SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. ____]
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
AmeriVest Properties Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
Not applicable
2. Aggregate number of securities to which transaction applies:
Not applicable
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): Not applicable
4. Proposed maximum aggregate value of transaction: Not
applicable
5. Total fee paid: Not applicable
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid: Not applicable
2. Form, Schedule or Registration Statement No.: Not applicable
3. Filing Party: Not applicable
4. Date Filed: Not applicable
<PAGE>
AMERIVEST PROPERTIES INC
3333 South Wadsworth Blvd., Suite D-216
Lakewood, Colorado 80227
(303) 980-1880
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS to be
held June 29, 1999
The Annual Meeting Of Stockholders of AmeriVest Properties Inc. (the
"Company") will be held on June 29, 1999 at 10:00 a.m. (local time) at the
Denver Marriott West, 1717 Denver West Boulevard, Golden, Colorado, for the
following purposes:
1. To elect one Class 3 director of the Company's Board Of Directors;
2. To consider and vote upon a proposal recommended by the Board Of
Directors to reincorporate the Company under the laws of the State of
Maryland, including provisions to (i) increase the Company's
authorized $.001 par value Common Stock from 10,000,000 shares to
15,000,000 shares, and (ii) provide for authorized preferred stock
consisting of 5,000,000 shares of $.001 par value preferred stock, the
rights and preferences of which will be determined by the Board of
Directors;
3. To consider and vote upon a proposal recommended by the Board Of
Directors to issue shares of common stock as a portion of the purchase
price for three office buildings located in Indianapolis, Indiana;
4. To ratify the selection of Wheeler Wasoff, P.C. to serve as the
Company's independent certified accountants for the year ending
December 31, 1999; and
5. To transact any other business that properly may come before the
meeting.
Only the stockholders of record as shown on the transfer books of the
Company at the close of business on May 21, 1999 are entitled to notice of, and
to vote at, the Stockholder Meeting.
All stockholders, regardless of whether they expect to attend the meeting
in person, are requested to complete, date, sign and return promptly the
enclosed form of proxy in the accompanying envelope (which requires no postage
if mailed in the United States). The person executing the proxy may revoke it at
any time before it is exercised by delivering written notice of revocation to
the Company, by substituting a new proxy executed at a later date, or by
requesting, in person at the Stockholder Meeting, that the proxy be returned.
ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE
STOCKHOLDER MEETING.
By the Board Of Directors
JAMES F. ETTER
President
Lakewood, Colorado
May 27, 1999
<PAGE>
PROXY STATEMENT
AMERIVEST PROPERTIES INC.
3333 South Wadsworth Blvd., Suite D-216
Lakewood, Colorado 80227
(303) 980-1880
ANNUAL MEETING OF STOCKHOLDERS
to be held
June 29, 1999
This Proxy Statement is provided in connection with the solicitation of
proxies by the Board Of Directors of AmeriVest Properties Inc., a Delaware
corporation (the "Company"), to be voted at the Annual Meeting Of Stockholders
of the Company to be held at 10:00 a.m. (local time) on June 29, 1999 at the
Denver Marriott West, 1717 Denver West Boulevard, Golden, Colorado or at any
adjournment or postponement of the meeting. The Company anticipates that this
Proxy Statement and the accompanying form of proxy will be first mailed or given
to stockholders of the Company on or about May 27, 1999.
The shares represented by all proxies that are properly executed and
submitted will be voted at the meeting in accordance with the instructions
indicated on the proxies. Unless otherwise directed, the shares represented by
proxies will be voted as follows: (1) for Robert J. McFann as the nominee for
Class 3 director; (2) in favor of reincorporating the Company in Maryland,
including provisions to increase the Company's authorized Common Stock from
10,000,000 shares to 15,000,000 shares and to provide for 5,000,000 shares of
authorized preferred stock; (3) in favor of the issuance of shares of common
stock as a portion of the purchase price for three office buildings located in
Indianapolis, Indiana; and (4) in favor of ratification of the selection of
Wheeler Wasoff, P.C. as the Company's independent auditors, as described in this
Proxy Statement.
A stockholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person
at the Annual Meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail; however,
following the original solicitation, further solicitations may be made by
telephone or oral communication with stockholders of the Company. Officers,
directors and employees of the Company may solicit proxies, but without
compensation for such solicitation other than their regular compensation as
employees of the Company. Arrangements also will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward solicitation materials
to beneficial owners of the shares held of record by those persons. The Company
may reimburse those persons for reasonable out-of-pocket expenses incurred by
them in so doing. All expenses involved in preparing, assembling and mailing
this Proxy Statement and the enclosed material will be paid by the Company. A
majority of the issued and outstanding shares of the Company's common stock (the
"Common Stock") entitled to vote, represented either in person or by proxy,
constitutes a quorum at any meeting of the stockholders.
Unless the context indicates otherwise, the term the "Company" shall be
used in the Proxy Statement to include AmeriVest Properties Inc. and all its
subsidiaries that existed during the period of reference.
<PAGE>
1. ELECTION OF CLASS 3 DIRECTOR
The Company's Amended And Restated Certificate Of Incorporation provides
that the Board Of Directors of the Company be divided into three classes,
designated Class 1, Class 2 and Class 3. Directors from each class are elected
once every three years for a three-year term. John Labate and James F. Etter
serve as the Class 1 directors, Charles R. Hoffman serves as the Class 2
director, and Robert J. McFann serves as the Class 3 director. The term of the
current Class 3 director expires at the Annual Meeting. At the Annual Meeting,
the stockholders will elect one Class 3 director to hold office until the annual
meeting of stockholders to be held in the year 2002 and thereafter until his
successor is elected and has qualified. The affirmative vote of a majority of
the shares represented at the meeting is required to elect the director.
Cumulative voting is not permitted in the election of directors. Consequently,
each stockholder is entitled to one vote for each share of Common Stock held in
the stockholder's name. In the absence of instructions to the contrary, the
person named in the accompanying proxy shall vote the shares represented by that
proxy for Mr. McFann as nominee of the Board Of Directors for Class 3 director
of the Company.
There is no nominating committee of the Board Of Directors. The Company's
bylaws provide that the board of directors, or a nominating committee of the
board if one is formed in the future, will consider nominations for directors
submitted by stockholders in accordance with the bylaws. To be considered, the
nominations generally must be submitted to the secretary of the Company not less
than 53 days nor more than 90 days prior to any meeting of the stockholders at
which directors are to be elected. Each notice of nomination of directors by a
stockholder must set forth (1) the name, agent, business address and, if known,
residence address of each nominee proposed in that notice, (2) the principal
occupation or employment of each such nominee for the five years preceding the
date of the notice, (3) the number of shares of stock of the Company that are
beneficially owned by each nominee, and (4) any arrangement, affiliation,
association, agreement or other relationship of the nominee with any stockholder
of the Company. The chairman of any meeting of stockholders of the Company may,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with this procedure and that the defective nomination
will be disregarded.
Mr. McFann has consented to be named in this Proxy Statement as a nominee
for director and to serve on the Board if elected. It is not anticipated that
Mr. McFann will become unable or unwilling to accept nomination or election,
but, if that should occur, the persons named in the proxy intend to vote for the
election of such other person as the Board Of Directors may recommend.
The Company completed a public offering of its common stock and redeemable
common stock purchase warrants in November 1996. The underwriter of that public
offering, I.A. Rabinowitz & Co., which subsequently changed its name to I.A.R.
Securities Corp. (the "Underwriter"), has the right, which expires in November
1999, to designate one person to serve as a member of the Company's Board Of
Directors pursuant to the Underwriting Agreement between the Underwriter and the
Company. The Underwriter's designee as director must be reasonably acceptable to
the Company. There is no restriction or requirement concerning whether the
person designated is a director, officer, partner, employee, or affiliate of the
Underwriter. As of the date of this Proxy Statement, the Underwriter has not
indicated a designee for director and has not informed the Company whether the
Underwriter intends to designate a director.
The following table sets forth, with respect to each director, the
director's age, his positions and offices with the Company, the expiration of
his term as a director, and the year in which he first became a director of the
Company. Individual background information concerning each of the directors
follows the table. For additional information concerning the directors,
including ownership of the Company's common stock and compensation for serving
as a director of the Company, see "EXECUTIVE COMPENSATION", "STOCK OWNERSHIP OF
DIRECTORS AND PRINCIPAL STOCKHOLDERS", and "CERTAIN TRANSACTIONS WITH MANAGEMENT
AND PRINCIPAL STOCKHOLDERS".
<TABLE>
<CAPTION>
Position With The Expiration Of Term Initial Date
Name Age The Company As Director As Director
---- --- ----------- ----------- -----------
<S> <C> <C> <C> <C>
James F. Etter 56 President, Chief Executive 2000 Annual Meeting 1995
Officer, and Director
John A. Labate(1)(2) 50 Director 2000 Annual Meeting 1995
Charles R. Hoffman(1) 62 Chairman Of The Board 2001 Annual Meeting 1994
Robert J. McFann(2) 82 Director, and Secretary 1999 Annual Meeting 1994
</TABLE>
2
<PAGE>
- ----------------------
(1) Member of the Audit Committee of the Board Of Directors.
(2) Member of the Acquisitions Committee of the Board Of Directors.
James F. Etter has served as President of the Company since May 1995, as a
director since December 1995, as Chief Executive Officer since January 1997, and
as Chief Financial Officer since July 1996. From 1994 until May 1995, Mr. Etter
acted as a consultant with respect to acquisitions not related to the Company.
Mr. Etter served as President and Chief Executive Officer of Recycling
Management Company from 1990 until 1994. From 1988 until 1990, Mr. Etter acted
as a real estate consultant for real estate development/resort projects in South
Carolina. Mr. Etter received his Masters of Business Administration and his
Bachelors of Business Administration degrees from the University of Cincinnati.
John A. Labate has served as a director of the Company since May 1995. Mr.
Labate has served as a member of each of the Audit Committee and of the
Acquisitions Committee of the Company's Board Of Directors since July 1995. Mr.
Labate currently is Vice President and Chief Financial Officer of GeoBiotics,
Inc., a Denver based mining technology company, and has served in that position
since August 1997. From 1992 to 1997, Mr. Labate served as the Chief Financial
Officer, Secretary, and Treasurer of Crown Resources Corporation, a publicly
traded, Denver, Colorado based international gold mining and exploration
company. From 1987 through 1991, Mr. Labate served as Corporate Controller of
Bond International Gold, Inc., a New York Stock Exchange listed international
mining and processing company based in Denver, Colorado. Prior to 1987, Mr.
Labate served as controller and manager of other mining companies and equipment
manufacturing companies. Mr. Labate received his Bachelor of Science degree in
accounting from San Diego State University.
Charles R. Hoffman has served as a director of the Company since August
1994 and as Chairman of the Board since May 1995. Mr. Hoffman also has been a
member of the Audit Committee of the Board Of Directors since July 1995. In July
1994, Mr. Hoffman retired as President of Texaco Pipeline Inc. In that capacity
he had executive responsibility for more than 1,200 employees and over 2,900
miles of pipeline. He also has experience in the crude oil terminal and
transportation business with companies such as Getty Pipeline, Inc., Getty
Trading And Transportation Company, and Skelly Pipe Line, Inc. He has served on
the boards of directors of a number of pipeline systems and as president of two
pipeline systems. Mr. Hoffman received his Bachelor of Science and Masters of
Science/Civil Engineering degrees from the Missouri School Of Mines And
Metallurgy.
Robert J. McFann has served as a director of the Company since August 1994
and as Secretary since May 1995. Mr. McFann has been a member of the
Acquisitions Committee of the Company's Board Of Directors since July 1995.
Prior to his retirement in 1996, Mr. McFann was the principal owner and
President of Hy Grade Meat Company, a private company which grew to a mid-sized
hotel and restaurant supply house under his direction. Prior to this, he worked
for Cudahy Meat Company in its sales department as well as other positions. He
has served on the Board Of Directors of the Bank Of Aurora and for several years
has managed a diverse family owned portfolio of commercial real estate, family
owned businesses and other investments.
Appointment of Additional Directors
If the Company completes the purchase of the three buildings (the "Keystone
Buildings") as described below under "3. ISSUANCE OF SHARES OF COMMON STOCK FOR
THE ACQUISITION OF THE KEYSTONE OFFICE BUILDINGS", the Company will, as required
by the terms of the Purchase Agreement for the Keystone Buildings, appoint two
designees of the seller of the Keystone Buildings to serve as directors of the
Company. The seller has designated William T. Atkins and Charles K. Knight to be
the two directors. Because Messrs. Atkins and Knight will not have been elected
by the stockholders, the Company's Certificate Of Incorporation provides that
their terms will expire at the next annual meeting of stockholders. At that
meeting, assuming that the Company's acquisition of the Keystone Buildings has
3
<PAGE>
been completed by that time, the stockholders will consider and vote on the
election of Messrs. Atkins and Knight, or two other designees of the seller, to
the full remaining terms of Class 3 and Class 2 directors, respectively. The
following is a description of the background and qualifications of each of Mr.
Atkins and Mr. Knight:
William T. Atkins, 50, has served as President of Sheridan Realty Corp.
since 1990. Mr. Atkins also is a principal shareholder and co-founder of
Sheridan Realty Corp., which is involved in the commercial real estate business
and which serves as the general partner of Sheridan Realty Partners, L.P.
Sheridan Realty Partners, L.P. is the current owner of the Keystone Office
Buildings located in Indianapolis, Indiana, that the Company proposes to
purchase. See below, "3. ISSUANCE OF SHARES OF COMMON STOCK FOR THE ACQUISITION
OF THE KEYSTONE OFFICE BUILDINGS". Since 1996, Mr. Atkins also has served as
general partner of Atkins Ltd. Partnership, an investment company. Since 1996,
Mr. Atkins has served as a director of Rock River Trust Company, which is
involved in trust administration, and from 1996 through 1998 he served as
President of Rock River Trust Company. From 1987 until 1994, Mr. Atkins served
as a Director and co-owner and, from 1987 until 1990, as President of E.K.
Williams & Company, an international business consulting and accounting services
firm operating in 19 countries with over 300 U.S. offices. Mr. Atkins earned a
B.A. degree in economics from Stanford University in 1971.
Charles K. Knight, 42, has served as Vice President and a member of
Sheridan Development, LLC since 1998. Sheridan Development is the property
manager of the Keystone Buildings and other properties owned by affiliated
entities of Sheridan. From 1996 through 1998, Mr. Knight was the owner and
served as the President of Abaco Investment Group, an investment company. From
1993 through 1996, Mr. Knight served as Vice President - Sales and Marketing of
Menda Scientific Products, Inc. During 1990, Mr. Knight served as a Vice
President of Public Storage, Inc., the largest owner and operator of
mini-storage properties in the world, where he was responsible for identifying
merger and acquisition opportunities. From 1986 to 1990, Mr. Knight served as
Vice President and General Counsel of Cardis Corporation, a publicly held
automotive parts distributor, Mr. Knight received an M.B.A. degree and a J.D.
degree from the University of California at Los Angeles in 1982 and a B.A.
degree from the University of California at Santa Barbara in 1977. Mr. Knight is
licensed to practice law in the States of California (inactive), New York and
Colorado.
Committees And Meetings
The Board Of Directors maintains an Audit Committee and an Acquisitions
Committee. The Audit Committee was formed to perform the following functions:
recommend to the Board Of Directors the independent auditors to be employed;
discuss the scope of the independent auditors' examination; review the financial
statements and the independent auditors' report; solicit recommendations from
the independent auditors regarding internal controls and other matters; review
all related party transactions for potential conflicts of interest; make
recommendations to the Board Of Directors; and perform other related tasks as
requested by the Board. During the year ended December 31, 1998, the Audit
Committee, currently consisting of Messrs. Hoffman and Labate, met twice.
The Acquisitions Committee was formed to perform the following functions:
recommend to the Board Of Directors an acquisitions policy and strategy; review
and update the acquisitions policy and strategy periodically; review proposed
acquisitions and make recommendations to the Board concerning those
acquisitions; review past acquisitions and make recommendations to the Board;
and perform other related tasks as requested by the Board. During the year ended
December 31, 1998, the Acquisitions Committee, currently consisting of Messrs.
Labate and McFann, did not meet as its functions were conducted by the Board Of
Directors meeting in full.
The Board Of Directors met nine times during 1998 and each director
participated in at least 75 percent of those meetings.
4
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's common stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
The Company believes that during the year ended December 31, 1998, its officers,
directors and holders of more than 10% of the Company's Common Stock complied
with all Section 16(a) filing requirements. In making these statements, the
Company has relied upon the written representations of its directors and
officers and the Company's review of the monthly statements of changes filed
with the Company by its officers and directors.
Executive Compensation
Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the Company's last three completed fiscal years by the Company's
President. No other employee of the Company received total salary and bonus
exceeding $100,000 during any of the last three fiscal years.
<TABLE>
<CAPTION>
Annual Compensation
- ---------------------------------------------------------------------------------------------------------------------------
Fiscal Long-Term
Name and Year Compensation Other Annual
Principal Position Ended Salary ($)(1) Bonus ($) Options Compensation ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James F. Etter, President 1998 $115,000 $20,000 10,000 $15,000 (2)
1997 $100,000 $15,000 20,000 $9,000 (3)
1996 $90,000 $5,000 10,000 $6,000 (4)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) The dollar value of base salary (cash and non-cash) received.
(2) Consists of $12,000 to reimburse for medical and life insurance coverage
and a $3,000 contribution to SIMPLE IRA Plan.
(3) Consists of $6,000 to reimburse for medical insurance coverage and a $3,000
contribution to SIMPLE IRA Plan.
(4) Consists of $6,000 reimbursement for medical insurance coverage.
Option Grants Table
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended December 31, 1998 to the
Company's President. See "- Employment Contracts And Termination Of Employment
And Change-In-Control Arrangements - 1995 Stock Option Plan", "- 1998 Stock
Option Plan", and "- Option Grants", below.
<TABLE>
<CAPTION>
Option Grants For Fiscal Year Ended December 31, 1998
-----------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
% of Total Options
Options Granted to Employees Exercise or Base Expiration
Name Granted (#) in Fiscal Year Price ($/Share) Date
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James F. Etter, President 10,000 67% $3.969/Share 12/10/03
- --------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Aggregated Option Exercises And Fiscal Year-End Option Value Table
The following table indicates that there were no exercises of stock options
during the fiscal year ended December 31, 1998 by the Company's President, and
also sets forth information concerning the fiscal year-end value of unexercised
options held by the President.
<TABLE>
<CAPTION>
Aggregated Option Exercises
For Fiscal Year Ended December 31, 1998
And Year-End Option Values
- -------------------------------------------------------------------------------------------------------------
Number of Value of
Unexercised Unexercised
Options In-The-Money
at Fiscal Options at Fiscal
Year-End (#)(3) Year-End ($)(4)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#)(1) Realized ($)(2) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James F. Etter, -0- -0- 34,500/25,500 $75/$225 (5)
President
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The number of shares received upon exercise of options during the fiscal
year ended December 31, 1998.
(2) With respect to options exercised during the Company's fiscal year ended
December 31, 1998, the dollar value of the difference between the option
price and the market value of the option shares purchased on the date of
the exercise of the options.
(3) The total number of unexercised options held as of December 31, 1998
separated between those options that were exercisable and those options
that were not exercisable.
(4) For all unexercised options held as of December 31, 1998, the aggregate
dollar value is calculated as the excess of the market price of the stock
underlying those options over the exercise price of those unexercised
options. For purposes of this table, the market price used for the Common
Stock is its closing sales price on December 31, 1998 of $4.00 per share as
reported on the Nasdaq SmallCap Stock Market.
(5) The amounts shown are for options to purchase shares at an exercise price
of $3.969 per share, 2,500 of which were exercisable and 7,500 of which
were unexercisable at December 31, 1998. Mr. Etter's other options have
exercise prices of $5.00 and $4.4375 per share, which are greater than the
closing sales price of $4.00 for the Common Stock on December 31, 1998 as
reported on the Nasdaq SmallCap Stock Market. These options therefore were
not "in-the-money", did not have any value on December 31, 1998, and are
not reflected in this column.
Employment Contracts And Termination Of Employment And Change-In-Control
Arrangements
Employment Agreement With James F. Etter. The Company entered into an
employment agreement (the "Etter Agreement") with James F. Etter effective as of
January 1, 1998, which replaced a previous agreement between the parties
effective as of January 1, 1996. Pursuant to the Etter Agreement, Mr. Etter will
serve as the President and Chief Executive Officer of the Company and will
devote substantially all his business time to the Company. For the 1998 fiscal
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<PAGE>
year, the Etter Agreement provided for the payment of salary at the rate of
$9,583 per month and a bonus to be determined by the Board Of Directors at year
end. The Etter Agreement also provides that the Company will reimburse Mr. Etter
for up to $12,000 annually for medical/insurance expenses paid by Mr. Etter.
Pursuant to the Etter Agreement, for the 1999 fiscal year, Mr. Etter's
salary was increased to $10,062.50 per month and the Company agreed to consider
paying Mr. Etter a bonus at the end of each year of the Etter Agreement, which
bonus will be at the discretion of the Board and will be based on criteria
determined by the Board. On December 9, 1998, the Board also granted to Mr.
Etter a bonus of $20,000 for 1998 and options to purchase 10,000 shares of
Common Stock. See below, "--Option Grants".
The Etter Agreement also provides that if the Company is acquired by
another company, and if the acquiring company does not offer Mr. Etter a
position in the Denver area at a salary level equal to or greater than his then
current salary, then all unexercised stock options held by Mr. Etter would
immediately become exercisable, and the Company would pay Mr. Etter a bonus
equal to one year's salary.
1995 Stock Option Plan. Pursuant to the Company's 1995 Stock Option
Plan (the "1995 Plan"), the Company may grant options to purchase an aggregate
of 130,000 shares of the Company's Common Stock to key employees, directors, and
other persons who have contributed or are contributing to the success of the
Company. The options granted pursuant to the 1995 Plan may be incentive options
qualifying for beneficial tax treatment for the recipient or they may be
non-qualified options. With respect to options granted to persons other than
directors of the Company who are not also employees of the Company, the 1995
Plan is administered by an option committee that determines the terms of the
options subject to the requirements of the 1995 Plan. In May 1995, directors of
the Company who are not also employees of the Company ("Outside Directors") were
granted an aggregate of 48,000 options with an exercise price of $5.00 per share
pursuant to the 1995 Plan, 12,000 of which subsequently expired without being
exercised. In December 1997, the Outside Directors were granted an aggregate of
36,000 options with an exercise price of $4.4375 per share pursuant to the 1995
Plan. At December 31, 1998 options to purchase an aggregate of 122,000 shares of
Common Stock were outstanding under the 1995 Plan. The option committee may
grant additional options to purchase 8,000 shares pursuant to the 1995 Plan.
1998 Stock Option Plan. Pursuant to the Company's 1998 Stock Option Plan
(the "1998 Plan"), the Company may grant options to purchase an aggregate of
200,000 shares of Common Stock to key employees, directors, and other persons
who have or are contributing to the success of the Company. The options granted
pursuant to the 1998 Plan may be incentive options qualifying for beneficial tax
treatment for the recipient, non-qualified options, or non-qualified
non-discretionary options. The terms of the 1998 Plan concerning incentive
options and non-qualified options are substantially the same except that only
employees of the Company or its subsidiaries are eligible for incentive options,
and employees and other persons who have contributed or are contributing to the
success of the Company are eligible for non-qualified options. Non-qualified
non-discretionary options may be granted only to Outside Directors. With respect
to options granted to persons other than Outside Directors, the 1998 Plan also
is administered by an option committee that determines the terms of the options
subject to the requirements of the 1998 Plan. The portion of the 1998 Plan
concerning non-qualified non-discretionary options provides that Outside
Directors automatically receive options to purchase 12,000 shares pursuant to
the 1998 Plan at the time of their initial election as an Outside Director. The
Options held by Outside Directors are not exercisable at the time of grant, but
Options to purchase 4,000 shares become exercisable for each Outside Director on
December 30 of each of the first three years immediately following the date of
grant of these options to the Outside Director. The exercise price for the
non-qualified non-discretionary options is the fair market value of the
Company's Common Stock on the date these options are granted. Shares acquired
upon exercise of these options cannot be sold for six months following the date
of grant. If not previously exercised, non-qualified non-discretionary options
that have been granted expire upon the later to occur of five years after the
date of grant and two years after the date these options first became
exercisable. The non-qualified non-discretionary options also expire 90 days
7
<PAGE>
after the optionholder ceases to be a director of the Company. At any time all
of an Outside Director's options have become exercisable, non-qualified
non-discretionary options to purchase an additional 12,000 shares, which are not
exercisable at the time of grant, shall be granted automatically to that Outside
Director.
All options granted under the 1998 Plan will become fully exercisable upon
the occurrence of a change in control of the Company or of certain mergers or
other reorganizations or asset sales described in the 1998 Plan. Options granted
pursuant to the 1998 Plan are not transferable during the optionee's lifetime.
Subject to the other terms of the 1998 Plan, the option committee has discretion
to provide vesting requirements and specific expiration provisions with respect
to the incentive options and non-qualified options granted. At December 31,
1998, options to purchase 15,000 shares of Common Stock were outstanding under
the 1998 Plan and options to purchase 185,000 were available to be granted
pursuant to the 1998 Plan.
Compensation Of Outside Directors
The Company compensates Outside Directors $250 per month plus $300 for each
meeting of the Board Of Directors that they attend. The Company also reimburses
directors for expenses incurred in attending meetings and for other expenses
incurred on behalf of the Company. In addition, each director who is not an
employee automatically receives non-qualified non-discretionary options to
purchase shares of Common Stock. See above, "- 1995 Stock Option Plan" and "-
1998 Stock Option Plan".
Option Grants. In addition to the automatic grants of options to Outside
Directors, stock options have been granted pursuant to the Company's 1995 Plan
and 1998 Plan on four occasions. In May 1995, the Company granted to Mr. Etter
options to acquire up to 20,000 shares of the Company's Common Stock at an
exercise price of $5 per share. 4,000 of these options became exercisable on
each of December 30, 1995, 1996, 1997 and 1998, and an additional 4,000 of these
options will become exercisable on December 30, 1999, and all of these options
expire on May 20, 2000. On December 9, 1996, the Company granted to Mr. Etter
options to purchase up to an additional 10,000 shares of Common Stock at an
exercise price of $5 per share. On that date, the last sales price for the
Company's Common Stock on the Nasdaq SmallCap Stock Market was $4.50, 2,000 of
these options became exercisable on each of December 30, 1996, 1997 and 1998, an
additional 2,000 of these options will become exercisable on each of December
30, 1999 and 2000, and all these options expire on December 9, 2001. On December
8, 1997, the Company granted to Mr. Etter options to purchase up to an
additional 20,000 shares of Common Stock at an exercise price equal to the last
sales price for the Company's Common Stock on the Nasdaq SmallCap Stock Market
on December 30, 1997, which was $4.4375 per share. 5,000 of these options became
exercisable on each of December 30, 1997 and 1998, an additional 5,000 of
options will become exercisable on each of December 30, 1999 and 2000, and all
of these options expire on December 8, 2002. On December 9, 1998, the Company
granted to Mr. Etter options to purchase up to an additional 10,000 shares of
Common Stock at an exercise price equal to the last sales price for the
Company's Common Stock on the Nasdaq SmallCap Stock Market on December 9, 1998,
which was $3.969 per share. 2,500 of these options became exercisable on
December 9, 1998, an additional 2,500 options will become exercisable on each of
December 31, 1999, 2000 and 2001, and all 10,000 of these options expire on
December 10, 2003.
Stock Ownership Of Directors And Principal Stockholders
The following table summarizes certain information as of April 5, 1999 with
respect to the beneficial ownership of the Company's common stock (i) by the
Company's directors, (ii) by stockholders known by the Company to own 5% or more
of the Company's common stock, and (iii) by all officers and directors as a
group.
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As Of April 5, 1999
----------------------------------------
Name and Address Percentage Of Class
Of Beneficial Owner Number Of Shares Beneficially Owned
- ------------------- ---------------- --------------------
Charles R. Hoffman 70,500(1) 4.2%
208 Somerset
Bentonville, Arkansas 72712
John A. Labate 15,000(1) *
5260 South Beeler Court
Englewood, Colorado 80111
Robert J. McFann 67,800(1) 4.1%
3260 Zephyr Court
Wheat Ridge, Colorado 80033
James F. Etter 60,939(2) 3.6%
3333 South Wadsworth Blvd.
Suite D-216
Lakewood, Colorado 80227
All Officers And Directors
As A Group (Four Persons) 214,239(1)(2) 12.2%
Maxine G. Hedlund 84,985 (3) 5.1%
7100 Grandview Ave., Suite 1
Arvada, Colorado 80002
- ---------------
*Less than one percent
(1) Includes the following numbers of shares underlying options to purchase
shares of Common Stock that currently are exercisable that were granted to
each Outside Director pursuant to the Company's 1995 and 1998 Stock Option
Plans: Charles Hoffman, 15,000; John Labate, 15,000; and Robert McFann,
15,000. The number of shares indicated also includes the following numbers
of shares underlying common stock purchase warrants ("Warrants") that
currently are exercisable that are held by each of the following persons:
Charles Hoffman, 8,000; and Robert J. McFann, 4,000.
(2) Consists of an aggregate of 20,939 shares of Common Stock owned by Mr.
Etter, his wife, and minor daughter, 34,500 shares of Common Stock
underlying currently exercisable options, and an aggregate of 5,500 shares
of Common Stock underlying Warrants owned by Mr. Etter and his wife. See
"EXECUTIVE COMPENSATION--Employment Contracts And Termination Of Employment
And Change-In-Control Arrangements--Option Grants".
(3) Includes 9,775 shares owned by the C.J. Hedlund Trust, of which Maxine G.
Hedlund is the beneficiary; 22,845 shares owned by Colorado Bighorn
Corporation, of which Maxine G. Hedlund is the President and a director;
15,540 shares owned by Continental Western Services Inc., of which Maxine
G. Hedlund is the President, a director and the beneficial owner of
approximately 24 percent of the outstanding stock; 14,400 shares owned by
the Maxine G. Hedlund Trust, of which Maxine G. Hedlund is the beneficiary;
and 600 shares owned by AmeriCo Realty Services Inc., 51 percent of which
is owned by Maxine G. Hedlund and of which she is a director.
Certain Transactions With Management And Principal Stockholders
The Company has been involved in the following transactions with its
current and past directors and officers and by persons known by the Company to
be the beneficial owners of 5% or more of the Company's Common Stock.
Property Management; Administrative Services. In 1995 and 1996, the Company
entered into property management contracts pursuant to which AmeriCo Realty
Services, Inc. ("AmeriCo") managed the following properties owned by the
Company: four private self storage facilities located in Colorado (the
"Self-Storage Facilities"), an office building in Appleton, Wisconsin (the
"Giltedge Office Building") and the Broadway Property. These agreements were
effective as of the date on which the Company acquired the respective property,
which was in 1995 for the Broadway Property and in 1996 for the other
properties. Pursuant to the termination provisions of each agreement, all of
which provided that the Company could terminate any of them after one year, all
of the agreements were terminated by the Company as of January 1, 1999. From
January 1, 1999 through June 30, 1999, unless the Company elects to terminate
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sooner, AmeriCo has and will continue to administer certain personnel-related
matters on behalf of the Company, in exchange for $4,000 per month. In addition,
from 1996 until the Company's offices were moved to Golden, Colorado in October
1998, AmeriCo provided the Company with accounting and clerical services as well
as general office support, including telephone, fax, and other services, for an
aggregate cost of $1,250 per month. Those services and support costs are now
conducted and borne directly by the Company. Maxine G. Hedlund, who is the
beneficial owner of approximately 5.1% of the Company's Common Stock, is a
director of AmeriCo and beneficially owns 51% of the outstanding common stock of
AmeriCo.
Property Acquisition; Brokerage Services. Effective as of August 30, 1996,
C.J. Hedlund, the Company, and Colorado Bighorn entered into an agreement
pursuant to which Mr. Hedlund and Colorado Bighorn granted to the Company the
right of first refusal to participate in any real estate transaction in which
Mr. Hedlund, Colorado Bighorn, or any of their affiliated entities was involved
or for which Mr. Hedlund, Colorado Bighorn, or any of their affiliated entities
otherwise received compensation, except that the right of first refusal did not
apply to any proposed transaction that related solely to their serving in a
brokerage function, such as a listing or selling broker. Also as part of this
transaction, the Company entered into broker listing agreements with Colorado
Bighorn pursuant to which Colorado Bighorn will serve as the Company's broker
for all purchase and sale transactions during the period of the agreement.
Pursuant to these listing agreements, the Company will pay Colorado Bighorn a
standard real estate commission for each purchase or sale transaction entered
into by the Company, including those pursuant to the right of first refusal
granted to the Company by Mr. Hedlund and Colorado Bighorn. This agreement and
the listing agreements were for one year terms beginning on August 30, 1996 and
were renewed for an additional one year term until the Company allowed the
agreements to terminate as of August 30, 1998. Pursuant to these agreements, the
Company paid Colorado Bighorn the commissions described below under "-- Purchase
Of State Of Texas Office Buildings" and "-- Purchase Of Four Office Buildings".
Maxine G. Hedlund controls, and is the President and a director of, Colorado
Bighorn.
Purchase Of State Of Texas Buildings. In June and July 1998, the Company
acquired 11 small office buildings located in Texas that are leased to various
Texas government agencies. The aggregate purchase price for these buildings
included approximately $6,300,000 and 207,200 shares of the Company's Common
Stock at the rate of $5.00 per share. As part of those transactions, the sellers
of the properties paid Colorado Bighorn aggregate commissions of $75,830 and
4,390 shares of the Company's Common Stock. See above, "--Property Acquisition
Brokerage Services."
Purchase Of Four Office Buildings. In August 1998, the Company acquired
four additional office buildings located in Texas. The primary tenants in each
building are branches of Bank Of America, N.A. The aggregate purchase price for
the four buildings was $3,625,000. As part of that transaction, the Company paid
Colorado Bighorn aggregate commissions of 13,500 shares of the Company's Common
Stock at the rate of $5.00 per share. See above, "-- Property Acquisition;
Brokerage Services."
Purchase Of Keystone Office Buildings. Pursuant to the agreement with
Sheridan Realty Partners, L.P. ("Sheridan") to purchase the Keystone Buildings
in Indianapolis, Indiana, the Company agreed to appoint two directors selected
by Sheridan Realty Partners, L.P. and to use Sheridan Development, LLC to manage
the Keystone Office Buildings following the purchase. William T. Atkins and
Charles K. Knight have been designated by Sheridan to serve as directors of the
Company. Mr. Atkins is the president and a 16.5% owner of Sheridan Realty Corp.,
which is the general partner of Sheridan. Sheridan Realty Corp. holds a 1%
interest in Sheridan as the general partner and an additional 3.1335% interest
as a limited partner. Upon the completion of the purchase of the Keystone
Buildings, Mr. Atkins will receive approximately 33,000 of the shares of common
stock paid by the Company as a portion of the purchase price. A trust company
for which Mr. Atkins serves as a director serves as trustee for trusts that will
receive approximately an additional 76,900 shares of common stock. Mr. Atkins
has no beneficial interest in any shares held by the trust company. Mr. Knight
will not receive any shares of common stock as a result of the purchase.
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The management agreement is for a one-year term and provides that Sheridan
Development, LLC is to receive a management fee equal to five percent of the
gross monthly rental income received from the Keystone Buildings. Mr. Atkins is
the co-manager, president and a 25.05% owner, and Mr. Knight is a vice president
and a 9.9% owner of Sheridan Development.
In connection with the purchase of the Keystone Buildings, the Company
agreed to indemnify William T. Atkins and others for liabilities that arise
after the purchase under guarantees and indemnifications those parties made for
the benefit of the holder of the mortgage on the property and a previous lender.
For additional information concerning the relationships of Mr. Atkins and Mr.
Knight, Sheridan Realty Partners, L.P. and Sheridan Development, LLC, see below,
"3. ISSUANCE OF SHARES OF COMMON STOCK FOR THE ACQUISITION OF THE KEYSTONE
OFFICE BUILDINGS - Summary Of Proposed Transaction".
Conflicts Of Interest Policies
The Company's Board Of Directors and its officers are subject to certain
provisions of Delaware law which are designed to eliminate or minimize the
effects of certain potential conflicts of interest. In addition, the Bylaws
provide that any transaction between the Company and an interested party must be
fully disclosed to the Board Of Directors, and that a majority of the directors
not otherwise interested in the transaction (including a majority of independent
directors) must make a determination that the transaction is fair, competitive
and commercially reasonable and on terms and conditions not less favorable to
the Company than those available from unaffiliated third parties.
All future transactions between the Company and the Company's officers,
directors and 5% stockholders will be on terms no less favorable than could be
obtained from independent third parties and will be approved by a majority of
the independent, disinterested directors of the Company. The Company believes
that by following these procedures it will be able to mitigate the possible
effects of these conflicts of interest.
2. PROPOSAL TO APPROVE REINCORPORATION IN MARYLAND
The Company's Board of Directors recommends that the stockholders
approve a proposal for the Company to change its state of incorporation to
Maryland from Delaware. We refer to this proposal as the Reincorporation
Proposal. The following discussion summarizes certain aspects and consequences
of the Reincorporation Proposal, which are related primarily to the differences
between the Maryland Business Corporation Act (the "Maryland Code") and the
Delaware General Corporation Law (the "Delaware Code"), as well as the
respective provisions of the articles and bylaws of AMVP Inc. ("AmeriVest
Maryland") and the Company. This summary is not intended to be complete. It is
qualified in its entirety by the Agreement And Plan of Merger (the "Merger
Agreement") between the Company and AmeriVest Maryland which is attached to this
Proxy Statement as Exhibit A, the Articles of Incorporation of AmeriVest
Maryland (the "Maryland Articles"), which are attached to this Proxy Statement
as Exhibit B, and the Bylaws of AmeriVest Maryland (the "Maryland Bylaws"),
which are attached to this Proxy Statement as Exhibit C.
Introduction
General
If it is approved by the Company's stockholders, the Reincorporation
Proposal will be accomplished by the merger of the Company with and into its
wholly-owned subsidiary, AmeriVest Maryland (the "Merger"). As a result of the
Merger, the Company's legal domicile will be changed from Delaware to Maryland,
and its name will be changed to AMVP Inc. At the time of the Merger, the name of
"AMVO Inc." will be changed to "AmeriVest Properties Inc." The Company
anticipates that, except for reduction in the annual franchise tax fees paid to
Delaware as described below, the Merger will not cause any change in the
business or financial condition of the Company, and that, except for the
differences in the Maryland Code from the Delaware Code described below, the
Merger will not cause any change in the management of the Company.
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Upon the terms and subject to the conditions of the Merger Agreement, at
the Effective Time (as defined in the Merger Agreement) of the Merger, each
outstanding share of the Company's $.001 par value common stock (the "Delaware
Common Stock") will be converted into one share of common stock, $.001 par
value, of AmeriVest Maryland (the "Maryland Common Stock"). In addition, at the
Effective Time, each outstanding option or warrant to purchase shares of
Delaware Common Stock will continue outstanding as a right to purchase shares of
Maryland Common Stock upon the same terms and conditions as immediately prior to
the Effective Time. Following the Effective Time, each outstanding certificate
representing shares of Delaware Common Stock will continue to represent the same
number of shares of Maryland Common Stock, and delivery of certificates for
shares of Delaware Common Stock will constitute "good delivery" for transaction
in the shares of Maryland Common Stock. IT WILL NOT BE NECESSARY FOR
STOCKHOLDERS OF THE COMPANY TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR
STOCK CERTIFICATES OF AMERIVEST MARYLAND.
The Company's Common Stock (symbol: AMVP) and warrants to purchase Common
Stock (symbol: AMVPW) became listed for trading on the Nasdaq SmallCap Stock
Market on November 6, 1996. At the Effective Time, those symbols will, without
interruption, represent the Maryland Common Stock and the warrants to purchase
Maryland Common Stock.
Also at the Effective Time, the Company will be governed by the Maryland
Code, by the Maryland Articles and by the Maryland Bylaws, which will result in
certain changes in the rights of stockholders and other matters related to the
Company. The most significant changes, which include changes in the availability
of appraisal rights and a significant decrease in the annual fees payable by the
Company to the state of incorporation, are discussed in this Proxy Statement
under "Certain Differences Between The Charter Documents Of AmeriVest Properties
Inc. and AMVP Inc." and "Certain Differences Between The Corporation Laws Of
Delaware And Maryland". For additional details and other information relating to
these and other changes in the rights of stockholders, you should review the
Maryland Articles attached to this proxy statement as Exhibit B and the Maryland
Bylaws attached as Exhibit C. In addition, you may inspect copies of the
Company's Delaware Certificate Of Incorporation (the "Delaware Articles") and
the Company's current Bylaws (the "Delaware Bylaws") at the principal business
offices of the Company, and we will send copies of the Delaware Articles and the
Delaware Bylaws to any stockholder who requests them.
The Reincorporation Proposal includes an increase in the Company's
authorized common stock from 10,000,000 shares to 15,000,000 shares, and the
authorization of 5,000,000 shares of preferred stock, $.001 par value, the
rights and preferences of which will be determined by the Company's Board Of
Directors for specific issuances of shares at the time that the issuance of
those shares is approved by the Board Of Directors. Except for the approximately
561,000 shares of common stock that are proposed to be issued as consideration
of the acquisition of the Keystone Property as described in this Proxy
Statement, the Company does not have any current plans to issue any shares of
common or preferred stock.
Effective Time
We anticipate that the Merger will become effective within one business day
after stockholder approval. However, the Merger Agreement provides that the
Merger may be abandoned prior to the Effective Time, either before or after
stockholder approval, if circumstances arise which, in the opinion of the Board,
make the Merger inadvisable. Even if the Merger is abandoned, the Company
intends to proceed with the acquisition described in this Proxy Statement. In
addition, the Merger Agreement may be amended prior to the Effective Time,
either before or after stockholder approval thereof, subject to applicable law.
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Vote Required
The Delaware Code and the Delaware Articles provide that the affirmative
vote of the holders of a majority of the outstanding shares of Delaware Common
Stock is required for approval of the Reincorporation Proposal. Regardless of
whether the Reincorporation Proposal is approved, the Company will continue to
be responsible for all its existing contracts, plans, arrangements and
obligations.
The Board Of Directors has unanimously approved the Reincorporation
Proposal and unanimously recommends that stockholders vote for the
Reincorporation Proposal.
Principal Reasons For And Effects Of Changing The State Of Incorporation
The Board Of Directors recommends that the Company become a Maryland
corporation subject to the statutes of Maryland rather than Delaware primarily
because this will eliminate the Company's annual Delaware franchise tax
expenses. The State of Delaware imposes franchise taxes on Delaware corporations
based on alternative formulas involving either (i) the corporation's aggregate
number of shares of authorized stock, or (ii) the corporation's capital
structure as compared to its assets. Delaware corporations may elect to be
treated under the formula alternative which results in the lesser amount of
franchise tax imposed on the corporation. The Company has always elected to be
considered under the formula which results in the lower franchise tax burden.
For the fiscal years ended December 31, 1998, and 1997, the Company's
Delaware franchise taxes were $28,456 and $16,420, respectively. As the Company
continues to acquire additional assets, annual franchise taxes will continue to
increase. Unlike Delaware, the State of Maryland does not impose a franchise tax
on corporations incorporated under its laws. If the Company is reincorporated in
Maryland, the only amount payable annually to the State of Maryland as a result
of being incorporated under its laws would be $100 to be paid in conjunction
with Maryland's annual reporting requirements.
Although there are several differences between the Delaware Code and the
Maryland Code, the Board Of Directors does not believe that these differences
will have a significant impact on the Company's operations. See "Certain
Differences Between The Corporation Laws Of Delaware And Maryland".
The Board Of Directors is not currently aware of any specific effort to
accumulate the Company's securities, other than for investment, or to obtain
control of the Company by merger, tender offer, solicitation in opposition to
the Board Of Directors, or otherwise.
The Board of Directors has unanimously concluded that the potential
benefits of the Reincorporation Proposal outweigh any possible disadvantages.
Accordingly, the Board Of Directors unanimously recommends that the stockholders
vote for the Reincorporation Proposal.
Certain Differences Between The Charter Documents Of AmeriVest Properties Inc.
And Those Of AmeriVest Maryland; Analysis Of The Delaware Code And The Maryland
Code
The following is a summary of certain differences between provisions
affecting holders of shares of the Company's common stock under the Delaware
Code, the Delaware Articles and the Delaware Bylaws and those affecting holders
of shares of AmeriVest Maryland under the Maryland Code, the Maryland Articles
and the Maryland Bylaws. The summary does not replace those full documents and
to the extent the summary conflicts with the terms of an actual document, the
terms of the actual document will prevail. Copies of the Maryland Articles and
Maryland Bylaws are attached to this proxy statement as Exhibit B and Exhibit C,
respectively. We will send copies of the Delaware Articles and Delaware Bylaws
to any stockholder who requests them.
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With respect to certain differences between the rights held by stockholders
under the Delaware Code and those which they would have under the Maryland Code,
the Maryland Articles and Bylaws have been structured so that the Maryland
charter documents provide for essentially the same rights and obligations as the
Company's Delaware charter documents, and management of the Company does not
have any present intention of amending or otherwise altering the Maryland
Articles or Bylaws. However, economic and/or business conditions and
considerations may arise which may, in the opinion of the present or future
directors of the Company, make amendment of the Maryland charter documents in
the Company's best interests. Therefore, there can be no assurance that the
Maryland charter documents will not be amended, including changes to provisions
that directly affect stockholders. Stockholders also should refer to the
Delaware Code and the Maryland Code with respect to the matters discussed in
this Proxy Statement.
Stockholder Meetings
Both the Delaware Bylaws and the Maryland Bylaws provide that an annual
meeting of stockholders will be held on a date and at a time and place
determined by the Board. The Delaware Bylaws provide that a majority of the
outstanding shares of the Company represented in person or by proxy constitute a
quorum at stockholder meetings. Under the Maryland Bylaws, one-third of the
outstanding shares represented in person or by proxy constitute a quorum at
stockholder meetings.
Under the Delaware Code, special meetings of stockholders may be called by
the Board Of Directors or by such other person or persons as may be authorized
by the certificate of incorporation or bylaws. Under the Delaware Bylaws, the
President, a majority of the Board Of Directors, a majority of independent
directors, or an officer of the Company upon written request by stockholders
holding not less than 10 percent of the outstanding common stock of the Company
may call a special meeting of stockholders.
Under the Maryland Code, special meetings may be called by the Board Of
Directors, the President, the holders of shares entitled to cast not less than
25 percent of the votes at the special meeting or such other persons as the
articles of incorporation or the bylaws provide. The Maryland Bylaws provide
that special meetings may be called by the President, the Board Of Directors or
the holders of shares entitled to cast not less than 10 percent of the votes at
such special meeting.
Both the Delaware Code and the Maryland Code provide that special meetings
of stockholders require a minimum of 10 days' notice. However, under both the
Delaware Bylaws and the Maryland Bylaws, special meetings of stockholders
require 15 days' notice.
Stockholder Vote For Certain Matters
Both the Delaware Code and the Maryland Code require an affirmative vote of
the stockholders of each of the constituent corporations in order to approve a
merger (other than a parent-subsidiary merger as described in the next
paragraph) or the sale, lease or exchange of all or substantially all of a
corporation's assets. Under the Delaware Code, these transactions must be
approved by the holders of a majority of the shares entitled to vote unless
otherwise provided in a corporation's certificate of incorporation. The Delaware
Articles require a majority vote in these circumstances. Under the Maryland
Code, a two-thirds vote is required unless a corporation's articles of
incorporation provide for a lesser (but not less than a majority) or greater
vote. The Maryland Articles provide that a majority vote is sufficient in these
circumstances.
Both the Delaware Code and the Maryland Code permit a corporation to
effect, without stockholder approval, a merger with or into a subsidiary if 90
percent or more of the subsidiary is owned by the corporation.
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Stockholder Action By Written Consent
Pursuant to the Delaware Code, the Company can take action with respect to
a matter if written consents are executed by those stockholders owning that
number of shares that would be required to take the same action at a meeting of
stockholders at which all stockholders were present. Under the Maryland Code,
stockholder action may be taken without a meeting only if all stockholders
entitled to vote on the matter consent in writing to the action proposed to be
taken.
Nominations Made By Stockholders For The Election Of Directors
The Delaware Bylaws do not contain specific provisions regarding
nominations made by stockholders for the election of directors.
The Maryland Bylaws provide that written notice of proposed nominations
made by stockholders for the election of directors must be received by the
Company not less than 53 days nor more than 90 days prior to the meeting (or, if
fewer than 60 days' notice of the meeting is given or made to stockholders, not
later than the seventh day following the day on which the notice of the date of
the meeting was mailed to stockholders). The notice must contain certain
information about the proposed nominee, including name, age, business address,
principal occupation or employment for the five years preceding the date of the
notice, the number of shares of stock of the Company beneficially owned by the
nominee, and any arrangement, affiliation, association, agreement or other
relationship of the nominee with any stockholder.
Classified Board Of Directors
Both the Delaware Articles and Maryland Articles provide that the members
of the Board Of Directors shall be divided, as evenly as possible, into three
classes, and that each director shall serve for a three year term or until his
successor is duly elected and has qualified.
The Delaware Code provides that in cases where a director is elected by the
board of directors, rather than the stockholders, in order to fill a vacancy on
the board, the newly elected director will serve until the term of that
directorship naturally expires. However, the Delaware Articles, the Maryland
Articles and the Maryland Code require that the new director be elected by the
stockholders at the next annual meeting.
Cumulative Voting
Both the Delaware Code and the Maryland Code permit a corporation to
specify in its articles of incorporation whether cumulative voting exists.
Neither the Delaware Articles nor the Maryland Articles allow cumulative voting.
Removal Of Directors
In the case of a corporation whose board is classified, both the Delaware
Code and the Maryland Code provide that directors may be removed only for cause
unless the charter documents provide otherwise. The Delaware charter documents
provide that directors may be removed, with or without cause, by the holders of
a majority of shares then entitled to vote at a meeting of stockholders. The
Maryland charter documents do not modify the code provisions concerning this
matter and therefore directors may be removed only for cause.
If a corporation's board is not classified and the charter documents do not
provide otherwise, both the Delaware Code and the Maryland Code provide that
directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors.
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Under both the Delaware Code and the Maryland Code, if cumulative voting is
allowed and less than the entire board of directors is to be removed, no
director may be removed without cause if the votes cast against such director's
removal would be sufficient to elect such director if then cumulatively voted at
an election of the entire board of directors, or, if there is more than one
class of directors, at an election of the class of directors of which such
director is a part.
Elimination Or Limitation Of Certain Personal Liability Of Directors And
Officers
The Delaware and Maryland charter documents contain provisions concerning
personal liability of directors. These provisions are worded differently but
have substantially the same effect. The only notable difference is that the
Maryland Code provides for limitation of officers' personal liability to the
same extent as for directors, and the Maryland Articles also provide for this
protection. The Delaware Code does not permit limitation of officers' personal
liability.
The Delaware Articles eliminate and limit the personal liability of each
director of the Company to the full extent permitted by the Delaware Code,
including without limitation as permitted by the provisions of Section 102(b)(7)
of the Delaware Code and any successor provision, as amended. Thus, the
Company's directors are not liable for certain money damages as a director.
However, pursuant to Section 102(b)(7), liability of directors is not eliminated
or limited (i) for any breach of a director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, (iii) under Section
174 of the Delaware Code (dealing with willful or negligent violation of certain
statutory provisions concerning dividends and stock purchases or redemptions),
and (iv) for any transaction from which the director derived an improper
personal benefit.
The Maryland Articles also contain provisions which eliminate and limit the
personal liability of directors to the full extent permitted by the Maryland
Code. Pursuant to the Maryland Code, the Maryland Articles also limit the
personal liability of officers to the same extent as that afforded directors.
Similar to the Delaware Code, however, the Maryland Code does not permit
limitation of personal liability of directors or officers (i) for the amount of
any improper benefit they actually receive, or (ii) to the extent that a
judgment or final adjudication adverse to the director or officer in a
proceeding based on the finding in that proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding.
Indemnification Of Directors And Officers
The Delaware Code and the Maryland Code each specify certain circumstances
when a corporation must, and other circumstances when it may, indemnify its
officers, directors, employees and agents against legal expenses and
liabilities. Generally, under both codes, the person being indemnified must have
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, in a criminal proceeding,
must have had no reasonable cause to believe his conduct was unlawful. A
director may be reimbursed in advance of a final disposition of a proceeding if
he undertakes to repay any such advances if it is determined he did not meet the
required standards of conduct. Both codes permit corporations to purchase
insurance on behalf of directors, officers, employees and agent for liability
asserted against them in their capacity as such regardless of whether the
corporation would have the power to indemnify them. Under both codes, a
corporation may expand the rights to indemnification by a provision in its
bylaws, by an agreement, by resolution of stockholders or directors not involved
in the proceeding, or otherwise.
The Maryland Bylaws provide that: (i) the Company is required to indemnify
its directors and officers to the fullest extent permitted by law, including
those circumstances in which indemnification would otherwise be discretionary;
(ii) the Company is required to advance expenses to its officers and directors
as incurred, including expenses relating to obtaining a determination that such
directors and officers are entitled to indemnification, provided that they
undertake to repay the amount advanced if it is ultimately determined that they
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are not entitled to indemnification; (iii) the Company is authorized to enter
into indemnification agreements with its directors and officers; and (iv) the
Company may not retroactively amend the indemnification provisions in the Bylaws
in a way which is adverse to its directors or officers. This indemnification is
more restrictive than under the Delaware Articles and Bylaws because under the
Delaware charter documents, pursuant to the Delaware Code, the Company may
indemnify directors or officers who are ultimately found to be liable to the
Company. However, under the Maryland charter documents, as required by the
Maryland Code, the Company may not indemnify a director or officer made party to
a proceeding by reason of service as a director if it is established that (a)
the act or omission of the director was material to the matter giving rise to
the proceeding and was either committed in bad faith or was the result of active
and deliberate dishonesty, (b) the director actually received an improper
personal benefit in money, property or services, or (c) in the case of any
criminal proceeding, the director had reasonable cause to believe that the act
or omission was unlawful. Also, the Maryland Code provides that a Maryland
corporation may not indemnify a director or officer if the proceeding was one by
or on behalf of the corporation and in the proceeding the director or officer is
adjudged to be liable to the corporation.
Although indemnification under the Maryland Code is not allowed to the same
extent as under the Delaware Code, the Board believes that the Maryland
indemnification provisions are reasonable and adequate, and that the Company
will be able to continue to attract and retain qualified directors and officers.
None of the Company's directors or officers has indicated that approval of the
Reincorporation Proposal would cause him to consider resigning from his position
with the Company.
Dividends
The Delaware Code permits the payment of dividends out of surplus or, if
there is no surplus, out of net profits for the current or preceding fiscal
year, provided that an amount equal to the par value represented by all shares
of the corporation's common and preferred stock remains in the stated capital
account.
The Maryland Code provides that a corporation may pay dividends to its
stockholders from time to time as authorized by the board of directors. However,
no dividend or other distribution may be made if, after giving effect to the
distribution (i) the corporation would not be able to pay its debts as they
became due in the usual course of business, or (ii) the corporation's total
assets would be less than the sum of the corporation's total liabilities plus
amounts payable to stockholders having preferential rights to assets in the
event of dissolution of the corporation.
Neither the Maryland charter documents nor the Delaware charter documents
modify the respective code provisions concerning this matter.
Amendments To Charter Documents
Pursuant to the Delaware Code, the Delaware Articles may be amended by a
majority vote of the outstanding shares of voting stock, except with respect to
the provisions governing the election, classification and removal of members of
the Board, in which case the Delaware Articles requires a 66 2/3 percent
stockholder vote for amendment. The Delaware Articles gives the Board the power
to amend, adopt or repeal the Delaware Bylaws except for provisions in the
Bylaws relating to the election, classification and removal of members of the
Board. The Delaware Bylaws also provide that the Delaware Bylaws may be altered,
amended or repealed, or new Bylaws may be adopted, by a majority vote of the
outstanding shares, without necessity of the concurrence of the Board.
As permitted by the Maryland Code, the Maryland Articles provide that the
stockholder vote required to approve charter amendments has been reduced from
two-thirds to a majority vote. It also is provided in the Maryland Articles and
Maryland Bylaws that the Maryland Bylaws may be amended or repealed, and new
Bylaws adopted, by the Board. The Maryland Bylaws also provide that the Maryland
Bylaws may be altered, amended or repealed or new Bylaws may be adopted by a
majority vote of the outstanding shares, without necessity of the concurrence of
the Board.
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<PAGE>
Inspection Of Books And Records
Under the Maryland Code, any stockholder may inspect and copy, during usual
business hours, the corporation's bylaws, minutes of the proceedings of
stockholders, annual statements of affairs and any voting trust agreements on
file at the corporation's principal office. Additionally, any person who has
been a holder of record for a minimum of six months or who owns at least five
percent of the corporation's outstanding shares has a right to (i) inspect the
corporation's books of account and stock ledger, (ii) present to any officer or
resident agent of the corporation a written request for a statement of its
affairs, and (iii) in the case of any corporation which does not maintain the
original or a duplicate stock ledger at the corporation's offices in Maryland,
present to any officer or resident agent of the corporation a written request
for a list of its stockholders.
Under the Delaware Code, any stockholder may submit a written demand to
inspect and copy the corporation's stock ledger, a list of its stockholders and
its other books and records. The written demand must state a purpose for the
inspection which is reasonably related to the demanding stockholder's interest
as a stockholder.
Appraisal Rights
Under the Delaware Code and the Maryland Code, stockholders, in certain
circumstances, have the right to dissent from certain corporate reorganizations
and mergers, provided that statutory procedures are followed. The
Reincorporation Proposal does not trigger any appraisal rights. See "DISSENTING
STOCKHOLDERS' RIGHTS OF APPRAISAL".
In cases where appraisal rights are available, both the Delaware Code and
the Maryland Code provide that a stockholder exercising his right to dissent may
demand payment in cash for his shares equal to their fair value, excluding any
appreciation or depreciation in anticipation of the transaction (although under
the Maryland Code such appreciation or depreciation may be included in
determining fair value if its exclusion would be inequitable). Under the
Delaware Code, fair value is determined by the Court of Chancery. Under the
Maryland Code, fair value is determined by agreement with the corporation or, if
an agreement cannot be reached, by an appropriate court upon the petition of the
surviving corporation or the dissenting stockholder.
The Maryland Code provides that stockholders may exercise their right to
dissent from the sale, lease, exchange or other disposition of all or
substantially all of a corporation's assets unless the proceeds from the
transaction are distributed to stockholders. The Delaware Code does not provide
appraisal rights to stockholders in transactions involving the sale, lease,
exchange or other disposition of all or substantially all of a corporation's
assets.
Under the Delaware Code, there are no appraisal rights for shares which, at
the record date for the meeting at which a merger or consolidation is to be
approved, are listed on a national securities exchange or are held of record by
more than 2,000 stockholders, unless stockholders receive anything other than:
(i) shares of stock of the corporation surviving or resulting from such merger
or consolidation; (ii) shares of stock of any other corporation which at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or held of record by more than 2,000 stockholders;
(iii) cash in lieu of fractional shares of the corporations described in the
foregoing clauses (i) and (ii); or (iv) any combination of (i), (ii) and (iii).
Under the Maryland Code, there are no appraisal rights if: (i) the stock is
listed on a national securities exchange or is designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. (a) with respect to the merger of a subsidiary
corporation, 90 percent or more of which is owned by the acquiring corporation,
on the date notice is given to or waived by the dissenting stockholder, or (b)
with respect to any other transaction, on the record date for determining
stockholders entitled to vote on the transaction objected to; (ii), the stock
received is that of the successor in the merger, unless the merger alters the
18
<PAGE>
contract rights of the stock as expressly set forth in the charter and the
charter does not reserve the right to do so, or the stock is to be changed or
converted in whole or in part in the merger into something other than either
stock in the successor, cash, scrip or other rights or interests arising out of
provisions for the treatment of fractional shares of stock in the successor; or
(iii) the stock is that of an open-end investment company registered under the
Investment Company Act of 1940, as amended, and the value placed on the stock in
the transaction is its net asset value.
Increase In Authorized Common Stock
The Company's Certificate of Incorporation currently authorizes the
issuance of 10,000,000 shares of $.001 par value common stock (the "Delaware
Common Stock"). The Maryland Articles authorize the issuance of 15,000,000
shares of $.001 par value common stock (the "Maryland Common Stock"). As of May
1, 1999, 1,658,770 shares of the Company's Delaware Common Stock were issued and
outstanding. If no action is taken to increase authorized common stock, the
Company would be able to issue 8,341,230 additional shares of Delaware Common
Stock. If the proposal to reincorporate in Maryland and the accompanying
increase in authorized capital is approved by stockholders, the Company will
have 13,341,230 unissued and unreserved shares of Maryland Common Stock
available for issuance in the future.
The Board believes that the additional shares of common stock resulting
from the increase in authorized capital should be available for issuance from
time to time as may be required for various purposes, including the issuance of
common stock in connection with financing or acquisition transactions and the
issuance or reservation of common stock for employee stock options. The Company
currently intends to issue approximately 561,000 shares of common stock in
connection with the acquisition of three office buildings located in
Indianapolis, Indiana, as described below in "3. ISSUANCE OF SHARES OF COMMON
STOCK FOR THE ACQUISITION OF THE KEYSTONE OFFICE BUILDINGS".
Additionally, the Company anticipates that in the future it will consider a
number of possible financing and acquisition transactions that may involve the
issuance of additional equity, debt or convertible securities. If the proposed
increase in authorized capital is approved, the Board would be able to authorize
the issuance of shares for these purposes without the necessity, and related
costs and delays, of either calling a special stockholders' meeting or of
waiting for the regularly scheduled annual meeting of stockholders in order to
increase the authorized capital. If in a particular instance stockholder
approval were required by law or otherwise deemed advisable by the Board, then
the matter would be referred to the stockholders for their approval regardless
of whether a sufficient number of shares previously had been authorized. For
example, the rules of the Nasdaq Stock Market require approval by the Company's
stockholders if the number of shares of common stock to be issued at any one
time exceeds 20 percent of the shares of common stock outstanding immediately
prior to that issuance. Neither the Delaware Code nor the Maryland Code have
similar provisions, and the stockholders of the Company are not entitled to
preemptive rights with respect to the issuance of any authorized but unissued
shares.
The proposed change in capital is not intended to have any anti-takeover
effect and is not part of any series of anti-takeover measures contained in any
debt instruments, the Delaware Articles or the Delaware Bylaws in effect on the
date of this Proxy Statement. However, stockholders should note that the
availability of additional authorized and unissued shares of Maryland Common
Stock could make any attempt to gain control of the Company or the Board more
difficult or time consuming and that the availability of additional authorized
and unissued shares might make it more difficult to remove current management.
Although the Board currently has no intention of doing so, shares of Maryland
Common Stock could be issued by the Board to dilute the percentage of Maryland
Common Stock owned by a significant stockholder and increase the cost of, or the
number of, voting shares necessary to acquire control of the Board or to meet
the voting requirements imposed by Maryland law with respect to a merger or
other business combination involving the Company. The Company is not aware of
any proposed attempt to take over the Company or of any attempt to acquire a
large block of the Company's Delaware Common Stock. The Company has no present
intention to use the increased authorized Common Stock for anti-takeover
purposes.
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<PAGE>
Creation Of Authorized Preferred Stock
The Delaware Articles do not currently authorize the issuance of any shares
of preferred stock. The Maryland Articles authorize the issuance of 5,000,000
shares of $.001 par value preferred stock (the "Maryland Preferred Stock").
The Maryland Preferred Stock carries such relative rights, preferences and
designations as may be determined by the Board in its sole discretion upon the
issuance of any shares of the Maryland Preferred Stock. The proposal to
authorize the class of Maryland Preferred Stock is intended to provide shares of
preferred stock for issuance from time to time as may be required for
financings, acquisitions or other purposes. The shares of Maryland Preferred
Stock could be issued from time to time by the Board in its sole discretion
without further approval or authorization by the stockholders, in one or more
series, each of which series could have any particular distinctive designations
as well as relative rights and preferences as determined by the Board. The
relative rights and preferences that may be determined by the Board in its
discretion from time to time, include but are not limited to the following:
o the rate of dividend and whether the dividends are to be cumulative
and the priority, if any, of dividend payments relative to other
series in the class;
o whether the shares of any such series may be redeemed, and if so, the
redemption price and the terms and conditions of redemption;
o the amount payable with respect to such series in the event of
voluntary or involuntary liquidation and the priority, if any, of each
series relative to other series in the class with respect to amounts
payable upon liquidation and sinking fund provision, if any, for the
redemption or purchase of the shares of that series; and
o the terms and conditions, if any, on which the shares of a series may
be converted into or exchanged for shares of any class, whether common
or preferred, or into shares of any series of the same class, and if
provision is made for conversion or exchange, the times, prices,
rates, adjustments and other terms.
The existence of authorized but unissued shares of preferred stock could
have anti-takeover effects because the Company could issue Maryland Preferred
Stock with special dividend or voting rights that could discourage potential
bidders.
Approval by the stockholders of the Reincorporation Proposal and the
accompanying authorization of the Maryland Preferred Stock will give the
Company's Board Of Directors the ability, without stockholder approval, to issue
shares of Maryland Preferred Stock with rights and preferences determined by the
Board of Directors in the future. As a result, the Company may issue shares of
Maryland Preferred Stock that have dividend, voting and other rights superior to
those of the Common Stock, or that convert into shares of Common Stock, without
the approval of the holders of Common Stock. This could result in the dilution
of the voting rights, ownership and liquidation value of current stockholders.
Certain Anti-Takeover Effects
The Delaware Articles currently contain provisions which may be viewed as
having anti-takeover effects. Stockholders of the Company do not have cumulative
voting rights in the election of directors, and the Delaware Articles provide
for a classified Board Of Directors. The Company currently has authorized but
unissued shares of its common stock that could also be issued in such a way as
to have anti-takeover effects.
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<PAGE>
The Maryland Articles and Maryland Bylaws also may be deemed to have
anti-takeover effects because the Maryland Articles (i) also do not allow for
cumulative voting by stockholders, (ii) also provide for a classified Board Of
Directors, (iii) provide for additional shares of authorized common stock and
creation of authorized preferred stock which may be issued by the Board without
further stockholder action, and (iv) provide for a 66 2/3 percent stockholder
vote to amend certain provisions of the Maryland Articles and Maryland Bylaws.
The Board currently has no intention of using the increase in authorized
common stock or the authorized Maryland Preferred Stock for anti-takeover
purposes or of proposing any other measures in the future which may be deemed to
have anti-takeover effects.
Dissenting Stockholders' Rights Of Appraisal
Pursuant to Section 253 of the Delaware Code, appraisal rights are not
available regarding mergers of two corporations if one of them owns at least 90
percent of the other's outstanding shares of each class of stock. Because the
Company owns 100 percent of all outstanding shares of AmeriVest Maryland, no
appraisal rights are available in connection with the Merger, the Merger
Agreement or the Reincorporation Proposal.
Required Vote; Board Recommendation
The affirmative vote of a majority of the outstanding shares of Common
Stock is required to approve reincorporation of the Company in Maryland,
including the provisions to increase authorized common stock and to authorize
preferred stock. The Board of Directors unanimously recommends that the
stockholders vote in favor of the Reincorporation Proposal.
3. ISSUANCE OF SHARES OF COMMON STOCK FOR THE
ACQUISITION OF THE KEYSTONE OFFICE BUILDINGS
The Board Of Directors has unanimously approved, and recommended that the
Company's stockholders approve, the issuance of shares of Common Stock to
purchase three office buildings in Indianapolis, Indiana. The following is a
summary of the proposed transaction.
Property To Be Acquired
In April 1999, the Company entered into a purchase and sale agreement (the
"Purchase Agreement") with Sheridan Realty Partners, L.P. ("Sheridan") to
purchase the Keystone Office Buildings in Indianapolis, Indiana (the "Keystone
Buildings"). The Keystone Buildings consist of three two-story multi-tenant
office buildings located at 3021, 3077 and 3091 East 98th Street at the
intersection of 98th Street and North Keystone Avenue (US 431) in north central
Indianapolis, Indiana. These buildings comprise approximately 95,836 total
rentable square feet on approximately 9.041 acres of land with 336 surface
parking spaces, plus a 1,596 square foot free-standing maintenance building. The
Keystone Buildings were constructed and completed from 1984 to 1986, and
Sheridan acquired the Keystone Buildings in 1996.
The Company does not have any plans for major capital improvements for the
Keystone Buildings and intends to hold the Keystone Buildings for income
purposes. The Keystone Buildings must compete with several mid-rise office
buildings in the area, but there is no dominant owner or building.
The occupancy rate for the Keystone Buildings at December 31, 1998 was 97%.
There is one tenant occupying 10% or more of the rentable space of the Keystone
Buildings. The principal businesses of this tenant are insurance and financial
services. For 1998, the average effective annual rent per square foot for the
Keystone Buildings was $14.16. The following is a schedule as of May 1, 1999 of
lease expirations for the Keystone Buildings for the next ten years:
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Percentage of
Number of Leases Total Area of Annual Revenue Gross Rents On
That Will Expire Expiring Leases of Expiring Leases Expiring Leases
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 (after May 1) 9 15,671 $220,374 16.4%
2000 10 22,157 $312,427 23.3%
2001 8 33,725 $428,207 35.9%
2002 6 15,716 $232,476 17.3%
2003 1 1,861 $30,707 2.3%
2004 1 4,274 $65,093 4.8%
2005 and after None 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
General Nature Of Business Conducted In The Keystone Office Buildings
The Keystone Buildings are leased by Sheridan to various business entities
for general office space purposes. After completing the purchase, the Company
intends to continue to lease the Keystone Buildings for general office space
purposes and to hold the Keystone Buildings for income from those leasing
activities.
Name And Address Of Seller
The name, address and telephone number of Sheridan, the seller of the
Keystone Buildings, is as follows:
Sheridan Realty Partners, L.P.
c/o Sheridan Realty Corp., General Partner
1800 Glenarm Place, Suite 500
Denver, Colorado 80202
Telephone (303) 297-1800
Summary Of Proposed Transaction
Purchase Price. The purchase price for the Keystone Buildings is
$7,944,000, which is payable through the assumption of approximately $5,279,000
of existing debt secured by the Keystone Buildings (the "Mortgage") and issuing
shares of the Company's common stock for the difference between the purchase
price and the amount owed pursuant to the Mortgage as of the closing date. The
common stock is to be issued at the rate of $4.75 per share, so that
approximately 561,000 shares would have to be issued if the Mortgage balance
were $5,279,000 on the closing date. Sheridan is required to immediately deliver
to the partners of Sheridan all shares issued as part of the purchase price. As
a result of the transfer of the shares to the partners of Sheridan, William T.
Atkins will own approximately 33,000 shares of Common Stock, and a company for
which he serves as a director serves as trustee of trusts that will own a total
of approximately 75,900 shares for the benefit of other persons. The Company
agreed to register the transfer of the shares issued as a portion of the
purchase price. However, the shares initially issued may not be transferred for
a period of one year after the purchase of the Keystone Buildings without the
consent of the Company. The Company is required to issue additional shares of
common stock to Sheridan if the Company's common stock is not trading at an
average price of $4.75 per share for the 15 trading days ending one year after
the closing of the purchase of the Property.
Terms Of Mortgage To Be Assumed. The approximately $5,279,000 principal
amount of the Mortgage being assumed by the Company is payable in monthly
installments of principal and interest of approximately $41,885, which is based
upon an amortization over the remaining 23 year term. Interest accrues at the
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rate of 8% per year. The estimated amount of the Mortgage to be assumed includes
$525,000 currently intended to be newly borrowed by Sheridan a short time prior
to the Company's purchase of the Keystone Buildings. The Mortgage holder,
Security Life Insurance Company of Colorado, Inc., has the right to require that
the loan be repaid in full on June 1, 2007 and every fifth anniversary of that
date. These dates are referred to in the Mortgage as "Call Dates". If the
Mortgage were paid according to its terms and the Mortgage holder required
payment on June 1, 2007, approximately $4,385,000 would be due on that date. If
not previously declared due and payable, the Mortgage would be fully paid
according to its terms on May 1, 2022.
The Mortgage may not be prepaid prior to May 1, 2000. In order to prepay
the Mortgage after that date, the Company would be required to pay a prepayment
premium in addition to the remaining balance of the Mortgage. The prepayment
premium is an amount that would allow the holder of the Mortgage to receive the
same yields that it would have received had the Mortgage been paid according to
its terms until the next Call Date or May 1, 2022, whichever is earlier, based
on investing the prepayment premium and the amount of the loan that was prepaid
in U.S. Treasury obligations or similar investments selected by the Mortgage
holder.
The Mortgage is nonrecourse against the Company. As a result, the Mortgage
holder will not proceed to collect amounts from the Company that exceed the
value of the Keystone Buildings unless the Mortgage holder becomes subject to
liabilities related to environmental problems or the Company engages in
fraudulent conduct. The loan documents require that the Company indemnify the
lender for certain potential liabilities related to the Property, including
environmental liabilities and liabilities related to fraudulent conduct.
Indemnification Of Mortgage Holder And Guarantors. The Mortgage holder
required that William T. Atkins, Jennifer Atkins, and Alexander Hewitt (the
"Guarantors") guarantee certain obligations regarding the Mortgage and that
certain Guarantors and Sheridan indemnify the Mortgage holder for certain
potential liabilities related to the Keystone Buildings, including environmental
liabilities that may arise. Pursuant to the Purchase Agreement, the Company
agreed to assume the obligations of the Guarantors and Sheridan pursuant to
these guarantees and indemnifications for liabilities arising after the
Company's purchase of the Keystone Buildings. William T. Atkins is the president
and a 16.5% owner of Sheridan Realty Corp., which is the general partner of
Sheridan. Alexander Hewitt is the vice president and 17.5% owner of Sheridan
Realty Corp. The Guarantors together will receive approximately 68,000 shares of
the Company's common stock as a result of the Purchase Agreement. See "1.
ELECTION OF CLASS 3 DIRECTOR--Certain Transactions With Management And Principal
Stockholders--Purchase Of Keystone Office Buildings".
Contingencies. The purchase of the Keystone Buildings is contingent upon
the occurrence of the following:
o The approval by the Mortgage holder of the Company's assumption of the
Mortgage loan.
o The Company's satisfaction with its review of the Keystone Buildings
and its operations, including the leases for the Keystone Buildings,
the Seller's financial records concerning the Keystone Buildings, and
other matters.
o Receipt by the Company of the stockholders' approval to the issuance
of the shares for the purchase of the Keystone Buildings.
o Receipt by Sheridan of the approval of its limited partners to the
sale of the Keystone Buildings.
Closing. The purchase of the Property is scheduled to close upon the later
to occur of five days after the Company obtains the stockholder approval sought
in this Proxy Statement and receipt of the approval of the Mortgage holder to
the Company's assumption of the mortgage loan, whichever occurs later. If these
items do not occur and the closing is not held on or before August 31, 1999, the
Purchase Agreement is terminated.
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<PAGE>
Appointment Of Directors. As required by the terms of the Purchase
Agreement, the Company will appoint two designees of Sheridan to serve as
directors of the Company. Sheridan has designated William T. Atkins and Charles
K. Knight to be the two directors. Because Messrs. Atkins and Knight will not
have been elected by the stockholders, the Delaware Articles provide that their
terms will expire at the next annual meeting of stockholders. At that meeting,
assuming that the Company's purchase of the Keystone Buildings has been
completed at that time, the stockholders will consider and vote on the election
of Messrs. Atkins and Knight, or two other designees of Sheridan, to the full
remaining terms of Class 3 and Class 2 directors, respectively. See "1. ELECTION
OF CLASS 3 DIRECTOR".
Management Agreement. The Company agreed to hire Sheridan Development, LLC,
a Colorado limited liability company, to manage the Keystone Buildings for a
one-year term following the closing. Sheridan Development will be responsible
for all aspects of the management and operation of the Keystone Buildings and
coordinating the leasing of the Keystone Buildings. The Company will pay a
management fee equal to 5% of the gross monthly rental income received from the
Keystone Buildings.
William T. Atkins is the co-manager, President and a 25.05% owner and
Charles K. Knight is a Vice President and 9.9% owner of Sheridan Development.
Mr. Atkins is the President and a 16.5% owner of Sheridan Realty Corp., which is
the general partner of Sheridan. Each of Mr. Atkins and Mr. Knight has been
designated by Sheridan to be appointed as a director of the Company following
the purchase of the Keystone Buildings.
Right Of First Refusal For Adjacent Property. The Purchase Agreement
provides that the Company shall have a first right of refusal to buy the vacant
parcel owned by Sheridan that is next to the Property if Sheridan decides to
sell that parcel in the future. The purchase price for that parcel would be the
amount of a bona fide offer received by Sheridan from a third party. The parcel
consists of approximately 2.55 acres and the Company believes that this parcel
would be suitable for construction of one additional office building.
Determination Of Purchase Price; Appraisal
The purchase price of the Keystone Buildings was determined by negotiations
between the Company and Sheridan. In evaluating the Keystone Buildings and
negotiating the purchase price, the Company considered the location and nature
of the Keystone Buildings, the age and quality of the buildings, local economic
conditions, and the flexibility of paying a portion of the purchase price in
shares of the Company's common stock and assuming the Mortgage as payment of the
remaining purchase price. In addition, the Company has obtained an appraisal of
$8.3 million for the Keystone Buildings from Joseph J. Blake And Associates,
Inc., a professional appraiser practicing in the Chicago and Indianapolis areas.
Reasons For Purchasing The Keystone Buildings
The Company determined to purchase the Keystone Buildings because the
buildings have a history of solid performance and fit the Company's profile of
acquiring small to medium sized office buildings. The Company also concluded
that the ability of the Company to purchase the Keystone Properties utilizing
stock and the assumption of debt, and without having to pay cash as part of the
purchase price, was beneficial to the Company and its stockholders. See also,
"--Determination Of Purchase Price; Appraisal" above.
Accounting Treatment Of Purchase Of Keystone Buildings
The purchase of the Keystone Buildings will be treated by the Company as a
purchase for accounting purposes. As a result, the purchase price and expenses
incurred by the Company in connection with the purchase of the Keystone
Buildings that relate to the buildings themselves will be depreciated on a
straight-line basis over a term of 40 years.
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<PAGE>
Federal Income Tax Consequences of Purchase of Keystone Buildings
The purchase of the Keystone Buildings will not result in a taxable event
for the Company under federal income tax laws.
Real Estate Taxes
For 1998, the real estate taxes for the Keystone Buildings were $116,911,
which is equal to 6.99% of the assessed value of the Keystone Buildings as
determined by the Hamilton County, Indiana Assessor.
No Federal Or State Regulatory Requirements
The Company is not aware of any federal or state regulatory requirements
that must be met in order to acquire the Keystone Buildings, other than
compliance with the securities laws with respect to the solicitation of proxies
and the issuance of the shares for a portion of the purchase price.
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<PAGE>
Keystone Buildings Financial Statements
The following historical financial statements of the Keystone Buildings
were prepared by Sheridan and provided to the Company for this proxy statement.
KEYSTONE OFFICE PARK
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
26
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Management of
Keystone Office Park:
We have audited the statement of revenue and certain expenses of Keystone Office
Park for the year ended December 31, 1998. This financial statement is the
responsibility of the Property's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The statement of revenue and certain expenses was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and is not intended to be a complete presentation of the Property's
revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of Keystone Office Park
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Denver, Colorado,
February 25, 1999.
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<PAGE>
KEYSTONE OFFICE PARK
--------------------
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998
1998
----
REVENUE:
Rental revenue (Note 2) $1,440,937
Other revenue 3,827
----------
Total revenue 1,444,764
----------
CERTAIN EXPENSES:
Repairs and maintenance 215,745
Utilities 127,466
Property taxes 119,774
Property management fees 71,942
Operating services 44,525
Insurance 16,663
----------
Total certain expenses 596,115
----------
EXCESS REVENUE OVER CERTAIN EXPENSES $ 848,649
==========
Theaccompanying notes are an integral
part of this financial statement.
28
<PAGE>
KEYSTONE OFFICE PARK
--------------------
NOTES TO THE STATEMENT OF REVENUE
AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998
(1) BASIS OF PRESENTATION
- -------------------------
The statement of revenue and certain expenses reflects the operations of
Keystone Office Park (the "Property"), located in Indianapolis, Indiana.
The Property is expected to be acquired by AmeriVest Properties, Inc. (the
"Company") from Sheridan Realty Partners, L.P. ("Sheridan") in July 1999. The
Property has an aggregate net rentable area of approximately 95,900 square feet
(97% leased as of December 31, 1998). This statement of revenue and certain
expenses is prepared pursuant to the rules and regulations of the Securities and
Exchange Commission.
The accounting records of the Property are maintained on the accrual basis. The
accompanying financial statements exclude certain expenses such as interest,
depreciation and amortization, professional fees, and other costs not directly
related to the future operations of the Property.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts revenue and expenses during the reporting period.
The ultimate results could differ from those estimates.
(2) OPERATING LEASES
- --------------------
Rental revenue presented for the year ended December 31, 1998, is recorded in
accordance with generally accepted accounting principles.
29
<PAGE>
The Property is leased to tenants under operating leases with expiration dates
extending to the year 2003. Future minimum rentals under noncancellable
operating leases, excluding tenant reimbursements of operating expenses as of
December 31, 1998, are as follows:
1999 $1,269,789
2000 974,534
2001 602,438
2002 170,116
2003 88,259
----------
$3,105,136
==========
One tenant, in the insurance industry, who occupies 21% of the total rentable
square feet of Keystone, was responsible for approximately 25% of the rental
revenue for the year ended December 31, 1998, and is responsible for
approximately 23% of the total future minimum rentals in the above schedule.
Leases also include provisions requiring tenants to reimburse Sheridan for
operating expenses up to stipulated amounts.
(3) RELATED PARTY TRANSACTIONS
- ------------------------------
During 1998, the Property engaged a related party to perform activities related
to property management and certain repairs and maintenance. Amounts totaling
$119,456 were incurred by this related party and have been expensed in the
statement of revenue and certain expenses.
30
<PAGE>
Pro Forma Financial Information
The following unaudited pro forma consolidated balance sheet presents the
historical financial information of the Company and its subsidiaries as of
December 31, 1998, as adjusted for the proposed acquisition of the Keystone
Buildings by the Company pursuant to the Purchase Agreement.
The following unaudited pro forma consolidated statement of operations for
the year ended December 31, 1998 combines the historical financial information
of the Company with the historical real estate operating revenues and expenses
of the Keystone Buildings as if the acquisition had occurred as of January 1,
1998.
The unaudited pro forma consolidated financial statements have been
prepared by the Company's management based upon the historical financial
statements of the Company and the Keystone Buildings. These unaudited pro forma
statements may not be indicative of the results that actually would have
occurred if the combination had been in effect on the date indicated or that may
be obtained in the future. The unaudited pro forma financial statements should
be read in conjunction with the historical financial statements of the Company
for the year ended December 31, 1998 included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998 that are incorporated by
reference into this Proxy Statement and in conjunction with the historical
Statement of Revenues and Certain Expenses of the Keystone Buildings for the
year ended December 31, 1998 that is included under "--Keystone Buildings
Financial Statement" below.
31
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma consolidated balance sheet presents the historical
financial information of AmeriVest Properties Inc. and Subsidiaries (AmeriVest)
as of December 31, 1998, as adjusted for the proposed acquisition of the
Keystone Office Buildings by AmeriVest, pursuant to a purchase and sale
agreement entered into April 26, 1999.
The accompanying pro forma consolidated statement of operations for the year
ended December 31, 1998 combines the historical financial information of
AmeriVest with the historical real estate operating revenues and expenses of the
Keystone Office Buildings as if the acquisition had occurred at the beginning of
the period presented.
The pro forma consolidated financial statements have been prepared by AmeriVest
management based upon the historical financial statements of AmeriVest and the
Keystone Office Buildings. These pro forma statements may not be indicative of
the results that actually would have occurred if the combination had been in
effect on the date indicated or which may be obtained in the future. The pro
forma financial statements should be read in conjunction with the historical
financial statements of AmeriVest for the year ended December 31, 1998 included
in AmeriVest's Form 10-KSB filed for the year ended December 31, 1998.
F - 1
<PAGE>
<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(Unaudited)
AmeriVest Pro Forma Pro Forma
(Historical) Adjustments Combined
------------ ----------- --------
<S> <C> <C> <C>
Assets
Investment in Real Estate
Land $ 4,745,754 $ 1,828,000 (a) $ 6,573,754
Building and improvements 22,363,656 6,156,000 (a) 28,519,656
Furniture, fixtures and equipment 284,993 -- 284,993
Tenant improvements 541,058 -- 541,058
Less accumulated depreciation and amortization
(5,837,264) -- (5,837,264)
------------ ------------ ------------
Net Investment in Real Estate 22,098,197 7,984,000 30,082,197
Cash and cash equivalents 441,316 (40,000) (d) 474,316
-- 73,000 (e) --
Tenant accounts receivable 48,615 -- 48,615
Deferred financing costs, net 624,917 -- 624,917
Prepaid expenses and other assets 501,889 -- 501,889
------------ ------------ ------------
Total Assets $ 23,714,934 $ 8,017,000 $ 31,731,934
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage loans and notes payable $ 18,861,599 $ 5,279,000 (b) $ 24,140,599
Accounts payable and accrued expenses
121,327 73,000 (e) 194,327
Accrued interest 108,810 -- 108,810
Accrued real estate taxes 558,745 -- 558,745
Prepaid rents and security deposits 214,912 -- 214,912
Dividends payable 199,052 -- 199,052
------------ ------------ ------------
Total Liabilities 20,064,445 5,352,000 25,416,445
------------ ------------ ------------
STOCKHOLDERS' EQUITY
Common stock 1,659 561 (c) 2,220
Capital in excess of par value 5,607,725 2,664,439 (c) 8,272,164
Distributions in excess of accumulated earnings
(1,958,895) -- (1,958,895)
------------ ------------ ------------
Total Stockholders' Equity 3,650,489 2,665,000 6,315,489
------------ ------------ ------------
$ 23,714,934 $ 8,017,000 $ 31,731,934
============ ============ ============
See notes to the pro forma consolidated financial statements.
F - 2
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(Unaudited)
Historical
Keystone Office Pro Forma Pro Forma
AmeriVest Buildings Adjustments Combined
--------- --------- ----------- --------
REAL ESTATE OPERATING REVENUE
Rental Revenue
Commercial properties $ 2,365,629 $ 1,444,764 $ -- $ 3,810,393
Storage properties 1,450,540 -- -- 1,450,540
----------- ----------- ----------- -----------
3,816,169 1,444,764 -- 5,260,933
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 955,796 404,399 -- 1,360,195
Real estate taxes 432,863 119,774 -- 552,637
Management fees 181,649 71,942 -- 253,591
General and administrative 458,223 -- -- 458,223
Interest 1,036,387 -- 426,500 (g) 1,462,887
Expenses associated with debt refinancing 321,178 -- -- 321,178
Depreciation and amortization 751,592 -- 155,000 (f) 906,592
----------- ----------- ----------- -----------
4,137,688 596,115 581,500 5,315,303
----------- ----------- ----------- -----------
OTHER INCOME
Interest income 4,113 -- -- 4,113
----------- ----------- ----------- -----------
NET (LOSS) INCOME $ (317,406) $ 848,649 $ (581,500) $ (50,257)
=========== =========== =========== ===========
NET (LOSS) PER COMMON SHARE -
Basic and Diluted $ (.02)
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING -
Basic and Diluted
2,099,456
===========
See notes to the pro forma consolidated financial statements.
F - 3
</TABLE>
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements
are presented to reflect the proposed acquisition of the Keystone
Office Buildings by AmeriVest.
The accompanying pro forma consolidated balance sheet as of December
31, 1998 has been prepared to give effect to the proposed acquisition
of the Keystone Office Buildings as if the acquisition occurred on
December 31, 1998. The accompanying pro forma consolidated statement
of operations combine the historical operations of AmeriVest for the
year ended December 31, 1998 with the historical real estate operating
revenues and expenses of the Keystone Office Buildings for the year
ended December 31, 1998, and is presented as if the proposed
acquisition had occurred at the beginning of 1998.
NOTE 2 - PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated financial statements reflect the
following pro forma adjustments:
a) Purchase price of Keystone Office Buildings.
b) Increase in mortgage loan related to debt assumed by AmeriVest
for acquisition of Keystone Office Buildings, interest at 8%.
c) Issuance of 561,053 shares of common stock, valued at $4.75 per
share, as partial consideration for acquisition of Keystone
Office Buildings.
d) Cash paid for additional costs of acquisition.
e) Capital improvement reserve.
f) Depreciation expense on Keystone Office Buildings to be
recognized by AmeriVest.
g) Interest expense to be recognized by AmeriVest related to
mortgage debt assumed in conjunction with the acquisition of the
Keystone Office Buildings.
NOTES 3 - (LOSS) PER SHARE
Pro forma (loss) per common share for the year ended December 31, 1998
is computed based on the weighted average number of common shares
outstanding during the year, assuming that the 561,053 shares issued
in conjunction with the acquisition of the Keystone Office Buildings
were issued at the beginning of the period.
F - 4
<PAGE>
Reasons For Requesting Stockholder Approval
Because the Company currently has 1,658,770 shares of common stock
outstanding and because the estimated 561,000 shares anticipated to be issued as
part of the purchase price for the Property exceeds 20% of the outstanding
shares, the Company is required by the rules of the Nasdaq Stock Market to
obtain stockholder approval of the issuance of the shares. If stockholder
approval is not received, the Purchase Agreement will terminate.
Required Vote; Board Recommendation
The affirmative vote of a majority of the shares represented at the meeting
is necessary to approve the issuance of the shares of common stock in connection
with the acquisition of the Keystone Properties. The board unanimously
recommends that the stockholders vote in favor of this proposal.
4. PROPOSAL TO RATIFY THE SELECTION OF
WHEELER WASOFF, P.C. AS AUDITORS
The Board Of Directors recommends that the stockholders of the Company vote
in favor of ratifying the selection of the certified public accounting firm of
Wheeler Wasoff, P.C. of Denver, Colorado as the auditors who will continue to
audit financial statements, review tax returns, and perform other accounting and
consulting services for the Company for the fiscal year ending December 31, 1999
or until the Board Of Directors, in its discretion, replaces them. Wheeler
Wasoff, P.C. has audited the Company's financial statements since (and
including) the fiscal year ended December 31, 1995.
An affirmative vote of the majority of shares represented at the meeting is
necessary to ratify the selection of auditors. There is no legal requirement for
submitting this proposal to the stockholders; however, the Board Of Directors
believes that it is of sufficient importance to seek ratification. Whether the
proposal is approved or defeated, the Board may reconsider its selection of
Wheeler Wasoff, P.C. It is expected that one or more representatives of Wheeler
Wasoff, P.C. will be present at the Annual Meeting and will be given an
opportunity to make a statement if they desire to do so and to respond to
appropriate questions from stockholders.
The Board Of Directors unanimously recommends that the stockholders vote
for approval of Wheeler Wasoff, P.C. as the Company's certified independent
accountants.
OTHER BUSINESS
The Board Of Directors of the Company is not aware of any other matters
that are to be presented at the Annual Meeting, and it has not been advised that
any other person will present any other matters for consideration at the
meeting. Nevertheless, if other matters should properly come before the Annual
Meeting, the stockholders present, or the persons, if any, authorized by a valid
proxy to vote on their behalf, shall vote on such matters in accordance with
their judgment.
VOTING PROCEDURES
Votes at the Annual Meeting Of Stockholders are counted by Inspectors Of
Election appointed by the Chairman of the meeting. If a quorum is present, an
affirmative vote of a majority of the votes entitled to be cast by those present
in person or by proxy is required for the approval of items submitted to
stockholders for their consideration, including the election of directors, the
issuance of the shares of common stock in connection with the purchase of the
Keystone Buildings, and the ratification of the selection of the independent
auditors, unless a different number of votes is required by statute or the
Company's Certificate Of Incorporation. The affirmative vote of a majority of
outstanding shares is required to approve authorization of the Preferred Stock.
32
<PAGE>
Abstentions by those present at the meeting are tabulated separately from
affirmative and negative votes and do not constitute affirmative votes. If a
stockholder returns his proxy card and withholds authority to vote for any or
all of the nominees, the votes represented by the proxy card will be deemed to
be present at the meeting for purposes of determining the presence of a quorum
but will not be counted as affirmative votes. Shares in the name of brokers that
are not voted are treated as not present.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS;
DISCRETIONARY AUTHORITY TO VOTE PROXIES
In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy relating to the Company's next Annual Meeting Of Stockholders
following the end of the Company's 1999 fiscal year, proposals by individual
stockholders must be received by the Company no later than December 3, 1999.
Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, as
amended, the Company hereby notifies its stockholders that the proxies solicited
by the Company in connection with the Company's annual meeting to be held in
2000 will confer discretionary authority to vote on matters raised by
stockholders for which the Company did not have notice on or before February 21,
2000. In addition, if the Company receives notice on or before February 21, 2000
of a matter that a stockholder intends to raise at the annual meeting of
stockholders to be held in 2000, the proxies solicited by the Company may
exercise discretion to vote on each such matter if the Company includes in its
proxy statement advice on the nature of the matter raised and how the Company
intends to exercise its discretion to vote on each such matter. However, the
Company may not exercise discretionary voting authority on a particular proposal
if the proponent of that proposal provides the Company with a written statement,
on or before February 21, 2000, that the proponent intends to deliver a proxy
statement and form of proxy to holders of at least the percentage of the
Company's voting shares required under applicable law to carry the proposal (the
"Required Percentage"), if the proponent includes the same statement in its
proxy materials filed under Rule 14a-6, and if the proponent, immediately after
soliciting the holders of the Required Percentage, provides the Company with a
statement from any solicitor or any other person with knowledge that the
necessary steps have been taken to deliver a proxy statement and form of proxy
to the holders of the Required Percentage. Generally, the Required Percentage
would be a majority of the Company's outstanding Common Stock or a majority of
the shares of Common Stock represented at the meeting, depending on the nature
of the proposal.
AVAILABILITY OF REPORTS ON FORM 10-KSB
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 TO ANY
OF THE COMPANY'S STOCKHOLDERS OF RECORD, OR TO ANY STOCKHOLDER WHO OWNS THE
COMPANY'S COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS NOMINEE, AT THE
CLOSE OF BUSINESS ON MAY 21, 1999. ANY REQUEST FOR A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB SHOULD BE MAILED TO THE SECRETARY, AMERIVEST
PROPERTIES INC., 3333 SOUTH WADSWORTH BLVD., SUITE D-216, LAKEWOOD, COLORADO
80227, (303) 980-1880.
33
<PAGE>
INCORPORATION BY REFERENCE
The Company incorporates by reference into this proxy statement the
following information included in reports filed by the Company with the
Securities And Exchange Commission:
1. Items 6 (Management's Discussion And Analysis Of Financial Condition And
Results Of Operations) and 7 (Financial Statements) included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1998.
A copy of that report is being mailed to each shareholder with this proxy
statement.
This Notice and Proxy Statement are sent by order of the Board Of
Directors.
Dated: May 27, 1999 James F. Etter
President
* * * * *
34
<PAGE>
Exhibit A
Agreement And Plan Of Merger Of
AmeriVest Properties Inc.
(A Delaware Corporation)
And AMVP Inc.
(A Maryland Corporation)
This Agreement And Plan Of Merger is by and between AMVP Inc., a Maryland
corporation ("AMVP"), and AmeriVest Properties Inc., a Delaware corporation
("AmeriVest"). AMVP and AmeriVest are sometimes referred to individually as a
"Constituent Corporation," and they are sometimes referred to jointly as the
"Constituent Corporations."
Recitals
--------
A. AMVP was formed as a wholly owned subsidiary of AmeriVest pursuant to a
proposal for the reorganization of AmeriVest approved by the board of directors
and stockholders of AmeriVest.
B. The reorganization of AmeriVest is to be effected by merging AmeriVest
with and into AMVP and causing the shareholders of AmeriVest to become the
stockholders of AMVP, with each outstanding share of common stock of AmeriVest
being deemed simultaneously at the time of the merger to be one share of common
stock of AMVP.
C. The General Corporation Law of the State of Maryland (the "Maryland
Code") and the General Corporation Law of the State of Delaware (the "Delaware
Code") permit the reorganization of AmeriVest into AMVP provided that AmeriVest
and AMVP each adopts a plan of merger which sets forth the terms and conditions
of the proposed merger, the mode of carrying the merger into effect, the manner
and basis of converting the shares of each corporation into shares or other
securities or obligations of the surviving corporation and other applicable
provisions.
Agreement
---------
In consideration of the premises and the following agreements, AMVP and
AmeriVest agree as follows:
1. Name Of Constituent Corporations And Surviving Corporation. The names of
the corporations proposing to merge are AMVP Inc., a Maryland corporation, and
AmeriVest Properties Inc., a Delaware corporation, and the name of the
corporation which shall be the surviving corporation is AMVP Inc., a Maryland
corporation.
2. Terms And Conditions Of The Merger. AmeriVest shall merge with and into
its wholly owned subsidiary, AMVP, effective as of the date of the later to
occur of the filing of a Certificate Of Merger, in the form attached to and made
a part of this Agreement as Exhibit A, with the Secretary of State of Delaware
in accordance with the Delaware Code and of the date of filing Articles Of
Merger, in the form attached to and made a part of this Agreement as Exhibit B,
with the Secretary of State of Maryland in accordance with the Maryland Code.
3. Manner And Basis Of Converting Shares. AMVP has authority to issue
15,000,000 shares of common stock having a par value of $.001 and 5,000,000
shares of preferred stock having a par value of $.001. AMVP has 100 shares of
<PAGE>
common stock issued and outstanding, all of which are owned by AmeriVest. AMVP
does not have any preferred stock issued and outstanding. AmeriVest has
authority to issue 10,000,000 shares of common stock having a par value of
$.001, 1,658,770 shares of which are outstanding. Upon the merger becoming
effective, (a) each outstanding share of common stock of AmeriVest shall
immediately be deemed to be one share of common stock of AMVP without an
exchange of certificates, and (b) the 100 shares of common stock of AMVP owned
by AmeriVest, which shall then be owned by AMVP by virtue of the merger, shall
be retired and resume the status of authorized and unissued shares and any
capital represented by the shares shall be eliminated.
4. Articles Of Incorporation And Bylaws. The Articles Of Incorporation of
AMVP in effect on the date of the merger shall be amended as of that date to
change the name of "AMVP Inc." to "AmeriVest Properties Inc." and, as amended,
shall be the Articles Of Incorporation of the surviving corporation until
further amended in accordance with the Maryland Code. The Bylaws of AMVP in
effect on the date of the merger shall be the Bylaws of the surviving
corporation until amended in accordance with the Maryland Code.
5. Directors. The directors of AMVP at the time of the merger shall be the
directors of the surviving corporation until their successors are elected and
qualified.
6. Effect Of Merger. Upon the merger becoming effective, AmeriVest shall
merge with and into AMVP, which shall be the surviving corporation, and
AmeriVest shall cease to exist. AMVP shall possess all the rights, privileges,
powers and franchises of a public as well as of a private nature, and shall be
subject to all the restrictions, disabilities and duties of each Constituent
Corporation, and all the rights, privileges, powers and franchises of each
Constituent Corporation and all property, real, personal and mixed, and all
debts due to either of the Constituent Corporations on whatever account, for
stock subscriptions as well as all other things in action or belonging to each
Constituent Corporation shall be vested in AMVP; and all property, rights,
privileges, powers and franchises, and all and every other interest shall be
thereafter the property of AMVP as effectually as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise, in
either of the Constituent Corporations, shall not revert or be in any way
impaired; and all rights of creditors and all liens upon any property of either
of the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the respective Constituent Corporations shall attach
to AMVP and may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
7. Obligations Of The Constituent Corporations. Each of the Constituent
Corporations shall take or cause to be taken all actions and do or cause to be
done all things necessary, proper or advisable under the laws of the states of
Delaware and Maryland to consummate and effect the merger.
8. Approval By Holder Of Common Stock. This agreement has been approved by
the sole stockholder of AMVP in the manner provided by the laws of the
jurisdiction under which AMVP was organized and exists.
9. Termination; Amendment. This agreement may be abandoned by either AMVP
or AmeriVest by appropriate resolution of the Board Of Directors of either
Constituent Corporation at any time prior to the merger becoming effective and
may be amended in matters of form or supplemented by additional agreements,
articles or certificates, as may be determined in the judgment of the Boards of
Directors of the Constituent Corporations to be necessary, desirable, or
2
<PAGE>
expedient to clarify the intentions of the Constituent Corporation or to effect
or facilitate the filing, recording or official approval of this Agreement And
Plan Of Merger in accordance with its purpose and intent.
10. Incorporation Documents. The Certificate Of Incorporation of AmeriVest
and the Articles Of Incorporation of AMVP are attached hereto as Exhibits C and
D, respectively, and incorporated and made a part of this Agreement And Plan Of
Merger.
IN WITNESS WHEREOF this Agreement And Plan Of Merger has been executed and
attested to by the persons indicated below to be effective on ______, 1999.
AMVP INC., a Maryland Corporation
Date: By:
----------------------- --------------------------------
James F. Etter, President
ATTEST:
- ---------------------------
Robert J. McFann, Secretary
AMERIVEST PROPERTIES INC.,
a Delaware Corporation
Date: By:
--------------------- ---------------------------------
James F. Etter, President
ATTEST:
- --------------------------
Robert J. McFann, Secretary
STATE OF COLORADO )
) ss.
COUNTY OF _____________ )
On this _____ day of ____________, 1999, before me personally appeared
James F. Etter, President of AmeriVest Properties Inc., who, being duly sworn by
me, acknowledged that he executed the foregoing instrument in the name of said
entity, that he had the authority to execute same, and that he executed the same
as the act and deed of said entity for the uses and purposes therein stated.
[SEAL]
My commission expires:
------------------------------- ----------------------------
Notary Public
3
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF _____________ )
On this _____ day of ____________, 1999, before me personally appeared
James F. Etter, President of AMVP Inc., who, being duly sworn by me,
acknowledged that he executed the foregoing instrument in the name of said
entity, that he had the authority to execute same, and that he executed the same
as the act and deed of said entity for the uses and purposes therein stated.
[SEAL]
My commission expires:
---------------------------- ----------------------------
Notary Public
4
<PAGE>
Exhibit B
ARTICLES OF INCORPORATION
OF
AMVP INC.
The undersigned, being at least eighteen years of age, hereby establishes a
corporation under the general laws of the State of Maryland and adopts the
following Articles Of Incorporation:
FIRST. The name of the corporation is AMVP Inc.
SECOND. The street address of the initial registered agent and of the
principal office of the corporation in Maryland is 11 East Chase Street,
Baltimore, Maryland 21202. The name of the initial registered agent of the
corporation at that address is CSC - Lawyers Incorporating Service Company. The
street address of the corporate offices is 3333 South Wadsworth Blvd., Suite
B-216, Lakewood, Colorado 80227.
THIRD. (a) The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Maryland (the "Maryland Code").
(b) In furtherance of the foregoing purposes, the corporation shall
have and may exercise all of the rights, powers and privileges granted by the
Maryland Code. In addition, it may do everything necessary, suitable and proper
for the accomplishment of any of its corporate purposes.
FOURTH. The corporation is authorized to issue 15,000,000 shares of common
stock, $.001 par value, and 5,000,000 shares of preferred stock, $.001 par
value; the aggregate par value of both of which is $20,000.
The following is a description of each class of capital stock of the
corporation, including any preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption:
1. Common Stock. Subject to the rights of holders of any series of
preferred stock established pursuant to Section 2 of this ARTICLE FOURTH, each
holder of common stock shall have one vote for each share of common stock
standing in his or her name on the books of the corporation and entitled to
vote, except that in the election of directors he or she shall have the right to
vote such number of shares for as many persons as there are directors to be
elected. Cumulative voting shall not be allowed in the election of directors or
for any other purpose. No stockholder of the corporation shall have any
preemptive or similar right to acquire any additional unissued or treasury
shares of stock or other securities of any class, or rights, warrants or options
to purchase stock or scrip, or securities of any kind convertible into stock or
carrying stock purchase warrants or privileges.
2. Preferred Stock. The Board of Directors shall have the power from time
to time to classify or reclassify, in one or more series, any unissued shares of
preferred stock by setting or changing the number of shares constituting a
series and by setting or changing the designation, preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, or terms or conditions of redemption of the
preferred stock.
1
<PAGE>
FIFTH. The corporation is to have perpetual existence.
SIXTH. The name and address of the undersigned incorporator are:
Name Address
---- -------
Alan L. Talesnick Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, Colorado 80264
SEVENTH. Elections of directors need not be by written ballot unless the
bylaws of the corporation so provide.
EIGHTH. The Board Of Directors of the corporation is expressly authorized
to adopt, amend, or repeal the bylaws of the corporation.
NINTH. The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and the same are
in furtherance of and not in limitation of the powers conferred by law:
No contract or other transaction of the corporation with any
other persons, firm or corporation in which this corporation is
interested, shall be affected or invalidated by the fact that any one
or more of the directors or officers of this corporation, individually
or jointly with others, may be a party to or may be interested in any
such contract or transaction so long as the contract or other
transaction is approved by the Board Of Directors in accordance with
the Maryland Code. Each person who may become a director or officer of
the corporation is hereby relieved from any liability that might
otherwise arise by reason of his contracting with the corporation for
the benefit of himself or any firm or corporation in which he may be in
any way interested.
TENTH. The personal liability of each director and officer of the
corporation shall be eliminated and limited to the full extent permitted by the
laws of the State of Maryland, including without limitation as permitted by the
provisions of Section 2-405.2 of the Maryland Code and any successor provision,
as amended from time to time. No amendment of these Articles of Incorporation or
repeal of any of their provisions shall limit or eliminate the benefits provided
to directors under this provision with respect to any act or omission that
occurred prior to that amendment or repeal.
ELEVENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in these articles of incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
TWELFTH. Directors.
(a) Number. The number of directors of the Corporation shall be fixed and
may be altered from time to time as provided in the Bylaws of the Corporation,
but in no event shall the number of directors exceed nine directors. If the
number of directors is decreased by resolution of the Board Of Directors
pursuant to the Bylaws, in no case shall the decrease shorten the term of any
incumbent director.
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(b) Classification. The directors shall be divided as evenly as possible
into three classes, designated Class 1, Class 2, and Class 3. If the number of
directors is not evenly divisible by three, the remainder positions shall be
allocated first to Class 1 and then to Class 2. At the first election of
directors by stockholders following the enactment of this ARTICLE TWELFTH,
Section (b), Class 1 directors shall be elected for a term expiring at the next
subsequent annual meeting of stockholders, Class 2 directors for a term expiring
at the second subsequent annual meeting of stockholders, and Class 3 directors
for a term expiring at the third subsequent annual meeting of stockholders. At
each succeeding annual meeting of stockholders, successors to directors whose
terms expired at that annual meeting shall be of the same class as the directors
they succeed and shall be elected for three-year terms. The following four
directors shall constitute the initial board of directors of the corporation:
Name And Class Address
-------------- -------
James F. Etter, Class 1 3333 South Wadsworth Blvd., Suite D-216
Lakewood, Colorado 80227
John A. Labate, Class 1 3333 South Wadsworth Blvd., Suite D-216
Lakewood, Colorado 80227
Charles R. Hoffman, Class 2 3333 South Wadsworth Blvd., Suite D-216
Lakewood, Colorado 80227
Robert J. McFann, Class 3 3333 South Wadsworth Blvd., Suite D-216
Lakewood, Colorado 80227
(c) Terms; Vacancies. A director shall hold office until the annual meeting
for the year in which his or her term expires and until his or her successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement or removal from office. Any newly created directorship
resulting from an increase in the number of directors and any other vacancy on
the Board Of Directors, however caused, may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Any director elected by one or more directors to fill a newly created
directorship or other vacancy shall, without regard to the class in which the
vacancy occurred, hold office until the next succeeding annual meeting of
stockholders and until his or her successor shall have been elected and
qualified. The term of a director elected by stockholders to fill a newly
created directorship or other vacancy shall expire at the same time as the terms
of the other directors of the same class.
(d) Nominations. Advance notice of nominations for the election of
directors, other than nominations by the Board Of Directors or a committee
thereof, shall be given to the Corporation in the manner provided from time to
time in the Bylaws.
(e) Special Director. Notwithstanding the foregoing, whenever the holders
of any one or more classes or series of preferred stock issued by the
Corporation shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the provisions of these Articles Of Incorporation. Directors so
elected shall not be divided into classes and shall be elected by such holders
annually unless expressly provided otherwise by those provisions or resolutions,
and, during the prescribed terms of office of those directors, the Board Of
Directors shall consist of the number of directors equal to the number of those
directors plus the number of directors determined as provided in paragraph (a)
of this ARTICLE TWELFTH.
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(f) Amendments, Etc. Notwithstanding anything contained in these Articles
Of Incorporation to the contrary, the affirmative vote of the holders of at
least 66 2/3 percent of the outstanding shares of Common Stock, voting together
as a single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this ARTICLE TWELFTH.
THIRTEENTH. When, with respect to any actions to be taken by shareholders
of the corporation, the Maryland Code requires the vote or concurrence of the
holders of two-thirds of the outstanding shares, of the shares entitled to vote
thereon, or of any class or series, such action may be taken by the vote or
concurrence of the majority of such shares or class or series thereof.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation this ____ day of _______, 1999.
--------------------------------
Alan L. Talesnick, Incorporator
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
BEFORE ME the undersigned authority, personally appeared Alan L. Talesnick,
known to me to be the individual described in and who executed the foregoing
Articles Of Incorporation, and he acknowledged that he subscribed the said
instrument for the uses and purposes set forth therein. The subscriber is
personally known to me.
WITNESS my hand and official seal in the County and State last aforesaid
this ______ day of __________, 1999.
-------------------------------------------
Notary Public
My Commission Expires:
----------------
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Exhibit C
BYLAWS
OF
AMVP INC.
<PAGE>
BYLAWS
OF
AMVP INC.
ARTICLE I.
Offices
The registered office of the corporation shall be located at 11 East Chase
Street, Baltimore, Maryland 21202, or such other city and county as the board of
directors shall determine.
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.
Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders shall be
held at a time and date fixed by the board of directors for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. Notwithstanding the foregoing, the annual meeting shall be
held upon reasonable notice and not later than a reasonable period following
delivery of the corporation?s annual report to stockholders. If the election of
directors shall not be held at the annual meeting of the stockholders, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a special meeting of the stockholders as soon thereafter as conveniently may
be.
Section 2. Special Meetings. Special meetings of the stockholders, for any
purpose, unless otherwise prescribed by statute, may be called by the president,
by a majority of directors, or by a majority of Independent Directors. Special
meetings also shall be called by an officer of the corporation upon written
request of stockholders holding in the aggregate not less than 10 percent of the
outstanding shares of the common stock of the corporation entitled to vote at
such meeting. Upon receipt of a written request, either in person or by mail,
stating the purpose(s) of the meeting, the Sponsor shall provide all
stockholders within 10 days after receipt of said request, written notice,
either in person or by mail, of the meeting and the purpose of such meeting, to
be held on a date not less than 15 days nor more than 60 days after the
distribution of the notice, at a time and place specified in the request, or if
none is specified, at a time and place convenient to stockholders.
Section 3. Place Of Meeting. The person or persons authorized to call any
annual or special meeting may designate any place, either within or outside
Maryland, as the place for the meeting. A waiver of notice signed by all
stockholders entitled to vote at a meeting may designate any place, either
within or outside Maryland, as the place for such meeting. If no designation is
made, the place of meeting shall be the principal corporate offices of the
corporation.
Section 4. Fixing Date For Determination Of Stockholders Of Record. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to express
consent to corporate action in writing without a meeting, or entitled to receive
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payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for any other lawful action, the board of directors may fix, in
advance, a date as the record date for any such determination of stockholders,
which date shall not be more than 60 nor less than ten days before the date of
such meeting, nor more than 60 days prior to any other action. If no record date
is fixed then the record date shall be as follows: (a) for determining
stockholders entitled to notice of or to vote at the meeting of stockholders,
the close of business on the day next preceding the day on which the meeting is
held; (b) for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is necessary, the day on which the first written consent is expressed,
and (c) for determining stockholders for any other purpose, the close of
business on the day on which the board of directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
Section 5. Notice Of Meeting. Except as otherwise provided herein, written
notice stating the place, day and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten nor more than 60 days before the date of the
meeting, unless otherwise required by statute, either personally or by mail, to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock books of
the corporation, with postage thereon prepaid. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting.
Section 6. Organization. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In the
absence of said officers, any stockholder entitled to vote at that meeting, or
any proxy of any such stockholder, may call the meeting to order and a chairman
shall be elected by a majority of the stockholders entitled to vote at that
meeting. In the absence of the secretary or any assistant secretary of the
corporation, any person appointed by the chairman shall act as secretary of such
meetings.
Section 7. Agenda And Procedure. The board of directors shall have the
responsibility of establishing an agenda for each meeting of stockholders,
subject to the rights of stockholders to raise matters for consideration which
may otherwise properly be brought before the meeting although not included
within the agenda. The chairman shall be charged with the orderly conduct of all
meetings; provided however, that in the event of any difference in opinion with
respect to the proper cause of action which cannot be resolved by reference to
statute, or to the articles of incorporation or these bylaws, Robert?s Rules Of
Order (as last revised) shall govern the disposition of the matter.
Section 8. Voting Lists. The officer who has charge of the stock books of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of each stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
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Section 9. Quorum. One-third of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders for the transaction of business except as otherwise
provided by statute or by the certificate of incorporation. If fewer than
one-third of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to time in
accordance with Section 5 of this Article, until a quorum shall be present or
represented.
Section 10. Manner Of Acting. When a quorum is present at any meeting, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders,
unless a different vote is required by law or the certificate of incorporation,
in which case such express provision shall govern.
Section 11. Informal Action By Stockholders. Unless otherwise provided in
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the stockholders may be taken without a meeting, without prior
notice and without a vote, provided that a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. In the event that the action
which is consented to is such as would require the filing of a certificate with
the Secretary of State of Maryland under the General Corporation Law of the
State of Maryland if such action had been voted on by stockholders at a meeting
thereof, the certificate filed shall state, in lieu of any statement required
under law concerning any vote of stockholders, that written consent has been
given in accordance with the provision of law and that written notice has been
given as provided by law.
Section 12. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize any other person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date unless the proxy provides for a longer period.
Section 13. Voting Of Shares. Unless otherwise provided in the certificate
of incorporation and subject to the provisions of Section 4 of this Article,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder. In the election of directors, each record holder of
stock entitled to vote at such election shall have the right to vote the number
of shares owned by him for as many persons as there are directors to be elected,
and for whose election he has the right to vote. Cumulative voting shall not be
allowed.
Section 14. Voting Of Shares By Certain Holders. Persons holding stock in a
fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the corporation the pledgor has expressly empowered the
pledgee to vote thereon, in which case only the pledgee or his proxy may
represent such shares and vote thereon. If shares stand of record in the names
of two or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, tenants by the entirety or otherwise, or if two or
more persons have the same fiduciary relationship respecting the same shares,
unless the secretary of the corporation is given written notice to the contrary
and if furnished with a copy of the instrument or order appointing them or
creating the relationship wherein it is so provided, their acts with respect to
voting shall be as set forth in the General Corporation Law of the State of
Maryland.
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Section 15. Inspectors. The chairman of the meeting may at any time appoint
one or more inspectors to serve at a meeting of the stockholders. Such
inspector(s) shall decide upon the qualifications of voters, including the
validity of proxies, accept and count the votes for and against the questions
presented, report the results of such votes, and subscribe and deliver to the
secretary of the meeting a certificate stating the number of shares of stock
issued and outstanding and entitled to vote thereon and the number of shares
voted for and against the questions presented. The inspector(s) does not need to
be a stockholder of the corporation, and any director or officer of the
corporation may be an inspector on any question other than a vote for or against
his election to any position with the corporation or on any other question in
which he may be directly interested.
ARTICLE III.
Board Of Directors
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of its board of directors, except as
otherwise provided in the General Corporation Law of the State of Maryland or
the certificate of incorporation. The directors are deemed to be in a fiduciary
relationship with the corporation and the stockholders.
Section 2. Number, Tenure And Qualification. The number of directors of the
corporation shall be as determined by the board of directors and shall be not
less than three nor more than nine. A majority of the directors must be
Independent Directors. Directors shall be elected at each annual meeting of
stockholders, except as otherwise provided in Section 4 of this Article by a
vote of a majority of stockholders present in person or by proxy at a meeting at
which a quorum is present. Each director shall hold office for a term of one
year and until his successor shall have been elected and qualified or until the
earliest of his death, resignation or removal. A director can be reelected by
the stockholders. Directors need not be residents of Maryland or stockholders of
the corporation.
Section 3. Notice of Nominations. Nominations for the election of directors
may be made by the board of directors or a committee of the board of directors
or by any stockholder entitled to vote for the election of directors.
Nominations by the board of directors or a committee of the board of directors
may be made by oral or written notice delivered to the secretary of the
corporation by any officer or director on behalf of the board of directors or
committee at any time prior to or at any meeting of the stockholders at which
directors are to be elected. Each notice of nomination of directors by the board
of directors or a committee of the board of directors shall set forth the names
of the nominees. Nominations by stockholders shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
secretary of the corporation not less than 53 days nor more than 90 days prior
to any meeting of the stockholders at which directors are to be elected;
provided, however, that if less than 60 days' notice of the meeting is given to
stockholders, written notice of nominations of directors by stockholders shall
be delivered or mailed, as prescribed, to the secretary of the corporation not
later than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Nominations by stockholders for directors to
be elected by written consent of stockholders shall be made by notice in
writing, delivered or mailed by first class United States mail, postage prepaid,
to the secretary of the corporation not less than 60 days nor more than 90 days
prior to the first solicitation of any written consents of stockholders for the
election of those members. Each notice of nomination of directors by a
stockholder of the corporation shall set forth (a) the name, age, business
address and, if known, residence address of each nominee proposed in that
notice, (b) the principal occupation or employment of each such nominee for the
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five years preceding the date of the notice, (c) the number of shares of stock
of the corporation that are beneficially owned by each nominee, and (d) any
arrangement, affiliation, association, agreement or other relationship of the
nominee with any stockholder of the corporation. The chairman of any meeting of
stockholders of the corporation may, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the foregoing
procedure, and if the chairman should so determine, the chairman shall so
declare to the meeting and the defective nomination shall be disregarded.
Any amendment or repeal of any provision or all provisions of this Article
III, Section 3, or the adoption of any provision inconsistent with any provision
or all provisions of this Article III, Section 3, shall, in addition to any
other vote or approval required by law or by these bylaws or by the articles of
incorporation, require the affirmative vote of (a) at least 75 percent of all
the directors including at least two-thirds of the Independent Directors, or (b)
(i) at least 66 2/3 percent of the outstanding shares of each class of Voting
Stock, and (ii) at least a majority, not including shares owned by Interested
Persons, of the outstanding shares of each class of Voting Stock.
Section 4. Vacancies. Any director may resign at any time by giving written
notice to the corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. Any vacancy or
newly created directorship resulting from an increase in the authorized number
of directors may be filled by the affirmative vote of the majority of directors
then in office, although less than a quorum, or by a sole remaining director,
and a director so chosen shall hold office until the next annual election and
until his successor is duly elected and qualified, unless sooner displaced.
Independent Directors will nominate replacements for vacancies amongst the
Independent Directors. If at any time, by reason of death, resignation or other
cause, the corporation should have no directors in office, then an election of
directors may be held in the manner provided by law. When one or more directors
shall resign from the board, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have the
power to fill any vacancy or vacancies, with the vote thereon to take effect
when such resignation or resignations shall become effective, and each director
so chosen shall hold office until the next annual election and until his
successor is duly elected and has qualified.
Section 5. Regular Meetings. Unless otherwise approved by the board of
directors, a regular meeting of the board of directors shall be held without
other notice than this bylaw immediately after and at the same place as the
annual meeting of stockholders. The board of directors may provide by resolution
the time and place, either within or outside Maryland, for the holding of
additional regular meetings without other notice than such resolution.
Section 6. Special Meetings. Special meetings of the board of directors may
be called by or at the request of the president or any two directors. The person
or persons authorized to call special meetings of the board of directors may fix
any place, either within or outside Maryland, as the place for holding any
special meeting of the board of directors called by them.
Section 7. Notice. Notice of any special meeting shall be given at least 24
hours previous thereto by written notice delivered personally, or at least one
business day (and not less than 24 hours) previous thereto if sent by facsimile
to the business address of the director, or at least five days previous thereto
if mailed to a director at his business address, or by notice given at least two
days previous thereto by telegraph. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
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Section 8. Quorum. A majority of the number of directors then in office
shall constitute a quorum for the transaction of business at any meeting of the
board of directors, but if less than such majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present.
Section 9. Manner Of Acting. Except as may be otherwise specifically
provided by law or the certificate of incorporation, the vote of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the board of directors, except that a majority of the Independent Directors
is required to determine whether fees and expenses paid in connection with
operating as a REIT are reasonable in light of the performance of the
corporation; to determine investment policies, the fairness of an acquisition
price and borrowing policies; to establish special meetings of the stockholders;
and to establish distribution reinvestment plans. In addition, without the
concurrence of a majority of the then outstanding shares, the directors may not
(i) sell all or substantially all of the assets of the corporation other than in
the ordinary course of the corporation?s business or in connection with
liquidation and dissolution; (ii) cause the merger or other reorganization of
the corporation; or (iii) dissolve or liquidate the corporation, other than
before the initial investment in property.
Section 10. Removal. Unless otherwise restricted by law, any director or
the entire board of directors may be removed, for cause only, by the holders of
a majority of shares then entitled to vote at a meeting of stockholders.
Section 11. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, provided that the
majority of the committee members must be Independent Directors. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not they constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amend the certificate of incorporation, to
adopt an agreement of merger or consolidation, to recommend to the stockholders
the sale, lease or exchange of all or substantially all of the corporation?s
property and assets, to recommend to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or to amend the bylaws of the
corporation; and, unless the resolution expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 12. Compensation. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at such meeting of the board of directors and may be paid
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a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of any committee of the board may be allowed like compensation for attending
committee meetings.
Section 13. Action By Written Consent Of Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the board of directors or
any committee thereof may be taken without a meeting if all members of the board
or committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of the proceedings of the board or
committee.
Section 14. Meetings By Telephone. Unless otherwise restricted by the
certificate of incorporation or these bylaws, members of the board of directors,
or any committee designated by the board of directors, may participate in a
meeting of the board of directors, or any committee thereof, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting in such manner shall constitute presence in person at the meeting.
ARTICLE IV.
Officers And Agents
Section 1. General. The officers of the corporation shall be a president, a
secretary and a treasurer. The board of directors may appoint such other
officers, assistant officers, and agents, a chairman or vice-chairmen of the
board, assistant secretaries and assistant treasurers, as they may consider
necessary, who shall be chosen in such manner and hold their offices for such
terms and have such authority and duties as from time to time may be determined
by the board of directors. The salaries of all the officers of the corporation
shall be fixed by the board of directors. Any number of offices may be held by
the same person with the exception of the office of president and secretary
being held simultaneously by the same person, or as otherwise provided in the
certificate of incorporation or these bylaws.
Section 2. Election And Term Of Office. The officers of the corporation
shall be elected by the board of directors annually at the first meeting of the
board held after each annual meeting of the stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and qualified or until the earliest to
occur of his death, resignation or removal.
Section 3. Removal. Any officer or agent elected or appointed by the board
of directors may be removed at any time by the board whenever in its judgment
the best interests of the corporation will be served thereby.
Section 4. Vacancies. Any officer may resign at any time upon written
notice to the corporation. Such resignation shall take effect at the time stated
therein; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Any vacancy occurring
in any office by death, resignation, removal or otherwise shall be filled by the
board of directors for the unexpired portion of the term. If any officer shall
be absent or unable for any reason to perform his duties, the board of
directors, to the extent not otherwise inconsistent with these bylaws or law,
may direct that the duties of such officer during such absence or inability
shall be performed by such other officer or assistant officer as seems advisable
to the board.
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Section 5. Authority And Duties Of Officers. The officers of the
corporation shall have the authority and shall exercise the powers and perform
the duties specified below, and as may be otherwise specified by the board of
directors or by these bylaws, except that in any event each officer shall
exercise such powers and perform such duties as may be required by law, and in
cases where the duties of any officer or agent are not prescribed by these
bylaws or by the board of directors, such officer or agent shall follow the
orders and instructions of (a) the president, and if a chairman of the board is
elected, then (b) the chairman of the board.
(a) President. The president, subject to the direction and supervision
of the board of directors, shall have the following responsibilities: (i)
be the chief executive officer of the corporation and have general and
active control of its affairs, business and property and general
supervision of its officers, agents and employees; (ii) preside at all
meetings of the stockholders; (iii) see that all orders and resolutions of
the board of directors are carried into effect; and (iv) sign or
countersign all certificates, contracts and other instruments of the
corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other
officer or agent of the corporation. In addition, the president shall,
unless otherwise directed by the board of directors, attend in person or by
substitute appointed by them, or by written instruments appointing proxy or
proxies to represent the corporation, all meetings of the stockholders of
any corporation in which the corporation shall hold any stock and may, on
behalf of the corporation, in person or by substitute or proxy, execute
written waivers of notice and consents with respect to such meetings. At
all such meetings, and otherwise, the president, in person or by substitute
or proxy as aforesaid, may vote the stock so held by the corporation and
may execute written consent and other instruments with respect to such
stock and may exercise any and all rights and powers incident to the
ownership of said stock, subject however to the instructions, if any, of
the board of directors. Subject to the directions of the board of
directors, the president shall exercise all other powers and perform all
other duties normally incident to the office of president of a corporation
and shall exercise such other powers and perform such other duties as from
time to time may be assigned to him by the board.
(b) Chairman Of The Board. If a chairman of the board has been
elected, the chairman of the board shall be the presiding officer at
meetings of the board of directors and shall have, subject to the direction
and modification of the board of directors, all the same responsibilities,
rights and obligations as described in these bylaws for the president.
(c) Vice Presidents. The vice presidents, if any shall be elected, and
if they be so directed, shall assist the president and shall perform such
duties as may be assigned to them by the president or by the board of
directors. In the absence of the president, the vice president designated
by the board of directors or (if there be no such designation) designated
in writing by the president shall have the powers and perform the duties of
the president. If no such designation shall be made all vice presidents may
exercise such powers and perform such duties.
(d) Secretary. The secretary shall perform the following functions:
(i) record or cause to be recorded the proceedings of the meetings of the
stockholders, the board of directors and any committees of the board of
directors in a book to be kept for that purpose; (ii) see that all notices
are duly given in accordance with the provisions of these bylaws or as
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required by law; (iii) be custodian of the corporate records and of the
seal of the corporation; (iv) keep at the corporation?s registered office
or principal place of business within or outside Maryland a record
containing the names and addresses of all stockholders and the number and
class of shares held by each, unless such a record shall be kept at the
office of the corporation?s transfer agent or registrar; (v) have general
charge of the stock books of the corporation, unless the corporation has a
transfer agent; and (vi) in general, perform all other duties as from time
to time may be assigned to him by the president, or by the board of
directors. Assistant secretaries, if any, shall have the same duties and
powers, subject to supervision by the secretary.
(e) Treasurer. The treasurer shall perform the following functions:
(i) be the principal financial officer of the corporation and have the care
and custody of all funds, securities, evidences of indebtedness and other
personal property of the corporation and deposit the same in accordance
with the instructions of the board of directors; (ii) receive and give
receipts and acquittances for monies paid in on account of the corporation,
and pay out of the funds on hand all bills, payrolls and other just debts
of the corporation of whatever nature upon maturity; (iii) be the principal
accounting officer of the corporation and as such prescribe and maintain
the methods and systems of accounting to be followed, keep complete books
and records of account, prepare and file all local, state and federal tax
returns, prescribe and maintain an adequate system of internal audit, and
prepare and furnish to the president and the board of directors statements
of account showing the financial position of the corporation and the
results of its operations; and (iv) perform all other duties incident to
the office of treasurer and such other duties as from time to time may be
assigned to him by the president or the board of directors. Assistant
treasurers, if any, shall have the same powers and duties, subject to the
supervision of the treasurer.
Section 6. Surety Bonds. The board of directors may require any officer or
agent of the corporation to execute to the corporation a bond in such sums and
with such sureties as shall be satisfactory to the board, conditioned upon the
faithful performance of his duties and for the restoration to the corporation of
all books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation.
Section 7. Salaries. Officers of the corporation shall be entitled to such
salaries, emoluments, compensation or reimbursement as shall be fixed or allowed
from time to time by the board of directors.
ARTICLE V.
Stock
Section 1. Certificates. Each holder of stock in the corporation shall be
entitled to have a certificate signed in the name of the corporation by the
president or a vice-president, and by the treasurer or an assistant treasurer,
or the secretary or an assistant secretary of the corporation. Any of or all the
signatures on the certificate may be facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue. Certificates of stock shall be consecutively numbered and
shall be in such form consistent with law as shall be prescribed by the board of
directors.
Section 2. Record. A record shall be kept of the name of each person or
other entity holding the stock represented by each certificate for shares of the
corporation issued, the number of shares represented by each such certificate,
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the date thereof and, in the case of cancellation, the date of cancellation. The
person or other entity in whose name shares of stock stand on the books of the
corporation shall be deemed the owner thereof, and thus a holder of record of
such shares of stock, for all purposes as regards the corporation.
Section 3. Consideration For Shares. Shares shall be issued for such
consideration (but not less than the par value thereof) as shall be determined
from time to time by the board of directors. Treasury shares shall be disposed
of for such consideration as may be determined from time to time by the board.
Such consideration may consist, in whole or in part, of cash, personal property,
real property, leases of real property, services rendered, or promissory notes,
and shall be paid in such form, in such manner and at such times as the
directors may require.
Section 4. Issuance Of Stock. The capital stock issued by the corporation
must be non-assessable. It shall be deemed to be fully paid and nonassessable
stock, if: (a) the entire amount of the consideration has been received by the
corporation in the form or forms set forth in Section 3 of this Article V and if
any part of the consideration is in the form of a promissory note or other
obligation, such note or obligation has been satisfied in full; or (b) not less
than the amount of the consideration determined to be capital pursuant to
statute has been received by the corporation in the form or forms set forth in
Section 3 of this Article V and the corporation has received a binding
obligation of the subscriber or purchaser to pay the balance of the subscription
or purchase price; provided, however, nothing contained herein shall prevent the
board of directors from issuing partly paid shares as described herein.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares the total amount of the consideration to be paid
therefor and the amount paid thereon shall be stated. Upon the declaration of
any dividend upon partly paid shares, the corporation shall declare a dividend
upon partly paid shares of the same class, but only upon the basis of the
percentage of the consideration actually paid thereon.
The directors may from time to time demand payment, in respect of each
share of stock not fully paid, of such sum of money as the necessities of the
business may, in the judgment of the board of directors, require, not exceeding
in the whole, the balance remaining unpaid on said stock, and such sum so
demanded shall be paid to the corporation at such times and by such installments
as the directors shall direct. The directors shall give written notice of the
time and place of such payments, which notice shall be mailed to each holder or
subscriber to his last known post office address at least thirty days before the
time for such payment for stock which is not fully paid.
The corporation may, but shall not be required to, issue fractions of a
share. If it does not issue fractions of a share, it shall: (a) arrange for the
disposition of fractional interests by those entitled thereto; (b) pay in cash
the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined; or (c) issue scrip or warrants in
registered or bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants shall not unless provided therein, entitle the holder to exercise
voting rights, to receive dividends thereon, and to participate in any of the
assets of the corporation in the event of liquidation. The board of directors
may cause scrip or warrants to be issued subject to the conditions that they
shall become void if not exchanged for certificates representing full shares
before a specified date, or subject to the conditions that the shares for which
scrip or warrants are exchangeable may be sold by the corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the board of directors may impose.
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The board of directors may, at any time and from time to time, if all of
the shares of capital stock which the corporation is authorized by its
certificate of incorporation to issue have not been issued, subscribed for, or
otherwise committed to be issued, issue or take subscriptions for additional
shares of its capital stock up to the amount authorized in its certificate of
incorporation.
Section 5. Lost Certificates. In case of the alleged loss, destruction or
mutilation of a certificate of stock, the board of directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The board of directors may in its
discretion require a bond in such form and amount and with such surety as it may
determine, before issuing a new certificate.
Section 6. Transfer Of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction in the stock books; provided however, that the corporation shall not
be required to effect the requested transfer if the corporation believes the
requested transfer would be in violation of any applicable law, regulation,
court order or other restriction of any nature.
Section 7. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and the corporation
shall be entitled to hold liable for calls and assessments a person registered
on its books as the owner of shares, and the corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof except as otherwise provided by the laws of Maryland.
Section 8. Transfer Agents, Registrars And Paying Agents. The board may at
its discretion appoint one or more transfer agents, registrars and agents for
making payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Maryland. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
Section 9. Real Estate Investment Trust (?REIT?) Ownership Rules.
(a) The corporation will not commence operations as a REIT until the
beneficial ownership of the Shares is held by 100 or more persons with no five
persons owning, directly or indirectly, more than 50 percent in value of the
shares of beneficial interest of the corporation. The word "persons", as used in
the second clause of the immediately preceding sentence, shall not include
corporations.
(b) From and after the corporation's initial public offering, no
person may own more than 9.8 percent in value of the shares of beneficial
interest of the corporation (the limitation on the ownership of outstanding
Shares of beneficial interest is referred to in this Section as the "Ownership
Limitation" and the 9.8 percent threshold is referred to in this Section as the
"Percentage Limit"), and no common stock or other securities of the corporation
shall be accepted, purchased, or in any manner acquired by any person if such
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issuance or transfer would result in that person's ownership of securities
exceeding the Percentage Limit. For purposes of determining if the Ownership
Limitation is exceeded by a person, Convertible Securities (as hereinafter
defined) owned by such person shall be treated as if the Convertible Securities
owned by such person had been converted into Shares if the effect of such
treatment would be to increase the ownership percentage of such person in the
corporation. The Ownership Limitation shall not apply (i) to acquisitions of
common stock by any person that has made a tender offer for all outstanding
Shares of the corporation (including Convertible Securities) in conformity with
applicable federal securities laws, or (ii) to the acquisition of the common
stock of the corporation by an underwriter in a public offering of the common
stock of the corporation, or in any transaction involving the issuance of the
common stock by the corporation, in which a majority of the directors determines
that the underwriter or other person or party initially acquiring such common
stock will timely distribute such common stock to or among others so that,
following such distribution, none of such common stock will be Excess Common
Stock (as hereinafter defined).
(c) If any common stock or other securities of the corporation is
accepted, purchased, or in any manner acquired by any person resulting in a
violation of paragraph (b) or (f) hereof, such issuance or transfer shall be
valid only with respect to such amount of common stock or other securities of
the corporation issued or transferred as does not result in a violation of
paragraph (b) or (f) hereof, and such acceptance, purchase or acquisition shall
be void ab initio with respect to the amount of common stock or other securities
that results in a violation of paragraph (b) or (f) hereof (the "Excess Common
Stock"), and the intended transferee of such Excess Common Stock shall acquire
no rights in such Excess Common Stock except as set forth in paragraph (e)
below.
(d) Ownership of the corporation's securities is conditioned upon the
owner's or prospective owner's having provided to the corporation definitive
written information respecting his ownership of the corporation's securities.
Failure to provide such information, upon reasonable request, shall result in
the securities so owned being treated as Excess Common Stock pursuant to
paragraph (c) hereof for so long as such failure continues.
(e) The Excess Common Stock, and the owners thereof, shall
have the following characteristics, rights and powers:
(i) Upon any purported transfer that results in Excess Common
Stock, pursuant to paragraphs (b) or (f) of this Section, such Excess
Common Stock shall be deemed to have been transferred to the
corporation, as trustee of a trust for the exclusive benefit of such
beneficiary or beneficiaries to whom an interest in such Excess Common
Stock may later be transferred pursuant to subparagraph (v) of this
paragraph (e). Any such Excess Common Stock so held in trust shall be
issued and outstanding stock of the corporation. The purported
transferee shall have no rights in such Excess Common Stock except as
provided in subparagraph (v) of this paragraph (e).
(ii) Excess Common Stock shall not be entitled to any dividends,
interest payments or other distributions. Any dividend or distribution
paid prior to the discovery by the corporation that the corporation?s
securities have become Excess Common Stock shall be repaid to the
corporation upon demand.
(iii) 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 Excess Common Stock shall be
entitled to receive, ratably with each other holder of Excess Common
Stock of the same class, that portion of the assets of the corporation
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available for distribution to its stockholders as the number of shares
of the Excess Common Stock held by such holder bears to the total
number of securities of that same class then outstanding. The
corporation, as holder of the Excess Common Stock in trust, or if the
corporation shall have been dissolved, any trustee of such trust
appointed by the corporation prior to the corporation's dissolution,
shall distribute ratably to the beneficiaries of such trust, when
determined, any such assets received in respect of the Excess Common
Stock in any liquidation, dissolution or winding up of, or any
distribution of the assets of, the corporation.
(iv) The holders of shares of Excess Common Stock shall not be
entitled to vote on any matters (except as required by law).
(v) Except as otherwise provided in this Section, Excess Common
Stock shall not be transferable. The purported transferee may freely
designate a beneficiary of an interest in the trust (representing the
number of shares of Excess Common Stock held by the trust attributable
to a purported transfer that resulted in the Excess Common Stock), if
(A) the shares of Excess Common Stock held in the trust would not be
Excess Common Stock in the hands of such beneficiary and (B) the
purported transferee does not receive a price from such beneficiary
that reflects a price per share for such Excess Common Stock that
exceeds (x) the price per share in such purported transfer that
resulted in the Excess Common Stock, or (y) if the purported
transferee did not give value for such Excess Common Stock (through a
gift, devise or other transaction), a price per share equal to the
Market Price on the date of the purported transfer that resulted in
Excess Common Stock. Upon such transfer of an interest in the trust,
the corresponding shares of Excess Common Stock in the trust shall be
automatically exchanged for an equal number of shares of the
applicable security of the corporation and such security shall be
transferred of record to the transferee of the interest in the trust
if such security would not be Excess Common Stock in the hands of such
transferee. Prior to any transfer of any interest in the trust, the
purported transferee must give advance notice to the corporation of
the intended transfer and the corporation must have waived in writing
its purchase rights under subparagraph (vi) of this paragraph (e).
Notwithstanding the foregoing, if a purported transferee receives a
price for designating a beneficiary of an interest in the trust that
exceeds the amounts allowable under the foregoing provisions of this
subparagraph (v), such purported transferee shall pay, or cause such
beneficiary to pay, such excess to the corporation.
(vi) Excess Common Stock 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 (A) the price per share in the transaction that
created such Excess Common Stock (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (B) 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 (x) the date of the
transfer which resulted in such Excess Common Stock and (y) the date
the directors determine in good faith that a transfer resulting in
Excess Common Stock has occurred.
(f) Any sale, transfer, gift, assignment, devise or other disposition
of the corporation's securities (a "transfer") that, if effective, would
result in (i) the shares being owned by fewer than 100 persons (determined
without reference to any rules of attribution) shall be void ab initio as
to the corporation's securities which would otherwise be beneficially owned
by the transferee, (ii) the corporation's being "closely held" within the
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meaning of Section 856(h) of the Internal Revenue Code of 1986, as amended
(the "Code"), shall be void ab initio as to the transfer of the
corporation?s securities that would cause the corporation to be "closely
held" within the meaning of Section 856(h) of the Code, and (iii) the
disqualification of the corporation as a REIT shall be void ab initio as to
the transfer of the corporation?s securities that would cause the
corporation to be disqualified as a REIT, and, in the case of each of
clauses (i), (ii) and (iii) of this paragraph (f), the intended transferee
shall acquire no rights in such securities except as set forth in paragraph
(e) above.
(g) For purposes of this Section:
(i) The term "Convertible Securities" means any securities of the
corporation that are convertible into Shares.
(ii) The term "individual" shall mean any natural person and
those organizations treated as natural persons in Section 542(a) of
the Code.
(iii) The term "Initial Public Offering" means the initial sale
of the common stock to the public pursuant to the corporation?s first
effective registration statement for such common stock filed under the
Securities Act of 1933, as amended.
(iv) The term "Market Price" means the last reported sales price
of the common stock on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system over
which the common stock may be traded, or if the common stock is not
then traded over any exchange or quotation system, then the market
price of the common stock on the relevant date as determined in good
faith by the directors.
(v) The term "ownership" (including "own" or "owns") of shares
means beneficial ownership. Beneficial ownership, for this purpose
shall be defined in accordance with or by reference to Sections 856,
542 and 544 of the Code.
(vi) The term "person" includes an individual, corporation,
partnership, association, joint stock company, trust, unincorporated
association or other entity and also includes a ?group? as that term
is defined in Section 13(d)(3) of the Exchange Act.
(vii) The term "REIT" means a "real estate investment trust" in
accordance with the provisions of Sections 856 through 860 of the Code
and applicable Treasury Regulations.
(viii) The term "common stock" means Shares and Convertible
Securities.
(h) If any of the restrictions on transfer set forth in this Section
are determined to be void, invalid or unenforceable by virtue of any legal
decision, statute, rule or regulation, then the intended transferee of any
Excess Common Stock may be deemed, at the option of the corporation, to
have acted as an agent on behalf of the corporation in acquiring the Excess
Common Stock and to hold the Excess Common Stock on behalf of the
corporation.
(i) Nothing herein contained shall limit the ability of the
corporation to impose or to seek judicial or other imposition of additional
restrictions if deemed necessary or advisable to protect the corporation
and the interests of its stockholders by preservation of the corporation?s
status as a qualified REIT under the Code.
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(j) All persons who own five percent or more of the total value of the
corporation's outstanding securities during any taxable year of the
corporation and any other security holder requested by the corporation
shall file with the corporation an affidavit setting forth the amount of
securities during such taxable year (i) owned directly (held of record by
such person or by a nominee or nominees of such person) and (ii) owned
indirectly (by reason of Sections 542, 544 and 856 of the Code or for
purposes of Rule 13(d) of the Exchange Act) by the person filing the
affidavit. The affidavit to be filed with the corporation shall set forth
all the information required to be reported (i) in returns of stockholders
under Income Tax Regulation 1.857-9 or similar provisions of any successor
regulation and (ii) in reports to be filed under Section 13(d) of the
Exchange Act. The affidavit or an amendment to a previously filed affidavit
shall be filed with the corporation annually within 30 days after the close
of the corporation's taxable year. A person shall have satisfied the
requirements of this paragraph (j) if the person furnishes to the
corporation the information in such person's possession after such person
has made a good faith effort to determine the securities it indirectly owns
and to acquire the information required by Income Tax Regulation 1.857-9 or
similar provisions of any successor regulations. Notwithstanding the
foregoing, if the corporation has fewer than 2,000 record stockholders, the
affidavit requirements of this paragraph (j) shall apply to holders of one
percent or more of the corporation's outstanding Shares, or to the holders
of 0.5 percent or more of the corporation's outstanding Shares if the
corporation has 200 or fewer record stockholders.
(k) The corporation will not engage in any activity that would cause
the corporation to lose its qualification as a REIT, except with the prior
consent of at least a majority of the Independent Directors.
ARTICLE VI.
Conflicts Of Interest And Investment Policies
Section 1. Sales And Leases To The Corporation. The corporation shall not
purchase property from a Sponsor, a director, or any Affiliate unless a majority
of the directors (including a majority of Independent Directors) not otherwise
interested in the transaction approve the transaction as being fair and
reasonable to the corporation and at a price to the corporation no greater than
the cost of the asset to the Sponsor, the director, or the Affiliate, or if the
price to the corporation is in excess of such cost, that substantial
justification for the excess exists, and that the excess is reasonable. In no
event shall the cost of an asset purchased by the corporation from a Sponsor,
director or Affiliate exceed its current appraised value.
Section 2. Sales And Leases To Sponsor, Directors, Or Affiliates. A
Sponsor, director, or Affiliate shall not acquire assets from the corporation
unless approved by a majority of the directors (including a majority of
Independent Directors) not otherwise interested in the transaction, as being
fair and reasonable to the corporation. The corporation may lease assets to a
Sponsor, a director, or an Affiliate only if approved by a majority of the
directors (including a majority of the Independent Directors) not otherwise
interested in the transaction, as being fair and reasonable to the corporation.
Section 3. Loans. The corporation may not borrow money from a Sponsor, a
director, or an Affiliate unless a majority of the directors (including a
majority of the Independent Directors) not otherwise interested in the
transaction, approve the transaction as being fair, competitive, and
commercially reasonable and no less favorable to the corporation than if it was
between unaffiliated parties under the same circumstances.
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Section 4. Investments.
(a) The corporation shall not invest in joint ventures with the
Sponsor, a director, or Affiliate unless a majority of the directors
(including a majority of Independent Directors) not otherwise interested in
the transaction, approve the transaction as fair and reasonable to the
corporation and on substantially the same terms and conditions as those
received by the other joint venturers.
(b) The corporation shall not invest in equity securities unless a
majority of the directors (including a majority of Independent Directors)
not otherwise interested in the transaction, approve the transaction as
being fair, competitive, and commercially reasonable.
Section 5. Other Transactions. All other transactions between the
corporation and a Sponsor, a director, or an Affiliate shall require approval by
a majority of the directors (including a majority of Independent Directors) not
otherwise interested in the transaction, as being fair and reasonable to the
corporation and on terms and conditions not less favorable to the corporation
than those available from unaffiliated third parties.
Section 6. Appraisal Of Real Property. The consideration paid for real
property acquired by the corporation shall ordinarily be based on the fair
market value of the property as determined by a majority of the directors. In
cases in which a majority of the Independent Directors so determine, such fair
market value will be determined by an Independent Expert selected by the
Independent Directors.
Section 7. Other Limitations. The corporation may not do any of the
following:
(a) Invest more than 10 percent of its total assets in Unimproved Real
Property.
(b) Invest in commodities or commodity future contracts (this
limitation is not intended to apply to future contracts when used solely
for hedging purposes in connection with the corporation's ordinary business
in investing in real estate assets).
(c) Invest in or make mortgage loans unless an appraisal is obtained
concerning the underlying property, except for those loans insured or
guaranteed by a government or government agency.
(d) Issue equity securities redeemable by the holder thereof.
(e) Issue debt securities unless the historical debt service coverage
(in the most recently completed fiscal year) as adjusted for known changes,
is sufficient to properly service that higher level of debt.
Section 8. Investment Policies. The investment and borrowing policies of
the corporation shall be as set forth in these Bylaws and in such other written
documents as may be approved by a majority of the Independent Directors. The
Independent Directors shall monitor the administrative procedures, investment
operations, and performance of the corporation and the corporation's officers,
directors, and other representatives, to assure that the investment and
borrowing policies of the corporation are carried out.
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ARTICLE VII.
Indemnification Of Officers And Directors
Section 1. Indemnification Of Directors, Officers, And Others. Subject to
Section 2, any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was at any time since the inception of the corporation a director, officer
or employee of the corporation, or is or was at any time since the inception of
the corporation serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including serving as trustee, plan administrator or
other fiduciary of any employee benefit plan, shall be indemnified by the
corporation to the full extent permitted by the General Corporation Law of the
State of Maryland (or any similar provision or provisions of applicable law at
the time in effect).
Section 2. Indemnification Of Officers, Directors And Employees Pursuant To
The Common Law Or Statutory Provisions Other Than The General Corporation Law Of
The State Of Maryland. Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was at any time since the inception of the corporation a director,
officer or employee of the corporation, or is or was at any time since the
inception of the corporation serving at the request of the corporation as a
director, officer, or employee of another corporation, partnership, joint
venture, trust or other enterprise, including serving as trustee, plan
administrator or other fiduciary of any employee benefit plan, shall be
indemnified by the corporation to the full extent permitted by the common law
and by any statutory provision other than the General Corporation Law of the
State of Maryland.
Section 3. Mandatory Advance Of Expenses. Reasonable expenses incurred in
defending any action, suit or proceeding described in Section 1 or 2 of this
Article VII shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director, officer or employee to repay such amount to the
corporation if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article.
Section 4. Payment Of Indemnified Claims. Reasonable amounts required to be
paid in settlement or as a judgment in any action, suit or proceeding described
in Section 1 or 2 of this Article VII shall be paid by the corporation within 90
days of the receipt of an undertaking by or on behalf of such director, officer
or employee to repay such amount to the corporation if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article; provided however, that the corporation shall not be
required to pay such amounts if a majority of the members of the Board of
Directors vote to deny the request for indemnification within the 90 day period
set forth in this Section 4.
Section 5. Rights Of Appeal. In the event that the corporation advances
funds for indemnification pursuant to this Article, and, subsequently,
indemnification pursuant to this Article is declared unenforceable by a court,
or the corporation determines that the director, officer or employee on whose
behalf the funds were advanced is not entitled to indemnification pursuant to
this Article, then such director, officer or employee shall have the right to
retain the indemnification payments until all appeals of the court?s or the
corporation?s decision have been exhausted.
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Section 6. Additional Indemnification. Without limiting the indemnification
otherwise provided by this Article VII, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was at any time since the inception of the
corporation a director, officer or employee of the corporation or a wholly owned
subsidiary of the corporation, or is or was at any time since the inception of
the corporation a trustee, plan administrator or other fiduciary of any employee
benefit plan of the corporation or a wholly owned subsidiary of the corporation,
shall be indemnified by the corporation against all expenses, including
attorneys? fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with such action, suit or proceeding,
including an action or suit by or in the right of the corporation to procure a
judgment in its favor, if (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, (ii) his conduct was not material to the matter giving rise to the
proceeding and was not committed in bad faith or was the result of active and
deliberate dishonesty, (iii) he did not actually receive an improper personal
benefit in money, property or services, and (iv) with respect to any criminal
action or proceeding, he had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 7. Indemnification Not Exclusive. The indemnification provided in
this Article shall not be deemed exclusive of any other rights to which any
person seeking indemnification may be entitled under any agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 8. Insurance. By action of the board of directors, notwithstanding
any interest of the directors in such action, the corporation may purchase and
maintain insurance, in such amounts as the board may deem appropriate, on behalf
of any person who is or was a director, officer or employee of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
applicable provisions of laws.
Section 9. Applicability; Effect. Any indemnification and advancement of
expenses provided by or granted pursuant to this Article VII shall be applicable
to acts or omissions that occurred prior to the adoption of this Article VII,
shall continue as to any persons who ceased to be a director, officer, or
employee of the corporation or a wholly owned subsidiary of the corporation, or
was serving as or has since ceased to be a trustee, plan administrator or other
fiduciary of any employee benefit plan of the corporation or a wholly owned
subsidiary of the corporation, and shall inure to the benefit of the heirs,
executors, and administrators of such person. The repeal or amendment of this
Article VII or any Section or provision hereof which would have the effect of
limiting, qualifying or restricting any of the powers or rights of
indemnification provided or permitted in this Article VII shall not, solely by
reason of such repeal or amendment, eliminate, restrict or otherwise affect the
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right or power of the corporation to indemnify any person, or affect any right
of indemnification of such person, with respect to any acts or omissions which
occurred prior to such repeal or amendment. All rights under this Article VII
shall be deemed to be provided by a contract between the corporation and each
person covered hereby.
Section 10. Savings Clause. If this Article VII or any Section or provision
hereof shall be invalidated by any court on any ground, then the corporation
shall nevertheless indemnify each party otherwise entitled to indemnification
hereunder to the fullest extent permitted by law or any applicable provision of
this Article VI that shall not have been invalidated.
ARTICLE VIII.
Execution Of Instruments; Loans; Checks
And Endorsements; Deposits; Proxies
Section 1. Execution Of Instruments. The president or any vice president
shall have the power to execute and deliver on behalf of and in the name of the
corporation any instrument requiring the signature of an officer of the
corporation, except as otherwise provided in these bylaws or where the execution
and delivery thereof shall be expressly delegated by the board of directors to
some other officer or agent of the corporation. Unless authorized to do so by
these bylaws or by the board of directors, no officer, agent or employee shall
have any power or authority to bind the corporation in any way, to pledge its
credit or to render it liable pecuniarily for any purpose or in any amount.
Section 2. Loans To Directors, Officers And Employees. The corporation may
lend money to, guarantee the obligations of and otherwise assist directors,
officers and employees of the corporation, or directors of another corporation
of which the corporation owns a majority of the voting stock, only upon
compliance with the requirements of the General Corporation Law of the State of
Maryland.
Section 3. Checks And Endorsements. All checks, drafts or other orders for
the payment of money, obligations, notes or other evidences of indebtedness,
bills of lading, warehouse receipts, trade acceptances and other such
instruments shall be signed or endorsed by such officers or agents of the
corporation as shall from time to time be determined by resolution of the board
of directors, which resolution may provide for the use of facsimile signatures.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the corporation?s credit in
such banks or other depositories as shall from time to time be determined by
resolution of the board of directors, which resolution may specify the officers
or agents of the corporation who shall have the power, and the manner in which
such powers shall be exercised, to make such deposits and to endorse, assign and
deliver for collection and deposit checks, drafts and other orders for the
payment of money payable to the corporation or its order.
Section 5. Proxies. Unless otherwise provided by resolution adopted by the
board of directors, the president or any vice president may from time to time
appoint one or more agents or attorneys-in-fact of the corporation, in the name
and on behalf of the corporation, to cast the votes which the corporation may be
entitled to cast as the holder of stock or other securities in any other
corporation, association or other entity any of whose stock or other securities
may be held by the corporation, at meetings of the holders of the stock or other
securities of such other corporation, association or other entity or to consent
in writing, in the name of the corporation as such other entity, and may
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be executed in the
name and on behalf of the corporation and under its corporate seal, or
otherwise, all such written proxies or other instruments as he may deem
necessary or proper in the premises.
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ARTICLE IX.
Miscellaneous
Section 1. Waivers Of Notice. Whenever notice is required to be given by
law, by the certificate of incorporation or by these bylaws, a written waiver
thereof, signed by the person entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting or (in the case of a stockholder) by proxy shall constitute
a waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need to be specified in any written waiver or notice
unless so required by the certificate of incorporation or these bylaws.
Section 2. Presumption Of Assent. A director or stockholder of the
corporation who is present at a meeting of the board of directors or
stockholders at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director or stockholder who voted in
favor of such action.
Section 3. Seal. The corporate seal of the corporation shall be circular in
form and shall contain the name of the corporation and the words "Seal,
Maryland." The custodian of the seal shall be the secretary, who along with the
president or other officer authorized by the board of directors, may affix the
seal to documents of the corporation.
Section 4. Amendments. These bylaws may be altered, amended or repealed or
new bylaws may be adopted by the board of directors at any meeting of the
directors. These bylaws may be altered, amended, or repealed or new bylaws may
be adopted by a vote of a majority of the outstanding shares, without the
necessity of the concurrence of the board of directors.
Section 5. Emergency Bylaws. Subject to repeal or change by action of the
stockholders, the board of directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the General Corporation Law of the State
of Maryland.
Section 6. Termination Of REIT Status. The corporation's REIT status may be
terminated by the holders of a majority of shares then outstanding at a meeting
of stockholders.
ARTICLE X.
Definitions
1. AFFILIATE: An AFFILIATE of another PERSON includes any of the following:
(a) any PERSON directly or indirectly owning, controlling, or holding,
with power to vote ten percent or more of the outstanding voting securities
of such other PERSON.
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(b) any PERSON ten percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held, with
power to vote, by such other PERSON.
(c) any PERSON directly or indirectly controlling, controlled by, or
under common control with such other PERSON.
(d) any executive officer, director, trustee or general partner of
such other PERSON.
(e) any legal entity for which such PERSON acts as an executive
officer, director, trustee or general partner.
2. INDEPENDENT EXPERT: A PERSON with no material current or prior business
or personal relationship with the directors who is engaged to a substantial
extent in the business of rendering opinions regarding the value of assets of
the type held by the REIT.
3. PERSON: Any natural persons, partnership, corporation, association,
trust, limited liability company or other legal entity.
4. REAL ESTATE INVESTMENT TRUST ("REIT"): A corporation, trust, association
or other legal entity (other than a real estate syndication) which is engaged
primarily in investing in equity interests in real estate (including fee
ownership and leasehold interests) or in loans secured by real estate or both.
5. SHARES: Shares of beneficial interest or of common stock of a REIT of
the class that has the right to elect the directors of such REIT.
6. SPONSOR: Any PERSON directly or indirectly instrumental in organizing,
wholly or in part, a REIT or any PERSON who will control, manage or participate
in the management of a REIT, and any AFFILIATE of such PERSON. Not included is
any PERSON whose only relationship with the REIT is as that of an independent
property manager of REIT assets, and whose only compensation is as such. SPONSOR
does not include wholly independent third parties such as attorneys, accountants
and underwriters whose only compensation is for professional services. A PERSON
may also be deemed a SPONSOR of the REIT by:
(a) taking the initiative, directly or indirectly, in founding or
organizing the business or enterprise of the REIT; either alone or in
conjunction with one or mother other PERSONS:
(b) receiving a material participation in the REIT in connection with
the founding or organizing of the business of the REIT, in consideration of
services or property, or both services and property;
(c) having a substantial number of relationships and contacts with the
REIT;
(d) possessing significant rights to control REIT properties;
(e) receiving fees for providing services to the REIT, which are paid
on a basis that is not customary in the industry; or
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(f) providing goods or services to the REIT on a basis which was not
negotiated at arms length with the REIT.
7. UNIMPROVED REAL PROPERTY: The real property of a REIT which has the
following three characteristics:
(a) an equity interest in real property which was not acquired for the
purpose of producing rental or other operating income;
(b) has no development or construction in process on such land; and
(c) no development or construction on such land is planned in good
faith to commence on such land within one year.
8. VOTING STOCK: Outstanding shares of capital stock generally entitled to
vote in the election of directors, or, with respect to any particular matter,
generally entitled to vote on that matter.
* * * * *
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PROXY PROXY
For the Annual Meeting Of Stockholders of
AMERIVEST PROPERTIES INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints James F. Etter and Robert J. McFann, or
either of them, as proxies or __________________ (stockholders may strike the
person(s) designated by Management and insert the name and address of the
person(s) to vote the proxy and mail the proxy to the named proxy holder(s))
with power of substitution to vote all the shares of the undersigned with all of
the powers which the undersigned would possess if personally present at the
Annual Meeting Of Stockholders of AmeriVest Properties Inc. (the "Corporation"),
to be held at 10:00 A.M. on June 29, 1999, at the Denver Marriott West, 1717
Denver West Boulevard, Golden Colorado, or any adjournments thereof, on the
following matters:
1. Election of Class 3 director.
FOR Robert J. McFann |_| WITHHOLD AUTHORITY to vote
for Robert J. McFann |_|
.
2. Proposal to reincorporate the Company under the laws of the State of
Maryland, including provisions to increase authorized common stock and
to provide for authorized preferred stock.
___ For ___ Against ___ Abstain
3. Proposal to issue shares of common stock as a portion of the purchase
price for three office buildings located in Indianapolis, Indiana.
___ For ___ Against ___ Abstain
4. Proposal to ratify the selection by the Board Of Directors of Wheeler
Wasoff, P.C. as the independent certified accountants for the
Corporation for the year ending December 31, 1999.
___ For ___ Against ___ Abstain
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Unless contrary instructions are given, the shares represented by this
proxy will be voted in favor of Items 1, 2, 3 and 4. This proxy is solicited on
behalf of the Board of Directors of AmeriVest Properties Inc.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE.
Date:
----------------------------------------
Signature:
----------------------------------
Signature:
----------------------------------
(Please sign exactly as shown on your stock certificate and
on the envelope in which this proxy was mailed. When signing
as partner, corporate officer, attorney, executor,
administrator, trustee, guardian, etc., give full title as
such and sign your own name as well. If stock is held
jointly, each joint owner should sign.)
Exhibit 10.1
PURCHASE AND SALE AGREEMENT
This Purchase And Sale Agreement (the "Agreement") is entered into on the
26th day of April 1999 between Sheridan Realty Partners, L.P., a Delaware
limited partnership ("Seller"), and AmeriVest Properties Inc., a Delaware
corporation ("Purchaser"). For purposes of this Agreement, each of Seller and
Purchaser may be referred to individually as a "Party", and both Seller and
Purchaser may be referred to collectively as the "Parties".
Recitals
--------
A. Seller owns a fee simple interest in three multi-tenant office buildings
located at 3021, 3077 and 3091 East 98th Street at the intersection of 98th
Street and North Keystone Avenue (US 431) in north central Indianapolis,
Indiana, consisting of approximately 95,836 total rentable square feet on
approximately 9.041 acres of land with 336 surface parking spaces, plus a 1,596
square foot free-standing maintenance building together with a reserve for
capital improvements in the amount of $72,637 as of January 1, 1999 and which
may be utilized in accordance with the 1999 budget previously given to Purchaser
(the "Property"). Seller also owns a fee simple interest in a vacant parcel (the
"ROFR Parcel") of approximately 2.550 acres in size located in the east portion
of Keystone Office Park, which Seller intends to develop. The Property and the
ROFR Parcel are more particularly described in Exhibit A attached to and made a
part of this Agreement.
B. Purchaser desires to purchase from Seller, and Seller desires to sell to
Purchaser, the Property. As part of its purchase of the Property, Purchaser
desires to receive, and Seller desires to grant, a first right to purchase and a
right of first refusal to purchase the ROFR Parcel pursuant to the terms of this
Agreement.
Agreement
---------
In consideration of the premises and of the mutual covenants contained in
this Agreement, the Parties agree as follows:
1. Purchase And Sale Of Property.
1.1 Purchase And Sale. Subject to the terms and conditions of this
Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase from Seller, the Property.
1.2 Purchase Price. The purchase price (the "Purchase Price") for the
Property shall be $7,944,000, payable in a combination of stock and
assumption of debt as follows:
1.2.1 The assumption of approximately $5,279,000 in mortgage debt
(the "Mortgage Debt") on the Property with all costs of assumption to
be paid by Seller, which Mortgage Debt is represented by a Mortgage
Note, Mortgage and Security Agreement and Assignment of Leases and
Rents (the "Mortgage") dated April 3, 1997 between Seller as Mortgagor
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and Security Life of Denver Insurance Company, a Colorado corporation,
as Mortgagee and Lender. The amount of Mortgage Debt assumes
additional borrowing of approximately $525,000 by Seller prior to or
simultaneously with the Closing; plus
1.2.2 The assumption commencing on the Effective Date (as defined
in Section 10 below) of all obligations and liabilities that are
incurred under all guarantees, indemnification and other agreements
made by Seller and Alexander S. Hewitt ("Hewitt") in that Guaranty and
Suretyship Agreement and Environmental Indemnification and Hold
Harmless Agreement dated April 3, 1997 and made by Seller, William
Atkins, Jennifer Atkins (collectively, "Atkins") and Hewitt for the
benefit of The First National Bank of Boston ("Prior Mortgagee") in
that Indemnity Agreement Regarding Hazardous Materials dated October
18, 1996 ("Indemnification Agreements") but only to the extent that
any such obligations or liabilities assumed by Purchaser result from
acts or omissions occurring on or after the Effective Date; plus
1.2.3 The number of shares (the "Purchaser Shares") of the
restricted common stock of Purchaser determined by dividing the
difference between the Purchase Price and the Mortgage Debt as of the
Closing Date by $4.75.
1.3 Adjustment Of Purchase Price And Purchaser Shares.
1.3.1 Adjustment For Dividends. If (i) the Effective Date (as
defined in Section 10) occurs during a calendar quarter (the
"Effective Quarter") in which there also occurs a record date (the
"Effective Quarter Record Date") for determination of those
stockholders of Purchaser that are entitled to receive a common stock
dividend declared by Purchaser (the "Effective Quarter Dividend"), and
(ii) the Effective Date is not the same day as the Effective Quarter
Record Date, then the Purchase Price shall be reduced by an amount
equal to the product of the number of Purchaser Shares multiplied by
the amount of the Effective Quarter Dividend per share, multiplied by
a fraction the numerator of which is the difference between 90 and the
number of days by which the Effective Date precedes the Effective
Quarter Record Date and the denominator of which is 90. For example,
if the number of Purchaser Shares is 560,000, the Effective Date is
June 1, 1999, the Effective Quarter Record Date is June 30, 1999 and
the dividend per share is $.12, then the Purchase Price would be
reduced by $44,800, which is equal to 560,000 multiplied by $.12 and
multiplied by 60/90. To the extent that the Purchase Price is to be
reduced pursuant to the provisions of this paragraph and the reduction
has not occurred, or a credit for the reduction not yet paid, as of
the dividend payment date for the Effective Quarter Dividend, Seller
agrees that Purchaser may deduct from the Effective Quarter Dividend
payable to Seller with respect to the Purchaser Shares an amount equal
to the amount by which the Purchase Price is to be reduced pursuant to
this Section 1.3.1.
1.3.2 Issuance Of Additional Shares; Adjustment Based On Stock
Price. Purchaser agrees that if the Weighted Average Trading Price (as
determined in accordance with this Section 1.3.2) of Purchaser's
common stock for the 15 trading days prior to the one year anniversary
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date of the Closing Date is less than $4.75 per share, then Purchaser
shall issue to Seller the number of additional shares (the "Adjustment
Shares") of Purchaser's common stock determined in accordance with
this Section 1.3.2. The number of Adjustment Shares shall be
determined by multiplying the number of Purchaser Shares by the excess
of $4.75 over the Weighted Average Trading Price and dividing the
product by the Weighted Average Trading Price. By way of illustration,
if the Weighted Average Trading Price is $4.00 per share and 561,053
Purchaser Shares were delivered at Closing, then Purchaser will issue
to Seller 105,197 Adjustment Shares. This is calculated by (i)
multiplying $.75 (the excess of $4.75 over the Weighted Average
Trading Price) by the 561,053 Purchaser Shares that were delivered at
the Closing, and (ii) dividing the product by 4.00 to determine the
Adjustment Shares. The Adjustment Shares, if any, required to be
delivered pursuant to this Section 1.3.2 shall be delivered to Seller
on or before the 30th day following the first anniversary of the
Closing Date. The Weighted Average Trading Price of Purchaser's common
stock shall mean the average trading price determined by multiplying
the number of shares involved in each individual trade during the
period of determination by the sale price for that trade and dividing
the sum of all those amounts by the total number of shares traded
during the relevant period of determination.
1.3.3 Additional Adjustments. The adjustments to the Purchase
Price and Purchaser Shares pursuant to this Section 1.3 shall be in
addition to any adjustments and prorations required pursuant to
Section 11 of this Agreement.
2. Title.
2.1 f this Agreement, , Seller has furnished to Purchaser a current
commitment for an A.L.T.A. owner's extended coverage title insurance policy
(with preprinted exceptions to be deleted) issued by Chicago Title
Insurance Company (the "Title Company"), for the Property in at least the
amount of the Purchase Price. Included with the title commitment shall be
true, correct, and legible copies of all documents listed in the schedule
of exceptions in the commitment. The title commitment and the underlying
exception documents are hereinafter collectively referred to as the "Title
Commitment". Seller will arrange to have the Approved Title Policy
delivered to Purchaser as soon as practicable after Closing. Seller shall
pay the cost of obtaining the Title Commitment.
2.2 Purchaser shall, within five (5) days after receipt of the Title
Commitment and prior to the signing of this Agreement, approve or
disapprove the Title Commitment by delivering written notice to Seller
("Purchaser's Title Notice") specifying each title defect or matter which
needs to be cured by Seller ("Title Defect") in order for the "Approved
Title Policy" (as defined below) to be issued for the Property at the
Closing. For purposes of this Agreement, the term "Approved Title Policy"
shall mean the title policy to be issued by the Title Company, in the form
and with the exceptions and endorsements acceptable to Purchaser,
designated to Seller by Purchaser either as part of Purchaser's Title
Notice or separately in writing on or before the Contingency Date.
Purchaser acknowledges that, unless otherwise expressly agreed to by
Seller, Purchaser will be responsible for paying any title insurance
premiums required to obtain any endorsement specified by Purchaser other
than endorsements required to deliver the Title Commitment as specified in
Section 2.1 and any endorsements required by the Mortgagee, the cost of
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which shall be paid by Seller. Seller agrees to cure all Title Defects
other than the Permitted Title Exceptions, as defined below, up to a
maximum cost to cure those Title Defects of $10,000. For purposes of this
Agreement, the following shall constitute "Permitted Title Exceptions": (i)
covenants, conditions and restrictions of record acceptable to the
Purchaser in its sole discretion; (ii) private, public and utility
easements and roads and highways acceptable to the Purchaser in its sole
discretion; (iii) existing leases and tenancies as listed in Exhibit B
attached hereto and any leases entered into pursuant to Paragraph 5.4; (iv)
general taxes for the year 1998 and subsequent years; (v) such additional
exceptions as the Purchaser may consent to in writing; (vi) liens accruing
from debt created or assumed as part of the Purchase Price, and (vii) any
other exception accepted or waived by Purchaser in writing. Within five
business days after receiving Purchaser's Title Notice, Seller shall
deliver to Purchaser written notice ("Seller's Title Notice") of those
Title Defects which Seller is unable or unwilling to eliminate or to cure.
If Seller does not eliminate or cure all Title Defects other than Permitted
Title Exceptions, then Buyer shall have the right, by written notice to
Seller within five business days after receipt of Seller's Title Notice,
either to (i) waive its prior notice as to the Title Defects, other than
Permitted Title Exceptions, that Seller is unwilling or unable to cure, or
(ii) proceed with the Closing and reduce the Purchase Price by an amount
equal to Purchaser's good faith estimate of the cost to cure the Title
Defects, other than Permitted Title Exceptions, that Seller is unwilling or
unable to cure but in no event shall such reduction exceed the excess of
$10,000 over the amount previously spent by Seller to cure pursuant to the
provisions of this paragraph, or (iii) terminate this Agreement.
2.3 Seller shall deliver to Purchaser the Approved Title Policy issued
by the Title Company in the amount of the Purchase Price, insuring
Purchaser that Purchaser has acquired Seller's interest in the Property
subject only to the Permitted Title Exceptions. Seller shall pay the cost
of the title insurance premium for (i) the Approved Title Policy with all
standard pre-printed exceptions deleted, and (ii) the endorsements required
by Mortgagee. If Purchaser elects to obtain extended coverage or any other
endorsements to the policy, Purchaser shall pay all costs and expenses
associated therewith and comply with any requirements thereof.
3. Environmental Audit. Seller has provided Purchaser with a Phase I
Environmental Site Assessment (including asbestos investigation) dated August
20, 1996 for the Property in conformity with the 1993 standards set by the
American Society for Testing and Materials prepared by ATEC Associates, Inc.
(the "Phase I Report"). Purchaser has, at Purchaser's expense, ordered a revised
Phase I Report (the "Revised Report") for the Property. In the event hazardous
waste or materials or nonhazardous materials that are controlled by the
Department of Health for the State of Indiana or by the Environmental Protection
Agency are revealed at the Property or historical uses as shown by the Phase I
Report or Revised Report that would indicate the possible presence of such waste
or materials in amounts which are, or in the reasonable judgment of Purchaser
may result, in violation of applicable laws or the Phase I Report or Revised
Report indicates that Seller is in violation of any local, state or federal
environmental laws, rules or regulations, then Seller shall, at Seller's cost
and expense, reimburse Purchaser for the cost of the Revised Report, and
remediate to the extent required by law or to prevent a violation of law, all
such waste, materials and violations prior to Closing so long as the reasonable
estimate of the cost and expense to remediate conditions on the Property does
not exceed a total of $50,000 . In the event such remediation cannot be
accomplished by the Closing Date, the Closing Date shall be extended up to an
additional 90 days ("Extended Closing Date") to allow Seller sufficient time to
complete the remediation . If the reasonable estimate of the cost to remediate
exceeds $50,000 or the time to complete the remediation will extend past the
Extended Closing Date, then Seller shall have the right to terminate this
Agreement by providing notice to Purchaser and by reimbursing Purchaser, as
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required above, for the cost of the Revised Report. However, Seller's right to
terminate under this Section 3 shall not be effective if, within five days of
notice to Purchaser of Seller's termination under this Section 3, Purchaser
delivers to Seller a written notice that Purchaser will proceed with this
Agreement. In the event that Purchaser elects to proceed hereunder, the Purchase
Price shall be reduced by the lesser of Purchaser's good faith estimated cost to
remediate or $50,000, and Seller shall continue to be responsible for the cost
of the Revised Report, which shall be deducted from the Purchase Price at
Closing if not paid previously. Notwithstanding anything to the contrary
contained herein, Purchaser retains the right to object to matters disclosed in
the Phase I Report or Revised Report in accordance with Section 8.7 of this
Agreement.
4. Survey. On or before ten (10) days after the execution of this
Agreement, Seller shall furnish to Purchaser a current ALTA/ACSM land title
survey for the Property (the "Survey") updated by a land surveyor licensed in
the State of Indiana. The Survey shall be certified to Seller, Purchaser and the
Title Company and Mortgagee, if requested by the Mortgagee. The Survey shall
reflect all exceptions to title (where applicable) as reflected on the Title
Commitment. The Survey shall provide that physical inspections at the Property
revealed no improvements situated upon or adjacent to the Property which are the
subject of any encroachments, and that no easements or rights-of-way have been
physically violated in any respect, except as shown in the Survey. Seller shall
pay the cost of the Survey. Purchaser retains the right to object to any matters
disclosed in the Survey or to the failure of the Survey to conform with the
provisions of this Section 4 in accordance with Section 8.7 of this Agreement.
5. Warranty As To Leases. Seller warrants that the attached Exhibit B is a
complete list of all leases, tenancies, rental agreements, and concession
agreements presently encumbering the Property; and that:
5.1 No person, firm, or corporation has any title, interest, or right
to possession of the Property or any portion of the Property as a lessee,
tenant, or concessionaire of Seller except as shown on Exhibit B and the
names as set forth in Exhibit B are the names of all tenants, lessees and
concessionaires which have a right of possession at the Property, whether
or not under a written instrument (which shall be specified) as of February
28, 1999; the date set forth for each tenant, lessee and concessionaire is
the date of the lease, tenancy, rental or concessionaire agreement pursuant
to which the tenant, lessee or concessionaire occupied the Property as of
February 28, 1999.
5.2 All the leases, tenancies, rental agreements, and concession
agreements shown on Exhibit B are now in full force and effect; except as
set forth on Exhibit B, none of Seller nor any of the tenants, lessees or
concessionaires set forth on Exhibit B is in default in the performance of
any such instrument or agreement; and, no tenant, lessee, or concessionaire
is entitled to any rebate, concession, or other benefit except as set forth
in the leases and agreements referred to in Exhibit B or in Exhibit B.
5.3 The rentals and other sums due or to become due under the leases
and agreements referred to in Exhibit B have not been assigned or
encumbered by Seller except as additional security under the Mortgage
against the Property, and will not be further assigned, encumbered, or
subjected to any liens by Seller prior to the Closing pursuant to this
Agreement.
5.4 Until Closing, Seller shall continue its present rental efforts at
the Property to rent vacant space, provided that after the date of mutual
execution of this Agreement, Seller shall not execute any new leases or
amend, terminate or accept the surrender of any existing tenancies or
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approve any subleases without the prior consent of Purchaser in accordance
with Section 20.2, except that Seller is authorized to accept the
termination of leases at the end of their existing terms and provided that
if Seller does execute a new lease or amends, terminates or accepts the
surrender of any existing tenancy or approves any sublease without
following the procedures set forth in Section 20.2, Purchaser may terminate
this Agreement and this Agreement shall be of no further force or effect.
6. Warranty As To Insurance. Seller warrants that the attached Exhibit C is
a complete list of all insurance policies now insuring the Property and that
Seller shall keep all such insurance policies in full force and effect until the
Closing. Seller warrants that Exhibit C shows (a) the number of each policy; (b)
the name of the insurance company that issued each policy; (c) the term,
expiration date and property covered by each policy; (d) the premiums on each
policy; and (e) the general nature and type of each policy set forth on Exhibit
C. Seller shall obtain and deliver to Purchaser at the Closing the written
approval of each insurance carrier to the assumption by Purchaser of each policy
specified by Purchaser in writing at least 45 days prior to the Closing Date. In
the event Seller is unable to obtain all such approvals on or before the
Closing, Purchaser shall have an option to (i) obtain alternative coverage
through another carrier or (ii) terminate this Agreement if no similar coverage
is available from an alternative carrier.
7. Corporate Resolutions Regarding Sale. At the Closing, Purchaser shall
provide to Seller a copy of resolutions of the Board of Directors of Purchaser
authorizing the execution and performance of this Agreement, including the
authorization of issuance of Purchaser Shares and Adjustment Shares and
directing the submission of the Agreement to a shareholder vote on the record
date set by Purchaser, which resolutions shall be certified by the secretary of
Purchaser.
8. Contingencies. This Agreement is contingent upon each of the following:
8.1 Financing. Purchaser's obligations pursuant to this Agreement are
expressly contingent upon the approval of Security Life of Denver Insurance
Company as the Mortgagee pursuant to the Mortgage securing the Mortgage
Debt to the transfer to Purchaser of Seller's obligations pursuant to the
Mortgage. If Purchaser has not received approval from the Mortgagee in a
form reasonably acceptable to Purchaser prior to the Closing, Purchaser may
terminate this Agreement without penalty upon written notice to Seller of
Purchaser's intention to terminate.
8.2 Leases. Approval by Purchaser of all leases and lease amendments
encumbering the Property. Seller shall deliver copies of the leases and
lease amendments to Purchaser within ten calendar days after the date of
mutual execution of this Agreement.
8.3 Management Records. Approval by Purchaser of true and complete
copies of the Income and Operating Expense Statements and Statements of
Assets and Liabilities relating to the Property since October, 1996 and
documentation, including estoppel letters in the form of Exhibit D from
tenants leasing at least 75% of the total rentable square footage of the
Property showing the current status of each lessee under that lessee's
lease. Seller shall deliver copies of said financial and lease documents to
Purchaser within ten calendar days after the date of mutual execution of
this Agreement. Estoppel letters shall be delivered to Purchaser no later
than the Closing Date.
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8.4 Service Contracts. Approval by Purchaser of all management,
service and other contracts pertaining to the Property in accordance with
Section 20.2. Seller shall deliver copies of the management, service and
other contracts pertaining to the Property to Purchaser within ten calendar
days after the date of mutual execution of this Agreement
8.5 Personal Property. Approval by Purchaser of a list of all personal
property now owned by Seller and used in connection with the management of
the Property. Seller shall deliver said list of personal property to
Purchaser within ten calendar days after the Effective Date
8.6 Permits, Licenses, Etc. Seller shall assign to Purchaser all
permits, certificates and licenses in its possession relating to the
Property. Seller shall use its best efforts to assist Purchaser in
obtaining such additional permits, certificates or licenses as may be
required. Seller shall obtain and deliver to Purchaser a certificate or
letter from the applicable zoning authority in a form reasonably
satisfactory to Purchaser stating that the Property is in compliance with
all applicable zoning and building code rules and regulations.
8.7 Investigation. The satisfactory completion of Purchaser's and
Seller's respective investigations pursuant to this Section 8.7. Purchaser
and Seller shall each have until 30 days after the date of delivery by the
other of the Property Information or the Corporate Information defined
below, as the case may be, but no later than May 21, 1999 (the
"Investigation Period") during which Seller shall furnish Purchaser with
all information and data including, but not limited to, accounts, books and
records, rent rolls, leases, loan documents, agreements, environmental
reports, plans, specifications, permits, accounting and financial
information and any other information of whatsoever kind or nature in
Seller's possession ("Property Information") in connection with the
Property, and Purchaser shall be permitted to inspect, make engineering,
architectural, environmental and economic studies, test soil and otherwise
determine ("Property Investigation") that the Property is suitable for
Purchaser's intended purpose. During the Inspection Period, Purchaser shall
furnish Seller with Property Information regarding all of Purchaser's real
property assets, and Seller shall be permitted to perform an appropriate
Property Investigation regarding such properties. Purchaser also shall
furnish Seller with any corporate information (the "Corporate Information")
reasonably requested by Seller. If either Purchaser or Seller is not
satisfied, in its sole discretion, with any aspect of the Corporate
Information, the Property Information or the Property Investigation
regarding the other's property, the dissatisfied party may terminate this
Agreement by written notice to the other, delivered on or before the end of
the Investigation Period, in which case all information or other items
shall be returned and each party shall be relieved of all obligations under
this Agreement. Notwithstanding the foregoing, if Purchaser orders
environmental, engineering, appraisal and other reports within three
business days after mutual execution of this Agreement, and all such
reports have not been received by Purchaser in final form at least five
business days prior to the end of the Investigation Period, or if, as a
result of its respective investigation Seller reasonably requests
additional Corporate Information or Purchaser reasonably requests
additional Property Information, then the Investigation Period shall be
extended so that it ends five business days after the last such Corporate
Information is received by Seller or such report or Property Information
has been received in final form by Purchaser, but in no event later than
June 30, 1999.
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8.8 Property Tax. Approval by Purchaser of all real and personal
property taxes pertaining to the Property as evidenced on the Title
Commitment or other documentation provided by Seller or the appropriate
taxing authority.
8.9 Stockholder Approval. The receipt by Purchaser of all approvals
necessary from Purchaser's stockholders and for the issuance of the
Purchaser Shares and Adjustment Shares to Seller in accordance with this
Agreement.
8.10 Limited Partner Approval. The receipt by Seller of all approvals
necessary from Seller's limited partners as may be required under the
Limited Partnership Agreement of Seller.
8.11 Assumption Of Indemnification Agreements. Execution of
appropriate indemnification agreements as contemplated by Section 1.2.2 of
this Agreement.
In the event any of the foregoing contingencies are not met at or
before the Closing, and absent an agreement of the Parties to resolve an
unsatisfied contingency, this Agreement shall terminate.
9. Deliveries At Closing.
9.1 At Closing, Seller shall deliver to Purchaser the following:
9.1.1 A special warranty deed conveying title to the Property to
Purchaser in a form reasonably acceptable to Purchaser and Seller.
9.1.2 The Title Commitment. 9.1.3 Any other documents required to be
delivered pursuant to this Agreement. 9.1.4 At and after Closing, such
additional and customary documents necessary to carry out or complete
the transaction set forth in this Agreement.
9.2 At Closing, Purchaser shall deliver to Seller the following:
9.2.1 A stock certificate representing Purchaser Shares
registered in the name of Seller, or the individual partners of
Seller, who have executed and delivered to Purchaser subscription and
registration rights agreements in the form of Exhibit E attached to
this Agreement, as required by Section 21.8 and as may be directed by
Seller, or, if such stock certificates are not available at the
Closing or Purchaser has not received a subscription and registration
rights agreement signed by an individual partner of Seller, an
undertaking signed by Purchaser's stock transfer agent to issue such
certificates directly to the Seller or the individual partners of
Seller upon Purchaser's receipt of the respective subscription and
registration rights agreement signed by the individual partner of
Seller.
9.2.2 At and after Closing, such additional and customary
documents necessary to carry out or complete the transaction set forth
in this Agreement.
10. Closing Date. Closing shall take place at a time to be established by
Purchaser and Seller but not later than the later to occur of: (i) five business
days after Purchaser's receipt of stockholder approval as required by Section
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8.9 or (ii) the approval of Mortgagee of the assumption by Purchaser of the
Mortgage obligations as required by Section 8.1 and in no case later than August
31, 1999 (the "Closing" or "Closing Date"). to be effective as of12:01 AM on the
first day of the calendar month during which the Closing occurs (the "Effective
Date"). The Closing shall take place at the offices of Purchaser or at the
offices of Purchaser's counsel, as determined by Purchaser.
11. Prorations And Closing Costs. At Closing, the following items shall be
prorated between Purchaser and Seller as of 12:01 a.m. on the Closing Date and
shall be adjusted against the Purchase Price and payable in certified funds at
the Closing:
11.1 Real and personal property taxes which are due as of the Closing,
shall be paid by Seller or allowed as a credit against the Purchase Price.
All unpaid real estate taxes which were a lien in 1998 and will be due and
payable in 1999 will be charged to Seller and allowed as a credit against
the Purchase Price. All other real estate taxes and other assessments which
will become a lien in 1999 against the Property but are not due and payable
until 2000 shall be prorated as of the Closing Date, and if the amount of
taxes due for 1999 but not payable until 2000 has not yet been fixed by
Closing, such taxes shall be prorated based upon the most recent available
mill levy applied to the latest assessed valuations and any assessments,
special or general. All other real estate and personal property taxes,
charges and assessments of municipal or other improvements payable
thereafter shall be paid by Purchaser.
11.2 Seller and Purchaser shall cooperate to cause all utility
suppliers furnishing electrical, gas, water, or other utility services to
the Property to read all utility meters on the Closing Date and to bill
Seller separately for all such charges. Purchaser shall be responsible for
making its own arrangements with respect to future billings and deposits.
In the event any such utility supplier refuses to read and bill any such
utilities, then such utility charges shall be prorated at or after the
Closing in accordance with this Section 11 based upon the bill for the
preceding billing period.
11.3 Any insurance policies held in Seller's name that are not assumed
by Purchaser shall be cancelled as of the Closing Date. Premiums on all
insurance policies applicable to the Property that are assumed by Purchaser
shall pro rated in accordance with this Section 11.
11.4 The portion of current rents and prepaid rents, additional rents,
reimbursements and/or other sums payable by tenants under any leases or
subleases relating to the Property ("Leases"), if any, collected by Seller
prior to the Closing Date which are allocable to the period commencing with
and following the Closing Date shall be paid to Purchaser at Closing.
Notwithstanding the foregoing, if any past-due rents, additional rents,
reimbursements and/or other sums (collectively, "Rentals") are owing by
tenants under the Leases at the Closing Date, all such Rentals shall be
prorated on the basis of the time period for which they were due, and
Purchaser shall within ten (10) days after receipt and clearance of checks
pay to Seller any Rentals which pertain to the time period prior to
Closing.
11.5 All charges and revenues arising out of the service contracts
which Purchaser has not elected to terminate shall be prorated as of the
Closing. All charges and revenues arising out of the service contracts
which Purchaser has elected to terminate shall be paid by Seller as long as
Purchaser notifies Seller not less than 35 days prior to Closing which
contracts will be terminated.
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11.6 Any prepaid expenses relating to the Property.
Seller shall be responsible for the cost of (i) the owner's title insurance
policy; (ii) updating the Survey; (iii) one-half of any escrow fees and real
estate transfer, stamp or documentary taxes; (iv) any sales or use taxes
relating to the transfer of personal property to the Purchaser; and (v) all fees
and costs (except Purchaser's attorneys' fees) related to assumption of the
Mortgage Debt by Purchaser. Purchaser shall be responsible for: (i) one-half of
any escrow fees and real estate transfer, stamp or documentary taxes; (ii)
recording the special warranty deed from Seller to Purchaser; and (iii)
mortgagee's title insurance, if any. Seller and Purchaser shall each pay the
fees and disbursements of its respective counsel and any inspecting architects,
engineering or other consultants hired by such party. In addition, Seller shall
deliver to Purchaser all security deposits previously collected by Seller from
tenants, if any, and any prepaid rent collected by Seller.
Purchaser and Seller agree to calculate all prorations required under this
Section 11 with respect to those items which cannot be accurately or finally
determined at Closing and to make the applicable payments resulting from those
calculations within 30 days after Closing. Each of these calculations shall be
apportioned retroactive to the Effective Date. If any errors or omissions are
made regarding adjustments and prorations the parties shall make appropriate
corrections promptly upon the discovery thereof. If any estimations are made at
the Closing regarding adjustments or prorations, the parties shall make the
appropriate corrections promptly when accurate information becomes available.
Any corrected adjustment or proration shall be paid in cash to the appropriate
party within fifteen (15) days of the correction or adjustment. Notwithstanding
anything to the contrary in this Section 11, any right to a correction or
adjustment shall terminate one (1) year after the Closing.
12. Assessments. Any bonds or improvement assessments which are a recorded
lien on the Property shall be assumed by Purchaser at the Closing.
13. Casualty Loss. If, prior to Closing, the Property shall be damaged or
destroyed by fire, explosion, disaster, earthquake, accident, disturbance or act
of God (except any damage or destruction caused by Purchaser or its agents,
servants or employees), within five days of becoming aware of such damage or
destruction, Seller shall deliver to Purchaser written notice thereof and the
estimated cost of repair, based upon Seller's reasonable good faith business
judgement. If the Property is " substantially damaged" i.e. (1) the estimated
cost of repairing such damage or destruction exceeds in the aggregate $100,000,
or (2) the casualty materially and adversely affects access to the Property, or
(3) the casualty would give one or more tenants with an aggregate total rental
square footage of more than 10,000 square feet, the right to terminate their
respective leases, or (4) the casualty would cause the rent of any one or more
tenants to abate for any period of time unless Seller is willing to credit
Purchaser for the full amount of the abated rent, this Agreement shall
automatically terminate unless Purchaser delivers to Seller written notice
waiving the right to terminate within five days following delivery to Purchaser
of Seller's notice of such damage. If Purchaser delivers notice of such waiver
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within such five-day period the transactions required by this Agreement shall
nevertheless close on the scheduled date, according to the terms of this
Agreement, and Seller shall assign to Purchaser all of Seller's rights to any
insurance proceeds payable as a result of such damage or destruction, except for
any claim for rent loss incurred prior to the Closing, and the Purchase Price
shall be reduced by the amount of the estimated cost of repairing such damage or
destruction that is not paid by insurance up to a maximum of $100,000. If the
estimated cost of repairing, such damage or destruction is equal to or less than
$100,000, and if the casualty is not one that otherwise gives Purchaser the
right to terminate this Agreement pursuant to this Section 13, the Closing shall
proceed and Seller shall assign to Purchaser all of Seller's rights to any
insurance proceeds payable as a result of such damage or destruction, except for
any claim for rent loss incurred prior to the Closing, and the Purchase Price
shall be reduced by the amount of the estimated cost of repairing such damage or
destruction that is not paid by insurance. If any damage to or destruction of
the Property is caused by Purchaser or its agents, servants or employees, then
the transactions required and contemplated by this Agreement shall nevertheless
close according to the terms of this Agreement, there shall be no reduction of
the Purchase Price and Purchaser shall be solely responsible for all repairs or
reconstruction unless such damage or destruction is covered by insurance, in
which event all insurance proceeds otherwise payable to Seller (except for any
claim for rent loss incurred prior to Closing) shall be assigned to Purchaser.
14. Representations And Warranties By Seller. Seller hereby represents and
warrants to Purchaser that the following are true and correct as of the date of
the execution of this Agreement and that the following shall be true and correct
as of the Closing:
14.1 Seller is duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has the power and authority to
carry on its business and to enter into this Agreement and the transactions
contemplated hereby.
14.2 The improvements situated on the Property are connected to all
public utility systems (including without limitation the sewer system) and,
to the best of Seller's knowledge, all utility systems are operational and
in compliance with all applicable public and private requirements.
14.3 Except as previously disclosed to Purchaser, to the best of
Seller's knowledge, there are no actions, suits, investigations, or
proceedings at law or in equity by or before any court, governmental
instrumentality, commission, or other agency now pending or threatened or
against or affecting Seller or any of Seller's properties or rights, before
any court, arbitrator, or administrative or governmental body which may
result in an adverse change in Seller's business or any of their respective
conditions, financial or otherwise. Further, Seller is not in default with
respect to any order, writ, injunction, or decree of any court or any
governmental agency or department.
14.4 Except for the requirement that the sale of the Property to
Purchaser be approved by the limited partners of Seller as contemplated by
Section 8.10 of this Agreement, Seller and Seller's appointed
representatives have full power, authority and legal right to execute and
deliver and to perform and observe the provisions hereof and of the
transactions contemplated hereby. Seller is not in default in the
performance of any obligation, covenant or condition in any agreement,
decree, or order to which Seller is party or by which Seller is bound or to
which any of Seller's properties are subject, including this Agreement.
Seller is not a party to a contract or agreement or subject to any
restriction which adversely affects Seller's business, property, assets or
financial condition. Seller is not a party to or otherwise subject to any
contract or agreement which restricts or otherwise affects Seller's right
or ability to undertake the transactions contemplated hereby or the
performance of any of its respective terms.
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14.5 Seller's execution of this Agreement will not violate any
provision of law or any agreement previously entered into, other than the
Mortgage and Indemnification Agreements which are being assumed by
Purchaser to the extent set forth in Section 1.2.2 as a condition of
Closing and for which Seller shall obtain all required consents or waivers
prior to Closing.
14.6 No tax liability which is now past due, including without
limitation, income tax liability, of any nature has been asserted against
Seller or the Property by any taxing authority.
14.7 Neither this Agreement nor any other document, certificate, or
statement furnished to Purchaser by Seller or any partner, employee, or
affiliate of Seller or, to the best knowledge of Seller, by any third party
in connection with the transactions contemplated hereby, contains any
untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. All of Seller's financial statements submitted to Purchaser
have been prepared in accordance with generally accepted accounting
principles consistently applied, unless otherwise expressly noted.
14.8 To the best of Seller's knowledge, no consent, approval,
authorization, permit or license from any federal, state, or local
regulatory authority is required in connection with the transactions
contemplated herein.
14.9 To the best knowledge of Seller, the improvements situated on the
Property are complete and structurally sound and all mechanical systems
contained therein are adequate for their intended use and in proper working
condition. Other than as previously disclosed to Purchaser, the Property
does not require any major repairs or further work.
14.10 Seller represents and warrants that based on its review of the
Phase I Report and its ownership and management of the Property since the
date of such report, neither the Property nor Seller, nor, to the best of
Seller's knowledge, any previous owner of the Property, is in violation of
or subject to any existing, pending or threatened investigation or inquiry
by any governmental authority or any remedial obligations under any
applicable laws, rules or regulations pertaining to health or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") and
the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"),
and Seller further represents and warrants that there are no facts,
conditions or circumstances known to Seller which could result in any such
investigation or inquiry if such facts, conditions and circumstances, if
any, were fully disclosed to the applicable governmental authority. Seller
represents and warrants that Seller has not obtained and Seller is not
required to obtain any permits, licenses, or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures or
equipment in connection with the Property constructed or to be constructed
by reason of any applicable environmental laws, rules or regulations.
Seller represents and warrants that Seller has no knowledge of any oil,
toxic or hazardous substances or solid wastes having been disposed of or
released on the Property other than in connection with the normal
operations of an office building in a manner that is in compliance with all
applicable laws, rules or regulations pertaining to health or the
environment, or any asbestos within the improvements.
14.11 The address set forth below is Seller's true and correct
residence, and Seller has no present intention of becoming a resident of
any other state or jurisdiction.
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14.12 Seller is the sole beneficial, legal, and record owner of the
Property.
14.13 Except as otherwise set forth herein, Seller has full power,
authority, and legal right to sell the Property.
14.14 There are no claims, liens, or other encumbrances on the
Property except for Permitted Title Exceptions and the Mortgage.
14.15 This Agreement constitutes a legal and binding obligation of
Seller, and is valid and enforceable against Seller in accordance with its
terms.
14.16 There are no other restrictions on Seller's right or ability to
sell the Property to Purchaser, except the Mortgage.
14.17 Seller has furnished Purchaser with true and complete copies of
the audited Statement of Assets and Liabilities for the Property as of
December 31, 1998 and the Property's audited statement of operations for
the year ended December 31, 1998 (the "Property Financial Statements"). The
Property Financial Statements were prepared in accordance with Seller's
books and records and in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
and fairly present the financial position of the Property as of the dates
and for the periods indicated.
On or before three business days prior to the Closing Date, Seller
shall furnish Purchaser with an unaudited Statement of Assets and
Liabilities for the Property as of the last day of the month ended
immediately prior to the third business day prior to Closing and an
unaudited income statement for the period beginning on January 1, 1999 and
ending on the last day of the month immediately prior to the third business
day prior to Closing (the "Property Updated Financial Statements"). The
Property Updated Financial Statements have been or will be prepared in
accordance with Seller's books and records and in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, subject to normal year-end adjustments. Seller has no
reason to believe that such adjustments, other than normal year-end
adjustments to depreciation and amortization, will be substantially in
excess of adjustments in prior years relative to the volume and nature of
operations for each of those years. The Property Updated Financial
Statements in all material respects fairly present the financial position
of the Property, as of the dates and for the periods indicated. There are
no material liabilities known to Seller (whether accrued, absolute,
contingent or otherwise) which are not described, shown or provided for in
the financial statements referred to in this section or otherwise in this
Agreement except those arising since the respective dates of the Property
Updated Financial Statements in the ordinary course of Seller's business.
Seller further represents that as of the Closing, the Property Updated
Financial Statements will not vary from the Property Financial Statements
in any material respect. If there is a material change in the Property
Updated Financial Statements from the Property Financial Statements, this
Agreement may be terminated by Purchaser by notice to Seller.
14.18 Seller understands that Purchaser Shares and Adjustment Shares
have not been registered under federal or state securities laws and are
"restricted" securities as defined in Rule 144 under the Securities Act of
1933, as amended (the "Act"). Seller understands that Seller may not sell,
offer for sale, transfer, pledge or hypothecate Purchaser Shares and
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Adjustment Shares in the absence of an effective registration statement
covering that transaction, under all applicable federal and state
securities laws, unless that transaction is exempt from registration under
all applicable federal and state securities laws, including an exemption
under Rule 144 promulgated under the Act. Seller acknowledges that the
distribution described in Section 20.8 will comply with all such applicable
federal and state securities laws. Seller and each transferee of Purchaser
Shares and Adjustment Shares pursuant to Section 20.8 shall sign and
deliver to Purchaser a Subscription Agreement and Registration Rights
Agreement in the form of Exhibit E attached to and made a part of this
Agreement concerning their respective acquisition of Purchaser Shares and
Adjustment Shares.
The foregoing representations and warranties are true and accurate as of
the date hereof, shall be true and accurate as of the Closing, and shall
survive the Closing for a period of twenty-four (24) months after the later
of the Closing Date or termination of the Management Agreement referred to
in Section 20.2 ("Survival Date"), except for the representations and
warranties set forth in Sections 14.1, 14.4 and 14.5, which shall survive.
Seller further agrees to notify Purchaser immediately in writing if any of
the foregoing representations or warranties herein are breached or are no
longer accurate at any time prior to and including Closing.
15. Representations And Warranties By Purchaser. Purchaser hereby
represents and warrants to Seller that the following are true and correct as of
the date of the execution of this Agreement and that the following shall be true
and correct as of the Closing:
15.1 Purchaser is duly organized, validly existing, and in good
standing under the laws of the state of Delaware and has the power and
authority to carry on its business, and to enter into this Agreement and
the transactions contemplated hereby.
15.2 The authorized capital stock of Purchaser consists of 10,000,000
common shares, of which 1,658,770 shares are issues and outstanding. All of
the Purchaser Shares and Adjustment Shares are validly authorized and, upon
issuance to Seller and Seller's partners, will be validly issued, fully
paid and non-assessable. Except for the above shares and as disclosed in
the Annual Report on Form 10-KSB for the year ended December 31, 1998 ,
there is no outstanding capital stock, and there are no outstanding rights,
options, calls, subscriptions, warrants, agreements or commitments of any
character relating to, nor any outstanding securities convertible into, the
issued or unissued capital stock of Purchaser. No holder of Purchaser's
shares is entitled to preemptive rights. Other than (i) the quarterly
dividend of $.12 per share declared on March 10, 1999 with a record date of
March 31, 1999 and a payment date of April 14, 1999, and (ii) the quarterly
dividend in an amount not to exceed $.13 per share planned to be declared
in June 1999 with a record date in June or July 1999 and a payment date in
July 1999, since December 31, 1998, Seller has not declared or paid any
dividend on, or declared or made any distribution of, or authorized the
creation or issuance of, or authorized or effected any split or any
recapitalization of, any of its capital stock, or directly or indirectly
redeemed, purchased or otherwise acquired any of its shares. There are no
outstanding contractual obligations of Purchaser to repurchase, redeem or
otherwise acquire any shares of Purchaser's capital stock.
15.3 Except as previously disclosed to Seller, there are no actions,
suits, investigations, or proceedings at law or in equity by or before any
court, governmental instrumentality, commission, or other agency now
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pending or threatened or against or affecting Purchaser (or any of its
subsidiaries or related entities) or any of Purchaser's properties or
rights, before any court, arbitrator, or administrative or governmental
body which may result in an adverse change in Purchaser's business or its
condition, financial or otherwise. Further, Purchaser is not in default
with respect to any order, writ, injunction, or decree of any court or any
governmental agency or department.
15.4 Except for the requirement that the issuance of Purchaser Shares
and the Adjustment Shares be approved by Purchaser's stockholders as
contemplated by Section 8.9 of this Agreement, Purchaser has full power,
authority and legal right to execute and deliver and to perform and observe
the provisions hereof and of the transactions contemplated hereby.
Purchaser is not in default in the performance of any obligation, covenant
or condition in any agreement, decree, or order to which Purchaser is party
or by which Purchaser is bound or to which any of Purchaser's property is
subject. Purchaser is not a party to a contract or agreement or subject to
any articles of incorporation or other corporate restriction which
adversely affects Purchaser's business, property, assets or financial
condition. Purchaser is not a party to or otherwise subject to any contract
or agreement which restricts or otherwise affects Purchaser's right or
ability to undertake the transactions contemplated hereby or the
performance of any of its respective terms.
15.5 The Purchaser's execution of this Agreement has been duly
authorized and will not violate any provision of law or certificate of
incorporation or corporate bylaws or any other agreement previously entered
into.
15.6 Neither this Agreement nor any other document, certificate, or
statement furnished to Seller by Purchaser or any director, officer,
employee, or affiliate of Purchaser, or to the best knowledge of Purchaser,
by any third party, in connection with the transactions contemplated
hereby, contains any untrue statement of material fact or omits to state a
material fact necessary in order to make the statements contained herein
and therein not misleading.
15.7 No consent, approval, authorization, permit or license from any
federal, state, or local regulatory authority is required in connection
with the transactions contemplated herein.
15.8 To the best knowledge of Purchaser, there are no existing
violations of any applicable provision of (i) federal laws or regulations
applicable to the business of Purchaser such as, but not limited to, those
relating to government contracting, employment practices, occupational
safety and health, environmental protection, toxic substances, securities
regulation or otherwise, or (ii) any provision of any comparable state,
local or foreign laws or regulations. During the past three years,
Purchaser has not been charged with any violation of any law or regulation
relating to its business practices, employment practices, safety or working
conditions or other federal or state regulation.
15.9 At the time the proxy statement is mailed to the shareholders of
Purchaser, at the time of the shareholders' meeting and on the Closing Date
the proxy statement (i) will comply as to form in all material respects
with the provisions of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, and (ii) will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that Purchaser makes no representation or warranty with
respect to information contained in the proxy statement furnished in
writing to Purchaser by Seller or Seller's partners or a Designee (as
defined in Section 20.6).
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15.10 Except as otherwise provided in this Agreement or in the
Corporate Information, from the date of the filing with the SEC of
Purchaser's latest periodic report pursuant to the Exchange Act through the
execution date of this Agreement, there has been no material adverse change
in the condition of Purchaser or in the business, results of operations,
assets, net worth, prospects, properties, litigation or the manner of
conducting the business of Purchaser ("business and operations"), other
than changes in the ordinary course of business and other than changes that
might result from general business or economic conditions, such as internet
rate levels, that are in the public domain. At all times from and after the
execution date of this Agreement and through the Closing and Closing Date,
Seller shall be kept fully advised with respect to the business and
operations of Purchaser. Seller has and shall continue to have access (in
the manner and subject to the limitations herein provided) to the books and
records of Purchaser and all material changes, if any, in the business and
operations of Purchaser have been and shall have been reviewed with Seller.
15.11 Each director and officer of Purchaser shall represent and
warrant that he is not aware of any action taken individually or by
Purchaser which could cause any of Purchaser's representations or
warranties herein to be untrue as of the date of the Closing or the Closing
Date.
The foregoing representations and warranties are true and accurate as of
the date hereof, shall be true and accurate as of the Closing, and shall survive
the Closing. Purchaser further agrees to notify Seller immediately in writing if
any of the representations or warranties herein are breached or are no longer
accurate at any time prior to and including the Closing.
16. Opinion Of Counsel. At the Closing, the Purchaser shall receive from
Seller an opinion, addressed to the Purchaser, of Wallack, Somers & Haas, PC,
Indianapolis, Indiana, counsel to Seller, that as of the Closing:
16.1 Seller has been duly formed and organized as a limited
partnership and is validly existing and in good standing under the laws of
the State of Delaware. Seller is duly qualified and licensed as a limited
partnership authorized to do business in the State of Indiana and, to the
best of such counsel's knowledge, the State of Indiana is the only
jurisdiction in which the failure to qualify would have a materially
adverse effect on the operations of Seller or the Property.
16.2 Seller's execution of this Agreement has been duly authorized and
will not violate any provision of the Certificate of Limited Partnership or
Partnership Agreement of Seller.
16.3 This Agreement, when executed and delivered by Seller, will be
valid and binding on Seller and enforceable in accordance with its terms,
except that (i) the enforcement of certain rights and remedies created by
this Agreement is subject to bankruptcy, insolvency, reorganization and
similar laws of general application affecting the rights and remedies of
parties, (ii) the enforceability of any particular provision of this
Agreement under principles of equity or the availability of equitable
remedies, such as specific performance, injunctive relief, waiver or other
equitable remedies is subject to the discretion of courts of competent
jurisdiction, and (iii) any court or administrative body may refuse to
enforce the indemnification provisions of this Agreement.
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In rendering its opinion, counsel may rely as to factual matters on
certificates of public officials and officers or employees of Seller provided
that copies of such opinions and certificates shall be delivered with such
opinion, provided further that in the case of any such reliance, counsel shall
state that it believes that it is justified in relying on such opinions and
certificates for such matters.
17. Opinion of Counsel. At the Closing, Seller shall receive from Purchaser
an opinion, addressed to Seller, of Patton Boggs LLP, counsel to Purchaser, that
as of the Closing:
17.1 Purchaser has been duly formed and organized as a corporation and
is validly existing and in good standing under the laws of the State of
Delaware.
17.2 The authorized capital stock of Purchasers consists of 10,000,000
shares of Common Stock, of which 1,658,770 shares are issued and
outstanding. All of the Purchaser Shares and Adjustment Shares are validly
authorized and, upon issuance to Seller and Seller's partners in accordance
with the terms of this Agreement, will be validly issued, fully paid and
non-assessable. To the best of such counsel's knowledge, except for the
Purchaser Shares and Adjustment Shares and as disclosed in the Annual
Report on Form 10-KSB for the year ended December 31, 1998, there is no
outstanding capital stock, and there are no outstanding rights, options,
calls, subscriptions, warrants, agreements or commitments of any character
relating to, or any outstanding securities convertible into, the issued or
unissued capital stock of Purchaser. No holder of Purchaser's shares is
entitled to preemptive rights. To the best of such counsel's knowledge,
other than the dividend of $.12 per share declared on March 10, 1999 with a
record date of March 31, 1999 and a payment date of April 14, 1999, since
December 31, 1998, Seller has not declared or paid any dividend on, or
declared or made any distribution of, or authorized the creation or
issuance of, or authorized or effected any split or any recapitalization
of, any of its capital stock, or directly or indirectly regained, purchased
or otherwise acquired any of its shares. To the best of such counsel's
knowledge, there are no outstanding contractual obligations of Purchaser to
repurchase, redeem or otherwise acquire any shares of Purchaser's capital
stock.
17.3 Seller's execution of this Agreement has been duly authorized and
will not violate any provision of the Certificate of Incorporation or
Bylaws of Purchaser.
17.4 This Agreement, when executed and delivered by Purchaser, will be
valid and binding on Purchaser and enforceable in accordance with its
terms, except that (i) the enforcement of certain rights and remedies
created by this Agreement is subject to bankruptcy, insolvency,
reorganization and similar laws of general application effecting the rights
and remedies of parties, (ii) the enforceability of any particular
provision of this Agreement under principles of equity or the availability
of equitable remedies, such as specific performance, injunctive relief,
waiver or other equitable remedies is subject to the discretion of courts
of competent jurisdiction, and (iii) any court or administrative body may
refuse to enforce the indemnification provisions of this Agreement.
In rendering its opinion, counsel may rely as to factual matters on
certificates of public officials and officers or employees of Seller provided
that copies of such opinions and certificates shall be delivered with such
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opinion, provided further that in the case of any such reliance, counsel shall
state that it believes that it is justified in relying on such opinions and
certificates for such matters.
18. Default. If Seller fails to comply with this Agreement for any reason,
Purchaser may either enforce specific performance, terminate this Agreement or
seek such other relief as may be provided by law. If Purchaser fails to comply
with this Agreement for any reason, Seller may terminate this Agreement or seek
such other relief as may be provided by law. In any action to enforce this
Agreement or for other relief provided by law, the prevailing Party shall be
entitled to such attorneys' fees and expenses as may be allowed by the court,
arbitrator or other judicial body.
19. Commission. Seller agrees and represents that no sales fees or sales
commissions will be due or payable to anyone by Seller with respect to the
transaction contemplated by this Agreement. Purchaser agrees and represents that
no sales fees or sales commissions will be due or payable to anyone by Purchaser
with respect to the transaction contemplated by this Agreement.
20. Indemnity Agreements. Purchaser hereby agrees to indemnify and hold
harmless Seller and Seller's officers, directors, employees and agents against
any loss, injury, damage, claim, lien, cost or expense, including reasonable
attorneys' fees, arising because of a breach by Purchaser of any lease, breach
by Purchaser of any contract, breach by Purchaser of this Agreement or of any
representations or warranties included in this Agreement, a claim by any broker
that it represented Purchaser or is otherwise entitled to compensation in
connection with this Agreement or with the sale of the Property, or any other
matter related to the Property which occurs after the Closing. Seller hereby
agrees to indemnify and hold harmless Purchaser and its officers, directors,
employees and agents against any loss, damage, claim, lien, cost or expense,
including reasonable attorneys' fees, arising out of a breach by Seller of any
lease, breach by Seller of any contract, breach by Seller of this Agreement or
of any representations or warranties included in this Agreement or the breach by
Seller of any agreement, representation or warranty included in any document
delivered by or on behalf of Seller in connection with this Agreement, a claim
by any broker that it represented Seller or is otherwise entitled to
compensation in connection with this Agreement or with the sale of the Property,
or any other matter related to the Property which occurs prior to the Closing.
21. Additional Agreements.
21.1 Registration Rights.
21.1.1 AmeriVest will, no later than 45 days after the Closing
Date, file with the SEC a registration statement on Form S-3 or other
appropriate Form under the Securities Act of 1933, as amended (the
"1933 Act") including such amendments as may be necessary, registering
the transfer of Purchaser Shares and any Adjustment Shares by the
partners of Seller and the shareholders of the general partner of
Seller or by Seller (the "Selling Stockholders") to parties not
related to Seller. Purchaser shall use reasonable diligence to cause
the registration statement to become effective and to remain effective
for a period ending two years after the Closing Date or such earlier
period as all Purchaser Shares and Adjustment Shares shall have been
sold to third parties by the partners of Seller.
21.1.2 As to the registration statement, Purchaser's obligations
contained in this Section 21.1 shall be conditioned upon timely
receipt by Purchaser in writing of information as to the terms of the
contemplated transfer to be registered furnished by and on behalf of
the Selling Stockholders and such other information as Purchaser or
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the managing underwriter, if any, reasonably may require from such
person or any underwriter for any shares of the Common Stock for
inclusion in the registration statement. Such information shall be
provided to Purchaser in writing within 10 days after the request for
that information by Purchaser.
21.1.3 All registration expenses incurred by Purchaser in
connection with the registration, qualification or compliance pursuant
to this Section 21.1, including reasonable printing expenses, fees and
disbursements of Purchaser's counsel, and registration and filing fees
relating to shares of Common Stock to be registered on behalf of
Purchaser or Selling Stockholders pursuant to the registration
statement required to be filed by Purchaser on behalf of the Selling
Stockholders pursuant to this Section 21.1, shall be borne by
Purchaser. All selling expenses, including commissions and brokers' or
investment bankers' expense allowances allocable to Purchaser Shares
and Adjustment Shares and the costs of counsel, if any, for the
Selling Stockholders pursuant to the registration, shall be borne by
the Selling Stockholders.
21.1.4 In the case of the registration, qualification or
compliance effected by Purchaser on behalf of the Selling Stockholders
pursuant to this Section 21.1, Purchaser shall keep the Selling
Stockholders advised in writing as to the initiation of such
registration, qualification, and compliance and as to the completion
thereof. At its expense, Purchaser will keep such registration,
qualification or compliance effective for a period ending two years
after the Closing Date or until the Selling Stockholders have
completed the distribution described in the registration statement
relating thereto, whichever first occurs. At its expense, Purchaser
shall furnish such number of prospectuses and other documents incident
thereto as the Selling Stockholders from time to time may reasonably
request.
21.1.5 In connection with the registration, qualification or
compliance effected by Purchaser on behalf of the Selling Stockholders
pursuant to this Section 21.1, Purchaser shall use its best efforts to
register and qualify the securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions as Seller or the Selling Stockholders may reasonably
request that allow registration by coordination and to do any and all
other acts and things which may be necessary or advisable to enable
the Selling Stockholders to complete such proposed sale or other
distribution of Purchaser Shares and Adjustment Shares in any such
jurisdiction; provided however, that in no event shall Purchaser be
obligated to register or qualify under the blue sky laws of any
jurisdiction which would require Purchaser to qualify to do business
or to file a general consent to service of process in any jurisdiction
where it shall not then be qualified.
21.1.6 In connection with any registration, qualification or
compliance pursuant to this Section 21.1, Purchaser and Seller agree
to the following indemnification terms:
(a) Without limitation of any other indemnity provided to
Seller, to the extent permitted by law, Purchaser shall indemnify
and hold harmless Seller and each Selling Stockholder, Seller's
affiliates, employees, partners and counsel, any underwriter (as
defined in the U.S. Securities Act of 1933, as amended (the
"Securities Act")) for the Selling Stockholders, and each person,
if any, who controls the underwriter (within the meaning of the
Securities Act or the U.S. Securities Exchange Act of 1934 (the
"Exchange Act")), against any losses, claims, damages or
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liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such
registration statement including any preliminary prospectus or
final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein in light of the
circumstances in which they were made not misleading, (iii) any
violation or alleged violation by Purchaser of the Securities
Act, the Exchange Act, or any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act
or any state securities law, and Purchaser shall reimburse Seller
and each Selling Stockholder and each affiliate, employee,
partner, counsel of Seller, underwriter or controlling person for
any legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that Purchaser shall not
be liable hereunder in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of,
or is based upon, a violation which occurs in reliance upon and
in conformity with information furnished expressly for use in
connection with such registration by Seller or any Selling
Stockholder or any other affiliate, employee, partner, counsel or
controlling person thereof. Individual Selling Stockholders shall
be liable solely for information provided by them and not for
information provided by other Selling Stockholders.
(b) Insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
any untrue statements of a material fact contained in any such
registration statement based upon (i) information provided by
such person to Purchaser specifically for inclusion therein in
connection with the offer or sale of Purchaser Shares and
Adjustment Shares, or (ii) any violation or alleged violation by
such person of any federal or state securities law or any
regulation promulgated under any federal or state securities law,
each Selling Stockholder shall, if securities held by such
Selling Stockholder pursuant to the registration statement are
included in such registration, to the extent permitted by law,
indemnify and hold harmless Purchaser, its affiliates, its
counsel, officers, directors, shareholders, any underwriter (as
defined in the Securities Act) and each person, if any, who
controls Purchaser or the underwriter (within the meaning of the
Securities Act) against any losses, claims, damages or
liabilities to which they may become subject under the Securities
Act, the Exchange Act or any state securities law, and each
Selling Stockholder shall reimburse each of Purchaser and such
affiliate, officer or director or partner, underwriter or
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under
this Section 21.1.6 of notice of the commencement of any action
(including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against any
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indemnifying party under this Section 21.1.6, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in
the defense thereof, and if the indemnifying party agrees in
writing that it will be responsible for any costs, expenses,
judgments, damages and losses incurred by the indemnified party
with respect to such claim, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own
counsel, with the reasonable fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes
that representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement
of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Agreement only if
and to the extent that such failure is materially prejudicial to
its ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise
than under this Agreement.
(d) If the indemnification provided for in this Agreement is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim,
damage or expense in such proportion as is appropriate to reflect
the relevant fault of the indemnifying party on the one hand and
the indemnified party on the other hand in connection with the
statements or omissions which resulted in such loss, liability,
claim, damage or expenses as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and
the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
(e) The indemnification provided by this Agreement shall be
a continuing right to indemnification and shall survive the
registration and sale of Purchaser Shares and Adjustment Shares
by any person entitled to indemnification hereunder and the
expiration or termination of this Agreement.
21.1.7 With a view to making available to the Selling
Stockholders the benefits of Rule 144 and any other rule or regulation
of the SEC that may at any time permit a Selling Stockholder to sell
securities of Purchaser to the public without registration, Purchaser
agrees to use its best efforts to: (i) make and keep public
information available, as those terms are understood and defined in
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Rule 144, at all time subsequent to the Closing Date; (ii) file with
the SEC in a timely manner all reports and other documents required of
Purchaser under the Securities Act and the Exchange Act; (iii) furnish
to any Selling Stockholder so long as such person owns any of
Purchaser Shares or Adjustment Shares forthwith upon request a copy of
the most recent annual or quarterly report of Purchaser, and such
other reports and documents so filed by Purchaser as may be reasonably
requested in availing the holder of any rule or regulation of the SEC
permitting the selling of any such securities without registration.
21.2 Property Management, Continuing Operations and Approvals.
Sheridan Development, LLC shall serve as property manager for the Property
for a management fee equal to five percent of the gross rents from the
Property pursuant to the terms of the Management Agreement attached to and
made a part of this Agreement as Exhibit F. Until the Closing, Seller shall
(i) continue its normal maintenance and repairs of the Property; (ii)
continue to operate and manage the Property in a manner consistent with
Seller's past and usual practice; (iii) without the approval of Purchaser,
not make or enter into any new leases or modifications thereof or any new
contracts for the maintenance, service, management or repair of the
Property which are not terminable with 30 days or less prior written
notice; (iv) use reasonable and customary efforts to collect all rents
which are due and payable as of the Closing; and (v) use reasonable efforts
to comply with Seller's obligations under the leases and contracts.
Notwithstanding the foregoing, unless otherwise required by the terms of
the leases, Seller shall not be required to undertake any substantial
repairs, renovations or capital improvements to the Property, except those
repairs, renovations or capital requirements required by law in which case
Seller may terminate this Agreement by giving written notice to Purchaser
setting forth in reasonable detail the reasons for the termination if the
cost of those repairs, renovations or capital improvements exceed $25,000
in the aggregate. Any contract or agreement, including leases and
modifications thereof, requiring Purchaser's approval shall be sent to
Purchaser with a written request for approval together with any other
information relating to the requested approval. Purchaser shall respond to
Seller's request for approval within three (3) business days after the
delivery of the request. Unless Purchaser delivers written notice to Seller
approving the proposed agreement within three (3) business days, Purchaser
shall be deemed to have disapproved such agreement and Seller may not enter
into such lease, contract or agreement in the form previously delivered to
Purchaser.
21.3 Right Of First Refusal Concerning ROFR Parcel. After the Closing,
Purchaser shall have a first right to purchase and a right of first refusal
to purchase the ROFR Parcel as follows: if Seller desires to sell the ROFR
Parcel, Seller shall first present Purchaser with a written offer setting
forth the material terms pursuant to which it is willing to sell the ROFR
Parcel. Within 30 days after receipt of this offer, Purchaser shall notify
Seller if it wishes to accept this offer. If Purchaser does not accept this
offer, then Seller may proceed to offer the property to others, provided
that if Seller receives a bona fide written offer, including a letter of
intent ("Offer") signed by a third party that desires to purchase the ROFR
Parcel, then Seller shall deliver a copy of the Offer to Purchaser, and
Purchaser shall have 10 days thereafter to deliver written notice to Seller
that Purchaser desires to purchase the ROFR Parcel on the same terms and
conditions as those set forth in the Offer. If Purchaser delivers written
notice within this time period, then Seller shall sell the ROFR Parcel to
Purchaser on the terms set forth in the Offer together with such other
terms and conditions that would be considered standard in a transaction of
this nature. If Purchaser does not deliver written notice within the stated
time period, then Seller may proceed to sell the ROFR Parcel on the terms
and conditions set forth in the Offer, together with the same "standard"
other terms and conditions that Seller requested of Purchaser, to the party
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that submitted the Offer. If Seller does not consummate the purchase of the
ROFR Parcel on those terms and conditions set forth within 90 days after
the first to occur of 90 days after the date scheduled for closing in the
Offer or six months after expiration of Purchaser's time period for giving
notice of exercise of its right of first refusal, then Seller may not sell
the ROFR Parcel without recommencing the procedures set forth herein.
Notwithstanding the foregoing, if Purchaser exercises its right of first
refusal or accepts Seller's offer to sell pursuant to the terms of this
paragraph, and Purchaser fails to consummate the acquisition because of
Purchaser's financial or other inability to close the acquisition or
because of Purchaser's lack of good faith, or Purchaser otherwise elects
not to close, provided that any such failure or inability of Purchaser to
close, or election of Purchaser not to close, is not because of Seller's
lack of good faith or other inability to consummate the transaction, and it
is not because of newly discovered adverse information concerning the
Property, then Purchaser's first right of purchase and right of first
refusal shall terminate.
21.4 Confidential Information; Inside Information; Publicity
21.4.1 Information Confidential And Not For Competitive Or Other
Use. Each Party acknowledges that the information provided to that
Party concerning the other Party pursuant to this Agreement
(collectively, the "Information") may include proprietary information
and data, interpretations, innovative processes, trade secrets,
marketing plans, and confidential or specialized data and/or other
information relative to the business and proposed business of the
other Party. " Information" shall not include any information which is
publicly available. Each Party (the "Receiving Party") agrees and
covenants with and unto the other Party (the "Disclosing Party") that
the Receiving Party will use the Information solely to evaluate the
Receiving Party's consummation of the transactions contemplated by
this Agreement. Without limiting the foregoing, except as specifically
authorized in writing by the Disclosing Party or as required by law
(including court order) or applicable federal securities regulations,
in which latter event the Receiving Party will immediately notify the
Disclosing Party of the requirement and reasonably assist the
Disclosing Party in contesting that requirement if requested by the
Disclosing Party, the Receiving Party will not use any Information for
the Receiving Party's or any other person's or entity's benefit,
including in any manner or for any purpose competitive with the
business of the Disclosing Party, and the Receiving Party will not, at
any time, disclose any of the Information to any other person, firm,
corporation or other entity without the written consent of the
Disclosing Party, except for reasonable disclosure made by the
Receiving Party to its employees, consultants, limited partners,
accountants or banks and only after such recipient agrees to be bound
by the terms of this Section 21.4.
21.4.2 Inside Information. Certain of the Information that
Purchaser may furnish to Seller and certain of Seller's
representatives may be material information concerning Purchaser and
its operations that has not been included in publicly filed documents
or otherwise been publicly disclosed (the "Non-Public Information").
Unless the information provided to Seller consists of or has been
specifically included in a periodic report filed with the SEC, a press
release, marketing materials, or otherwise has been made publicly
available otherwise than by Seller, that information shall be
considered Non-Public Information. Seller agrees, and shall cause each
of Seller's representatives who receives such Non-Public Information,
to maintain the confidentiality of the Non-Public Information. Seller
acknowledges that the Purchaser is a corporation that is subject to
the reporting requirements of the Exchange Act and whose common stock
is traded publicly. In this regard, Seller recognizes that applicable
U.S. federal securities laws impose significant restrictions
concerning the use or disclosure of the Non-Public Information in
general and in buying or selling, or discussing with others the
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possibility of buying or selling, Purchaser's securities by persons
who have access to Non-Public Information concerning Purchaser that is
not generally available to members of the general public. Seller
acknowledges that the Non-Public Information may be considered
material non-public information that constitutes "inside information"
under the U.S. federal securities laws. By virtue of its access to the
Non-Public Information, Seller and its representatives will be subject
to these restrictions. Seller agrees that it will not, and that it
will use its best efforts to ensure that any person having access to
such Non-Public Information through it, including without limitation
partners of Seller, will not buy or sell Purchaser's securities, or
discuss with others any Non-Public Information concerning Purchaser or
the possibility or advisability of buying or selling Purchaser's
securities, at any time that the respective Investor possesses
Non-Public Information concerning Purchaser. Seller agrees to disclose
any Non-Public Information obtained by it only to representatives of
Seller and only if each recipient of the Non-Public Information first
agrees that he or she will abide by the provisions of this Section
21.4. Seller and Purchaser hereby confirm that any information
disclosed to Seller, or any discussions held between Seller and
Purchaser, prior to the date of this Agreement shall be subject to the
terms of this Section 21.4.
21.4.3 Responsibility For Recipients Of Information. Each
Receiving Party shall be responsible and liable to the Disclosing
Party for the failure of the Receiving Party or any other person
receiving the Information from the Receiving Party to comply with any
of the provisions of this Section 21.4.
21.4.4 Publicity. All notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement
shall be directed by Purchaser after consultation with Seller.
Notwithstanding anything to the contrary in this Section, any Party to
this Agreement shall be permitted unilaterally to make such notices
and to engage in such publicity as it reasonably deems necessary to
comply with applicable laws and regulations, including its respective
reporting obligations, if any, under the 1934 Act. The provisions of
this Section shall remain in effect only until the earlier to occur of
the Closing or the termination of this Agreement.
21.5 Cooperation Concerning Financial Statements And Taxes. After the
Closing Date, each of the Parties shall cooperate, and cause its respective
directors, employees, officers and representatives to cooperate, with the
others and with each other's respective agents, including accounting firms
and legal counsel, in connection with the preparation or audit of any
financial statements, tax return or report, amended return or report,
periodic report or proxy or information statement required to be filed with
the SEC, claim for refund in any tax claim or litigation in respect of any
of the parties, or the Property or their respective activities, which
cooperation shall include, but not be limited to, making available to the
other all information, records, and documents in their possession relating
to the Property, except as may be limited by this Agreement. Each of the
Parties also shall make available to the others, as reasonably requested
and available, the personnel responsible for preparing, maintaining and
interpreting information, records and documents in connection with
financial statements and taxes of Seller or related to the Property as well
as related litigation. Any information provided or obtained pursuant to
Section 21.5 shall be kept confidential, except as may be otherwise
necessary in connection with the filing of periodic reports required under
the Exchange Act, other disclosure requirements of Purchaser, or of returns
or reports, refund claims, audits, tax claims and litigation.
21.6 Appointment Of Directors. Immediately after the Closing,
Purchaser shall cause two designees (the "Designees") of Seller, who shall
be reasonably acceptable to Purchaser, to be elected directors of Purchaser
in such classes as are available for new directors in accordance with
Purchaser's Bylaws. If, pursuant to Purchaser's Bylaws, the Designees are
to serve in separate classes, Seller may designate which Designee shall
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serve in which class. If not previously elected to Purchaser's Board of
Directors, the initial Designees shall be entitled to attend meetings of
Purchaser's Board of Directors commencing on the date this Agreement is
signed by both Parties and continuing until this Agreement is terminated.
21.7 Additional Documents; Further Assurances. In addition to the
schedules and other items specifically required to be furnished hereunder,
the Parties hereby agree that each will promptly furnish to the other such
further schedules, certificates and other instruments and take such other
action as may reasonably be requested in order to effectuate the purposes
of this Agreement.
21.8 Distribution Of Shares; Lock-Up. Purchaser Shares and Adjustment
Shares to be issued as consideration for the purchase hereunder shall be
distributed to the partners of Seller upon receipt, subject to the
requirements of all applicable federal and state securities laws. This
distribution will be structured to result in compliance by Seller and by
all partners of Seller with Article V, Section 9 of Purchaser's Bylaws, as
amended, with respect to the number of shares of Purchaser's stock that are
deemed to be owned by any person or entity. Prior to transferring Purchaser
Shares and Adjustment Shares on Purchaser's stock transfer records,
Purchaser may require evidence of compliance with applicable federal and
state securities laws and Purchaser's Bylaws, including appropriate
representation or subscription agreements signed by each transferee of
Purchaser Shares and Adjustment Shares, which subscription agreements shall
be substantially in the form of D to and made a part of this Agreement.
Notwithstanding the foregoing, neither Seller nor any partner of Seller may
sell, offer for sale, transfer, pledge or hypothecate in any manner
Purchaser Shares prior to the first anniversary of the Closing Date without
Purchaser's written consent, which consent may be withheld by Purchaser in
Purchaser's sole discretion.
22. Notices. All notices, requests, demands, directions and other
communications ("Notices") concerning this Agreement shall be in writing and
shall be mailed or delivered personally or sent by telecopier or facsimile to
the applicable Party at the address of such Party set forth below in this
Section 22. When mailed, each such Notice shall be sent by first class by first
class, certified mail, return receipt requested, enclosed in a postage prepaid
wrapper, and shall be effective on the fifth business day after it has been
deposited in the mail. When delivered personally, each such Notice shall be
effective when delivered to the address for the respective Party set forth in
this Section 22, provided that it is delivered on a business day and further
provided that it is delivered prior to 5:00 p.m., local time of the Party to
whom the notice is being delivered, on that business day; otherwise, each such
Notice shall be effective on the first business day occurring after the Notice
is delivered. When sent by telecopier or facsimile, each such Notice shall be
effective on the day on which it is sent provided that it is sent on a business
day and further provided that it is sent prior to 5:00 p.m., local time of the
Party to whom the Notice is being sent, on that business day; otherwise, each
such Notice shall be effective on the first business day occurring after the
Notice is sent. Each such Notice shall be addressed to the Party to be notified
as shown below:
To Purchaser:
AmeriVest Properties Inc.
c/o James F. Etter
2801 Youngfield
Suite 300
Golden Colorado 80401
Facsimile: (303) 235-0124
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To Seller:
Sheridan Realty Partners, L.P.
c/o Sheridan Realty Corp., General Partner
1800 Glenarm Place, Suite 500
Denver, Colorado 80202
Facsimile: (303) 296-7353
Attn: Charles K. Knight
Either Party may change its respective address for purposes of this Section
22 by giving the other Party Notice of the new address in the manner set forth
above.
23. Entire Agreement. This Agreement, together with the exhibits attached
hereto, all of which are incorporated by reference, is the entire agreement
between the parties with respect to the subject matter hereof, and no
alteration, modification or interpretation hereof shall be binding unless in
writing and signed by both parties.
24. Severability. If any provision of this Agreement or application to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law.
25. Captions. The captions in this Agreement are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope of this Agreement or the scope or content of any of its provisions.
26. Time Of Essence. Time is of the essence in this Agreement.
27. Counterparts; Facsimile Signatures. This Agreement may be executed and
delivered in any number of counterparts, each of which so executed and delivered
shall be deemed to be an original and all of which shall constitute one and the
same instrument. Facsimile signatures shall be as binding as original
signatures.
28. Recordation. Seller and Purchaser agree not to record this Agreement or
any memorandum hereof.
29. Parties In Interest; Survival; Assignment. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of Seller and Purchaser. All representations, covenants,
and agreements in this Agreement or any statement, certificate, or other
document delivered in connection with this Agreement or pursuant hereto shall
survive the Closing except as specifically limited herein. This Agreement may
not be assigned by either Party without the prior written consent of the other
Party hereto, except that Purchaser may assign this Agreement to a wholly-owned
subsidiary of the Purchaser in which event Purchaser shall continue to be
obligated to issue the Purchaser Shares and Adjustment Shares, if any are
required to be issued, and to register the Registrable Securities in accordance
with the terms of this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers or representatives on the dates set forth
below to be effective as of the date set forth on the first page of this
Agreement.
SHERIDAN REALTY PARTNERS, L.P AMERIVEST PROPERTIES INC.
a Delaware limited partnership a Delaware corporation
By: Sheridan Realty Corp., General Partner
By: /s/ William T. Atkins By: /s/ James F. Etter
-------------------------------- ----------------------------
Signature James F. Etter
President
William T. Atkins, President
- ------------------------------------
Printed Name and Title
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PURCHASE AND SALE AGREEMENT
Dated April 26, 1999
Between Sheridan Realty Partners, L.P. and
AmeriVest Properties Inc.
EXHIBIT INDEX
Exhibit Description
- ------- -----------
A Legal Description
B Leases and Tenancies
C Insurance Policies
D Form of Estoppel Letter
E Subscription and Registration Rights Agreement
F Management Agreement
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