following
such notice from Purchaser, Partners shall pay the Deposit, together with
interest thereon from the date hereof at the "prime rate", as such rate is
declared by Citibank as its "prime rate" from time to time (the "Prime Rate"),
by Federal funds wire transfer as directed by Purchaser, whereupon this
Agreement shall terminate. In the event Partners fail to proceed with the
Closing in accordance with the terms of this Agreement for any reason
whatsoever, Purchaser's sole remedy shall be to receive the return of the
Deposit, together with interest thereon at Prime Rate from the date hereof. Upon
such failure, Partners shall return the Deposit, together with interest thereon
at the Prime Rate, whereupon this Agreement shall terminate. The obligation of
the Partners to refund the Deposit in accordance with the terms of this Section
18.7 shall survive the termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PURCHASER:
AIMCO BAY CLUB, L. P.,
a Delaware limited partnership
By: AIMCO HOLDINGS, L. P.,
a Delaware limited partnership
Its: General Partner
By: AIMCO HOLDINGS QRS, Inc.,
a Delaware corporation
Its: General Partner
By: /s/ Harry Alcock
-----------------------
Name: Harry Alcock
Title: VP
AIMCO HOLDINGS, L. P.,
a Delaware limited partnership
By: AIMCO HOLDINGS, QRS, INC.,
A Delaware limited corporation
Its: General Partner
By: /s/ Harry Alcock
-----------------------
Name: Harry Alcock
Title: VP
BAY CLUB I PARTNERS WILLIAMSBERRY DEVELOPMENT CORPORATION
By: /s/ Lawrence Lopater
------------------------------------
Name: Lawrence Lopater
Title: President
COLLEY WILLIAMSBERRY LIMITED PARTNERSHIP
BY: Colley Aventura, Inc., general
partner
By: /s/ Lawrence Lopater
--------------------------------
Name: Lawrence Lopater
Title: President
26
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BAY CLUB II PARTNERS WILLIAMSBERRY DEVELOPMENT CORP. II
By: /s/ Lawrence Lopater
------------------------------------
Name: Lawrence Lopater
Title: President
COLLEY WILLIAMSBERRY L-2 C LIMITED
PARTNERSHIP
By: Colley Aventura L-2 C, Inc., general
partner
By: /s/ Lawrence Lopater
--------------------------------
Name: Lawrence Lopater
Title: President
BAY CLUB III PARTNERS COLBRO DEVELOPMENT L-2 B CORP.
By: /s/ Lawrence Lopater
------------------------------------
Name: Lawrence Lopater
Title: President
COLLEY WILLIAMSBERRY L-2 B LIMITED
PARTNERSHIP
By: Colley Aventura L-2 B, Inc., general
partner
By: /s/ Lawrence Lopater
--------------------------------
Name: Lawrence Lopater
Title: President
AIMCO IS JOINING IN ON THE EXECUTION OF THIS AGREEMENT FOR THE SOLE PURPOSE OF
AGREEING TO EXECUTE AND DELIVER THE GUARANTEE UNDER SECTION 8.2 OF THIS
AGREEMENT.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY,
a Maryland Real Estate Investment
Trust
By: /s/ Harry Alcock
--------------------------------
Name: Harry Alcock
Title: VP
27
<PAGE>
ACQUISITION AND CONTRIBUTION AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
DATED
APRIL 11, 1997,
BY AND BETWEEN
AIMCO PROPERTIES, L.P.,
AS TRANSFEREE,
AND
THE MORTON TOWERS PARTNERSHIP
AND ALL OF THE PARTNERS THEREOF
AS TRANSFEROR
<PAGE>
ACQUISITION AND CONTRIBUTION AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS ACQUISITION AND CONTRIBUTION AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this "AGREEMENT") is made and entered into as of April 11, 1997
(the "EXECUTION DATE"), by and among AIMCO PROPERTIES, L.P., a Delaware
limited partnership ("TRANSFEREE"), THE MORTON TOWERS PARTNERSHIP, a Florida
general partnership (the "PARTNERSHIP"), and all of the partners of the
Partnership, as identified on EXHIBIT "A-1" attached hereto (collectively,
the "PARTNERS" and, together with the Partnership, "TRANSFEROR"), for the
purpose of setting forth the agreement of the parties and of instructing
Chicago Title Insurance Company ("ESCROW AGENT"), with respect to the
transactions contemplated by this Agreement.
R E C I T A L S:
A. The Partnership is the owner of an undivided fee simple
interest in the real property located at 1500 Bay Road, in the City of Miami
Beach, County of Dade, State of Florida, as more particularly described as on
EXHIBIT "B-1" attached hereto (the "APARTMENT SITE"). The Partnership
controls the undivided fee simple interest in the adjacent unimproved land as
more particularly described on EXHIBIT "B-2" attached hereto (the "PARKING
SITE" and, together with the Apartment Site, the "LAND PARCELS"). The Land
Parcels, together with the Improvements, the balance of the "Real Property,"
the "Personal Property," and the "Intangible Property" (each as hereinafter
defined), shall be collectively referred to herein as the "Property."
B. The Partnership acquired the Property at a point in time prior to
the date that a partnership could hold record title under Florida law.
Therefore, record title is held by certain partners of the Partnership
identified on EXHIBIT "A-2" attached hereto (the "RECORD TITLE HOLDERS").
C. As of the Execution Date, certain partners of the Partnership
identified on EXHIBIT "A-3" attached hereto (the "SIGNING PARTNERS") have agreed
to transfer and contribute and to use their Commercially Reasonable Efforts (as
hereinafter defined) to cause the other partners of the Partnership identified
on EXHIBIT "A-4" attached hereto (the "OTHER PARTNERS") to transfer and
contribute the Property to Transferee and Transferee desires to accept the
transfer
<PAGE>
and contribution of the Property upon and subject to the terms and conditions
set forth in this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Transferee and Transferor hereby
agree, and instruct Escrow Agent, as follows:
1. TRANSFER AND CONTRIBUTION.
Subject to all of the terms and conditions of this Agreement, the
Signing Partners agree to (i) cause to be transferred, contributed and conveyed
to Transferee and (ii) use their Commercially Reasonable Efforts to cause the
Other Partners to cause to be transferred, contributed and conveyed to
Transferee, and Transferee agrees to accept from Transferor, a good and
marketable fee simple title interest in the Property, upon the terms and
conditions set forth herein. As used herein, the term "COMMERCIALLY REASONABLE
EFFORTS" shall mean the reasonable efforts of a party without the requirement
that such party (i) incur any unanticipated (as of the date hereof)
out-of-pocket expenses, including, without limitation, the making of any payment
to obtain the consent or approval of another person, or (ii) incur any other
unanticipated (as of the date hereof) burden or commence or pursue litigation in
any action, suit or proceeding, whether administrative, civil or criminal,
except for an action for dissolution of the Morton Towers Partnership in
connection with obtaining the consent of the Other Partners.
2. CONTRIBUTION VALUE.
The contribution value of the Property (the "CONTRIBUTION VALUE")
shall equal Fifty Eight Million Dollars ($58,000,000), subject to adjustment as
hereinafter provided, which shall be payable as follows:
2.1 DEPOSIT. On or before the Due Diligence Termination Date,
Transferee shall deposit into "Escrow" (as hereinafter defined) the sum of Two
Hundred Fifty Thousand Dollars ($250,000.00) (which amount, together with any
and all interest and dividends earned thereon, shall hereinafter be referred to
as the "DEPOSIT"), by wire transfer or by certified or bank check payable to the
order of Escrow Agent. Escrow Agent shall invest the Deposit in insured money
2
<PAGE>
market accounts, certificates of deposit, United States Treasury Bills or such
other instruments as Transferee may instruct from time to time. At the
"Closing" (as hereinafter defined), the Deposit shall be applied to Transferor's
share of the "Closing Costs" (as hereinafter defined). In the event that the
contribution and acceptance of the Property is not consummated for any reason
other than a default under this Agreement solely on the part of Transferee, the
Deposit shall be returned to Transferee.
2.2 BALANCE. On or before the tenth (10th) "Business Day" (as
hereinafter defined) prior to the "Closing Date" (as hereinafter defined) (and
following the parties' approval of the "Preliminary Closing Statement" (as
hereinafter defined) in accordance with the terms of Section 7.5.2 hereof),
Transferor shall deliver to Transferee a notice ("OP UNIT NOTICE") which notice
shall (i) identify the names of parties constituting Transferor or their
respective designees (collectively, the "OP UNIT RECIPIENTS"), (ii) indicate the
amount of the Contribution Value allocable to each such OP Unit Recipient (which
amount shall, with respect to each OP Unit Recipient, be hereinafter referred to
as an "ALLOCABLE SHARE") and (iii) with respect to each Allocable Share,
identify the dollar amount to be payable in cash (the "CASH PORTION") and the
dollar amount to be payable in OP Units (the "OP UNIT PORTION"); provided,
however, that in no event shall the Cash Portion payable to all of the OP Unit
Recipients, in the aggregate (the "CASH AMOUNT"), exceed the sum of (a) twenty
five percent (25%) of the Contribution Value, (b) the "Shortfall Amount" (as
hereinafter defined), (c) the "Contracted Capital Improvements" (as hereinafter
defined) and (d) the "Approved Capital Improvements" (as hereinafter defined).
At the Closing, Transferee shall (1) issue to each of the OP Unit Recipients, OP
Units equal in value (as determined in accordance with the last sentence of this
Section 2.2) to the OP Unit Portion as identified in the OP Unit Notice and (2)
pay to the OP Unit Recipients the Cash Portion less the sum of (y) the Deposit
and (z) the "Credit Amount" (as hereinafter defined) (and subject to adjustment
in accordance with Section 2.3 hereof) in cash by wire transfer of federal
funds. As used herein, "OP UNITS" shall mean limited partnership units in the
Operating Partnership. The number of OP Units which the OP Unit Recipients
shall receive on account of the OP Unit portion identified in the OP Unit Notice
shall be determined by dividing OP Unit Portion by the average trading price of
the Class A Common Stock (the "COMMON STOCK") of the Apartment Investment and
Management Company, a Maryland corporation (the "REIT ") for the ten (10)
Business Days preceding the second (2nd) Business Day prior to the Closing,
which amount shall, for the purposes of this Section 2.2, be deemed to be the
price of the Common Stock.
3
<PAGE>
2.3 ADJUSTMENT FOR PRORATIONS AND CLOSING COSTS.
2.3.1 CREDIT AMOUNT. On the Closing Date, Transferee
shall receive as a credit against the Contribution Value an amount (the "CREDIT
AMOUNT") equal to the sum of: (i) security deposits which were paid by
"Tenants" (as hereinafter defined) to or for the account of Transferor, plus
accrued interest, if and to the extent required to be paid to such Tenants on
such security deposits; (ii) expenses and other sums owed by Transferor to
Tenants for work or disputes which occurred prior to the Closing Date (as
evidenced in any written agreement or correspondence from Transferor or its
agents, whereby Transferor accepts or acknowledges responsibility for such
amounts); and (iii) the amount, if any, by which prorated amounts allocated to
Transferor pursuant to Section 7.5.1 below exceed prorated amounts allocated to
Transferee pursuant to Section 7.5.1 below.
2.3.2 SATISFACTION OF CREDIT AMOUNT. In the event that
the Credit Amount plus the sum of all amounts required to be disbursed pursuant
to Section 7.4.1.5 below is more than the Cash Amount (the amount of such
deficit being referred to herein as the "SHORTFALL AMOUNT"), then Transferor may
adjust the OP Unit Notice to increase the Cash Amount to reflect the Shortfall
Amount.
2.3.3 APPLICATION OF BALANCE OF CASH AMOUNT. In the
event that the Credit Amount plus the sum of all amounts required to be
disbursed pursuant to section 7.4.1.5 below is less than the Cash Amount (the
amount of such positive balance being referred to herein as the "CASH AMOUNT
BALANCE"), then the Cash Amount Balance shall be applied to satisfy Transferor's
share of Closing Costs, with the remainder, if any, disbursed to Transferor at
Closing pursuant to section 7.4.1.5.
2.4 ADJUSTMENT FOR MAJOR CAPITAL IMPROVEMENTS. Attached
hereto as EXHIBIT "C" is a schedule of major capital improvements that
Transferor has made or is in the process of making to the Property (the
"CONTRACTED CAPITAL IMPROVEMENTS"). The Contribution Value shall be
increased to include the sum of money that Transferor has paid to third
parties unaffiliated with Transferor, as of the Closing Date, for (i)
Contracted Capital Improvements, provided that the amount paid in connection
with Contracted Capital Improvements does not exceed the amount described in
the contracts delivered to Transferee as part of the Property Documents in
accordance with Section 4.1.1 hereof and (ii) Approved Capital Improvements
(as defined in Section 10.1.9 hereof).
4
<PAGE>
3. OPENING OF ESCROW.
3.1 ESCROW INSTRUCTIONS. On or before the second (2nd) Business
Day after the Execution Date, Transferee and Transferor shall cause an escrow
("ESCROW") to be opened with Escrow Agent by delivery to Escrow Agent of a
fully executed copy of this Agreement (the "OPENING OF ESCROW"). This
Agreement shall constitute escrow instructions to the Escrow Agent as well as
the agreement of the parties. Escrow Agent is hereby appointed and
designated to act as the Escrow Agent and instructed to deliver, pursuant to
the terms of this Agreement, the documents and funds to be deposited into
Escrow as herein provided. The parties hereto shall execute such additional
escrow instructions (not inconsistent with this Agreement as determined by
counsel for Transferee and Transferor) as Escrow Agent shall deem reasonably
necessary for its protection, including Escrow Agent's general provisions (as
may be modified by Transferee, Transferor and Escrow Agent). In the event of
any inconsistency between this Agreement and such additional escrow
instructions, the provisions of this Agreement shall govern. In the event of
doubt as to its duties or liabilities under the provisions of this Agreement,
the Escrow Agent may, in its sole discretion, continue to hold the monies
which are then held in Escrow until a judgment of a court of competent
jurisdiction shall determine the rights of the parties thereto, or may
deposit all the monies then held in Escrow with the Clerk of the Circuit
Court of the County having jurisdiction of the dispute, and upon notifying
all parties concerned of such action, all liability on the part of the Escrow
Agent shall fully terminate, except to the extent of accounting for any
monies theretofore delivered out of escrow. In the event of any suit between
Transferor and Transferee wherein the Escrow Agent is made a party by virtue
of acting as such Escrow Agent hereunder, or in the event of any suit wherein
Escrow Agent interpleads the subject matter of the Escrow, the Escrow Agent
shall be entitled to recover its reasonable attorneys' fee and costs, said
fees and costs to be charged and assessed as court costs in favor of the
prevailing party. All parties agree that the Escrow Agent shall not be
liable to any party or person whomsoever from misdelivery to Transferor and
Transferee of monies subject to the Escrow, unless such misdelivery shall be
due to willful breach of this Agreement or gross negligence on the part of
Escrow Agent.
3.2 TRANSFEROR DEPOSIT. On or before the Execution Date, Transferor
shall deposit into Escrow the sum of One Hundred Twenty Five Thousand Dollars
($125,000) (which amount, together with any and all interest and dividends
earned thereon, shall hereinafter be referred to as the "TRANSFEROR DEPOSIT"),
by wire transfer or by certified or bank check payable to the order of
5
<PAGE>
Escrow Agent. Escrow Agent shall invest the Transferor Deposit in the same
manner as Escrow Agent is instructed to invest the Deposit pursuant to
Section 2.1 hereof. At the Closing, the Transferor Deposit shall be returned
to Transferor. In the event that the contribution and acceptance of the
Property is not consummated as a result of (i) the Signing Partners' failure
to secure the performance of the Other Partners required to complete the
transactions contemplated hereby or (ii) a default under this Agreement
solely on the part of Transferor (pursuant to which Transferee elects to
terminate this Agreement under the terms of Section 12.2 hereof), the
Transferor Deposit shall be released to Transferee in accordance with the
terms of Sections 6.3, 12.2 and/or 12.3 hereof.
4. ACTIONS PENDING CLOSING.
4.1 DUE DILIGENCE PERIOD.
4.1.1 PROPERTY DOCUMENTS. Not later than five (5) days
after the Execution Date, Transferor shall make available to Transferee for
its review and copying, at the management office at the Property, true,
correct and complete copies of all contracts, documents, books, records and
other materials relating to the Property, including, without limitation,
as-built plans and specifications, income and expense records, "Leases" (as
hereinafter defined), rent rolls, engineering tests, soil tests, hazardous
materials reports, termite reports, phase one environmental reports, service
contracts, structural and mechanical reports, maps (including, without
limitation, topographical maps), plans, agreements, governmental permits and
approvals, licenses, appraisals, title policies, surveys, construction
warranties, land studies, a description of existing and proposed local
improvements affecting the Property (including, without limitation,
assessment levels), a certificate from the appropriate governmental
authorities confirming the zoning, building and platting status of the
Property, all correspondence with all governmental entities regarding the
Property, all property tax statements and assessed value notices, all
insurance policies, and all contracts relating to Contracted Capital
Improvements (collectively, the "PROPERTY DOCUMENTS"), to the extent that the
same are in the possession or control of Transferor or its agents, auditors
or independent contractors, all at Transferor's sole cost and expense.
4.1.2 PROPERTY QUESTIONNAIRE. Not later than ten (10) days
after the Execution Date, Transferor shall deliver to Transferee a completed
property questionnaire in the form of EXHIBIT "D" attached hereto (the
"PROPERTY QUESTIONNAIRE").
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4.1.3 INVESTOR QUESTIONNAIRES. Not later than ten (10) days
after the Execution Date, Transferor shall deliver to Transferee completed
investor questionnaires in the form of EXHIBIT "E" attached hereto
(collectively, "INVESTOR QUESTIONNAIRES"), executed by each of the Signing
Partners. On or before the Closing, Transferor shall deliver to Transferee
completed Investor Questionnaires, executed by each of the OP Unit Recipients
other than the Signing Partners.
4.1.4 DILIGENCE TESTS. At all reasonable times during the
sixty (60) day period commencing on the Execution Date (the "DUE DILIGENCE
PERIOD"), Transferee, its agents and representatives shall be entitled at
Transferee's sole cost and expense to (i) enter onto the Property during
normal business hours and upon reasonable advance notice to Transferor, to
perform any inspections, investigations, studies and tests of the Property,
including, without limitation, physical, structural, mechanical,
architectural, engineering, soils, geotechnical and environmental tests and
an ALTA Survey of each Land Parcel (collectively, the "SURVEYS") that
Transferee deems reasonable; (ii) cause an environmental assessment of the
Property to be performed, upon reasonable notice to Transferor; (iii) review
all Property Documents and examine and copy any and all books and records
maintained by Transferor or its agents (including, without limitation, all
documents relating to utilities, zoning and the access, subdivision and
appraisal of, and all legal requirements affecting, the Property); and (iv)
investigate such other matters as Transferee may desire. Transferee shall
indemnify, defend and hold harmless Transferor from all claims (including,
without limitation, any claim for a mechanic's lien or materialman's lien),
causes of action, costs, losses, damages and reasonable attorneys' fees
incurred by Transferor in connection with or arising out of any inspections
carried on, by or on behalf of Transferee pursuant to this Section 4.1.4;
provided, however, that Transferee shall not indemnify Transferor for any
claim, loss or cause of action caused by Transferor's gross negligence or
willful misconduct or any physical condition existing on the Property prior
to Transferee's or its agent's entry thereon. The provisions of this Section
4.1.4 shall survive the Closing or the earlier termination of this Agreement.
4.1.5 TERMINATION RIGHT. Transferee shall have the right at
any time on or before the last day of the Due Diligence Period (the "DUE
DILIGENCE TERMINATION DATE") to terminate this Agreement if Transferee
determines in its sole and absolute discretion that (i) the Property is not
acceptable to Transferee, (ii) based upon information disclosed in the Property
Questionnaire, the consummation of the transactions contemplated by this
Agreement could jeopar-
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dize the status of the REIT as a real estate investment trust, as defined in
Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "IRC")
or (iii) the information disclosed in the Investor Questionnaires is not
satisfactory to Transferee. In the event that Transferee fails to deliver
the Deposit into Escrow and a written notice to Transferor and Escrow Agent
waiving its termination right hereunder (a "WAIVER NOTICE") on or before the
Due Diligence Termination Date, then (i) the parties shall equally share the
cancellation charges of Escrow Agent and "Title Company" (as hereinafter
defined), if any, (ii) Escrow Agent shall return the Transferor Deposit to
Transferor and (iii) this Agreement shall automatically terminate and be of
no further force or effect and neither party shall have any further rights or
obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement. Whether or not
Transferee exercises its right to terminate this Agreement, it shall deliver
to Transferor copies of all Property related data which it received from
Transferor or which was generated by independent third parties during
Transferor's investigation of the Property.
4.2 TITLE.
4.2.1 DELIVERIES BY TRANSFEROR. Not later than
ten (10) days after the Execution Date, Transferor shall deliver or cause to
be delivered to Transferee the following: (a) a title insurance commitment
(the "TITLE COMMITMENT") issued by Chicago Title Insurance Company (in such
capacity, the "TITLE COMPANY"), committing the Title Company to issue the
Owner's Title Policy in accordance with Section 6.1.1 hereof; (b) legible
copies of all documents referenced as exceptions in the Title Commitment (the
"UNDERLYING DOCUMENTS"), for the Land Parcels; and (c) a UCC Search with
regard to the Personal Property (the "UCC SEARCH"). Within thirty (30) days
after the Execution Date, Transferee may, at Transferee's election and at its
sole cost and expense, cause an ALTA survey of the Real Property (the
"SURVEY") to be prepared in accordance with ALTA / ACSM minimum technical
standards and the laws of the State of Florida, and showing the entire Real
Property, adjoining streets and roads, including the points of ingress and
egress thereto, setting forth the exact location by metes and bounds and the
exact dimensions of the Real Property, a legal description of the Real
Property, the exact location of any Improvements, the location of parking
areas on the Real Property, the location of all easements on and upon the
Real Property, together with all rights-of-way and other matters relating to
the Real Property. The Title Commitment, the Underlying Documents, the
Survey and the UCC Search shall be collectively referred to herein as the
"TITLE DOCUMENTS."
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4.2.2 TRANSFEREE'S REVIEW OF TITLE. Regardless of the
passage of the Due Diligence Termination Date, Transferee shall have fifteen
(15) Business Days after its receipt of all of the Title Documents to notify
Transferor and Escrow Agent in writing ("TRANSFEREE'S OBJECTION LETTER") of
any objection which Transferee may have to any matters reported or shown in
the Title Documents or any updates thereof (provided, however, that if any
such updates are received by Transferee, Transferee shall have an additional
five (5) Business Days, regardless of the passage of the Due Diligence
Termination Date, following Transferee's receipt of such update and legible
copies of all documents referenced therein to notify Transferor of objections
to items shown on any such update which were not disclosed on the previously
delivered Title Documents). In addition to the Leases, matters reported in
or shown by the Title Documents (or any updates thereof) and not timely
objected to by Transferee as provided above shall be deemed to be "PERMITTED
EXCEPTIONS." Transferor shall have no obligation to cure or correct any
matter objected to by Transferee, other than any "Liens" (as hereinafter
defined). However, on or before the tenth (10th) Business Day following
Transferor's receipt of Transferee's Objection Letter, Transferor may elect,
by delivering written notice of such election to Transferee and Escrow Agent
("TRANSFEROR'S RESPONSE"), to either remove or, to Transferee's reasonable
satisfaction, insure over any matters objected to in Transferee's Objection
Letter. If Transferor fails to provide Transferor's Response, it shall not
be deemed to be a default by Transferor hereunder, but such failure shall be
deemed to be an expression of Transferor's unwillingness or inability to cure
the objections set forth in Transferee's Objection Letter. If Transferor
fails to remove or satisfactorily insure over any exceptions or matters
objected to by Transferee, then Transferee must elect by delivering written
notice of such election to Transferor and Escrow Agent on or prior to the
earlier to occur of (i) the tenth (10th) Business Day following Transferee's
receipt of Transferor's Response or (ii) if no Transferor's Response is
received by Transferee, the tenth (10th) Business Day following the date on
which Transferor shall have been deemed to have responded, as provided above,
to: (a) terminate this Agreement (in which case Escrow Agent shall return
the Deposit (to the extent it has been delivered into Escrow) to Transferee,
the parties shall equally share the cancellation charges of Escrow Agent and
Title Company, if any, and neither party shall thereafter have any rights or
obligations to the other hereunder, other than pursuant to any provision
hereof which expressly survives the termination of this Agreement); (b)
discharge any objected to exceptions or matters which are monetary liens and
which can be discharged by the payment of an undisputed liquidated monetary
obligation and deduct from the Contribution Value the amount necessary to
discharge such lien; (c) extend the Closing Date to allow Transferor a
reasonable period of time to
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remove such objected to exceptions or matters to the extent that Transferor
is diligently working to cure or discharge such exceptions; or (d) proceed to
a timely Closing whereupon such objected to exceptions or matters shall be
deemed to be Permitted Exceptions. In the event that Transferee fails to
make such election on a timely basis in accordance with the terms hereof,
then this Agreement shall terminate in accordance with terms of clause (a)
above. Notwithstanding anything to the contrary contained herein, Transferor
shall be required to discharge and remove any and all liens affecting the
Property which secure an obligation to pay money, other than installments of
real estate taxes not delinquent as of the Closing (collectively, "LIENS")
and, even though Transferee does not expressly disapprove such Liens, such
Liens shall not be Permitted Exceptions.
4.2.3 CONDITION OF TITLE AT CLOSING. Upon the Closing,
Transferor shall contribute, transfer and convey to Transferee, fee simple
title to the Real Property (subject only to the Permitted Exceptions), by
delivering the following duly executed and acknowledged deeds (collectively,
the "DEEDS"): (i) special warranty, trustee or personal representative's
deeds for the Real Property, executed by the Record Title Holders, in the
form of EXHIBIT "F-1" attached hereto, and (ii) quitclaim deeds for the Real
Property, executed by the Partnership, Robert L. Turchin and Lucille Jaffe,
in the form of EXHIBIT "F-2" attached hereto. Prior to Closing, Transferor
shall not take or permit the Record Title Holders to take any action or
commit or suffer any acts which would give rise to a variance from the
current legal description of the Real Property, or cause the creation of any
exception or encumbrance against or respecting the Real Property without the
prior written consent of Transferee, which consent may be withheld in
Transferee's sole and absolute discretion. Nothing in this Section 4.2.3
shall preclude Transferee from disapproving title matters in accordance with
the provisions of Section 4.2.2 above.
5. DESCRIPTION OF PROPERTY.
5.1 THE IMPROVEMENTS. As used herein, the term "IMPROVEMENTS"
shall mean all buildings, improvements, structures and fixtures now or
hereafter located on or in the Land Parcels, including, without limitation,
the building located at 1500 Bay Road, Miami Beach, Florida 33139 being used
for residential apartments, containing 1277 units and known as "Morton
Towers."
5.2 THE REAL PROPERTY. As used herein, the term "REAL PROPERTY"
shall include (i) the Land Parcels, (ii) the Improvements, (iii) all
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apparatus, equipment and appliances affixed to and used in connection with
the operation or occupancy of the Land Parcels and the Improvements (such as
heating, air conditioning or mechanical systems and facilities used to
provide any utility services, refrigeration, ventilation, waste disposal or
other services) and now or hereafter located on or in the Land Parcels or the
Improvements, and (iv) all of the rights, privileges and easements
appurtenant to or used in connection with the Land Parcels and the
Improvements, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances, all development rights, air rights, water, water
rights and water stock relating to the Land Parcels, all strips and gores,
all of Transferor's right, title and interest in and to any streets, alleys,
easements, rights-of-way, public ways, or other rights appurtenant, adjacent
or connected to the Land Parcels.
5.3 THE PERSONAL PROPERTY. As used herein, the term "PERSONAL
PROPERTY" shall mean all of that certain tangible personal property,
equipment and supplies owned by Transferor and situated at the Real Property
and used by Transferor in connection with the use, operation, maintenance or
repair of the Real Property, including, without limitation, all Personal
Property described on EXHIBIT "G" attached hereto.
5.4 THE INTANGIBLE PROPERTY. As used herein, the term
"INTANGIBLE PROPERTY" shall mean all of that certain intangible property owned
by Transferor and used by Transferor in connection with the Real Property and/or
the Personal Property, including, without limitation, all of Transferor's right,
title and interest in, to and under: (i) the Leases, all contract rights, books,
records, reports, test results, environmental assessments, if any, as-built
plans, specifications and other similar documents and materials relating to the
use, operation, maintenance, repair, construction or fabrication of the Real
Property or the Personal Property; (ii) all rights, if any, in and to the name
"Morton Towers;" (iii) all transferable business licenses, architectural, site,
landscaping or other permits, applications, approvals, authorizations and other
entitlements affecting the Real Property; and (iv) all transferable guarantees,
warranties and utility contracts relating to the Real Property.
6. CONDITIONS TO CLOSING.
6.1 TRANSFEREE'S CONDITIONS. The obligation of Transferee to
accept the Property in accordance with this Agreement is subject to the
following conditions precedent (and conditions concurrent, with respect to
deliveries to be made by the parties at Closing) (the "TRANSFEREE'S CLOSING
CONDITIONS"), which
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conditions may be waived, or the time for satisfaction thereof extended, by
Transferee only in a writing executed by Transferee (provided, however, that
any such waiver shall not affect Transferee's ability to pursue any remedy it
may have with respect to any breach hereunder by Transferor):
6.1.1 TITLE. Title Company shall be prepared and irrevocably
committed to issue to Transferee after the Closing Date (with an effective
date as of the Closing Date) an American Land Title Association extended
coverage owner's policy of title insurance in favor of Transferee for the
Real Property in an amount equal to the Contribution Value showing fee title
to the Property vested in Transferee or Transferee's nominee, with those
endorsements reasonably requested by Transferee, subject only to the
Permitted Exceptions (the "OWNER'S TITLE POLICY").
6.1.2 TRANSFEROR'S DUE PERFORMANCE. All of the
representations and warranties of Transferor set forth in this Agreement
shall have been true, correct and complete in all material respects as of the
Execution Date and, as of the Closing Date, there shall be no Material
Adverse Change (as hereinafter defined) in any of the representations and
warranties of Transferor set forth in this Agreement. Transferor, on or
prior to the Closing Date, shall have complied with and/or performed all of
the obligations, covenants and agreements required on the part of Transferor
to be complied with or performed pursuant to the terms of this Agreement. As
used herein, the term "MATERIAL ADVERSE CHANGE" shall mean a change in
circumstance which has a direct and significant reduction in the value of the
property. A significant reduction shall be $500,000.00 or more.
6.1.3 PHYSICAL CONDITION OF PROPERTY. Subject to the
provisions of Section 11 below, the physical condition of the Property shall
be substantially the same on the Closing Date as on the Execution Date,
except for reasonable wear and tear and any damages due to any act of
Transferee, the Other Partners or their respective representatives.
6.1.4 BANKRUPTCY. No action or proceeding shall have been
commenced by or against Transferor or the Record Title Holders under the
federal bankruptcy code or any state law for the relief of debtors or for the
enforcement of the rights of creditors and no attachment, execution, lien or
levy shall have attached to or been issued with respect to their interests in
the Property or any portion thereof.
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6.15 LEASES. At the Closing, Transferor and the Record Title
Holders shall assign all of their rights and remedies under the Leases
(including, without limitation, the right to any security deposits and
prepaid rent) to Transferee and Transferee shall assume the obligations of
Transferor and the Record Title Holders with respect thereto, pursuant to
assignments of leases and security deposits (collectively, the "ASSIGNMENTS
OF LEASES") in the form of EXHIBIT "H" attached hereto.
6.16 BILL OF SALE. At the Closing, Transferor and the Record
Title Holders shall deliver to Transferee bills of sale and assignments
(collectively, the "BILLS OF SALE"), by which Transferor and the Record Title
Holders shall transfer to Transferee all the Personal Property and the
Intangible Property, but excluding the Leases, in each case free of all liens
and encumbrances, in the form of EXHIBIT "I" attached hereto.
6.17 NON-FOREIGN AFFIDAVIT. On or before the Closing,
Transferor and the Record Title Holders shall deliver to Transferee Non-Foreign
Affidavits (collectively "NON-FOREIGN AFFIDAVIT") in the form of EXHIBIT "J"
attached hereto executed by Transferor and each of the Record Title Holders.
6.18 ACKNOWLEDGMENT. At the Closing, Transferor shall deliver
to Transferee acknowledgments (collectively, the "ACKNOWLEDGMENTS"), pursuant
to which each of the OP Unit Recipients accepts its limited partnership
interest in, and is admitted as a limited partner of Transferee in the form
of EXHIBIT "K" attached hereto.
6.19 NO MORATORIA. No moratorium, statute, regulation,
ordinance, legislation, order, judgment, ruling or decree of any governmental
agency or of any court shall have been enacted, adopted, issued, entered or
pending which is directed specifically at the Property and which would have a
material adverse effect on the value of the Property.
6.1.10 INVESTOR QUESTIONNAIRES. Transferor shall have
delivered the Investor Questionnaires to Transferee in accordance with the
terms of Section 4.1.3 hereof.
6.1.10.1 PROPERTY QUESTIONNAIRE. Transferor shall have
delivered the Property Questionnaire to Transferee in accordance with the terms
of Section 4.1.2 hereof.
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6.2 FAILURE OF TRANSFEREE'S CLOSING CONDITIONS. Subject to the
provisions of Sections 6.3 and 12.3 hereof and Transferee's rights under
Section 12.2 hereof with respect to any default by Transferor (including,
without limitation, any default in the performance of any covenants of
Transferor set forth in this Section 6), if any of the Transferee's Closing
Conditions have not been fulfilled within the applicable time periods,
Transferee may:
6.2.1 waive the Transferee's Closing Condition and close Escrow
in accordance with this Agreement, without adjustment or abatement of the
Contribution Value; or
6.2.2 pursue all of its rights and remedies pursuant to the
terms of Section 12.2 hereof (provided, however, that if the only conditions
not to be fulfilled are (a) those set forth in Section 6.1.1 or Section 6.1.9
hereof or (b) the existence of any Material Adverse Change (as defined in
Section 6.1.2 hereof) in the representations and warranties of Transferor set
forth in this Agreement (but only to the extent that such representations and
warranties were true, correct and complete as of the Execution Date, and
became untrue, incorrect or incomplete after the Execution Date as a result
of such Material Adverse Change), the parties hereby acknowledge and agree
that such failure shall not be considered a default by Transferor under this
Agreement and, in the event that Transferee elects not to waive such failure,
its sole and exclusive remedy for such failure shall be as follows: (i) this
Agreement shall terminate and shall be of no further force or effect and
neither party shall have any further rights or obligations hereunder, other
than pursuant to any provision hereof which expressly survives the
termination of this Agreement; (ii) Escrow Agent shall return the Deposit to
Transferee; (iii) Escrow Agent shall return the Transferor Deposit to
Transferor; (iv) all other documents, instruments and funds delivered into
Escrow shall be returned to the party that delivered the same into Escrow;
and (v) the parties shall equally share the cancellation charges of Title
Company and Escrow Agent, if any).
6.3 TRANSFEROR'S FAILURE TO SECURE RECORD TITLE HOLDERS CONSENT.
Notwithstanding anything to the contrary in this Agreement (including, without
limitation, Section 6.2.2 hereof), in the event that the Closing does not occur
in accordance with the terms hereof solely as a result of the Signing Partners'
failure to secure each of the Record Title Holder's (including, without
limitation, the Other Partners') performance required to complete the
transactions contemplated hereby, then, on the "Extended Closing Date" (as
hereinafter defined), (i) Escrow Agent shall return the Deposit to Transferee,
(ii) Transferor
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shall pay for all of the cancellation charges of Title Company and Escrow
Agent, if any, (iii) Escrow Agent shall deliver the Transferor Deposit to
Transferee as liquidated damages in accordance with Section 12.3 hereof and
(iv) neither party shall thereafter have any rights or obligations hereunder,
other than pursuant to any provision hereof which expressly survives the
termination of this Agreement. Notwithstanding anything to the contrary
herein, Transferee shall have the right but not the obligation to proceed to
the Closing without the performance of the Other Partners in which event the
Signing Partners shall deliver to Transferee at the Closing (in addition to
their other delivery obligations hereunder) an assignment of all of the
Signing Partners' right, title and interest in and to any claims they may
have against the Other Partners in connection with the Property.
6.4 TRANSFEROR'S CONDITIONS. The obligation of Transferor to
contribute the Property in accordance with this Agreement is subject to the
following conditions precedent (and conditions concurrent, with respect to
deliveries to be made by the parties at Closing) (the "TRANSFEROR'S CLOSING
CONDITIONS"), which conditions may be waived, or the time for satisfaction
thereof extended, by Transferor only in a writing executed by Transferor
(provided, however, that any such waiver shall not affect Transferor's ability
to pursue any remedy it may have with respect to any breach hereunder by
Transferee):
6.4.1 TRANSFEREE'S DUE PERFORMANCE. All of the
representations and warranties of Transferee set forth in this Agreement
shall be true, correct and complete in all material respects as of the
Closing Date, and Transferee, on or prior to the Closing Date, shall have
complied with and/or performed all of the obligations, covenants and
agreements required on the part of Transferee to be complied with or
performed pursuant to the terms of this Agreement.
6.4.2 BANKRUPTCY. No action or proceeding shall have
been commenced by or against Transferee under the federal bankruptcy code or
any state law for the relief of debtors or for the enforcement of the rights
of creditors.
6.4.3 NO SUSPENSION IN TRADING. There shall be no
suspension in the trading of the shares in the REIT.
6.5 FAILURE OF TRANSFEROR'S CLOSING CONDITIONS. Subject to
Transferor's rights under Section 12.1 hereof with respect to any default by
Transferee (including, without limitation, any default in the performance of
any covenants of Transferee set forth in this Section 6), if any of the
Transferor's
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Closing Conditions have not been fulfilled within the applicable time periods,
Transferor may:
6.5.1 waive the Transferor's Closing Condition and close Escrow
in accordance with this Agreement, without adjustment or abatement of the
Contribution Value; or
6.5.2 pursue all of its rights and remedies pursuant to the
terms of Section 12.1 hereof.
6.6 VARIATIONS IN OP UNIT VALUE.
6.6.1 UNIT VALUE DEFINITIONS. As used herein, "UNIT VALUE"
shall mean, on any given day, with respect to each OP Unit, the price per
share on the New York Stock Exchange (the "NYSE") for the Common Stock at the
close of the immediately preceding day on which the Common Stock is traded.
As used herein, "AVERAGE UNIT VALUE" shall mean, on any given day, with
respect to each OP Unit, the average of the closing price per share of the
Common Stock on the NYSE for each of the ten (10) immediately preceding days
on which the Common Stock is traded.
6.6.2 TRANSFEREE'S RIGHT TO EXTEND CLOSING DATE OR TERMINATE
AGREEMENT.
6.6.2.1 In the event that the Average Unit Value as
of the Intended Closing Date or, if applicable, as of the Extended Closing
Date, is less than $23.50 per share (the "TRANSFEREE FLOOR PRICE"), then
Transferee, in its sole and absolute discretion by written notice to
Transferor and Escrow Agent delivered on the Intended Closing Date or the
Extended Closing Date, as the case may be, may:
(a) elect to terminate this Agreement, in which case
(subject to the terms of Section 6.6.2.3 hereof) Escrow Agent shall return
the Deposit to Transferee, Escrow Agent shall return the Transferor Deposit
to Transferor, all other documents, instruments and funds delivered into
Escrow shall be returned to the party that delivered the same into Escrow,
the parties shall equally share the cancellation charges of Escrow Agent
and Title Company, if any, and neither party shall have any further rights
or obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement; or
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(b) elect to extend the Closing Date to a date that is
not later than thirty (30) Business Days following the Intended Closing
Date or the Extended Closing Date, as the case may be, and the Closing
shall occur on the date (the "TRANSFEREE EXTENDED CLOSING DATE") thereafter
selected by Transferee upon five (5) Business Days' prior written notice to
Transferor and Escrow Agent, provided that such Transferee Extended Closing
Date shall occur within such thirty (30) Business Day period following the
Intended Closing Date or the Extended Closing Date, as the case may be.
6.6.2.2 In the event that Transferee elects to extend
the Closing Date to the Transferee Extended Closing Date or Transferor has
elected to extend the Closing Date to the Transferor Extended Closing Date
(as hereinafter defined) and the Average Unit Value as of either the
Transferee Extended Closing Date or the Transferor Extended Closing Date is
less than the Transferee Floor Price, then Transferee, in its sole and
absolute discretion by written notice to Transferor and Escrow Agent
delivered on the applicable Extended Closing Date may elect to terminate this
Agreement, in which case, subject to Section 6.6.2.3 hereof, Escrow Agent
shall return the Deposit to Transferee, Escrow Agent shall return the
Transferor Deposit to Transferor, all other documents, instruments and funds
delivered into Escrow shall be returned to the party that delivered the same
into Escrow, the parties shall equally share the cancellation charges of
Escrow Agent and Title Company, if any, and neither party shall have any
further rights or obligations hereunder, other than pursuant to any provision
hereof which expressly survives the termination of this Agreement.
6.6.2.3 Notwithstanding the foregoing provisions of
this Section 6.6.2, in the event that Transferee elects to terminate this
Agreement pursuant to the terms of this Section 6.6.2, Transferor may override
Transferee's election by delivering written notice ("TRANSFEROR'S OVERRIDING
NOTICE") to Transferee and Escrow Agent within one (1) Business Day of
Transferor's receipt of written notice from Transferee (indicating that
Transferee elects to terminate pursuant to the terms of this Section 6.6.2), in
which case, (i) the Transferee Floor Price shall be used in lieu of the Average
Unit Value, for the purposes of calculating the OP Units and the Cash Amount,
and (ii) the Closing shall take place on the date selected by Transferor in
Transferor's Overriding Notice, provided that such date shall be on or before
the fifth (5th) Business Days following Transferee's receipt of Transferor's
Overriding Notice.
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6.6.3 TRANSFEROR'S RIGHT TO EXTEND CLOSING DATE OR TERMINATE
AGREEMENT.
6.6.3.1 In the event that the Average Unit Value as
of the Intended Closing Date or, if applicable, as of the Extended Closing
Date, is either (i) less than $23.50 per share (the "TRANSFEROR FLOOR PRICE")
or (ii) greater than $35.00 per share (the "TRANSFEROR CAP PRICE"), then
Transferor, in its sole and absolute discretion by written notice to
Transferee and Escrow Agent delivered on the Intended Closing Date or the
Extended Closing Date, as the case may be, may:
(a) elect to terminate this Agreement, in which case
(subject to the terms of Section 6.6.3.3 hereof) Escrow Agent shall return
the Deposit to Transferee, Escrow Agent shall return the Transferor Deposit
to Transferor, all other documents, instruments and funds delivered into
Escrow shall be returned to the party that delivered the same into Escrow,
the parties shall equally share the cancellation charges of Escrow Agent
and Title Company, if any, and neither party shall have any further rights
or obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement; or
(b) elect to extend the Closing Date to a date that is
not later than thirty (30) Business Days following the Intended Closing
Date or the Extended Closing Date, as the case may be, and the Closing
shall occur on the date (the "TRANSFEROR EXTENDED CLOSING DATE") thereafter
selected by Transferor upon five (5) Business Days' prior written notice to
Transferee and Escrow Agent, provided that such Transferor Extended Closing
Date shall occur within such thirty (30) Business Day period following the
Intended Closing Date or the Extended Closing Date, as the case may be.
6.6.3.2 In the event that Transferor elects to extend
the Closing Date to the Transferor Extended Closing Date or Transferee has
elected to extend the Closing Date to the Transferee Extended Closing Date
and the Average Unit Value as of either the Transferor Extended Closing Date
or the Transferee Extended Closing Date is less than the Transferor Floor
Price or greater than the Transferor Cap Price, then Transferor, in its sole
and absolute discretion by written notice to Transferee and Escrow Agent
delivered on the applicable Extended Closing Date may elect to terminate this
Agreement, in which case, subject to Section 6.6.3.3 hereof, Escrow Agent
shall return the
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Deposit to Transferee, Escrow Agent shall return the Transferor Deposit to
Transferor, all other documents, instruments and funds delivered into Escrow
shall be returned to the party that delivered the same into Escrow, the
parties shall equally share the cancellation charges of Escrow Agent and
Title Company, if any, and neither party shall have any further rights or
obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement.
6.6.3.3 Notwithstanding the foregoing provisions of
this Section 6.6.3, in the event that Transferor elects to terminate this
Agreement pursuant to the terms of this Section 6.6.3 as a result of the fact
that the Average Unit Value is greater than the Transferor Cap Price, then,
Transferee may override Transferor's election by delivering written notice
("TRANSFEREE'S OVERRIDING NOTICE") to Transferor and Escrow Agent within one
(1) Business Day of Transferee's receipt of written notice from Transferor
(indicating that Transferor elects to terminate pursuant to the terms of this
Section 6.6.3 as a result of the fact that the Average Unit Value is greater
than the Transferor Cap Price), in which case, (i) the Transferor Cap Price
shall be used in lieu of the Average Unit Value, for the purposes of
calculating the OP Units and the Cash Amount, and (ii) the Closing shall take
place on the date selected by Transferee in Transferee's Overriding Notice,
provided that such date shall be on or before the fifth (5th) Business Days
following Transferor's receipt of Transferee's Overriding Notice. In the
event that Transferor elects to terminate this Agreement pursuant to the
terms of this Section 6.6.3 as a result of the fact that the Average Unit
Value is less than the Transferor Floor Price, Transferee shall have no right
to override such election.
7. CLOSING.
7.1 CLOSING DATE. Subject to the provisions of this Agreement, the
"Closing" (as defined below) shall take place on the thirtieth (30th) day
following the Due Diligence Termination Date (the "INTENDED CLOSING DATE");
provided, however, that in the event that the Signing Partners have not
obtained the joinder and consent of each of the Record Title Holders on or
before the Intended Closing Date, then by written notice to Transferee, the
Signing Partners may (by delivering written notice to Transferee) elect to
extend the Closing Date to a date no later than September 30, 1997 (the date
set forth in such notice shall also be referred to herein as an "EXTENDED
CLOSING DATE") in order to obtain such consents and joinders.
Notwithstanding the foregoing, the Closing Date shall also be subject to (i)
Transferee's right to extend the Closing Date pursuant to Section
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4.2.2 hereof, (ii) each party's right to extend the Closing Date pursuant to
Section 6.6 hereof and (iii) any further extension or acceleration of the
Closing as the parties hereto may agree. As used herein, the following terms
shall have the following meanings: (i) the "CLOSING" shall mean the
recordation of the Deeds in the Official Records of the County of Dade (the
"OFFICIAL RECORDS"); and (ii) the "CLOSING DATE" shall mean the date upon
which the Closing actually occurs.
7.2 DELIVERIES BY TRANSFEROR. On or before the Closing Date,
Transferor, at its sole cost and expense, shall deliver or cause to be
delivered into Escrow the following documents and instruments, each dated as
of the Closing Date, in addition to the other items and payments required by
this Agreement to be delivered by Transferor:
7.2.1 DEEDS. The original executed and acknowledged Deeds
from each of the Record Title Holders conveying the Real Property to
Transferee;
7.2.2 NON-FOREIGN AFFIDAVIT. The original Non-Foreign
Affidavits, executed by Transferor and the Record Title Holders;
7.2.3 ASSIGNMENTS OF LEASES. Four (4) original executed
counterparts of each of the Assignments of Leases;
7.2.4 BILLS OF SALE. Four (4) original executed counterparts
of each of the Bills of Sale;
7.2.5 PROOF OF AUTHORITY. Such proof of Transferor's authority
and authorization to enter into this Agreement and the transaction
contemplated hereby, and such proof of the power and authority of the
individual(s) executing or delivering any instruments, documents or
certificates on behalf of Transferor to act for and bind Transferor as may be
reasonably required by Title Company or Transferee;
7.2.6 CASH. Cash in an amount equal to the amount by which
Transferor's share of Closing Costs exceeds the Cash Amount Balance; and
7.2.7 ACKNOWLEDGMENTS. From each of the OP Unit Recipients
receiving OP Units, two (2) original executed counterparts of the
Acknowledgments;
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7.2.8 REGISTRATION RIGHTS AGREEMENTS. Four (4) original
executed counterparts of a Registration Rights Agreement in the form of EXHIBIT
"L" attached hereto and made a part hereof (the "REGISTRATION RIGHTS
AGREEMENT");
7.2.9 OTHER. Such other documents and instruments (including,
without limitation, affidavits reasonably required by the Title Company to
facilitate the issuance of the Owner's Title Policy at the Closing prior to the
recordation of the Deeds), signed and properly acknowledged by Transferor, if
appropriate, as may be reasonably required by Transferee, Title Company, Escrow
Agent, or otherwise in order to effectuate the provisions of this Agreement and
the Closing of the transactions contemplated herein.
7.3 DELIVERIES BY TRANSFEREE. On or before the Closing,
Transferee, at its sole cost and expense, shall deliver or cause to be
delivered into Escrow (i) cash in an amount equal to Transferee's share of
prorations and Closing Costs, as provided in Sections 7.5 and 7.6 hereof,
respectively, and the balance of the Cash Portion as provided in Section 2.2
hereof, (ii) four (4) original executed and acknowledged counterparts of each
of the Assignments of Leases, (iii) certificates (the "CERTIFICATES")
representing the OP Units issued pursuant to Section 2.2 hereof, (iv) two (2)
executed original counterparts of each of the Acknowledgments, executed by
AIMCO-G.P., Inc., a Delaware corporation, (iv) four (4) original counterparts
of the Registration Rights Agreement executed by the REIT, and (v) such other
documents and instruments, signed and properly acknowledged by Transferee, if
appropriate, as may reasonably be required by Transferor, Escrow Agent or
otherwise in order to effectuate the provisions of this Agreement and the
closing of the transactions contemplated herein.
7.4 ACTIONS BY ESCROW AGENT. Provided that Escrow Agent shall not
have received written notice from Transferee or Transferor of the failure of
any condition to the Closing or of the termination of the Escrow and this
Agreement, when Transferee and Transferor have deposited into Escrow the
documents and funds required by this Agreement, and Title Company is
irrevocably committed to issue the Owner's Title Policy after the Closing,
with an effective date as of the Closing Date (as evidenced by the Title
Company's delivery to Transferee of a "mark-up" of the Title Commitment on or
prior to the Closing), Escrow Agent shall, in the order and manner herein
below indicated, take the following actions:
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7.4.1 FUNDS AND CERTIFICATES. Upon the Title Company's
irrevocable and unconditional commitment to issue the Owner's Title Policy (as
evidenced by its delivery to Transferee of a "mark-up" of the Title Commitment
on or prior to the Closing), disburse all funds and deliver the Certificates
deposited with it by Transferee as follows:
7.4.1.1 pursuant to the "Closing Statement" (as
hereinafter defined), retain for Escrow Agent's own account all escrow fees
and costs, disburse to Title Company the fees and expenses incurred in
connection with the issuance of the Owner's Title Policy, and disburse to any
other persons or entities entitled thereto the amount of any other Closing
Costs;
7.4.1.2 deliver to Transferor (on behalf of all of the
OP Unit Recipients) the Certificates;
7.4.1.3 disburse funds necessary to discharge and
release any and all Monetary Encumbrances against the Property;
7.4.1.4 pay to Transferor (on behalf of all of the OP
Unit Recipients) the remaining Cash Amount Balance and the Transferor Deposit,
if any, after all disbursements pursuant to Sections 7.4.1.1 and 7.4.1.3 above
have been completed; and
7.4.1.5 disburse to Transferee any remaining funds in
the possession of Escrow Agent after payments pursuant to Sections 7.4.1.1,
7.4.1.3 and 7.4.1.4 above have been completed.
7.4.2 RECORDING. Upon the Title Company's irrevocable and
unconditional commitment to issue the Owner's Title Policy (as evidenced by
its delivery to Transferee of a "mark-up" of the Title Commitment on or prior
to the Closing), cause the Deeds and any other documents which the parties
hereto may mutually direct to be recorded in the Official Records and obtain
conformed copies thereof for distribution to Transferee and Transferor.
7.4.3 DELIVERY OF DOCUMENTS. Deliver (a) to Transferee and
Transferor each, two (2) originals of all documents deposited into Escrow,
other than the Deeds and the Non-Foreign Affidavits, and (b) to Transferee,
the Non-Foreign Affidavits.
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7.5 PRORATIONS. For the purpose of this Section 7.5, all references
to Transferor shall mean collectively Transferor and each of the Record Title
Holders.
7.5.1 Rentals, revenues, and other income, if any, from the
Property, taxes, assessments, improvement bonds, service or other contract
fees, utility costs, and other expenses affecting the Property shall be
prorated between Transferee and Transferor as of the Closing Date; provided,
however, that Transferor shall receive a credit at the Closing in an amount
equal to the rentals that are delinquent as of the Closing Date, but only to
the extent that such delinquent rentals are due and owing from Tenants
occupying a portion of the Property on the Closing Date; and provided
further, that Transferee shall be entitled to any and all payments
subsequently received in satisfaction of such delinquent rentals,
notwithstanding the fact that such rentals are attributable to a period prior
to Closing. For purposes of calculating prorations, Transferee shall be
deemed to be title holder of the Property, and therefore entitled to the
income and responsible for the expenses, after 12:01 a.m. on the Closing
Date. After the Closing, Transferor shall have no right to proceed in any
manner or make any claim against Tenants for rents that were delinquent as of
the Closing Date, except to the extent that any such person no longer
occupies any portion of the Property. All non-delinquent real estate taxes
or assessments on the Property shall be prorated based on the actual current
tax bill, but if such tax bill has not yet been received by Transferor by the
Closing Date or if supplemental taxes are assessed after the Closing for the
period prior to the Closing, the parties shall make any necessary adjustment
after the Closing by cash payment to the party entitled thereto so that
Transferor shall have borne all real property taxes, including all
supplemental taxes, allocable to the period prior to the Closing and
Transferee shall bear all real property taxes, including all supplemental
taxes, allocable to the period from and after the Closing. If any expenses
attributable to the Property and allocable to the period prior to the Closing
are discovered or billed after the Closing, the parties shall make any
necessary adjustment after the Closing by cash payment to the party entitled
thereto so that Transferor shall have borne all expenses allocable to the
period prior to the Closing and Transferee shall bear all expenses allocable
to the period from and after the Closing. The provisions of this Section 7.5
shall survive the Closing.
7.5.2 Fifteen (15) Business Days prior to the Closing, Escrow
Agent shall deliver to each of the parties for their review and approval a
preliminary closing statement (the "PRELIMINARY CLOSING STATEMENT") setting
forth (i) the proration amounts allocable to each of the parties pursuant to
this Section
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7.5, and (ii) the Closing Costs. Based on each of the party's comments, if any,
regarding the Preliminary Closing Statement, Escrow Agent shall revise the
Preliminary Closing Statement and deliver a final, signed version of a closing
statement to each of the parties at the Closing (the "CLOSING STATEMENT").
7.6 CLOSING COSTS. Each party shall pay its own costs and expenses
arising in connection with the Closing (including, without limitation, its own
attorney and advisor fees), except the following costs (the "CLOSING COSTS"):
7.6.1 all documentary transfer, stamp, sales and other taxes
related to the transfer of the Property, which shall be paid by Transferee;
7.6.2 Escrow Agent's escrow fees and costs, which shall be
paid one-half (1/2) by Transferor and one-half (1/2) by Transferee (provided,
however, that notwithstanding the foregoing, Transferor shall pay no more than
$1,000 for its one-half of such escrow fees and costs and any such escrow fees
and costs in excess of $1,000 shall be paid by Transferee);
7.6.3 the cost of the Survey, which shall be paid by
Transferee;
7.6.4 the cost of the Owner's Title Policy and all
endorsements thereto, which shall be paid by Transferee;
7.6.5 all recording fees, which shall be paid by Transferor;
and
7.6.6 any and all prepayment or other penalties or amounts due
and payable in connection with the discharge and satisfaction of any Monetary
Encumbrances.
7.7 DELIVERIES OUTSIDE OF ESCROW. Transferor shall deliver and cause
the Record Title Holders to deliver possession of the Property, subject only to
the Permitted Exceptions, to Transferee upon the Closing. Further, Transferor
hereby covenants and agrees to deliver and cause the Record Title Holders to
deliver to Transferee, on or prior to the Closing, the following items:
7.7.1 INTANGIBLE PROPERTY. The Intangible Property,
including, without limitation, the original Leases.
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7.7.2 PERSONAL PROPERTY. The Personal Property, including,
without limitation, any and all keys, pass cards, remote controls, security
codes, computer software and other devices relating to access to the
Improvements.
7.7.3 NOTICES.
7.7.3.1 NOTICES TO TENANTS. A letter for each
Tenant in form and substance reasonably acceptable to Transferee, duly
executed by Transferor, dated as of the Closing Date and addressed to the
Tenants, informing such Tenants of the transfer of the Property and the
assignment of the Leases to Transferee together with an instruction to pay
all amounts due under the Leases following the Closing Date to Transferee.
7.7.3.2 SERVICE CONTRACTS NOTICES. A letter to
each of the vendors of the service contracts for the Property
(collectively, the "SERVICE CONTRACTS") in form and substance reasonably
acceptable to Transferee, duly executed by Transferor, dated as of the
Closing Date and addressed to each Service Contract vendor, informing said
vendors of the assignment of the Service Contracts to Transferee.
8. TRANSFEROR'S REPRESENTATIONS AND WARRANTIES.
For the purposes of this Article 8, "Transferor's actual knowledge"
shall mean the actual knowledge of the parties constituting Transferor without
having undertaken any special inquiry or investigation. Transferor represents
and warrants to and agrees with Transferee, as of the Execution Date and as of
the Closing Date (subject to any modifications that may be made by Transferor
pursuant to the terms of Section 10.1.4 hereof), as follows:
8.1 LEASES.
8.1.1 LEASE SCHEDULE. To Transferor's actual knowledge, the
schedule attached hereto as EXHIBIT "M" (the "LEASE SCHEDULE") is true, correct
and complete with respect to: (i) the leases, licenses, tenancies and other
occupancy agreements (whether written or oral) now in effect at the Property
(the "LEASES"), (ii) the dates of the Leases and of all amendments thereof,
(iii) the identities of the tenants under the Leases (the "TENANTS"), (iv) the
space occupied by the Tenants, (v) the commencement and expiration dates of the
Leases, (vi)
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the annual rents payable thereunder, (vii) the base year for any escalated rent
thereunder, (viii) the currently escalated rents, (ix) any options to renew or
cancel the Leases, (x) any rights of first refusal and (xi) any outstanding
agreements, written or oral, to amend or otherwise modify any of the Leases.
8.12 DELIVERY OF LEASES. To Transferor's actual knowledge, true
and complete copies of all Leases and all amendments, guarantees and other
documents relating thereto shall be delivered to Transferee in accordance with
Section 4.1.1 hereof; provided, however, that for purposes of this Agreement,
Transferee may rely on the data set forth on the Lease Schedule.
8.13 SECURITY DEPOSITS. Except as set forth on the Lease
Schedule, there are no security deposits held by the landlord under any of the
Leases and there are no arrearages in rent or additional rent under any of the
Leases.
8.14 NO TENANT DISPUTES. Except as set forth on the Lease
Schedule or on EXHIBIT "N" attached hereto, (i) Transferor has not received any
written notice from any Tenant whatsoever that would change the terms of such
Tenant's tenancy, including, without limitation, any notice to cancel, renew or
extend any Lease or supply any additional services to such Tenant, and (ii)
Transferor has not received any written notification from any Tenant that it
disputes the computation of the rents payable pursuant to its Lease.
8.15 NO PRE-PAID RENT. No Tenant has paid any rent for more
than one (1) month in advance, except as may otherwise be set forth on the
Leasxe Schedule.
8.2 EXISTING CONTRACTS. Except as set forth on the schedule
attached hereto as EXHIBIT "O", neither Transferor nor any agent of
Transferor has executed any service, maintenance, repair, management, supply
or other contracts affecting the Property which would be binding on
Transferee subsequent to the Closing.
8.3 INSURANCE. True, correct and complete copies of all insurance
policies maintained by Transferor with respect to the Property shall be made
available to Transferee as part of the Property Documents. All premiums due on
such insurance policies have been paid by Transferor and Transferor will
maintain such insurance policies from the Execution Date through the Closing
Date or earlier termination of this Agreement. Transferor has not received and
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has no knowledge of any notice or request from any insurance company
requesting the performance of any work or alteration with respect to the
Property. Transferor has received no notice from any insurance company
concerning, nor is Transferor aware of, any defects or inadequacies in the
Property which, if not corrected, would result in the termination of
insurance coverage or increase its cost.
8.4 LITIGATION. Except as disclosed on the schedule attached
hereto as EXHIBIT "P" (the "LITIGATION SCHEDULE"), there are no actions,
suits or proceedings before any judicial or quasi-judicial body, by any
governmental authority or other third party, pending, or to Transferor's
actual knowledge, threatened, against or affecting all or any portion of the
Property and, to Transferor's knowledge, there is no basis for any such
action. Except for eviction or similar actions against Tenants brought in
the ordinary course of Transferor's operation of the Property and which are
disclosed on the Litigation Schedule or have been disclosed to Transferee in
writing prior to the Closing, there are no actions, suits or proceedings
pending, contemplated or threatened by Transferor in connection with all or
any portion of the Property or Transferor's ownership, rights, use,
development or maintenance thereof, including, without limitation, tax
reduction proceedings; and from and after the date hereof, except for routine
eviction actions (which Transferor shall assign to Transferee at the
Closing), Transferor shall not commence or allow to be commenced on its
behalf any action, suit or proceeding with respect to all or any portion of
the Property without the prior written consent of Transferee. No
attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending, or,
to Transferor's actual knowledge, threatened, against Transferor.
8.5 COMPLIANCE WITH LAWS. Except as disclosed on the schedule
attached hereto as EXHIBIT "Q", to Transferor's actual knowledge, Transferor
has not received any written notice indicating that the Property is not in
full compliance with all existing laws, rules, regulations, ordinances and
orders of all applicable federal, state, city and other governmental
authorities in effect as of the date of this Agreement (collectively,
"LAWS"), including, without limitation, (i) the Americans with Disabilities
Act, 42 U.S.C. Section 12102, et seq., together with all rules, regulations
and official interpretations promulgated pursuant thereto, and (ii) all Laws
with respect to zoning, building, fire and health codes and sanitation.
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8.6 CONDEMNATION; SPECIAL ASSESSMENTS. Transferor has no actual
knowledge of any pending or contemplated condemnation, eminent domain or similar
proceeding or special assessment which would affect the Property or any part
thereof in any way whatsoever.
8.7 TOXIC OR HAZARDOUS MATERIALS.
8.7.1 DEFINITIONS.
(a) "ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation or written notice by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (i) the manufacture, treatment, processing,
distribution, use, transport, handling, deposit, storage, disposal, leaking or
other presence, or release into the environment of any "Hazardous Substance" (as
defined below) in, at, on, under or about any location, whether or not owned or
operated by Transferor or (ii) circumstances forming the basis of any violation,
or alleged violation, of any "Environmental Law" (as defined below).
(b) "ENVIRONMENTAL LAWS" means all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment, including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, including, without limitation, the Resource Conservation
and Recovery Act (42 U.S.C. 6901 ET SEQ.), as amended, and the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601, ET
SEQ.), as amended.
(c) "HAZARDOUS SUBSTANCE" means any chemical, pollutant,
contaminant, waste, toxic substance, petroleum or petroleum product defined in,
governed under or regulated pursuant to any Environmental Laws, including,
without limitation, the Resource Conservation and Recovery Act (42 U.S.C. 6901
ET SEQ.), as amended, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601, ET SEQ.), as amended, and any state analogs or
counterparts, as amended.
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8.7.2 REPRESENTATIONS AND WARRANTIES. Transferor represents
and warrants to and agrees with Transferee that, as of the Execution Date,
and as of the Closing, to Transferor's actual knowledge and except as
disclosed on EXHIBIT "R" attached hereto: (i) Transferor is in full
compliance with all applicable Environmental Laws relating to the Property,
which compliance includes, but is not limited to, the possession by
Transferor of all permits and other governmental authorities required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (ii) Transferor has not received any written communication, whether
from a governmental authority, citizens group, employee or otherwise, that
alleges that Transferor is not in such full compliance and there are no
circumstances that may prevent or interfere with such full compliance in the
future; (iii) there is no Environmental Claim pending or threatened with
regard to the Property; (iv) there are no past or present actions,
activities, circumstances, conditions, events or incidents relating to the
Property, including, without limitation, the manufacture, treatment,
processing, distribution, use, transport, handling, deposit, storage,
disposal, leaking, or other presence or release of any Hazardous Substance,
that could form the basis of any Environmental Claim against Transferor or
against any person or entity, including, without limitation, persons or
entities whose liability for any such Environmental Claim Transferor has or
may have retained or assumed either contractually or by operation of law; and
(v) without in any way limiting the generality of the foregoing, (a)
Transferor has not stored, disposed or arranged for the disposal of Hazardous
Substances on the Property, (b) there are no underground storage tanks
located on the Property, (c) there is no asbestos contained in or forming
part of any Improvement, including, without limitation, any building,
building component, structure or office space on the Property, and (d) no
polychlorinated biphenyls (PCBs) are used or stored at the Property.
8.7.3 SURVIVAL. Notwithstanding the limitations of any
provision to the contrary contained herein, the representations, warranties,
covenants and indemnification set forth in this Section 8.7 shall survive the
Closing.
8.8 NO CONFLICTS. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with, or, with or without
notice or the passage of time or both, result in a breach of any of the terms
or provisions of, or constitute a default under, any indenture, deed of
trust, mortgage, loan agreement, or other document, or instrument or
agreement, oral or written, to which Transferor is a party or by which
Transferor or the Property is bound, or any applicable regulation of any
governmental agency, or any judgment, order
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or decree of any court having jurisdiction over Transferor or all or any
portion of the Property.
8.9 DUE ORGANIZATION; CONSENTS. Except with respect to the
consents of the Other Partners, which Transferor shall use its Commercially
Reasonable Efforts to obtain prior to the Closing, no consent of any partner,
shareholder, beneficiary, creditor, investor, judicial or administrative body,
governmental authority or other party is required in connection herewith which
has not been obtained.
8.10 TRANSFEROR AUTHORITY; VALIDITY OF AGREEMENTS. Except with
respect to the consents of the Other Partners, which Transferor shall use its
Commercially Reasonable Efforts to obtain prior to the Closing, Transferor
has full right, power and authority to sell and convey the Property to
Transferee as provided in this Agreement and to carry out its obligations
hereunder. The individual(s) executing this Agreement and the instruments
referenced herein on behalf of Transferor have the legal power, right and
actual authority to bind Transferor to the terms hereof and thereof. This
Agreement is, and all instruments, documents and agreements to be executed by
Transferor in connection herewith shall be, duly authorized, executed and
delivered by Transferor and shall be valid, binding and enforceable
obligations of Transferor.
8.11 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Transferor is not
a foreign person within the meaning of 42 USCS Section 1445(f)(3).
8.12 OP UNITS.
8.12.1 OP UNIT RECIPIENT REPRESENTATIONS. Transferor hereby
represents and warrants and agrees as of the Closing Date, on behalf of itself
and each of the OP Unit Recipients (and in so doing represents that it has the
authority from the OP Unit Recipients to make the representations, warranties,
acknowledgements and agreements made in this Agreement on their behalf):
(a) The Partners identified on EXHIBIT "A-1" attached hereto,
constitute all of the partners of the Partnership and no other person or entity
has any claim or interest in any of the Property.
(b) Transferor and each of the OP Unit Recipients is, and at
the Closing will be, either (i) an "Accredited Investor," as defined in Rule
501 of the General Rules and Regulations promulgated under the Securities Act
of
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1933, as amended (the "ACT"), or (ii) a person or entity with such knowledge
and experience in financial and business matters that such OP Unit Recipient
is capable of evaluating the merits and risks of an investment in OP Units.
(c) Transferor and each of the OP Unit Recipients (i) have
received and reviewed that certain Private Placement Memorandum, dated as of
December 5, 1996, and (ii) have had access to such additional financial and
other information, and have been afforded the opportunity to ask questions of
representatives of Transferee, and to receive answers to those questions, as
they have deemed necessary in connection with the acquisition of the OP Units
that may be acquired pursuant hereto.
(d) Transferor and each of the OP Unit Recipients
(i) acknowledge that the OP Units that will be acquired pursuant to this
Agreement are being acquired in transactions not involving any public offering
within the meaning of the Act, and that the OP Units have not been registered
and may never be registered under the Act, and (ii) agree not to offer, sell,
transfer or otherwise dispose of all or any portion of the OP Units in the
absence of registration under the Act unless they deliver to Transferee an
opinion of counsel reasonably satisfactory to Transferee, in form and substance
satisfactory to Transferee, to the effect that the proposed sale, transfer or
other disposition may be effected without registration under the Act and under
applicable state securities or blue sky laws.
(e) Transferor and each of the OP Unit Recipients acknowledge
and agree that the OP Units will be in the form of physical certificates and
that unless such OP Units shall have been registered under the Act, the
certificates will bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS TRANSFEROR DELIVERS TO THE COMPANY AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITH-
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OUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS.
(f) Transferor and each of the OP Unit Recipients (i) have
such knowledge and experience in financial and business matters that each
such party is capable of evaluating the merits and risks of an acquisition of
the OP Units and is able to bear the economic risk of a loss of an investment
in the OP Units and (ii) are not acquiring any OP Units with a view to the
distribution of the OP Units or any present intention of offering or selling
any of the OP Units in a transaction that would violate the Act or the
securities laws of any state or any other applicable jurisdiction.
(g) With respect to individual or partnership tax and other
economic considerations involved in the transactions contemplated by this
Agreement, including an investment in OP Units, neither Transferor nor the OP
Unit Recipients are relying on Transferee (or any agent or representative of
Transferee). Transferor and each of the OP Unit Recipients have carefully
considered and have, to the extent each believes such discussion necessary,
discussed with its professional legal, tax, accounting and financial advisors
the suitability of an investment in the OP Units for its particular tax and
financial situation and has determined that the OP Units being acquired by
Transferor and the OP Unit Recipients are a suitable investment for Transferor
and the OP Unit Recipients.
8.12.2 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations
or warranties by Transferor, on behalf of itself or the OP Unit Recipients, in
this Agreement, nor any document, exhibit, statement, certificate or schedule
heretofore or hereinafter furnished to Transferee pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements or facts contained therein not
misleading.
8.13 TAXES. There are no liens for "Taxes" (as hereinafter defined)
upon the Property, except liens for Taxes that are not yet due and payable. As
used herein, the term "TAXES" shall mean all taxes, charges, fees, levies or
other assessments, together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority upon the Property.
8.14 SURVIVAL. All of the representations, warranties and
agreements of Transferor (on behalf of itself and each of the OP Unit
Recipients) set forth in this Agreement shall be true upon the Execution Date,
shall be deemed to
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be repeated at and as of the Closing Date (except as otherwise disclosed in
writing to Transferee) and shall survive the delivery of the Deeds and the
Closing.
9. TRANSFEREE'S REPRESENTATIONS AND WARRANTIES.
Transferee represents and warrants to Transferor, as of the Execution
Date and as of the Closing, as follows:
9.1 NO CONFLICTS. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with, or, with or without
notice or the passage of time or both, result in a breach of any of the terms
or provisions of, or constitute a default under, any indenture, deed of
trust, mortgage, loan agreement, or other document or instrument to which
Transferee is a party or by which Transferee is bound, or any applicable
regulation of any governmental agency, or any judgment, order or decree of
any court having jurisdiction over Transferee or all or any portion of the
Property.
9.2 DUE ORGANIZATION. Transferee is a limited partnership duly
organized and existing in good standing under the laws of the State of
Delaware, with its principal place of business in the State of Colorado. All
requisite partnership action has been taken by Transferee in connection with
entering into this Agreement, and will be taken prior to the Closing in
connection with, the execution and delivery of the instruments referenced
herein and the consummation of the transactions contemplated hereby.
9.3 TRANSFEREE'S AUTHORITY; VALIDITY OF AGREEMENTS. Transferee has
full right, power and authority to accept the Property from Transferor as
provided in this Agreement and to carry out its obligations hereunder. The
individual(s) executing this Agreement and the instruments referenced herein
on behalf of Transferee have the legal power, right and actual authority to
bind Transferee to the terms hereof and thereof. This Agreement is, and all
other documents and instruments to be executed and delivered by Transferee in
connection with this Agreement shall be, duly authorized, executed and
delivered by Transferee and shall be valid, binding and enforceable
obligations of Transferee.
9.4 CONDITION OF IMPROVEMENTS. Transferee is purchasing the
Improvements in "AS-IS" condition and, except as otherwise provided herein,
Transferor makes no representations or warranties as to the condition of the
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Improvements. Without in any way limiting the generality of the immediately
preceding sentence, Transferee and Transferor further acknowledge and agree that
in entering into this Agreement and acquiring the Property:
9.4.1 Transferee hereby acknowledges that, except as otherwise
expressly provided herein, Transferor has not made, will not and does not make
any warranties or representations, whether express or implied, with respect to
the Property, their condition, the value, profitability, developability or
marketability thereof;
9.4.2 Transferee acknowledges that, except as otherwise
expressly provided herein, with respect to the Property, Transferor has not and
will not make any warranties, whether express or implied, of merchantability,
habitability or fitness for a particular use;
9.4.3 Transferee acknowledges that Transferee has made
and/or shall be given an adequate opportunity to make such legal, factual and
other inquiries and investigations as Transferee deems necessary, desirable
or appropriate with respect to the Property, the value or marketability
thereof and of the appurtenances thereto. Such inquiries and investigations
of Transferee shall be deemed to include, but shall not be limited to, the
condition of all portions of the Property, such state of facts as an accurate
survey would show, and the present and future zoning, ordinances, resolutions
and regulations of the city, county and state where the Property are located;
9.4.4 Transferee acknowledges that Transferee has not
relied, and is not relying, upon any information, document, projection, pro
forma, statement, representation, guaranty or warranty (whether express or
implied, or oral or written or material or immaterial) that may have been
given by or made by or on behalf of Transferor other than the representations
and warranties set forth herein and in the documents delivered by Transferor
and the Record Title Holders at or prior to the Closing.
9.5 SURVIVAL. All of the representations, warranties and
agreements of Transferee set forth in this Agreement shall be true upon the
Execution Date, shall be deemed to be repeated at and as of the Closing Date
(except as otherwise set forth in writing to Transferor) and shall survive
the delivery of the Deeds and the Closing.
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10. ADDITIONAL COVENANTS.
10.1 ADDITIONAL COVENANTS OF TRANSFEROR. In addition to the
covenants and agreements of Transferor set forth elsewhere in this Agreement,
Transferor covenants and agrees (on behalf of itself and the Record Title
Holders) that between the Execution Date and the Closing Date:
10.1.1 TITLE. Transferor shall not directly or indirectly
sell, contribute, assign or create any right, title or interest whatsoever in
or to the Property, or create or permit to exist thereon any lien, charge or
encumbrance other than the Permitted Exceptions, or enter into any agreement
to do any of the foregoing, including, without limitation, any new leases (or
renewals, modifications or extensions of any Leases) (other than leases
entered into in the ordinary course of Transferor's business) or any new
service contracts (or renewals, modifications or extensions of any existing
service contracts), without the prior written consent of Transferee (which
consent may be granted or withheld in Transferee's sole and absolute
discretion).
10.1.2 DEVELOPMENT ACTIVITIES. Transferor shall not take
any actions with respect to the development of the Property, including,
without limitation, applying for, pursuing, accepting or obtaining any
permits, approvals or other development entitlements from any governmental or
other regulatory entities or finalizing or entering into any agreements
relating thereto without the prior written consent of Transferee (which
consent may be granted or withheld in Transferee's sole and absolute
discretion). Transferor hereby agrees to reasonably cooperate with
Transferee in Transferee's efforts to obtain such governmental approvals as
Transferee deems necessary to permit Transferee to operate the Property as
Transferee wishes.
10.2.3 NO PRE-PAID RENT. Transferor shall not accept any
rent from any Tenant (or any new tenant under any new lease to which
Transferee has consented) for more than one (1) month in advance of the
payment date.
10.1.4 NOTICE OF CHANGE IN CIRCUMSTANCES. Transferor shall
promptly notify Transferee of any change (collectively, the "CHANGES") in any
condition with respect to the Property or any portion thereof or of any event
or circumstance of which Transferor obtains actual knowledge subsequent to
the Execution Date which (a) entitles Transferee to terminate this Agreement
pursuant to the terms of Section 6.2 hereof, (b) makes any representation or
warranty of
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Transferor to Transferee under this Agreement untrue or misleading in any
material respect, or (c) makes any covenant or agreement of Transferor under
this Agreement incapable or substantially less likely of being performed, it
being expressly understood that Transferor's obligation to provide
information to Transferee under this Section 10.1.4 shall in no way relieve
Transferor of any liability for a breach by Transferor of any of its
representations, warranties, covenants or agreements under this Agreement.
In addition to the foregoing, on or before the Due Diligence Termination
Date, Transferor shall deliver to Transferee written notice of any Changes of
which Transferor has actual knowledge that have occurred since or subsequent
to the Execution Date. Notwithstanding anything to the contrary contained
herein, if Transferor becomes aware after the Execution Date of any Changes
that (i) make any representation or warranty set forth in this Agreement
(which was true, correct and complete as of the Execution Date) untrue,
incorrect or incomplete or (ii) make any covenant or agreement of Transferor
under this Agreement (which was, as of the Execution Date, capable of being
performed) incapable or substantially less likely of being performed, such
Changes shall not constitute a default by Transferor hereunder, but
Transferor shall promptly notify Transferee of such Changes.
10.1.5 NO DEFAULTS; MAINTENANCE OF PROPERTY. Transferor
shall not default with respect to the performance of any material obligation
relating to the Property, including, without limitation, the payment of all
amounts due and the performance of all obligations with respect to any
existing indebtedness or existing leases or contracts affecting the Property.
Transferor shall operate and maintain the Property in accordance with
Transferor's past practice and all applicable Laws, rules and regulations
affecting the Property or any portion thereof.
10.1.6 EXCLUSIVE NEGOTIATIONS. Transferor shall (i) remove
the Property from the market, and (ii) cease and refrain from any and all
negotiations with any other prospective optionees or purchasers of the
Property.
10.1.7 SERVICE, MANAGEMENT AND EMPLOYMENT CONTRACTS.
Transferor shall not enter into, extend, renew or replace any existing
service, property management or employment contracts in respect of the
Property without the prior written consent of Transferee (which consent may
be withheld in Transferee's sole and absolute discretion), unless the same
shall be cancellable without penalty or premium, upon not more than thirty
(30) days' notice from the owner of the Property.
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10.1.8 NEW LEASES. At Transferee's request, Transferor shall
advise Transferee of any and all negotiations with current or potential tenants
of the Property. Transferor shall not enter into any new lease or extend any
Lease for a term in excess of one (1) year without Transferee's prior written
consent, which consent may be withheld in Transferee's sole and absolute
discretion.
10.1.9 CAPITAL IMPROVEMENTS. Except with respect to the
Contracted Capital Improvements, Transferor shall not make any material
capital improvements to the Property without the prior written consent of
Transferee (which consent may be granted or withheld in Transferee's sole and
absolute discretion). In connection with any proposed capital improvement,
Transferor shall submit to Transferee (i) a detailed written description of
the proposed capital improvement (together with the cost thereof) and (ii)
copies of any contracts to be entered into in connection therewith. All
capital improvement approved by Transferee in accordance with this Section
10.1.9 shall be referred to herein as "APPROVED CAPITAL IMPROVEMENTS."
10.2 ADDITIONAL COVENANTS OF TRANSFEREE. In addition to the
covenants and agreements of Transferee set forth elsewhere in this Agreement,
Transferee covenants and agrees as follows:
10.2.1 TRANSFER RESTRICTION. Transferee covenants and
agrees that from the Closing until the earlier to occur of (i) the date that
is five (5) years after the Closing Date, or (ii) the date on which
Transferor and the OP Unit Recipients collectively hold less than fifty
percent (50%) of the OP Units delivered collectively to them at the Closing,
Transferee will not voluntarily transfer all or any portion of the Property
in a transaction that could reasonably be expected to result in recognition
of taxable gains by Transferor or the OP Unit Recipients. Transferor and
each of the OP Unit Recipients acknowledge and agree that a tax-deferred
exchange of the Property or any portion thereof pursuant to Section 1031 of
the IRC would not reasonably be expected to result in recognition of taxable
gains by Transferor or the OP Unit Recipients and, therefore, is a permitted
disposition pursuant to the foregoing sentence. Notwithstanding anything to
the contrary in the first (1st) sentence of this Section 10.2.1, Transferor
acknowledges and agrees that Transferee may contribute all or any portion of
the Property to an affiliate of Transferee and that such contribution is
permitted hereunder, provided that any such permitted transferee agrees to be
bound by the provisions of this Section 10.2.1.
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10.2.2 ALLOCATION OF GAIN AND LOSS. Any allocation of gain
or loss of Transferee that is made to any Transferor under Section 704(c) of
the IRC shall be made under the traditional method prescribed under Treasury
Regulation Section 1.704-3 alone, without curative or remedial allocations,
and any such allocation under Section 704(c) shall be subject to the
reasonable approval of such Transferor.
10.2.3 EMPLOYEES. Transferee shall give due consideration
to the hiring of the on-site employees employed at the Property at the time
of the Closing; provided, however, that Transferee shall have no obligation
whatsoever to hire any such employees.
10.2.4 FREQUENCY AND AMOUNT OF DIVIDENDS AND DISTRIBUTIONS.
Transferee covenants and agrees on behalf of itself and the REIT that
distributions or dividends, as applicable, with respect to OP Units and
Common Stock are made with the same frequency and in the same amount;
provided, however, that the initial distributions with respect to OP Units
accrue only for the period applicable from the date of the issuance of such
OP Units to the distributee.
10.2.5 SURVIVAL. The covenants set forth in this Section
10.2 shall survive the Closing and shall apply to the period following the
Closing.
11. RISK OF LOSS.
11.1 CONDEMNATION. If, prior to the Closing, all or any material
portion of either or both of the Land Parcels or any other part of the
Property is taken by condemnation or eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), Transferor
shall immediately notify Transferee of such fact. In such event, Transferee
shall have the option to terminate this Agreement upon written notice to
Transferor given not later than thirty (30) days after receipt of such notice
from Transferor. Upon such termination, Escrow Agent shall return the
Deposit to Transferee, the parties shall equally share the cancellation
charges of Escrow Agent and Title Company, if any, and neither party shall
have any further rights or obligations hereunder, other than pursuant to any
provision hereof which expressly survives the termination of this Agreement.
Transferee shall have no right to terminate this Agreement as a result of any
non-material taking of the Property. If Transferee does not elect or has no
right to terminate this Agreement, Transferor shall assign and turn over to
Transferee, and Transferee shall be entitled to receive and
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keep, all awards for the taking by condemnation and Transferee shall be
deemed to have accepted the Property subject to the taking without reduction
in the Contribution Value.
11.2 CASUALTY. Prior to the Closing and notwithstanding the
pendency of this Agreement, the entire risk of loss or damage by earthquake,
flood, landslide, fire or other casualty shall be borne and assumed by
Transferor. If, prior to the Closing any material part of the Improvements
located on either or both of the Land Parcels or any other part of the
Property is damaged or destroyed by earthquake, flood, landslide, fire or
other casualty, Transferor shall immediately notify Transferee of such fact.
In such event, Transferee shall have the option to terminate this Agreement
in the same manner as provided in Section 11.1 hereof upon written notice to
Transferor given not later than thirty (30) days after receipt of any such
notice from Transferor. Transferee shall have no right to terminate this
Agreement as a result of any non-material damage or destruction of the
Property. If Transferee does not elect or has no right to terminate this
Agreement, (i) Transferor shall assign and turn over, and Transferee shall be
entitled to receive and keep, all insurance proceeds payable with respect to
such damage or destruction (which shall then be repaired or not at
Transferee's option and cost) and Transferee shall receive as a credit
against the Contribution Value an amount equal to the deductible amount with
respect to the insurance and the parties shall proceed to the Closing
pursuant to the terms hereof without modification of the terms of this
Agreement, and (ii) Transferee shall have the right to participate in any
adjustment of the insurance claim; provided, however, that (subject to
Transferee's reasonable approval) Transferor shall be entitled to use such
insurance proceeds, or any portion thereof, to the extent necessary to repair
(or commence repairing) any damage or destruction prior to the Closing and,
to the extent that such insurance proceeds are used by Transferor in
accordance with the terms hereof, Transferee shall not be entitled to receive
such proceeds.
12. REMEDIES.
12.1 DEFAULT BY TRANSFEREE. In the event that the Escrow and this
transaction fail to close solely as a result of the default of Transferee in
the performance of its obligations under this Agreement, Transferee and
Transferor agree that Transferor's actual damages would be impracticable or
extremely difficult to fix. The parties therefore agree that in the event
that Escrow and this transaction fail to close solely as a result of the
default of Transferee in the performance of its obligations hereunder,
Transferor, as Transferor's sole and exclusive remedy, is entitled to either
(i) elect to file an action for specific perfor-
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mance of this Agreement to compel Transferee to perform hereunder or (ii)
elect to receive liquidated damages in the amount of the Deposit (exclusive
of interest and dividends earned thereon). In no event shall Transferor be
entitled to seek any type of damages from Transferee as a result of the
failure to close, other than the liquidated damages described in the
preceding sentence, the enforcement of the indemnity set forth in Section
4.1.4 hereof and attorneys' fees pursuant to Section 15.16 hereof. In the
event that Escrow fails to close solely as a result of Transferee's default
and Transferor elects to receive liquidated damages under clause (ii) above,
then the parties hereby agree and instruct Escrow Agent as follows: (a) this
Agreement and the rights and obligations of Transferee and Transferor
hereunder and the Escrow created hereby shall terminate and neither party
shall have any further rights or obligations hereunder, other than pursuant
to any provision hereof which expressly survives the termination of this
Agreement; (b) Escrow Agent shall return promptly all documents and
instruments to the parties who deposited the same; (c) Escrow Agent shall
deliver the Transferor Deposit to Transferor pursuant to Transferor's
instructions; (d) Escrow Agent shall deliver the Deposit (exclusive of
interest and dividends earned thereon) to Transferor pursuant to Transferor's
instructions, and the same shall be the full, agreed and liquidated damages;
(e) all Title Company and Escrow Agent cancellation charges, if any, shall be
charged to Transferee; and (f) Escrow Agent shall deliver all interest and
dividends earned on the Deposit to Transferee pursuant to Transferee's
instructions.
Transferor and Transferee acknowledge that they have read and
understand the provisions of this Section 12.1, and by their initials
immediately below agree to be bound by its terms.
/s/ /s/
- ------------ ------------
Transferor's Transferee's
Initials Initials
12.2 DEFAULT BY TRANSFEROR. In the event that the Escrow and this
transaction fail to close solely as a result of the default of Transferor in
the performance of its obligations under this Agreement, Transferee and
Transferor agree that Transferee's actual damages would be impracticable or
extremely difficult to fix. The parties therefore agree that in the event
that escrow and this transaction fail to close solely as a result of the
default of Transferor in the performance of its obligations hereunder,
Transferee, as Transferee's sole and exclusive remedy, is entitled to either
(i) elect to file an action for specific perfor-
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mance of this Agreement to compel Transferor to perform hereunder or (ii)
elect to receive liquidated damages in the amount of the Transferor Deposit
(exclusive of interest and dividends earned thereon). In no event shall
Transferee be entitled to seek any type of damages from Transferor as a
result of the failure to close, other than the liquidated damages described
in the preceding sentence, the delivery to Transferee of the Transferor
Deposit pursuant to Sections 6.3 and 12.3 hereof and attorneys' fees pursuant
to Section 15.16 hereof. In the event that Escrow fails to close solely as a
result of Transferor's default, and Transferee elects to receive liquidated
damages under clause (ii) above, then the parties hereby agree and instruct
Escrow Agent as follows: (a) this Agreement and the rights and obligations
of Transferee and Transferor hereunder and the Escrow created hereby shall
terminate and neither party shall have any further rights or obligations
hereunder, other than pursuant to any provision hereof which expressly
survives the termination of this Agreement; (b) Escrow Agent shall return
promptly all documents and instruments to the parties who deposited same; (c)
Escrow Agent shall deliver the Deposit to Transferee pursuant to Transferee's
instructions; (d) Escrow Agent shall deliver the Transferor Deposit
(exclusive of interest and dividends earned thereon) to Transferee pursuant
to Transferee's instructions, and the same shall be the full, agreed and
liquidated damages; (e) all Title Company and Escrow Agent cancellation
charges, if any, shall be charged to Transferor; and (f) Escrow Agent shall
deliver all interest and dividends earned on the Transferor Deposit to
Transferor pursuant to Transferor's instructions.
Transferor and Transferee acknowledge that they have read and
understand the provisions of this Section 12.2, and by their initials
immediately below agree to be bound by its terms.
/s/ /s/
- ------------ ------------
Transferor's Transferee's
Initials Initials
12.3 FAILURE TO OBTAIN OTHER PARTNER CONSENTS. In the event that
the Escrow and this transaction fail to close solely as a result of the
Signing Partners' failure to secure each of the Record Title Holder's
(including, without limitation, the Other Partners') performance required to
complete the transactions contemplated hereby, Transferee and Transferor
agree that Transferee's actual damages would be impracticable or extremely
difficult to fix. The parties therefore agree that in the event that Escrow
and this transaction fail to close solely as a result of the Signing
Partners' failure to secure each of the Record Title
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Holder's (including, without limitation, the Other Partners') performance
required to complete the transactions contemplated hereby, Transferee, as
Transferee's sole and exclusive remedy, is entitled to liquidated damages in
the amount of the Transferor Deposit (exclusive of interest and dividends
earned thereon). In the event that Escrow fails to close solely as a result
of such failure, then (notwithstanding anything to the contrary contained in
this Agreement, including, without limitation, Section 6.2.2 hereof) the
parties hereby agree and instruct Escrow Agent as follows: (i) this
Agreement and the rights and obligations of Transferee and Transferor
hereunder and the Escrow created hereby shall terminate and neither party
shall have any further rights or obligations hereunder, other than pursuant
to any provision hereof which expressly survives the termination of this
Agreement; (ii) Escrow Agent shall return promptly all documents and
instruments to the parties who deposited the same; (iii) Escrow Agent shall
deliver the Deposit to Transferee pursuant to Transferee's instructions; (iv)
Escrow Agent shall deliver the Transferor Deposit (exclusive of interest and
dividends earned thereon) to Transferee pursuant to Transferee's
instructions, and the same shall be the full, agreed and liquidated damages;
(v) all Title Company and Escrow Agent cancellation charges, if any, shall be
charged to Transferor; and (vi) Escrow Agent shall deliver all interest and
dividends earned on the Transferor Deposit to Transferor pursuant to
Transferor's instructions.
Transferor and Transferee acknowledge that they have read and
understand the provisions of this Section 12.3, and by their initials
immediately below agree to be bound by its terms.
/s/ /s/
- ------------ ------------
Transferor's Transferee's
Initials Initials
13. BROKERS.
Transferee and Transferor each hereby represent, warrant to and
agree with each other that it has not had, and shall not have, any dealings
with any third party to whom the payment of any broker's fee, finder's fee,
commission or other similar compensation ("COMMISSION") shall or may become
due or payable in connection with the transaction contemplated hereby, other
than with Aztec Group Inc. (the "BROKER"). Transferee hereby agrees to pay
all Commissions due and payable to the Broker in connection with the
transaction contemplated hereby pursuant to its separate agreement with the
Broker (and the parties
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hereby acknowledge and agree that Transferor shall have no obligation to pay
such Commissions, or any portion thereof, to the Broker). Transferor shall
indemnify, defend and hold Transferee harmless from and against any and all
claims, losses, damages, costs and expenses (including reasonable attorneys'
fees, charges and disbursements) incurred by Transferee by reason of any
breach or inaccuracy of the representation, warranty and agreement of
Transferor contained in this Section 13. Transferee shall indemnify,
protect, defend and hold Transferor harmless from and against any and all
claims, losses, damages, costs and expenses (including reasonable attorneys'
fees, charges and disbursements) incurred by Transferor by reason of any
breach or inaccuracy of the representation, warranty and agreement of
Transferee contained in this Section 13. The provisions of this Section 13
shall survive the Closing or earlier termination of this Agreement.
14. INDEMNIFICATION.
14.1 GENERAL INDEMNIFICATION. Transferee hereby agrees to
indemnify, defend and hold Transferor harmless from and against any claims,
demands, obligations, losses, costs, damages, liabilities, judgments or
expenses (including reasonable attorneys' fees, charges and disbursements)
(collectively, "CLAIMS") arising out of or in connection with the ownership,
operation or maintenance of the Property after the Closing. Transferor
hereby agrees to indemnify, defend and hold Transferee harmless from and
against any Claims arising out of or in connection with the ownership,
operation or maintenance of the Property prior to the Closing, as to which
(i) Transferor committed fraud and/or concealment in the making of any
representation, warranty or agreement with respect to the subject thereof and
(ii) Transferee did not discover such fraud and/or concealment prior to the
Closing. Except with respect to the parties' obligations under this Section
14.1, nothing contained in this Agreement is intended to apportion
responsibility for any Claims and, should any such Claims be discovered or
exist, the parties hereby acknowledge and agree that they shall each retain
and have available to them all rights and remedies under any applicable laws.
Each party shall do, execute and deliver, or shall cause to be done,
executed and delivered, all such further acts and instruments which the other
party may reasonably request in order to more fully effectuate the
indemnifications provided for in this Agreement. The obligation of the
constituent partners of Transferor to indemnify Transferee pursuant to any
provision of this Agreement shall be several but not joint and shall be
limited to the proportionate share of the Contribution Value received by each
such constituent partner at the Closing, as set forth on the notice
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to be delivered by Transferor to Transferee pursuant to Section 2.2 of this
Agreement.
14.2 SPECIFIC INDEMNIFICATION. Transferee hereby acknowledges that
(i) Transferee is aware of a lawsuit styled Juli Lawrence, et al, Plaintiffs,
vs. Richard Morton, Lottie Morton, and Sydney R. Newman, d/b/a Morton Towers,
Defendants, which is now pending in the Circuit Court of the 11th Judicial
Circuit in and for Dade County, Florida, as Case No 95-19477 CA 15 (the "MOLD
LITIGATION"), and (ii) Transferee will have an adequate opportunity to make
such legal, factual and other inquiries and investigations as Transferee
deems necessary, desirable and appropriate with respect to the Mold
Litigation, including, without limitation, the issues raised therein and the
potential for future expenses as a result of the facts thereof.
Notwithstanding anything to the contrary contained herein, this Section 14.2
is intended to be the only provision of this Agreement that governs the
parties' indemnification rights and obligations with respect to the Mold
Litigation and any mold and mildew on the Property. Transferor shall
indemnify, defend and hold Transferee harmless from and against any Claims
arising out of or in connection with the Mold Litigation, but only to the
extent that the damage which is the subject of such Claims occurred prior to
the Closing; provided, however, that the parties hereby acknowledge and agree
that this indemnification shall not apply to any Claims relating to any mold
or mildew on the Property other than Claims arising from the Mold Litigation
and then only to the extent that the damage which is the subject of such
Claims occurred prior to the Closing. Transferee shall indemnify, defend and
hold Transferor harmless from and against any Claims arising out of or in
connection with the Mold Litigation and any mold or mildew on the Property to
the extent that the damage which is the subject of such Claims occurred after
the Closing. In the event that a Claim involves damage suffered both before
and after Closing, then Transferor and Transferee agree to use reasonable,
good faith efforts to apportion such Claim among themselves. To the extent
that Transferee and Transferor cannot agree upon apportionment, then the
matter shall be submitted exclusively to binding arbitration in accordance
with the rules then in effect of the American Arbitration Association, and a
judgment upon the award rendered may be entered in any court having
jurisdiction thereof.
14.3 PROCEDURES. Each person to be indemnified pursuant to this
Agreement (each, an "INDEMNIFIED PARTY") hereby agrees to deliver prompt
written notice to each person indemnifying such Indemnified Party (each, an
"INDEMNIFYING PARTY") of the assertion of any claim, or the commencement of
any suit, action or proceeding, brought against or sought to be collected
from such
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Indemnified Party (each, a "THIRD PARTY CLAIM"). The Indemnifying Party
shall be entitled to participate in the defense and settlement of each Third
Party Claim; provided, however, that after the Closing, Transferee shall be
the party responsible (on its own or through any appropriate insurance
company) for pursuing any and all claims, suits, actions or proceedings that
are to be indemnified by either party pursuant to the terms hereof and, to
the extent that Transferor is the Indemnifying Party of such claim, suit,
action or proceeding, pursuant to the terms of this Agreement, Transferor
shall reimburse Transferee for Transferee's reasonable costs and expenses
incurred in connection therewith (including, without limitation, reasonable
attorneys' fees, charges and disbursements). Notwithstanding the foregoing
provisions of this Section 14.3, the Indemnified Party shall not, without the
prior written consent of the Indemnifying Party, effect any settlement of any
pending or threatened proceeding without the Indemnifying Party's prior
written consent (which consent shall not be unreasonably withheld or
delayed). In the event that any Indemnified Party has a claim (each, a
"DIRECT CLAIM") against any Indemnifying Party pursuant to this Agreement
that does not involve a Third Party Claim being asserted against or sought to
be collected from such Indemnified Party, the Indemnified Party shall
promptly deliver written notice of such claim ("NOTICE OF DIRECT CLAIM") to
the Indemnifying Party. If the parties are unable to resolve the Direct
Claim within thirty (30) days of the Indemnifying Party's receipt of the
Notice of Direct Claim, then the parties shall be entitled to resolve the
same in a court of law (subject to the provisions of Section 15.20 hereof).
14.4 SURVIVAL. The provisions of this Section 14 shall survive the
Closing.
15. MISCELLANEOUS PROVISIONS.
15.1 GOVERNING LAW. This Agreement and the legal relations between
the parties hereto shall be governed by and construed and enforced in
accordance with the laws of the State of Florida, without regard to its
principles of conflicts of law. The parties each hereby irrevocably consent
and submit to the jurisdiction of the courts in the State of Florida, County
of Dade for the purposes of all legal proceedings arising out of or relating
to this Agreement.
15.2 ENTIRE AGREEMENT; MODIFICATIONS; WAIVER.
15.2.1 ENTIRE AGREEMENT. This Agreement, including the
exhibits and schedules attached hereto, constitutes the entire agreement between
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Transferee and Transferor pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent,
negotiations and discussions, whether oral or written, of the parties, and
there are no warranties, representations or other agreements, express or
implied, made to either party by the other party in connection with the
subject matter hereof except as specifically set forth herein or in the
documents delivered pursuant hereto or in connection herewith.
15.2.2 MODIFICATION. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
15.2.3 NOTICES. All notices, consents, requests, reports,
demands or other communications hereunder (collectively, "NOTICES") shall be in
writing and may be given personally, by registered or certified mail, or by
Federal Express (or other reputable overnight delivery service).
To Transferee: AIMCO Properties, L.P.
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Harry Alcock
Telephone: (303) 757-8101
and to: AIMCO Properties, L.P.
510 West 6th Street, Suite 1000
Los Angeles, California 90014
Attention: Mr. Peter K. Kompaniez
Telephone: (213) 680-2936
With A Copy To: Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Allan G. Mutchnik, Esq.
Telephone: (213) 687-5391
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To Transferor: Mr. Richard Morton
80 S.W. Eighth Street, Suite 2590
Miami, Florida 33130
Telephone: (305) 377-0596
With A Copy To: Katz, Barron, Squitero, Faust & Berman, PA
2699 S. Bayshore Drive, 7th Floor
Miami, Florida 33133
Attention: Michael D. Katz, Esq.
Telephone: (305) 856-2444
To Escrow Chicago Title Insurance Company
Agent: 6303 Blue Lagoon Drive, Suite 100
Miami, Florida 33126
Attention: Mr. Albert Gomez-Vidal
Telephone: (305) 265-7000
or to such other address or such other person as the addressee party shall
have last designated by notice to the other party. All Notices shall be
deemed to have been given when received.
15.4 EXPENSES. Subject to the provision for payment of Closing
Costs in accordance with Section 7.6 hereof, whether or not the transactions
contemplated by this Agreement shall be consummated, all fees and expenses
incurred by any party hereto in connection with this Agreement shall be borne
by such party.
15.5 ASSIGNMENT.
15.5.1 TRANSFEROR'S RIGHT TO ASSIGN. Transferor shall not
have the right to assign, this Agreement or any portion therefor to delegate
any duties or obligations arising under this Agreement, voluntarily,
involuntarily or by operation of law, without Transferee's prior written
consent.
15.1.2 TRANSFEREE'S RIGHT TO ASSIGN. Transferee shall have
the right, power and authority to assign this Agreement or any portion of
this Agreement or Transferee's rights hereunder or to delegate any duties or
obligations arising under this Agreement, voluntarily, involuntarily or by
operation of law, without Transferor's consent, to any affiliate of
Transferee; provided,
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however, that no such assignment or delegation shall relieve Transferee of its
obligations or liabilities under this Agreement.
15.6 SEVERABILITY. Any provision or part of this Agreement which
is invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction.
15.7 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of Section 15.5 hereof, all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors and assigns.
Except as specifically set forth or referred to herein, nothing herein
expressed or implied is intended or shall be construed to confer upon or give
to any person or entity (including, without limitation, any employee of
Transferor), other than the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
15.8 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one
and the same instrument.
15.9 HEADINGS. The Section headings of this Agreement are for
convenience of reference only and shall not be deemed to modify, explain,
restrict, alter or affect the meaning or interpretation of any provision
hereof.
15.10 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
15.11 FURTHER ASSURANCES. In addition to the actions recited herein
and contemplated to be performed, executed, and/or delivered by Transferor
and Transferee, Transferor and Transferee agree to perform, execute and/or
deliver or cause to be performed, executed and/or delivered at closing or
after Closing any and all such further acts, instruments, deeds and
assurances as may be reasonably required to consummate the transactions
contemplated hereby.
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15.12 NUMBER AND GENDER. Whenever the singular number is used, and
when required by the context, the same includes the plural, and the masculine
gender includes the feminine and neuter genders.
15.13 CONSTRUCTION. This Agreement shall not be construed more
strictly against one party hereto than against any other party hereto merely
by virtue of the fact that it may have been prepared by counsel for one of
the parties.
15.14 POST-CLOSING ACCESS TO RECORDS. Upon receipt by Transferor of
Transferee's reasonable written request at anytime and from time to time
within a period of three (3) years after the Closing, Transferor shall, at
Transferor's principal place of business, during Transferor's normal business
hours, make all of Transferor's records relating to the Property available to
Transferee for inspection and copying (at Transferee's sole cost and expense).
15.15 EXHIBITS. All exhibits attached hereto are hereby
incorporated by reference as though set out in full herein.
15.16 ATTORNEYS' FEES. In the event that either party hereto brings
an action or proceeding against the other party to enforce or interpret any
of the covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover
all costs and expenses of such action or proceeding, including, without
limitation, attorneys' fees, charges, disbursements and the fees and costs of
expert witnesses.
15.17 BUSINESS DAYS. As used herein, the term "BUSINESS DAY" shall
mean a day that is not a Saturday, Sunday or legal holiday. In the event
that the date for the performance of any covenant or obligation under this
Agreement shall fall on a Saturday, Sunday or legal holiday, the date for
performance thereof shall be extended to the next Business Day.
15.18 RADON GAS. Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in buildings
in Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
15.19 TRUSTEE EXCULPATION: Transferee acknowledges and agrees that
a number of the partners constituting Transferor are trusts and the trustees
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therefor are acting solely "as trustee" and not individually and they have
not assumed any personal liability for the obligations of the trust or the
beneficiaries thereunder and, accordingly, the individual property of such
trustees shall not be subject to any claims of Transferee or any other claims
arising out of, in connection with or related to this Agreement.
15.20 WAIVER OF TRIAL BY JURY: THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR TRANSFEREE AND TRANSFEROR ENTERING INTO THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TRANSFEREE:
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.,
Its: General Partner
By: /s/ Peter K. Kopaniez
Peter K. Kompaniez
Vice President
TRANSFEROR:
EXECUTED BY THE PARTNERSHIP AND THE SIGNING PARTNERS,
ON BEHALF OF TRANSFEROR
THE PARTNERSHIP:
THE MORTON TOWERS PARTNERSHIP,
a Florida general partnership
By: /s/ Richard Morton
Name: Richard Morton
Its:
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THE SIGNING PARTNERS:
/s/ Robert W. Newman
Robert W. Newman
/s/ Janice Newman Rosenthal
Janice Newman Rosenthal
/s/ Richard Morton
Richard Morton
/s/ Alan Morton
Alan Morton
/s/ Monique Morton Berg
Monique Morton Berg
/s/ Richard Morton
Richard Morton, as Trustee under the Trust created
under the Last Will and Testament of James Morton,
dated August 15, 1966
/s/ Alan Morton
Alan Morton, as Trustee under the Trust created under
the Last Will and Testament of James Morton, dated
August 15, 1966
52
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THE SIGNING PARTNERS (CONTINUED):
/s/ Laurie Morton-Jungroth
Laurie Morton-Jungroth
/s/ Robert Christopher Morton
Robert Christopher Morton
/s/ Richard Morton
Richard Morton, as Trustee of the Trust created under
the Last Will and Testament of Lawrence Morton, for the
benefit of Alan Morton
/s/ Richard Morton
Richard Morton, as Trustee of the Trust created under
the Last Will and Testament of Lawrence Morton, for the
benefit of Cindy Beth Morton
/s/ Richard Morton
Richard Morton, as Trustee of the Trust created under
the Last Will and Testament of Lawrence Morton, for the
benefit of James Andrew Morton
53
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THE SIGNING PARTNERS (CONTINUED):
/s/ Richard Morton
Richard Morton, as Trustee of the Trust created under
the Last Will and Testament of Lawrence Morton, for the
benefit of Alexandra Morton
/s/ Richard Morton
Richard Morton, as Trustee of the Trust created under
the Last Will and Testament of Lawrence Morton, for the
benefit of Eden Morton Thibeault
/s/ Richard Morton
Richard Morton, as Trustee of the Trust created under
the Last Will and Testament of Lawrence Morton, for the
benefit of Adam Morton
/s/ Robert L. Turchin
Robert L. Turchin
/s/ Lucille Jaffe
Lucille Jaffe
54
<PAGE>
ESCROW AGENT:
The undersigned Escrow Agent accepts the foregoing Contribution Agreement and
Joint Escrow Instructions and agrees to act as Escrow Agent under this Agreement
in strict accordance with its terms.
CHICAGO TITLE INSURANCE COMPANY
By: /s/ Albert Gomez Vidal
Name: Albert Gomez Vidal
Title: Assistant Regional Counsel
55
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THE REIT:
In connection with the execution of the foregoing Acquisition and
Contribution Agreement and Joint Escrow Instructions (the "AGREEMENT"), by
and among The Morton Towers Partnership, a Florida general partnership (the
"PARTNERSHIP"), all of the partners of the Partnership (together with the
Partnership, "TRANSFEROR"), and AIMCO Properties, L.P., a Delaware limited
partnership, Apartment Investment and Management Company, a Maryland
corporation, hereby covenants to and agrees with Transferor that: (i)
distributions or dividends, as applicable, with respect to OP Units and
Common Stock (each as defined in the Agreement) are made with the same
frequency and in the same amount, provided, however, that the initial
distributions with respect to OP Units accrue only for the period applicable
from the date of the issuance of such OP Units to the distributee; and (ii)
the covenant and agreement set forth in the preceding clause (i) shall
survive (and shall apply to the period following) the Closing (as defined in
the Agreement).
Dated: April 11, 1997.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
a Maryland corporation
By: /s/ Peter K. Kompaniez
Peter K. Kompaniez
Vice Chairman
<PAGE>
- -------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
AIMCO PROPERTIES, L.P.
a Delaware limited partnership
----------------------
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
dated as of July 29, 1994
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . 17
Section 2.1 Organization. . . . . . . . . . . . . . . . . . . 17
Section 2.2 Name. . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.3 Registered Office and Agent; Principal Office . . 17
Section 2.4 Power of Attorney . . . . . . . . . . . . . . . . 18
Section 2.5 Term. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 3 PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.1 Purpose and Business. . . . . . . . . . . . . . . 19
Section 3.2 Powers. . . . . . . . . . . . . . . . . . . . . . 19
Section 3.3 Partnership Only for Purposes Specified . . . . . 20
Section 3.4 Representations and Warranties by the Parties . . 20
ARTICLE 4 CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 22
Section 4.1 Capital Contributions of the Partners . . . . . . 22
Section 4.2 Issuances of Additional Partnership Interests . . 22
Section 4.3 Additional Funds. . . . . . . . . . . . . . . . . 23
Section 4.4 Stock Option Plans. . . . . . . . . . . . . . . . 24
Section 4.5 No Interest; No Return. . . . . . . . . . . . . . 25
Section 4.6 Conversion of Junior Shares . . . . . . . . . . . 25
ARTICLE 5 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 5.1 Requirement and Characterization of Distributions 26
Section 5.2 Distributions in Kind . . . . . . . . . . . . . . 26
Section 5.3 Amounts Withheld. . . . . . . . . . . . . . . . . 26
Section 5.4 Distributions Upon Liquidation. . . . . . . . . . 26
Section 5.5 Restricted Distributions. . . . . . . . . . . . . 26
ARTICLE 6 ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Timing and Amount of Allocations of
Net Income and Net Loss . . . . . . . . . . . . . 27
Section 6.2 General Allocations . . . . . . . . . . . . . . . 27
Section 6.3 Additional Allocation Provisions. . . . . . . . . 27
Section 6.4 Tax Allocations.. . . . . . . . . . . . . . . . . 29
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ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS. . . . . . . . . . . . . . 30
Section 7.1 Management. . . . . . . . . . . . . . . . . . . . 30
Section 7.2 Certificate of Limited Partnership. . . . . . . . 33
Section 7.3 Restrictions on General Partner's Authority . . . 33
Section 7.4 Reimbursement of the General Partner. . . . . . . 35
Section 7.5 Outside Activities of the Previous
General Partner and the General Partner . . . . . 36
Section 7.6 Contracts with Affiliates . . . . . . . . . . . . 36
Section 7.7 Indemnification . . . . . . . . . . . . . . . . . 37
Section 7.8 Liability of the General Partner. . . . . . . . . 39
Section 7.9 Other Matters Concerning the General Partner. . . 40
Section 7.10 Title to Partnership Assets . . . . . . . . . . . 40
Section 7.11 Reliance by Third Parties . . . . . . . . . . . . 40
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . . 41
Section 8.1 Limitation of Liability . . . . . . . . . . . . . 41
Section 8.2 Management of Business. . . . . . . . . . . . . . 41
Section 8.3 Outside Activities of Limited Partners. . . . . . 41
Section 8.4 Return of Capital . . . . . . . . . . . . . . . . 42
Section 8.5 Rights of Limited Partners Relating to the
Partnership . . . . . . . . . . . . . . . . . . . 42
Section 8.6 Redemption Rights of Qualifying Parties . . . . . 43
Section 8.7 Partnership Right to Call Limited Partner
Interests . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . 47
Section 9.1 Records and Accounting. . . . . . . . . . . . . . 47
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . 47
Section 9.3 Reports . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 10 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.1 Preparation of Tax Returns. . . . . . . . . . . . 48
Section 10.2 Tax Elections . . . . . . . . . . . . . . . . . . 48
Section 10.3 Tax Matters Partner . . . . . . . . . . . . . . . 48
Section 10.4 Withholding . . . . . . . . . . . . . . . . . . . 49
ARTICLE 11 TRANSFERS AND WITHDRAWALS. . . . . . . . . . . . . . . . . . . . 50
Section 11.1 Transfer. . . . . . . . . . . . . . . . . . . . . 50
Section 11.2 Transfer of General Partner's Partnership
Interest. . . . . . . . . . . . . . . . . . . . . 51
Section 11.3 Limited Partners' Rights to Transfer. . . . . . . 51
Section 11.4 Substituted Limited Partners. . . . . . . . . . . 53
Section 11.5 Assignees . . . . . . . . . . . . . . . . . . . . 54
ii
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Section 11.6 General Provisions. . . . . . . . . . . . . . . . 54
ARTICLE 12 ADMISSION OF PARTNERS. . . . . . . . . . . . . . . . . . . . . . 55
Section 12.1 Admission of Successor General Partner. . . . . . 55
Section 12.2 Admission of Additional Limited Partners. . . . . 56
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership . . . . . . . . . . . . . . . 56
Section 12.4 Admission of Initial Limited Partners . . . . . . 56
Section 12.5 Limit on Number of Partners . . . . . . . . . . . 56
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . 57
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . 57
Section 13.2 Winding Up. . . . . . . . . . . . . . . . . . . . 57
Section 13.3 Deemed Distribution and Recontribution. . . . . . 59
Section 13.4 Rights of Limited Partners. . . . . . . . . . . . 59
Section 13.5 Notice of Dissolution . . . . . . . . . . . . . . 59
Section 13.6 Cancellation of Certificate of Limited
Partnership . . . . . . . . . . . . . . . . . . . 59
Section 13.7 Reasonable Time for Winding-Up. . . . . . . . . . 59
ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS;
AMENDMENTS; MEETINGS . . . . . . . . . . . . . . . . . . . . . . 60
Section 14.1 Procedures for Actions and Consents of Partners . 60
Section 14.2 Amendments. . . . . . . . . . . . . . . . . . . . 60
Section 14.3 Meetings of the Partners. . . . . . . . . . . . . 60
ARTICLE 15 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 61
Section 15.1 Addresses and Notice. . . . . . . . . . . . . . . 61
Section 15.2 Titles and Captions . . . . . . . . . . . . . . . 61
Section 15.3 Pronouns and Plurals. . . . . . . . . . . . . . . 61
Section 15.4 Further Action. . . . . . . . . . . . . . . . . . 61
Section 15.5 Binding Effect. . . . . . . . . . . . . . . . . . 61
Section 15.6 Waiver. . . . . . . . . . . . . . . . . . . . . . 61
Section 15.7 Counterparts. . . . . . . . . . . . . . . . . . . 62
Section 15.8 Applicable Law. . . . . . . . . . . . . . . . . . 62
Section 15.9 Entire Agreement. . . . . . . . . . . . . . . . . 62
Section 15.10 Invalidity of Provisions. . . . . . . . . . . . . 62
Section 15.11 Limitation to Preserve REIT Status. . . . . . . . 62
Section 15.12 No Partition. . . . . . . . . . . . . . . . . . . 63
Section 15.13 No Third-Party Rights Created Hereby. . . . . . . 63
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Page
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EXHIBIT A PARTNERS AND PARTNERSHIP UNITS . . . . . . . . . . . . . . . . . A-1
EXHIBIT B EXAMPLES REGARDING ADJUSTMENT FACTOR . . . . . . . . . . . . . . B-1
EXHIBIT C LIST OF DESIGNATED PARTIES . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D SUB-ALLOCATION OF GROSS FAIR MARKET VALUES . . . . . . . . . . . D-1
EXHIBIT E NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F FORM OF UNIT CERTIFICATE . . . . . . . . . . . . . . . . . . . . F-1
iv
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- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF AIMCO PROPERTIES, L.P., dated as of July 29, 1994, is entered into by and
among Apartment Investment and Management Company, a Maryland corporation
(the "PREVIOUS GENERAL PARTNER"), AIMCO-GP, Inc., a Delaware corporation (the
"GENERAL PARTNER"), AIMCO-LP, Inc., a Delaware corporation (the "SPECIAL
LIMITED PARTNER"), and the other Limited Partners (as defined below).
WHEREAS, the General Partner has submitted, and the Limited
Partners have approved, an amendment and restatement of the Agreement of
Limited Partnership of AIMCO Properties, L.P. on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in
this Agreement.
"ACT" means the Delaware Revised Uniform Limited Partnership Act,
as it may be amended from time to time, and any successor to such statute.
"ACTIONS" has the meaning set forth in Section 7.7 hereof.
"ADDITIONAL FUNDS" has the meaning set forth in Section 4.3.A hereof.
"ADDITIONAL LIMITED PARTNER" means a Person who is admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2
hereof and who is shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts that such
Partner is obligated to restore pursuant to this Agreement or by
operation of law upon liquidation of such Partner's Partnership
Interest or is deemed to be obligated to restore pursuant to the
penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
<PAGE>
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"ADJUSTMENT FACTOR" means 1.0; PROVIDED, HOWEVER, that in the event
that:
(i) the Previous General Partner (a) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a
distribution to all holders of its outstanding REIT Shares in
REIT Shares, (b) splits or subdivides its outstanding REIT Shares
or (c) effects a reverse stock split or otherwise combines its
outstanding REIT Shares into a smaller number of REIT Shares, the
Adjustment Factor shall be adjusted by multiplying the Adjustment
Factor previously in effect by a fraction, (i) the numerator of
which shall be the number of REIT Shares issued and outstanding
on the record date for such dividend, distribution, split,
subdivision, reverse split or combination (assuming for such
purposes that such dividend, distribution, split, subdivision,
reverse split or combination has occurred as of such time) and
(ii) the denominator of which shall be the actual number of REIT
Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination;
(ii) the Previous General Partner distributes any rights,
options or warrants to all holders of its REIT Shares to
subscribe for or to purchase or to otherwise acquire REIT Shares
(or other securities or rights convertible into, exchangeable for
or exercisable for REIT Shares) at a price per share less than
the Value of a REIT Share on the record date for such
distribution (each a "DISTRIBUTED RIGHT"), then the Adjustment
Factor shall be adjusted by multiplying the Adjustment Factor
previously in effect by a fraction (a) the numerator of which
shall be the number of REIT Shares issued and outstanding on the
record date plus the maximum number of REIT Shares purchasable
under such Distributed Rights and (b) the denominator of which
shall be the number of REIT Shares issued and outstanding on the
record date plus a fraction (1) the numerator of which is the
maximum number of REIT Shares purchasable under such Distributed
Rights times the minimum purchase price per REIT Share under such
Distributed Rights and (2) the denominator of which is the Value
of a REIT Share as of the record date; PROVIDED, HOWEVER, that,
if any such Distributed Rights expire or become no longer
exercisable, then the Adjustment Factor shall be adjusted,
effective retroactive to the date of distribution of the
Distributed Rights, to reflect a reduced maximum number of REIT
Shares or any change in the minimum purchase price for the
purposes of the above fraction; and
(iii) the Previous General Partner shall, by dividend or
otherwise, distribute to all holders of its REIT Shares evidences
of its indebtedness or assets (including securities, but
excluding any dividend or distribution referred to in subsection
(i) above), which evidences of indebtedness or assets relate to
assets not received by the Previous General Partner, the General
Partner and/or the Special Limited Partner pursuant to a pro rata
distribution by the Partnership, then the Adjustment Factor shall
be adjusted to equal the amount determined by multiplying the
Adjustment Factor in effect immediately prior to the close of
business on the date fixed for determination of shareholders
entitled to receive such distribution by a fraction (i) the
numerator shall be such Value of a REIT Share on the date fixed
for such determination and (ii) the denominator shall be the
Value of a REIT
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Share on the dates fixed for such determination less the then fair
market value (as determined by the General Partner, whose
determination shall be conclusive) of the portion of the evidences
of indebtedness or assets so distributed applicable to one REIT
Share.
Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if
any, for such event, PROVIDED, HOWEVER, that any Limited Partner may waive,
by written notice to the General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner, and, thereafter, such adjustment will not be effective as to
such Partnership Common Units. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on EXHIBIT B attached
hereto.
"AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "CONTROL" when used with
respect to any Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGREEMENT" means this Second Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P., as it may be amended,
supplemented or restated from time to time.
"APPLICABLE PERCENTAGE" has the meaning set forth in Section 8.6.B
hereof.
"APPRAISAL" means, with respect to any assets, the written opinion
of an independent third party experienced in the valuation of similar assets,
selected by the General Partner in good faith. Such opinion may be in the
form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial
point of view, to the Partnership.
"ASSIGNEE" means a Person to whom one or more Partnership Common
Units have been Transferred in a manner permitted under this Agreement, but
who has not become a Substituted Limited Partner, and who has the rights set
forth in Section 11.5 hereof.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made,
(i) the sum, without duplication, of:
(1) the Partnership's Net Income or Net Loss (as the
case may be) for such period,
(2) Depreciation and all other noncash charges to the
extent deducted in determining Net Income or Net Loss for such
period,
(3) the amount of any reduction in reserves of the
Partnership referred to in clause (ii)(6) below (including,
without limitation, reductions resulting because the General
Partner determines such amounts are no longer necessary),
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(4) the excess, if any, of the net cash proceeds from
the sale, exchange, disposition, financing or refinancing of
Partnership property for such period over the gain (or loss, as
the case may be) recognized from such sale, exchange,
disposition, financing or refinancing during such period
(excluding Terminating Capital Transactions), and
(5) all other cash received (including amounts
previously accrued as Net Income and amounts of deferred income)
or any net amounts borrowed by the Partnership for such period
that was not included in determining Net Income or Net Loss for
such period;
(ii) less the sum, without duplication, of:
(1) all principal debt payments made during such
period by the Partnership,
(2) capital expenditures made by the Partnership
during such period,
(3) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clause (ii)(1) or clause (ii)(2) above,
(4) all other expenditures and payments not deducted
in determining Net Income or Net Loss for such period (including
amounts paid in respect of expenses previously accrued),
(5) any amount included in determining Net Income or
Net Loss for such period that was not received by the Partnership
during such period,
(6) the amount of any increase in reserves (including,
without limitation, working capital reserves) established during
such period that the General Partner determines are necessary or
appropriate in its sole and absolute discretion, and
(7) any amount distributed or paid in redemption of
any Limited Partner Interest or Partnership Units including,
without limitation, any Cash Amount paid.
Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements
made, or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital
Contributions, whenever received.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day
on which commercial banks in Denver, Colorado, Los Angeles, California or New
York, New York are authorized or required by law to close.
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"CAPITAL ACCOUNT" means, with respect to any Partner, the Capital
Account maintained by the General Partner for such Partner on the
Partnership's books and records in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added
such Partner's Capital Contributions, such Partner's distributive share of
Net Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 6.3 hereof, and the principal amount of any
Partnership liabilities assumed by such Partner or that are secured by any
property distributed to such Partner.
(b) From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that are specially allocated pursuant to Section 6.3
hereof, and the principal amount of any liabilities of such Partner assumed
by the Partnership or that are secured by any property contributed by such
Partner to the Partnership.
(c) In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent that it
relates to the Transferred interest.
(d) In determining the principal amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(e) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Regulations. If the General Partner shall
determine that it is prudent to modify the manner in which the Capital
Accounts are maintained in order to comply with such Regulations, the General
Partner may make such modification provided that such modification will not
have a material effect on the amounts distributable to any Partner without
such Partner's Consent. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book purposes,
in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any
appropriate modifications in the event that unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b) or Section 1.704-2.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2
or 4.3 hereof or is deemed to contribute pursuant to Section 4.4 hereof.
"CASH AMOUNT" means the lesser of (a) an amount of cash equal to
the product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount
determined as of the applicable Valuation Date or (b) in the case of a
Declination followed by a Public Offering Funding, the Public Offering
Funding Amount.
"CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof
and the Act.
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"CHARTER" means the Articles of Amendment and Restatement of the
Previous General Partner filed with the Maryland State Department of
Assessments and Taxation on July 19, 1994, as amended, supplemented or
restated from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"COMPANY EMPLOYEE" has the meaning ascribed thereto in the Previous
General Partner's 1994 Stock Option Plan.
"CONSENT" means the consent to, approval of, or vote in favor of a
proposed action by a Partner given in accordance with Article 14 hereof.
"CONSENT OF THE LIMITED PARTNERS" means the Consent of a Majority
in Interest of the Limited Partners, which Consent shall be obtained prior to
the taking of any action for which it is required by this Agreement and,
except as otherwise provided in this Agreement, may be given or withheld by a
Majority in Interest of the Limited Partners, in their reasonable discretion.
"CONTRIBUTED PROPERTY" means each Property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to Code
Section 708).
"CONTROLLED ENTITY" means, as to any Limited Partner, (a) any
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Limited Partner or such Limited Partner's Family
Members, (b) any trust, whether or not revocable, of which such Limited
Partner or such Limited Partner's Family Members are the sole beneficiaries,
(c) any partnership of which such Limited Partner is the managing partner and
in which such Limited Partner or such Limited Partner's Family Members hold
partnership interests representing at least twenty-five percent (25%) of such
partnership's capital and profits and (d) any limited liability company of
which such Limited Partner is the manager and in which such Limited Partner
or such Limited Partner's Family Members hold membership interests
representing at least twenty-five percent (25%) of such limited liability
company's capital and profits.
"CONTROLLING PERSON" means any Person, whatever his or her title,
who performs executive or senior management functions for the General Partner
or its Affiliates similar to those of directors, executive management and
senior management, or any Person who either holds a two percent (2%) or more
equity interest in the General Partner or its Affiliates, or has the power to
direct or cause the direction of the General Partner or its Affiliates,
whether through the ownership of voting securities, by contract or otherwise,
or, in the absence of a specific role or title, any Person having the power
to direct or cause the direction of the management-level employees and
policies of the General Partner or its Affiliates. It is not intended that
every Person who carries a title such as vice president, senior vice
president, secretary or treasurer be included in the definition of
"Controlling Person."
"CUT-OFF DATE" means the fifth (5th) Business Day after the General
Partner's receipt of a Notice of Redemption.
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"DEBT" means, as to any Person, as of any date of determination,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services; (ii) all amounts owed by such Person
to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of
property or services secured by any lien on any property owned by such
Person, to the extent attributable to such Person's interest in such
property, even though such Person has not assumed or become liable for the
payment thereof; and (iv) lease obligations of such Person that, in
accordance with generally accepted accounting principles, should be
capitalized.
"DECLINATION" has the meaning set forth in Section 8.6.D hereof.
"DEPRECIATION" means, for each Fiscal Year or other applicable
period, an amount equal to the federal income tax depreciation, amortization
or other cost recovery deduction allowable with respect to an asset for such
year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year or period, Depreciation shall be in an amount that
bears the same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization or other cost recovery deduction for
such year or other period bears to such beginning adjusted tax basis;
PROVIDED, HOWEVER, that if the federal income tax depreciation, amortization
or other cost recovery deduction for such year or period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"DESIGNATED PARTIES" means the Persons designated on EXHIBIT C
attached hereto. The General Partner may, in its sole and absolute
discretion, amend EXHIBIT C to add Persons to be designated as Designated
Parties.
"DISTRIBUTED RIGHT" has the meaning set forth in the definition of
"Adjustment Factor."
"EFFECTIVE DATE" means July 29, 1994.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"FAMILY MEMBERS" means, as to a Person that is an individual, such
Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers, sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by
adoption), brothers and sisters are beneficiaries.
"FISCAL YEAR" means the fiscal year of the Partnership, which shall
be the calendar year.
"FUNDING DEBT" means any Debt incurred by or on behalf of the
Previous General Partner, the General Partner or the Special Limited Partner
for the purpose of providing funds to the Partnership.
"GENERAL PARTNER" means AIMCO-GP, Inc., a Delaware corporation, and
its successors and assigns, as the general partner of the Partnership in
their capacities as general partner of the Partnership.
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"GENERAL PARTNER INTEREST" means the Partnership Interest held by
the General Partner, which Partnership Interest is an interest as a general
partner under the Act. A General Partner Interest may be expressed as a
number of Partnership Common Units, Partnership Preferred Units or any other
Partnership Units.
"GENERAL PARTNER LOAN" has the meaning set forth in Section 4.3.D
hereof.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market values of such
assets as determined by the General Partner and agreed to by the contributing
Partner. In any case in which the General Partner and the contributing
Partner are unable to agree as to the gross fair market value of any
contributed asset or assets, such gross fair market value shall be determined
by Appraisal. The sub-allocation of gross fair market value is indicated on
EXHIBIT D attached hereto, as amended.
(b) The Gross Asset Values of all Partnership assets
immediately prior to the occurrence of any event described in clause (i),
clause (ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted
to equal their respective gross fair market values, as determined by the
General Partner using such reasonable method of valuation as it may adopt, as
of the following times:
(i) the acquisition of an additional interest in the
Partnership (other than in connection with the execution of this
Agreement but including, without limitation, acquisitions pursuant to
Section 4.2 hereof or contributions or deemed contributions by the
General Partner pursuant to Section 4.2 hereof) by a new or existing
Partner in exchange for more than a de minimis Capital Contribution,
if the General Partner reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic interests of
the Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership, if the General
Partner reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(iii) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) upon the admission of a successor General Partner
pursuant to Section 12.1 hereof; and
(v) at such other times as the General Partner shall
reasonably determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset
on the date of distribution as determined by the distributee and the General
Partner provided that, if the distributee is the General Partner or if the
distributee and the General Partner cannot agree on such a determination,
such gross fair market value shall be determined by Appraisal.
8
<PAGE>
(d) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m);
PROVIDED, HOWEVER, that Gross Asset Values shall not be adjusted pursuant to
this subsection (d) to the extent that the General Partner reasonably
determines that an adjustment pursuant to subsection (b) above is necessary
or appropriate in connection with a transaction that would otherwise result
in an adjustment pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset for purposes
of computing Net Income and Net Losses.
"HOLDER" means either (a) a Partner or (b) an Assignee, owning a
Partnership Unit, that is treated as a member of the Partnership for federal
income tax purposes.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any Partner who is
an individual, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation
or limited liability company, the filing of a certificate of dissolution, or
its equivalent, for the corporation or the revocation of its charter; (iii)
as to any Partner that is a partnership, the dissolution and commencement of
winding up of the partnership; (iv) as to any Partner that is an estate, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust that is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi)
as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief of or against such Partner under any
bankruptcy, insolvency or other similar law now or hereafter in effect, (b)
the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar
law now or hereafter in effect has been entered against the Partner, (c) the
Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of
a trustee, receiver or liquidator for the Partner or for all or any
substantial part of the Partner's properties, (f) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect has not been dismissed within
one hundred twenty (120) days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a trustee,
receiver or liquidator has not been vacated or stayed within ninety (90) days
of such appointment, or (h) an appointment referred to in clause (g) above is
not vacated within ninety (90) days after the expiration of any such stay.
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason of its status as (A) the Previous General Partner or the General
Partner or (B) a director of the Previous General Partner or the General
Partner or an officer or employee of the Partnership or the Previous General
Partner or the General Partner and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner
may designate from time to time (whether before or after the event giving
rise to potential liability), in its sole and absolute discretion.
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"INDEPENDENT DIRECTOR" has the meaning ascribed thereto in the
Previous General Partner's 1994 Stock Option Plan.
"INTEREST" means interest, original issue discount and other
similar payments or amounts paid by the Partnership for the use or
forbearance of money.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"JUNIOR SHARE" means a share of the Previous General Partner's
Class B Common Stock, par value $.01 per share.
"LIMITED PARTNER" means the Special Limited Partner and any Person
named as a Limited Partner in EXHIBIT A attached hereto, as such EXHIBIT A
may be amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person's capacity as a Limited Partner in
the Partnership.
"LIMITED PARTNER INTEREST" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled
as provided in this Agreement, together with all obligations of such Person
to comply with the terms and provisions of this Agreement. A Limited Partner
Interest may be expressed as a number of Partnership Common Units,
Partnership Preferred Units or other Partnership Units.
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1
hereof.
"LIQUIDATOR" has the meaning set forth in Section 13.2.A hereof.
"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means Limited
Partners (other than (i) the Special Limited Partner and (ii) any Limited
Partner fifty percent (50%) or more of whose equity is owned, directly or
indirectly, by the (a) General Partner or (b) any REIT as to which the
General Partner is a "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2))) holding more than fifty percent (50%) of the outstanding
Partnership Common Units held by all Limited Partners (other than (i) the
Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or
more of whose equity is owned, directly or indirectly, by (a) the General
Partner or (b) any REIT as to which the General Partner is a "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2))).
"NET INCOME" or "NET LOSS" means, for each Fiscal Year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income (or
Net Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be
added to (or subtracted from, as the case may be) such taxable income (or
loss);
(b) Any expenditure of the Partnership described in Code
Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
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taken into account in computing Net Income (or Net Loss) pursuant to this
definition of "Net Income" or "Net Loss," shall be subtracted from (or added
to, as the case may be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subsection (b) or subsection (c) of the
definition of "Gross Asset Value," the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost
recovery deductions that would otherwise be taken into account in computing
such taxable income or loss, there shall be taken into account Depreciation
for such Fiscal Year;
(f) To the extent that an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Partner's interest in the Partnership, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of
"Net Income" or "Net Loss," any item that is specially allocated pursuant to
Section 6.3 hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."
"NEW SECURITIES" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or Preferred Shares, excluding Junior Shares, Preferred
Shares and grants under the Previous General Partner's Stock Option Plans, or
(ii) any Debt issued by the Previous General Partner that provides any of the
rights described in clause (i).
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Fiscal
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"NOTICE OF REDEMPTION" means the Notice of Redemption substantially
in the form of EXHIBIT E attached to this Agreement.
"OPTIONEE" means a Company Employee, Partnership Employee or
Independent Director to whom a stock option is granted under the Previous
General Partner's Stock Option Plans.
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"ORIGINAL LIMITED PARTNERS" means the Persons listed as the Limited
Partners on EXHIBIT A originally attached to this Agreement, without regard to
any amendment thereto, and does not include any Assignee or other transferee,
including, without limitation, any Substituted Limited Partner succeeding to all
or any part of the Partnership Interest of any such Person.
"OWNERSHIP LIMIT" means the applicable restriction on ownership of
shares of the Previous General Partner imposed under the Charter.
"PARTNER" means the General Partner or a Limited Partner, and
"PARTNERS" means the General Partner and the Limited Partners.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Fiscal Year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"PARTNERSHIP" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"PARTNERSHIP COMMON UNIT" means a fractional share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but
does not include any Partnership Preferred Unit or any other Partnership Unit
specified in a Partnership Unit Designation as being other than a Partnership
Common Unit; PROVIDED, HOWEVER, that the General Partner Interest and the
Limited Partner Interests shall have the differences in rights and privileges as
specified in this Agreement. The ownership of Partnership Common Units may (but
need not, in the sole and absolute discretion of the General Partner) be
evidenced by the form of certificate for Partnership Common Units attached
hereto as EXHIBIT F.
"PARTNERSHIP EMPLOYEE" has the meaning ascribed thereto in the
Previous General Partner's 1994 Stock Option Plan.
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Partnership Common Units, Partnership Preferred
Units or other Partnership Units.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Fiscal Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
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"PARTNERSHIP PREFERRED UNIT" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.2 hereof that has distribution rights, or rights upon liquidation,
winding up and dissolution, that are superior or prior to the Partnership
Common Units.
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall generally be the same as the record date
established by the Previous General Partner for a distribution to its
shareholders of some or all of its portion of such distribution.
"PARTNERSHIP SUBSIDIARY" has the meaning ascribed thereto in the
Apartment Investment and Management Company 1997 Stock Award and Incentive Plan.
"PARTNERSHIP UNIT" shall mean a Partnership Common Unit, a Partnership
Preferred Unit or any other fractional share of the Partnership Interests that
the General Partner has authorized pursuant to Section 4.2 hereof.
"PARTNERSHIP UNIT DESIGNATION" shall have the meaning set forth in
Section 4.2 hereof.
"PERCENTAGE INTEREST" means, as to each Partner, its interest in the
Partnership Units as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding.
"PERMITTED TRANSFER" has the meaning set forth in Section 11.3.A
hereof.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
"PLEDGE" has the meaning set forth in Section 11.3.A hereof.
"PREFERRED SHARE" means a share of capital stock of the Previous
General Partner now or hereafter authorized or reclassified that has dividend
rights, or rights upon liquidation, winding up and dissolution, that are
superior or prior to the REIT Shares.
"PREVIOUS GENERAL PARTNER" means Apartment Investment and Management
Company, a Maryland corporation.
"PREVIOUS GENERAL PARTNER'S 1994 STOCK OPTION PLAN" means the 1994
Stock Option Plan of Apartment Investment and Management Company and Affiliates.
"PREVIOUS GENERAL PARTNER'S STOCK OPTION PLANS" means the Previous
General Partner's 1994 Stock Option Plan, the Apartment Investment and
Management Company 1996 Stock Award and Incentive Plan, the Amended and Restated
Apartment Investment and Management Company Non-Qualified Employee Stock Option
Plan, the Apartment Investment and Management Company 1997 Stock Award and
Incentive Plan and any other stock option plan hereafter adopted by the Previous
General Partner.
"PRIMARY OFFERING NOTICE" has the meaning set forth in Section
8.6.F(4) hereof.
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"PROPERTIES" means any assets and property of the Partnership such as,
but not limited to, interests in real property and personal property, including,
without limitation, fee interests, interests in ground leases, interests in
limited liability companies, joint ventures or partnerships, interests in
mortgages, and Debt instruments as the Partnership may hold from time to time.
"PUBLIC OFFERING FUNDING" has the meaning set forth in Section
8.6.D(2) hereof.
"PUBLIC OFFERING FUNDING AMOUNT" means the dollar amount equal to (i)
the product of (x) the number of Registrable Shares sold in a Public Offering
Funding and (y) the public offering price per share of such Registrable Shares
in such Public Offering Funding, LESS (ii) the aggregate underwriting discounts
and commissions in such Public Offering Funding.
"QUALIFIED TRANSFEREE" means an "accredited investor" as defined in
Rule 501 promulgated under the Securities Act.
"QUALIFYING PARTY" means (a) an Original Limited Partner, (b) an
Additional Limited Partner, (c) a Designated Party that is either a Substituted
Limited Partner or an Assignee, (d) a Family Member, or a lending institution as
the pledgee of a Pledge, who is the transferee in a Permitted Transfer or (e)
with respect to any Notice of Redemption delivered to the General Partner within
the time period set forth in Section 11.3.A(4) hereof, a Substituted Limited
Partner succeeding to all or part of the Limited Partner Interest of (i) an
Original Limited Partner, (ii) an Additional Limited Partner, (iii) a Designated
Party that is either a Substituted Limited Partner or an Assignee or (iv) a
Family Member, or a lending institution who is the pledgee of a Pledge, who is
the transferee in a Permitted Transfer.
"REDEEMABLE UNITS" means those Partnership Common Units issued to the
Original Limited Partners as of the Effective Date together with such additional
Partnership Common Units that, after the Effective Date, may be issued to
Additional Limited Partners pursuant to Section 4.2 hereof.
"REDEMPTION" has the meaning set forth in Section 8.6.A hereof.
"REGISTRABLE SHARES" has the meaning set forth in Section 8.6.D(2)
hereof.
"REGULATIONS" means the applicable income tax regulations under the
Code, whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"REGULATORY ALLOCATIONS" has the meaning set forth in Section
6.3.B(viii) hereof.
"REIT" means a real estate investment trust qualifying under Code
Section 856.
"REIT PARTNER" means (a) a Partner that is, or has made an election to
qualify as, a REIT, (b) any "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) of any Partner that is, or has made an election to
qualify as, a REIT and (c) any Partner, including, without limitation, the
General Partner and the Special Limited Partner, that is a "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2)) of a REIT.
"REIT PAYMENT" has the meaning set forth in Section 15.11 hereof.
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"REIT REQUIREMENTS" has the meaning set forth in Section 5.1.A hereof.
"REIT SHARE" means a share of the Previous General Partner's Class A
Common Stock, par value $.01 per share. Where relevant in this Agreement, "REIT
SHARES" includes shares of the Previous General Partner's Class A Common Stock,
par value $.01 per share, issued upon conversion of Preferred Shares or Junior
Shares.
"REIT SHARES AMOUNT" means a number of REIT Shares equal to the
product of (a) the number of Tendered Units and (b) the Adjustment Factor;
PROVIDED, HOWEVER, that, in the event that the Previous General Partner issues
to all holders of REIT Shares as of a certain record date rights, options,
warrants or convertible or exchangeable securities entitling the Previous
General Partner's shareholders to subscribe for or purchase REIT Shares, or any
other securities or property (collectively, the "RIGHTS"), with the record date
for such Rights issuance falling within the period starting on the date of the
Notice of Redemption and ending on the day immediately preceding the Specified
Redemption Date, which Rights will not be distributed before the relevant
Specified Redemption Date, then the REIT Shares Amount shall also include such
Rights that a holder of that number of REIT Shares would be entitled to receive,
expressed, where relevant hereunder, in a number of REIT Shares determined by
the Previous General Partner in good faith.
"RELATED PARTY" means, with respect to any Person, any other Person
whose ownership of shares of the Previous General Partner's capital stock would
be attributed to the first such Person under Code Section 544 (as modified by
Code Section 856(h)(1)(B)).
"RIGHTS" has the meaning set forth in the definition of "REIT Shares
Amount."
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SINGLE FUNDING NOTICE" has the meaning set forth in Section 8.6.D(3)
hereof.
"SPECIAL LIMITED PARTNER" means AIMCO-LP, Inc., a Delaware
corporation.
"SPECIFIED REDEMPTION DATE" means the later of (a) the tenth (10th)
Business Day after the receipt by the General Partner of a Notice of Redemption
or (b) in the case of a Declination followed by a Public Offering Funding, the
Business Day next following the date of the closing of the Public Offering
Funding; PROVIDED, HOWEVER, that no Specified Redemption Date shall occur during
the first Twelve-Month Period; PROVIDED, FURTHER, that the Specified Redemption
Date, as well as the closing of a Redemption, or an acquisition of Tendered
Units by the Previous General Partner pursuant to Section 8.6.B hereof, on any
Specified Redemption Date, may be deferred, in the General Partner's sole and
absolute discretion, for such time (but in any event not more than one hundred
fifty (150) days in the aggregate) as may reasonably be required to effect, as
applicable, (i) a Public Offering Funding or other necessary funding
arrangements, (ii) compliance with the Securities Act or other law (including,
but not limited to, (a) state "blue sky" or other securities laws and (b) the
expiration or termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and (iii)
satisfaction or waiver of other commercially reasonable and customary closing
conditions and requirements for a transaction of such nature.
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"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person; PROVIDED, HOWEVER, that, with respect to the
Partnership, "SUBSIDIARY" means solely a partnership or limited liability
company (taxed, for federal income tax purposes, as a partnership and not as an
association or publicly traded partnership taxable as a corporation) of which
the Partnership is a member unless the General Partner has received an
unqualified opinion from independent counsel of recognized standing, or a ruling
from the IRS, that the ownership of shares of stock of a corporation or other
entity will not jeopardize the Previous General Partner's status as a REIT or
the General Partner's or the Special Limited Partner's status as a "qualified
REIT subsidiary" (within the meaning of Code Section 856(i)(2)), in which event
the term "SUBSIDIARY" shall include the corporation or other entity which is the
subject of such opinion or ruling.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"TAX ITEMS" has the meaning set forth in Section 6.4.A hereof.
"TENDERED UNITS" has the meaning set forth in Section 8.6.A hereof.
"TENDERING PARTY" has the meaning set forth in Section 8.6.A hereof.
"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"TRANSFER," when used with respect to a Partnership Unit, or all or
any portion of a Partnership Interest, means any sale, assignment, bequest,
conveyance, devise, gift (outright or in trust), Pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; PROVIDED,
HOWEVER, that when the term is used in Article 11 hereof, "TRANSFER" does not
include (a) any Redemption of Partnership Common Units by the Partnership, or
acquisition of Tendered Units by the Previous General Partner, pursuant to
Section 8.6 hereof or (b) any redemption of Partnership Units pursuant to any
Partnership Unit Designation. The terms "Transferred" and "Transferring" have
correlative meanings.
"TWELVE-MONTH PERIOD" means (a) as to an Original Limited Partner or
any successor-in-interest that is a Qualifying Party, a twelve-month period
ending on the day before the first (1st) anniversary of the Effective Date or on
the day before a subsequent anniversary thereof and (b) as to any other
Qualifying Party, a twelve-month period ending on the day before the first (1st)
anniversary of such Qualifying Party's becoming a Holder of Partnership Common
Units or on the day before a subsequent anniversary thereof; PROVIDED, HOWEVER,
that the General Partner may, in its sole and absolute discretion, by written
agreement with a Qualifying Party, shorten the first Twelve-Month Period to a
period of less than twelve (12) months with respect to a Qualifying Party other
than an Original Limited Partner or successor-in-interest.
"UNITHOLDER" means the General Partner or any Holder of Partnership
Units.
"VALUATION DATE" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the immediately
preceding Business Day.
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"VALUE" means, on any Valuation Date with respect to a REIT Share, the
average of the daily market prices for ten (10) consecutive trading days
immediately preceding the Valuation Date (except that, as provided in Section
4.4.C. hereof, the market price for the trading day immediately preceding the
date of exercise of a stock option under the Previous General Partner's Stock
Option Plans shall be substituted for such average of daily market prices for
purposes of Section 4.4 hereof). The market price for any such trading day
shall be:
(i) if the REIT Shares are listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market System,
the closing price, regular way, on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices on such day,
in either case as reported in the principal consolidated transaction
reporting system,
(ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market System,
the last reported sale price on such day or, if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner,
or
(iii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market System and
no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on
such day, as reported by a reliable quotation source designated by the
General Partner, or if there shall be no bid and asked prices on such day,
the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than ten (10) days prior to the date in question)
for which prices have been so reported;
PROVIDED, HOWEVER, that, if there are no bid and asked prices reported during
the ten (10) days prior to the date in question, the Value of the REIT Shares
shall be determined by the General Partner acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate. In the event that the REIT Shares Amount includes Rights
(as defined in the definition of "REIT Shares Amount") that a holder of REIT
Shares would be entitled to receive, then the Value of such Rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 ORGANIZATION. The Partnership is a limited partnership
organized pursuant to the provisions of the Act and upon the terms and subject
to the conditions set forth in this Agreement. Except as expressly provided
herein to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2 NAME. The name of the Partnership is "AIMCO Properties,
L.P." The Partnership's business may be conducted under any other name or names
deemed advisable by the General Partner, including the name of the General
Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change
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the name of the Partnership at any time and from time to time and shall notify
the Partners of such change in the next regular communication to the Partners.
Section 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE. The
address of the registered office of the Partnership in the State of Delaware is
located at 32 Lockerman Square, Suite L-100, Dover, Delaware 19901, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office is The Prentice-Hall Corporation System, Inc.
The principal office of the Partnership is located at 1873 South Bellaire
Street, Denver, Colorado 80222, or such other place as the General Partner may
from time to time designate by notice to the Limited Partners. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the General Partner deems advisable.
Section 2.4 POWER OF ATTORNEY.
A. Each Limited Partner and each Assignee hereby irrevocably
constitutes and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and attorney-
in-fact, with full power and authority in its name, place and stead to:
(1) execute, swear to, seal, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate and all amendments, supplements or restatements thereof) that
the General Partner or the Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the Partnership
as a limited partnership (or a partnership in which the limited partners
have limited liability to the extent provided by applicable law) in the
State of Delaware and in all other jurisdictions in which the Partnership
may conduct business or own property; (b) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms;
(c) all conveyances and other instruments or documents that the General
Partner or the Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of
cancellation; (d) all conveyances and other instruments or documents that
the General Partner or the Liquidator deems appropriate or necessary to
reflect the distribution or exchange of assets of the Partnership pursuant
to the terms of this Agreement; (e) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article 11, Article 12 or Article 13 hereof
or the Capital Contribution of any Partner; and (f) all certificates,
documents and other instruments relating to the determination of the
rights, preferences and privileges relating to Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner, to
make, evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action that is made or given by the Partners hereunder
or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole and absolute discretion of the General Partner, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article 14 hereof or as may be
otherwise expressly provided for in this Agreement.
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B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Limited Partners and Assignees will be relying upon the
power of the General Partner or the Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any Limited
Partner or Assignee and the Transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Units or Partnership Interest and shall
extend to such Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or Assignee hereby agrees
to be bound by any representation made by the General Partner or the Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
the Liquidator's request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.
Section 2.5 TERM. The term of the Partnership commenced on May 16,
1994, the date that the original Certificate was filed in the office of the
Secretary of State of Delaware in accordance with the Act, and shall continue
until December 31, 2093 unless the Partnership is dissolved sooner pursuant to
the provisions of Article 13 hereof or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 PURPOSE AND BUSINESS. The purpose and nature of the
Partnership is to conduct any business, enterprise or activity permitted by or
under the Act, including, but not limited to, (i) to conduct the business of
ownership, construction, development and operation of multifamily rental
apartment communities, (ii) to enter into any partnership, joint venture,
business trust arrangement, limited liability company or other similar
arrangement to engage in any business permitted by or under the Act, or to own
interests in any entity engaged in any business permitted by or under the Act,
(iii) to conduct the business of providing property and asset management and
brokerage services, whether directly or through one or more partnerships, joint
ventures, subsidiaries, business trusts, limited liability companies or other
similar arrangements, and (iv) to do anything necessary or incidental to the
foregoing; PROVIDED, HOWEVER, such business and arrangements and interests may
be limited to and conducted in such a manner as to permit the Previous General
Partner, in the sole and absolute discretion of the General Partner, at all
times to be classified as a REIT.
Section 3.2 POWERS.
A. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership.
B. Notwithstanding any other provision in this Agreement, the
General Partner may cause the Partnership not to take, or to refrain from
taking, any action that, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the Previous
General Partner to continue to qualify as a REIT, (ii) could subject the
Previous General Partner to any additional taxes under Code Section 857 or Code
Section 4981 or (iii) could violate any law or regulation of any governmental
body or agency having
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jurisdiction over the Previous General Partner, the General Partner, their
securities or the Partnership, unless such action (or inaction) under clause
(i), clause (ii) or clause (iii) above shall have been specifically consented
to by the Previous General Partner and the General Partner in writing.
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES SPECIFIED. The Partnership
shall be a limited partnership only for the purposes specified in Section 3.1
hereof, and this Agreement shall not be deemed to create a company, venture or
partnership between or among the Partners with respect to any activities
whatsoever other than the activities within the purposes of the Partnership as
specified in Section 3.1 hereof. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or
assume any obligation or responsibility on behalf of the Partnership, its
properties or any other Partner. No Partner, in its capacity as a Partner under
this Agreement, shall be responsible or liable for any indebtedness or
obligation of another Partner, nor shall the Partnership be responsible or
liable for any indebtedness or obligation of any Partner, incurred either before
or after the execution and delivery of this Agreement by such Partner, except as
to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the terms of this Agreement and the Act.
Section 3.4 REPRESENTATIONS AND WARRANTIES BY THE PARTIES.
A. Each Partner that is an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to each other Partner(s) that (i) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any material agreement by which such Partner or any of such Partner's property
is bound, or any statute, regulation, order or other law to which such Partner
is subject, (ii) such Partner is neither a "foreign person" within the meaning
of Code Section 1445(f) nor a "foreign partner" within the meaning of Code
Section 1446(e), (iii) such Partner does not own, directly or indirectly, (a)
five percent (5%) or more of the total combined voting power of all classes of
stock entitled to vote, or five percent (5%) or more of the total number of
shares of all classes of stock, of any corporation that is a tenant of either
(I) the Previous General Partner, the General Partner, the Special Limited
Partner or any "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to the Previous General Partner, (II) the Partnership or
(III) any partnership, venture or limited liability company of which the
Previous General Partner, the General Partner, the Special Limited Partner, any
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with
respect to the Previous General Partner or the Partnership is a member or (b) an
interest of five percent (5%) or more in the assets or net profits of any tenant
of either (I) the Previous General Partner, the General Partner, the Special
Limited Partner or any "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2)) with respect to the Previous General Partner, (II) the
Partnership or (III) any partnership, venture, or limited liability company of
which the Previous General Partner, the General Partner, the Special Limited
Partner, any "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to the Previous General Partner or the Partnership is a
member and (iv) this Agreement is binding upon, and enforceable against, such
Partner in accordance with its terms.
B. Each Partner that is not an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to each other Partner(s) that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, charter or bylaws, as
the case may be,
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any material agreement by which such Partner or any of such Partner's
properties or any of its partners, members, beneficiaries, trustees or
shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
members, trustees, beneficiaries or shareholders, as the case may be, is or
are subject, (iii) such Partner is neither a "foreign person" within the
meaning of Code Section 1445(f) nor a "foreign partner" within the meaning of
Code Section 1446(e), (iv) such Partner does not own, directly or indirectly,
(a) five percent (5%) or more of the total combined voting power of all
classes of stock entitled to vote, or five percent (5%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant
of either (I) the Previous General Partner, the General Partner, the Special
Limited Partner or any "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) with respect to the Previous General Partner, (II)
the Partnership or (III) any partnership, venture or limited liability
company of which the Previous General Partner, the General Partner, the
Special Limited Partner, any "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2)) with respect to the Previous General Partner or
the Partnership is a member or (b) an interest of five percent (5%) or more
in the assets or net profits of any tenant of either (I) the Previous General
Partner, the General Partner the Special Limited Partner or any "qualified
REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with respect
to the Previous General Partner, (II) the Partnership or (III) any
partnership, venture or limited liability company for which the Previous
General Partner, the General Partner, the Special Limited Partner, any
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))
with respect to the Previous General Partner or the Partnership is a member
and (v) this Agreement is binding upon, and enforceable against, such Partner
in accordance with its terms.
C. Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment only and not for
the purpose of, or with a view toward, the resale or distribution of all or any
part thereof, nor with a view toward selling or otherwise distributing such
interest or any part thereof at any particular time or under any predetermined
circumstances. Each Partner further represents and warrants that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for the funds
that it has invested in the Partnership in what it understands to be a highly
speculative and illiquid investment.
D. The representations and warranties contained in Sections 3.4.A,
3.4.B and 3.4.C hereof shall survive the execution and delivery of this
Agreement by each Partner (and, in the case of an Additional Limited Partner or
a Substituted Limited Partner, the admission of such Additional Limited Partner
or Substituted Limited Partner as a Limited Partner in the Partnership) and the
dissolution, liquidation and termination of the Partnership.
E. Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner) hereby
acknowledges that no representations as to potential profit, cash flows, funds
from operations or yield, if any, in respect of the Partnership or the General
Partner have been made by any Partner or any employee or representative or
Affiliate of any Partner, and that projections and any other information,
including, without limitation, financial and descriptive information and
documentation, that may have been in any manner submitted to such Partner shall
not constitute any representation or warranty of any kind or nature, express or
implied.
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ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS. The Partners
have heretofore made Capital Contributions to the Partnership. Each Partner
owns Partnership Units in the amount set forth for such Partner on EXHIBIT A,
as the same may be amended from time to time by the General Partner to the
extent necessary to reflect accurately sales, exchanges or other Transfers,
redemptions, Capital Contributions, the issuance of additional Partnership
Units, or similar events having an effect on a Partner's ownership of
Partnership Units. Except as provided by law or in Section 4.2, 4.3 or 10.4
hereof, the Partners shall have no obligation or right to make any additional
Capital Contributions or loans to the Partnership.
Section 4.2 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS.
A. GENERAL. The General Partner is hereby authorized to cause the
Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner and the Special Limited
Partner) or to other Persons, and to admit such Persons as Additional Limited
Partners, for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole and absolute discretion, all
without the approval of any Limited Partners. Without limiting the
foregoing, the General Partner is expressly authorized to cause the
Partnership to issue Partnership Units (i) upon the conversion, redemption or
exchange of any Debt, Partnership Units or other securities issued by the
Partnership, (ii) for less than fair market value, so long as the General
Partner concludes in good faith that such issuance is in the best interests
of the General Partner and the Partnership, and (iii) in connection with any
merger of any other Person into the Partnership if the applicable merger
agreement provides that Persons are to receive Partnership Units in exchange
for their interests in the Person merging into the Partnership. Subject to
Delaware law, any additional Partnership Interests may be issued in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties as shall be determined by the General
Partner, in its sole and absolute discretion without the approval of any
Limited Partner, and set forth in a written document thereafter attached to
and made an exhibit to this Agreement (each, a "PARTNERSHIP UNIT
DESIGNATION"). Without limiting the generality of the foregoing, the General
Partner shall have authority to specify (a) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests; (b) the right of each such class or series
of Partnership Interests to share in Partnership distributions; (c) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; (d) the voting rights, if any, of each
such class or series of Partnership Interests; and (e) the conversion,
redemption or exchange rights applicable to each such class or series of
Partnership Interests. Upon the issuance of any additional Partnership
Interest, the General Partner shall amend EXHIBIT A as appropriate to reflect
such issuance.
B. ISSUANCES TO THE GENERAL PARTNER OR SPECIAL LIMITED PARTNER.
No additional Partnership Units shall be issued to the General Partner or the
Special Limited Partner unless (i) the additional Partnership Units are
issued to all Partners in proportion to their respective Percentage
Interests, (ii) (a) the additional Partnership Units are (x) Partnership
Common Units issued in connection with an issuance of REIT Shares, or (y)
Partnership Units (other than Partnership Common Units) issued in connection
with an issuance of Preferred Shares, New Securities or other interests in
the Previous General Partner (other than REIT Shares), which Preferred
Shares, New Securities or other interests have designations, preferences and
other rights, terms and provisions that are substantially the same as the
designations, preferences and other rights, terms and provisions of the
additional Partnership Units issued to the General Partner or the Special
Limited Partner, and (b) the General Partner or the Special Limited Partner,
as the case may be, contributes to the Partnership the cash proceeds or other
consideration received in
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connection with the issuance of such REIT Shares, Preferred Shares, New
Securities or other interests in the Previous General Partner, (iii) the
additional Partnership Units are issued upon the conversion, redemption or
exchange of Debt, Partnership Units or other securities issued by the
Partnership, or (iv) the additional Partnership Units are issued pursuant to
Section 4.6.
C. NO PREEMPTIVE RIGHTS. No Person, including, without
limitation, any Partner or Assignee, shall have any preemptive, preferential,
participation or similar right or rights to subscribe for or acquire any
Partnership Interest.
Section 4.3 ADDITIONAL FUNDS.
A. GENERAL. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds
("ADDITIONAL FUNDS") for the acquisition or development of additional
Properties, for the redemption of Partnership Units or for such other
purposes as the General Partner may determine. Additional Funds may be
obtained by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3
without the approval of any Limited Partners.
B. ADDITIONAL CAPITAL CONTRIBUTIONS. The General Partner, on
behalf of the Partnership, may obtain any Additional Funds by accepting
Capital Contributions from any Partners or other Persons and issuing
additional Partnership Units in consideration therefor.
C. LOANS BY THIRD PARTIES. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt to any Person (other than the Previous General Partner, the
General Partner or the Special Limited Partner) upon such terms as the
General Partner determines appropriate, includng making such Debt
convertible, redeemable or exchangeable for Partnership Units; PROVIDED,
HOWEVER, that the Partnership shall not incur any such Debt if (i) a breach,
violation or default of such Debt would be deemed to occur by virtue of the
Transfer of any Partnership Interest, or (ii) such Debt is recourse to any
Partner (unless the Partner otherwise agrees).
D. GENERAL PARTNER LOANS. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt with the Previous General Partner, the General Partner or the
Special Limited Partner (each, a "GENERAL PARTNER LOAN") if (i) such Debt is,
to the extent permitted by law, on substantially the same terms and
conditions (including interest rate, repayment schedule, and conversion,
redemption, repurchase and exchange rights) as Funding Debt incurred by the
Previous General Partner, the General Partner or the Special Limited Partner,
the net proceeds of which are loaned to the Partnership to provide such
Additional Funds, or (ii) such Debt is on terms and conditions no less
favorable to the Partnership than would be available to the Partnership from
any third party; PROVIDED, HOWEVER, that the Partnership shall not incur any
such Debt if (a) a breach, violation or default of such Debt would be deemed
to occur by virtue of the Transfer of any Partnership Interest, or (b) such
Debt is recourse to any Partner (unless the Partner otherwise agrees).
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E. ISSUANCE OF SECURITIES BY THE PREVIOUS GENERAL PARTNER. The
Previous General Partner shall not issue any additional REIT Shares,
Preferred Shares, Junior Shares or New Securities unless (i) the Previous
General Partner contributes the cash proceeds or other consideration received
from the issuance of such additional REIT Shares, Preferred Shares, Junior
Shares or New Securities, as the case may be, and from the exercise of the
rights contained in any such additional New Securities, to either or both of
the General Partner and the Special Limited Partner, and (ii) it or they, as
the case may be, contribute such cash proceeds or other consideration to the
Partnership in exchange for (x) in the case of an issuance of REIT Shares,
Partnership Common Units, or (y) in the case of an issuance of Preferred
Shares, Junior Shares or New Securities, Partnership Units with designations,
preferences and other rights, terms and provisions that are substantially the
same as the designations, preferences and other rights, terms and provisions
of such Preferred Shares, Junior Shares or New Securities; PROVIDED, HOWEVER,
that notwithstanding the foregoing, the Previous General Partner may issue
REIT Shares, Preferred Shares, Junior Shares or New Securities (a) pursuant
to Section 4.4 or Section 8.6.B hereof, (b) pursuant to a dividend or
distribution (including any stock split) of REIT Shares, Preferred Shares,
Junior Shares or New Securities to all of the holders of REIT Shares,
Preferred Shares, Junior Shares or New Securities, as the case may be, (c)
upon a conversion, redemption or exchange of Preferred Shares, (d) upon a
conversion of Junior Shares into REIT Shares, (e) upon a conversion,
redemption, exchange or exercise of New Securities, or (f) in connection with
an acquisition of a property or other asset to be owned, directly or
indirectly, by the Previous General Partner if the General Partner determines
that such acquisition is in the best interests of the Partnership. In the
event of any issuance of additional REIT Shares, Preferred Shares, Junior
Shares or New Securities by the Previous General Partner, and the
contribution to the Partnership, by the General Partner or the Special
Limited Partner, of the cash proceeds or other consideration received from
such issuance, the Partnership shall pay the Previous General Partner's
expenses associated with such issuance, including any underwriting discounts
or commissions.
Section 4.4 STOCK OPTION PLANS.
A. OPTIONS GRANTED TO COMPANY EMPLOYEES AND INDEPENDENT
DIRECTORS. If at any time or from time to time, in connection with the
Previous General Partner's Stock Option Plans, a stock option granted to a
Company Employee or Independent Director is duly exercised:
(1) The Special Limited Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership in an amount
equal to the exercise price paid to the Previous General Partner by such
exercising party in connection with the exercise of such stock option.
(2) Notwithstanding the amount of the Capital Contribution
actually made pursuant to Section 4.4.A(1) hereof, the Special Limited
Partner shall be deemed to have contributed to the Partnership as a
Capital Contribution, in consideration of an additional Limited Partner
Interest (expressed in and as additional Partnership Common Units), an
amount equal to the Value of a REIT Share as of the date of exercise
MULTIPLIED BY the number of REIT Shares then being issued in connection
with the exercise of such stock option.
(3) An equitable Percentage Interest adjustment shall be made in
which the Special Limited Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4.A(2) hereof.
B. OPTIONS GRANTED TO PARTNERSHIP EMPLOYEES. If at any time or
from time to time, in connection with the Previous General Partner's Stock
Option Plans, a stock option granted to a Partnership Employee is duly
exercised:
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(1) The General Partner shall cause the Previous General Partner
to sell to the Partnership, and the Partnership shall purchase from the
Previous General Partner, the number of REIT Shares as to which such
stock option is being exercised. The purchase price per REIT Share for
such sale of REIT Shares to the Partnership shall be the Value of a REIT
Share as of the date of exercise of such stock option.
(2) The Partnership shall sell to the Optionee (or if the Optionee
is an employee of a Partnership Subsidiary, the Partnership shall sell
to such Partnership Subsidiary, which in turn shall sell to the
Optionee), for a cash price per share equal to the Value of a REIT Share
at the time of the exercise, the number of REIT Shares equal to (a) the
exercise price paid to the Previous General Partner by the exercising
party in connection with the exercise of such stock option DIVIDED BY
(b) the Value of a REIT Share at the time of such exercise.
(3) The Partnership shall transfer to the Optionee (or if the
Optionee is an employee of a Partnership Subsidiary, the Partnership
shall transfer to such Partnership Subsidiary, which in turn shall
transfer to the Optionee) at no additional cost, as additional
compensation, the number of REIT Shares equal to the number of REIT
Shares described in Section 4.4.B(1) hereof LESS the number of REIT
Shares described in Section 4.4.B(2) hereof.
(4) The Special Limited Partner shall, as soon as practicable
after such exercise, make a Capital Contribution to the Partnership of
an amount equal to all proceeds received (from whatever source, but
excluding any payment in respect of payroll taxes or other withholdings)
by the Previous General Partner, the General Partner or the Special
Limited Partner in connection with the exercise of such stock option.
An equitable Percentage Interest adjustment shall be made in which the
Special Limited Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4.B(1) hereof.
C. SPECIAL VALUATION RULE. For purposes of this Section 4.4, in
determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Previous
General Partner's Stock Option Plans shall be considered.
D. FUTURE STOCK INCENTIVE PLANS. Nothing in this Agreement shall
be construed or applied to preclude or restrain the Previous General Partner,
the General Partner or the Special Limited Partner from adopting, modifying
or terminating stock incentive plans, in addition to the Previous General
Partner's Stock Option Plans, for the benefit of employees, directors or
other business associates of the Previous General Partner, the General
Partner, the Special Limited Partner, the Partnership or any of their
Affiliates. The Limited Partners acknowledge and agree that, in the event
that any such plan is adopted, modified or terminated by the Previous General
Partner, the General Partner or the Special Limited Partner amendments to
this Section 4.4 may become necessary or advisable and that any approval or
consent to any such amendments requested by the Previous General Partner, the
General Partner or the Special Limited Partner shall not be unreasonably
withheld or delayed.
Section 4.5 NO INTEREST; NO RETURN. No Partner shall be entitled
to interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to
demand or receive the return of its Capital Contribution from the Partnership.
Section 4.6 CONVERSION OF JUNIOR SHARES. If, at any time, any of
the Junior Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Common Units equal to (i) the number of REIT Shares
issued upon such conversion DIVIDED BY (ii) the Adjustment Factor then in
effect shall be issued to the General Partner and the Special Limited Partner
(and between the General Partner and the Special Limited Partner
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in proportion to their ownership of Partnership Common Units immediately
preceding such conversion), and the Percentage Interests of the General
Partner and the Limited Partners (including the Special Limited Partner)
shall be adjusted to reflect such conversion.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS.
Subject to the terms of any Partnership Unit Designation, the General Partner
shall cause the Partnership to distribute quarterly all, or such portion as
the General Partner may in its sole and absolute discretion determine, of
Available Cash generated by the Partnership during such quarter to the
Holders of Partnership Common Units in accordance with their respective
Partnership Common Units held on such Partnership Record Date. Distributions
payable with respect to any Partnership Units that were not outstanding
during the entire quarterly period in respect of which any distribution is
made shall be prorated based on the portion of the period that such units
were outstanding. The General Partner in its sole and absolute discretion
may distribute to the Unitholders Available Cash on a more frequent basis and
provide for an appropriate record date. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the Previous General Partner's qualification as a REIT,
to cause the Partnership to distribute sufficient amounts to enable (i) the
General Partner and the Special Limited Partner to transfer funds to the
Previous General Partner and (ii) the Previous General Partner to pay
shareholder dividends that will (a) satisfy the requirements for qualifying
as a REIT under the Code and Regulations (the "REIT REQUIREMENTS") and (b)
avoid any federal income or excise tax liability of the Previous General
Partner.
Section 5.2 DISTRIBUTIONS IN KIND. No right is given to any
Unitholder to demand and receive property other than cash as provided in this
Agreement. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to
ensure that the fair market value is distributed and allocated in accordance
with Articles 5, 6 and 10 hereof.
Section 5.3 AMOUNTS WITHHELD. All amounts withheld pursuant to
the Code or any provisions of any state or local tax law and Section 10.4
hereof with respect to any allocation, payment or distribution to any
Unitholder shall be treated as amounts paid or distributed to such Unitholder
pursuant to Section 5.1 hereof for all purposes under this Agreement.
Section 5.4 DISTRIBUTIONS UPON LIQUIDATION. Notwithstanding the
other provisions of this Article 5, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to
the Unitholders in accordance with Section 13.2 hereof.
Section 5.5 RESTRICTED DISTRIBUTIONS. Notwithstanding any
provision to the contrary contained in this Agreement, neither the
Partnership nor the General Partner, on behalf of the Partnership, shall make
a distribution to any Unitholder on account of its Partnership Interest or
interest in Partnership Units if such distribution would violate Section
17-607 of the Act or other applicable law.
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ARTICLE 6
ALLOCATIONS
Section 6.1 TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME AND NET
LOSS. Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Fiscal Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and
subject to Section 11.6.C hereof, an allocation to a Unitholder of a share of
Net Income or Net Loss shall be treated as an allocation of the same share of
each item of income, gain, loss or deduction that is taken into account in
computing Net Income or Net Loss.
Section 6.2 GENERAL ALLOCATIONS. Subject to the terms of any
Partnership Unit Designation, except as otherwise provided in this Article 6
and subject to Section 11.6.C hereof, Net Income and Net Loss shall be
allocated to each of the Holders of Partnership Common Units in accordance
with their respective Partnership Common Units at the end of each Fiscal Year.
Section 6.3 ADDITIONAL ALLOCATION PROVISIONS. Notwithstanding the
foregoing provisions of this Article 6:
A. INTENTIONALLY OMITTED.
B. REGULATORY ALLOCATIONS.
(i) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of
Section 6.2 hereof, or any other provision of this Article 6, if there
is a net decrease in Partnership Minimum Gain during any Fiscal Year,
each Holder of Partnership Common Units shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Holder's share of the net
decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be allocated
to each Holder pursuant thereto. The items to be allocated shall be
determined in accordance with Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.3.B(i) is intended to qualify as a
"minimum gain chargeback" within the meaning of Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.B(i)
hereof, if there is a net decrease in Partner Minimum Gain attributable
to a Partner Nonrecourse Debt during any Fiscal Year, each Holder of
Partnership Common Units who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i)(5), shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Holder's share of the net
decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.7042(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to
each General Partner, Limited Partner and other Holder pursuant thereto.
The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3.B(ii) is
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intended to qualify as a "chargeback of partner nonrecourse debt minimum
gain" within the meaning of Regulations Section 1.704-2(i) and shall be
interpreted consistently therewith.
(iii) NONRECOURSE DEDUCTIONS AND PARTNER NONRECOURSE
DEDUCTIONS. Any Nonrecourse Deductions for any Fiscal Year shall be
specially allocated to the Holders of Partnership Common Units in
accordance with their Partnership Common Units. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the
Holder(s) who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable, in accordance with Regulations Section 1.704-2(i).
(iv) QUALIFIED INCOME OFFSET. If any Holder of Partnership
Common Units unexpectedly receives an adjustment, allocation or
distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Partnership income and gain shall be allocated, in
accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder
in an amount and manner sufficient to eliminate, to the extent required
by such Regulations, the Adjusted Capital Account Deficit of such Holder
as quickly as possible, provided that an allocation pursuant to this
Section 6.3.B(iv) shall be made if and only to the extent that such Holder
would have an Adjusted Capital Account Deficit after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.B(iv) were not in the Agreement. It is intended that this Section
6.3.B(iv) qualify and be construed as a "qualified income offset" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(v) GROSS INCOME ALLOCATION. In the event that any Holder of
Partnership Common Units has a deficit Capital Account at the end of any
Fiscal Year that is in excess of the sum of (1) the amount (if any) that
such Holder is obligated to restore to the Partnership upon complete
liquidation of such Holder's Partnership Interest (including, the
Holder's interest in outstanding Partnership Preferred Units and other
Partnership Units) and (2) the amount that such Holder is deemed to be
obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder
shall be specially allocated items of Partnership income and gain in the
amount of such excess to eliminate such deficit as quickly as possible,
provided that an allocation pursuant to this Section 6.3.B(v) shall be
made if and only to the extent that such Holder would have a deficit
Capital Account in excess of such sum after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.B(v) and Section 6.3.B(iv) hereof were not in the Agreement.
(vi) LIMITATION ON ALLOCATION OF NET LOSS. To the extent
that any allocation of Net Loss would cause or increase an Adjusted
Capital Account Deficit as to any Holder of Partnership Common Units,
such allocation of Net Loss shall be reallocated among the other Holders
of Partnership Common Units in accordance with their respective
Partnership Common Units, subject to the limitations of this Section
6.3.B(vi).
(vii) SECTION 754 ADJUSTMENT. To the extent that an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2) (iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Holder of Partnership
Common Units in complete liquidation of its interest in the Partnership,
the amount of such adjustment to the Capital Accounts shall be treated
as an item of
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gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such gain or loss shall be
specially allocated to the Holders in accordance with their Partnership
Common Units in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) CURATIVE ALLOCATIONS. The allocations set forth in
Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the
"REGULATORY ALLOCATIONS") are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections
1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.1
hereof, the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the
Holders of Partnership Common Units so that to the extent possible
without violating the requirements giving rise to the Regulatory
Allocations, the net amount of such allocations of other items and the
Regulatory Allocations to each Holder of a Partnership Common Unit shall
be equal to the net amount that would have been allocated to each such
Holder if the Regulatory Allocations had not occurred.
C. SPECIAL ALLOCATIONS UPON LIQUIDATION. Notwithstanding any
provision in this Article VI to the contrary, in the event that the
Partnership disposes of all or substantially all of its assets in a
transaction that will lead to a liquidation of the Partnership pursuant to
Article XIII hereof, then any Net Income or Net Loss realized in connection
with such transaction and thereafter (and, if necessary, constituent items of
income, gain, loss and deduction) shall be specially allocated among the
Partners as required so as to cause liquidating distributions pursuant to
Section 13.2.A(4) hereof to be made in the same amounts and proportions as
would have resulted had such distributions instead been made pursuant to
Section 5.1 hereof.
D. ALLOCATION OF EXCESS NONRECOURSE LIABILITIES. For purposes of
determining a Holder's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), each Holder's interest in Partnership profits shall be such
Holder's share of Partnership Common Units.
Section 6.4 TAX ALLOCATIONS.
A. IN GENERAL. Except as otherwise provided in this Section 6.4,
for income tax purposes under the Code and the Regulations each Partnership
item of income, gain, loss and deduction (collectively, "TAX ITEMS") shall be
allocated among the Holders of Partnership Common Units in the same manner as
its correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Sections 6.2 and 6.3 hereof.
B. ALLOCATIONS RESPECTING SECTION 704(c) REVALUATIONS.
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that
is contributed to the Partnership with a Gross Asset Value that varies from
its basis in the hands of the contributing Partner immediately preceding the
date of contribution shall be allocated among the Holders of Partnership
Common Units for income tax purposes pursuant to Regulations promulgated
under Code Section 704(c) so as to take into account such variation. The
Partnership shall account for such variation under any method approved under
Code Section 704(c) and the applicable Regulations as chosen by the General
Partner, including, without limitation, the "traditional method" as described
in Regulations Section 1.704-3(b). In the event that the Gross Asset Value
of any partnership asset is adjusted pursuant to subsection (b) of the
definition of "Gross Asset Value" (provided in Article 1 hereof), subsequent
allocations of Tax Items with
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respect to such asset shall take account of the variation, if any, between
the adjusted basis of such asset and its Gross Asset Value in the same manner
as under Code Section 704(c) and the applicable Regulations.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT.
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and no Limited Partner
shall have any right to participate in or exercise control or management
power over the business and affairs of the Partnership. The General Partner
may not be removed by the Partners with or without cause, except with the
Consent of the General Partner. In addition to the powers now or hereafter
granted a general partner of a limited partnership under applicable law or
that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof
including Section 7.3, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit the Previous General Partner (so
long as the Previous General Partner qualifies as a REIT) to avoid the
payment of any federal income tax (including, for this purpose, any
excise tax pursuant to Code Section 4981) and to make distributions to
its shareholders sufficient to permit the Previous General Partner to
maintain REIT status or otherwise to satisfy the REIT Requirements), the
assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness (including
the securing of same by deed to secure debt, mortgage, deed of trust or
other lien or encumbrance on the Partnership's assets) and the incurring
of any obligations that it deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(3) the acquisition, sale, transfer, exchange or other
disposition of any assets of the Partnership (including, but not limited
to, the exercise or grant of any conversion, option, privilege or
subscription right or any other right available in connection with any
assets at any time held by the Partnership) or the merger,
consolidation, reorganization or other combination of the Partnership
with or into another entity;
(4) the mortgage, pledge, encumbrance or hypothecation of any
assets of the Partnership, the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms that it sees fit,
including, without limitation, the financing of the operations and
activities of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
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(including, without limitation, the Partnership's Subsidiaries) and the
repayment of obligations of the Partnership, its Subsidiaries and any
other Person in which it has an equity investment, and the making of
capital contributions to and equity investments in the Partnership's
Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property,
including, without limitation, any Contributed Property, or other asset
of the Partnership or any Subsidiary;
(6) the negotiation, execution and performance of any
contracts, leases, conveyances or other instruments that the General
Partner considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General Partner's
powers under this Agreement, including contracting with contractors,
developers, consultants, accountants, legal counsel, other professional
advisors and other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement, the holding, management,
investment and reinvestment of cash and other assets of the Partnership,
and the collection and receipt of revenues, rents and income of the
Partnership;
(8) the selection and dismissal of employees of the
Partnership or the General Partner (including, without limitation,
employees having titles or offices such as "president," "vice
president," "secretary" and "treasurer"), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership or the
General Partner and the determination of their compensation and other
terms of employment or hiring;
(9) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(10) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to,
any Subsidiary and any other Person in which it has an equity investment
from time to time); PROVIDED, HOWEVER, that, as long as the Previous
General Partner has determined to continue to qualify as a REIT, the
General Partner may not engage in any such formation, acquisition or
contribution that would cause the Previous General Partner to fail to
qualify as a REIT or the General Partner to fail to qualify as a
"qualified REIT subsidiary" within the meaning of Code Section 856(i)(2);
(11) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment, of any claim, cause of action, liability, debt or damages,
due or owing to or from the Partnership, the commencement or defense of
suits, legal proceedings, administrative proceedings, arbitrations or
other forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the
incurring of legal expense, and the indemnification of any Person
against liabilities and contingencies to the extent permitted by law;
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(12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Subsidiary or any
other Person (including, without limitation, the contribution or loan of
funds by the Partnership to such Persons);
(13) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as it may adopt; PROVIDED that such methods are otherwise
consistent with the requirements of this Agreement;
(14) the enforcement of any rights against any Partner
pursuant to representations, warranties, covenants and indemnities
relating to such Partner's contribution of property or assets to the
Partnership;
(15) the exercise, directly or indirectly, through any
attorney- in-fact acting under a general or limited power of attorney,
of any right, including the right to vote, appurtenant to any asset or
investment held by the Partnership;
(16) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the
Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest, pursuant to contractual or other
arrangements with such Person;
(18) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing
necessary or appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner enumerated in
this Agreement;
(19) the issuance of additional Partnership Units, as
appropriate and in the General Partner's sole and absolute discretion,
in connection with Capital Contributions by Additional Limited Partners
and additional Capital Contributions by Partners pursuant to Article 4
hereof; and
(20) an election to dissolve the Partnership pursuant to
Section 13.1.C hereof.
B. Each of the Limited Partners agrees that, except as provided
in Section 7.3 hereof, the General Partner is authorized to execute, deliver
and perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as provided in
Section 7.3 hereof), the Act or any applicable law, rule or regulation. The
execution, delivery or performance by the General Partner or the Partnership
of any agreement authorized or permitted under this Agreement shall not
constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
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C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the Properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain working capital and other
reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
by it. The General Partner and the Partnership shall not have liability to a
Limited Partner under any circumstances as a result of an income tax liability
incurred by such Limited Partner as a result of an action (or inaction) by the
General Partner pursuant to its authority under this Agreement so long as the
action or inaction is taken in good faith.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP. To the extent that
such action is determined by the General Partner to be reasonable and necessary
or appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, the
District of Columbia or any other jurisdiction, in which the Partnership may
elect to do business or own property. Subject to the terms of Section 8.5.A(4)
hereof, the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any
Limited Partner. The General Partner shall use all reasonable efforts to cause
to be filed such other certificates or documents as may be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability to the extent provided by applicable law) in the
State of Delaware and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Section 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY.
A. The General Partner may not take any action in contravention of
this Agreement, including, without limitation:
(1) take any action that would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(2) possess Partnership property, or assign any rights in
specific Partnership property, for other than a Partnership purpose
except as otherwise provided in this Agreement;
(3) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(4) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other
liability except as provided herein or under the Act; or
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(5) enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the effect of
prohibiting or restricting, the ability of (a) the General Partner,
the Previous General Partner or the Partnership from satisfying its
obligations under Section 8.6 hereof in full or (b) a Limited Partner
from exercising its rights under Section 8.6 hereof to effect a
Redemption in full, except, in either case, with the written consent
of such Limited Partner affected by the prohibition or restriction.
B. The General Partner shall not, without the prior Consent of the
Limited Partners, undertake, on behalf of the Partnership, any of the following
actions or enter into any transaction that would have the effect of such
transactions:
(1) except as provided in Section 7.3.C hereof, amend,
modify or terminate this Agreement other than to reflect the
admission, substitution, termination or withdrawal of Partners
pursuant to Article 11 or Article 12 hereof;
(2) make a general assignment for the benefit of creditors
or appoint or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Partnership;
(3) institute any proceeding for bankruptcy on behalf of the
Partnership; or
(4) subject to the rights of Transfer provided in Sections
11.1.C and 11.2 hereof, approve or acquiesce to the Transfer of the
Partnership Interest of the General Partner, or admit into the
Partnership any additional or successor General Partners.
C. Notwithstanding Section 7.3.B hereof, the General Partner shall
have the power, without the Consent of the Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited
Partners;
(2) to reflect the admission, substitution or withdrawal of
Partners or the termination of the Partnership in accordance with this
Agreement, and to amend EXHIBITS A and C in connection with such
admission, substitution or withdrawal;
(3) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited Partners in any
material respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with other
provisions, or make other changes with respect to matters arising
under this Agreement that will not be inconsistent with law or with
the provisions of this Agreement;
(4) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law;
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(5) (a) to reflect such changes as are reasonably necessary
(i) for either the General Partner or the Special Limited Partner, as
the case may be, to maintain its status as a "qualified REIT
subsidiary" within the meaning of Code Section 856(i)(2) or (ii) for
the Previous General Partner to maintain its status as a REIT or to
satisfy the REIT Requirement; (b) to reflect the Transfer of all or
any part of a Partnership Interest among the Previous General Partner,
the General Partner, the Special Limited Partner or any other
"qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to the Previous General Partner;
(6) to modify the manner in which Capital Accounts are
computed (but only to the extent set forth in the definition of
"Capital Account" or contemplated by the Code or the Regulations); and
(7) the issuance of additional Partnership Interests in
accordance with Section 4.2.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
D. Notwithstanding Sections 7.3.B and 7.3.C hereof, this Agreement
shall not be amended, and no action may be taken by the General Partner, without
the Consent of each Partner adversely affected, if such amendment or action
would (i) convert a Limited Partner Interest in the Partnership into a General
Partner Interest (except as a result of the General Partner acquiring such
Partnership Interest), (ii) modify the limited liability of a Limited Partner,
(iii) alter the rights of any Partner to receive the distributions to which such
Partner is entitled, pursuant to Article 5 or Section 13.2.A(4) hereof, or alter
the allocations specified in Article 6 hereof (except, in any case, as permitted
pursuant to Sections 4.2 and 7.3.C hereof), (iv) alter or modify the Redemption
rights, Cash Amount or REIT Shares Amount as set forth in Sections 8.6 and 11.2
hereof, or amend or modify any related definitions, or (v) amend this Section
7.3.D; PROVIDED, HOWEVER, that the Consent of each Partner adversely affected
shall not be required for any amendment or action that affects all Partners
holding the same class or series of Partnership Units on a uniform or pro rata
basis. Further, no amendment may alter the restrictions on the General
Partner's authority set forth elsewhere in this Section 7.3 without the Consent
specified therein. Any such amendment or action consented to by any Partner
shall be effective as to that Partner, notwithstanding the absence of such
consent by any other Partner.
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER.
A. The General Partner shall not be compensated for its services as
general partner of the Partnership except as provided in elsewhere in this
Agreement (including the provisions of Articles 5 and 6 hereof regarding
distributions, payments and allocations to which it may be entitled in its
capacity as the General Partner).
B. Subject to Sections 7.4.C and 15.11 hereof, the Partnership shall
be liable for, and shall reimburse the General Partner on a monthly basis, or
such other basis as the General Partner may determine in its sole and absolute
discretion, for all sums expended in connection with the Partnership's business,
including, without limitation, (i) expenses relating to the ownership of
interests in and management and operation of, or for the benefit of, the
Partnership, (ii) compensation of officers and employees, including, without
limitation, payments under future compensation plans of the General Partner that
may provide for stock units, or other phantom stock, pursuant to which employees
of the General Partner will receive payments based upon dividends on or the
value of REIT Shares, (iii) director fees and expenses and (iv) all costs and
expenses of the General Partner being a public
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company, including costs of filings with the SEC, reports and other
distributions to its shareholders; PROVIDED, HOWEVER, that the amount of any
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership as permitted pursuant to Section 7.5 hereof. Such
reimbursements shall be in addition to any reimbursement of the General
Partner as a result of indemnification pursuant to Section 7.7 hereof.
C. To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership and, subject to Section 15.11 hereof,
reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as "guaranteed
payments" within the meaning of Code Section 707(c).
Section 7.5 OUTSIDE ACTIVITIES OF THE PREVIOUS GENERAL PARTNER AND
THE GENERAL PARTNER. Neither the General Partner nor the Previous General
Partner shall directly or indirectly enter into or conduct any business, other
than in connection with (a) the ownership, acquisition and disposition of
Partnership Interests as General Partner, (b) the management of the business of
the Partnership, (c) the operation of the Previous General Partner as a
reporting company with a class (or classes) of securities registered under the
Exchange Act, (d) the Previous General Partner's operations as a REIT, (e) the
offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (f) financing or refinancing of any type
related to the Partnership or its assets or activities, (g) the General
Partner's qualification as a "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) and (h) such activities as are incidental thereto.
Nothing contained herein shall be deemed to prohibit the General Partner or the
Previous General Partner from executing guarantees of Partnership debt for which
it would otherwise be liable in its capacity as General Partner. Subject to
Section 7.3.B hereof, the General Partner, the Previous General Partner, the
Special Limited Partner and all "qualified REIT subsidiaries" (within the
meaning of Code Section 856(i)(2)), taken as a group, shall not own any assets
or take title to assets (other than temporarily in connection with an
acquisition prior to contributing such assets to the Partnership) other than
Partnership Interests as the General Partner or Special Limited Partner and
other than such cash and cash equivalents, bank accounts or similar instruments
or accounts as such group deems reasonably necessary, taking into account
Section 7.1.D hereof and the requirements necessary for the Previous General
Partner to qualify as a REIT and for the Previous General Partner, the General
Partner and the Special Limited Partner to carry out their respective
responsibilities contemplated under this Agreement and the Charter.
Notwithstanding the foregoing, if the Previous General Partner or the General
Partner acquires assets in its own name and owns Property other than through the
Partnership, the Partners agree to negotiate in good faith to amend this
Agreement, including, without limitation, the definition of "Adjustment Factor,"
to reflect such activities and the direct ownership of assets by the Previous
General Partner or the General Partner. The General Partner and any Affiliates
of the General Partner may acquire Limited Partner Interests and shall be
entitled to exercise all rights of a Limited Partner relating to such Limited
Partner Interests.
Section 7.6 CONTRACTS WITH AFFILIATES.
A. The Partnership may lend or contribute funds or other assets to
its Subsidiaries or other Persons in which it has an equity investment, and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 7.5 hereof and subject to Section
3.1 hereof, the Partnership may transfer assets to joint ventures, limited
liability companies, partnerships, corporations, business trusts or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions
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consistent with this Agreement and applicable law as the General Partner, in
its sole and absolute discretion, believes to be advisable.
C. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to the Partnership, directly or indirectly, except pursuant to
transactions that are determined by the General Partner in good faith to be fair
and reasonable.
D. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership or any of the
Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
Section 7.7 INDEMNIFICATION.
A. To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorney's fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership ("ACTIONS") as set forth in
this Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise; PROVIDED, HOWEVER, that the Partnership shall
not indemnify an Indemnitee (i) for willful misconduct or a knowing violation of
the law or (ii) for any transaction for which such Indemnitee received an
improper personal benefit in violation or breach of any provision of this
Agreement. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. It is the intention of this Section 7.7.A that the Partnership
indemnify each Indemnitee to the fullest extent permitted by law. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, does not create a presumption that such Indemnitee acted in a
manner contrary to that specified in this Section 7.7.A with respect to the
subject matter of such proceeding. Any indemnification pursuant to this Section
7.7 shall be made only out of the assets of the Partnership, and neither the
General Partner nor any Limited Partner shall have any obligation to contribute
to the capital of the Partnership or otherwise provide funds to enable the
Partnership to fund its obligations under this Section 7.7.
B. To the fullest extent permitted by law, expenses incurred by an
Indemnitee who is a party to a proceeding or otherwise subject to or the focus
of or is involved in any Action shall be paid or reimbursed by
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the Partnership as incurred by the Indemnitee in advance of the final
disposition of the Action upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking
by or on behalf of the Indemnitee to repay the amount if it shall ultimately
be determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee unless otherwise provided in a
written agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any of the Indemnitees and such other Persons
as the General Partner shall determine, against any liability that may be
asserted against or expenses that may be incurred by such Person in connection
with the Partnership's activities, regardless of whether the Partnership would
have the power to indemnify such Person against such liability under the
provisions of this Agreement.
E. Any liabilities which an Indemnitee incurs as a result of acting
on behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of an
employee benefit plan or any related trust or funding mechanism (whether such
liabilities are in the form of excise taxes assessed by the IRS, penalties
assessed by the Department of Labor, restitutions to such a plan or trust or
other funding mechanism or to a participant or beneficiary of such plan, trust
or other funding mechanism, or otherwise) shall be treated as liabilities or
judgments or fines under this Section 7.7, unless such liabilities arise as a
result of (i) such Indemnitee's intentional misconduct or knowing violation of
the law, or (ii) any transaction in which such Indemnitee received a personal
benefit in violation or breach of any provision of this Agreement or applicable
law.
F. In no event may an Indemnitee subject any of the Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
I. It is the intent of the Partners that any amounts paid by the
Partnership to the General Partner pursuant to this Section 7.7 shall be treated
as "guaranteed payments" within the meaning of Code Section 707(c).
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Section 7.8 LIABILITY OF THE GENERAL PARTNER.
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's shareholders collectively and that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's shareholders (including, without limitation,
the tax consequences to Limited Partners, Assignees or the General Partner's
shareholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions.
C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its employees or agents
(subject to the supervision and control of the General Partner). The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's, and its officers' and directors',
liability to the Partnership and the Limited Partners under this Section 7.8 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
E. Notwithstanding anything herein to the contrary, except for
fraud, willful misconduct or gross negligence, or pursuant to any express
indemnities given to the Partnership by any Partner pursuant to any other
written instrument, no Partner shall have any personal liability whatsoever, to
the Partnership or to the other Partner(s), for the debts or liabilities of the
Partnership or the Partnership's obligations hereunder, and the full recourse of
the other Partner(s) shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no officer, director or
shareholder of the General Partner shall be liable to the Partnership for money
damages except for (i) active and deliberate dishonesty established by a non-
appealable final judgment or (ii) actual receipt of an improper benefit or
profit in money, property or services. Without limitation of the foregoing, and
except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) in favor of any other Partner(s) and arising out of, or in connection
with, this Agreement. This Agreement is executed by the officers of the General
Partner solely as officers of the same and not in their own individual
capacities.
F. To the extent that, at law or in equity, the General Partner has
duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or the Limited Partners, the General Partner shall not be liable to
the Partnership or to any other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of the General Partner
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otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such General Partner.
Section 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters that the General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
C. The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty that
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provision of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the Previous General Partner to
continue to qualify as a REIT, (ii) for the Previous General Partner otherwise
to satisfy the REIT Requirements, (iii) to avoid the Previous General Partner
incurring any taxes under Code Section 857 or Code Section 4981 or (iv) for the
General Partner or the Special Limited Partner to continue to qualify as a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
Section 7.10 TITLE TO PARTNERSHIP ASSETS. Title to Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively with other Partners or Persons, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name
in which legal title to such Partnership assets is held.
Section 7.11 RELIANCE BY THIRD PARTIES. Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without the consent or approval of any other Partner or Person, to encumber,
sell or otherwise use
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in any manner any and all assets of the Partnership and to enter into any
contracts on behalf of the Partnership, and take any and all actions on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of
this Agreement have been complied with or to inquire into the necessity or
expediency of any act or action of the General Partner or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was
in full force and effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (iii) such certificate, document
or instrument was duly executed and delivered in accordance with the terms
and provisions of this Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY. The Limited Partners shall have
no liability under this Agreement except as expressly provided in this Agreement
(including, without limitation, Section 10.4 hereof) or under the Act.
Section 8.2 MANAGEMENT OF BUSINESS. No Limited Partner or Assignee
(other than the General Partner, any of its Affiliates or any officer, director,
member, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such) shall take
part in the operations, management or control (within the meaning of the Act) of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, director, member, employee, partner, agent, representative, or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS. Subject to any
agreements entered into pursuant to Section 7.6.D hereof and any other
agreements entered into by a Limited Partner or its Affiliates with the General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, officer, director,
employee, agent, trustee, Affiliate or shareholder of any Limited Partner shall
be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities that are in direct or indirect competition with the Partnership
or that are enhanced by the activities of the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. Subject to such
agreements, none of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the partnership relationship established
hereby in any business ventures of any other Person (other than the General
Partner, to the extent expressly provided herein), and such Person shall have no
obligation pursuant to this Agreement, subject to Section 7.6.D hereof and any
other agreements entered into by a Limited Partner or its Affiliates with the
General Partner, the Partnership or a Subsidiary, to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such other
Person, even if such
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opportunity is of a character that, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 RETURN OF CAPITAL. Except pursuant to the rights of
Redemption set forth in Section 8.6 hereof, no Limited Partner shall be entitled
to the withdrawal or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein. Except to the extent provided in Article 6
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of (i) the most recent annual and quarterly
reports filed with the SEC by the Previous General Partner or the General
Partner pursuant to the Exchange Act and (ii) each report or other written
communication sent to the shareholders of the Previous General Partner;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Fiscal Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and
all amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or services
contributed by each Partner and that each Partner has agreed to contribute
in the future, and the date on which each became a Partner.
B. The Partnership shall notify any Limited Partner that is a
Qualifying Party, on request, of the then current Adjustment Factor or any
change made to the Adjustment Factor.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or the General Partner or (ii) the Partnership or the General
Partner is required by law or by agreements with unaffiliated third parties to
keep confidential.
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Section 8.6 REDEMPTION RIGHTS OF QUALIFYING PARTIES.
A. After the first Twelve-Month Period, a Qualifying Party, but no
other Limited Partner or Assignee, shall have the right (subject to the terms
and conditions set forth herein) to require the Partnership to redeem all or a
portion of the Redeemable Units held by such Tendering Party (such Redeemable
Units being hereafter "TENDERED UNITS") in exchange (a "REDEMPTION") for the
Cash Amount payable on the Specified Redemption Date. Any Redemption shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Qualifying Party when exercising the Redemption right (the "TENDERING
PARTY"). The Partnership's obligation to effect a Redemption, however, shall
not arise or be binding against the Partnership (i) until and unless there has
been a Declination and (ii) before the Business Day following the Cut-Off Date.
Regardless of the binding or non-binding nature of a pending Redemption, a
Tendering Party shall have no right to receive distributions with respect to any
Tendered Units (other than the Cash Amount) paid after delivery of the Notice of
Redemption, whether or not the Partnership Record Date for such distribution
precedes or coincides with such delivery of the Notice of Redemption. In the
event of a Redemption, the Cash Amount shall be delivered as a certified check
payable to the Tendering Party or, in the General Partner's sole and absolute
discretion, in immediately available funds.
B. Notwithstanding the provisions of Section 8.6.A hereof, on or
before the close of business on the Cut-Off Date, the General Partner may, in
its sole and absolute discretion but subject to the Ownership Limit and the
transfer restrictions and other limitations of the Charter, elect to cause the
Previous General Partner to acquire some or all (such percentage being referred
to as the "APPLICABLE PERCENTAGE") of the Tendered Units from the Tendering
Party in exchange for REIT Shares. In making such election to cause the
Previous General Partner to acquire Tendered Units, the General Partner shall
act in a fair, equitable and reasonable manner that neither prefers one group or
class of Qualifying Parties over another nor discriminates against a group or
class of Qualifying Parties. If the General Partner so elects, on the Specified
Redemption Date the Tendering Party shall sell such number of the Tendered Units
to the Previous General Partner in exchange for a number of REIT Shares equal to
the product of the REIT Shares Amount and the Applicable Percentage. The
Tendering Party shall submit (i) such information, certification or affidavit as
the Previous General Partner may reasonably require in connection with the
application of the Ownership Limit and other restrictions and limitations of the
Charter to any such acquisition and (ii) such written representations,
investment letters, legal opinions or other instruments necessary, in the
Previous General Partner's view, to effect compliance with the Securities Act.
In the event of a purchase of the Tendered Units by the Previous General Partner
pursuant to this Section 8.6.B, the Tendering Party shall no longer have the
right to cause the Partnership to effect a Redemption of such Tendered Units,
and, upon notice to the Tendering Party by the General Partner or the Previous
General Partner, given on or before the close of business on the Cut-Off Date,
that the Previous General Partner has elected to acquire some or all of the
Tendered Units pursuant to this Section 8.6.B, the obligation of the Partnership
to effect a Redemption of the Tendered Units as to which the General Partner's
notice relates shall not accrue or arise. The product of the Applicable
Percentage and the REIT Shares Amount, if applicable, shall be delivered by the
Previous General Partner as duly authorized, validly issued, fully paid and
accessible REIT Shares and, if applicable, Rights, free of any pledge, lien,
encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Charter, the Bylaws of the Previous General
Partner, the Securities Act and relevant state securities or "blue sky" laws.
Neither any Tendering Party whose Tendered Units are acquired by the Previous
General Partner pursuant to this Section 8.6.B, any Partner, any Assignee nor
any other interested Person shall have any right to require or cause the
Previous General Partner or the General Partner to register, qualify or list any
REIT Shares owned or held by such Person, whether or not such REIT Shares are
issued pursuant to this Section 8.6.B, with the SEC, with any state securities
commissioner, department or agency, under the Securities Act or the Exchange Act
or with any stock exchange; PROVIDED, HOWEVER, that this limitation shall not be
in derogation of any registration or similar rights
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granted pursuant to any other written agreement between the Previous General
Partner and any such Person. Notwithstanding any delay in such delivery, the
Tendering Party shall be deemed the owner of such REIT Shares and Rights for
all purposes, including, without limitation, rights to vote or consent,
receive dividends, and exercise rights, as of the Specified Redemption Date.
REIT Shares issued upon an acquisition of the Tendered Units by the Previous
General Partner pursuant to this Section 8.6.B may contain such legends
regarding restrictions under the Securities Act and applicable state
securities laws as the Previous General Partner in good faith determines to
be necessary or advisable in order to ensure compliance with such laws.
C. Notwithstanding the provisions of Section 8.6.A and 8.6.B hereof,
the Tendering Parties (i) where the Redemption would consist of less than all
the Partnership Common Units held by Partners other than the General Partner and
the Special Limited Partner, shall not be entitled to elect or effect a
Redemption to the extent that the aggregate Percentage Interests of the Limited
Partners (other than the Special Limited Partner) would be reduced, as a result
of the Redemption (or the acquisition of the Tendered Units by the Previous
General Partner pursuant to Section 8.6.B hereof), to less than one percent (1%)
and (ii) shall have no rights under this Agreement that would otherwise be
prohibited under the Charter. To the extent that any attempted Redemption or
acquisition of the Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof would be in violation of this Section 8.6.C, it shall be
null and void ab initio, and the Tendering Party shall not acquire any rights or
economic interests in REIT Shares otherwise issuable by the Previous General
Partner under Section 8.6.B hereof.
D. In the event that the Previous General Partner declines or fails
to exercise its purchase rights pursuant to Section 8.6.B hereof following
receipt of a Notice of Redemption (a "DECLINATION"):
(1) The Previous General Partner or the General Partner shall
give notice of such Declination to the Tendering Party on or before
the close of business on the Cut-Off Date. The failure of both the
Previous General Partner and the General Partner to give notice of
such Declination by the close of business on the Cut-Off Date shall
itself constitute a Declination.
(2) The Partnership may elect to raise funds for the payment of
the Cash Amount either (a) by requiring that the General Partner
contribute such funds from the proceeds of a registered public
offering (a "PUBLIC OFFERING FUNDING") by the Previous General Partner
of a number of REIT Shares ("REGISTRABLE SHARES") equal to the REIT
Shares Amount with respect to the Tendered Units or (b) from any other
sources (including, but not limited to, the sale of any Property and
the incurrence of additional Debt) available to the Partnership.
(3) Promptly upon the General Partner's receipt of the Notice of
Redemption and the Previous General Partner or the General Partner
giving notice of the Previous General Partner's Declination, the
General Partner shall give notice (a "SINGLE FUNDING NOTICE") to all
Qualifying Parties then holding a Partnership Interest (or an interest
therein) and having Redemption rights pursuant to this Section 8.6 and
require that all such Qualifying Parties elect whether or not to
effect a Redemption of their Partnership Common Units to be funded
through such Public Offering Funding. In the event that any such
Qualifying Party elects to effect such a Redemption, it shall give
notice thereof and of the number of Partnership Common Units to be
made subject thereon in writing to the General Partner within ten (10)
Business Days after receipt of the Single Funding Notice, and such
Qualifying Party shall be treated as a Tendering Party for all
purposes of this Section 8.6. In the event that a Qualifying Party
does not so elect, it shall be deemed to have waived its right to
effect a Redemption for the current Twelve-Month Period;
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PROVIDED, HOWEVER, that the Previous General Partner shall not be
required to acquire Partnership Common Units pursuant to this
Section 8.6.D more than twice within a Twelve-Month Period.
Any proceeds from a Public Offering Funding that are in excess of the Cash
Amount shall be for the sole benefit of the Previous General Partner and/or the
General Partner. The General Partner and/or the Special Limited Partner shall
make a Capital Contribution of such amounts to the Partnership for an additional
General Partner Interest and/or Limited Partner Interest. Any such contribution
shall entitle the General Partner and the Special Limited Partner, as the case
may be, to an equitable Percentage Interest adjustment.
E. Notwithstanding the provisions of Section 8.6.B hereof, the
Previous General Partner shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the REIT Shares Amount if such exchange would be
prohibited under the Charter.
F. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.C hereof), with respect to any Redemption (or any tender of
Redeemable Units for Redemption if the Tendered Units are acquired by the
Previous General Partner pursuant to Section 8.6.B hereof) pursuant to this
Section 8.6:
(1) All Partnership Common Units acquired by the Previous
General Partner pursuant to Section 8.6.B hereof shall be
contributed by the Previous General Partner to either or both of
the General Partner and the Special Limited Partner in such
proportions as the Previous General Partner, the General Partner
and the Special Limited Partner shall determine. Any Partnership
Common Units so contributed to the General Partner shall
automatically, and without further action required, be converted
into and deemed to be a General Partner Interest comprised of the
same number of Partnership Common Units. Any Partnership Common
Units so contributed to the Special Limited Partner shall remain
outstanding.
(2) Subject to the Ownership Limit, no Tendering Party may
effect a Redemption for less than five hundred (500) Redeemable
Units or, if such Tendering Party holds (as a Limited Partner or,
economically, as an Assignee) less than five hundred (500)
Redeemable Units, all of the Redeemable Units held by such
Tendering Party.
(3) Each Tendering Party (a) may effect a Redemption only
once in each fiscal quarter of a Twelve-Month Period and (b) may
not effect a Redemption during the period after the Partnership
Record Date with respect to a distribution and before the record
date established by the Previous General Partner for a
distribution to its shareholders of some or all of its portion of
such Partnership distribution.
(4) Notwithstanding anything herein to the contrary, with
respect to any Redemption or acquisition of Tendered Units by the
Previous General Partner pursuant to Section 8.6.B hereof, in the
event that the Previous General Partner or the General Partner
gives notice to all Limited Partners (but excluding any
Assignees) then owning Partnership Interests (a "PRIMARY OFFERING
NOTICE") that the Previous General Partner desires to effect a
primary offering of its equity securities then, unless the
Previous General Partner and the General Partner otherwise
consent, commencement of the actions denoted in Section 8.6.E
hereof as to a Public Offering Funding with respect to any
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Notice of Redemption thereafter received, whether or not the
Tendering Party is a Limited Partner, may be delayed until the
earlier of (a) the completion of the primary offering or (b) ninety
(90) days following the giving of the Primary Offering Notice.
(5) Without the Consent of the Previous General Partner, no
Tendering Party may effect a Redemption within ninety (90) days
following the closing of any prior Public Offering Funding.
(6) The consummation of such Redemption (or an acquisition
of Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof, as the case may be) shall be subject to the
expiration or termination of the applicable waiting period, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
(7) The Tendering Party shall continue to own (subject, in
the case of an Assignee, to the provision of Section 11.5 hereof)
all Redeemable Units subject to any Redemption, and be treated as
a Limited Partner or an Assignee, as applicable, with respect to
such Redeemable Units for all purposes of this Agreement, until
such Redeemable Units are either paid for by the Partnership
pursuant to Section 8.6.A hereof or transferred to the Previous
General Partner (or directly to the General Partner or Special
Limited Partner) and paid for, by the issuance of the REIT
Shares, pursuant to Section 8.6.B hereof on the Specified
Redemption Date. Until a Specified Redemption Date and an
acquisition of the Tendered Units by the Previous General Partner
pursuant to Section 8.6.B hereof, the Tendering Party shall have
no rights as a shareholder of the Previous General Partner with
respect to the REIT Shares issuable in connection with such
acquisition.
For purposes of determining compliance with the restrictions set forth in this
Section 8.6.F, all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.
G. In connection with an exercise of Redemption rights pursuant to
this Section 8.6, the Tendering Party shall submit the following to the General
Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the Notice
of Redemption, (a) disclosing the actual and constructive
ownership, as determined for purposes of Code Sections 856(a)(6)
and 856(h), of REIT Shares by (i) such Tendering Party and (ii)
any Related Party and (b) representing that, after giving effect
to the Redemption or an acquisition of the Tendered Units by the
Previous General Partner pursuant to Section 8.6.B hereof,
neither the Tendering Party nor any Related Party will own REIT
Shares in excess of the Ownership Limit;
(2) A written representation that neither the Tendering
Party nor any Related Party has any intention to acquire any
additional REIT Shares prior to the closing of the Redemption or
an acquisition of the Tendered Units by the Previous General
Partner pursuant to Section 8.6.B hereof on the Specified
Redemption Date; and
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(3) An undertaking to certify, at and as a condition to the
closing of (i) the Redemption or (ii) the acquisition of the
Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof on the Specified Redemption Date, that
either (a) the actual and constructive ownership of REIT Shares
by the Tendering Party and any Related Party remain unchanged
from that disclosed in the affidavit required by Section 8.6.G(1)
or (b) after giving effect to the Redemption or an acquisition of
the Tendered Units by the Previous General Partner pursuant to
Section 8.6.B hereof, neither the Tendering Party nor any Related
Party shall own REIT Shares in violation of the Ownership Limit.
Section 8.7 PARTNERSHIP RIGHT TO CALL LIMITED PARTNER INTERESTS.
Notwithstanding any other provision of this Agreement, on and after the date on
which the aggregate Percentage Interests of the Limited Partners (other than the
Special Limited Partner) are less than one percent (1%), the Partnership shall
have the right, but not the obligation, from time to time and at any time to
redeem any and all outstanding Limited Partner Interests (other than the Special
Limited Partner's Limited Partner Interest) by treating any Limited Partner as a
Tendering Party who has delivered a Notice of Redemption pursuant to Section 8.6
hereof for the amount of Partnership Common Units to be specified by the General
Partner, in its sole and absolute discretion, by notice to such Limited Partner
that the Partnership has elected to exercise its rights under this Section 8.7.
Such notice given by the General Partner to a Limited Partner pursuant to this
Section 8.7 shall be treated as if it were a Notice of Redemption delivered to
the General Partner by such Limited Partner. For purposes of this Section 8.7,
(a) any Limited Partner (whether or not otherwise a Qualifying Party) may, in
the General Partner's sole and absolute discretion, be treated as a Qualifying
Party that is a Tendering Party and (b) the provisions of Sections 8.6.C(1),
8.6.F(2), 8.6.F(3) and 8.6.F(5) hereof shall not apply, but the remainder of
Section 8.6 hereof shall apply, MUTATIS MUTANDIS.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING.
A. The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 8.5.A or Section 9.3 hereof. Any records maintained by or on behalf
of the Partnership in the regular course of its business may be kept on, or be
in the form for, punch cards, magnetic tape, photographs, micrographics or any
other information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period of
time.
B. The books of the Partnership shall be maintained, for financial
and tax reporting purposes, on an accrual basis in accordance with generally
accepted accounting principles, or on such other basis as the General Partner
determines to be necessary or appropriate. To the extent permitted by sound
accounting practices and principles, the Partnership, the General Partner and
the Previous General Partner may operate with integrated or consolidated
accounting records, operations and principles.
Section 9.2 FISCAL YEAR. The Fiscal Year of the Partnership shall be
the calendar year.
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Section 9.3 REPORTS.
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Fiscal Year, the General Partner shall
cause to be mailed to each Limited Partner, of record as of the close of the
Fiscal Year, an annual report containing financial statements of the
Partnership, or of the Previous General Partner if such statements are prepared
solely on a consolidated basis with the Previous General Partner, for such
Fiscal Year, presented in accordance with generally accepted accounting
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.
B. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each calendar quarter (except the last
calendar quarter of each year), the General Partner shall cause to be mailed to
each Limited Partner, of record as of the last day of the calendar quarter, a
report containing unaudited financial statements of the Partnership, or of the
Previous General Partner if such statements are prepared solely on a
consolidated basis with the Previous General Partner, and such other information
as may be required by applicable law or regulation or as the General Partner
determines to be appropriate. At the request of any Limited Partner, the
General Partner shall provide access to the books, records and workpapers upon
which the reports required by this Section 9.3 are based, to the extent required
by the Act.
ARTICLE 10
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS. The General Partner shall
arrange for the preparation and timely filing of all returns with respect to
Partnership income, gains, deductions, losses and other items required of the
Partnership for federal and state income tax purposes and shall use all
reasonable effort to furnish,within ninety (90) days of the close of each
taxable year, the tax information reasonably required by Limited Partners for
federal and state income tax reporting purposes. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed Properties, including tax basis and other relevant information, as
may be reasonably requested by the General Partner from time to time.
Section 10.2 TAX ELECTIONS. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code, including, but not limited to,
the election under Code Section 754 and the election to use the "recurring item"
method of accounting provided under Code Section 461(h) with respect to property
taxes imposed on the Partnership's Properties; PROVIDED, HOWEVER, that, if the
"recurring item" method of accounting is elected with respect to such property
taxes, the Partnership shall pay the applicable property taxes prior to the date
provided in Code Section 461(h) for purposes of determining economic
performance. The General Partner shall have the right to seek to revoke any
such election (including, without limitation, any election under Code Sections
461(h) and 754) upon the General Partner's determination in its sole and
absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3 TAX MATTERS PARTNER.
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. The tax matters partner shall
receive no compensation for its services. All third-party costs and expenses
incurred by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the Partnership in
addition to any reimbursement pursuant to Section 7.4
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hereof. Nothing herein shall be construed to restrict the Partnership from
engaging an accounting firm to assist the tax matters partner in discharging
its duties hereunder, so long as the compensation paid by the Partnership for
such services is reasonable. At the request of any Limited Partner, the
General Partner agrees to consult with such Limited Partner with respect to
the preparation and filing of any returns and with respect to any subsequent
audit or litigation relating to such returns; PROVIDED, HOWEVER, that the
filing of such returns shall be in the sole and absolute discretion of the
General Partner.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for income
tax purposes (such administrative proceedings being referred to as a "TAX
AUDIT" and such judicial proceedings being referred to as "JUDICIAL
REVIEW"), and in the settlement agreement the tax matters partner may
expressly state that such agreement shall bind all Partners, except that
such settlement agreement shall not bind any Partner (i) who (within the
time prescribed pursuant to the Code and Regulations) files a statement
with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner or
(ii) who is a "notice partner" (as defined in Code Section 6231) or a
member of a "notice group" (as defined in Code Section 6223(b)(2));
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "FINAL ADJUSTMENT") is mailed to
the tax matters partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the United States
Tax Court or the United States Claims Court, or the filing of a complaint
for refund with the District Court of the United States for the district in
which the Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or complaint) for judicial review
with respect to such request;
(5) to enter into an agreement with the IRS to extend the period
for assessing any tax that is attributable to any item required to be taken
into account by a Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners in
connection with any tax audit or judicial review proceeding to the extent
permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the General Partner set forth
in Section 7.7 hereof shall be fully applicable to the tax matters partner in
its capacity as such.
Section 10.4 WITHHOLDING. Each Limited Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to such Limited
Partner any amount of federal, state, local or foreign taxes
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that the General Partner determines that the Partnership is required to
withhold or pay with respect to any amount distributable or allocable to such
Limited Partner pursuant to this Agreement, including, without limitation,
any taxes required to be withheld or paid by the Partnership pursuant to Code
Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446. Any
amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan
shall be repaid by such Limited Partner within fifteen (15) days after notice
from the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution that would otherwise
be made to the Limited Partner or (ii) the General Partner determines, in its
sole and absolute discretion, that such payment may be satisfied out of the
Available Funds of the Partnership that would, but for such payment, be
distributed to the Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest
in such Limited Partner's Partnership Interest to secure such Limited
Partner's obligation to pay to the Partnership any amounts required to be
paid pursuant to this Section 10.4. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section
10.4 when due, the General Partner may, in its sole and absolute discretion,
elect to make the payment to the Partnership on behalf of such defaulting
Limited Partner, and in such event shall be deemed to have loaned such amount
to such defaulting Limited Partner and shall succeed to all rights and
remedies of the Partnership as against such defaulting Limited Partner
(including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in the WALL STREET JOURNAL, plus four
(4) percentage points (but not higher than the maximum lawful rate) from the
date such amount is due (I.E., fifteen (15) days after demand) until such
amount is paid in full. Each Limited Partner shall take such actions as the
Partnership or the General Partner shall request in order to perfect or
enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER.
A. No part of the interest of a Partner shall be subject to the
claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
B. No Partnership Interest shall be Transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio.
C. Notwithstanding the other provisions of this Article 11 (other
than Section 11.6.D hereof), the Partnership Interests of the General Partner
and the Special Limited Partner may be Transferred, in whole or in part, at any
time or from time to time, to or among the Previous General Partner, the General
Partner, the Special Limited Partner, and any other Person that is, at the time
of such Transfer, a "QUALIFIED REIT SUBSIDIARY" (within the meaning of Code
Section 856(i)(2)) with respect to the Previous General Partner. Any transferee
of the entire General Partner Interest pursuant to this Section 11.1.C shall
automatically become, without further action or Consent of any Limited Partners,
the sole general partner of the Partnership, subject to all the rights,
privileges, duties and obligations under this Agreement and the Act relating to
a general partner. Any transferee of a Limited Partner Interest pursuant to
this Section 11.1.C shall automatically become, without further action or
Consent of any Limited Partners, a Substituted Limited Partner. Upon any
Transfer permitted by this Section 11.1.C, the
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transferor Partner shall be relieved of all its obligations under this
Agreement. The provisions of Section 11.2.B (other than the last sentence
thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any Transfer
permitted by this Section 11.1.C.
Section 11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST.
A. The General Partner may not Transfer any of its General Partner
Interest or withdraw from the Partnership except as provided in Sections 11.2.B
and 11.2.C hereof.
B. The General Partner shall not withdraw from the Partnership and
shall not Transfer all or any portion of its interest in the Partnership
(whether by sale, disposition, statutory merger or consolidation, liquidation or
otherwise) without the Consent of the Limited Partners, which Consent may be
given or withheld in the sole and absolute discretion of the Limited Partners.
Upon any Transfer of such a Partnership Interest pursuant to the Consent of the
Limited Partners and otherwise in accordance with the provisions of this Section
11.2.B, the transferee shall become a successor General Partner for all purposes
herein, and shall be vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all duties
of the General Partner, once such transferee has executed such instruments as
may be necessary to effectuate such admission and to confirm the agreement of
such transferee to be bound by all the terms and provisions of this Agreement
with respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such Transferred Partnership
Interest, and such Transfer shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Limited Partners.
In the event that the General Partner withdraws from the Partnership, in
violation of this Agreement or otherwise, or otherwise dissolves or terminates,
or upon the bankruptcy of the General Partner, a Majority in Interest of the
Limited Partners may elect to continue the Partnership business by selecting a
successor General Partner in accordance with the Act.
C. The General Partner may merge with another entity if immediately
after such merger substantially all of the assets of the surviving entity, other
than the General Partner Interest held by the General Partner, are contributed
to the Partnership as a Capital Contribution in exchange for Partnership Units.
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER.
A. GENERAL. Prior to the end of the first Twelve-Month Period, no
Limited Partner shall Transfer all or any portion of its Partnership Interest to
any transferee without the Consent of the General Partner, which Consent may be
withheld in its sole and absolute discretion; PROVIDED, HOWEVER, that any
Limited Partner may, at any time, without the consent of the General Partner,
(i) Transfer all or part of its Partnership Interest to any Designated Party,
any Family Member, any Controlled Entity or any Affiliate, provided that the
transferee is, in any such case, a Qualified Transferee, or (ii) pledge (a
"PLEDGE") all or any portion of its Partnership Interest to a lending
institution, that is not an Affiliate of such Limited Partner, as collateral or
security for a bona fide loan or other extension of credit, and Transfer such
pledged Partnership Interest to such lending institution in connection with the
exercise of remedies under such loan or extension or credit (any Transfer or
Pledge permitted by this proviso is hereinafter referred to as a "PERMITTED
TRANSFER"). After such first Twelve-Month Period, each Limited Partner, and
each transferee of Partnership Units or Assignee pursuant to a Permitted
Transfer, shall have the right to Transfer all or any portion of its Partnership
Interest to any Person, subject to the provisions of Section 11.6 hereof and to
satisfaction of each of the following conditions:
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(1) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The transferring
Partner shall give written notice of the proposed Transfer to the General
Partner, which notice shall state (i) the identity of the proposed
transferee and (ii) the amount and type of consideration proposed to be
received for the Transferred Partnership Units. The General Partner shall
have ten (10) Business Days upon which to give the Transferring Partner
notice of its election to acquire the Partnership Units on the proposed
terms. If it so elects, it shall purchase the Partnership Units on such
terms within ten (10) Business Days after giving notice of such election;
PROVIDED, HOWEVER, that in the event that the proposed terms involve a
purchase for cash, the General Partner may at its election deliver in lieu
of all or any portion of such cash a note payable to the Transferring
Partner at a date as soon as reasonably practicable, but in no event later
than one hundred eighty (180) days after such purchase, and bearing
interest at an annual rate equal to the total dividends declared with
respect to one (1) REIT Share for the four (4) preceding fiscal quarters of
the General Partner, DIVIDED BY the Value as of the closing of such
purchase; PROVIDED, FURTHER, that such closing may be deferred to the
extent necessary to effect compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, if applicable, and any other applicable
requirements of law. If it does not so elect, the Transferring Partner may
Transfer such Partnership Units to a third party, on terms no more
favorable to the transferee than the proposed terms, subject to the other
conditions of this Section 11.3.
(2) QUALIFIED TRANSFEREE. Any Transfer of a Partnership
Interest shall be made only to a single Qualified Transferee; PROVIDED,
HOWEVER, that, for such purposes, all Qualified Transferees that are
Affiliates, or that comprise investment accounts or funds managed by a
single Qualified Transferee and its Affiliates, shall be considered
together to be a single Qualified Transferee; PROVIDED, FURTHER, that each
Transfer meeting the minimum Transfer restriction of Section 11.3.A(3)
hereof may be to a separate Qualified Transferee.
(3) MINIMUM TRANSFER RESTRICTION. Any Transferring Partner must
Transfer not less than the lesser of (i) the greater of five hundred (500)
Partnership Units or one-third (1/3) of the number of Partnership Units
owned by such Partner as of the Effective Date or (ii) all of the remaining
Partnership Units owned by such Transferring Partner; PROVIDED, HOWEVER,
that, for purposes of determining compliance with the foregoing
restriction, all Partnership Units owned by Affiliates of a Limited Partner
shall be considered to be owned by such Limited Partner.
(4) TRANSFEREE AGREEMENT TO EFFECT A REDEMPTION. Any proposed
transferee shall deliver to the General Partner a written agreement
reasonably satisfactory to the General Partner to the effect that the
transferee will, within six (6) months after consummation of a Partnership
Common Units Transfer, tender its Partnership Common Units for Redemption
in accordance with the terms of the Redemption rights provided in Section
8.6 hereof.
(5) NO FURTHER TRANSFERS. The transferee (other than a
Designated Party) shall not be permitted to effect any further Transfer of
the Partnership Units, other than to the General Partner.
(6) EXCEPTION FOR PERMITTED TRANSFERS. The conditions of
Sections 11.3.A(1) through 11.3.A(5) hereof shall not apply in the case of
a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest, and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations
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and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner,
in its sole and absolute discretion. Notwithstanding the foregoing, any
transferee of any Transferred Partnership Interest shall be subject to any
and all ownership limitations (including, without limitation, the Ownership
Limit) contained in the Charter that may limit or restrict such transferee's
ability to exercise its Redemption rights, including, without limitation, the
Ownership Limit. Any transferee, whether or not admitted as a Substituted
Limited Partner, shall take subject to the obligations of the transferor
hereunder. Unless admitted as a Substituted Limited Partner, no transferee,
whether by a voluntary Transfer, by operation of law or otherwise, shall have
any rights hereunder, other than the rights of an Assignee as provided in
Section 11.5 hereof.
B. INCAPACITY. If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more rights than those enjoyed by other Limited Partners, for the
purpose of settling or managing the estate, and such power as the Incapacitated
Limited Partner possessed to Transfer all or any part of its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. OPINION OF COUNSEL. In connection with any Transfer of a Limited
Partner Interest, the General Partner shall have the right to receive an opinion
of counsel reasonably satisfactory to it to the effect that the proposed
Transfer may be effected without registration under the Securities Act and will
not otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Interests Transferred. If, in
the opinion of such counsel, such Transfer would require the filing of a
registration statement under the Securities Act or would otherwise violate any
federal or state securities laws or regulations applicable to the Partnership or
the Partnership Units, the General Partner may prohibit any Transfer otherwise
permitted under this Section 11.3 by a Limited Partner of Partnership Interests.
D. ADVERSE TAX CONSEQUENCES. No Transfer by a Limited Partner of
its Partnership Interests (including any Redemption, any other acquisition of
Partnership Units by the General Partner or any acquisition of Partnership Units
by the Partnership) may be made to any person if (i) in the opinion of legal
counsel for the Partnership, it would result in the Partnership being treated as
an association taxable as a corporation, or (ii) such Transfer is effectuated
through an "established securities market" or a "secondary market (or the
substantial equivalent thereof)" within the meaning of Code Section 7704.
Section 11.4 SUBSTITUTED LIMITED PARTNERS.
A. No Limited Partner shall have the right to substitute a
transferee (including any Designated Party or other transferees pursuant to
Transfers permitted by Section 11.3 hereof) as a Limited Partner in its place.
A transferee (including, but not limited to, any Designated Party) of the
interest of a Limited Partner may be admitted as a Substituted Limited Partner
only with the Consent of the General Partner, which Consent may be given or
withheld by the General Partner in its sole and absolute discretion. The
failure or refusal by the General Partner to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or the General Partner. Subject to the
foregoing, an Assignee shall not be admitted as a Substituted Limited Partner
until and unless it furnishes to the General Partner (i) evidence of acceptance,
in form and substance satisfactory to the General Partner, of all the terms,
conditions and applicable obligations of this Agreement, (ii) a counterpart
signature page to this Agreement executed by such Assignee and (iii) such other
documents and instruments as may be required or advisable, in the sole and
absolute discretion of the General Partner, to effect such Assignee's admission
as a Substituted Limited Partner.
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B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and
powers and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend EXHIBIT A to reflect the name, address and number
of Partnership Units of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and number of Partnership Units of
the predecessor of such Substituted Limited Partner.
Section 11.5 ASSIGNEES. If the General Partner, in its sole and
absolute discretion, does not consent to the admission of any permitted
transferee under Section 11.3 hereof as a Substituted Limited Partner, as
described in Section 11.4 hereof, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be entitled to
all the rights of an assignee of a limited partnership interest under the
Act, including the right to receive distributions from the Partnership and
the share of Net Income, Net Losses and other items of income, gain, loss,
deduction and credit of the Partnership attributable to the Partnership Units
assigned to such transferee and the rights to Transfer the Partnership Units
provided in this Article 11, but shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement (other than as
expressly provided in Section 8.6 hereof with respect to a Qualifying Party
that becomes a Tendering Party), and shall not be entitled to effect a
Consent or vote with respect to such Partnership Units on any matter
presented to the Limited Partners for approval (such right to Consent or
vote, to the extent provided in this Agreement or under the Act, fully
remaining with the transferor Limited Partner). In the event that any such
transferee desires to make a further assignment of any such Partnership
Units, such transferee shall be subject to all the provisions of this Article
11 to the same extent and in the same manner as any Limited Partner desiring
to make an assignment of Partnership Units.
Section 11.6 GENERAL PROVISIONS.
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted Transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11, with respect to which
the transferee becomes a Substituted Limited Partner, or pursuant to a
redemption (or acquisition by the Previous General Partner) of all of its
Partnership Units pursuant to a Redemption under Section 8.6 hereof and/or
pursuant to any Partnership Unit Designation.
B. Any Limited Partner who shall Transfer all of its Partnership
Units in a Transfer (i) permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner, (ii) pursuant to
the exercise of its rights to effect a redemption of all of its Partnership
Units pursuant to a Redemption under Section 8.6 hereof and/or pursuant to
any Partnership Unit Designation or (iii) to the Previous General Partner or
the General Partner, whether or not pursuant to Section 8.6.B hereof, shall
cease to be a Limited Partner.
C. If any Partnership Unit is Transferred in compliance with the
provisions of this Article 11, or is redeemed by the Partnership, or acquired
by the Previous General Partner pursuant to Section 8.6 hereof, on any day
other than the first day of a Fiscal Year, then Net Income, Net Losses, each
item thereof and all other items of income, gain, loss, deduction and credit
attributable to such Partnership Unit for such Fiscal Year shall be allocated
to the transferor Partner or the Tendering Party, as the case may be, and, in
the case of a Transfer or assignment other than a Redemption, to the
transferee Partner (including, without limitation, the General Partner and
the Special Limited Partner as transferees of the Previous General Partner in
the case of an acquisition of Partnership Common Units pursuant to Section
8.6 hereof), by taking into account their varying interests during the Fiscal
Year in accordance with Code Section 706(d), using the "interim closing of
the books" method or another
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permissible method selected by the General Partner. Solely for purposes of
making such allocations, each of such items for the calendar month in which a
Transfer occurs shall be allocated to the transferee Partner and none of such
items for the calendar month in which a Transfer or a Redemption occurs shall
be allocated to the transferor Partner or the Tendering Party, as the case
may be, if such Transfer occurs on or before the fifteenth (15th) day of the
month, otherwise such items shall be allocated to the transferor. All
distributions of Available Cash attributable to such Partnership Unit with
respect to which the Partnership Record Date is before the date of such
Transfer, assignment or Redemption shall be made to the transferor Partner or
the Tendering Party, as the case may be, and, in the case of a Transfer other
than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.
D. In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a Partnership
Interest by any Partner (including any Redemption, any acquisition of
Partnership Units by the Previous General Partner or any other acquisition of
Partnership Units by the Partnership) be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii)
in violation of applicable law; (iii) of any component portion of a
Partnership Interest, such as the Capital Account, or rights to
distributions, separate and apart from all other components of a Partnership
Interest; (iv) in the event that such Transfer would cause either (a) the
Previous General Partner to cease to comply with the REIT Requirements or (b)
the General Partner or the Special Limited Partner to cease to qualify as a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2);
(v) if such Transfer would, in the opinion of counsel to the Partnership or
the General Partner, cause a termination of the Partnership for federal or
state income tax purposes (except as a result of the Redemption (or
acquisition by the Previous General Partner) of all Partnership Common Units
held by all Limited Partners other than the Special Limited Partner); (vi) if
such Transfer would, in the opinion of legal counsel to the Partnership,
cause the Partnership to cease to be classified as a partnership for federal
income tax purposes (except as a result of the Redemption (or acquisition by
the Previous General Partner) of all Partnership Common Units held by all
Limited Partners other than the Special Limited Partner); (vii) if such
Transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined
in ERISA Section 3(14)) or a "disqualified person" (as defined in Code
Section 4975(c)); (viii) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (ix) if such Transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (x) if such Transfer causes the
Partnership to become a "publicly traded partnership," as such term is
defined in Code Section 469(k)(2) or Code 7704(b); (xi) if such Transfer
would cause the Partnership to have more than five hundred (500) partners
(including as partners those persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, subchapter S
corporation or grantor trust); (xii) if such Transfer causes the Partnership
(as opposed to the Previous General Partner or the General Partner) to become
a reporting company under the Exchange Act; or (xiii) if such Transfer
subjects the Partnership to regulation under the Investment Company Act of
1940, the Investment Advisors Act of 1940 or ERISA, each as amended.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor
to all of the General Partner's General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to such Transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission
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shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to
effect the admission.
Section 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
A. After the admission to the Partnership of an Original Limited
Partner on the date hereof, a Person (other than an existing Partner) who
makes a Capital Contribution to the Partnership in accordance with this
Agreement shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the General Partner (i) evidence of
acceptance, in form and substance satisfactory to the General Partner, of all
of the terms and conditions of this Agreement, including, without limitation,
the power of attorney granted in Section 2.4 hereof, (ii) a counterpart
signature page to this Agreement executed by such Person and (iii) such other
documents or instruments as may be required in the sole and absolute
discretion of the General Partner in order to effect such Person's admission
as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2,
no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person
as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Fiscal Year, then Net
Income, Net Losses, each item thereof and all other items of income, gain,
loss, deduction and credit allocable among Partners and Assignees for such
Fiscal Year shall be allocated among such Additional Limited Partner and all
other Partners and Assignees by taking into account their varying interests
during the Fiscal Year in accordance with Code Section 706(d), using the
"interim closing of the books" method or another permissible method selected
by the General Partner. Solely for purposes of making such allocations, each
of such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners and
Assignees including such Additional Limited Partner, in accordance with the
principles described in Section 11.6.C hereof. All distributions of Available
Cash with respect to which the Partnership Record Date is before the date of
such admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash
thereafter shall be made to all the Partners and Assignees including such
Additional Limited Partner.
Section 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP. For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act
to amend the records of the Partnership and, if necessary, to prepare as soon
as practical an amendment of this Agreement (including an amendment of
EXHIBIT A) and, if required by law, shall prepare and file an amendment to
the Certificate and may for this purpose exercise the power of attorney
granted pursuant to Section 2.4 hereof.
Section 12.4 ADMISSION OF INITIAL LIMITED PARTNERS. The Persons
listed on EXHIBIT A as limited partners of the Partnership shall be admitted
to the Partnership as Limited Partners upon their execution and delivery of
this Agreement.
Section 12.5 LIMIT ON NUMBER OF PARTNERS. No Person shall be
admitted to the Partnership as an Additional Limited Partner if the effect of
such admission would be to cause the Partnership to have a number of Partners
(including as Partners for this purpose those Persons indirectly owning an
interest in the Partnership
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through another partnership, a limited liability company, a subchapter S
corporation or a grantor trust) that would cause the Partnership to become a
reporting company under the Exchange Act.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 DISSOLUTION. The Partnership shall not be dissolved
by the admission of Substituted Limited Partners or Additional Limited
Partners or by the admission of a successor General Partner in accordance
with the terms of this Agreement. Upon the withdrawal of the General
Partner, any successor General Partner shall continue the business of the
Partnership without dissolution. However, the Partnership shall dissolve,
and its affairs shall be wound up, upon the first to occur of any of the
following (each a "LIQUIDATING EVENT"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal, as defined in the Act (including,
without limitation, bankruptcy), of the sole General Partner unless, within
ninety (90) days after the withdrawal, a "majority in interest" (as such
phrase is used in Section 17-801(3) of the Act) of the remaining Partners
agree in writing, in their sole and absolute discretion, to continue the
business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a successor General Partner:
C. an election to dissolve the Partnership made by the General
Partner in its sole and absolute discretion, with or without the Consent of
the Limited Partners;
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
E. the occurrence of a Terminating Capital Transaction;
F. the Redemption (or acquisition by the Previous General
Partner, the General Partner and/or the Special Limited Partner) of all
Partnership Common Units other than Partnership Common Units held by the
General Partner or the Special Limited Partner; or
G. the Redemption (or acquisition by the General Partner) of all
Partnership Common Units other than Partnership Common Units held by the
General Partner.
Section 13.2 WINDING UP.
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets and satisfying the claims of its
creditors and Partners. After the occurrence of a Liquidating Event, no
Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event that there is no remaining General
Partner or the General Partner has dissolved, become bankrupt within the
meaning of the Act or ceased to operate, any Person elected by a Majority in
Interest of the Limited Partners (the General Partner or such other Person
being referred to herein as the "LIQUIDATOR")) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property, and the
Partnership property shall be liquidated as promptly
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as is consistent with obtaining the fair value thereof, and the proceeds
therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the Previous General Partner) shall be applied and
distributed in the following order:
(1) First, to the satisfaction of all of the Partnership's
debts and liabilities to creditors other than the Partners and their
Assignees (whether by payment or the making of reasonable provision for
payment thereof);
(2) Second, to the satisfaction of all of the Partnership's
debts and liabilities to the General Partner (whether by payment or the
making of reasonable provision for payment thereof), including, but not
limited to, amounts due as reimbursements under Section 7.4 hereof;
(3) Third, to the satisfaction of all of the Partnership's
debts and liabilities to the other Partners and any Assignees (whether
by payment or the making of reasonable provision for payment thereof);
and
(4) Subject to the terms of any Partnership Unit Designation,
the balance, if any, to the General Partner, the Limited Partners and
any Assignees in accordance with and in proportion to their positive
Capital Account balances, after giving effect to all contributions,
distributions and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof that
require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership's assets would be impractical or would cause undue loss to
the Partners, the Liquidator may, in its sole and absolute discretion, defer
for a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) and/or distribute to the Partners, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 13.2.A hereof,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as
the Liquidator deems reasonable and equitable and to any agreements governing
the operation of such properties at such time. The Liquidator shall
determine the fair market value of any property distributed in kind using
such reasonable method of valuation as it may adopt.
C. In the event that the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be
made pursuant to this Article 13 to the Partners and Assignees that have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive
Capital Account balances. If any Partner has a deficit balance in its
Capital Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit,
and such deficit shall not be considered a debt owed to the Partnership or to
any other Person for any purpose whatsoever. In the sole and absolute
discretion of the General Partner or the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the Partners pursuant to
this Article 13 may be withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or
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otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such withheld or escrowed
amounts shall be distributed to the General Partner and Limited Partners in
the manner and order of priority set forth in Section 13.2.A hereof as soon
as practicable.
Section 13.3 DEEMED DISTRIBUTION AND RECONTRIBUTION.
Notwithstanding any other provision of this Article 13, in the event that the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(G), but no Liquidating Event has occurred, the
Partnership's Property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes the Partnership shall be
deemed to have distributed the Property in kind to the Partners and the
Assignees, who shall be deemed to have assumed and taken such Property
subject to all Partnership liabilities, all in accordance with their
respective Capital Accounts. Immediately thereafter, the Partners and the
Assignees shall be deemed to have recontributed the Partnership Property in
kind to the Partnership, which shall be deemed to have assumed and taken such
Property subject to all such liabilities; PROVIDED, HOWEVER, that nothing in
this Section 13.3 shall be deemed to have constituted any Assignee as a
Substituted Limited Partner without compliance with the provisions of Section
11.4 hereof.
Section 13.4 RIGHTS OF LIMITED PARTNERS. Except as otherwise
provided in this Agreement, (a) each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contribution, (b) no
Limited Partner shall have the right or power to demand or receive property
other than cash from the Partnership and (c) no Limited Partner shall have
priority over any other Limited Partner as to the return of its Capital
Contributions, distributions or allocations.
Section 13.5 NOTICE OF DISSOLUTION. In the event that a
Liquidating Event occurs or an event occurs that would, but for an election
or objection by one or more Partners pursuant to Section 13.1 hereof, result
in a dissolution of the Partnership, the General Partner shall, within thirty
(30) days thereafter, provide written notice thereof to each of the Partners
and, in the General Partner's sole and absolute discretion or as required by
the Act, to all other parties with whom the Partnership regularly conducts
business (as determined in the sole and absolute discretion of the General
Partner), and the General Partner may, or, if required by the Act, shall,
publish notice thereof in a newspaper of general circulation in each place in
which the Partnership regularly conducts business (as determined in the sole
and absolute discretion of the General Partner).
Section 13.6 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP.
Upon the completion of the liquidation of the Partnership cash and property
as provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed with the State of Delaware, all
qualifications of the Partnership as a foreign limited partnership or
association in jurisdictions other than the State of Delaware shall be
cancelled, and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.7 REASONABLE TIME FOR WINDING-UP. A reasonable time
shall be allowed for the orderly winding-up of the business and affairs of
the Partnership and the liquidation of its assets pursuant to Section 13.2
hereof, in order to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
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ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS. The
actions requiring consent or approval of Limited Partners pursuant to this
Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable
law, are subject to the procedures set forth in this Article 14.
Section 14.2 AMENDMENTS. Amendments to this Agreement may be
proposed by the General Partner or by a Majority in Interest of the Limited
Partners. Following such proposal, the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek
the written consent of the Limited Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that
the General Partner may deem appropriate. For purposes of obtaining a
written consent, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and failure
to respond in such time period shall constitute a consent that is consistent
with the General Partner's recommendation with respect to the proposal;
PROVIDED, HOWEVER, that an action shall become effective at such time as
requisite consents are received even if prior to such specified time.
Section 14.3 MEETINGS OF THE PARTNERS.
A. Meetings of the Partners may be called by the General Partner
and shall be called upon the receipt by the General Partner of a written
request by a Majority in Interest of the Limited Partners. The call shall
state the nature of the business to be transacted. Notice of any such
meeting shall be given to all Partners not less than seven (7) days nor more
than thirty (30) days prior to the date of such meeting. Partners may vote
in person or by proxy at such meeting. Whenever the vote or Consent of
Partners is permitted or required under this Agreement, such vote or Consent
may be given at a meeting of Partners or may be given in accordance with the
procedure prescribed in Section 14.3.B hereof.
B. Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting
forth the action so taken is signed by a majority of the Percentage Interests
of the Partners (or such other percentage as is expressly required by this
Agreement for the action in question). Such consent may be in one instrument
or in several instruments, and shall have the same force and effect as a vote
of a majority of the Percentage Interests of the Partners (or such other
percentage as is expressly required by this Agreement). Such consent shall
be filed with the General Partner. An action so taken shall be deemed to
have been taken at a meeting held on the effective date so certified.
C. Each Limited Partner may authorize any Person or Persons to
act for it by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited
Partner or its attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise
provided in the proxy (or there is receipt of a proxy authorizing a later
date). Every proxy shall be revocable at the pleasure of the Limited Partner
executing it, such revocation to be effective upon the Partnership's receipt
of written notice of such revocation from the Limited Partner executing such
proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to
such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate in its sole and absolute discretion. Without
limitation, meetings of Partners
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may be conducted in the same manner as meetings of the General Partner's
shareholders and may be held at the same time as, and as part of, the
meetings of the General Partner's shareholders.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE. Any notice, demand, request or
report required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first class United States mail or by
other means of written communication (including by telecopy, facsimile, or
commercial courier service) to the Partner or Assignee at the address set
forth in EXHIBIT A or such other address of which the Partner shall notify
the General Partner in writing.
Section 15.2 TITLES AND CAPTIONS. All article or section titles
or captions in this Agreement are for convenience only. They shall not be
deemed part of this Agreement and in no way define, limit, extend or describe
the scope or intent of any provisions hereof. Except as specifically
provided otherwise, references to "Articles" or "Sections" are to Articles
and Sections of this Agreement.
Section 15.3 PRONOUNS AND PLURALS. Whenever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and VICE VERSA.
Section 15.4 FURTHER ACTION. The parties shall execute and
deliver all documents, provide all information and take or refrain from
taking action as may be necessary or appropriate to achieve the purposes of
this Agreement.
Section 15.5 BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 15.6 WAIVER.
A. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement
or condition.
B. The restrictions, conditions and other limitations on the
rights and benefits of the Limited Partners contained in this Agreement, and
the duties, covenants and other requirements of performance or notice by the
Limited Partners, are for the benefit of the Partnership and, except for an
obligation to pay money to the Partnership, may be waived or relinquished by
the General Partner, in its sole and absolute discretion, on behalf of the
Partnership in one or more instances from time to time and at any time;
PROVIDED, HOWEVER, that any such waiver or relinquishment may not be made if
it would have the effect of (i) creating liability for any other Limited
Partner, (ii) causing the Partnership to cease to qualify as a limited
partnership, (iii) reducing the amount of cash otherwise distributable to the
Limited Partners, (iv) resulting in the classification of the Partnership as
an association or publicly traded partnership taxable as a corporation or (v)
violating the Securities Act, the Exchange Act or any state "blue sky" or
other securities laws; PROVIDED,
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FURTHER, that any waiver relating to compliance with the Ownership Limit or
other restrictions in the Charter shall be made and shall be effective only
as provided in the Charter.
Section 15.7 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.
Section 15.8 APPLICABLE LAW. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law. In the event
of a conflict between any provision of this Agreement and any non-mandatory
provision of the Act, the provisions of this Agreement shall control and take
precedence.
Section 15.9 ENTIRE AGREEMENT. This Agreement contains all of the
understandings and agreements between and among the Partners with respect to
the subject matter of this Agreement and the rights, interests and
obligations of the Partners with respect to the Partnership.
Section 15.10 INVALIDITY OF PROVISIONS. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.11 LIMITATION TO PRESERVE REIT STATUS. Notwithstanding
anything else in this Agreement, to the extent that the amount paid,
credited, distributed or reimbursed by the Partnership to any REIT Partner or
its officers, directors, employees or agents, whether as a reimbursement,
fee, expense or indemnity (a "REIT PAYMENT"), would constitute gross income
to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Fiscal Year so that the
REIT Payments, as so reduced, for or with respect to such REIT Partner shall
not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) four
and nine-tenths percent (4.9%) of the REIT Partner's total gross income
(but excluding the amount of any REIT Payments) for the Fiscal Year that
is described in subsections (A) through (H) of Code Section 856(c)(2)
over (b) the amount of gross income (within the meaning of Code Section
856(c)(2)) derived by the REIT Partner from sources other than those
described in subsections (A) through (H) of Code Section 856(c)(2) (but
not including the amount of any REIT Payments); or
(ii) an amount equal to the excess, if any, of (a)
twenty-four percent (24%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Fiscal Year that is
described in subsections (A) through (I) of Code Section 856(c)(3) over
(b) the amount of gross income (within the meaning of Code Section
856(c)(3)) derived by the REIT Partner from sources other than those
described in subsections (A) through (I) of Code Section 856(c)(3) (but
not including the amount of any REIT Payments);
PROVIDED, HOWEVER, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such
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excess amounts shall not adversely affect the REIT Partner's ability to
qualify as a REIT. To the extent that REIT Payments may not be made in a
Fiscal Year as a consequence of the limitations set forth in this Section
15.11, such REIT Payments shall carry over and shall be treated as arising in
the following Fiscal Year. The purpose of the limitations contained in this
Section 15.11 is to prevent any REIT Partner from failing to qualify as a
REIT under the Code by reason of such REIT Partner's share of items,
including distributions, reimbursements, fees, expenses or indemnities,
receivable directly or indirectly from the Partnership, and this Section
15.11 shall be interpreted and applied to effectuate such purpose.
Section 15.12 NO PARTITION. No Partner nor any
successor-in-interest to a Partner shall have the right while this Agreement
remains in effect to have any property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such
property of the Partnership partitioned, and each Partner, on behalf of
itself and its successors and assigns hereby waives any such right. It is
the intention of the Partners that the rights of the parties hereto and their
successors-in-interest to Partnership property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Partners
and their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.
Section 15.13 NO THIRD-PARTY RIGHTS CREATED HEREBY. The
provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, INTER SE; and no other person, firm or entity
(I.E., a party who is not a signatory hereto or a permitted successor to such
signatory hereto) shall have any right, power, title or interest by way of
subrogation or otherwise, in and to the rights, powers, title and provisions
of this Agreement. No creditor or other third party having dealings with the
Partnership shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans to the Partnership or to
pursue any other right or remedy hereunder or at law or in equity. None of
the rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may any
such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or any of the Partners.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
PREVIOUS GENERAL PARTNER:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By: /S/ PETER KOMPANIEZ
--------------------------
Name: Peter Kompaniez
Title: Vice Chairman
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ Peter Kompaniez
--------------------------
Name: Peter Kompaniez
Title: Vice President
SPECIAL LIMITED PARTNER:
AIMCO-LP, INC.
By: /s/ Peter Kompaniez
--------------------------
Name: Peter Kompaniez
Title: Vice President
LIMITED PARTNERS:
By: AIMCO-GP, INC.,
as attorney-in-fact
By: /s/ Peter Kompaniez
--------------------------
Name: Peter Kompaniez
Title: Vice President
<PAGE>
FIRST AMENDMENT TO THE SECOND
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
This FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of August 4, 1997 (this
"Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the
"General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware
limited partnership (the "Partnership"), pursuant to the authority conferred on
the General Partner by Section 7.3.C(7) of the Second Amended and Restated
Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29,
1994 (the "Agreement"). Capitalized terms used, but not otherwise defined
herein, shall have the respective meanings ascribed thereto in the Agreement.
WHEREAS, on August 4, 1997, the Previous General Partner issued 750,000
shares of its Class B Cumulative Convertible Preferred Stock, par value $.01 per
share (the "Class B Preferred Stock"), and in accordance with Section 4.3.E of
the Agreement, contributed the cash proceeds from such issuance to the Special
Limited Partner, which contributed such cash proceeds to the Partnership in
exchange for 750,000 Partnership Preferred Units with designations, preferences
and other rights, terms and provisions that are substantially the same as the
designations, preferences and other rights, terms and provisions of the Class B
Preferred Stock; and
WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is
authorized to determine the designations, preferences and relative,
participating, optional or other special rights, powers and duties of such
Partnership Preferred Units.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by the addition of a new exhibit,
entitled "Exhibit G," in the form attached hereto, which shall be attached to
and made a part of the Agreement.
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
<PAGE>
EXHIBIT G
PARTNERSHIP UNIT DESIGNATION OF THE
CLASS B PARTNERSHIP PREFERRED UNITS
OF AIMCO PROPERTIES, L.P.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ Peter Kompaniez
---------------------------------
Name: Peter Kompaniez
Title: Vice President
<PAGE>
EXHIBIT G
PARTNERSHIP UNIT DESIGNATION OF THE
CLASS B PARTNERSHIP PREFERRED UNITS
OF AIMCO PROPERTIES, L.P.
1. NUMBER OF UNITS AND DESIGNATION.
A class of Partnership Preferred Units is hereby designated as "Class B
Partnership Preferred Units," and the number of Partnership Preferred Units
constituting such class shall be Seven Hundred Fifty Thousand (750,000).
2. DEFINITIONS.
For purposes of the Class B Partnership Preferred Units, the following
terms shall have the meanings indicated in this Section 2. Capitalized terms
used and not otherwise defined herein shall have the meanings assigned thereto
in the Agreement.
"AGREEMENT" shall mean the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended.
"CALL DATE" shall have the meaning set forth in paragraph (a) of Section 5
of this Article.
"CLASS B PARTNERSHIP PREFERRED UNIT" means a Partnership Preferred Unit
with the designations, preferences and relative, participating, optional or
other special rights, powers and duties as are set forth in this EXHIBIT G.
It is the intention of the General Partner that each Class B Partnership
Preferred Unit shall be substantially the economic equivalent of one share
of Class B Preferred Stock.
"CLASS B PREFERRED STOCK" means the Class B Cumulative Convertible
Preferred Stock, par value $0.01 per share, of the Previous General
Partner.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto. Reference to any provision of
the Code shall mean such provision as in effect from time to time, as the
same may be amended, and any successor thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect
from time to time.
G-1
<PAGE>
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Previous General Partner or such shares of the Previous
General Partner's capital stock into which outstanding shares of Common
Stock shall be reclassified.
"DISTRIBUTION PAYMENT DATE" shall mean any date on which cash dividends are
paid on the Class B Preferred Stock.
"JUNIOR PARTNERSHIP UNITS" shall have the meaning set forth in paragraph
(c) of Section 8 of this Article.
"PARITY PARTNERSHIP UNITS" shall have the meaning set forth in paragraph
(b) of Section 8 of this Article.
"PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware limited
partnership.
"SENIOR PARTNERSHIP UNITS" shall have the meaning set forth in paragraph
(a) of Section 8 of this Article.
3. DISTRIBUTIONS.
On every Distribution Payment Date, the holders of Class B Partnership
Preferred Units shall be entitled to receive distributions payable in cash in an
amount per Class B Partnership Preferred Unit equal to the per share dividend
payable on the Class B Preferred Stock on such Distribution Payment Date. Each
such distribution shall be payable to the holders of record of the Class B
Partnership Preferred Units, as they appear on the records of the Partnership at
the close of business on the record date for the dividend payable with respect
to the Class B Preferred Stock on such Distribution Payment Date. Holders of
Class B Partnership Preferred Units shall not be entitled to any distributions
on the Class B Partnership Preferred Units, whether payable in cash, property or
stock, except as provided herein.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, before any payment or
distribution of the Partnership (whether capital or surplus) shall be made to or
set apart for the holders of Junior Partnership Units, the holders of Class B
Partnership Preferred Units shall be entitled to receive One Hundred Dollars
($100) per Class B
G-2
<PAGE>
Partnership Preferred Unit (the "Liquidation Preference"), plus an amount equal
to all dividends (whether or not earned) accumulated, accrued and unpaid on each
share of Class B Preferred Stock to the date of final distribution to such
holders; but such holders shall not be entitled to any further payment. Until
the holders of the Class B Partnership Preferred Units have been paid the
Liquidation Preference in full, plus an amount equal to all dividends (whether
or not earned) accumulated, accrued and unpaid on the Class B Preferred Stock to
the date of final distribution to such holders, no payment will be made to any
holder of Junior Partnership Units upon the liquidation, dissolution or winding
up of the Partnership. If, upon any liquidation, dissolution or winding up of
the Partnership, the assets of the Partnership, or proceeds thereof,
distributable among the holders of Class B Partnership Preferred Units shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any Parity Partnership Units, then such assets, or the proceeds
thereof, shall be distributed among the holders of Class B Partnership Preferred
Units and any such Parity Partnership Units ratably in the same proportion as
the respective amounts that would be payable on such Class B Partnership
Preferred Units and any such other Parity Partnership Units if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Partnership with one or more partnerships, or
(ii) a sale or transfer of all or substantially all of the Partnership's assets
shall not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Partnership.
(b) Upon any liquidation, dissolution or winding up of the
Partnership, after payment shall have been made in full to the holders of
Class B Partnership Preferred Units and any Parity Partnership Units, as
provided in this Section 4, any other series or class or classes of Junior
Partnership Units shall, subject to the respective terms thereof, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Class B Partnership Preferred Units and any Parity Partnership Units
shall not be entitled to share therein.
5. REDEMPTION.
Class B Partnership Preferred Units shall be redeemable by the Partnership
as follows:
(a) At any time that the Previous General Partner exercises its right
to redeem all or any of the shares of Class B Preferred Stock, the General
Partner shall cause the Partnership to redeem an equal number of Class B
Partnership Preferred Units, at a redemption price payable in cash equal to 100%
of the Liquidation Preference thereof, plus an amount equal to all accrued and
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unpaid dividends on each share of Class B Preferred Stock to the date fixed for
redemption (the "Call Date"), in the manner set forth herein.
(b) If the Partnership shall redeem Class B Partnership Preferred
Units pursuant to paragraph (a) of this Section 5, from and after the Call Date
(unless the Partnership shall fail to make available the amount of cash
necessary to effect such redemption), (i) except for payment of the redemption
price, the Partnership shall not make any further distributions on the Class B
Partnership Preferred Units so called for redemption (except that, in the case
of a Call Date after a distribution record date and prior to the related
Distribution Payment Date, holders of Class B Partnership Preferred Units on the
distribution record date will be entitled on such Distribution Payment Date to
receive the distribution payable thereon), (ii) said units shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as holders
of Class B Partnership Preferred Units of the Partnership shall cease (except
the rights to receive the cash payable upon such redemption, without interest
thereon, and to receive any distributions payable thereon). No interest shall
accrue for the benefit of the holders of Class B Partnership Preferred Units to
be redeemed on any cash set aside by the Partnership.
If fewer than all the outstanding Class B Partnership Preferred Units are
to be redeemed, units to be redeemed shall be selected by the Partnership from
outstanding Class B Partnership Preferred Units not previously called for
redemption by any method determined by the General Partner in its discretion.
Upon any such redemption, the General Partner shall amend EXHIBIT A to the
Agreement as appropriate to reflect such redemption.
6. STATUS OF REACQUIRED UNITS.
All Class B Partnership Preferred Units which shall have been issued and
reacquired in any manner by the Partnership (including Class B Partnership
Preferred Units which have been surrendered for conversion into Partnership
Common Units) shall be deemed cancelled.
7. CONVERSION.
Class B Partnership Preferred Units shall be convertible by the holders
thereof as follows:
(a) Upon any conversion of shares of Class B Preferred Stock into
shares of Common Stock, the General Partner shall cause a number of Class B
Partnership Preferred Units equal to the number of such converted shares of
Class
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B Preferred Stock to be converted by the holders thereof into Partnership Common
Units. The conversion ratio in effect from time to time for the conversion of
Class B Partnership Preferred Units into Partnership Common Units pursuant to
this Section 7 shall at all times be equal to, and shall be automatically
adjusted as necessary to reflect, the conversion ratio in effect from time to
time for the conversion of Class B Preferred Stock into Common Stock.
(b) Holders of Class B Partnership Preferred Units at the close of
business on a distribution payment record date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. Except as provided
above, the Partnership shall make no payment or allowance for unpaid
distributions on converted units or for distributions on the Partnership Common
Units issued upon such conversion. Each conversion of Class B Partnership
Preferred Units into Partnership Common Units shall be deemed to have been
effected at the same time and date that the corresponding conversion of Class B
Preferred Stock into Common Stock is deemed to have been effected.
(c) No fractional Partnership Common Units shall be issued upon
conversion of Class B Partnership Preferred Units. Instead of any fractional
Partnership Common Units that would otherwise be deliverable upon the conversion
of Class B Partnership Preferred Units, the Partnership shall pay to the holder
of such converted units an amount in cash equal to the cash payable to a holder
of an equivalent number of converted shares of Class B Preferred Stock in lieu
of fractional shares of Common Stock.
(d) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of (i) the issue or delivery of
Partnership Common Units or other securities or property on conversion or
redemption of Class B Partnership Preferred Units pursuant hereto, and (ii) the
issue or delivery of Common Stock or other securities or property on conversion
or redemption of Class B Preferred Stock pursuant to the terms hereof.
8. RANKING.
Any class or series of Partnership Units of the Partnership shall be deemed
to rank:
(a) prior or senior to the Class B Partnership Preferred Units, as to
the payment of distributions and as to distributions of assets upon liquidation,
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dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of distributions or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class B Partnership Preferred Units ("Senior
Partnership Units");
(b) on a parity with the Class B Partnership Preferred Units, as to
the payment of distributions and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the distribution rates, distribution
payment dates or redemption or liquidation prices per unit or other denomination
thereof be different from those of the Class B Partnership Preferred Units, if
the holders of such class or series of Partnership Units and the Class B
Partnership Preferred Units shall be entitled to the receipt of distributions
and of amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective amounts of accrued and unpaid distributions per
unit or other denomination or liquidation preferences, without preference or
priority one over the other ("Parity Partnership Units"); and
(c) junior to the Class B Partnership Preferred Units, as to the
payment of distributions or as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series of Partnership Units shall be
Partnership Common Units or if the holders of Class B Preferred Partnership
Units shall be entitled to receipt of distributions or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be, in preference
or priority to the holders of such class or series of Partnership Units ("Junior
Partnership Units").
9. SPECIAL ALLOCATIONS.
(a) Gross income and, if necessary, gain shall be allocated to the
holders of Class B Partnership Preferred Units for any Fiscal Year (and, if
necessary, subsequent Fiscal Years) to the extent that the holders of Class B
Partnership Preferred Units receive a distribution on any Class B Partnership
Preferred Units (other than an amount included in any redemption pursuant to
Section 5 hereof) with respect to such Fiscal Year.
(b) If any Class B Partnership Preferred Units are redeemed pursuant
to Section 5 hereof, for the Fiscal Year that includes such redemption (and, if
necessary, for subsequent Fiscal Years) (a) gross income and gain (in such
relative proportions as the General Partner in its discretion shall determine)
shall be allocated to the holders of Class B Partnership Preferred Units to the
extent that the redemption amounts paid or payable with respect to the Class B
Partnership Preferred Units so redeemed exceeds the aggregate Capital
Contributions (net of liabilities assumed
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or taken subject to by the Partnership) per Class B Partnership Preferred Unit
allocable to the Class B Partnership Preferred Units so redeemed and (b)
deductions and losses (in such relative proportions as the General Partner in
its discretion shall determine) shall be allocated to the holders of Class B
Partnership Preferred Units to the extent that the aggregate Capital
Contributions (net of liabilities assumed or taken subject to by the
Partnership) per Class B Partnership Preferred Unit allocable to the Class B
Partnership Preferred Units so redeemed exceeds the redemption amount paid or
payable with respect to the Class B Partnership Preferred Units so redeemed.
10. RESTRICTIONS ON OWNERSHIP.
The Class B Partnership Preferred Units shall be owned and held solely by
the General Partner or the Special Limited Partner.
11. GENERAL.
(a) The ownership of Class B Partnership Preferred Units may (but
need not, in the sole and absolute discretion of the General Partner) be
evidenced by one or more certificates. The General Partner shall amend EXHIBIT
A to the Agreement from time to time to the extent necessary to reflect
accurately the issuance of, and subsequent conversion, redemption, or any other
event having an effect on the ownership of, Class B Partnership Preferred Units.
(b) The rights of the General Partner and the Special Limited
Partner, in their capacity as holders of the Class B Partnership Preferred
Units, are in addition to and not in limitation of any other rights or authority
of the General Partner or the Special Limited Partner, respectively, in any
other capacity under the Agreement or applicable law. In addition, nothing
contained herein shall be deemed to limit or otherwise restrict the authority of
the General Partner or the Special Limited Partner under the Agreement, other
than in their capacity as holders of the Class B Partnership Preferred Units.
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