-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkOxQqC5Mh8rkkgMS2296x/qhcRbwaqVcUj80nT14M/nUo95Og3t1ffzaE31mrga xKBiA4STrUPnSozvJMBt/w== 0000892626-97-000094.txt : 19970404 0000892626-97-000094.hdr.sgml : 19970404 ACCESSION NUMBER: 0000892626-97-000094 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19970402 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMLI RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000914724 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363925916 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-24433 FILM NUMBER: 97573845 BUSINESS ADDRESS: STREET 1: 125 S WACKER DR STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129845037 FORMER COMPANY: FORMER CONFORMED NAME: AMLI RESIDENTIAL PROPERTIES INC DATE OF NAME CHANGE: 19931112 S-3 1 As filed with the Securities and Exchange Commission on April 2, 1997 Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------ AMLI RESIDENTIAL PROPERTIES TRUST ----------------------------------------------------- (Exact name of Registrant as specified in its charter) Maryland 36-3925916 (State of organization) (I.R.S. Employer Identification Number) 125 South Wacker Drive Suite 3100 Chicago, Illinois 60606 (312) 443-1477 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ------------------------------ Allan J. Sweet 125 South Wacker Drive Suite 3100 Chicago, Illinois 60606 (312) 443-1477 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ Copy to: Edward J. Schneidman Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Approximate date of commencement of proposed sale to the public: From time to time after the Registration Statement becomes effective. ------------------------------ If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: [ X ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF OF SECURITIES TO AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION BE REGISTERED BE REGISTERED PER SHARE (1) PRICE (1) FEE - ------------------ ------------- --------------- ------------------ ------------ Common Shares of Beneficial Interest, par value $0.01 per share 168,690 shares $23 $3,879,870 $1,176 (1) Estimated solely for purposes of determining the registration fee, based on the average of the high and low sales price on April 1, 1997. ------------------------------ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS ---------- AMLI RESIDENTIAL PROPERTIES TRUST 168,690 Common Shares This Prospectus relates to 168,690 Common Shares of Beneficial Interest, par value $.01 per share (the "Common Shares" and such 168,690 Common Shares, the "Shares"), of Amli Residential Properties Trust, a Maryland real estate investment trust (the "Company"), which may be offered from time to time by certain selling shareholders (the "Selling Shareholders"). The Shares may be issued from time to time upon exchange of 168,690 limited partnership interests ("Units") in Amli Residential Properties, L.P. (the "Operating Partnership") which were issued to the Selling Shareholders, as consideration in the acquisition by the Company of certain assets. See "Selling Shareholders." The Shares are being registered to permit public secondary trading of the Shares from time to time after the date of this Prospectus, but the registration of the Shares does not necessarily mean that any of the Shares will be offered or sold by the Selling Shareholders. The Common Shares are listed on the New York Stock Exchange (the "NYSE") under the symbol "AML." To ensure that the Company maintains its qualification as a real estate investment trust ("REIT"), ownership by any person is limited to 5% of the outstanding Common Shares and preferred shares of beneficial interest of the Company, with certain exceptions. See "Description of Capital Shares-Description of Common Shares-Restrictions on Transfer." The Selling Shareholders may from time to time offer and sell the Shares on the NYSE or otherwise at market prices then prevailing or at prices and upon terms then obtainable. Sales may be made in ordinary brokerage transactions, in block transactions, in privately negotiated transactions, pursuant to Rule 144 ("Rule 144") under the Securities Act of 1933, as amended (the "Securities Act"), or otherwise. If the Shares are sold through brokers, customary brokerage commissions and charges are expected to be paid by the Selling Shareholders. The Company will not receive any of the proceeds from the sale of any of the Shares by the Selling Shareholders but has agreed to bear certain expenses of registration and sale of the Shares. On March 31, 1997, the last reported sale price of the Common Shares on the NYSE was $23 per share. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - ------------------------------ THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------------ The date of this Prospectus is April 2, 1997 No person is authorized in connection with any offering made hereby to give any information or to make any representation not contained in this Prospectus, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or the Selling Shareholders. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the Common Shares offered hereby, nor does it constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in which it is unlawful to make such an offer or solicitation to such person. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstance create any implication that the information contained herein is correct as of any date subsequent to the date hereof. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy material and other information concerning the Company can be inspected and copied at the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or at its regional offices, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, such material can also be obtained from the Commission's Web site at http://www.sec.gov. The Company's outstanding Common Shares are listed on the New York Stock Exchange (the "NYSE") under the symbol "AML", and all such reports, proxy material and other information filed by the Company with the NYSE may be inspected at the offices of the NYSE at 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a registration statement on Form S-3 (together with all amendments and exhibits, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the securities offered hereby. This prospectus ("Prospectus"), which constitutes a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain items of which are omitted in accordance with the rules and regulations of the Commission. Statements made in this Prospectus as to the content of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed or incorporated by reference as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. For further information, reference is hereby made to the Registration Statement which may be inspected and copied in the manner and at the sources described above. INCORPORATION BY REFERENCE The following documents filed by the Company with the Commission (File No. 1-12784) pursuant to the Exchange Act are incorporated by reference in this Prospectus: (1) The Company's Annual Report on Form 10-K (filed March 20, 1997), for the fiscal year ended December 31, 1996; and (2) Description of the Common Shares included in the Registration Statement on Form 8-A dated February 1, 1994 (filed February 1, 1994). All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering made hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document which is or is deemed to be incorporated by reference herein, modifies or supersedes any such statement. Any such statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, on the request of such person, a copy of any of the foregoing documents incorporated herein by reference (other than the exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents). Requests should be directed to Amli Residential Properties Trust, 125 South Wacker Drive, Chicago, Illinois 60606, Attention: Secretary, telephone (312) 984-5037. THE COMPANY The Company and its affiliates constitute a self-administered and self-managed real estate investment trust (a "REIT") which was organized in February, 1994 to continue and expand the multifamily property business conducted by Amli Realty Co. and its affiliates ("Amli") since 1980. The Company and its affiliates own, manage, lease, acquire and develop institutional quality apartment communities. The Company's communities (the "Communities") are located in specific markets in the Southwest, Southeast and Midwest areas of the United States. The Company also holds interests in co-investment ventures involving residential apartment communities (the "Co-Investment Communities"). Additionally, the Company engages in development activities on its own and through co-investment joint ventures. The business of the Company is operated through the Operating Partnership, Amli Management Company (the "Management Company"), Amli Institutional Advisors, Inc. ("AIA") and Amli Residential Construction, Inc. ("Amrescon" and together with the Management Company and AIA, the "Service Companies"). The Company is the sole general partner of the Operating Partnership, a Delaware limited partnership, through which it owns the Communities and its interests in the Co-Investment Communities. As of March 31, 1997, the Company owned 84% of the partnership interests ("Units") in the Operating Partnership. The Management Company provides management and leasing services to each of the Communities, the Co- Investment Communities and several additional properties in which the Company has no interest. AIA, a "QPAM" (qualified professional asset manager), renders real estate investment advice to institutional capital sources, primarily pension plans, endowments, foundations and insurance companies. The Company actively pursues co-investments through relationships administered by AIA, in this way seeking to diversify the sources of its equity capital for investment in apartment communities. Amrescon provides general contracting, construction management and landscaping services to the Company and its managed ventures. The Company was formed as a Maryland real estate investment trust on December 16, 1993. The Company's executive offices are located at 125 South Wacker Drive, Suite 3100, Chicago, Illinois 60606 and its telephone number is (312) 984-5037. The Company's principal office is in Chicago, Illinois with regional offices in Dallas, Texas and Atlanta, Georgia. USE OF PROCEEDS The Company will not receive any of the proceeds of the sale of the Shares offered hereby. All proceeds from the sale of the Shares will be received by the Selling Shareholders. SELLING SHAREHOLDERS The following table provides the name of each Selling Shareholder and, assuming in each case the conversion into Common Shares of all Units held by the Selling Shareholder, the total number of Common Shares held by each Selling Shareholder before the offering, the total number of Common Shares held by each Selling Shareholder which are offered hereby and the number of Common Shares (based on the total number of Common Shares and Units held by the Selling Shareholder as of the date hereof) which will be held by each Selling Shareholder after the offering assuming that all Common Shares offered hereby are sold. Since the Selling Shareholders may sell all, some or none of the Common Shares offered hereby, no estimate can be made of the aggregate number of Common Shares that are to be offered hereby or that will be held by each Selling Shareholder upon completion of the offering to which this Prospectus relates. If, however, all the Common Shares offered hereby are sold by the Selling Shareholders, no Selling Shareholder (based on the total number of Common Shares and Units held by the Selling Shareholders as of the date hereof and assuming conversion into Common Shares of all Units held by the Selling Shareholders) would hold one percent or more of the outstanding Common Shares. None of the information in the following table reflects the total number of Common Shares which any Selling Shareholder may be deemed to beneficially own. Number of Number of Common Shares Common Shares Number of Held After Held Prior to Common Shares Completion of the Offering Offered Hereby the Offering ------------- -------------- ------------- Bristol Chicago Development Corp. 0 26,182 26,182 Sharon Walsh(1) 0 39,324 39,324 William Walsh(1) 0 3,188 3,188 David A. Sislen(1) 0 3,720 3,720 G. David Fensterheim (1) 0 3,188 3,188 Andrew G. New and Cheryl M. New, as Joint Tenants by the Entirety(1) 0 3,720 3,720 JSDP, Inc. 0 2,923 2,923 James E. Sowell 0 34,971 34,971 Donald Pilkinton 0 3,995 3,995 Steven E. Smathers 0 1,930 1,930 J.M. Williams, Jr. a/k/a James M. Williams, Jr. 0 45,549 45,549 (1) Received Units from Bristol Oakhurst Development L.L.C. pursuant to an Assignment and Assumption Agreement, dated December 1, 1996. The Operating Partnership issued 53,140 Units to Bristol Oakhurst Development L.L.C. pursuant to the agreement attached hereto as Exhibit 99.2. DESCRIPTION OF CAPITAL SHARES SHARES OF BENEFICIAL INTEREST AND SHAREHOLDER LIABILITY The Declaration of Trust of the Company provides that the Company may issue up to 150,000,000 shares of beneficial interest, par value $.01 per share. No holder of any class of shares of beneficial interest of the Company will have any preemptive right to subscribe for any securities of the Company except as may be granted by the Board of Trustees in authorizing the issuance of a class of preferred shares of beneficial interest. Any class of preferred shares which may be issued in the future, together with the Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $.01 per share (the "Series A Preferred Shares") are referred to herein as "Preferred Shares." The Company's Declaration of Trust authorizes the Trustees to classify or reclassify any unissued Common Shares or Preferred Shares by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption. Both Maryland statutory law governing real estate investment trusts organized under the laws of that state and the Company's Declaration of Trust provide that no shareholder of the Company will be personally liable for any obligations of the Company. The Company's Declaration of Trust further provides, with certain limited exceptions, that the Company shall indemnify each shareholder against claims or liabilities to which the shareholder may become subject by reason of his being or having been a shareholder and that the Company shall reimburse each shareholder for all legal and other expenses reasonably incurred by him in connection with any such claim or liability. In addition, it is the Company's policy to include a clause in its contracts, including the Partnership Agreement of the Operating Partnership, which provides that shareholders assume no personal liability for obligations entered into on behalf of the Company. However, with respect to tort claims, contractual claims where shareholder liability is not so negated, claims for taxes and certain statutory liability, a shareholder may, in some jurisdictions, be personally liable to the extent that such claims are not satisfied by the Company. Inasmuch as the Company will carry public liability insurance which it considers adequate, any risk of personal liability to shareholders is limited to situations in which the Company's assets plus its insurance coverage would be insufficient to satisfy the claims against the Company and its shareholders. DESCRIPTION OF COMMON SHARES General The summary of certain terms and provisions of the Common Shares contained in this Prospectus does not purport to be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of the Company's Declaration of Trust, as amended, and Bylaws, as amended, which are incorporated by reference herein. All outstanding Common Shares issued are duly authorized, fully paid and, except as described under "--Shares of Beneficial Interest and Shareholder Liability," non-assessable. Subject to the provisions of the Company's Declaration of Trust regarding Excess Shares (as defined below), each outstanding Common Share entitles the holder thereof to one vote on all matters voted on by shareholders, including the election of Trustees. Holders of Common Shares do not have the right to cumulate their votes in the election of Trustees, which means that the holders of a majority of the outstanding Common Shares can elect all of the Trustees then standing for election. Distributions may be paid to the holders of Common Shares if and when declared by the Board of Trustees of the Company out of funds legally available therefor, subject to the provisions of the Company's Declaration of Trust regarding Excess Shares. The Company currently pays regular quarterly dividends. Holders of Common Shares have no conversion, redemption, preemptive or exchange rights to subscribe to any securities of the Company. If the Company is liquidated, each outstanding Common Share will be entitled to participate pro rata in the assets remaining after payment of, or adequate provision for, all known debts and liabilities of the Company and the rights of holders of any Preferred Shares. The rights of holders of Common Shares are subject to the rights and preferences established by the Board of Trustees for any Preferred Shares which have been or may be issued by the Company. For a description of the rights and preferences of the Series A Preferred Shares, see "--Description of Series A Preferred Shares." Restrictions on Transfer The Company's Declaration of Trust contains certain restrictions on the number of Common Shares and Preferred Shares that individual shareholders may own. For the Company to qualify as a REIT under the Code, no more than 50% in value of its shares of beneficial interest (after taking into account options to acquire shares of beneficial interest) may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities and constructive ownership among specified family members) during the last half of a taxable year (other than the first taxable year) or during a proportionate part of a shorter taxable year. The shares of beneficial interest must also be beneficially owned (other than during the first taxable year) by 100 or more persons during at least 335 days of a taxable year or during a proportionate part of a shorter taxable year. Because the Company expects to qualify as a REIT, the Declaration of Trust of the Company contains restrictions on the acquisition of Common Shares and Preferred Shares intended to ensure compliance with these requirements. Subject to certain exceptions specified in the Company's Declaration of Trust, no holder may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 5% (the "Ownership Limit") of the number or value of the issued and outstanding shares of beneficial interest of the Company. The Company's Board of Trustees, upon receipt of a ruling from the Internal Revenue Service (the "Service"), an opinion of counsel or other evidence satisfactory to the Board of Trustees, and upon such other conditions as the Board of Trustees may direct, may also exempt a proposed transferee from the Ownership Limit. As a condition of such exemption, the intended transferee must give written notice to the Company of the proposed transfer no later than the fifteenth day prior to any transfer which, if consummated, would result in the intended transferee owning shares in excess of the Ownership Limit. The Board of Trustees of the Company may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure the Company's status as a REIT. Any transfer of Common Shares or Preferred Shares that would (i) create a direct or indirect ownership of shares in excess of the Ownership Limit, (ii) result in the shares being beneficially owned by fewer than 100 persons as provided in Section 856(a) of the Code, or (iii) result in the Company being "closely held" within the meaning of Section 856(h) of the Code, shall be null and void, and the intended transferee will acquire no rights to the shares. The foregoing restrictions on transferability and ownership will not apply if the Board of Trustees determines, which determination must be approved by the shareholders, that it is no longer in the best interests of the Company to attempt to qualify, or to continue to qualify, as a REIT. The Company's Board of Trustees by resolution has excluded from the foregoing ownership restriction UICI and Gregory T. Mutz who collectively may own up to 34.9% of the outstanding shares of beneficial interest of the Company as a group, or, subject to certain limitations, individually (subject to the group restrictions) up to 29.9% of the outstanding shares of beneficial interest of the Company in the case of UICI and up to 24.9% in the case of Gregory T. Mutz. The Company's Declaration of Trust excludes certain investors (and their transferees) from whom apartment communities were obtained in exchange for Units or Common Shares in connection with the formation of the Company and who would exceed the Ownership Limit as a result of the ownership of such Common Shares or the exchange of such Units for Common Shares. In no event will such persons be entitled to acquire additional shares of beneficial interest of the Company such that the five largest beneficial owners of shares of beneficial interest of the Company hold more than 50% of the total outstanding shares. Any purported transfer of shares that would result in a person owning shares in excess of the Ownership Limit or cause the Company to become "closely held" under Section 856(h) of the Code that is not otherwise permitted as provided above will constitute excess shares ("Excess Shares"), which will be transferred pursuant to the Declaration of Trust to the Company as trustee for the exclusive benefit of the person or persons to whom the Excess Shares are ultimately transferred, until such time as the purported transferee retransfers the Excess Shares. While these Excess Shares are held in trust, they will not be entitled to vote or to share in any dividends or other distributions. Subject to the Ownership Limit, the Excess Shares may be transferred by the purported transferee to any person (if the Excess Shares would not be Excess Shares in the hands of such person) at a price not to exceed the price paid by the purported transferee (or, if no consideration was paid, fair market value), at which point the Excess Shares will automatically be exchanged for the shares to which the Excess Shares are attributable. In addition, such Excess Shares held in trust are subject to purchase by the Company at a purchase price equal to the lesser of the price paid for the shares by the purported transferee (or, if no consideration was paid, fair market value) and the fair market value of the shares of beneficial interest (as reflected in the last reported sales price reported on the NYSE on the trading day immediately preceding the relevant date, or if not then traded on the NYSE, the last reported sales price of such shares on the trading day immediately preceding the relevant date as reported on any exchange or quotation system over which such shares may be traded, or if not then traded over any exchange or quotation system, then the market price of such shares on the relevant date as determined in good faith by the Board of Trustees of the Company) on the date the Company elects to purchase. All certificates representing shares of beneficial interest will bear a legend referring to the restrictions described above. Transfer Agent and Registrar Harris Trust and Savings Bank has been appointed as transfer agent and registrar for the Common Shares. DESCRIPTION OF SERIES A PREFERRED SHARES General The summary of certain terms and provisions of the Series A Preferred Shares contained in this Prospectus does not purport to be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of the Articles Supplementary relating to the Series A Preferred Shares and the Company's Declaration of Trust, as amended, and Bylaws, as amended, which are incorporated by reference herein. The Company's Board of Trustees is authorized to issue, from the authorized but unissued shares of beneficial interest of the Company, preferred shares in series and to establish from time to time the number of preferred shares to be included in such series and to fix the designation and any preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of the shares of each such series. The outstanding Series A Preferred Shares are validly issued, fully paid and, except as set forth under "-Shares of Beneficial Interest and Shareholder Liability", nonassessable. The holders of the Series A Preferred Shares have no preemptive rights with respect to any shares of the capital securities of the Company or any other securities of the Company convertible into or carrying rights or options to purchase any such shares. The Series A Preferred Shares are not subject to any sinking fund or other obligation of the Company to redeem or retire the Series A Preferred Shares. Ranking The Series A Preferred Shares will rank senior to the Common Shares with respect to payment of dividends and amounts upon liquidation, dissolution or winding up. While any Series A Preferred Shares are outstanding, the Company may not authorize, create or increase the authorized amount of any class or any security convertible into shares of any class that ranks senior to the Series A Preferred Shares with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up without the consent of the holders of two-thirds of the outstanding Series A Preferred Shares and all other shares of Voting Preferred Shares (as defined below), voting as a single class. However, the Company may create additional classes of shares, increase the authorized number of preferred shares or issue series of preferred shares ranking on a parity with the Series A Preferred Shares with respect, in each case, to the payment of dividends and amounts upon liquidation, dissolution and winding up (a "Parity Share") without the consent of any holder of Series A Preferred Shares. See "-Voting Rights" below. Distributions Holders of the Series A Preferred Shares shall be entitled to receive, when and as declared by the Board of Trustees, out of funds legally available for the payment of distributions, cumulative preferential cash distributions in an amount per share equal to the greater (i) $1.72 per annum or (ii) the cash distribution (determined on each of the quarterly dividend payment dates referred to below) on the number of Common Shares, or portion thereof, into which a Series A Preferred Share is convertible. Such distributions shall be cumulative from the date of original issue and shall be payable quarterly in arrears on the Tuesday which is nearest to the twenty-first (21st) day of February, May, August and November or, if not a business day, the next succeeding business day, (each, a "Dividend Payment Date"). Such distribution and any distribution payable on the Series A Preferred Shares for any partial distribution period will be computed on the basis of the actual number of days in such period. Distributions will be payable to holders of record as they appear in the records of the Company at the close of business on the applicable record date, which shall be on such date designated by the Board of Trustees of the Company for the payment of distributions that is not more than 50 days prior to such Dividend Payment Date (each, a "Dividend Record Date"). Except as provided in the next sentence, no distributions will be declared or paid on any Parity Shares unless full cumulative distributions have been declared and paid or are contemporaneously declared and funds sufficient for payment set aside on the Series A Preferred Shares for all prior distribution periods. If accrued dividends on the Series A Preferred Shares for all prior dividend periods have not been paid in full, then any dividend declared on the Series A Preferred Shares and on any Parity Shares for any dividend period will be declared ratably in proportion to accrued and unpaid dividends on the Series A Preferred Shares and such Parity Shares. The Company will not (i) declare, pay or set apart funds for the payment of any dividend or other distribution with respect to any Junior Shares (as defined below) or (ii) redeem, purchase or otherwise acquire for consideration any Junior Shares through a sinking fund or otherwise (other than a redemption or purchase or other acquisition of Common Shares made for purposes of any employee incentive or benefit plan of the Company or any entity in which the Company, either directly or indirectly, owns more than a 50% economic interest), unless (A) all cumulative dividends with respect to the Series A Preferred Shares and any Parity Shares at the time such dividends are payable have been paid or declared and funds have been set apart for payment of such dividends and (B) sufficient funds have been paid or declared and set apart for the payment of the dividend for the current dividend period with respect to the Series A Preferred Shares and any Parity Shares. The limitations in this paragraph do not restrict the Company's ability to take the actions in this paragraph with respect to any Parity Shares. As used herein, (i) the term "dividend" does not include dividends or other distributions payable solely in Fully Junior Shares on Junior Shares, or in options, warrants or rights to holders of Junior Shares to subscribe for or purchase any Fully Junior Shares, (ii) the term "Junior Shares" means the Common Shares and any other class of capital shares of the Company now or hereafter issued and outstanding that ranks junior to the Series A Preferred Shares as to the payment of distributions or amounts upon liquidation, dissolution and winding up and (iii) the term "Fully Junior Shares" means Junior Shares that rank junior to the Series A Preferred Shares both as to the payment of dividends and amounts upon liquidation, dissolution and winding up. Redemption Except as required by the limitation on ownership (see "-Restrictions on Transfer"), the Series A Preferred Shares are not redeemable prior to January 25, 2001. On and after January 25, 2001 the Company, at its option, upon not less than 30 nor more than 90 days' written notice, may redeem the Series A Preferred Shares, in whole or in part, at any time or from time to time, (i) for one Common Share per Series A Preferred Share (subject to possible future adjustment in certain circumstances) plus accumulated, accrued and unpaid distributions, provided that for twenty (20) consecutive trading days within the thirty (30) trading days ending on the date on which notice of redemption is given by the Company, the closing price of the Common Shares on the NYSE equals or exceeds the conversion price per share (see "-Conversion Rights"), or (ii) cash at a redemption price equal to $20.00 per share, plus accumulated, accrued and unpaid distributions thereon to the date fixed for redemption. If fewer than all of the outstanding Series A Preferred Shares are to be redeemed, the number of shares to be redeemed will be determined by the Company and such shares may be redeemed pro rata from the holders of record of such shares in proportion to the number of such shares held by such holders (with adjustments to avoid redemption of fractional shares) or by lot in a manner determined by the Company. Unless full cumulative distributions on all Series A Preferred Shares shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past distribution periods and the then current distribution period, no Series A Preferred Shares shall be redeemed or purchased by the Company except pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series A Preferred Shares or Parity Shares. Notice of redemption will be mailed at least 30 days but not more than 90 days before the redemption date to each holder of record of Series A Preferred Shares at the address shown on the share transfer books of the Company. Each notice shall state: (i) the redemption date; (ii) the number of Series A Preferred Shares to be redeemed; (iii) the redemption price; (iv) the place or places where certificates for Series A Preferred Shares are to be surrendered for payment of the redemption price; and (v) that distributions on the Series A Preferred Shares will cease to accrue on such redemption date. If fewer than all Series A Preferred Shares are to be redeemed, the notice mailed to each such holder thereof shall also specify the number of Series A Preferred Shares to be redeemed from each such holder. If notice of redemption of any Series A Preferred Shares has been given and if the funds necessary for such redemption have been set aside by the Company in trust for the benefit of the holders of Series A Preferred Shares so called for redemption, then from and after the redemption date, distributions will cease to accrue on the Series A Preferred Shares, such Series A Preferred Shares shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. The holders of Series A Preferred Shares at the close of business on a Dividend Record Date will be entitled to receive the distribution payable with respect to such Series A Preferred Shares on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the Company's default in the payment of the distribution due. Except as provided above, the Company will make no payment or allowance for unpaid distributions, whether or not in arrears, on Series A Preferred Shares which have been called for redemption. The Series A Preferred Shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. However, in order to preserve the Company's status as a REIT, as defined in the Code, the Series A Preferred Shares may be subject to redemption or exchange as described under "-Restrictions on Transfer." Liquidation Preference The holders of Series A Preferred Shares are entitled to receive in the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, $20.00 per Series A Preferred Share plus an amount per Series A Preferred Share equal to all distributions (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders, and no more. Until the holders of Series A Preferred Shares and Parity Shares have been paid their liquidation preference in full, no payment will be made to any holder of Junior Shares upon the liquidation, dissolution or winding up of the Company. If, upon any liquidation, dissolution or winding up of the Company, the assets of the Company, or proceeds thereof, distributable among the holders of the Series A Preferred Shares are insufficient to pay in full the liquidation preference with respect to the Series A Preferred Shares and any other Parity Shares, then such assets, or the proceeds thereof, will be distributed among the holders of Series A Preferred Shares and any such Parity Shares ratably in accordance with the respective amounts which would be payable on such Series A Preferred Shares and any such Parity Shares if all amounts payable thereon were paid in full. Neither a consolidation or merger of the Company with another corporation, a statutory share exchange by the Company nor a sale or transfer of all or substantially all of the Company's assets will be considered a liquidation, dissolution or winding up, voluntary or involuntary, of the Company. Voting Rights Except as indicated below, or except as otherwise from time to time required by applicable law, the holders of Series A Preferred Shares have no voting rights. If six quarterly distributions (whether or not consecutive) payable on the Series A Preferred Shares or any Parity Shares are in arrears, whether or not earned or declared, the number of Trustees then constituting the Board of Trustees of the Company will be increased by two, and the holders of Series A Preferred Shares, voting together as a class with the holders of any other series of Parity Shares (any such other series, the "Voting Preferred Shares"), will have the right to elect two additional Trustees to serve on the Company's Board of Trustees at any annual meeting of shareholders or a properly called special meeting of the holders of Series A Preferred Shares and such Voting Preferred Shares and at each subsequent annual meeting of shareholders until all such distributions and distributions for the current quarterly period on the Series A Preferred Shares and such other Voting Preferred Shares have been paid or declared and paid or set aside for payment. Such voting right will terminate when all such accrued and unpaid dividends have been declared and paid or set aside for payment. The term of office of all Trustees so elected will terminate with the termination of such voting rights. The approval of two-thirds of the outstanding Series A Preferred Shares and all other series of Voting Preferred Shares similarly affected, voting as a single class, is required in order to (i) amend the Company's Declaration of Trust to affect materially and adversely the rights, preferences or voting power of the holders of the Series A Preferred Shares or the Voting Preferred Shares, (ii) enter into a share exchange that affects the Series A Preferred Shares, consolidate with or merge into another entity, or permit another entity to consolidate with or merge into the Company, unless in each such case each Series A Preferred Share remains outstanding without a material adverse change to its terms and rights or is converted into or exchanged for preferred stock of the surviving entity having preferences, rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or conditions of redemption thereof identical to that of a Series A Preferred Share (except for changes that do not materially and adversely affect the holders of the Series A Preferred Shares) or (iii) authorize, reclassify, create, or increase the authorized amount of any class of capital shares having rights senior to the Series A Preferred Shares with respect to the payment of distributions or amounts upon liquidation, dissolution or winding up. However, the Company may create additional classes of Parity Shares and Junior Shares, increase the authorized number of Parity Shares and Junior Shares and issue additional series of Parity Shares and Junior Shares without the consent of any holder of Series A Preferred Shares. Except as provided above and as required by law, the holders of Series A Preferred Shares are not entitled to vote on any merger or consolidation involving the Company or a sale of all or substantially all of the assets of the Company. Conversion Rights The Series A Preferred Shares are convertible, in whole or in part, at any time, unless previously redeemed, at the option of the holders thereof, into authorized but previously unissued Common Shares at a conversion price of $20.00 per Common Share (equivalent to a conversion rate of one Common Share for each Series A Preferred Share), subject to adjustment as described below (the "Conversion Price"). See "-Conversion Price Adjustments." The right to convert Series A Preferred Shares called for redemption will terminate at the close of business on the fifth business day prior to the redemption date for such Series A Preferred Shares. For information as to notices of redemption, see "-Redemption" above. For a description of the Company's Common Shares, see "-Description of Common Shares." Conversion of Series A Preferred Shares, or a specified portion thereof, may be effected by delivering certificates evidencing such shares, together with written notice of conversion and a proper assignment of such certificates to the Company or in blank, to the office or agency to be maintained by the Company for that purpose. Initially such office will be the office of the Transfer Agent. Each conversion will be deemed to have been effected immediately prior to the close of business on the date on which the certificates for Series A Preferred Shares shall have been surrendered and notice shall have been received by the Company as aforesaid (and if applicable, payment of an amount equal to the dividend payable on such shares shall have been received by the Company as described below) and the conversion shall be at the Conversion Price in effect at such time and on such date. Holders of Series A Preferred Shares at the close of business on a Dividend Record Date will be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Dividend Record Date and prior to such Dividend Payment Date. However, Series A Preferred Shares surrendered for conversion during the period between the close of business on any Dividend Record Date and the opening of business on the corresponding Dividend Payment Date (except shares converted after the issuance of a notice of redemption with respect to a redemption date during such period, which will be entitled to such dividend) must be accompanied by payment of an amount equal to the distribution payable on such shares on such Dividend Payment Date. A holder of Series A Preferred Shares on a Dividend Record Date who (or whose transferee) tenders any such shares for conversion into Common Shares on such Dividend Payment Date will receive the dividend payable by the Company on such Series A Preferred Shares on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of Series A Preferred Shares for conversion. Except as provided above, the Company will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the Common Shares issued upon such conversion. The Company will not issue fractional Common Shares upon conversion but in lieu thereof will pay cash at the current market price of the Common Shares on the day prior to the conversion date. Conversion Price Adjustments The Conversion Price is subject to adjustment upon certain events, including without duplication (i) dividends (and other distributions) payable in Common Shares, (ii) the issuance to all holders of Common Shares of certain rights or warrants entitling them to subscribe for or purchase Common Shares at a price per share less than the fair market value per Common Share (which, as defined, includes an adjustment for underwriting commissions avoided in rights offerings to shareholders), (iii) subdivisions, combinations and reclassifications of Common Shares, and (iv) distributions to all holders of Common Shares of any capital shares of the Company (other than Common Shares), evidences of indebtedness of the Company or assets (including securities, but excluding those dividends, rights, warrants and distributions referred to above and excluding Permitted Common Share Cash Distributions, as herein defined). "Permitted Common Share Cash Distributions" are those cumulative cash dividends and distributions paid with respect to the Common Shares after December 31, 1995 which are not in excess of the following: the sum of (i) the Company's cumulative undistributed funds from operations at December 31, 1995; plus (ii) the cumulative amount of funds from operations, as determined by the Board of Trustees of the Company, after December 31, 1995, minus (iii) the cumulative amount of distributions accrued or paid on the Series A Preferred Shares or any other class of preferred shares after January 18, 1996. In addition to the foregoing adjustments, the Company will be permitted to make such reductions in the Conversion Price as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of the Common Shares. In the event that the Company shall be a party to any transaction (including without limitation a merger, consolidation, statutory share exchange, tender offer for all or substantially all of the Common Shares or sale of all or substantially all of the Company's assets), in each case as a result of which all or substantially all Common Shares are converted into the right to receive stock, securities or other property (including cash or any combination thereof), each Series A Preferred Share that is not redeemed or converted prior to such transaction, will thereafter be convertible into the kind and amount of shares of stock and other securities and property receivable (including cash or any combination thereof) upon the consummation of such transaction by a holder of that number of Common Shares or fraction thereof into which one Series A Preferred Share was convertible immediately prior to such transaction (assuming such holder of Common Shares failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non-electing shares). The Company may not become a party to any such transaction unless the terms thereof are consistent with the foregoing. No adjustment of the Conversion Price will be required to be made in any case until cumulative adjustments amount to 1% or more of the Conversion Price. Any adjustments not so required to be made will be carried forward and taken into account in subsequent adjustments. Restrictions on Transfer For information regarding restrictions on ownership of the shares of beneficial interest of the Company, see "Description of Common Shares- Restrictions on Transfer." Transfer Agent and Registrar Harris Trust and Savings Bank has been appointed as transfer agent and registrar for the Series A Preferred Shares. CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE COMPANY'S DECLARATION OF TRUST AND BYLAWS The following paragraphs summarize certain provisions of Maryland law and the Company's Declaration of Trust and Bylaws. The summary does not purport to be complete and reference is made to Maryland law as well as the Company's Declaration of Trust and Bylaws, which are filed as exhibits to the Registration Statement of which this Prospectus is part. Board of Trustees The Company's Declaration of Trust and Bylaws provide that the number of Trustees of the Company may be established by a majority of the Board of Trustees but may not be fewer than three nor more than fifteen. The Declaration of Trust provides that a majority of the Trustees must be persons who are not affiliated with Amli or its affiliates ("Disinterested Trustees"). Any vacancy on the Board of Trustees will be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the remaining Trustees (even if less than a quorum), except that a vacancy resulting from an increase in the number of Trustees will be filled by a majority of the entire Board of Trustees and, in the event that a majority of the Board of Trustees are not Disinterested Trustees by reason of the resignation or removal of one or more Disinterested Trustees or otherwise, the remaining Disinterested Trustees (or, if there are no Disinterested Trustees, the remaining members of the Board of Trustees) shall promptly appoint that number of Disinterested Trustees necessary to cause the Board of Trustees to include a majority of Disinterested Trustees. Pursuant to the terms of the Declaration of Trust, the Trustees are divided into three classes, holding office initially for one-year, two-year and three-year terms, respectively. As these initial terms expire, Trustees in each class are elected for terms of three years and until their successors are duly elected and qualified. The Company believes that classification of the Board of Trustees will help to assure the continuity and stability of the Company's business strategies and policies as determined by the Board of Trustees. The classified Trustee provision could have the effect of making the removal of incumbent Trustees more time-consuming and difficult, which could discourage a third party from making a tender offer or otherwise attempting to obtain control of the Company, even though such an attempt might be beneficial to the Company and its shareholders. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of the Board of Trustees. Holders of Common Shares have no right to cumulative voting for the election of Trustees. Consequently, at each annual meeting of shareholders, the holders of a majority of Common Shares voting together as a single class will be able to elect all of the successors of the class of Trustees whose term expires at that meeting. Business Combinations Under the Maryland General Corporation Law, as amended from time to time (the "MGCL"), as applicable to Maryland real estate investment trusts, certain "business combinations" (including a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland real estate investment trust and any person who beneficially owns 10% or more of the voting power of the shares of the trust or an affiliate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then- outstanding voting shares of beneficial interest of the trust (an "Interested Shareholder") or an affiliate thereof are prohibited for five years after the most recent date on which the Interested Shareholder became an Interested Shareholder. Thereafter, any such business combination must be (a) recommended by the Board of Trustees of such trust and (b) approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting shares of the trust and (ii) two- thirds of the votes entitled to be cast by holders of outstanding voting shares (other than voting shares held by the Interested Shareholder with whom the business combination is to be effected or by an affiliate or associate thereof), voting together as a single group, unless, among other things, the company's common shareholders receive a minimum price (as defined in the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Shareholder for his shares. These provisions of Maryland law do not apply, however, to business combinations with a particular Interested Shareholder or its existing or future affiliates that are approved or exempted by the board of trustees of the trust prior to the time that the Interested Shareholder becomes an Interested Shareholder or if the original declaration of trust includes a provision electing not to be governed, in whole or in part, as to business combinations generally, specifically or generally by types, as to identified or unidentified existing or future Interested Shareholders or their affiliates. The Company's Declaration of Trust, in accordance with Maryland law, exempts Mr. Mutz, Baldwin & Lyons and Amli and their respective affiliates and successors from the foregoing restrictions. As a result, such persons and entities may be able to enter into business combinations with the Company, which may not be in the best interests of the shareholders, without compliance by the Company with the super-majority voting requirements and the other provisions of the statute. Control Share Acquisitions The MGCL, as applicable to Maryland real estate investment trusts, imposes limitations on the voting rights of shares acquired in a "control share acquisition" relating to a Maryland real estate investment trust. The MGCL defines a "control share acquisition" as the acquisition of "control shares," which is defined as voting shares that would entitle the acquiror to exercise voting power in electing trustees in excess of the following levels of voting power: 20%, 33-1/3%, and 50%. The MGCL requires a two-thirds shareholder vote (excluding shares owned by the acquiring person and certain members of management) to accord voting rights to shares acquired in a control share acquisition. The MGCL also requires a Maryland real estate investment trust to hold a special meeting at the request of an actual or proposed control share acquiror generally within 50 days after a request is made with the submission of an "acquiring person statement," but only if the acquiring person (a) delivers a written undertaking to pay the expenses of such special meeting or, if required by the Board of Trustees, posts a bond for the cost of the meeting and (b) submits a definitive financing agreement to the extent that financing is not provided by the acquiring person. In addition, unless the charter or bylaws provide otherwise, the MGCL gives a Maryland real estate investment trust, within certain time limitations, various redemption rights if there is a shareholder vote on the issue and the grant of voting rights is not approved, or if an "acquiring person statement" is not delivered to the target company within 10 days following a control share acquisition. Moreover, unless the charter or bylaws provide otherwise, the MGCL provides that if, before a control share acquisition occurs, voting rights are accorded to the control shares which results in the acquiring person having a majority of voting power, then minority shareholders are entitled to appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition. The control share acquisition statute does not apply (a) to shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction or (b) to acquisitions approved or exempted by the declaration of trust or bylaws of the trust. The Company's Declaration of Trust, in accordance with Maryland law, contains a provision exempting acquisitions of shares by Mr. Mutz, Baldwin & Lyons and Amli and their respective affiliates and successors from the foregoing provisions. Amendment to the Declaration of Trust The Company's Declaration of Trust may be amended only by the affirmative vote or written consent of the holders of not less than a majority of all of the shares of beneficial interest entitled to vote on the matter, except that the Trustees by a two-thirds vote may amend provisions of the Company's Declaration of Trust from time to time to qualify as a real estate investment trust under the Code and Maryland law. Termination of the Company The Company's Declaration of Trust permits the termination of the Company and the discontinuation of the operations of the Company by the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of beneficial interest. Advance Notice of Trustee Nominations and New Business The Bylaws of the Company provide that (a) with respect to an annual meeting of shareholders, nominations of persons for election to the Board of Trustees and the proposal of business to be considered by shareholders may be made only (i) pursuant to the Company's notice of the meeting, (ii) by the Board of Trustees, or (iii) by a shareholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in the Bylaws, and (b) with respect to special meetings of shareholders, only the business specified in the Company's notice of meeting may be brought before the meeting of shareholders, and nominations of persons for election to the Board of Trustees may be made only on terms similar to those for annual meetings. Anti-Takeover Effect of Certain Provisions of Maryland Law and of the Declaration of Trust and Bylaws The business combination provisions and the control share acquisition provisions of the MGCL, the provisions of the Declaration of Trust on classification of the Board of Trustees and the advance notice provisions of the Bylaws could delay, defer or prevent a transaction or a change in control of the Company that might involve a premium price for holders of Common Shares or otherwise be in their best interest. FEDERAL INCOME TAX CONSIDERATIONS The following is a description of the material Federal income tax consequences to the Company and its shareholders of the treatment of the Company as a REIT. The discussion is general in nature and not exhaustive of all possible tax considerations, nor does the discussion give a detailed description of any state, local, or foreign tax considerations. The discussion does not discuss all aspects of Federal income tax law that may be relevant to a prospective shareholder in light of his particular circumstances or to certain types of shareholders (including insurance companies, financial institutions or broker-dealers, tax exempt organizations, foreign corporations and persons who are not citizens or residents of the United States) subject to special treatment under the federal income tax laws nor does the discussion address special considerations, if any, which may relate to the purchase of Preferred Shares. THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING, AND EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH ITS TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT OF THE PURCHASE, OWNERSHIP AND SALE OF THE COMMON SHARES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP AND SALE, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS. If certain detailed conditions imposed by the REIT provisions of the Code are met, entities, such as the Company, that invest primarily in real estate and that otherwise would be treated for Federal income tax purposes as corporations, are generally not taxed at the corporate level on their "REIT taxable income" that is currently distributed to shareholders. This treatment substantially eliminates the "double taxation" (i.e., at both the corporate and shareholder levels) that generally results from the use of corporations. If the Company fails to qualify as a REIT in any year, however, it will be subject to Federal income taxation as if it were a domestic corporation, and its shareholders will be taxed in the same manner as shareholders of ordinary corporations. In this event, the Company could be subject to potentially significant tax liabilities, and therefore the amount of cash available for distribution to its shareholders would be reduced or eliminated. The Company has elected REIT status effective for the taxable year ended December 31, 1994, and the Board of Trustees of the Company believes that the Company has operated and expects that the Company will continue to operate in a manner that will permit the Company to elect REIT status in each taxable year thereafter. There can be no assurance, however, that this belief or expectation will be fulfilled, since qualification as a REIT depends on the Company continuing to satisfy numerous asset, income and distribution tests described below, which in turn will be dependent in part on the Company's operating results. TAXATION OF THE COMPANY General. In any year in which the Company qualifies as a REIT it will not, in general, be subject to Federal income tax on that portion of its REIT taxable income or capital gain which is distributed to shareholders. The Company may, however, be subject to tax at normal corporate rates upon any taxable income or capital gain not distributed. Notwithstanding its qualification as a REIT, the Company may also be subject to taxation in certain other circumstances. If the Company should fail to satisfy either the 75% or the 95% gross income test (as discussed below), and nonetheless maintains its qualification as a REIT because certain other requirements are met, it will be subject to a 100% tax on the greater of the amount by which the Company fails either the 75% or the 95% test, multiplied by a fraction intended to reflect the Company's profitability. The Company will also be subject to a tax of 100% on net income from any "prohibited transaction" as described below, and if the Company has (i) net income from the sale or other disposition of "foreclosure property" which is held primarily for sale to customers in the ordinary course of business or (ii) other non-qualifying income from foreclosure property, it will be subject to tax on such income from foreclosure property at the highest corporate rate. In addition, if the Company should fail to distribute during each calendar year at least the sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net income for such year, and (iii) any undistributed taxable income from prior years, the Company would be subject to a 4% excise tax on the excess of such required distribution over the amounts actually distributed. The Company may also be subject to the corporate alternative minimum tax, as well as tax in certain situations not presently contemplated. Each of the Management Company, Amrescon and AIA will be taxed on its income at regular corporate rates. The Company will use the calendar year both for Federal income tax purposes and for financial reporting purposes. In order to qualify as a REIT, the Company must meet, among others, the following requirements: Share Ownership Tests. The Company's shares of beneficial interest must be held by a minimum of 100 persons for at least 335 days in each taxable year (or a proportional number of days in any short taxable year). In addition, at all times during the second half of each taxable year, no more than 50% in value of the outstanding shares of beneficial interest of the Company may be owned, directly or indirectly and by applying certain constructive ownership rules, by five or fewer individuals, which for this purpose includes certain tax-exempt entities. However, for purposes of this test, any shares of beneficial interest held by a qualified domestic pension or other retirement trust will be treated as held directly by its beneficiaries in proportion to their actuarial interest in such trust rather than by such trust. In order to attempt to ensure compliance with the foregoing share ownership tests, the Company has placed certain restrictions on the transfer of its shares of beneficial interest to prevent additional concentration of share ownership. Moreover, to evidence compliance with these requirements, under Treasury regulations the Company must maintain records which disclose the actual ownership of its outstanding shares of beneficial interest. In fulfilling its obligations to maintain records, the Company must and will demand written statements each year from the record holders of designated percentages of its shares of beneficial interest disclosing the actual owners of such shares of beneficial interest (as prescribed by Treasury regulations). A list of those persons failing or refusing to comply with such demand must be maintained as a part of the Company's records. A shareholder failing or refusing to comply with the Company's written demand must submit with his tax return a similar statement disclosing the actual ownership of Company shares of beneficial interest and certain other information. In addition, the Company's Declaration of Trust provides restrictions regarding the transfer of its shares of beneficial interest that are intended to assist the Company in continuing to satisfy the share ownership requirements. See "Description of Capital Shares - Description of Common Shares - Restrictions on Transfer" and "Description of Capital Shares - Description of Preferred Shares - Restrictions on Transfer." Asset Tests. At the close of each quarter of the Company's taxable year, the Company must satisfy two tests relating to the nature of its assets (with "assets" being determined in accordance with generally accepted accounting principles). First, at least 75% of the value of the Company's total assets must be represented by interests in real property, interests in mortgages on real property, shares in other REITs, cash, cash items, government securities and qualified temporary investments. Second, although the remaining 25% of the Company's assets generally may be invested without restriction, securities in this class may not exceed (i) in the case of securities of any one non-government issuer, 5% of the value of the Company's total assets or (ii) 10% of the outstanding voting securities of any one such issuer. Where the Company invests in a partnership (such as the Operating Partnership), it will be deemed to own a proportionate share of the partnership's assets. See "-Tax Aspects of the Company's Investments in Partnerships-General." Accordingly, the Company's investment in the Communities and the Co-Investment Communities through its interest in the Operating Partnership is intended to constitute an investment in qualified assets for purposes of the 75% asset test. The Operating Partnership owns 100% of the non-voting preferred stock of each of the Management Company, Amrescon and AIA and 5% of the voting common stock of each of the Management Company, Amrescon and AIA. See "The Company." By virtue of its partnership interest in the Operating Partnership, the Company is deemed to own its pro rata share of the assets of the Operating Partnership, including the securities of the Management Company, Amrescon and AIA, as described above. Because the Operating Partnership owns only 5% of the voting securities of each of the Management Company, Amrescon and AIA and the preferred stock's approval right in the case of each of the Management Company, Amrescon and AIA is limited to certain fundamental corporate actions that could adversely affect the preferred stock as a class, the 10% limitation on holdings of voting securities of any one issuer should not be exceeded. Based upon its analysis of the total estimated value of the Management Company stock, Amrescon stock and AIA stock and the subordinated notes of the Management Company and AIA (each, "Subordinated Note"), respectively, owned by the Operating Partnership relative to the estimated value of the total assets owned by the Operating Partnership and the other assets of the Company, the Company believes that the Company's pro rata share of the non-voting preferred stock, voting common stock and Subordinated Note of the Management Company owned by the Operating Partnership does not exceed, on the date of this Prospectus, 5% of the value of the Company's total assets, that the Company's pro rata share of the non-voting preferred stock and voting common stock of Amrescon owned by the Operating Partnership does not exceed, on the date of this Prospectus, 5% of the value of the Company's total assets, and that the Company's pro rata share of the non-voting preferred stock, voting common stock and Subordinated Note of AIA owned by the Operating Partnership does not exceed, on the date of this Prospectus, 5% of the value of the Company's total assets. As to the securities of any Service Company, this 5% limitation must be satisfied not only as of the date that the Company (directly or through the Operating Partnership) acquired securities of the Management Company, Amrescon or AIA, but also at the end of any quarter in which the Company increases its interest in the Management Company, Amrescon or AIA or so acquires other property. In this respect, if the holder of a right to exchange Units for Common Shares exercises such rights, the Company will thereby increase its proportionate (indirect) ownership interest in the Management Company, Amrescon and AIA, thus requiring the Company to meet the 5% test in any quarter in which such conversion option is exercised. Although the Company plans to take steps to ensure that it satisfies the 5% value test for any quarter with respect to which retesting is to occur, there can be no assurance that such steps will always be successful or will not require a reduction in the Operating Partnership's overall interest in the Management Company, Amrescon or AIA. Gross Income Tests. There are three separate percentage tests relating to the sources of the Company's gross income which must be satisfied for each taxable year. For purposes of these tests, where the Company invests in a partnership, the Company will be treated as receiving its share of the income and loss of the partnership, and the gross income of the partnership will retain the same character in the hands of the Company as it has in the hands of the partnership. See "-Tax Aspects of the Company's Investments in Partnerships-General" below. The three tests are as follows: The 75% Test. At least 75% of the Company's gross income for the taxable year must be "qualifying income." Qualifying income generally includes (i) rents from real property (except as modified below); (ii) interest on obligations secured by mortgages on, or interests in, real property; (iii) gains from the sale or other disposition of interests in real property and real estate mortgages, other than gain from property held primarily for sale to customers in the ordinary course of the Company's trade or business ("dealer property"); (iv) dividends or other distributions on shares in other REITs, as well as gain from the sale of such shares; (v) abatements and refunds of real property taxes; (vi) income from the operation, and gain from the sale, of property acquired at or in lieu of a foreclosure of the mortgage secured by such property ("foreclosure property"); (vii) commitment fees received for agreeing to make loans secured by mortgages on real property or to purchase or lease real property; and (viii) certain qualified temporary investment income attributable to the investment of new capital received by the Company in exchange for its shares during the one-year period following the receipt of such capital. Rents received from a tenant will not, however, qualify as rents from real property in satisfying the 75% test (or the 95% gross income test described below) if the Company, or an owner of 10% or more of the Company, directly or constructively owns 10% or more of such tenant. In addition, if rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as rents from real property. Moreover, an amount received or accrued will not qualify as rents from real property (or as interest income) for purposes of the 75% and 95% gross income tests if it is based in whole or in part on the income or profits of any person, although an amount received or accrued generally will not be excluded from "rents from real property" solely by reason of being based on a fixed percentage or percentages of receipts or sales. Finally, for rents received to qualify as rents from real property for purposes of the 75% and 95% gross income tests, the Company generally must not operate or manage the property or furnish or render services to tenants, other than through an "independent contractor" from whom the Company derives no income, except that the "independent contractor" requirement does not apply to the extent that the services provided by the Company are "usually or customarily rendered" in connection with the rental of space for occupancy only, or are not otherwise considered "rendered to the occupant for his convenience." The Management Company (which does not satisfy the independent contractor standard) provides management and leasing services to each of the Communities and each of the Co-Investment Communities and may provide certain services on any newly acquired properties of the Operating Partnership. The Company believes for purposes of the 75% and 95% gross income tests, that the services provided by the Management Company on the Operating Partnership's properties and any other services and amenities provided by the Operating Partnership or its agents with respect to such properties are and will continue to be of the type usually or customarily rendered in connection with the rental of space for occupancy only. The Company intends to monitor the services and amenities provided by the Management Company as management agent as well as by others, if any, on the properties of the Operating Partnership. The Company intends that services that cannot be provided directly by the Operating Partnership, the Management Company or other agents will be performed by independent contractors. The 95% Test. In addition to deriving 75% of its gross income from the sources listed above, at least 95% of the Company's gross income for the taxable year must be derived from the above-described qualifying income, or from dividends, interest, or gains from the sale or other disposition of stock or other securities that are not dealer property. Dividends and interest on any obligations not collateralized by an interest in real property are included for purposes of the 95% test, but not for purposes of the 75% test. For purposes of determining whether the Company complies with the 75% and the 95% gross income tests, gross income does not include income from prohibited transactions. A "prohibited transaction" is a sale of dealer property (excluding foreclosure property); however, it does not include a sale of property if such property is held by the Company for at least four years and certain other requirements (relating to the number of properties sold in a year, their tax bases, and the cost of improvements made thereto) are satisfied. See "-Taxation of the Company-General" and "-Tax Aspects of the Company's Investments in Partnerships-Sale of the Communities and Co- Investment Communities." The Company believes that, for purposes of both the 75% and the 95% gross income tests, its investment in the Communities and the Co-Investment Communities through the Operating Partnership will in major part give rise to qualifying income in the form of rents, and that gains on sales of the Communities and the Co-Investment Communities, or of the Company's interest in the Operating Partnership, generally will also constitute qualifying income. The Management Company receives and anticipates continuing to receive fee income in consideration of the performance of property management and other services with respect to properties not owned by the Company or the Operating Partnership, Amrescon receives and anticipates continuing to receive fee income in consideration of the performance of general contracting and construction management services, and AIA receives and anticipates continuing to receive fee income for providing investment advisory services; however, substantially all income derived by the Company from the Management Company, Amrescon and AIA will be in the form of dividends on the preferred stock and common stock of each of the Service Companies owned by the Operating Partnership and interest on the Subordinated Notes. Such dividends and interest income will satisfy the 95%, but not the 75%, gross income test (as discussed above). In addition, the Company's share of any income realized on interest rate swap or cap agreements, including income received at the time of entering into such agreements, generally will satisfy the 95%, but not the 75%, gross income test. The Company intends to closely monitor its non-qualifying income and anticipates that non-qualifying income on its other investments and activities, including such dividend income, interest income and interest rate swap or cap income (if any), will not result in the Company failing either the 75% or 95% gross income test. Even if the Company fails to satisfy one or both of the 75% or 95% gross income tests for any taxable year, it may still qualify as a REIT for such year if it is entitled to relief under certain provisions of the Code. These relief provisions will generally be available if: (i) the Company's failure to comply was due to reasonable cause and not to willful neglect; (ii) the Company reports the nature and amount of each item of its income included in the tests on a schedule attached to its tax return; and (iii) any incorrect information on this schedule is not due to fraud with intent to evade tax. If these relief provisions apply, however, the Company will nonetheless be subject to a 100% tax on the greater of the amount by which it fails either the 75% or 95% gross income test, multiplied by a fraction intended to reflect the Company's profitability. The 30% Test. The Company must derive less than 30% of its gross income for each taxable year from the sale or other disposition of (i) real property held for less than four years (other than foreclosure property and involuntary conversions); (ii) stock or securities (including an interest rate swap or cap agreement) held for less than one year; and (iii) property in a prohibited transaction. The Company does not anticipate that it will have difficulty in complying with this test. However, if extraordinary circumstances were to occur that give rise to dispositions of Communities or Co-Investment Communities held for less than four years (for example, on account of the inability to obtain refinancing), the 30% test could become an issue. Annual Distribution Requirements. In order to qualify as a REIT, the Company is required to distribute dividends (other than capital gain dividends) to its shareholders each year in an amount at least equal to (A) the sum of (i) 95% of the Company's REIT taxable income (computed without regard to the dividends paid deduction and the Company's net capital gain) and (ii) 95% of the net income (after tax), if any, from foreclosure property, minus (B) the sum of certain items of non-cash income. Such distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before the Company timely files its tax return for such year and if paid on or before the first regular dividend payment after such declaration. To the extent that the Company does not distribute all of its net capital gain or distributes at least 95%, but less than 100%, of its REIT taxable income, as adjusted, it will be subject to tax on the undistributed amount at regular capital gains or ordinary corporate tax rates, as the case may be. The Company intends to make timely distributions sufficient to satisfy the annual distribution requirements described in the first sentence of the preceding paragraph. In this regard, the Partnership Agreement authorizes the Company, as general partner, to take such steps as may be necessary to cause the Operating Partnership to distribute to its partners an amount sufficient to permit the Company to meet these distribution requirements. It is possible that the Company may not have sufficient cash or other liquid assets to meet the 95% distribution requirement, due to timing differences between the actual receipt of income and actual payment of expenses on the one hand, and the inclusion of such income and deduction of such expenses in computing the Company's REIT taxable income on the other hand; due to the Operating Partnership's inability to control cash distributions with respect to any properties as to which it does not have decision making control; or for other reasons. To avoid a problem with the 95% distribution requirement, the Company will closely monitor the relationship between its REIT taxable income and cash flow and, if necessary, intends to borrow funds (or cause the Operating Partnership or other affiliates to borrow funds) in order to satisfy the distribution requirement. However, there can be no assurance that such borrowing would be available at such time. If the Company fails to meet the 95% distribution requirement as a result of an adjustment to the Company's tax return by the Service, the Company may retroactively cure the failure by paying a "deficiency dividend" (plus applicable penalties and interest) within a specified period. Failure to Qualify. If the Company fails to qualify for taxation as a REIT in any taxable year and the relief provisions do not apply, the Company will be subject to tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Distributions to shareholders in any year in which the Company fails to qualify as a REIT will not be deductible by the Company, nor generally will they be required to be made under the Code. In such event, to the extent of current and accumulated earnings and profits, all distributions to shareholders will be taxable as ordinary income, and, subject to certain limitations in the Code, corporate distributees may be eligible for the dividends received deduction. Unless entitled to relief under specific statutory provisions, the Company also will be disqualified from re-electing taxation as a REIT for the four taxable years following the year during which qualification was lost. TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS General. The Company holds a partnership interest in the Operating Partnership. See "The Company." In general, a partnership is a "pass-through" entity which is not subject to Federal income tax. Rather, partners are allocated their proportionate shares of the items of income, gain, loss, deduction and credit of a partnership, and are potentially subject to tax thereon, without regard to whether the partners receive a distribution from the partnership. The Company will include its proportionate share of the foregoing partnership items for purposes of the various REIT gross income tests and in the computation of its REIT taxable income. See "-Taxation of the Company-General" and "-Gross Income Tests." Accordingly, any resultant increase in the Company's REIT taxable income from its interest in the Operating Partnership (whether or not a corresponding cash distribution is also received from the Operating Partnership) will increase its distribution requirements (see "-Taxation of the Company-Annual Distribution Requirements"), but will not be subject to Federal income tax in the hands of the Company provided that an amount equal to such income is distributed by the Company to its shareholders. Moreover, for purposes of the REIT asset tests (see "-Taxation of the Company-Asset Tests"), the Company will include its proportionate share of assets held by the Operating Partnership. Entity Classification. The Company's interest in the Operating Partnership involves special tax considerations, including the possibility of a challenge by the Service of the status of the Operating Partnership as a partnership (as opposed to an association taxable as a corporation for Federal income tax purposes). If the Operating Partnership were to be treated as an association, it would be taxable as a corporation and therefore subject to an entity-level tax on its income. In such a situation, the character of the Company's assets and items of gross income would change, which would preclude the Company from satisfying the REIT asset tests and the REIT gross income tests (see "-Taxation of the Company- Asset Tests" and "-Gross Income Tests"), which in turn would prevent the Company from qualifying as a REIT. (See "-Taxation of the Company-Failure to Qualify" above, for a discussion of the effect of the Company's failure to meet such tests.) Tax Allocations with Respect to the Communities. Pursuant to Section 704(c) of the Code, income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership (such as certain of the Communities), must be allocated in a manner such that the contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution. The amount of such unrealized gain or unrealized loss is generally equal to the difference between the fair market value of the contributed property at the time of contribution, and the adjusted tax basis of such property at the time of contribution (a "Book-Tax Difference"). Such allocations are solely for Federal income tax purposes and do not affect the book capital accounts or other economic arrangements among the partners. The formation of the Operating Partnership included contributions of appreciated property (including certain Communities or interests therein). Consequently, the Partnership Agreement requires certain allocations to be made in a manner consistent with Section 704(c) of the Code. In general, certain contributors of certain of the Communities or interests therein will be allocated lower amounts of depreciation deductions for tax purposes and increased taxable income and gain on sale by the Operating Partnership on the contributed assets (including certain of the Communities). This will tend to eliminate the Book-Tax Difference over the life of the Operating Partnership. However, the special allocation rules of Section 704(c) do not always entirely rectify the Book-Tax Difference on an annual basis or with respect to a specific taxable transaction such as a sale or a deemed sale, and accordingly variations from normal Section 704(c) principles may arise, which could result in the allocation of additional taxable income to the Company in excess of corresponding cash proceeds in certain circumstances. Treasury regulations issued under Section 704(c) of the Code provide partnerships with a choice of several methods of accounting for Book-Tax Differences, including retention of the method under current law. The Operating Partnership and the Company will use the remedial method for making allocations under Section 704(c) with respect to the existing Communities. With respect to any property purchased by the Operating Partnership subsequent to the admission of the Company to the Operating Partnership, in general, such property will initially have a tax basis equal to its fair market value and Section 704(c) of the Code will not apply. Sale of the Communities and Co-Investment Communities. The Company's share of any gain realized by the Operating Partnership on the sale of any dealer property generally will be treated as income from a prohibited transaction that is subject to a 100% penalty tax. See "Taxation of the Company-General" and "Gross Income Tests-The 95% Test." Under existing law, whether property is dealer property is a question of fact that depends on all the facts and circumstances with respect to the particular transaction. The Operating Partnership intends to hold the Communities and Co-Investment Communities for investment with a view to long-term appreciation, to engage in the business of acquiring, owning, operating and developing the Communities, Co-Investment Communities and other multifamily residential properties, and to make such occasional sales of the Communities, Co-Investment Communities and other properties acquired subsequent to the date hereof as are consistent with the Company's investment objectives. Based upon the Company's investment objectives, the Company believes that overall the Communities and Co-Investment Communities should not be considered dealer property and that the amount of income from prohibited transactions, if any, will not be material. TAXATION OF SHAREHOLDERS Taxation of Taxable Domestic Shareholders. As long as the Company qualifies as a REIT, distributions made to the Company's taxable domestic shareholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be taken into account by them as ordinary income and will not be eligible for the dividends received deduction for corporations. Distributions that are designated as capital gain dividends will be taxed as long-term capital gains (to the extent they do not exceed the Company's actual net capital gain for the taxable year) without regard to the period for which the shareholder has held its shares of beneficial interest of the Company. However, corporate shareholders may be required to treat up to 20% of certain capital gain dividends as ordinary income. To the extent that the Company makes distributions in excess of current and accumulated earnings and profits, these distributions are treated first as a tax-free return of capital to the shareholder, reducing the tax basis of a shareholder's shares of beneficial interest by the amount of such excess distribution (but not below zero), with distributions in excess of the shareholder's tax basis being taxed as capital gains (if the shares of beneficial interest are held as a capital asset). In addition, any dividend declared by the Company in October, November or December of any year and payable to a shareholder of record on a specific date in any such month shall be treated as both paid by the Company and received by the shareholder on December 31 of such year, provided that the dividend is actually paid by the Company during January of the following calendar year. Shareholders may not include in their individual income tax returns any net operating losses or capital losses of the Company. Federal income tax rules may also require that certain minimum tax adjustments and preferences be apportioned to Company shareholders. In general, any loss upon a sale or exchange of shares of beneficial interest by a shareholder who has held such shares of beneficial interest for six months or less (after applying certain holding period rules) will be treated as a long-term capital loss, to the extent of distributions from the Company required to be treated by such shareholder as long-term capital gains. Backup Withholding. The Company will report to its domestic shareholders and to the Service the amount of dividends paid for each calendar year, and the amount of tax withheld, if any, with respect thereto. Under the backup withholding rules, a shareholder may be subject to backup withholding at the rate of 31% with respect to dividends paid unless such shareholder (i) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact or (ii) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. A shareholder that does not provide the Company with its correct taxpayer identification number may also be subject to penalties imposed by the Service. Any amount paid as backup withholding is available as a credit against the shareholder's income tax liability. In addition, the Company may be required to withhold a portion of capital gain distributions made to any shareholders who fail to certify their non-foreign status to the Company. See "Certain United States Tax Considerations for Non-U.S. Shareholders-Distributions from the Company-Capital Gain Dividends" below. Taxation of Tax-Exempt Shareholders. The Service has issued a revenue ruling in which it held that amounts distributed by a REIT to a tax-exempt employees' pension trust do not constitute unrelated business taxable income ("UBTI"). Subject to the discussion below regarding a "pension-held REIT," based upon such ruling and the statutory framework of the Code, distributions by the Company to a shareholder that is a tax-exempt entity should not constitute UBTI, provided that the tax-exempt entity has not financed the acquisition of its shares with "acquisition indebtedness" within the meaning of the Code, that the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity, and that the Company, consistent with its present intent, does not hold a residual interest in a real estate mortgage investment conduit. However, if any pension or other retirement trust that qualifies under Section 401(a) of the Code ("qualified pension trust") holds more than 10% by value of the interests in a "pension-held REIT" at any time during a taxable year, a portion of the dividends paid to the qualified pension trust by such REIT may constitute UBTI. For these purposes, a "pension-held REIT" is defined as a REIT if (i) such REIT would not have qualified as a REIT but for the provisions of the Code which look through such a qualified pension trust in determining ownership of shares of the REIT and (ii) at least one qualified pension trust holds more than 25% by value of the interests of such REIT or one or more qualified pension trusts (each owning more than a 10% interest by value in the REIT) hold in the aggregate more than 50% by value of the interests in such REIT. Dividend Reinvestment Plan. Shareholders participating in the dividend reinvestment and share purchase plan adopted by the Company will be deemed to have received the gross amount of any cash distributions which would have been paid by the Company to such shareholders had they not elected to participate. These deemed distributions will be treated as actual distributions from the Company to the participating shareholders and will retain the character and tax effects applicable to distributions from the Company generally. See "-Taxation of Shareholders-Taxation of Taxable Domestic Shareholders." Participants in the dividend reinvestment and share purchase plan are subject to Federal income tax on the amount of the deemed distributions to the extent that such distributions represent dividends or gains, even though they receive no cash. In addition, participants in the dividend reinvestment and share purchase plan are subject to Federal income tax on payment by the Company of brokerage commissions and bank fees on their behalf. Common Shares received under the plan will have a holding period beginning with the day after purchase, and a tax basis equal to their cost (which is the gross amount of the deemed distribution plus the amount of any brokerage commissions and bank fees paid on the holder's behalf). OTHER TAX CONSIDERATIONS The Management Company, Amrescon and AIA; Other Considerations. A portion of the cash to be used by the Operating Partnership to fund distributions to partners, including the Company, is expected to come from the Management Company, Amrescon and AIA through dividends on the common and preferred stock of the Management Company, Amrescon and AIA held by the Operating Partnership and from interest on the Subordinated Notes. In addition, the Management Company, Amrescon and AIA will each receive income from the Company, the Operating Partnership and unrelated third parties. Because the Company, the Operating Partnership, the Management Company, Amrescon and AIA are related through stock or partnership ownership, income of the Management Company, Amrescon or AIA from services performed for the Company and the Operating Partnership may be subject to certain rules under which additional income may be allocated to the Management Company, Amrescon or AIA. On account of such ownership relationships, the allocation of certain expenses and reimbursements thereof among the Company, the Management Company, the Operating Partnership, Amrescon and AIA could be subject to additional scrutiny by the Service. Each of the Management Company, Amrescon and AIA will pay Federal and state income taxes at the full applicable corporate rates on its income prior to payment of any dividends. Each of the Management Company, Amrescon and AIA will attempt to minimize the amount of such taxes, but there can be no assurance whether or the extent to which measures taken to minimize taxes will be successful. To the extent that the Management Company, Amrescon and AIA are required to pay Federal, state, or local taxes, the cash available for distribution by the Company to shareholders will be reduced accordingly. In addition, to the extent that tax exempt entities and foreign persons hold shares of beneficial interest of the Company, the interest expense deductions of the Management Company and AIA on the Subordinated Notes could be reduced. Possible Legislative or Other Actions Affecting Tax Consequences. Prospective shareholders should recognize that the present Federal income tax treatment of investment in the Company may be modified by legislative, judicial or administrative action at any time and that any such action may affect investments and commitments previously made. The rules dealing with Federal income taxation are constantly under review by persons involved in the legislative process and by the Service and the Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes. No assurance can be given as to the form or content (including with respect to effective dates) of any tax legislation which may be enacted. Revisions in Federal tax laws and interpretations thereof could adversely affect the tax consequences of investment in the Company. State and Local Taxes. The Company and its shareholders may be subject to state or local taxation, and the Company and the Operating Partnership may be subject to state or local tax withholding requirements, in various jurisdictions, including those in which it or they transact business or reside. The state and local tax treatment of the Company and its shareholders may not conform to the Federal income tax consequences discussed above. Consequently, prospective shareholders should consult their own tax advisors regarding the effect of state and local tax laws on an investment in shares of beneficial interest of the Company. CERTAIN UNITED STATES TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS The following is a discussion of certain anticipated U.S. Federal income and U.S. Federal estate tax consequences of the ownership and disposition of shares of beneficial interest applicable to Non-U.S. Shareholders of such shares. A "Non-U.S. Shareholder" is (i) any individual who is neither a citizen nor resident of the United States, (ii) any corporation or partnership other than a corporation or partnership created or organized in the United States or under the laws of the United States or any state thereof or under the laws of the District of Columbia or (iii) any estate or trust that is not "resident" in the United States. The discussion is based on current law and is for general information only. The discussion does not address other aspects of U.S. Federal taxation other than income and estate taxation or all aspects of U.S. Federal income and estate taxation. The discussion does not consider any specific facts or circumstances that may apply to a particular Non-U.S. Shareholder. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF BENEFICIAL INTEREST. DISTRIBUTIONS FROM THE COMPANY Ordinary Dividends. The portion of dividends received by Non-U.S. Shareholders payable out of the Company's earnings and profits that are not attributable to capital gains of the Company and that are not effectively connected with a U.S. trade or business of the Non-U.S. Shareholder will be subject to U.S. withholding tax at the rate of 30% (unless reduced by treaty or the Non-U.S. Shareholder files an Internal Revenue Service Form 4224 with the Company certifying that the investment to which the distribution relates is effectively connected to a United States trade or business of such Non-U.S. Shareholder). Under certain limited circumstances, the amount of tax withheld may be refundable, in whole or in part, because of the tax status of certain partners or beneficiaries of Non-U.S. Shareholders that are either foreign partnerships or foreign estates or trusts. In general, Non-U.S. Shareholders will not be considered engaged in a U.S. trade or business solely as a result of their ownership of shares of beneficial interest. In cases where the dividend income from a Non-U.S. Shareholder's investment in shares of beneficial interest is (or is treated as) effectively connected with the Non-U.S. Shareholder's conduct of a U.S. trade or business, the Non-U.S. Shareholder generally will be subject to U.S. tax at graduated rates, in the same manner as U.S. shareholders are taxed with respect to such dividends (and may also be subject to the 30% branch profits tax (unless reduced by treaty) in the case of a Non-U.S. Shareholder that is a foreign corporation). Under currently applicable Treasury regulations, withholding agents are required to determine the applicable withholding rate pursuant to the appropriate tax treaty, and withhold the appropriate amount. Under the current regulations, dividends paid to an address in a foreign country are presumed to be paid to a resident of that country (unless the payer has knowledge to the contrary) for purposes of the withholding discussed above and, under the current interpretation of the Treasury regulations, for purposes of determining the applicability of a tax treaty rate. Treasury regulations proposed in 1996, which have not been adopted, and are, therefore, not currently effective, would, if and when they become effective, require Non-U.S. Shareholders to file a form W-8 to obtain the benefit of any applicable tax treaty providing for a lower rate of withholding tax on dividends paid after December 31, 1997. Such form would require a representation by the holder as to foreign status, the holder's name and permanent residence address, the basis for a reduced withholding rate (e.g., the relevant tax treaty) and other pertinent information, to be certified by such holder under penalties of perjury. Such information is subject to being reported to the Internal Revenue Service. A permanent resident address for this purpose generally is the address in the country where the person claims to be a resident for the purpose of the country's income tax. If the beneficial holder is a corporation, then the address is where the corporation maintains its principal office in its country of incorporation. Capital Gain Dividends. Under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), any distribution made by the Company to a Non- U.S. Shareholder, to the extent attributable to gains from dispositions of United States Real Property Interests ("USRPIs") by the Company ("USRPI Capital Gains"), will be considered effectively connected with a U.S. trade or business of the Non-U.S. Shareholder and subject to U.S. income tax at the rates applicable to U.S. individuals or corporations, without regard to whether such distribution is designated as a capital gain dividend. In addition, the Company will be required to withhold tax equal to 35% of the amount of such distribution to the extent it constitutes USRPI Capital Gains. Such distribution may also be subject to the 30% branch profits tax (unless reduced by treaty) in the case of a Non-U.S. Shareholder that is a foreign corporation. Non-Dividend Distributions. Any distributions by the Company that exceed both current and accumulated earnings and profits of the Company will not be taxed as either ordinary dividends or capital gain dividends. See "Federal Income Tax Considerations - Taxation of Shareholders - Taxation of Taxable Domestic Shareholders." However, if it cannot be determined at the time a distribution is made whether or not such distribution will be in excess of current and accumulated earnings and profits, the distribution will be subject to withholding. Should this occur, the Non-U.S. Shareholder may seek a refund of over withholding from the Service once it is subsequently determined that such distribution was, in fact, in excess of current and accumulated earnings and profits of the Company. DISPOSITIONS OF SHARES OF BENEFICIAL INTEREST Unless the shares of beneficial interest constitute USRPIs, a sale or exchange of shares of beneficial interest by a Non-U.S. Shareholder generally will not be subject to U.S. taxation under FIRPTA. The shares of beneficial interest will not constitute USRPIs if the Company is a "domestically controlled REIT." A domestically controlled REIT is a REIT in which, at all times during a specified testing period, less than 50% in value of its shares is held directly or indirectly by Non-U.S. Shareholders. It is currently anticipated that the Company will be a domestically controlled REIT and, therefore, that the sale of shares of beneficial interest will not be subject to taxation under FIRPTA. No assurance can be given that the Company will continue to be a domestically controlled REIT. If the Company does not constitute a domestically controlled REIT, a Non-U.S. Shareholder's sale or exchange of shares of beneficial interest generally will still not be subject to tax under FIRPTA as a sale of USRPIs provided that (i) the Company's shares of beneficial interest are "regularly traded" (as defined by applicable Treasury regulations) on an established securities market (e.g., the NYSE, on which the Common Shares are listed) and (ii) the selling Non-U.S. Shareholder held 5% or less of the Company's outstanding shares of beneficial interest at all times during a specified testing period. If gain on the sale or exchange of shares of beneficial interest were subject to taxation under FIRPTA, the Non-U.S. Shareholder would be subject to U.S. income tax at the rates applicable to U.S. individuals or corporations, and the purchaser of shares of beneficial interest could be required to withhold 10% of the purchase price and remit such amount to the Service. The branch profits tax would not apply to such sales or exchanges. Capital gains not subject to FIRPTA will nonetheless be taxable in the United States to a Non-U.S. Shareholder in two cases: (i) if the Non-U.S. Shareholder's investment in shares of beneficial interest is effectively connected with a U.S. trade or business conducted by such Non-U.S. Shareholder, the Non-U.S. Shareholder will be subject to the same treatment as U.S. shareholders with respect to such gain, (ii) if the Non-U.S. Shareholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a "tax home" in the United States, the nonresident alien individual will be subject to 30% tax on the individual's capital gain (unless reduced or eliminated by treaty), or (iii) if the Non-U.S. Shareholder is subject to tax pursuant to the Code provisions applicable to certain U.S. expatriates. FEDERAL ESTATE TAX Shares of beneficial interest owned or treated as owned by an individual who is not a citizen or "resident" (as specifically defined for U.S. Federal estate tax purposes) of the United States at the time of death will be includable in the individual's gross estate for U.S. Federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. Such individual's estate may be subject to U.S. Federal estate tax on the property includable in the estate for U.S. Federal estate tax purposes. INFORMATION REPORTING AND BACKUP WITHHOLDING The Company must report annually to the Service and to each Non-U.S. Shareholder the amount of dividends (including any capital gain dividends) paid to, and the tax withheld with respect to, each Non-U.S. Shareholder. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of these returns may also be made available under the provisions of a specific treaty or agreement with the tax authorities in the country in which the Non-U.S. Shareholder resides. U.S. backup withholding (which generally is imposed at the rate of 31% on certain payments to persons that fail to furnish the information required under the U.S. information reporting requirements) and information reporting will generally not apply to dividends (including any capital gain dividends) paid on shares of beneficial interest to a Non-U.S. Shareholder at an address outside the United States. The proposed Treasury regulations referred to under "Distributions from the Company-Ordinary Dividends," in general, would similarly require a Non-U.S. Shareholder to provide the form W-8 for dividends paid after December 31, 1997 to be exempt from backup withholding and information reporting. The payment of the proceeds from the disposition of shares of beneficial interest to or through a U.S. office of a broker will be subject to information reporting and backup withholding unless the owner, under penalties of perjury, certifies, among other things, its status as a Non- U.S. Shareholder, or otherwise establishes an exemption. The payment of the proceeds from the disposition of shares of beneficial interest to or through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding and information reporting, except as noted below. In the case of a payment of proceeds from the disposition of shares of beneficial interest to or through a non-U.S. office of a broker which is (i) a U.S. person, (ii) a "controlled foreign corporation" for U.S. Federal income tax purposes or (iii) a foreign person 50% or more of whose gross income for certain periods is derived from a U.S. trade or business (a "Foreign U.S. Connected Broker"), information reporting (but not backup withholding) will apply unless the broker has documentary evidence in its files that the holder is a Non-U.S. Shareholder (and the broker has no actual knowledge to the contrary) and certain other conditions are met, or the holder otherwise establishes an exemption. In addition, the Treasury Department has indicated that it is studying the possible application of backup withholding in the case of such foreign offices of U.S. and Foreign U.S. Connected Brokers. Under proposed Treasury regulations, a payment of the proceeds from the disposition of shares of beneficial interest to or through such broker will be subject to backup withholding if such broker has actual knowledge that the holder is a U.S. person. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be refunded or credited against the Non-U.S. Shareholder's U.S. Federal income tax liability, provided that required information is furnished to the Service. These backup withholding and information reporting rules are currently under review by the Treasury Department, and their application to shares of beneficial interest is subject to change. PLAN OF DISTRIBUTION The Selling Shareholders may from time to time offer and sell the Shares on the NYSE or otherwise at market prices then prevailing or at prices and upon terms then obtainable. Sales may be made in ordinary brokerage transactions, in block transactions, in privately negotiated transactions, pursuant to Rule 144 or otherwise. If the Shares are sold through brokers, customary brokerage commissions and charges are expected to be paid by the Selling Shareholders. The Shares are being registered to permit public secondary trading of the Shares from time to time after the date of this Prospectus. The Company will bear all expenses (other than selling commissions, underwriting discounts and fees and expenses of counsel to any Selling Shareholder) to the Selling Shareholders in connection with the registration and sale of the Shares. The Company is registering the Shares pursuant to or as required by the provisions of the agreements between the Operating Partnership and certain of the Selling Shareholders, which agreements are filed as exhibits to the Registration Statement of which this Prospectus is a part. The Selling Shareholders and any dealer, broker or other agent selling securities offered hereby for a Selling Shareholder or purchasing any such securities from a Selling Shareholder for purposes of resale may be deemed to be an underwriter under the Securities Act and any compensation received by the Selling Shareholder, dealer, broker or other agent may be deemed underwriting compensation. The amount of such compensation cannot currently be estimated. The Company knows of no existing arrangements between any Selling Shareholder and any other dealer, broker or other agent. To comply with certain states' securities laws, if applicable, the Shares offered hereby may be sold in such states only through brokers or dealers. In addition, in certain states the Shares may not be sold unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. EXPERTS The consolidated financial statements and schedule of Amli Residential Properties Trust as of December 31, 1996 and 1995, and for each of the years in the three-year period ended December 31, 1996, have been incorporated by reference herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, which report is incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. To the extent that KPMG Peat Marwick LLP audits and reports on financial statements of Amli Residential Properties Trust issued at future dates, and consents to the use of their report thereon, such financial statements also will be incorporated by reference in the Registration Statement in reliance upon their report and said authority. LEGAL MATTERS Certain legal matters relating to the validity of the Shares offered pursuant to this Prospectus will be passed upon for the Company by Mayer, Brown & Platt. Mayer, Brown & Platt has in the past represented and is currently representing the Company and certain of its affiliates. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities registered hereby, all of which will be paid by the Registrant: SEC registration fee . . . . . . . . . . . . . $ 1,176 Printing and duplicating expenses. . . . . . . 1,000 Legal fees and expenses. . . . . . . . . . . . 10,000 Accounting fees and expenses . . . . . . . . . 3,500 Miscellaneous expenses . . . . . . . . . . . . 1,500 -------- Total. . . . . . . . . . . $ 17,176 ======== ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS. The Registrant's officers and Trustees are and will be indemnified under the Declaration of Trust and Bylaws of the Registrant, and the Partnership Agreement of the Operating Partnership against certain liabilities. The Declaration of Trust requires the Registrant to indemnify its Trustees and officers, among others, against claims and liabilities and reasonable expenses actually incurred by them in connection with any claim or liability by reason of their services in those or other capacities unless it is established that the act or omission of the Trustee or officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, or the Trustee or officer actually received an improper personal benefit, or, in the case of any criminal proceeding, the Trustee or officer had reasonable cause to believe that the act or omission was unlawful. Additionally, the Company has entered into indemnification agreements with the Company's officers and Trustees providing substantially the same scope of coverage afforded by provisions in the Declaration of Trust. As permitted by Maryland Law, the Declaration of Trust provides that a Trustee or officer of the Registrant shall not be liable for monetary damages to the Registrant or its shareholders for any act or omission in the performance of his duties, except to the extent that (1) the person actually received an improper benefit or (2) the person's action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated. The Partnership Agreement of the Operating Partnership also provides for indemnification of the Registrant and its officers and Trustees to the same extent indemnification is provided to officers and Trustees of the Registrant in its Declaration of Trust, and limits the liability of the Registrant to the Operating Partnership and its partners to the same extent the liability of the officers and Trustees of the Registrant to the Registrant and its shareholders is limited under the Registrant's Declaration of Trust. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. See Exhibit Index included herewith which is incorporated herein by reference. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any Prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrant hereby undertakes to supplement the applicable prospectus supplement, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the applicable prospectus supplement, a post-effective amendment will be filed to set forth the terms of such offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the provisions set forth or described in Item 15 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of Amli Residential Properties Trust, a Maryland real estate investment trust, and each of the undersigned Trustees and officers of Amli Residential Properties Trust, hereby constitutes and appoints Gregory T. Mutz, John E. Allen, Allan J. Sweet and Charles C. Kraft, its, his or her true and lawful attorneys-in- fact and agents, for it, him or her and in its, his or her name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this Registration Statement, and to file each such amendment to this Registration Statement with all exhibits thereto, and any and all documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things required and necessary to be done, as fully and to all intents and purposes as it, he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois on April 2, 1997. AMLI RESIDENTIAL PROPERTIES TRUST By: /s/ JOHN E. ALLEN John E. Allen Its: Vice Chairman Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 2, 1997. NAME TITLE ---- ----- /s/ GREGORY T. MUTZ Gregory T. Mutz Chairman of the Board of Trustees (Principal Executive Officer) /s/ JOHN E. ALLEN John E. Allen Vice-Chairman of the Board of Trustees (Principal Financial Officer) /s/ ALLAN J. SWEET Allan J. Sweet Trustee and President /s/ CHARLES C. KRAFT Charles C. Kraft Treasurer (Principal Accounting Officer) /s/ LAURA D. GATES Laura D. Gates Trustee /s/ MARC S. HEILWEIL Marc S. Heilweil Trustee /s/ STEPHEN G. MCCONAHEY Stephen G. McConahey Trustee /s/ QUINTON E. PRIMO III Quintin E. Primo III Trustee /s/ JOHN G. SCHREIBER John G. Schreiber Trustee /s/ PHILIP N. TAGUE Philip N. Tague Trustee INDEX TO EXHIBITS Exhibit Number Document Description - ------ -------------------- 4.1 Amended and Restated Declaration of Trust of the Registrant (Incorporated by reference to exhibit 3.1 to Registration Statement No. 33- 71566). 4.2 Amended and Restated By-laws of the Registrant (Incorporated by reference to exhibit 3.2 to Registration Statement No. 33-71566). 4.3 Amended and Restated Agreement of Limited Partnership of Amli Residential Properties, L.P. (Incorporated by reference to exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 4.3(a) First Amendment to the Amended and Restated Agreement of Limited Partnership of Amli Residential Properties, L.P. (Incorporated by reference to exhibit 10.1(a) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 4.3(b) Second Amendment to the Amended and Restated Agreement of Limited Partnership of Amli Residential Properties, L.P. (Incorporated by reference to exhibit 10.1(b) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 4.3(c) Third Amendment to the Amended and Restated Agreement of Limited Partnership of Amli Residential Properties, L.P. (Incorporated by reference to exhibit 10.1(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996). 4.4 Form of Common Share Certificate (Incorporated by reference to exhibit 4.1 to Registration Statement No. 33-71566). 4.5 Articles Supplementary to the Amended and Restated Declaration of Trust of the Registrant Classifying Unissued Shares of Beneficial Interest in the Registrant as Series A Cumulative Convertible Preferred Shares of Beneficial Interest (Incorporated by reference to exhibit 4.9 to the Registrant's Current Report on Form 8-K dated January 30, 1996). 4.6 Form of Series A Preferred Share Certificate (Incorporated by reference to exhibit 4.5 to the Registrant's Current Report on Form 8-K dated January 18, 1996). 5.1 Opinion of Mayer, Brown & Platt. 8.1 Tax Opinion of Mayer, Brown & Platt. 23.1 Consent of KPMG Peat Marwick LLP. 23.2 Consent of Mayer, Brown & Platt (Included in the opinions filed as Exhibits 5.1 and 8.1 to this Registration Statement). INDEX TO EXHIBITS - CONTINUED Exhibit Number Document Description - ------ -------------------- 24.1 Power of Attorney (Included on the page of the Registration Statement immediately preceding the signature page). 99.1 Agreement to Assign Sales Contract and Development Documents, dated as of January 16, 1996, between Bristol Chicago Development Corp and Amli Residential Properties, L.P. 99.2 Agreement to Assign Sales Contract and Development Documents, dated as of July 22, 1996, between Bristol Oakhurst Development L.L.C. and Amli Residential Properties, L.P, and the First Amendment thereto dated as of October 2, 1996. 99.3 Agreement Regarding Acquisition of Partnership Interests, dated as of December 20, 1996, among Amli Residential Properties, L.P., Verandah Holdings Phase I Inc., JSDP, Inc., M&B Holdings General Partnership, Fairgrowth International, Inc. and TVA SP Partnership, the First Amendment thereto dated as of January 16, 1997, and the Second Amendment thereto dated as of February 28, 1997. 99.4 Assignment of Contract, dated as of March, 1997, by Easlan Capital of Atlanta, Inc. to Amli Residential Properties, L.P.; Sales Agreement, dated as of February 29, 1996, among Virgil R. Williams, James N. Williams, Easlan Capital of Atlanta, Inc., Belkofer and Company, Inc. and Williams-Adair Realty Corp., the First Amendment thereto dated as of April 25, 1996, the Second Amendment thereto dated as of September, 1996, and the Third Amendment thereto. EX-5.1 2 EXHIBIT 5.1 - ----------- (FORM S-3) April 2, 1997 The Board of Trustees Amli Residential Properties Trust 125 South Wacker Drive Chicago, Illinois 60606 Ladies and Gentlemen: We have acted as counsel to Amli Residential Properties Trust, a Maryland real estate investment trust (the "Company"), in connection with the proceedings (the "Company Proceedings") taken and to be taken relating to the registration by the Company of an aggregate of 169,690 common shares of beneficial interest (the "Shares") of the Company, $.01 par value per share, with the Securities and Exchange Commission (the "SEC") for resale by certain selling shareholders who may obtain the Shares upon exchange of limited partnership units in Amli Residential Properties, L.P. We have also participated in the preparation and filing with the SEC under the Securities Act of 1933, as amended, of a registration statement on Form S-3 (the "Registration Statement"), relating to such Shares. As special counsel to the Company, we have examined originals or copies certified to our satisfaction of the Company's Amended and Restated Declaration of Trust (the "Declaration of Trust") and Amended and Restated Bylaws, resolutions of the Board of Trustees, and such other Company records, instruments, certificates and documents and such questions of law as we considered necessary or appropriate to enable us to express this opinion. As to certain facts material to our opinion, we have relied, to the extent we deem such reliance proper, upon certificates of public officials and officers of the Company. In rendering this opinion, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of photostatic copies. Based upon and subject to the foregoing and to the assumptions, limitations and conditions set forth herein, we are of the opinion that, upon completion of the Company Proceedings, the Shares will have been duly authorized for issuance, and when the Shares are issued and delivered in accordance with the Company Proceedings and the resolutions authorizing their issuance, the Shares will be validly issued, fully paid and, except as described below, nonassessable. Our opinion relating to the nonassessability of the Shares does not pertain to the potential liability of shareholders of the Company for debts and liabilities of the Company. Section 5-350 of the Maryland Courts and Judicial Proceedings Code provides that "a shareholder . . . of a real estate investment trust . . . is not personally liable for the obligations of the real estate investment trust." The Declaration of Trust provides that no shareholder shall be personally liable in connection with the Company's property or the affairs of the Company. The Declaration of Trust further provides that the Company shall indemnify and hold harmless shareholders against all claims and liabilities and related reasonable expenses to which they become subject by virtue of their status as current or former shareholders. In addition, we have been advised that the Company, as a matter of practice, inserts a clause in its business, management and other contracts that provides that shareholders shall not be personally liable thereunder. Accordingly, no personal liability should attach to the Company's shareholders for contract claims under any contract containing such a clause where adequate notice is given. However, with respect to tort claims, contract claims where shareholder liability is not so negated, claims for taxes and certain statutory liability, the shareholders may, in some jurisdictions, be personally liable for such claims and liabilities. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters". Very truly yours, /s/ MAYER, BROWN & PLATT MAYER, BROWN & PLATT EX-8.1 3 EXHIBIT 8.1 - ----------- (FORM S-3) April 2, 1997 The Board of Trustees Amli Residential Properties Trust 125 South Wacker Drive, Suite 3100 Chicago, Illinois 60606 Re: Partnership Classification; Status as a Real Estate Investment Trust ("REIT"); Information in the Registration Statement under "FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED STATES TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS" -------------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to Amli Residential Properties Trust, a Maryland real estate investment trust ("ARPT"), in connection with the registration of 168,690, common shares of beneficial interest of ARPT (the "Common Shares"), all of which Common Shares may be offered and sold by certain selling shareholders from time to time as set forth in the prospectus (the "Prospectus") which forms a part of the Registration Statement on Form S-3 filed with the Securities and Exchange Commission on April 2, 1997, as amended through the date hereof (the "Registration Statement"). Unless otherwise specifically defined herein, all capitalized terms have the meanings assigned to them in the Registration Statement. In connection with the registration of the Common Shares, you have requested our opinions concerning (i) the treatment of Amli Residential Properties, L.P. (the "Operating Partnership") as a partnership for Federal income tax purposes, and not as an association taxable as a corporation; (ii) the qualification and taxation for Federal income tax purposes of the Company as a REIT; and (iii) the information in the Registration Statement under the headings "FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED STATES TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS." The Board of Trustees April 2, 1997 Page 2 In formulating our opinions, we have reviewed and relied upon the partnership agreement of the Operating Partnership, the Registration Statement, other documents and information provided by you, and such applicable provisions of law and other documents as we have considered necessary or desirable for purposes of the opinions expressed herein. In addition, we have relied upon the Company's certificate (the "Officer's Certificate"), executed by a duly appointed officer of the Company, setting forth certain representations relating to the organization and actual and proposed operation of the Company, the Operating Partnership, the Management Company, AIA, Amrescon and each of the partnerships in which the Operating Partnership will directly or indirectly hold an interest and which actually owns an interest in real property (the "Property Partnerships"). For purposes of our opinions, we have not made an independent investigation of the facts set forth in such documents, the Officer's Certificate, the partnership agreements for the Operating Partnership or the Property Partnerships, or the Registration Statement. We have, consequently, relied upon your representations that the information presented in such documents or otherwise furnished to us accurately and completely describes all material facts. No facts have come to our attention, however, that would cause us to question the accuracy or completeness of such facts or documents in a material way. In rendering these opinions, we have assumed that the transactions contemplated by the foregoing documents will be consummated in accordance with the operative documents, and that such documents accurately reflect the material facts of such transactions. In addition, the opinions are based on the assumption that the Company, the Operating Partnership, the Management Company, AIA, Amrescon and the Property Partnerships have operated and will continue to each be operated in the manner described in the applicable partnership agreement or other organizational documents and in the Registration Statement, and all terms and provisions of such agreements and documents have been and will continue to be complied with by all parties thereto. Our opinions expressed herein are based on the applicable laws of the States of Maryland and Delaware, the Code, Treasury regulations promulgated thereunder, and interpretations of the Code and such regulations by the courts and the Internal Revenue Service, all as they are in effect and exist at the date of this letter. It should be noted that statutes, regulations, judicial decisions, and administrative interpretations are The Board of Trustees April 2, 1997 Page 3 subject to change at any time and, in some circumstances, with retroactive effect. A material change that is made after the date hereof in any of the foregoing bases for our opinions could adversely affect our conclusions. Based upon and subject to the foregoing, it is our opinion that: 1. The Operating Partnership will be treated, for Federal income tax purposes, as a partnership, and not as an association taxable as a corporation. 2. Beginning with the Company's taxable year ending December 31, 1994, the Company has been organized in conformity with the requirements for qualification as a REIT under the Code, and the Company's actual and proposed method of operation, as described in the Registration Statement and as represented in the Officer's Certificate, has enabled it and will continue to enable it to satisfy the requirements for qualification as a REIT. 3. The information in the Registration Statement under the headings "FEDERAL INCOME TAX CONSIDERATIONS" and "CERTAIN UNITED STATES TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS," to the extent that it constitutes matters of law or legal conclusions, has been reviewed by us and is correct in all material respects. Other than as expressly stated above, we express no opinion on any issue relating to the Company, the Operating Partnership, any Property Partnership or to any investment therein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein and under the caption "FEDERAL INCOME TAX CONSIDERATIONS" in the Registration Statement. Very truly yours, /s/ MAYER, BROWN & PLATT MAYER, BROWN & PLATT WAL EX-23.1 4 EXHIBIT 23.1 - ------------ (FORM S-3) CONSENT OF KPMG PEAT MARWICK LLP -------------------------------- The Board of Trustees Amli Residential Properties Trust: We consent to the use of our report dated February 28, 1997 on the consolidated financial statements and schedule of Amli Residential Properties Trust as of December 31, 1996 and 1995, and for each of the years in the three-year period ended December 31, 1996, incorporated by reference herein and to the reference to our Firm under the heading "EXPERTS". /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Chicago, Illinois April 1, 1997 EX-99.1 5 EXHIBIT 99.1 - ------------ (Form S-3) AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS 18.22 Acre Parcel, Aurora, Illinois THIS AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS (hereinafter this "AGREEMENT"), is made and entered into as of the 16th day of January, 1996, between BRISTOL CHICAGO DEVELOPMENT CORP. (hereinafter called "ASSIGNOR") and AMLI RESIDENTIAL PROPERTIES L.P., a Delaware limited partnership (hereinafter called "ASSIGNEE"). A. Assignor is the purchaser under that certain Real Estate Sales Contract, dated March 7, 1995, by and among Assignor, Wil-Freds Developments, Inc. and Harris Bank Naperville, as trustee under Trust Agreement dated August 9, 1973 a/k/a Trust No. 1689 (herein, Wil-Freds Developments, Inc. and Harris Bank Trust No. 1689 are collectively referred to as the "CONTRACT SELLER"), as amended by that certain letter agreement dated April 4, 1995, that certain letter agreement dated August 15, 1995 and that certain letter agreement dated January 3, 1996 (such agreement, as amended, being herein called the "SALES CONTRACT" and being attached hereto as EXHIBIT A). B. Pursuant to the Sales Contract, and subject to the terms and conditions therein set forth, Assignor has the right to acquire approximately 18.22 acres in Aurora, DuPage County, Illinois (the "PROPERTY") as described in Exhibit A to the Sales Contract. Terms used herein and not otherwise defined herein shall have the meanings given such terms in the Sales Contract. C. Subject to the terms and conditions hereof, Assignor desires to assign to Assignee all of Assignor's right, title and interest (i) to purchase the Property including without limitation, Assignor's rights in and to the Sales Contract (the "PURCHASE RIGHTS") and (ii) in and to all existing plans, drawings, specifications, permits, licenses, governmental approvals, development rights, Regulatory Approvals (defined below), agreements (with governmental bodies, architects, engineers, consultants or other persons or entities) and other materials related to the development of the Property (the "DEVELOPMENT RIGHTS"; all written materials evidencing the Development Rights are called the "DEVELOPMENT DOCUMENTS" and are more particularly described on EXHIBIT B attached hereto) as a 272-unit luxury multifamily community known as Aurora Crossing Apartments (the "PROJECT"), and Assignee desires to accept such assignment and to assume and agree to perform, subject to the terms and conditions hereof, all of the Purchaser's duties, obligations and liabilities under the Sales Contract and the Development Documents. AGREEMENT: --------- NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged: 1. AGREEMENT TO PURCHASE AND SELL. Assignee agrees to accept and Assignor agrees to contribute the Purchase Rights and the Development Rights for the consideration and subject to the terms and conditions set forth in this Agreement. 2. CONTRIBUTION. The value of the Purchase Rights and the Development Rights (the "EXCHANGE AMOUNT") is $540,000, to be paid to Assignor as consideration for the contribution and assignment to Assignee of the Purchase Rights and the Development Rights. On the Closing Date (as defined below) the Exchange Amount shall be payable entirely in the form of operating units of Assignee and the Earnest Money will be refunded to Assignee at closing. The number of operating units to be delivered to Assignor will be calculated based upon the closing price on the New York Stock Exchange of the common shares of Amli Residential Properties Trust on the first business day prior to the Closing Date. Such operating units shall be convertible at any time into an equal number of shares of Amli Residential Properties Trust. In the event, upon conversion, such shares are "restricted securities" (i.e., unregistered), and remain so for 90 days after the conversion by Assignor, then Assignor shall have the right to put such shares to Assignee for cash in an amount based on the number of shares so put, multiplied by the closing price on the New York Stock Exchange for such shares as of the first business day prior to the date of exercise of the put, and the cash shall be paid to Assignor within thirty (30) days of receipt of written notice to Assignor of such put. 3. REIMBURSEMENT OF COSTS. Upon the closing of this transaction, Assignee agrees to reimburse Assignor for certain acceptable third party costs incurred by Assignor related to the development of the Project through the date hereof. The exact amount of the reimbursement will be determined by the parties prior to closing and shall be payable in cash. Prior to and as a condition of such reimbursement, Assignor shall provide to Assignee an estoppel or letter (substantially in the form of EXHIBIT C- 1, C-2 or C-3 attached hereto, as the case may be) from such third parties confirming the work performed under their respective agreements, the amounts paid to such third parties and the amount remaining to be paid to such third parties. 4. EARNEST MONEY. Assignee shall deposit $50,000 in cash as earnest money (the "EARNEST MONEY") within three (3) business days following the later of execution of this Agreement (the "CONTRACT DATE") and the satisfaction of the conditions set forth in Section 12 hereof, in a strict joint order escrow account (the "ESCROW") with Chicago Title Insurance Company (the "TITLE INSURER"), as escrow trustee, with such funds to be deposited in an insured interest bearing account designated by Assignee. The Earnest Money shall thereafter be non-refundable to Assignee provided Assignor fulfills its obligations under this Agreement and all conditions precedent have been satisfied or waived. Upon closing of the purchase and sale of the Property to Assignee pursuant to Section 5(e) below, Assignee will cause the earnest money posted by Assignor as purchaser under the Sales Contract to be refunded to Assignor, including any interest accrued thereon. 2 5. CONDITIONS PRECEDENT TO ASSIGNEE'S OBLIGATION TO CLOSE. Assignee's obligation to purchase the Purchase Rights and the Development Rights shall be subject to the following conditions precedent (the "CONDITIONS PRECEDENT"), any of which may be waived by Assignee. a. FEASIBILITY CONTINGENCY. Assignee shall have until January 16th, 1996 (the "REVIEW PERIOD"), or such later date as mutually agreed to by the parties to perform a feasibility analysis of the Property. During this time Assignee will conduct and review soil tests, engineering, planning, site planning, utilities, wetlands, environmental risk, title, survey and other reviews determined to be necessary by the Assignee. In addition, Assignee shall review the costs proposed to be reimbursed by Assignee pursuant to SECTION 3 above. If Assignee determines, in its sole discretion, that the Property is not suitable for development by Assignee, or Assignor and Assignee are unable to agree upon the costs to be reimbursed, then Assignee shall have the right to terminate this Agreement by delivering written notice thereof to Assignor at any time prior to the end of the Review Period, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. If Assignee fails to so notify Assignor, then Assignee shall be deemed to have waived this feasibility contingency and this Agreement shall remain in full force and effect, subject to the Regulatory Approvals (as defined below) contingency and other contingencies set forth herein and therein. b. REGULATORY APPROVALS CONTINGENCY. On or prior to the Closing Date, Assignee shall ascertain costs and the existence and transferability of all governmental approvals (the "REGULATORY APPROVALS") required to develop the Property for the use detailed in the Development Documents. The Regulatory Approvals shall include (without limitation) the following: i. Evidence of planned unit development, preliminary plat and preliminary plan, and final plat and final plan approval of the Project from the City of Aurora (the "CITY") including a copy certified by the City of the ordinances granting such approvals and of all plans, agreements and other submissions on which such approval is based; ii. recordation of a final plat of subdivision for the Property; iii. issuance of a building permit for the construction of (i) all grading, site work, roadwork, utilities, and other infrastructure serving or required to be built in connection with the Project, and (ii) pool area, recreation center and first planned residential buildings, together with evidence satisfactory to Purchaser (which may be in the form of a letter from the City) that all building, engineering and other plans for the balance of the Project have been approved, that the City is ready to issue a building permit for such construction upon the payment of 3 specified permit fees, and identifying specifically by latest revision date all plans approved by the City upon which permits have been or may be issued; iv. evidence of the amount of DuPage County ("COUNTY") impact fees which will be assessed against the Project, which evidence may be in the form of a letter from the County; v. if any of the roads adjoining or serving the Property are not City roads, then issuance of a curb cut and other applicable construction permits by the authority controlling such roads (e.g., County, IDOT) permitting the construction of all curb cuts, de- acceleration or acceleration lanes, turn lanes, or other improvements required to be constructed in connection with the Project; vi. evidence (which may consist of issuance of the applicable permit or a letter from the Project's civil engineer SDI Consultants, Ltd. (the "ENGINEER")) that all permits for tap on and service of the Project with water and sanitary sewer in sufficient capacities either have been issued by,or will be available upon payment of specific permit and tap on fees to, all applicable authorities including the Fox Metropolitan Water Reclamation District and the IEPA; vii. an agreement with the school, park, fire, police, library and any other applicable districts specifying the amount of impact fees payable to each, or other evidence (such as a letter from the applicable district) of the amount of or absence of these fees or other applicable impact fees, land donations or other similar payment or donation obligations; viii. written and recorded easement agreements for any utility lines or improvements (such as storm ponds) not located entirely within the Property; ix. a certificate from the Engineer and Bloodgood Sharp Buster Architects & Planners, Inc. (the "ARCHITECT") in the form of EXHIBITS C-1 and C-2 attached hereto and additionally addressing other matters which Assignee may reasonably request. Such Regulatory Approvals shall be in form and substance acceptable to Assignee. If Assignee determines, in its sole discretion, that the Property does not have the appropriate Regulatory Approvals for development of the Project by Assignee, then Assignee shall have the right to terminate this Agreement by delivering written notice thereof to Assignor at any time prior to the Closing Date, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. 4 c. CONSTRUCTION CONTRACT CONTINGENCY. On or prior to the Closing Date, Assignee shall have received a binding bid to enter into a construction general contract in form and substance and with a contractor acceptable to Assignee. It is understood that from and after the date hereof, Assignee and Assignor shall mutually cooperate in attempting to achieve such a contract at a mutually agreed upon guaranteed maximum price. Assignee and Assignor shall be represented by Sonnenschein Nath & Rosenthal ("SNR") in negotiating such a contract and the reasonable attorneys' fees of SNR in so doing shall be paid equally by Assignee and Assignor. In addition, to the extent SNR certifies that the work performed by them prior to the date hereof in connection with the Contract Seller's construction contract can be utilized in connection with the subsequent contract, their certified fees with respect to such work shall be deemed a reimbursable cost pursuant to SECTION 3 hereof. Assignor shall be the principal negotiator of the contract, but drafts shall be mutually reviewed and to the maximum extent possible the suggestions of Assignee shall be raised in the negotiations and covered in such drafts. In the event that this condition is not satisfied on or prior to the Closing Date, then Assignee shall have the right to terminate this Agreement by delivering written notice to Assignor any time on or prior to the Closing Date, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. d. INSPECTION. Assignee and its agents and contractors shall have (and Assignor shall cause the Contract Seller to provide) unlimited access to the Property prior to the Closing Date, including the right to take soil tests and borings. Assignee shall repair any damage caused by its entry and shall indemnify, defend and hold Assignor and Contract Seller harmless with respect to any damage to the Property or injury to any person caused by Assignee, its agents, employees or contractors in connection with its investigations of the Property. e. CLOSING OF SALES CONTRACT. Assignee and Assignor shall not be obligated to close this Agreement unless the Contract Seller under the Sales Contract has performed all of its obligations thereunder and Assignor is prepared to proceed with the Closing of the Sales Contract in the manner described in SECTION 8. In the event that this condition is not satisfied on or prior to the Closing Date then Assignee shall have the right to terminate this Agreement at any time on or prior to the Closing Date, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. Notwithstanding the foregoing, in the event that the reason that the Closing is not occurring is because of the failure of the Contract Seller to perform under the Sales Contract, than Assignee shall have the following additional options in lieu of terminating this Agreement, which options must be exercised by notice to Assignor within five (5) business days after the scheduled Closing Date. Assignee may extend this Agreement up to an additional 60 days during which time Assignor shall use commercially reasonable efforts, excluding the pursuit of legal action, to enforce the Sales Contract against the Contract Seller. Alternatively, Assignee may close the exchange by paying the Exchange Value and receiving assignments of the Purchase 5 Rights and Development Rights, in which event Assignee may pursue legal remedies against the Contract Seller in the Sales Contract directly, and Assignor shall have no further interest therein. If Assignee chooses the extension option and the Sales Contract is not closing at the end of the extension, then at such time Assignee may choose by notice to Assignor within five (5) business days after an expiration of the extension period either to terminate (and receive a refund of the Earnest Money) or to complete the exchange as set forth in the prior sentence. 6. CONVEYANCE. On the Closing Date, Assignor shall contribute and assign all the Purchase Rights and the Development Rights to Assignee or its designee pursuant to an Assignment and Assumption Agreement (the "ASSIGNMENT") in the form of EXHIBIT D attached hereto. The Assignment of the Purchase Rights shall be consented to by the Contract Seller. The Assignment of the Development Rights shall be consented to by consultants and contractors who are parties to the Development Documents. 7. SURVEY AND TITLE COMMITMENT. Assignor shall deliver to Assignee within seven (7) business days from the date hereof, a current ALTA plat of survey of the Property dated no earlier than six months prior to the Contract Date, certified to Assignee and the Title Insurer and meeting the minimum standard detail requirements of ALTA/ACSM adopted in 1992 as well as a commitment for an ALTA Owner's Title Insurance Policy Form B-June, 1987 from the Title Insurer with respect to the Property, dated after the Contract Date. Assignor shall consult with and obtain written approval from Assignee, which approval shall not be unreasonably withheld, of any notice or determination required to be given or made to Contract Seller with regard to objections to title or survey matters under the Sales Contract. Assignee shall approve or disapprove all matters of title and survey within the Review Period. All costs of the survey that exceed those provided for in the Sales Contract shall be paid by Assignor and all costs of the title commitment and policy that exceed those provided for in the Sales Contract shall be paid by Assignee. 8. CLOSING. If the conditions precedent set forth herein are either satisfied or waived by Assignee as evidenced by written notice to Assignor, and Assignor is prepared to go forward with the Closing (as defined in the Sales Contract) with the Contract Seller, then the closing under this Agreement shall take place on a date (the "CLOSING DATE") specified by Assignee, which date shall not be less than eleven (11) days after such notice and shall not be more than twenty-seven (27) days following the end of the Review Period, provided, however, the Closing Date shall be no later than March 15, 1996. The closing under this Agreement and the Sales Contract shall take place simultaneously, and the closing under this Agreement shall be conditioned upon the Closing under the Sales Contract. The Assignment shall be delivered to the Contract Seller at the Closing under the Sales Contract, and all conveyances under the Sales Contract shall be made directly to Assignee, provided that the delivery of the Assignment to the Contract Seller shall not be effective unless and until the Closing under the Sales Contract has taken place, unless Assignee elects under SECTION 5(e) above to pursue remedies directly against the Contract Seller. At the request of either party, the transactions shall be closed through an 6 escrow with the Title Insurer at its downtown Chicago office, with each party to pay one-half of such escrow fees. 9. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants to Assignee as of the date hereof and as of the Closing Date (as defined below) that: a. a true, accurate and complete copy of the Sales Contract is attached hereto as EXHIBIT A, and the Sales Contract has not been modified or amended; b. a true, accurate and complete list of the Development Documents is attached hereto as EXHIBIT B; c. Assignor is the absolute owner of the Purchase Rights and the Development Rights and has the right to assign the Purchase Rights and the Development Rights; d. Assignor has not given or received any notice of default or breach under the Sales Contract or Development Documents, and to Assignor's knowledge, no such default or breach exists and no event or circumstance exists which with the giving of notice or passage of time or both would constitute a default or breach under the Sales Contract or Development Documents by any party thereto; e. The Purchase Rights and the Development Rights are free of any lien or charge and are not subject to any assignment, transfer, or hypothecation; f. Assignor has been duly organized and is validly existing. Assignor has the full right and authority and has obtained any and all consents required therefor to enter into the Sales Contract, the Development Documents and this Agreement and consummate or cause to be consummated the sale and assignments contemplated therein and herein. The persons signing the Sales Contract, the Development Documents and this Agreement on behalf of Assignor are authorized to do so. The Sales Contract, the Development Documents and this Agreement have been properly authorized and executed and constitute the valid and binding obligations of Assignor, enforceable in accordance with their terms; g. There is no agreement to which Assignor is a party or binding on Assignor which is in conflict with the Sales Contract, the Development Documents or this Agreement; h. There is no action or proceeding pending or, to Assignor's knowledge, threatened against the Assignor which challenges or impairs Assignor's ability to execute, deliver or perform this Agreement; 7 i. The Property is zoned to permit the uses contemplated by the Project and Assignor has obtained the Regulatory Approvals specified in Section 5(b)(i)-(viii) above, and, to Assignor's knowledge, such approvals are all those necessary for the construction of the Project other than issuance of building, construction or curb cut permits, which permits are available upon payment of the fees listed under clause (k) below. j. Assignor has delivered to Assignee a true and complete copy of all plans, agreements, ordinances or other written materials entered into with, or issued or approved by the City, any utility provider, local school, park or other district or other governmental body in connection with the Property and Project and Regulatory Approvals, and at closing will deliver such permits referred to in Section 5.b.iii; k. To Assignor's knowledge, based on Assignor's due investigation and inquiry, a true, accurate and complete list of all fees exceeding $300 assessed or likely to be assessed by any governmental entity or utility provider associated with the Project (including without limitation, all such permit fees, impact fees, review fees, inspection fees, tap-on fees, and recapture fees) is attached hereto as EXHIBIT E; and l. Assignor has deposited $35,000 as Earnest Money under the Sales Contract with Title Insurer as escrowee. 10. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE: Assignee represents and warrants to Assignor that: a. Assignee has been duly organized and is validly existing. Assignee has the full right and authority and has obtained any and all consents required to enter into this Agreement and consummate or cause to be consummated the sale and make or cause to be made transfers and assignments contemplated herein, subject to completing its due diligence review and approval of the Property and the Development Documents. The persons signing this Agreement on behalf of Assignee are authorized to do so. This Agreement has been authorized and properly executed and will constitute the valid and binding obligations of Assignee, enforceable against Assignee in accordance with its terms. b. There is no agreement to which Assignee is a party or to Assignee's knowledge binding on Assignee which is in conflict with this Agreement. c. There is no action or proceeding pending or, to Assignee's knowledge, threatened against the Assignee which challenges or impairs Assignee's ability to execute, deliver or perform this Agreement. 8 d. The operating units of Assignee are free and clear of any lien or charge, are not subject to any assessments and are readily convertible to shares of Amli Residential Properties Trust pursuant to Section 2 of this Agreement. 11. PAYMENT OF REAL ESTATE BROKERS. Each party represents to the other that no real estate broker has been used in connection with this transaction and no real estate broker's commissions shall be payable to any party. Assignee agrees to defend, indemnify and hold Assignor harmless from and against any claim for a real estate broker's commission, or fee by any other party claiming by, through or under Assignor. Assignor agrees to defend, indemnify and hold Assignee harmless from and against any claim for a real estate broker's commission or fee by any other party claiming by, through or under Assignee. 12. SALES CONTRACT. a. EXTENSION. Assignor shall have delivered to Assignee a true, correct and complete copy of the Sales Contract, extended and in full force and effect with the following changes each of which must be approved by Assignee: i. Section 5 of the Rider shall be modified to provide a closing date commensurate with the Closing Date set forth herein; ii. Section 13(B) of the Rider shall be modified to specifically permit the assignment of the Sales Contract to Assignee; iii. Section 13(J) of the Rider shall be modified to delete any obligations of Assignee other than to deposit the Purchase Price (as defined in the Sales Contract) with an authorized intermediary. b. AMENDMENTS. Except as set forth in clause a. above, the Sales Contract shall not be amended or modified without Assignee's prior written consent. c. DUE DILIGENCE. Assignor shall cause the Contract Seller to consent in writing to Assignee's access to the Property pursuant to Section 5.a. and d. hereof. Assignee shall indemnify, defend and hold the Contract Seller harmless with respect to any damage to the Property or injury to any person caused by Assignee, its agents, employees or contractors in connection with its investigation of the Property. d. ESTOPPEL. Prior to the expiration of the Review Period and again on the Closing Date, Assignor shall deliver to Assignee an estoppel from the Contract Seller confirming that the Sales Contract, as modified as set forth in this Section, is in full force and effect, confirming that there are no defaults or other modifications and, confirming the amount of earnest money on deposit and confirming such other matters as are reasonably requested by Assignee. 9 13. CONSULTING AGREEMENT WITH ASSIGNOR. As of the Closing Date, as additional consideration for the exchange herein, Assignor and Assignee shall enter into a consulting agreement in the form of EXHIBIT F attached hereto to provide continuing basic services with respect to the Property and the Project. 14. DEFAULT. a. ASSIGNOR'S DEFAULT. If this transaction fails to close as a result of Assignor's default, the Earnest Money shall be returned to Assignee. In addition, Assignee shall be entitled to such remedies for Assignor's breach of contract as may be available at law and in equity, including, without limitation, the remedy of specific performance, which the parties agree was bargained for because of the unique nature of the rights to be transferred hereunder and the difficulty of compensating Assignee with damages, provided, however, if Assignor is in default due to causes beyond its reasonable control, Assignee shall not be entitled to pursue Assignor for monetary damages. Assignor shall be deemed to be in default under this Agreement if it fails to proceed with the Closing under the Sales Contract on the Closing Date or otherwise defaults under the Sales Contract. b. ASSIGNEE'S DEFAULT. If this transaction fails to close due to the default of Assignee, then Assignor's sole remedy shall be to terminate this Agreement and to retain the Earnest Money as liquidated damages, Assignor waiving all other rights or remedies in the event of such default by Assignee. The parties acknowledge that Assignor's actual damages in the event of a default by Assignee under this Agreement will be difficult to ascertain, and that such liquidated damages represent the parties' best estimate of such damages. 15. NO AMENDMENTS. As long as this Agreement remains in full force and effect, Assignor shall perform all of its obligations under the Sales Contract, shall not amend or modify the Sales Contract (except as set forth in Section 12.a.) and shall not make any elections, issue any approvals, give any notice, or otherwise take any action with respect to the Sales Contract or the Property without the prior written consent of Assignee which consent shall not be unreasonably withheld or delayed. 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in this Agreement shall be continuing and shall survive for a period of nineteen (19) months following the Closing Date. Each party shall indemnify and hold the other harmless from and against any loss, cost, liability or expense, including reasonable attorneys fees, incurred by reason of any breach of any of its representations or warranties under this Agreement. Notwithstanding anything to the contrary contained in this Section 16, if Assignee has actual knowledge prior to closing that a representation or warranty made by Assignor is false, despite any lack of knowledge on the part of Assignor, and Assignee proceeds with the 10 closing, then any claims of Assignee for breach of such representation or warranty shall be deemed waived as of the Closing Date. For purposes of this Section 16, Assignee's knowledge shall be deemed to mean the actual knowledge of Stephen C. Ross without inquiry or investigation. 17. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, provided that this Agreement may not be assigned by Assignor without Assignee's consent, which consent may be withheld in Assignee's sole discretion. Assignee may not assign this Agreement without Assignor's prior written consent, which consent shall not be unreasonably withheld. Any assigning party shall remain liable for the obligations of its assignee. 18. NOTICES. Upon the execution and delivery of this Agreement, Assignor and Assignee shall deliver a copy of this Agreement to the Contract Seller, and request that a copy of any notices sent to Assignor under the Sales Contract also be sent to Assignee. All notices required or permitted hereunder shall be in writing and shall be served on the parties at the following addresses: If to Assignor: Bristol Chicago Development Corp. Attn: William Walsh 1931 North Meacham Road Suite 330 Schaumburg, Illinois 60173 Phone: 708/397-7171 Facsimile: 708/397-8597 and Bristol Capital Corp. Attn: David Sislen 6116 Executive Boulevard Suite 430 Rockville, Maryland 20852 Phone: 301/984-2520 Facsimile: 301/984-6099 with a copy to: Sonnenschein, Nath & Rosenthal Attn: Gerald J. Sherman 8000 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 Phone: 312/876-8000 Facsimile: 312/876-7934 11 If to Assignee: Amli Residential Properties L.P. Attn: Stephen C. Ross 125 South Wacker Drive Suite 3100 Chicago, Illinois 60606 Phone: 312/443-1477 Facsimile: 312/443-0909 with a copy to: Mayer, Brown & Platt Attn: Paul Meyer 190 South LaSalle Street Chicago, Illinois 60603 Phone: 312/782-0600 Facsimile: 312/701-7711 Any such notices shall be either (a) sent by certified mail, return receipt requested, in which case notice shall be deemed delivered three (3) days after deposit, postage prepaid in the U.S. Mail, (b) sent by overnight delivery using a nationally recognized overnight courier, in which case it shall be deemed delivered one business day after deposit with such courier, (c) sent by facsimile transmission, in which case notice shall be deemed delivered upon transmission of such notice, or (d) sent by personal delivery. The above addresses may be changed by written notice to the other party; provided, however, that no notice of a change of address shall be effective until actual receipt of such notice. 19. LIMITATION OF LIABILITY. Any obligation or liability whatsoever of Assignee which may arise at any time under this Agreement or the Sales Contract shall be satisfied, if at all, out of Assignee's assets only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the property of any of its partners, shareholders, trustees, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise. The negative capital account of any partner in Assignee or the obligation of any partner in Assignee to make a capital contribution to Assignee shall not be deemed to be an asset of Assignee. 20. GOVERNING AGREEMENT. In the event of any conflict or inconsistency between the terms and provisions of this Agreement and the Sales Contract, the terms and provisions of this Agreement shall govern and control. If any provision of this Agreement shall be deemed unenforceable as a matter of law, the remainder hereof shall remain in full force and effect. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BRISTOL CHICAGO DEVELOPMENT CORP., By: /s/ WILLIAM J. WALSH ------------------------------ Name: William J. Walsh ------------------------------ Its: Chairman ------------------------------ AMLI RESIDENTIAL PROPERTIES L.P., a Delaware limited partnership By: Amli Residential Properties Trust, a Maryland real estate investment trust By: /s/ STEPHEN C. ROSS ------------------------------ Name: Stephen C. Ross ------------------------------ Title: Executive Vice President ------------------------------ 13 EX-99.2 6 EXHIBIT 99.2 - ------------ (Form S-3) AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS Approximately 29 Acre Parcel, Aurora, Illinois THIS AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS (hereinafter this "AGREEMENT"), is made and entered into as of the 22nd day of July, 1996, between BRISTOL OAKHURST DEVELOPMENT L.L.C., an Illinois limited liability company (hereinafter called "ASSIGNOR") and AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership (hereinafter called "ASSIGNEE"). RECITALS A. Bristol Chicago Development Corp., an Illinois corporation ("BRISTOL") is the purchaser under that certain Sales Agreement, dated May 17, 1995, by and between Bristol and Aurora Venture, an Illinois limited partnership (the "CONTRACT SELLER"), with attached Addendum (such agreement, as amended in accordance with the terms hereof, being herein called the "SALES CONTRACT" and being attached hereto as EXHIBIT A). The Sales Contract was assigned by Bristol to Assignor. B. Pursuant to the Sales Contract, and subject to the terms and conditions therein set forth, Assignor has the right to acquire approximately 29 acres in Aurora, DuPage County, Illinois (the "PROPERTY") as described in EXHIBIT A-1. Terms used herein and not otherwise defined herein shall have the meanings given such terms in the Sales Contract. C. Subject to the terms and conditions hereof, Assignor desires to assign to Assignee all of Assignor's right, title and interest (i) to purchase the Property including without limitation, Assignor's rights in and to the Sales Contract (the "PURCHASE RIGHTS") and (ii) in and to all existing plans, drawings, specifications, permits, licenses, governmental approvals, development rights, Regulatory Approvals (defined below), agreements (with governmental bodies, architects, engineers, consultants or other persons or entities) and other materials related to the development of the Property (the "DEVELOPMENT RIGHTS"; all written materials evidencing the Development Rights are called the "DEVELOPMENT DOCUMENTS" and are more particularly described on EXHIBIT K which shall be prepared by Assignor within ten (10) days after the date of this Agreement and submitted to Assignee for its approval during the Review Period [defined below]) as a 464-unit luxury multifamily community known as The Crossings at Oakhurst North (the "PROJECT"), and Assignee desires to accept such assignment and to assume and agree to perform, subject to the terms and conditions hereof, all of the Purchaser's duties, obligations and liabilities under the Sales Contract and the Development Documents. AGREEMENT: --------- NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged: 1. AGREEMENT TO PURCHASE AND SELL. Assignee agrees to accept and Assignor agrees to contribute the Purchase Rights and the Development Rights for the consideration and subject to the terms and conditions set forth in this Agreement. 2. CONTRIBUTION. a. EXCHANGE AMOUNT. The value of the Purchase Rights and the Development Rights (the "EXCHANGE AMOUNT") is One Million Five Hundred Eighty Five Thousand and No/100 Dollars ($1,585,000.00), to be paid to Assignor in two parts as set forth below in consideration for the contribution and assignment to Assignee of the Purchase Rights and the Development Rights. A portion of the Exchange Amount valued at One Million One Hundred Thousand and No/100 Dollars ($1,100,000.00) (the "INITIAL EXCHANGE AMOUNT") shall be paid in full in the manner provided herein at the Closing Date (as defined below). The remainder of the Exchange Amount, valued at Four Hundred and Eighty Five Thousand and No/100 Dollars ($485,000.00) (the "FINAL EXCHANGE AMOUNT"), shall (subject to Assignee's offset rights as set forth in SECTION 3 hereof) be paid in full in cash within ten (10) business days after the date on which all buildings comprising Project have received a final certificate of occupancy in a form in which the City of Aurora (the "CITY") customarily issues such certificates with no conditions other than those which are standard on the City's customary form of certificate of occupancy. On the Closing Date the Initial Exchange Amount will, at Assignor's option, either (i) be payable entirely in the form of units of limited partnership interest ("UNITS") of Assignee or (ii) up to twenty percent (20%) of the Initial Exchange Amount will be payable in cash and the remaining portion of the Initial Exchange Amount will be payable in the form of Units. Not less than five (5) days prior to the Closing Date, Assignor shall provide written notice to Assignee identifying what portion of the Initial Exchange Amount will be payable in cash or Units. The number of Units to be delivered to Assignor will be equal to the quotient of (i) the difference between the Initial Exchange Amount less any portions thereof payable in cash and (ii) the average closing price on the New York Stock Exchange of the common shares of beneficial interest, par value $.01 per share (the "COMMON SHARES"), of Amli Residential Properties Trust, a Maryland real estate investment trust ("ARPT") for the five (5) business day period immediately preceding the first business day prior to the Closing Date. b. CONVERSION OF UNITS. The Units received by Assignor as provided above shall have the rights and limitations afforded Units as set forth in the Partnership Agreement (defined below), including rights with respect to conversion into Common 2 Shares (herein, such Common Shares given in conversion are referred to as "SHARES") which conversion right shall be subject to the terms and provisions set forth in the Partnership Agreement and which right may be exercised at any time in accordance with such terms. ARPT will endeavor to file a registration statement for the registration of resales by the Assignor of such Shares within a reasonable period of time after the Closing Date. On the Closing Date, Assignor, Assignee and ARPT shall execute the put agreement in the form attached hereto as EXHIBIT B (the "PUT AGREEMENT"). c. TRANSFER AND PLEDGE OF UNITS. Assignor acknowledges that the transfer or pledge of the Units held by it shall be subject to the restrictions set forth in ARTICLE XI of that certain Amended and Restated Agreement of Limited Partnership of Amli Residential Properties, L.P., dated as of February 15, 1994, as amended by that certain First Amendment to Amended and Restated Agreement of Limited Partnership of Amli Residential Properties, L.P., dated as of July 3, 1995 and as further amended by that certain Second Amendment to Amended and Restated Agreement of Limited Partnership, dated January 30, 1996 (herein, as amended and as it may hereafter be amended from time to time, the "PARTNERSHIP AGREEMENT") and to compliance with applicable laws including the Securities Act of 1933, as amended (the "SECURITIES ACT") and all other applicable securities laws. Subject to the foregoing, to the extent Assignor desires to pledge the economic interest allocable to the Units to a financial institution in connection with a loan transaction, Assignee agrees it shall cause ARPT to execute a consent in the form of EXHIBIT C attached hereto (the "PLEDGE CONSENT"). Both Assignor and Assignee acknowledge that SECTION 11.4(a) of the Partnership Agreement makes special provisions to allow transferees of Units who are an Affiliate (as defined in the Partnership Agreement) or a member of the Immediate Family (as defined in the Partnership Agreement) of the transferor to become Substituted Limited Partners (as defined in the Partnership Agreement). d. DOCUMENTS EVIDENCING UNITS. On the Closing Date, Assignor shall execute and deliver, and cause its members (the "MEMBERS") to execute and deliver, a certificate in the form of EXHIBIT D attached hereto and Assignor shall execute and deliver a joinder to the Partnership Agreement in the form of EXHIBIT E attached hereto. Assignee agrees that it shall, as soon as practicable after the execution of the above referenced joinder, execute a certificate to Assignor attaching a true and correct copy of EXHIBIT A to the Partnership Agreement, which EXHIBIT A will be amended to identify Assignor as a holder of the applicable number of Units as issued to it in accordance with the terms hereof. In addition, Assignee shall execute a Unit certificate, substantially in the form of EXHIBIT F attached hereto, acknowledging the number of Units held by Assignor. e. REPRESENTATIONS AND WARRANTIES CONCERNING UNITS. Assignor covenants and agrees to make, and to cause its Members to make, such representations and warranties to Assignee and ARPT as either Assignee or ARPT may deem reasonably necessary to 3 confirm that the issuance of the Units pursuant to the terms hereof complies with the Securities Act and all applicable securities laws. Without limiting the foregoing or the representations set forth in SECTION 9 hereof, Assignor represents and warrants as follows: 1) Assignor is duly formed, validly existing and in good standing under the laws of Illinois; (ii) Assignor has all requisite power and authority to invest in the Units and the Shares as provided herein; (iii) such investment will not result in any violation of or conflict with any term of the charter, by-laws or operating agreement of Assignor or any other organizational document or instrument by which it is bound or any law or regulation applicable to it and (iv) such investment has been duly authorized by all necessary action on behalf of Assignor; 2) Each Member that is a natural person is at least 21 years of age, a citizen of the United States and legally competent to join in the execution of this Agreement and to make the certifications, representations and warranties contained herein; 3) The Units and the Shares are being acquired for the Assignor's or Members' own account and not with any view toward the resale or distribution thereof, or with any present intention of selling or distributing any of the Units or the Shares; 4) Assignor and the Members have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of an investment in the Units and the Shares; 5) Assignor and the Members have carefully reviewed all documents of which they have requested copies, have been furnished with all other materials that they consider relevant to an investment in the Units and the Shares (including, without limitation the Partnership Agreement and the Amended and Restated Declaration of Trust, dated January 31, 1994, and Amended and Restated Bylaws of ARPT) and have had a full opportunity to ask questions of and receive answers from Assignee or a person or persons acting on behalf of Assignee concerning the terms and conditions of an investment in the Units and the Shares; 6) All written information which Assignor and the Members have provided to Assignee concerning Assignor and the Members, their financial positions and their knowledge of financial and business matters, or the knowledge of financial and business matters of the person making the investment decision on behalf of Assignor or the Members, including all information contained herein, is correct and complete in all material respects as of the date hereof and may be 4 relied upon, and if there should be any material change in such information prior to the Closing Date, Assignor will immediately provide Assignee with notice of such change; 7) Assignor's and the Members' addresses in Illinois and Maryland listed herein is Assignor's principal place of business and are Members' principal residences and Illinois is the only jurisdiction in which an offer to sell the Units and the Shares was made to Assignor or the Members; 8) Assignor and each Member is an accredited investor within the meaning of Rule 501 of Regulation D. Assignor was not formed, organized or reorganized for the specific purpose, even among other purposes, of acquiring the Units or the Shares; 9) Each Member is a natural person (i) whose net worth (either individually or jointly with spouse) exceeds $1,000,000 at the time of this Certificate or (ii) who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; and 10) The sole Members of the Assignor are: Sharon E. Walsh, William J. Walsh and David Sislen and their respective principal residences are 1149 Blackburn, Inverness, Illinois 60067, 1149 Blackburn, Inverness, Illinois 60067 and 11509 Cushman Road, Rockville, Maryland 20852. The representations and warranties set forth above are true and correct in all material respects as of the date hereof and shall also be true and correct in all material respects as of the Closing Date. f. ACKNOWLEDGMENTS CONCERNING UNITS. Assignor and the Members is aware and understands that: 1) Assignee is relying upon the certifications, representations, warranties, and agreements of Assignor and the Members contained in this Agreement in determining the applicability of certain laws and regulations to the transactions contemplated pursuant to the Agreement and accordingly such certifications, representations and warranties shall survive the closing under this Agreement; 2) No federal or state agency has passed upon the Units or the Shares or made any finding or determination as to the fairness of Assignor's investment 5 in the Units or the Shares, or the terms of the offer and the sale of the Units or the Shares; 3) Assignor and the Members must bear the economic risk of an investment in the Units and the Shares for an indefinite period of time because (i) the Units and the Shares have not been registered under the Securities Act, and, therefore, cannot be sold or transferred unless either they are subsequently registered under the Securities Act or an exemption from such registration is available and (ii) the Units and the Shares cannot be sold or transferred unless they are registered under applicable state securities laws or an exemption from such registration is available; and 4) There is no market for the Units and no such market is likely to develop and the Shares, when issued upon exchange of Units, will be "restricted securities" within the meaning of Rule 144 under the Securities Act. 3. REIMBURSEMENT OF COSTS. Upon the closing of this transaction, Assignee agrees to reimburse Assignor for certain acceptable third party costs incurred and actually paid by Assignor related to the development of the Project through June 30, 1996. With respect to costs incurred and actually paid by Assignor from and after July 1, 1996 to the Closing Date, Assignor shall submit a written statement of such costs and only those costs pertaining to on-going development activity with respect to the Project (as opposed to sale or closing activity related to the transaction described herein) shall be reimbursable, provided that all activity of Elmer Hamning (EH Consultants) pertaining to the Project shall be reimbursable. An estimated amount of the reimbursement will be determined by the parties during the Review Period and will be delivered in writing to Assignor prior to the expiration of the Review Period. A final reimbursement statement will be delivered to Assignor on the Closing Date. Such final reimbursement statement is subject to the reasonable approval of Assignor. Prior to and as a condition of such reimbursement, Assignor shall provide to Assignee lien waivers, or partial lien waivers, as the case may be, each in form and substance reasonably satisfactory to Assignee and the Title Insurer (defined below) from such third parties confirming payment for the work performed under their respective agreements and the amounts paid to such third parties as follows: prior to the Closing Date Assignor shall (i) provide current lien waivers from the land planner, JEN Land Design, Inc. (the "PLANNER"), the civil engineer, SDI Consultants, Ltd. (the "ENGINEER"), the architect, Bloodgood Sharp Buster Architects & Planners, Inc. (the "ARCHITECT"), (ii) use its best efforts to provide lien waivers from all other parties doing lienable work with respect to the Project and (iii) provide such indemnities, cash, escrows, sworn statements, or other agreements as may be required by the Title Insurer to provide title insurance coverage to Assignee over liens arising by acts of Assignor, Bristol or other parties not claiming through Assignee with respect to the Project. Any amounts still owed to such third parties as of the Closing Date for work already performed shall be paid on the Closing Date by Assignee if such costs are identified in the final reimbursement statement or by Assignor, from its own funds, if such costs are not identified on the final reimbursement statement. Any reimbursement 6 to Assignor for costs identified in the final reimbursement statement shall be in an amount equal to the lesser of (i) that portion of such costs incurred and actually paid by Assignor and (ii) that portion of such costs confirmed in the lien waivers or partial lien waivers as having been paid to the applicable service provider. Assignor shall execute and deliver, and shall cause Bristol to execute and deliver, a general undertaking and indemnity agreement, in the form of EXHIBIT G attached hereto in order to indemnify Assignee from any claims of third parties performing services or work in connection with the Project that did not submit lien waivers as of the Closing Date. Such general undertaking and indemnity agreement shall provide that Assignee may off-set unsatisfied claims covered by such general undertaking and indemnity agreement, which are not insured over by the Title Insurer to Assignee's reasonable satisfaction, against the Final Exchange Amount. In addition to lien waivers, Assignor shall provide Assignee with vendor's certificates substantially in the form of EXHIBIT H attached hereto (or such other form on which the parties may agree, acting reasonably) from parties providing on-going services or from parties which provide professional services on which Assignee will rely. 4. EARNEST MONEY. Assignee shall deposit $50,000 in cash as earnest money (the "EARNEST MONEY") within three (3) business days following the later of execution of this Agreement (the "CONTRACT DATE") and the satisfaction of the conditions set forth in SECTION 12 hereof, in a strict joint order escrow account (the "ESCROW") with Chicago Title Insurance Company (the "TITLE INSURER"), as escrow trustee, with such funds to be deposited in an insured interest bearing account designated by Assignee. The Earnest Money shall thereafter be non-refundable to Assignee provided Assignor fulfills its obligations under this Agreement and all conditions precedent have been satisfied or waived; provided that the Earnest Money shall, on the Closing Date, be disbursed to Assignee. Upon closing of the purchase and sale of the Property to Assignee pursuant to SECTION 5(e) below, Assignee will cause the earnest money posted by Assignor as purchaser under the Sales Contract to be refunded to Assignor, including any interest accrued thereon. 5. CONDITIONS PRECEDENT TO ASSIGNEE'S OBLIGATION TO CLOSE. Assignee's obligation to purchase the Purchase Rights and the Development Rights shall be subject to the following conditions precedent (the "CONDITIONS PRECEDENT"), any of which may be waived by Assignee. a. FEASIBILITY CONTINGENCY. Assignee shall have until the date that is thirty (30) days after the execution of this Agreement (the "REVIEW PERIOD"), or such later date as mutually agreed to by the parties to perform a feasibility analysis of the Property. Within ten (10) days after the date of this Agreement, Assignor shall prepare for Assignee's review and approval a true and complete list of all Development Documents, which list, after it is approved by Assignee, shall supplement the list attached to this Agreement on the date hereof as EXHIBIT K. During the Review Period Assignee will conduct and review soil tests, engineering, planning, site planning, utilities, wetlands, environmental risk, title, survey, CC&R and other reviews determined to be necessary by the Assignee and Assignee will review and determine the cost, existence and transferability of items 1, 4, 6, 7, 9 and 10 of the Regulatory Approvals (as defined 7 below). In addition, Assignee shall review the costs proposed to be reimbursed by Assignee pursuant to SECTION 3 above. If Assignee determines, in its sole discretion, that the Property is not suitable for development by Assignee, or Assignor and Assignee (each acting reasonably) are unable to agree upon either (i) the costs to be reimbursed or (ii) the final list of Development Documents to be attached as EXHIBIT K, then Assignee shall have the right to terminate this Agreement by delivering written notice thereof to Assignor at any time prior to the end of the Review Period, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. If Assignee fails to so notify Assignor, then Assignee shall be deemed to have waived this feasibility contingency and this Agreement shall remain in full force and effect, subject to the Regulatory Approvals contingency and other contingencies set forth herein and therein. At such time as Assignee has approved the revised list of Development Documents as provided herein, EXHIBIT K shall be revised to incorporate such approved list. The "Regulatory Approvals" shall be all governmental approvals required to develop the Property for the use detailed in the Development Documents including (without limitation) the following: 1) Evidence of planned unit development, preliminary plat and preliminary plan, and final plat and final plan approval of the Project from the City including a copy certified by the City of the ordinances granting such approvals and of all plans, agreements and other submissions on which such approval is based; 2) recordation of a final plat of subdivision for the Property; 3) issuance of a building permit for the construction of (i) all grading, site work, roadwork, utilities, and other infrastructure serving or required to be built in connection with the Project, and (ii) pool area, recreation center and first planned residential buildings, together with evidence satisfactory to Purchaser (which may be in the form of a letter from the City) that all building, engineering and other plans for the balance of the Project have been approved, that the City is ready to issue a building permit for such construction upon the payment of specified permit fees, and identifying specifically by latest revision date all plans approved by the City upon which permits have been or may be issued; 8 4) evidence of the amount of DuPage County ("COUNTY") impact fees which will be assessed against the Project, which evidence may be in the form of a letter from the County; 5) if any of the roads adjoining or serving the Property are not City roads, then issuance of a curb cut and other applicable construction permits by the authority controlling such roads (e.g., County, IDOT) permitting the construction of all curb cuts, de-acceleration or acceleration lanes, turn lanes, or other improvements required to be constructed in connection with the Project; 6) evidence (which may consist of issuance of the applicable permit or a letter from the Engineer that all permits for tap on and service of the Project with water and sanitary sewer in sufficient capacities either have been issued by,or will be available upon payment of specific permit and tap on fees to, all applicable authorities including the Fox Valley Metropolitan Water Reclamation District and the IEPA; 7) an agreement with the school, park, fire, police, library and any other applicable districts specifying the amount of impact fees payable to each, or other evidence (such as a letter from the applicable district) of the amount of or absence of these fees or other applicable impact fees, land donations or other similar payment or donation obligations; 8) written and recorded easement agreements for any utility lines or improvements (such as storm ponds) not located entirely within the Property; 9) a certificate from the Engineer, the Architect and W-T Engineering in the form of EXHIBITS I-1, I-2 and I-3 attached hereto and additionally addressing other matters which Assignee may reasonably request; and 10) evidence reasonably satisfactory to Assignee that the total fees incurred in connection with obtaining the Regulatory Approvals, including but not limited to, impact fees, permit fees, plan review fees and other development fees and costs imposed by governmental or regulatory agencies, will not exceed $1,500 per apartment unit, in the aggregate. b. REGULATORY APPROVALS CONTINGENCY. On or prior to the Closing Date, Assignee shall ascertain costs and the existence and transferability of all Regulatory Approvals specified as items 2, 3, 5 and 8 above (the "PERMIT APPROVALS"). The Permit Approvals shall be in form and substance acceptable to Assignee. If Assignee determines, in its sole discretion, that the Property does not have the Permit Approvals, then Assignee shall have the right to terminate this Agreement by delivering written notice thereof to Assignor at any time prior to the Closing Date, in which case the 9 Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. c. CONSTRUCTION CONTRACT CONTINGENCY. On or prior to the Closing Date, Assignee shall have received a binding bid to enter into a construction general contract in form and substance and with a contractor approved by Assignee in its sole discretion. It is understood that from and after the date hereof, Assignee and Assignor shall mutually cooperate in attempting to achieve such a contract in a form entirely acceptable to Assignee based upon a bid set of plans and specifications which replicate, in all material respects, the plans and specifications of Amli at Aurora Crossing, dated June 25, 1996 (except for those items of particular difference between the two projects such as the newly designed clubhouse and the snap-on stone facade). Assignee shall submit to the chosen contractor a list of alternates to the construction contract to be priced in addition to the basic plans and specifications. Assignee shall be the sole negotiator of the contract, but drafts shall be mutually reviewed and to the maximum extent possible the suggestions of Assignor shall be raised in the negotiations and covered in such drafts. In the event that this condition is not satisfied on or prior to the Closing Date, then Assignee shall have the right to terminate this Agreement by delivering written notice to Assignor any time on or prior to the Closing Date, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. d. HOME OWNER'S ASSOCIATION CONTINGENCY. Without limiting Assignee's right to disapprove title and survey matters during the Review Period, on or prior to the Closing Date, Assignee shall have received all approvals required pursuant to that certain Amended and Restated Declaration of Covenants, Conditions and Restrictions for Oakhurst North Community Association, recorded May 3, 1996 in the DuPage County Recorder's Office as Document No. R96-073226 (the "DECLARATION OF COVENANTS"), including, but not limited to any approvals required pursuant to ARTICLES XI and XIII thereof. During the Review Period, Assignee must receive evidence reasonably satisfactory to it that the residents of the Project will have a vested right to use the community pool and clubhouse described in the Declaration of Covenants upon the payment of reasonable fees or dues. e. INSPECTION. Subject to executing the License Agreement referred to in SECTION 12(c) hereof, Assignee and its agents and contractors shall have (and Assignor shall cause the Contract Seller to provide) unlimited access to the Property prior to the Closing Date, including the right to take soil tests and borings. Assignee shall repair any damage caused by its entry and shall indemnify, defend and hold Assignor and Contract Seller harmless with respect to any damage to the Property or injury to any person caused by Assignee, its agents, employees or contractors in connection with its investigations of the Property. 10 f. CLOSING OF SALES CONTRACT. Assignee shall not be obligated to close this Agreement unless the Contract Seller under the Sales Contract has performed all of its obligations thereunder and Assignor is prepared to proceed with the Closing of the Sales Contract in the manner described in SECTION 8. In the event that this condition is not satisfied on or prior to the Closing Date then Assignee shall have the right to terminate this Agreement at any time on or prior to the Closing Date, in which case the Earnest Money shall be promptly refunded to Assignee and this Agreement shall be terminated. Notwithstanding the foregoing, in the event that the reason that the Closing is not occurring is because of the failure of the Contract Seller to perform under the Sales Contract, then Assignee shall have the following additional options in lieu of terminating this Agreement, which options must be exercised by notice to Assignor within five (5) business days after the scheduled Closing Date. Assignee may extend this Agreement up to an additional 60 days during which time Assignor shall use commercially reasonable efforts, excluding the pursuit of legal action, to enforce the Sales Contract against the Contract Seller. Alternatively, Assignee may close the exchange by paying the Initial Exchange Value and receiving assignments of the Purchase Rights and Development Rights, in which event Assignee may pursue legal remedies against the Contract Seller in the Sales Contract directly, and Assignor shall have no further interest therein. If Assignee chooses the extension option and the Sales Contract is not closing at the end of the extension, then at such time Assignee may choose by notice to Assignor within five (5) business days after an expiration of the extension period either to terminate (and receive a refund of the Earnest Money) or to complete the exchange as set forth in the prior sentence. 6. CONVEYANCE. On the Closing Date, Assignor shall contribute and assign all the Purchase Rights and the Development Rights to Assignee or its designee pursuant to an Assignment and Assumption Agreement (the "ASSIGNMENT") in the form of EXHIBIT J attached hereto. The Assignment of the Purchase Rights shall be consented to by the Contract Seller. The Assignment of the Development Rights shall be consented to by consultants and contractors who are parties to the Development Documents. 7. SURVEY AND TITLE COMMITMENT. Assignor shall deliver to Assignee within fifteen (15) business days from the date hereof, a current ALTA plat of survey of the Property showing the subdivided lot legal description of the Property, certified to Assignee and the Title Insurer and meeting the minimum standard detail requirements of ALTA/ACSM adopted in 1992 as well as a commitment for an ALTA Owner's Title Insurance Policy Form B-June, 1987 from the Title Insurer with respect to the Property, dated after the Contract Date. Assignor shall consult with and obtain written approval from Assignee, which approval shall not be unreasonably withheld, of any notice or determination required to be given or made to Contract Seller with regard to objections to title or survey matters under the Sales Contract. Assignee shall approve or disapprove all matters of title and survey within the Review Period. All costs of the survey that exceed those provided for in the Sales Contract shall be paid by Assignor and all costs of 11 the title commitment and policy that exceed those provided for in the Sales Contract shall be paid by Assignee. 8. CLOSING. If the conditions precedent set forth herein are either satisfied or waived by Assignee as evidenced by written notice to Assignor, then the closing under this Agreement shall take place on a date (the "CLOSING DATE") specified by Assignee, which date shall not be less than fifteen (15) days after such notice and shall not be more than thirty (30) days following the end of the Review Period. The closing under this Agreement and the Sales Contract shall take place simultaneously, and the closing under this Agreement shall be conditioned upon the Closing under the Sales Contract. The Assignment shall be delivered to the Contract Seller at the Closing under the Sales Contract, and all conveyances under the Sales Contract shall be made directly to Assignee, provided that the delivery of the Assignment to the Contract Seller shall not be effective unless and until the Closing under the Sales Contract has taken place, unless Assignee elects under SECTION 5(e) above to pursue remedies directly against the Contract Seller. The transactions described herein shall be closed through an escrow with the Title Insurer at its Wheaton, Illinois office, with each party to pay one-half of such escrow fees. 9. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants to Assignee as of the date hereof and as of the Closing Date (as defined below) that: a. a true, accurate and complete copy of the Sales Contract is attached hereto as EXHIBIT A, and the Sales Contract has not been modified or amended; b. a true, accurate and complete list of the Development Documents will be provided to Assignee within ten (10) days of the date of this Agreement and, upon approval by Assignee, will be attached hereto as EXHIBIT K; c. Assignor is the absolute owner of the Purchase Rights and the Development Rights and has the right to assign the Purchase Rights and the Development Rights; d. Assignor has not given or received any notice of default or breach under the Sales Contract or Development Documents, and to Assignor's knowledge, no such default or breach exists and no event or circumstance exists which with the giving of notice or passage of time or both would constitute a default or breach under the Sales Contract or Development Documents by any party thereto; e. The Purchase Rights and the Development Rights are free of any lien or charge and are not subject to any assignment, transfer, or hypothecation; f. Assignor has been duly organized and is validly existing. Assignor has the full right and authority and has obtained any and all consents required therefor to enter into the Sales Contract, the Development Documents and this Agreement and 12 consummate or cause to be consummated the sale and assignments contemplated therein and herein. The persons signing the Sales Contract, the Development Documents and this Agreement on behalf of Assignor are authorized to do so. The Sales Contract, the Development Documents and this Agreement have been properly authorized and executed and constitute the valid and binding obligations of Assignor, enforceable in accordance with their terms; g. There is no agreement to which Assignor is a party or binding on Assignor which is in conflict with the Sales Contract, the Development Documents or this Agreement; h. There is no action or proceeding pending or, to Assignor's knowledge, threatened against the Assignor which challenges or impairs Assignor's ability to execute, deliver or perform this Agreement; i. The Property is zoned to permit the uses contemplated by the Project and to Assignor's knowledge, the Regulatory Approvals are all those necessary for the construction of the Project other than issuance of building, construction or curb cut permits, which permits are available upon payment of the fees listed under clause (k) below. j. Assignor has delivered to Assignee a true and complete copy of all plans, agreements, ordinances or other written materials entered into with, or issued or approved by the City, any utility provider, local school, park or other district or other governmental body in connection with the Property and Project and Regulatory Approvals, and at closing will deliver all of the Regulatory Approvals; k. To Assignor's knowledge, based on Assignor's due investigation and inquiry, a true, accurate and complete list of all fees exceeding $300 assessed or likely to be assessed by any governmental entity or utility provider associated with the Project (including without limitation, all such permit fees, impact fees, review fees, inspection fees, tap-on fees, and recapture fees) is attached hereto as EXHIBIT L; and l. Assignor has deposited $50,000 as Earnest Money under the Sales Contract with Title Insurer as escrowee. 10. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE: Assignee represents and warrants to Assignor that: a. Assignee has been duly organized and is validly existing. Assignee has the full right and authority and has obtained any and all consents required to enter into this Agreement and consummate or cause to be consummated the sale and make or cause to be made transfers and assignments contemplated herein, subject to completing its due 13 diligence review and approval of the Property and the Development Documents. The persons signing this Agreement on behalf of Assignee are authorized to do so. This Agreement has been authorized and properly executed and will constitute the valid and binding obligations of Assignee, enforceable against Assignee in accordance with its terms. b. There is no agreement to which Assignee is a party or to Assignee's knowledge binding on Assignee which is in conflict with this Agreement. c. There is no action or proceeding pending or, to Assignee's knowledge, threatened against the Assignee which challenges or impairs Assignee's ability to execute, deliver or perform this Agreement. d. The Units of Assignee are free and clear of any lien or charge, are not subject to any assessments and are convertible to Common Shares as set forth in and subject to the limitations set forth in SECTION 2 of this Agreement. 11. PAYMENT OF REAL ESTATE BROKERS. Each party represents to the other that no real estate broker has been used in connection with this transaction and no real estate broker's commissions shall be payable to any party. Assignee agrees to defend, indemnify and hold Assignor harmless from and against any claim for a real estate broker's commission, or fee by any other party claiming by, through or under Assignor. Assignor agrees to defend, indemnify and hold Assignee harmless from and against any claim for a real estate broker's commission or fee by any other party claiming by, through or under Assignee. 12. SALES CONTRACT. a. EXTENSION. Assignor shall have delivered to Assignee a true, correct and complete copy of the Sales Contract, extended and in full force and effect with the following changes each of which must be approved by Assignee: 1) The dates which may be chosen for the Closing Date thereunder shall be amended to be consistent with the Closing Date which may be specified hereunder. 2) SECTION 4 shall be amended to provided that Contract Seller shall escrow at closing its pro rata share of accrued but unpaid real estate taxes allocable to the Property and Contract Buyer (which shall mean the party holding the purchaser's interest in the Sales Contract, which is currently Assignor and shall be Assignee if this transaction closes) shall deposit current year post-closing taxes in the same escrow, which shall be used only to pay real estate taxes allocable to the Property. The escrow will be interest bearing and Contract Buyer will pay all escrow fees. 14 3) SECTION 13.1 shall be amended to provide that Contract Seller has approved the documents comprising the Final Plan and Plat (the "FINAL PLAN") which was approved by the City in Resolution PDFKL 96-16 on April 11, 1996 and any updated or additional Project plans which may currently exist, and that Contract Seller shall have no further rights to approve such plans or modifications thereof, provided that Contract Buyer shall still be subject to the approval requirements in the Declaration of Covenants. 4) SECTION 14.3 shall be amended to provide that all landscaping "in the landscape easements along Eola and Liberty" shall be completed by the time required in SECTION 14.3. The landscape easements shall be identified and provisions for maintenance of such easements satisfactory to Contract Buyer shall be negotiated. 5) SECTION 14.4 shall provide that (i) Contract Seller must provide an easement (either through an existing easement or a new easement) satisfactory to Contract Buyer (acting reasonably) for drainage into the Facility (as defined in the Sales Contract) and into any other shared detention areas on the Final Plan, (ii) all work (other than work to be performed by Contract Buyer on the Property) on the Facility (including sidewalks, street lighting and landscaping) and such other shared detention areas must be complete, and (iii) the Facility has been conveyed to the Association (as defined in the Declaration of Covenants). If any of (i), (ii) or (iii) are not completed at the closing, then the payment required by SECTION 14.4 shall be made into an escrow until all of items (i), (ii) and (iii) are satisfied. SECTION 14.4 shall also be amended to address maintenance rights and obligations regarding the Facility and other shared detention areas in a manner satisfactory to Contract Buyer. 6) SECTION 20 shall be modified to set forth Contract Seller's consent to the assignment of the Sales Contract from Bristol to Assignor and to the assignment of the Sales Contract to Assignee or to a permitted assignee as defined in SECTION 17 below. 7) SECTION 34 and EXHIBIT R shall be amended to provide that the right of first refusal shall not apply to an assignment of the Sales Contract or the transfer of the Property to Assignee or an affiliate of Assignee, including subsequent assignments or transfers by Assignee or an affiliate of Assignee to an entity in which Assignee or an affiliate of Assignee has a partnership, members or other similar interest. Contract Seller agrees upon request to issue a release of the right of first refusal when it terminates. Contract Seller also agrees to issue a confirmation of the subordination of the right of first refusal to a construction lender in such form as may be reasonably requested by such construction lender. EXHIBIT R shall also be amended to add the following to 15 restriction 2 thereunder: "or modify any development rights or development approvals affecting the Property." 8) SECTION 38 shall be amended to allow the use of "Oakhurst North" or "Oakhurst" in the marketing name of the apartment community to be constructed on the Property. 9) Provision shall be made to permit Contract Buyer to install a lighted water feature in the Facility. 10) The Sales Contract shall be amended to provide for the terms and conditions set forth in that certain Amendment to Sales Agreement, undated and unsigned by Contract Seller, but executed by Bristol on June 26, 1996. b. DUE DILIGENCE. Assignor shall cause the Contract Seller to consent in writing to Assignee's access to the Property pursuant to SECTION 5.a. and d. hereof. Assignee agrees to enter into a License Agreement substantially in the form of EXHIBIT D to the Sales Contract if the Contract Seller requests. Assignee shall indemnify, defend and hold the Contract Seller harmless with respect to any damage to the Property or injury to any person caused by Assignee, its agents, employees or contractors in connection with its investigation of the Property. c. ESTOPPEL. Prior to the expiration of the Review Period and again on the Closing Date, Assignor shall deliver to Assignee an estoppel from the Contract Seller (i) confirming that the Sales Contract, as modified as set forth in this SECTION, is in full force and effect, (ii) confirming that there are no defaults or other modifications, (iii) confirming the amount of earnest money on deposit, (iv) confirming the net acreage of the Property and the final purchase price, (v) confirming that Contract Seller's (as required in the Sales Contract) and the Design Review Committee's approval (as required under the Declaration of Covenants) of the most current Project plans, including without limitation the landscape plan and budget, and any signage plans, and (vi) confirming such other matters as are reasonably requested by Assignee. 13. CONSULTING AGREEMENT WITH ASSIGNOR. As of the Closing Date, as additional consideration for the exchange herein, Assignor and Assignee shall enter into a consulting agreement in the form of EXHIBIT M attached hereto to provide continuing basic services with respect to the Property and the Project. 14. DEFAULT. a. ASSIGNOR'S DEFAULT. If this transaction fails to close as a result of Assignor's default, the Earnest Money shall be returned to Assignee. In addition, Assignee shall be entitled to such remedies for Assignor's breach of contract as may be 16 available at law and in equity, including, without limitation, the remedy of specific performance, which the parties agree was bargained for because of the unique nature of the rights to be transferred hereunder and the difficulty of compensating Assignee with damages, provided, however, if Assignor is in default due to causes beyond its reasonable control, Assignee shall not be entitled to pursue Assignor for monetary damages. Assignor shall be deemed to be in default under this Agreement if it fails to proceed with the Closing under the Sales Contract on the Closing Date or otherwise defaults under the Sales Contract. b. ASSIGNEE'S DEFAULT. If this transaction fails to close due to the default of Assignee, then Assignor's sole remedy shall be to terminate this Agreement and to retain the Earnest Money as liquidated damages, Assignor waiving all other rights or remedies in the event of such default by Assignee. The parties acknowledge that Assignor's actual damages in the event of a default by Assignee under this Agreement will be difficult to ascertain, and that such liquidated damages represent the parties' best estimate of such damages. 15. NO AMENDMENTS. As long as this Agreement remains in full force and effect, Assignor shall perform all of its obligations under the Sales Contract, shall not amend or modify the Sales Contract (except as set forth in SECTION 12.a.) and shall not make any elections, issue any approvals, give any notice, or otherwise take any action with respect to the Sales Contract or the Property without the prior written consent of Assignee which consent shall not be unreasonably withheld or delayed. 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in this Agreement shall be continuing and shall survive for a period of nineteen (19) months following the Closing Date. Each party shall indemnify and hold the other harmless from and against any loss, cost, liability or expense, including reasonable attorneys fees, incurred by reason of any breach of any of its representations or warranties under this Agreement. Notwithstanding anything to the contrary contained in this SECTION 16, if Assignee has actual knowledge prior to closing that a representation or warranty made by Assignor is false, despite any lack of knowledge on the part of Assignor, and Assignee proceeds with the closing, then any claims of Assignee for breach of such representation or warranty shall be deemed waived as of the Closing Date. For purposes of this SECTION 16, Assignee's knowledge shall be deemed to mean the actual knowledge of Stephen C. Ross or Gregory T. Mutz without inquiry or investigation. 17. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, provided that this Agreement may not be assigned by Assignor without Assignee's consent, which consent may be withheld in Assignee's sole discretion. Assignee may not assign this Agreement, other than to a "permitted assignee", without Assignor's prior written consent, which consent shall not be unreasonably withheld. A partnership or limited liability company having Assignee or ARPT as a general 17 partner or managing member shall be a "permitted assignee". Any assigning party shall remain liable for the obligations of its assignee. 18. NOTICES. Upon the execution and delivery of this Agreement, Assignor and Assignee shall deliver a copy of this Agreement to the Contract Seller, and request that a copy of any notices sent to Assignor under the Sales Contract also be sent to Assignee. All notices required or permitted hereunder shall be in writing and shall be served on the parties at the following addresses: If to Assignor: Bristol Oakhurst Development L.L.C. Attn: William Walsh 1931 North Meacham Road Suite 330 Schaumburg, Illinois 60173 Phone: 708/397-7171 Facsimile: 708/397-8597 and Bristol Capital Corp. Attn: David Sislen 6116 Executive Boulevard Suite 430 Rockville, Maryland 20852 Phone: 301/984-2520 Facsimile: 301/984-6099 with a copy to: Sonnenschein, Nath & Rosenthal Attn: Gerald J. Sherman 8000 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 Phone: 312/876-8000 Facsimile: 312/876-7934 If to Assignee: Amli Residential Properties L.P. Attn: Stephen C. Ross 125 South Wacker Drive Suite 3100 Chicago, Illinois 60606 Phone: 312/443-1477 Facsimile: 312/443-0909 18 with a copy to: Mayer, Brown & Platt Attn: Paul Meyer 190 South LaSalle Street Chicago, Illinois 60603 Phone: 312/782-0600 Facsimile: 312/701-7711 Any such notices shall be either (a) sent by certified mail, return receipt requested, in which case notice shall be deemed delivered three (3) days after deposit, postage prepaid in the U.S. Mail, (b) sent by overnight delivery using a nationally recognized overnight courier, in which case it shall be deemed delivered one business day after deposit with such courier, (c) sent by facsimile transmission, in which case notice shall be deemed delivered upon transmission of such notice, or (d) sent by personal delivery. The above addresses may be changed by written notice to the other party; provided, however, that no notice of a change of address shall be effective until actual receipt of such notice. 19. LIMITATION OF LIABILITY. Any obligation or liability whatsoever of Assignee or ARPT which may arise at any time under this Agreement or the Sales Contract shall be satisfied, if at all, out of Assignee's or ARPT's respective assets only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the property of any of their respective partners, or the shareholders, trustees, officers, employees or agents of Assignee or ARPT, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise. The negative capital account of any partner in Assignee or the obligation of any partner in Assignee to make a capital contribution to Assignee shall not be deemed to be an asset of Assignee. 20. GOVERNING AGREEMENT. In the event of any conflict or inconsistency between the terms and provisions of this Agreement and the Sales Contract, the terms and provisions of this Agreement shall govern and control. If any provision of this Agreement shall be deemed unenforceable as a matter of law, the remainder hereof shall remain in full force and effect. 21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between Assignor and Assignee concerning the subject matter hereof and supersedes all prior or contemporaneous agreements of the parties, including without limitation, that certain letter, dated July 3, 1996 from Assignee to and accepted by Assignor. 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BRISTOL OAKHURST DEVELOPMENT L.L.C. By: /s/ WILLIAM S. WALSH ------------------------------ Name: William S. Walsh ------------------------------ Its: Manager ------------------------------ AMLI RESIDENTIAL PROPERTIES L.P., a Delaware limited partnership By: Amli Residential Properties Trust, a Maryland real estate investment trust By: /s/ CHARLOTTE A. SPARROW ------------------------------ Name: Charlotte A. Sparrow ------------------------------ Title: Vice President ------------------------------ 20 JOINDER The undersigned join in the execution of this Agreement solely for the purpose of making the representations, warranties and acknowledgments set forth in SECTION 2 of the Agreement applicable to Members of Assignor. /s/ SHARON E. WALSH ------------------------------ Sharon E. Walsh /s/ WILLIAM WALSH ------------------------------ William Walsh ------------------------------ David Sislen Subject to SECTION 19 of this Agreement, the undersigned joins in the execution of this Agreement solely for the purpose of agreeing to the undertakings to be performed by ARPT in accordance with SECTION 2 of this Agreement. AMLI RESIDENTIAL PROPERTIES TRUST, a Maryland real estate investment trust By: /s/ CHARLOTTE A. SPARROW ------------------------------ Name: Charlotte A. Sparrow ------------------------------ Title: Vice President ------------------------------ FIRST AMENDMENT TO AGREEMENT TO ASSIGN SALES CONTRACT AND DEVELOPMENT DOCUMENTS First Amendment to Agreement to Assign Sales Contract and Development Documents (the "AMENDMENT"), dated as of October 2, 1996, by and between BRISTOL OAKHURST DEVELOPMENT L.L.C. ("ASSIGNOR"), and AMLI RESIDENTIAL PROPERTIES, L.P. ("ASSIGNEE"). R E C I T A L S : ----------------- A. Assignor and Assignee entered into an Agreement to Assign Sales Contract and Development Documents dated July 22, 1996 (as amended, the "AGREEMENT"). All initially-capitalized terms not defined herein shall have the meanings ascribed to them in the Purchase Agreement. B. Assignor and Assignee desire to amend the Agreement to reduce the Exchange Amount to reflect additional impact fees attributable to the acquisition and development of the Property. NOW, THEREFORE, in consideration of the foregoing, the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties agree as follows: 1. The foregoing recitals are incorporated herein by this reference. 2. Section 2.a is hereby amended as follows: a. The value of the Exchange Amount is hereby amended to be $1,515,000.00; and b. The Final Exchange Amount is hereby amended to be $415,000.00. 3. Except as expressly amended hereby, the Purchase Agreement continues in full force and effect, in accordance with its terms, and embodies the entire agreement between the parties, and supersedes all prior agreements and understandings relating to the subject matter hereof. The Purchase Agreement may be further amended or supplemented only by an instrument in writing executed by both parties. 4. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one instrument. To facilitate execution of this Amendment, the parties may execute and exchange by telephone facsimile counterparts of the signature pages. IN WITNESS HEREOF, the parties have caused this Amendment to be executed as of the date first above written. BRISTOL OAKHURST DEVELOPMENT L.L.C. By: /s/ WILLIAM S. WALSH ------------------------------ Name: William S. Walsh ------------------------------ Title: Manager ------------------------------ AMLI RESIDENTIAL PROPERTIES L.P., a Delaware limited partnership By: Amli Residential Properties Trust By: /s/ CHARLOTTE A. SPARROW ------------------------------ Name: Charlotte A. Sparrow ------------------------------ Title: Vice President ------------------------------ -2- EX-99.3 7 EXHIBIT 99.3 - ------------ (Form S-3) AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS among AMLI RESIDENTIAL PROPERTIES, L.P., VERANDAH HOLDINGS PHASE I INC., JSDP, INC., M&B HOLDINGS GENERAL PARTNERSHIP, FAIRGROWTH INTERNATIONAL, INC. AND TVA SP PARTNERSHIP Dated as of December __, 1996 TABLE OF CONTENTS ----------------- PAGE ---- DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE I PURCHASE AND SALE OF PARTNERSHIP INTERESTS . . . . . . . . . 4 1.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . 4 1.2 Payments at Closing. . . . . . . . . . . . . . . . . . . . . 4 1.3 Prorations and Adjustments . . . . . . . . . . . . . . . . . 5 ARTICLE II GUARANTY OPTION AND REVIEW PERIOD. . . . . . . . . . . . . . 6 2.1 OP Units Sellers' Guaranty Option. . . . . . . . . . . . . . 6 2.2 Review Period. . . . . . . . . . . . . . . . . . . . . . . . 7 2.3 Title and Survey Review. . . . . . . . . . . . . . . . . . . 8 ARTICLE III REPRESENTATIONS AND WARRANTIESOF THE SELLERS . . . . . . . . 9 3.1 Ownership of Acquired Interests. . . . . . . . . . . . . . . 9 3.2 Due Formation. . . . . . . . . . . . . . . . . . . . . . . . 11 3.3 Due Authorization. . . . . . . . . . . . . . . . . . . . . . 11 3.4 No Other Agreement . . . . . . . . . . . . . . . . . . . . . 12 3.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.7 Assets, Liabilities and Activities of the Partnership. . . . 14 3.8 Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.11 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 15 3.12 Access/Utilities . . . . . . . . . . . . . . . . . . . . . . 16 3.13 Absence of Bankruptcy Proceedings. . . . . . . . . . . . . . 16 3.14 No Defaults or Violations. . . . . . . . . . . . . . . . . . 16 3.15 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . 16 3.16 Environmental Laws . . . . . . . . . . . . . . . . . . . . . 16 3.17 Absence of Liens or Assessments. . . . . . . . . . . . . . . 16 3.18 No Unpaid Bills or Claims. . . . . . . . . . . . . . . . . . 17 3.19 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 17 -i- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . 17 4.1 Due Organization.. . . . . . . . . . . . . . . . . . . . . . 17 4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . 18 4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 18 4.4 Registration of Shares . . . . . . . . . . . . . . . . . . . 18 ARTICLE V COVENANTS OF SELLERS . . . . . . . . . . . . . . . . . . . . 18 5.1 Implementing Agreement . . . . . . . . . . . . . . . . . . . 18 5.2 Additional Actions . . . . . . . . . . . . . . . . . . . . . 18 5.3 Preservation of Partnership Interests. . . . . . . . . . . . 19 5.4 Preservation of Ownership of Phase I Property. . . . . . . . 19 5.5 No Default . . . . . . . . . . . . . . . . . . . . . . . . . 19 5.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 19 5.7 Operation of the Partnership and the Phase I Property. . . . 19 5.8 Accuracy of Representations and Warranties . . . . . . . . . 22 5.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 5.10 Code Violations. . . . . . . . . . . . . . . . . . . . . . . 22 5.11 Conduct of Verandah Condominiums . . . . . . . . . . . . . . 22 ARTICLE VI COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . 23 6.1 Implementing Agreement . . . . . . . . . . . . . . . . . . . 23 6.2 Disposition of Phase I Property. . . . . . . . . . . . . . . 23 6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER . . . . . . 23 7.1 Ownership of Phase I Property and the Remainder. . . . . . . 23 7.2 Representations and Warranties True. . . . . . . . . . . . . 24 7.3 Compliance with Agreements and Covenants . . . . . . . . . . 24 7.4 Condition of Property. . . . . . . . . . . . . . . . . . . . 24 7.5 Verandah Apartments Agreement. . . . . . . . . . . . . . . . 24 7.6 Other Closing Documents. . . . . . . . . . . . . . . . . . . 24 7.7 Failure to Close . . . . . . . . . . . . . . . . . . . . . . 24 ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS . . . . . 25 -ii- 8.1 Ownership of Phase I Property. . . . . . . . . . . . . . . . 25 8.2 Representations and Warranties True. . . . . . . . . . . . . 25 8.3 Compliance with Agreements and Covenants . . . . . . . . . . 25 8.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . 25 8.5 Verandah Apartments Agreement. . . . . . . . . . . . . . . . 25 8.6 Failure to Close . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE IX CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 26 9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 26 9.2 Deliveries by the Sellers. . . . . . . . . . . . . . . . . . 26 9.3 Deliveries by Purchaser. . . . . . . . . . . . . . . . . . . 27 ARTICLE X TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 27 10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 27 10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . 28 ARTICLE XI SURVIVAL; INDEMNIFICATION. . . . . . . . . . . 28 11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 28 11.2 Indemnification by the Cash Sellers. . . . . . . . . . . . . 28 11.3 Indemnification by the OP Units Sellers. . . . . . . . . . . 28 11.4 Limitation on Liability. . . . . . . . . . . . . . . . . . . 29 11.5 Indemnification by Purchaser . . . . . . . . . . . . . . . . 29 ARTICLE XII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 29 12.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 29 12.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 29 12.3 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . 29 12.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 12.5 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 31 12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 31 12.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 31 12.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 32 12.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 32 12.10 Other Instruments. . . . . . . . . . . . . . . . . . . . . . 32 12.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 32 12.12 Verandah Apartments Agreement. . . . . . . . . . . . . . . . 32 -iii- 12.13 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 32 SCHEDULES --------- Schedule 3.1 Partnership Interests Owned by Sellers EXHIBITS -------- Exhibit A Description of Land Exhibit B OP Units Letter Exhibit C Partnership Interests Assignment Exhibit D FIRPTA Affidavit and Certificate -iv- AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS THIS AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS, dated as of the ______ day of December, 1996, by and among AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership ("PURCHASER"); VERANDAH HOLDINGS PHASE I INC., a Canadian corporation ("PHASE I"), JSDP, INC., a Texas corporation ("JSDP"), M&B HOLDINGS GENERAL PARTNERSHIP, a Texas general partnership ("M&B"), FAIRGROWTH INTERNATIONAL, Inc. an Ontario corporation ("FAIRGROWTH"), and TVA SP PARTNERSHIP, a Texas general partnership ("TVA SP") (collectively, the "SELLERS"). R E C I T A L S ---------------- WHEREAS, the Verandah Partners Ltd., a Texas Limited Partnership (the "PARTNERSHIP") is the owner of the Remainder (hereinafter defined), and either is the owner of, or will acquire ownership of not less than one day prior to the expiration of the Review Period, the Phase I Property (hereinafter defined). WHEREAS, the Partnership is governed by and in accordance with that certain Amended and Restated Agreement of Limited Partnership dated as of June 1, 1990, by and among Phase I, JSDP, M&B, Fairgrowth, Donald L. Pilkinton and James E. Sowell, as amended by the First Amendment to Amended and Restated Agreement of Limited Partnership dated July 31, 1991 by and among Phase I, JSDP, M&B and TVA SP (as so amended, the "PARTNERSHIP AGREEMENT"). WHEREAS, Phase I and JSDP are the sole general partners of the Partnership, and M&B, Fairgrowth and TVA SP are the sole limited partners of the Partnership. WHEREAS, subsequent to the acquisition by the Partnership of the Phase I Property, Purchaser or an Affiliate of Purchaser desires to purchase from Sellers and Sellers desire to sell to Purchaser or an Affiliate of Purchaser all of their Partnership Interests in the Partnership, so that Purchaser or an Affiliate of Purchaser will own 100% of the Partnership. In consideration of the mutual covenants, agreements and warranties herein contained, it is agreed that Purchaser or an Affiliate of Purchaser shall acquire from the Sellers all of the Partnership Interests (as defined herein) upon the terms and conditions hereinafter set forth. DEFINITIONS ----------- The following terms shall have the meanings set forth herein for the purposes of the transactions described in this Agreement: "ACQUIRED INTERESTS" shall mean the Partnership Interests held by Sellers and to be transferred to the Purchaser at Closing, which, as of the date hereof, constitute, and at Closing will constitute, 100% of the Partnership Interests of the Partnership. "AFFILIATE" of any person shall mean any corporation, proprietorship, partnership or business entity which, directly or indirectly, owns or controls, is under common ownership or control with, or is owned or controlled by, such person. For purposes of this Agreement, any corporation, proprietorship, partnership or business entity in which Purchaser has or owns a ten percent or greater interest shall be deemed to be an affiliate of Purchaser. "AGREEMENT" shall mean this Agreement Regarding Acquisition of Partnership Interests, including all Exhibits and Schedules hereto, as it may be amended from time to time in accordance with its terms. "CASH SELLERS" shall have the meaning assigned to it in Section 1.2.1 hereof. "CLOSING" shall have the meaning assigned to it in Section 1.2 hereof. "CLOSING DATE" shall have the meaning assigned to it in Section 9.1 hereof. "COMMITMENT" shall have the meaning assigned to it in Section 2.3 hereof. "ENCUMBRANCE" shall mean any option, pledge, security interest, lien, charge, encumbrance, mortgage, trust deed, easement, lease, sublease, claim, right of way, covenant, condition or restriction (whether on sale, transfer or disposition or otherwise) whether imposed by agreement, law or otherwise, whether of record or otherwise. "ENVIRONMENTAL LAW" shall mean any law, statute, ordinance, rule, regulation, order or determination of any governmental authority or agency affecting the Phase I Property or the Remainder and pertaining to health or the environment including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the Resource Conservation and Recovery Act of 1986. "LOSSES" shall mean all actual liabilities, losses, costs, damages, penalties or expenses (including, without limitation, attorneys' fees and expenses and costs of investigation and litigation). "OP UNITS SELLERS" shall have the meaning assigned to it in Section 1.2.2 hereof. -2- "PARTNERSHIP ASSETS" shall mean all of the assets of the Partnership, which shall be the Remainder, the Phase I Property and may include an amount of cash as provided for herein. "PARTNERSHIP INTERESTS" shall mean the general and limited partnership interests in the Partnership. "PARTNERSHIP LIABILITIES" - none. "PHASE I PROPERTY" shall mean the following: (a) The term "PHASE I LAND" shall mean that certain parcel of real property located in the City of Arlington, County of Tarrant, State of Texas, and being more particularly described in EXHIBIT A attached hereto and incorporated herein by reference for all purposes, together with all rights and appurtenances pertaining to such real estate, including, without limitation, any and all rights of in and to all roads, alleys, easements, streets and ways adjacent to the same and, strips and gores and rights of ingress and egress thereto. (b) All improvements, structures and fixtures placed, constructed or installed on the Phase I Land shall be referred to herein as the "PHASE I IMPROVEMENTS." (c) All equipment, furnishings, materials, inventory, supplies and other tangible personal property owned by the Partnership, placed or installed on or about the Phase I Land or Phase I Improvements and used as part of or in connection therewith, including, without limitation, all leases or other occupancy agreements, keys, leasing materials and forms, records relating to tenants, security deposits, prepaid rentals, service contracts, maintenance agreements, bonds, and unexpired warranties, guarantees, bonds and the like relating to the Phase I Property shall be referred to herein as the "PHASE I PERSONAL PROPERTY". (d) All right, title and interest of the Partnership in and to (i) the right to the use of the trade name of Verandah Apartments, and goodwill relating thereto, (ii) all telephone exchange numbers related to the Phase I Improvements and (iii) all licenses and permits of any kind related to the use or operation of the Phase I Improvements and any all right, title and interest of the Partnership in and to and all other intangible property related to the Phase I Improvements are hereinafter collectively referred to as the "PHASE I INTANGIBLE PROPERTY." -3- (e) The Phase I Land, Phase I Improvements, Phase I Personal Property, the Phase I Intangible Property and other matters covered hereby and relating to Phase I shall be referred to collectively herein as the "PHASE I PROPERTY." "PHASE II PROPERTY" shall mean the "Property" as defined in Section 1.1 of the Verandah Apartments Agreement. "PLANNED DONATION" shall mean the planned dedication of the Release Parcel to the City of Arlington, Texas. "PURCHASE PRICE" shall mean the cash to be paid and the securities to be delivered pursuant to Sections 1.2.1 and 1.2.2 hereof. "REMAINDER" shall mean a portion of a tract of land (the "ADJACENT LAND") which is shown on Sheet 1 of 3 of that certain survey dated September 23, 196, prepared by James G. Ferguson and titled "A Land Title Survey of 27.360 Acres of Land." A portion of the Adjacent Land is referred to on such survey as the "RELEASE PARCEL" and will be dedicated to the City of Arlington, Texas as park land, and the remainder thereof is referred herein to as the "Remainder" and will be retained by the Partnership. If the Release Parcel has not been so dedicated as of the Closing Date, then the term "Remainder" shall include the Release Parcel and Purchaser shall, following the Closing, cause the Partnership to so dedicate the Release Parcel. "VERANDAH APARTMENTS AGREEMENT" shall mean the agreement dated as of even date herewith between Verandah Phase II Limited Partnership, a Texas limited partnership (the "Phase II Partnership") and Purchaser. All other capitalized terms used herein without definition shall have the respective meanings given such terms in the Verandah Apartments Agreement. ARTICLE I --------- PURCHASE AND SALE OF PARTNERSHIP INTERESTS 1.1 PURCHASE AND SALE. Subject to the terms and conditions hereof, on the Closing Date the Sellers shall sell, transfer and deliver to Purchaser or an Affiliate of Purchaser, and Purchaser or an Affiliate of Purchaser shall purchase, acquire and accept delivery of, all of the Acquired Interests owned by such Sellers, so that Purchaser or an Affiliate of Purchaser shall thereby acquire 100% of the outstanding Partnership Interests. -4- 1.2 PAYMENTS AT CLOSING. Subject to the terms and conditions hereof, at the closing of the transactions contemplated hereby (the "CLOSING"): 1.2.1 Purchaser or an Affiliate of Purchaser shall deliver to Phase I and M&B (together with Fairgrowth, the "CASH SELLERS"), by cashier's or certified check, or by wire transfer of immediately available funds to the account designated by such Sellers, an aggregate of $17,337,000, subject to adjustment as herein provided, which amount shall be allocated among them as they shall determine. Phase I and M&B shall be responsible for allocating to Fairgrowth its allocable shares of the such amount. 1.2.2 Purchaser or an Affiliate of Purchaser shall issue to JSDP and TVA SP (together, the "OP UNITS SELLERS"), or to such parties as may be designated by such Sellers, an aggregate number of partnership interests in Purchaser ("OP UNITS") obtained by dividing (i) $1,053,000 by (ii) the Average Closing Price. The Average Closing Price shall be equal to average per share price of a share of beneficial interest (a "Share") of Amli Residential Properties Trust, a Maryland real estate investment trust (the "REIT"), at the close of trading on the New York Stock Exchange for the ten trading days preceding the fifth business day prior to Closing. Each OP Units Seller's (or OP Units Seller's designee's) acquisition and ownership of the OP Units shall be subject to the execution of a letter (the "OP UNITS LETTER") in the form attached hereto as EXHIBIT B. Purchaser shall also pay to the OP Units Sellers $25,000 in cash, which shall be remitted at Closing dirctly to the OP Unit Sellers' legal expenses in payment of legal expenses incurred in connection with this Agreement. 1.3 PRORATIONS AND ADJUSTMENTS. Collected rents, operating expenses, ad valorem taxes on the Phase I Property and the Remainder for the current year, charges under the Phase I Approved Service Contracts (as hereinafter defined) and utility charges and all other income and expense related to the Phase I Property or the Remainder shall be prorated at the Closing, effective as of the Closing Date, utilizing the best available computations of such items. Sellers retain all rights to a refund of any existing utility deposits. If current ad valorem tax assessments are unavailable at Closing, said ad valorem taxes shall be adjusted based upon a ten percent (10%) increase over the prior year's taxes; provided, however, if for the prior year the Phase I Property was not taxed as a completed and operating apartment project, then the ad valorem tax assessment shall be prorated based upon a written estimate of such taxes, prepared by an independent, local real estate tax consultant, such estimate to be reasonably acceptable to Purchaser and Sellers; provided further, all special tax assessments made by any taxing authority with respect to the Phase I Property prior to Closing shall be the sole responsibility of Sellers and shall be paid by Sellers at Closing. Such prorations shall be subject to reprorations at such time as actual numbers are available or in the event that is determined that any prorated item may not have been mathematically calculated correctly. Sellers shall be entitled to any and all cash and cash equivalents owned by the Partnership as of the Closing, and Purchaser shall cooperate with Sellers after the Closing to distribute to Sellers any such cash or cash equivalents. Delinquent rents collected by the Partnership after -5- the Closing shall be remitted by Purchaser to the Cash Sellers upon receipt thereof by the Partnership; provided, however, that the Partnership shall be under no obligation to collect such rents and all rentals received shall be applied first to current rents and then to delinquent rents. Purchaser shall receive a credit against the Purchase Price for tenant security deposits that are not yet forfeited and the security deposits of all tenants who have moved out within five (5) business days prior to the Closing. Purchaser shall assume responsibility for such deposits and shall determine the amount of such deposits to refund, and any balance not refunded shall be retained by Purchaser. All adjustments shall be cumulated for a period of six months after the Closing Date, at which time a final adjustment shall be made to the Purchase Price, and no adjustments thereafter shall be made. The prorations shall be made by adjustment to the cash portion of the Purchase Price. ARTICLE II GUARANTY OPTION AND REVIEW PERIOD 2.1 OP UNITS SELLERS' GUARANTY OPTION. Each OP Units Seller, at such OP Units Seller's option, or one or more of such OP Units Seller's partners or shareholders, as the case may be, shall have the right, but not the obligation, to guaranty its pro rata portion (based upon its percentage interest in the Partnership) of up to an aggregate of Four Million, Eight Hundred Thousand and No/100 Dollars ($4,800,000) of the indebtedness to be secured by the Phase I Property, on terms and conditions reasonably acceptable to Purchaser, each such OP Units Seller and Purchaser's lender. Each OP Units Seller, or such partners or shareholders, as the case may be, shall have a period of up to ten (10) days after the date hereof to negotiate the form of such guaranty. Each OP Units Seller hereby agrees to, and to cause its respective partners or shareholders to, as the case may be, use its reasonable best efforts to negotiate such a guaranty. If any OP Units Seller, or such partners or shareholders, as the case may be, shall not have negotiated a form of guaranty reasonably acceptable to the Purchaser within such ten-day period, such OP Units Seller shall have the right to terminate this Agreement as to itself and all other Sellers by written notice to the Purchaser on or before the expiration of such ten-day period, and the parties hereto shall have no further liabilities one to the other, except obligations which expressly survive any termination hereof. If no OP Units Seller shall have so terminated this Agreement within such period, this Section 2.1 shall be deemed deleted from this Agreement. If any OP Units Seller, or such OP Units Seller's partners or shareholders, as the case may be, shall negotiate an acceptable form of guaranty, such OP Units Seller shall so notify Purchaser and provide Purchaser with a copy thereof and with copies of any amendments thereof or notices related thereto. Any such guaranty shall confer no rights upon the guarantor, particularly no right of reimbursement and contribution. The guarantor's consent shall not be required in connection with any prepayment, sale and assumption, modification, amendment, extension, refinancing or any other matter related to such financing; provided, however, any such action undertaken by Purchaser shall not increase any liability under such guaranty or amend the terms of the guaranty. Purchaser makes no representation or warranty of any kind or nature as to such -6- guaranty, including no representation or warranty as to tax consequences and whether Purchaser's lender will permit the same. Purchaser undertakes no obligations or covenants in connection with the same. During the seven- year period beginning on the Closing Date, Purchaser may not voluntarily prepay the debt secured by the Phase I Property (the "PHASE I DEBT") unless it gives each guarantor the opportunity to guaranty other debt of Purchaser, if any, of the same character for tax purposes as the Phase I Debt which guaranty would enable such guarantor to preserve its tax position; provided, that if Purchaser involuntarily prepays or is required to prepay the Phase I Debt so that the outstanding balance thereof is less than $4,800,000, Purchaser will cooperate with each guarantor in enabling such guarantor to guaranty other debt of Purchaser, if any, of the same character for tax purposes as the Phase I Debt which guaranty would enable such guarantor to preserve its tax position. 2.2 REVIEW PERIOD. For a period (the "REVIEW PERIOD") beginning on the earlier to occur of (i) the date the OP Units Sellers notify Purchaser that they, or their respective partners or shareholders, as the case may be, have all negotiated an acceptable form of guaranty pursuant to Section 2.1 above and (ii) the expiration of the ten-day period set forth in Section 2.1 above (such earlier date is hereby referred to as the "DUE DILIGENCE PERIOD COMMENCEMENT DATE") and expiring on the later to occur of (x) forty-five days after the Due Diligence Period Commencement Date and (y) one business day after the Partnership acquires ownership of the Phase I Property, Purchaser shall have the right to have performed any and all inspections or studies of the Phase I Property and the Remainder which Purchaser may desire, including but not limited to the status of the ownership thereof any Encumbrances thereon, a physical and mechanical inspection (including all building and construction plans and specifications related to the Phase I Improvements as well as those maintained by municipal building departments or any other governmental agencies), subject to the rights of tenants, an environmental inspection, a feasibility study, an inspection of all leasing and maintenance files and all books and records and financial information pertaining thereto. In connection therewith, Sellers agree to cause to be made available to Purchaser for its review, as soon as possible after the date hereof, similar items as made available pursuant to Section 5.1.3 of the Verandah Apartments Agreement, pertaining to the Phase I Property and (to the extent applicable thereto) the Remainder. Purchaser shall coordinate all of Purchaser's inspections and investigations with Sellers in advance, and at Sellers' option, shall be accompanied by Sellers or a representative of Sellers. Purchaser shall have the right to make and retain copies of any document or item reviewed by Purchaser during its inspection (if Purchaser terminates this Agreement for any reason, Purchaser shall return all of such copies to Sellers). On or before the expiration of the Review Period, Purchaser shall send to Sellers a notice setting forth the service contracts pertaining to the Phase I Property (the "PHASE I APPROVED SERVICE CONTRACTS") which Purchaser agrees may remain binding on the Partnership. If Purchaser shall not notify Sellers of any Phase I Approved Service Contracts, then it shall be assumed that the Purchaser does not desire any service contracts to remain binding on the Partnership. Sellers shall be responsible, at their cost and expense, to cause the Partnership to terminate all contracts which Purchaser does not desire to remain binding on the Partnership, with such termination to be effective thirty (30) days after the Closing. Sellers shall, or shall cause the Partnership to, terminate, at their cost and expense, effective -7- as of the Closing Date, the existing APS security monitoring contract; provided, however, that if any lease requires that security monitoring be provided, Purchaser shall be solely responsible for ensuring that such requirements are satisfied following the Closing. If Purchaser shall find such inspections or studies to be unsatisfactory, for any reason, or if Purchaser otherwise determines that the Phase I Property is not suitable to it, for any reason whatsoever, in Purchaser's sole discretion, Purchaser shall have the right, at its option, to terminate this Agreement by written notice delivered to Sellers prior to the expiration of said Review Period and, upon such termination, the parties hereto shall have no further liabilities one to the other, except obligations which expressly survive any termination hereof. Purchaser shall indemnify and hold Sellers harmless from any injuries, accidents or damage to or on the Property caused by Purchaser or Purchaser's inspecting agents during Purchaser's inspections, such indemnity to survive the termination of this Agreement. Notwithstanding the foregoing, Purchaser's indemnity shall not cover any loss, claim or damage to the Property or to any person directly related to environmental issues or the existence of any hazardous waste or materials on the Phase I Property or the Remainder, including but not limited to Purchaser's inspection causing existing hazardous materials to be released or for causing any existing environmental concern or problem to become exacerbated, except to the extent any such loss, claim or damage is solely caused by the negligence of any one or more of Purchaser or its agents or contractors. With respect to inspecting individual apartment units, Purchaser shall give Sellers notice (which may be oral or written) of Purchaser's desire to inspect such units at least one (1) day in advance of the inspection. Purchaser shall not interfere with any occupants of the Phase I Property in conducting its inspections. If Purchaser shall not have terminated this Agreement on or before the expiration of the Review Period, then Purchaser shall be deemed to have waived its rights to terminate pursuant to this Section 2.2. Purchaser shall maintain in confidence all information obtained by Purchaser in connection with the Phase I Property or the Remainder (provided that Purchaser may share such information with Purchaser's attorneys, consultants, advisors, prospective partners, lenders and the like, and as required by requirements of the Securities and Exchange Commission) and shall not use such information or permit such information to be used for any purpose other than Purchaser's decision whether to purchase the Property. Purchaser's obligations under this Section 2.2 shall survive the termination of this Agreement. 2.3 TITLE AND SURVEY REVIEW. Sellers, at Sellers' sole cost and expense, shall, within five (5) days after the date hereof, deliver to Purchaser a commitment for Title Insurance or a Commitment to Insure (the "COMMITMENT") dated no earlier than the date hereof, issued by Chicago Title Insurance Company (the "TITLE COMPANY") through its agent American Title Company, 1330 Summit Avenue, Fort Worth, Texas 76102 (phone: 817-335- 5741, fax: 817-654-9304) (Attn: Ms. JoAnna Cloud) (the "ESCROW AGENT"), showing (i) title to the Phase I Property to be good and indefeasible and vested in Verandah Condominiums (hereafter defined) and (ii) title to the Remainder to be good and indefeasible and vested in the Partnership, both together with true, correct and legible copies of all items and documents referred to on Schedule B therein. Seller has delivered to Purchaser a Survey (the "SURVEY") of the Phase I Property and the Remainder, prepared by Landes & Associates, Inc., and dated -8- October 15, 1996. Purchaser shall have ten (10) business days after receipt of the Commitment and copies of the exception documents to examine the condition of title and the Survey and approve or disapprove the same. Those items listed in the Commitment or shown on the Survey and not disapproved of by Purchaser or waived by Purchaser's failure to timely terminate this Agreement as hereinafter provided shall be referred to as the "PERMITTED EXCEPTIONS". In the event that Purchaser disapproves of all or any item referred to in the Commitment or shown on the Survey, Sellers shall have a period of ten (10) business days after receipt of Purchaser's written notice of title and/or survey objections within which they may, but without obligation, cure or remove such exceptions provided, however, Sellers shall, as of the Closing (or at Sellers' expense cause the Partnership to do the same), pay, discharge, bond around or otherwise cause to be released any liens which are Cure Items (hereinafter defined). In the event Sellers fail or refuse to, or at Sellers' expense cause the Partnership to, cure all of such items within such ten (10) business day cure period, or in the event that Sellers notify Purchaser (the "CURE NOTICE") of which items they will cure (the "CURE ITEMS") and which items they will not cure, Purchaser shall have the right, exercisable within five (5) days after the earlier of (i) the expiration of said ten (10) business day cure period or (ii) receipt of Sellers' Cure Notice indicating that Sellers will not cure all of Purchaser's objections, to terminate this Agreement, whereupon the parties hereto shall be released from all obligations hereunder except obligations which expressly survive the termination hereof. If Purchaser shall not so terminate, Sellers shall cure, or cause the Partnership to cure, all Cure Items and shall deliver the Partnership Interests with the Partnership owning title in its existing condition with the Cure Items having been cured and Purchaser shall, by failing to timely terminate this Agreement within the time period set forth above, shall be deemed to have waived any objections to such title which have not been cured except as to any uncured Cure Item and warranties contained in the documents of conveyance, and all such waived objections shall constitute Permitted Exceptions for purposes hereof. In connection with addressing any of Purchaser's objections as provided for in this Section 2.3 above, Sellers agree to have the Survey updated to a date not earlier than the date of Purchaser's comment letter and to correct the certification so the same is certified in favor of the Partnership, Purchaser, or any assignee and/or lender of Purchaser identified to Sellers prior to such time (the Survey currently being certified in favor of Purchaser's general partner). ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS 3.1 OWNERSHIP OF ACQUIRED INTERESTS. 3.1.1 Phase I represents and warrants that it owns and has 1% of the Partnership Interests, and at the Closing shall transfer to Purchaser, good and valid title to the Acquired Interests to be transferred by it to Purchaser at the Closing, free and clear of all Encumbrances. None of the Acquired Interests being sold by Phase I is -9- subject to any restriction on transfer, except as set forth in the Partnership Agreement and/or Encumbrances which will be released at Closing, and no other person or entity has any right, title or interest in or to such Partnership Interests. Neither Phase I nor any of its Affiliates has any contract, agreement, arrangement or understanding with respect to the sale or other disposition of the Partnership Interests to be transferred by it to Purchaser at the Closing. 3.1.2 M&B represents and warrants that its owns and has an aggregate of 80.4% of the Partnership Interests, and at the Closing shall transfer to Purchaser, good and valid title to the Acquired Interests to be transferred by it to Purchaser at the Closing, free and clear of all Encumbrances. None of the Acquired Interests being sold by M&B is subject to any restriction on transfer, except as set forth in the Partnership Agreement and/or Encumbrances which will be released at Closing, and no other person or entity has any right, title or interest in or to such Partnership Interests. Neither M&B nor any of their respective Affiliates has any contract, agreement, arrangement or understanding with respect to the sale or other disposition of the Partnership Interests to be transferred by it to Purchaser at the Closing. 3.1.3. JSDP represents and warrants that it owns and has 1% of the Partnership Interests, and at the Closing shall transfer to Purchaser, good and valid title to the Acquired Interests to be transferred by it to Purchaser at the Closing, free and clear of all Encumbrances. None of the Acquired Interests being sold by JSDP is subject to any restriction on transfer, except as set forth in the Partnership Agreement and/or Encumbrances which will be released at Closing, and no other person or entity has any right, title or interest in or to such Partnership Interests. Neither JSDP nor any of its Affiliates has any contract, agreement, arrangement or understanding with respect to the sale or other disposition of the Partnership Interests to be transferred by it to Purchaser at the Closing. 3.1.4 TVA SP represents and warrants that it owns and has 14% of the Partnership Interests, and at the Closing shall transfer to Purchaser, good and valid title to the Acquired Interests to be transferred by it to Purchaser at the Closing, free and clear of all Encumbrances. None of the Acquired Interests being sold by TVA SP is subject to any restriction on transfer, except as set forth in the Partnership Agreement and/or Encumbrances which will be released at Closing, and no other person or entity has any right, title or interest in or to such Partnership Interests. Neither TVA SP nor any of its Affiliates has any contract, agreement, arrangement or understanding with respect to the sale or other disposition of the Partnership Interests to be transferred by it to Purchaser at the Closing. Donald L. Pilkinton and James E. Sowell are the sole partners of TVA SP. 3.1.5 Fairgrowth represents and warrants that its owns and has an aggregate of 3.6% of the Partnership Interests, and at the -10- Closing shall transfer to Purchaser, good and valid title to the Acquired Interests to be transferred by it to Purchaser at the Closing, free and clear of all Encumbrances. None of the Acquired Interests being sold by Fairgrowth is subject to any restriction on transfer, except as set forth in the Partnership Agreement and/or Encumbrances which will be released at Closing, and no other person or entity has any right, title or interest in or to such Partnership Interests. Neither M&B nor any of their respective Affiliates has any contract, agreement, arrangement or understanding with respect to the sale or other disposition of the Partnership Interests to be transferred by it to Purchaser at the Closing. 3.2 DUE FORMATION. The OP Unit Sellers represent and warrant as follows: The Partnership is a limited partnership duly formed and validly existing under the laws of the State of Texas with all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Partnership does not conduct business or own any property in any jurisdiction other than Texas, the conduct or ownership of which would require qualification. The Partnership does not hold any interest in any other security issued by a corporation or other entity. 3.3 DUE AUTHORIZATION. 3.3.1 Each of the Cash Sellers represents and warrants that (i) it is a partnership or corporation duly formed or incorporated, validly existing and in good standing under the laws of the State of its formation or incorporation and (ii) the execution, delivery and performance of this Agreement by the Cash Sellers has been duly authorized by all necessary action on the part of the Cash Sellers, and the Cash Sellers have full power and authority to execute and deliver this Agreement, to perform their respective obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Cash Sellers, and constitutes the legal, valid and binding obligation of the Cash Sellers, enforceable in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity. The execution, delivery and performance of this Agreement and all other instruments, agreements, certificates and documents contemplated hereby by the Cash Sellers do not and will not on the Closing Date: (i) violate or conflict with (A) any term or provision of the partnership agreement or the certificate of incorporation or bylaws of any Cash Seller; (B) any decree or judgment of any court or Governmental Authority which may be applicable to or binding on any Cash Seller or the Partnership Interests of any Cash Seller, except where any such violation or conflict would not have a material adverse effect on the Cash Sellers' ability to consummate the transactions contemplated hereby; (C) any law, statute, rule or regulation to which any Cash Seller is subject; (ii) violate or conflict with, or result in a breach of, or constitute a default (or an event of default) under, or result in the creation of any Encumbrance upon, any of the Partnership Interests owned by any Cash Seller except for Encumbrances to be released as of the Closing; or (iii) permit the acceleration of the maturity of any indebtedness secured by any Partnership -11- Interests owned by any Cash Seller, except for Encumbrances which will be released as of the Closing. 3.3.2 Each of the OP Units Sellers represents and warrants that (i) it is a partnership or corporation duly formed or incorporated, validly existing and in good standing under the laws of the State of its formation or incorporation and (ii) the execution, delivery and performance of this Agreement by the OP Units Sellers has been duly authorized by all necessary action on the part of the OP Units Sellers, and the OP Units Sellers have full power and authority to execute and deliver this Agreement, to perform their respective obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the OP Units Sellers, and the OP Units Sellers have not taken any action which would cause this Agreement not to constitute the legal, valid and binding obligation of the OP Units Sellers, enforceable in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity. The execution, delivery and performance of this Agreement and all other instruments, agreements, certificates and documents contemplated hereby by the OP Units Sellers do not and will not on the Closing Date, except for Encumbrances which will be released at the Closing: (i) violate or conflict with (A) any term or provision of the Partnership Agreement of the Partnership; (B) any term or provision of the partnership agreement or the certificate of incorporation or bylaws of any OP Units Seller; (C) any decree or judgment of any court or Governmental Authority which may be applicable to or binding on any OP Units Seller, the Partnership, the Partnership Assets or the Partnership Interests, except where any such violation or conflict would not have a material adverse effect on the OP Unit Sellers' ability to consummate the transactions contemplated hereby; (D) any law, statute, rule or regulation to which any OP Units Seller or the Partnership is subject; (ii) violate or conflict with, or result in a breach of, or constitute a default (or an event of default) under, or result in the creation of any Encumbrance upon, any of the Partnership Assets or the Partnership Interests, except where any such violation or conflict would not have a material adverse effect on the OP Unit Sellers' ability to consummate the transactions contemplated hereby; or (iii) permit the acceleration of the maturity of any indebtedness of the Partnership, or any indebtedness secured by any of the Partnership Assets or the Partnership Interests, except for Encumbrances which will be released as of the Closing. 3.4 NO OTHER AGREEMENT. 3.4.1 The Cash Sellers represent and warrant that neither the Cash Sellers nor the Partnership nor any of their respective Affiliates has any contract, agreement, arrangement or understanding, with respect to the sale or other disposition of the Partnership Interests owned by the Cash Sellers except as set forth in this Agreement. -12- 3.4.2 The OP Units Sellers represent and warrant that neither the OP Units Sellers nor the Partnership nor any of their respective Affiliates has any contract, agreement, arrangement or understanding, other than the Verandah Apartments Agreement, with respect to the sale or other disposition of the Partnership Assets or the Partnership Interests owned by the OP Units Sellers except as set forth in this Agreement. No person, firm or corporation or other entity has any right or option to acquire the Phase I Property, or any part thereof, or any other Partnership Assets from the Partnership. 3.5 CONSENTS. 3.5.1. The Cash Sellers represent and warrant that as of the Closing Date, the Cash Sellers shall have obtained all necessary consents and permissions related to the transfer of the Acquired Interests to be conveyed by them as herein contemplated and required under any covenant, agreement, Encumbrance, law or regulation which is applicable to any Cash Seller, other than consents which would not prevent the transactions from closing on a timely basis or result in a material liability. 3.5.2 The OP Units Sellers represent and warrant that as of the Closing Date, the OP Units Sellers shall have obtained all necessary consents and permissions related to the transfer of the Acquired Interests to be conveyed by them as herein contemplated and required under any covenant, agreement, Encumbrance, law or regulation which is applicable to any OP Units Seller, other than consents which would not prevent the transactions from closing on a timely basis or result in a material liability. 3.6 TAXES. As used in this Section 3.6 or in Article XI, "TAX" or "TAXES" are defined to include all taxes, however denominated, imposed by any federal, state, local or foreign government or any agency or political subdivision of any such government, which taxes shall include, without limiting the generality of the foregoing, all income or profits taxes (including any interest, penalties or additions attributable to or imposed on or with respect to any such taxes), real property gain taxes, payroll and employee withholding taxes, unemployment insurance taxes, social security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation, Pension Benefit Guaranty Corporation premiums and other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing, which the Partnership or the Sellers are required to pay, withhold or collect, imposed with respect to the assets or operations of the Partnership. As used in this Section 3.6, "TAX RETURN" is defined as any return, report, information return schedule or other document (including, without limitation, any related or supporting information or schedule, such as self-employment schedules and returns, federal tax Form 1099's for all applicable transactions, property tax filings, sales and use tax returns, federal and state payroll reports and federal tax Form 5500's) filed or required to be filed with any federal, state, local or foreign -13- governmental entity or other authority in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax. The OP Units Sellers represent and warrant that: 3.6.1 The Partnership has timely filed (or has had timely filed on its behalf) or will timely file or cause to be timely filed, all Tax Returns required by applicable law to be filed by it prior to or as of the Closing Date. All such Tax Returns and amendments thereto are or will be true, complete and correct in all respects. 3.6.2 No audit by a Tax authority is pending or threatened with respect to any Tax Returns filed by, or Taxes due from, the Partnership. No issue has been raised by any Tax authority in any audit of the Partnership that if raised with respect to any other period not so audited could be expected to result in a material proposed deficiency for any period not so audited. No deficiency or adjustment for any Taxes has been threatened, proposed, asserted or assessed against the Partnership. There are no liens for Taxes upon the assets of the Partnership, except liens for current Taxes not yet due. 3.6.3 The Partnership has not given or been requested to give any waiver of statutes of limitations relating to the payment of Taxes or has executed powers of attorney with respect to Tax matters, which will be outstanding as of the Closing Date. 3.6.4 There are no changes in the tax accounting methods subject to Section 481(a) of the Internal Revenue Code of 1986, as amended (the "CODE") which have an ongoing effect on the Partnership. 3.6.5 Each Seller other than Phase I and Fairgrowth is not a foreign person, foreign corporation, foreign partnership, foreign trust or foreign estate within the meaning of Section 1445 of the Code. 3.6.6 The Partnership is, and has been since its formation, classified as a partnership and not as an association taxable as a corporation for Federal income tax purposes for any and all periods up to and including the Closing. The IRS has not challenged or threatened to challenge the status of the Partnership as a partnership and not an association taxable as a corporation for Federal income tax purposes. All Tax Returns and other filings have been filed on a basis consistent with such position for Federal income tax purposes. 3.7 ASSETS, LIABILITIES AND ACTIVITIES OF THE PARTNERSHIP. The OP Unit Sellers represent and warrant that the Partnership has no liabilities, contingent or otherwise, other than liabilities which are either (i) prorated pursuant to Section 1.3 hereof, (ii) otherwise referred to or dealt with hereunder or under the Verandah Apartments Agreement, (iii) paid in -14- full at the Closing or (iv) which Purchaser would have had or incurred had it purchased the Phase I Property and the Remainder rather than the Acquired Interests. As to Sections 3.8 through 3.19, each of Phase I and the OP Units Sellers (for purposes of Section Sections 3.8 through 3.19, the term "Sellers" shall mean only Phase I and the OP Units Sellers"), severally and not jointly, represents and warrants that: 3.8 ZONING. No Seller has received any written notice or has any knowledge of any pending or proposed changes or modifications to the current zoning of the Phase I Property or the Remainder. 3.9 LITIGATION. To each Seller's knowledge, except for the Planned Donation and except as reflected in the Commitment, there are no existing or pending litigation, claims, condemnations or sales in lieu thereof, with respect to any aspect of the Phase I Property or the Remainder or other Partnership Assets nor, to the knowledge of such Seller, have any such actions, suits, proceedings or claims been threatened or asserted. 3.10 LEASES. The executed copies of the leases to be made available for Purchaser's inspection (and to be a Partnership Asset at the Closing) shall be, to each Seller's knowledge, true and correct, and shall constitute all leases or occupancy agreements affecting the Phase I Property. Seller has not received any written notice from any tenant that the Partnership is in default under any such lease. There are no leases or occupancy agreements affecting the Remainder. To such Seller's knowledge, except as set forth on a rent roll for the Phase I Property (the "RENT ROLL") to be delivered pursuant to Section 2.2, there is not in existence any condition or fact which with notice or passage of time or both, shall constitute a material default by either the landlord or by the tenant under such leases. To each Seller's knowledge: other than as shown on the Rent Roll, no such tenants shall be entitled to any rebates, rent concessions or free rent; other than as shown on the Rent Roll, no written commitments have been made to any tenant for repairs or improvements other than a general landlord requirement for normal maintenance in the future; no rents due under any such tenant leases have been assigned, hypothecated or encumbered other than to the holders of indebtedness to be released at Closing; and other than as shown on the Rent Roll there are no leasing fees, leasing commissions, locator fees or similar charges payable to any person or entity in regard to the Phase I Property. 3.11 COMPLIANCE WITH LAW. No Seller has any knowledge, and has not received any written notice, of any lack of compliance with applicable setback requirements and other applicable laws, statutes, ordinances, codes, covenants, conditions or restrictions of any kind or nature affecting the Phase I Property or the Remainder, including zoning, building, health, fire, safety or similar laws and ordinances, orders or regulations, or the certificate or certificates of occupancy issued or to be issued for the Phase I Property. Notwithstanding the foregoing, (i) as to the retaining walls on the Phase I Property, each Seller discloses that it understands that the same would not be in compliance with applicable building codes if constructed as of the date hereof in their current manner; (ii) the Remainder has not, as of this -15- date, been platted as a separate lot; and (iii) Sellers make no representation or warranty as to whether the Phase I Improvements are in compliance with applicable building codes if constructed as of the date hereof in their current manner. 3.12 ACCESS/UTILITIES. No Seller has any knowledge of any proposed termination or reduction of the current access from the Phase I Property to existing thoroughfares, or of any reduction in or to sewer or other utility services presently serving the Phase I Property, other than those matters shown on the Commitment 3.13 ABSENCE OF BANKRUPTCY PROCEEDINGS. There are no attachments, executions, assignments for the benefit of creditors or voluntary or, to such Seller's knowledge, involuntary proceedings in bankruptcy pending against or contemplated by Sellers or the Partnership, and to the knowledge of each Seller, no such actions have been threatened against it or the Partnership. 3.14 NO DEFAULTS OR VIOLATIONS. Neither the execution and delivery of this Agreement by Sellers nor Sellers' performance of their obligations hereunder will result in a violation or breach of any term or provision or constitute a default or accelerate the performance required under any other agreement or document to which any of the Sellers is a party or is otherwise bound (subject to satisfaction of requirements of any loan documents evidencing or securing debt which is secured by the Phase I Property) and to Sellers' knowledge will not constitute a violation of any law, ruling, regulation or order to which any Seller is subject. 3.15 UTILITIES. No Seller has any knowledge nor has it received any notice of any proposed reductions or changes to the utilities (including but not limited to, water, storm and sanitary sewers, gas, electricity and telephone facilities) currently serving the Phase I Property. Each Seller has no knowledge of any contingent liabilities, costs, expenses, or outstanding assessments, including, without limitation, "tap-in fees", which may be incurred by the Partnership as a condition to the use or enjoyment of such utilities except for normal fees and expenses, including deposits, which may become payable in connection with the transfer of utility services to the Partnership and thereafter to Purchaser. 3.16 ENVIRONMENTAL LAWS. To Seller's knowledge, neither the Phase I Property, the Remainder, the Partnership nor any Seller are in violation of any existing, applicable Environmental Law and are not subject to any existing, pending or threatened investigation or inquiry by any governmental authority and are not subject to any remedial action or obligations under any Environmental Law. To Seller's knowledge, no underground storage tanks are now and were not previously located on the Phase I Property or the Remainder. To Seller's knowledge, no hazardous substances or toxic wastes have been disposed of on the Phase I Property or the Remainder in violation of Environmental Laws. To the knowledge of each Seller, during the Partnership's ownership of the Phase I Property and Verandah Condominiums' ownership of the Phase I Property, neither the Partnership nor Verandah Condominiums have violated any Environmental Law. -16- 3.17 ABSENCE OF LIENS OR ASSESSMENTS. No Seller has received any written notice or has any knowledge of any pending improvements, liens or special assessments to be made against the Phase I Property or the Remainder by any governmental authority except for any matter set forth in the Commitment. Neither Sellers, nor to the best of each Seller's knowledge, any prior owner, have applied for or been granted an agricultural tax exemption so that the Phase I Property or the Remainder would be subject to any "roll back" taxes. 3.18 NO UNPAID BILLS OR CLAIMS. As of the Closing Date there will be no unpaid bills or claims in connection with the construction of or any repairs to the Phase I Property or the Remainder by or on behalf of the Partnership. 3.19 CONTRACTS. As of the Closing Date, neither the Partnership nor the Phase I Property or the Remainder will be obligated under any employment, maintenance, management or service contract pertaining to the Phase I Property or the Remainder which cannot be canceled or terminated upon written notice of thirty (30) days or less, except for the Phase I Approved Service Contracts and matters reflected in the Commitment. As used in Sections 3.8 through 3.19, references to a Seller's knowledge, when used in any context, or in any combination, including where reference is made to "best" knowledge, shall be limited to the current, actual knowledge, without investigation or inquiry (except as set forth below), of Rudy Bratty and Don Pilkinton. Prior to Sellers' execution hereof, Sellers have provided copies of these representations and warranties to Mr. Pilkinton, who through his involvement in the original construction of the Phase I Property and his current involvement as liaison between Sellers and the current property manager, would be in a position to have some knowledge regarding the subject of these representations and warranties. Further, Sellers have provided copies of these representations and warranties to Sarah Holbrook, the direct property supervisor of the Phase I Property, and Ms. Holbrook has indicated to Sellers that she believes these representations and warranties to be true and correct in all material respects. Neither Mr. Bratty, Mr. Pilkinton nor Ms. Holbrook shall be deemed to have made any of these representations and warranties in any personal capacity. PURCHASER AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SELLERS DO NOT AND HAVE NOT MADE ANY REPRESENTATIONS OR WARRANTIES TO PURCHASER REGARDING THE PHASE I PROPERTY. -17- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to the Sellers and the Partnership as follows: 4.1 DUE ORGANIZATION. Purchaser is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. 4.2 DUE AUTHORIZATION. Purchaser represents and warrants that the execution, delivery and performance of this Agreement by Purchaser has been duly authorized by all necessary action on the part of Purchaser, and Purchaser has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity. The execution, delivery and performance of this Agreement and all other instruments, agreements, certificates and documents contemplated hereby by Purchaser do not and will not on the Closing Date: (i) violate or conflict with (A) any term or provision of the partnership agreement of Purchaser; (B) any decree or judgment of any court or Governmental Authority which may be applicable to or binding on Purchaser, the partnership assets of Purchaser or the partnership interests in Purchaser; (C) any law, statute, rule or regulation to which Purchaser is subject; (ii) violate or conflict with, or result in a breach of, or constitute a default (or an event of default) under, or result in the creation of any Encumbrance upon, any of the partnership assets of Purchaser or the partnership interests in Purchaser; or (iii) permit the acceleration of the maturity of any indebtedness of Purchaser or any indebtedness secured by any of the partnership assets of Purchaser or the partnership interests in Purchaser. 4.3 CONSENTS. No notice to, filing with, authorization of, exemption by, or consent of any person, entity, or public or Governmental Authority is required in order for Purchaser to consummate the transactions contemplated hereby. 4.4 REGISTRATION OF SHARES. The Shares which may be issued upon exchange of OP Units issued pursuant hereto will be issued pursuant to an effective registration statement under the Securities Act. -18- ARTICLE V COVENANTS OF SELLERS Each of the Sellers agrees, as to itself only, that from the date hereof to the Closing Date: 5.1 IMPLEMENTING AGREEMENT. Each of the Sellers will, and shall cause the Partnership to, take all actions and do all things necessary, proper, or advisable to fulfill their obligations under this Agreement and to consummate the transactions contemplated hereby. 5.2 ADDITIONAL ACTIONS. Each of the Sellers will take all additional steps as may be required to put Purchasers in exclusive possession and operating control of the assets, properties and business of the Partnership, including the following actions: if requested by Purchaser, each Seller will execute and deliver an amendment to, or a restatement of, the Partnership Agreement, and also amendments, if any, to the Partnership's fictitious name filings, all as prepared by Purchaser's legal counsel and in form and substance acceptable to Purchaser and to Sellers, acting reasonably (it being understood that none of the foregoing documents will increase Sellers' liabilities beyond the level they would have been without the execution of such documents). 5.3 PRESERVATION OF PARTNERSHIP INTERESTS. Each Seller agrees that such Seller will not sell, assign, transfer, pledge or otherwise dispose of any interest in such Seller's Partnership Interests, except as expressly contemplated by this Agreement. 5.4 PRESERVATION OF OWNERSHIP OF PHASE I PROPERTY. No Seller shall, and shall not cause the Partnership to, sell, assign or create any right, title or interest whatsoever in or to the Phase I Property or the Remainder or create any lien, Encumbrance or charge thereon, other than liens or Encumbrances either noted in the Commitment or those which shall be released at Closing. The foregoing shall not limit or impair the Partnership's right or ability to enter into leases and service contracts in the ordinary course of operating the Phase I Property. 5.5 NO DEFAULT. Neither Phase I nor any OP Units Seller shall, and each of Phase I and the OP Units Sellers shall cause the Partnership not to, do any act or omit to do any act, or permit any act or omission to act, which will cause a material breach of any contract, agreement or understanding to which the Partnership, the Partnership Assets or the Partnership Interests are subject, the breach of which would have an adverse effect on the financial condition, operation or prospects of the Partnership or on any of the Partnership Assets or the Partnership Interests. M&B shall not take any affitmative action permitting the Partnership to do any act or omit to do any act, or permit any act or omission to act, which will cause a material breach of any contract, agreement or understanding to which the Partnership, the Partnership Assets or the Partnership Interests are subject, the breach of which would have an adverse effect on the financial condition, operation or prospects of the Partnership or on any of the Partnership Assets or the Partnership Interests. -19- 5.6 COMPLIANCE WITH LAWS. Phase I and the OP Units Sellers shall cause the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to fail to, duly comply with all laws, statutes, regulations, rules and orders applicable to the business or operation of the Partnership or as may be required for the valid and effective transfer and assignment of the Partnership Interests. Each Seller agrees to promptly notify Purchaser of any fact of which such Seller becomes aware which would cause the representation set forth in Section 3.16 to become false and of any notice that such Seller receives regarding the matters set forth in Section 3.16. 5.7 OPERATION OF THE PARTNERSHIP AND THE PHASE I PROPERTY. From and after the date hereof with respect to the Remainder, and from and after the time the Partnership acquires ownership of the Phase I Property with respect to the Phase I Property: 5.7.1 Phase I and the OP Units Sellers shall cause the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to fail to, operate and maintain the Phase I Property through Closing in substantially the same manner as heretofore operated and maintained, reasonable and ordinary wear and tear and damage by fire or casualty excepted. Phase I and the OP Units Sellers shall cause the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to fail to, make-ready all rental units of the Phase I Property vacated at least ten (10) days prior to the Closing Date to a condition consistent with current practices with respect to the Phase I Property, and as of the Closing all such vacated units shall be ready for occupancy by a new tenant. In the event any unit vacated at least ten (10) days prior to the Closing Date has not been made ready for occupancy to a condition consistent with current practices with respect to the Phase I Property as of the Closing Date, Purchaser and Sellers shall agree upon an appropriate amount which shall be credited to the Purchase Price; in the event Purchaser and Sellers are unable to agree on an appropriate amount, the Broker (as defined herein) shall determine a fair and reasonable amount which shall be credited to the Purchase Price. During the term of this Agreement, Purchaser, or its authorized agents, shall be given reasonable access to the Phase I Property in order to prepare for an orderly transition of management thereof. 5.7.2 All permits, licenses and occupancy certificates, including, but not limited to, all building and use permits and a certificate of occupancy, which have been obtained on all operations to date and are currently in effect shall be maintained through Closing, to the extent required by applicable legal requirements. 5.7.3 Phase I and the OP Unit Sellers shall, and shall cause the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to fail to, conduct the Partnership's leasing activities in the normal course of business and shall execute no new tenant leases other than on the form of lease currently used with respect to the Phase I Property or such other form as may be approved by Purchaser, with such new tenant leases being for a term (including renewals) no longer than -20- twelve (12) months past the Closing Date without Purchaser's prior written approval. Further, none of Phase or the OP Unit Sellers shall, and shall not permit the Partnership to, nor shall M&B take any affirmative action which would permit the Partnership to, grant any leasing concessions which are not currently being offered at the Phase I Property without Purchaser's prior written consent. Phase I and the OP Units Sellers shall cause the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to fail to, quote all rents and leases without monitored alarms unless the resident contracts individually with the monitoring service. 5.7.4 Neither Phase I nor any OP Units Seller shall allow the Partnership to, nor shall M&B take any affirmative action which would permit the Partnership to, transfer or remove any Phase I Personal Property or fixtures from the Phase I Property subsequent to the date hereof, except for purposes of replacement thereof, in which case such replacements shall be promptly installed prior to Closing and shall be comparable in quantity and quality to the item(s) being replaced. All Phase I Personal Property and fixtures, including all HVAC equipment, are and will be on the Closing Date on the Phase I Property and in substantially the same condition as currently existing, reasonable and ordinary wear and tear and damage by fire or casualty excepted. 5.7.5 Phase I and the OP Units Sellers shall satisfy, or shall cause the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to fail to, satisfy prior to Closing, any and all claims for mechanics' or materialmen's liens or other claims or charges against the Phase I Property or the Remainder or any part thereof on or prior to Closing; provided, however, Sellers shall have the right to contest, or cause the Partnership to contest, any such claims so long as a bond is posted by Sellers and/or other procedures reasonably acceptable to Purchaser are followed in order to protect the Phase I Property or the Remainder and so long as no exception therefor appears in the Phase I Owner's Title Policy described in Section 7.1 herein. 5.7.6 Phase I and the OP Units Sellers shall cause the Partnership not to, and M&B will not take any affirmative action which would permit the Partnership to: amend the Partnership Agreement or admit new partners (except as contemplated herein); incur or assume any long-term or short-term debt other than long-term or short-term debt discharged at or prior to Closing; assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person other than obligations discharged at or prior to Closing; make any loans or advances to any person; mortgage or pledge any of its assets, tangible or intangible, or create any Encumbrance thereupon other than Encumbrances; adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization; conduct any business other than as provided in Section 5.7.1 hereof; sell, lease, encumber, transfer or dispose of any assets outside the ordinary course of business consistent with past -21- practices; admit liability, guilt or culpability in connection with the settlement or compromise of any action, suit or proceeding against or involving the Partnership or the Phase I Property or the Remainder; or take any action likely to materially decrease or diminish the value of the Phase I Property. Nothing herein contained shall limit the ability of the Partnership to operate the Phase I Property in the ordinary course of business consistent with past practices. 5.7.7 No Seller shall, Phase I and the OP Units Sellers shall not permit the Partnership to, and M&B will not take any affirmative action which would permit the Partnership to, enter into any leases or agreements with respect to or improve or otherwise physically alter the Remainder. 5.8 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No Seller shall intentionally take any action, or intentionally omit to take any action, which action or omission would have the effect of violating any of the representations and warranties of such Seller contained in this Agreement. 5.9 NOTICE. Sellers shall provide to Purchaser copies of any notices of violations referred to in Section 3.16 that the Partnership may receive following the date hereof. 5.10 CODE VIOLATIONS. Prior to Closing, Phase I and the OP Units Sellers shall at such Sellers' expense cause the Partnership to make, cure or correct all violations referred to in Section 3.11 ("CODE VIOLATIONS") if any such Code Violations were caused by the Partnership or Verandah Condominiums' actions (the "REQUIREMENTS"). If the cost of the Requirements (together with similar "Requirements" under the Verandah Apartments Agreement) exceeds $25,000 (the "MAXIMUM AMOUNT"), then if such Sellers do not at such Sellers' expense cause the Partnership to cure, correct or comply with same prior to the Closing Date, Purchaser may either terminate this Agreement or close this transaction and receive a credit against the Purchase Price in an amount equal to the difference between the Maximum Amount and the amount spent by such Sellers or the Partnership (and the Phase II Partnership) in curing, correcting or complying with the Requirements. If the cost of correcting, curing or complying with the Requirements (together with similar "Requirements" under the Verandah Apartments Agreement) is less than or equal to the Maximum Amount and if such Sellers or the Partnership (and the Phase II Partnership) shall not at such Sellers' expense have corrected same prior to Closing, Purchaser shall be entitled to a credit against of the Purchase Price in an amount equal to the cost of correcting, curing or complying with the Requirements. The terms "Code Violations" and "Requirements" as used herein shall not include or apply to matters referred to in the second sentence of Section 3.11. In addition, the Maximum Amount shall be the aggregate amount required to be incurred or otherwise permitted to be charged against such Sellers under this Agreement and Phase II Partnership under Section 6.2.10 of the Verandah Apartments Agreement. 5.11 CONDUCT OF VERANDAH CONDOMINIUMS. From the date hereof through the date the Partnership become the record owner of the Phase I Property, Phase I and the OP Units -22- Phase I and the OP Units Sellers shall cause Verandah Condominiums to comply with the covenants contained in Section 5.7 hereof. ARTICLE VI COVENANTS OF PURCHASER Purchaser agrees that from the date hereof to the Closing Date: 6.1 IMPLEMENTING AGREEMENT. Purchaser will take all actions and do all things necessary, proper and advisable to fulfill its obligations under this Agreement and to consummate the transactions contemplated hereby. 6.2 DISPOSITION OF PHASE I PROPERTY. For a period of five years from the Closing Date, Purchaser will not, without the written consent of each of the OP Units Sellers, sell, assign or transfer, other than to an Affiliate of Purchaser, the Partnership or the Phase I Property. Purchaser may cause the Partnership to be dissolved and liquidated at Closing, with the Phase I Property and the Remainder being transferred to Purchaser or an Affiliate of Purchaser. 6.3 CONFIDENTIALITY. Except as required by any Governmental Authority, all information supplied to Purchaser pursuant to Section 2.2 shall be maintained in strict confidence by Purchaser, and in the event that this Agreement is terminated, Purchaser shall make no further use of such information whatsoever. ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER The obligations of Purchaser under this Agreement are, at the option of Purchaser, subject to satisfaction of the following conditions on or before the Closing Date (or such earlier date as may be specified): 7.1 OWNERSHIP OF PHASE I PROPERTY AND THE REMAINDER. The Partnership shall own the Phase I Property and the Remainder free and clear of all liens and Encumbrances, other than existing Encumbrances, not less than one day prior to the expiration of the Review Period. Before the expiration of the Review Period, Sellers shall provide to Purchaser copies of all documents evidencing such acquisition. Purchaser shall be satisfied, in its sole discretion, that the Partnership owns all right, title and interest to the Phase I Property and the Remainder, subject to the Permitted Exceptions, and Purchaser shall have received a Commitment, -23- updated to the expiration of the Review Period, showing title to the Phase I Property as vested in the Partnership. Additionally, Sellers shall deliver to Purchaser a Texas Standard Owner's Policy of Title Insurance (the "PHASE I OWNER'S TITLE POLICY") at Closing, or the Title Company's irrevocable commitment to issue the same, in the full amount of the Purchase Price, subject only to the Permitted Exceptions, insuring the Partnership as the owner of the Phase I Property and the Remainder. Purchaser intends to dissolve the Partnership at Closing and transfer the Phase I Property to Purchaser or an Affiliate of Purchaser. Under the Verandah Apartments Agreement, Verandah Phase II Partnership, a Texas limited partnership has committed to furnish Purchaser or its permitted assignee a policy of title insurance (the "PHASE II OWNER'S TITLE POLICY"). The Phase I Owner's Title Policy and the Phase II Owner's Title Policy shall be issued as a single policy, insuring that fee simple title to all of the Phase I Property, the Remainder and the Phase II Property is vested in Purchaser or its permitted assignee. Sellers shall pay the cost of the Phase I Owner's Title Policy. In the event that the title company is not willing to issue the Phase I Owners Title Policy and the Phase II Owners Title Policy as a single policy, then the Phase I Owners Policy shall be issued a separate policy at Sellers' expense. If Purchaser elects not to dissolve the Partnership at Closing, thereby requiring separate issuance of the Phase I Owners Title Policy and the Phase II Owners Title Policy, then Purchaser shall be responsible for any incremental premium cause thereby. Sellers shall, at their sole cost and expense, cause all existing indebtedness secured by the Phase I Property or the Remainder, to be released, including the payment of any prepayment premium. 7.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties of the Sellers contained herein shall be true and correct in all material respects on and as of the date hereof and (except for such changes as are contemplated herein) on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. 7.3 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Each of the Sellers shall, in all material respects, have performed and complied with all of their respective obligations, agreements and covenants hereunder prior to the Closing Date. 7.4 CONDITION OF PROPERTY. The environmental, financial and physical condition of the Phase I Property and the Remainder shall not change adversely and materially after the date hereof. 7.5 VERANDAH APARTMENTS AGREEMENT. All conditions precedent to Purchaser's obligations under the Verandah Apartments Agreement shall have been satisfied or waived. 7.6 OTHER CLOSING DOCUMENTS. All of the other agreements, certificates and instruments to be delivered to Purchaser at the Closing pursuant to Article IX hereof shall have been delivered to Purchaser. 7.7 FAILURE TO CLOSE. In the event that any of the conditions to Purchaser's obligation to close shall not have been satisfied on or before the Closing Date (and all of Sellers' -24- obligations to close shall have been satisfied on or before the Closing Date) or in the event that any Seller shall default under this Agreement, Purchaser may, at its option, and as its sole and exclusive remedy, terminate this Agreement pursuant to Section 10.1 hereof or seek to enforce specific performance of this Agreement against any defaulting Seller; provided however that in the event that as a result of a Seller's voluntary and intentional actions specific performance is not available as a remedy, such as if a Seller sells the Acquired Interest to be transferred by it at the Closing, or any portion thereof, to a third party, Purchaser may seek damages for breach of this Agreement from such defaulting Seller. If Purchaser elects to terminate this Agreement as provided above, it is entitled to a full and immediate refund of all Earnest Money previously deposited pursuant to the Verandah Apartments Agreement. ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS The obligations of the Sellers under this Agreement are, at the option of the Sellers, subject to the satisfaction of the following conditions on or before the Closing Date: 8.1 OWNERSHIP OF PHASE I PROPERTY. The Partnership shall actually acquire the Phase I Property free and clear of all liens and Encumbrances, other than the Permitted Exceptions. 8.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties of Purchaser contained herein shall be true and correct in all material respects on and as of the date hereof and (except for such changes as are contemplated herein) on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. 8.3 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Purchaser shall have performed and complied with all of its obligations, agreements and covenants hereunder in all material respects prior to the Closing Date. 8.4 OTHER AGREEMENTS. All of the other agreements, certificates and instruments to be delivered to the Sellers at the Closing pursuant to Article IX hereof shall have been delivered to the Sellers. 8.5 VERANDAH APARTMENTS AGREEMENT. Purchaser shall not be in default under the Verandah Apartments Agreement. 8.6 FAILURE TO CLOSE. In the event that any of the conditions to Sellers' obligation to close shall not have been satisfied on or before the Closing Date (and all of Purchaser's obligations to close shall have been satisfied on or before the Closing Date), Sellers' sole remedy (subject to Section 10.2) shall be to terminate this Agreement and Purchaser's liability shall be limited to the loss of the Earnest Money deposited pursuant to the Verandah Apartments Agreement, and it shall be the responsibility of Sellers to enter into such -25- agreement with the Phase II Partnership regarding an equitable sharing thereof. In any event, Purchaser shall pay to Sellers the sum of One Hundred Dollars ($100.00) as independent consideration for Sellers' agreement to sell the Partnership Interests to Purchaser. Purchaser and Sellers acknowledge that such amount shall be liquidated damages with respect to Purchaser's breach, that Seller's actual damages would be difficult to ascertain and that such amount is a fair and reasonable estimate of Seller's damages and is not intended as a penalty. ARTICLE IX CLOSING 9.1 CLOSING. The Closing shall be held no later than forty-five (45) days after the expiration of the Review Period, the actual date being designated by Purchaser upon at least five (5) business days prior written notice to Sellers (the "CLOSING DATE"), provided that in any event the Closing shall be held simultaneously with closing under the Verandah Apartments Agreement. The Closing shall be held at the Dallas offices of the Title Company or at such other location as the parties hereto shall agree. 9.2 DELIVERIES BY THE SELLERS. At the Closing, the Sellers will deliver to Purchaser the following: 9.2.1 Each Seller will deliver and transfer to Purchaser all of such Seller's Partnership Interests set forth next to Seller's name on SCHEDULE 3.1, free and clear of any Encumbrances, adverse claims or security interests. Each Seller will execute an assignment (the "PARTNERSHIP INTEREST ASSIGNMENT") in the form of EXHIBIT C attached hereto, assigning their respective Partnership Interests to Purchaser. 9.2.2 A copy of the Partnership Agreement of the Partnership certified as of a recent date by the general partners in the Partnership; 9.2.3 The Phase I Owner's Title Policy as described in Section 7.1 hereof; 9.2.4 An amendment (the "AMENDMENT") to the Certificate of Limited Partnership of Purchaser evidencing the succession of Purchaser to the Partnership Interests of Phase I and JSDP; 9.2.5 If a Seller is a partnership, a copy of the Partnership Agreement of such Seller certified as of a recent date by each of the parties thereto; 9.2.6 If a Seller is a corporation, (i) a copy of such Seller's certificate of incorporation certified as of a recent date by the Secretary of State of the State of such Seller's incorporation, (ii) a copy of such Seller's bylaws and (iii) a certificate of the -26- Secretary of State of the State of such Seller's incorporation as to the good standing of the corporation; and 9.2.7 Each of the Sellers shall deliver to the Purchaser a certificate in such form as may be required by the Internal Revenue Service pursuant to Section 1445 of the Code or the regulations issued pursuant thereto, certifying as to the nonforeign status of a transferor, with such certificate to be substantially in the form of EXHIBIT D attached hereto and made a part hereof for all purposes, or such variation thereof as may be required by the Internal Revenue Service. In the event that any Seller fails or refuses to deliver such certificate to Purchaser at the Closing, such Seller authorizes Purchaser to withhold, and remit to the Internal Revenue Service, from such Seller's portion of the Purchase Price an amount equal to ten percent (10%) of such Seller's portion of the Purchase Price. Notwithstanding the foregoing, if a Seller otherwise delivers a certificate from the Internal Revenue Service indicating the amount to be withheld and remitted, Purchaser shall withhold and remit such amount. 9.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser will deliver to the Sellers the following: 9.3.1 The Purchase Price in the form of cash and OP Units as described in Section 1.2, as it may be adjusted pursuant to Section 1.3; 9.3.2 The Amendment, duly executed by Purchaser; and 9.3.3 A copy of the Partnership Agreement of Purchaser certified as of a recent date by the general partners in Purchaser. ARTICLE X TERMINATION 10.1 TERMINATION. This Agreement may be terminated at any time on or prior to the Closing Date: (1) With the mutual consent of the Sellers and Purchaser; (2) By Purchaser, if any Seller has materially breached this Agreement and Purchaser has not materially breached this Agreement or if a condition precedent to Purchaser's obligations has failed to be satisfied; and (3) By the Sellers, if Purchaser has materially breached this Agreement and none of the Sellers have materially breached this Agreement or if a condition precedent to Sellers' obligations has failed to be satisfied. -27- In the event of any termination pursuant to this Section 10.1 (other than pursuant to Section 10.1(1)), written notice setting forth the reasons thereof shall forthwith be given by Purchaser, if Purchaser is the terminating party, to the Sellers, or by the Sellers, if the Sellers are the terminating party, to Purchaser. 10.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to Section 10.1 hereof, all obligations of the parties hereunder shall terminate, except for the obligations and provisions set forth in Section 2.2, Article XI and Sections 7.7, 8.6 and 12.1 hereof, which shall survive the termination of this Agreement, and except that no such termination shall relieve any party from liability for any breach of this Agreement, except as otherwise provided in Section 7.7 and 8.6. ARTICLE XI SURVIVAL; INDEMNIFICATION 11.1 SURVIVAL. All warranties, representations, covenants obligations and agreements contained in this Agreement shall survive the Closing hereof for a period of six (6) months, and any suit by Purchaser against Seller with respect to any breach of the foregoing shall be brought within six (6) months from the Closing Date or any cause of action arising in connection therewith shall be forever barred; except that with respect to (i) Sections 3.1, 3.2, 3.3, 3.4, 3.5, 4.1 and 4.2, the representations and warranties shall survive indefinitely and actions with respect to breaches thereof may be brought at any time and (ii) Section 3.6 and Section 3.7, the representations and warranties shall survive, and actions with respect to breaches thereof may be brought, until 90 days following the full period of any statute of limitations (as such period may have been extended by any waiver thereof) applicable to such obligation. In the event that any Seller becomes aware of any fact that would cause a representation or warranty to become false or misleading, such Seller shall give Purchaser notice of the same promptly after becoming aware of such fact. Unless Purchaser terminates this Agreement within five (5) days of receiving Sellers' notice, the representations and warranties shall be deemed modified to reflect such fact. 11.2 INDEMNIFICATION BY THE CASH SELLERS. Subject to the limitations set forth in Sections 11.1 and 11.4 hereof, each of the Cash Sellers shall, jointly and severally, indemnify, defend and hold harmless Purchaser, its officers, directors, Affiliates, successors and assigns ("PURCHASER INDEMNIFIED PARTIES") against any and all Losses incurred or suffered by any Purchaser Indemnified Party arising out of any of the following: (a) any breach of or any inaccuracy in any representation or warranty made by such Cash Seller in Section 3.1, 3.3, 3.4 or 3.5 of this Agreement, and any breach of or failure by such Cash Seller to perform any covenant or obligation of such Cash Seller set forth herein; or (b) the ownership of its Partnership Interests prior to the Closing Date. -28- 11.3 INDEMNIFICATION BY THE OP UNITS SELLERS. Each of the OP Units Sellers shall, jointly and severally, indemnify, defend and hold harmless Purchaser Indemnified Parties against any and all Losses incurred or suffered by any Purchaser Indemnified Party arising out of any of the following: (a) any breach of or any inaccuracy in any representation or warranty made by any OP Units Seller pursuant to this Agreement, and any breach of or failure by any OP Units Seller to perform any covenant or obligation of the Sellers set forth in this Agreement; (b) the ownership of its Partnership Interests prior to the Closing Date or (c) Taxes or liabilities attributable to taxable income of the Partnership, any Seller or the Phase I Property otherwise allocable to periods (or any portion thereof) on or prior to the Closing Date. 11.4 LIMITATION ON LIABILITY. Purchaser agrees that, except with respect to breaches of the representation and warranties contained in Section 3.1 through 3.7 hereof (i) Sellers' liability for breaches of representations, warranties, covenants, obligations and agreements contained herein and the liability of Phase II Partnership in the Verandah Apartments Agreement shall be limited to an aggregate amount of $200,000 and (ii) no Seller shall be liable for punitive, special, consequential, speculative, lost profits or any other damages with respect to breaches of any representation, warranty, covenant, obligation or agreement of such Seller contained herein. 11.5 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify, defend and hold harmless the Sellers from any and all Losses incurred or suffered by any of the Sellers arising out of any of the following: (a) any breach of or any inaccuracy in any representation or warranty made by Purchaser pursuant to this Agreement, and any breach of or failure by Purchaser to perform any covenant or obligation of Purchaser set out in this Agreement; or (b) the business or operation of the Partnership from and after the Closing Date. ARTICLE XII MISCELLANEOUS 12.1 EXPENSES. Each party shall bear its own expenses and costs in connection with this Agreement and the transactions contemplated thereby. The OP Units Sellers shall pay all taxes, assessments, charges and fees, if any, imposed by the United States or any state or political subdivision thereof, required to be paid in connection with the transfer and assignment of the Partnership Interests. 12.2 AMENDMENT. This Agreement may be amended, modified or supplemented but only in writing signed by all of the parties hereto. 12.3 BROKERS. Each of the parties hereto represents that, other than Kendall-Miller Realty Partners, Inc. (the "BROKERS") and Curtis Walker, no broker or finder has acted for it in connection with this Agreement or the transactions contemplated hereby and that no broker -29- or finder is entitled to any brokerage or finder's fee or other commission based on agreements, arrangements or understandings made by it. Sellers will pay all costs and commissions owed to the Broker in connection with this Agreement and the Verandah Apartments Agreement. The parties acknowledge that Curtis Walker is an employee of Purchaser, that he represents the Purchaser only in connection with this transaction and owes no fiduciary duties to the Sellers. 12.4 NOTICES. All notices, requests, instructions, documents or other communications hereunder shall be in writing and shall be deemed to have been given, (i) when received if given in person, (ii) on the date of acknowledgment of receipt if sent by telex, facsimile or other wire transmission or (iii) three days after being deposited in the U.S. mail, certified or registered mail, postage prepaid: -30- If to any of the Sellers, addressed as follows: Bratty & Partners 4950 Yonge Street Suite 2000 North York, Ontario, Canada M2N 6K1 Attention: Mr. Rudy Bratty Phone: 416-226-0660 Facsimile: 416-226-6395 and to: Jim Sowell Company L.P. 3131 McKinney, Suite 200 Dallas Texas 75204 Attention: Keith Martin With copies to: Geary, Porter & Donovan, P.C. 16475 North Dallas Parkway Suite 550 Dallas, Texas 75248 Attention: David Tatum Phone: 972-733-2207 Facsimile: 972-931-9028 and to: Steven E. Smathers 3131 McKinney, Suite 200 Dallas, Texas 75204 If to Purchaser: Amli Residential Properties, L.P. 125 S. Wacker Drive Suite 3100 Chicago, Illinois 60606 Attention: Mr. Fred Shapiro Telephone: (312) 984-5039 Facsimile: (312) 443-0909 -31- With a copy to: Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Attention: Martin G. Rosenstein Telephone: (312) 701-7159 Facsimile: (312) 701-7711 and to: Smith, Stern & Friedman, P.C. 8144 Walnut Hill Lane Suite 1100, LB 103 Dallas, Texas 75231-4337 Attention: Clifford L. Friedman Telephone: (214) 739-0606 Facsimile: (214) 739-0608 or to such other individual or address as a party hereto may designate for itself by notice given as herein provided. 12.5 WAIVERS. The failure of a party hereto at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. 12.6 COUNTERPARTS. This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 12.7 HEADINGS. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 12.8 GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Texas. 12.9 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. -32- No party to this Agreement may assign any of its rights or obligations under this Agreement without the prior consent of the other parties, except that the rights and obligations of Purchaser may be assigned by Purchaser to any of Purchaser's Affiliates; provided, that the rights and obligations of Purchaser under the Verandah Apartments Agreement are assigned simultaneously to such Affiliate; provided, further, that no such transfer shall relieve Purchaser of its obligations hereunder. 12.10 OTHER INSTRUMENTS. Upon the reasonable request of Purchaser, the Sellers will, on and after the Closing Date, execute and deliver to Purchaser such other documents, releases, assignments and other instruments as may be required to effectuate completely the transfer and assignment to Purchaser of, and to vest fully in Purchaser title to, each of the Acquired Interests. 12.11 ENTIRE AGREEMENT. This Agreement and the Verandah Apartments Agreement constitute the entire agreement and understanding of the parties hereto with respect to subject matter hereof and supersede all other prior agreements and understandings, both written and oral, with respect to the subject matter hereof and are not intended to confer upon any other person any rights or remedies hereunder. 12.12 VERANDAH APARTMENTS AGREEMENT. Pursuant to the Verandah Apartments Agreement, Purchaser has agreed to acquire the Phase II Property. Purchaser agrees that any default by Purchaser under the Verandah Apartments Agreement shall be deemed a default by Purchaser under this Agreement, and any default by Purchaser under this Agreement shall be deemed a default by Purchaser under the Verandah Apartments Agreement. Sellers agrees that any default by the Phase II Partnership under the Verandah Apartments Agreement shall be deemed a default by Sellers under this Agreement, and any default by Sellers under this Agreement shall be deemed a default by the Phase II Partnership under the Verandah Apartments Agreement. In the event that Verandah Apartments Agreement is terminated or otherwise fails to close for any reason other than default by the Phase II Partnership thereunder, Sellers shall have the right to terminate this Agreement. In the event that the Verandah Apartments Agreement is terminated for any reason other than default by the Purchaser thereunder, Purchaser shall have the right to terminate this Agreement. 12.13 RISK OF LOSS. Risk of Loss until the Closing shall be borne by Sellers. In the event that damage, loss or destruction of the Phase I Property or the Remainder or any part thereof, in an amount equal to $250,000 or more, by fire or other casualty, or through condemnation or sale in lieu thereof, occurs prior to the actual closing of the transactions contemplated hereby, the Purchaser shall, at its option, elect one of the following: 12.13.1 To terminate this Agreement. 12.13.2 To close the transactions contemplated hereby and receive a credit against the cash portion of the Purchase Price due at Closing in the amount of all insurance or condemnation proceeds payable as a result of such casualty loss or -33- condemnation and any deductible applicable to such insurance coverage. If the Purchaser elects to proceed under this Section 12.13.2 and the Review Period has expired, then Purchaser shall have the right to settle any claim with the applicable insurance company or condemning authority, subject to Sellers' approval of any proposed settlement, Sellers' approval not to be unreasonably withheld or delayed. Other than receiving a credit against the cash portion of the purchase Price due at Closing as provided in this Section 12.13.2, there shall be no reduction in the Purchase Price by reason of such damage or condemnation. Sellers shall cause the Partnership to maintain the current insurance coverage in force for the Property in full force and effect through the Closing Date. In the event that the damage, loss or destruction shall be in an amount of less than $250,000.00, the Purchaser shall be required to elect option 12.13.2 above. Purchaser shall be deemed to have elected to proceed under option 12.13.2 above if Purchaser fails to send written notice of Purchaser's election to Sellers within five (5) business days after Purchaser learns of the casualty or condemnation. -34- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered on the date first above written. AMLI RESIDENTIAL PROPERTIES, L.P. By: /s/ FRED SHAPIRO ------------------------------ Name: Fred Shapiro ------------------------------ Title: Vice President ------------------------------ VERANDAH HOLDINGS PHAS I INC. By: /s/ R.P. BRATTY ------------------------------ Name: R.P. Bratty ------------------------------ Title: ------------------------------ JSDP, INC. By: /s/ DAN PILKINTON ------------------------------ Name: Dan Pilkinton ------------------------------ Title: President ------------------------------ M&B HOLDINGS GENERAL PARTNERSHIP By: /s/ R.P. BRATTY ------------------------------ Name: R.P. Bratty ------------------------------ Title: ------------------------------ FAIRGROWTH INTERNATIONAL By: /s/ THOMAS WU ------------------------------ Name: Thomas Wu ------------------------------ Title: President ------------------------------ TVA SP PARTNERSHIP By: /s/ DONALD L. PILKINTON ------------------------------ Name: Donald L. Pilkinton ------------------------------ Title: General Partner ------------------------------ By: /s/ JAMES E. SOWELL ------------------------------ Name: James E. Partner ------------------------------ Title: General Manager ------------------------------ FIRST AMENDMENT TO AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS THIS FIRST AMENDMENT is made and entered into by and between AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership (hereinafter referred to as "Purchaser") and Verandah Holdings Phase I, Inc., an Ontario, Canada corporation, JSDP, Inc., a Texas corporation, M&B Holdings General Partnership, a Texas general partnership, Fairgrowth International, Inc., an Ontario, Canada corporation, and TVA SP Partnership, a Texas general partnership (hereinafter collectively referred to as "Sellers") and is dated as of the 16th day of January, 1997. W I T N E S S E T H: -------------------- Purchaser and Sellers entered into that certain Agreement Regarding Acquisition of Partnership Interests (the "Agreement") dated as of December ___, 1996 [sic] and are desirous of amending the same (all terms not defined herein shall have the same meaning as set forth in the Agreement). NOW, THEREFORE, in consideration of the premises and the respective undertakings of the parties hereinafter set forth, the receipt and sufficiency of which consideration are hereby acknowledged, it is hereby agreed as follows: 1. DATE OF AGREEMENT. The date of the Agreement shall be December 20, 1996. 2. THE PROPERTY. The Remainder was conveyed by the Partnership to Verandah Condominiums by warranty deed dated November 11, 1996 and recorded at Volume 12611, Page 2173, Real Property Records of Tarrant County, Texas. The Planned Donation has occurred with the Release Parcel having been conveyed to the City of Arlington, Texas on November 11, 1996, by warranty deed of even date and recorded at Volume 12635, Page 1851, Real Property Records of Tarrant County, Texas. Purchaser hereby consents to such conveyances. The term "Phase I Land" shall include the Remainder, and all other references to the Remainder are hereby deleted. Seller commenced the process of causing the Phase I Land (which definition includes the Remainder) to be replatted so that the Phase I Land (including the Remainder) is platted as a single block. As currently platted, the Phase I Land (including the Remainder) and the Release Parcel are platted as a single block. Seller may, but is not obligated to, continue such replatting efforts, or Seller may cease all work in connection therewith. 3. OP UNITS SELLERS' GUARANTY. The form of the guaranty has been agreed to by the OP Units Sellers, Purchasers and Purchaser's lender. 4. REVIEW PERIOD. The Review Period shall expire on February 28, 1997. 5. CLOSING DATE. The Closing Date shall be held no later than March 31, 1997, the actual date being designated by Purchaser as provided in Section 9.1 of the Agreement and in any event simultaneous with the closing under the Verandah Apartments Agreement. Page 1 6. EXECUTION. This Amendment may be executed in any number of counterparts, all of which shall have the effect of a single document. A copy of an executed counterpart delivered by telecopy transmission shall have the same effect as an original. 7. FULL FORCE AND EFFECT. Except as amended and modified hereby, the Agreement is, and shall be, in full force and effect. PURCHASER: --------- AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership By: AMLI RESIDENTIAL PROPERTIES TRUST, a Maryland real estate investment trust, its general partner By: /s/ FRED SHAPIRO ------------------------------ Printed Name: Fred Shapiro ------------------------------ Title: Vice President ------------------------------ SELLERS: ------- VERANDAH HOLDINGS PHASE I, INC., an Ontario, Canada corporation By: /s/ R.P. BRATTY ------------------------------ Printed Name: R.P. Bratty ------------------------------ Title: ------------------------------ JSDP, INC., a Texas corporation By: /s/ DONALD L. PILKINTON ------------------------------ Printed Name: ------------------------------ Title: ------------------------------ Page 2 [Sellers' signatures continued on the following page] [Sellers' signatures continued] M&B HOLDINGS GENERAL PARTNERSHIP, a Texas general corporation By: Authorized Signatory ------------------------------ Printed Name: ------------------------------ Title: ------------------------------ FAIRGROWTH INTERNATIONAL, INC., an Ontario, Canada corporation By: Authorized Signatory ------------------------------ Printed Name: ------------------------------ Title: President ------------------------------ TVA SP PARTNERSHIP, a Texas general partnership By: /s/ DONALD L. PILKINTON ------------------------------ Donald L. Pilkinton By: /s/ JAMES E. SOWELL ------------------------------ James E. Sowell Page 3 SECOND AMENDMENT TO AGREEMENT REGARDING ACQUISITION OF PARTNERSHIP INTERESTS THIS SECOND AMENDMENT is made and entered into by and between AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership (hereinafter referred to as "Purchaser") and Verandah Holdings Phase I, Inc., an Ontario, Canada corporation, JSDP, Inc., a Texas corporation, M&B Holdings General Partnership, a Texas general partnership, Fairgrowth International, Inc., an Ontario, Canada corporation, and TVA SP Partnership, a Texas general partnership (hereinafter collectively referred to as "Sellers") and is dated as of the 28th day of February, 1997. W I T N E S S E T H: -------------------- Purchaser and Sellers entered into that certain Agreement Regarding Acquisition of Partnership Interests dated as of December 20, 1996, as amended by First Amendment dated as of January 16, 1997 (as amended, the "Agreement"), and are desirous of further amending the same (all terms not defined herein shall have the same meaning as set forth in the Agreement). NOW, THEREFORE, in consideration of the premises and the respective undertakings of the parties hereinafter set forth, the receipt and sufficiency of which consideration are hereby acknowledged, it is hereby agreed as follows: 1. REVIEW PERIOD. The Review Period shall expire on March 6, 1997. 2. CREDIT FOR CODE ISSUES. At Closing, Purchaser shall receive a credit against the Purchase Price in the amount of Twenty Three Thousand, Seven Hundred and No/100 Dollars ($23,700.00). such credit shall satisfy in full Sellers' obligations under Section 5.10 of the Agreement and said Section 5.10 shall be deemed deleted from the Agreement. Such credit shall be allocated Three Thousand, Five Hundred Fifty Five and No/100 Dollars ($3,555.00) to the OP Units Sellers and Twenty Thousand, One Hundred Forty Five and No/100 Dollars ($20,125.00) to the Cash Sellers. As to the OP Units Sellers, the figure of $1,053,000.00 set forth in Section 1.2.2 of the Agreement shall be reduced by Three Thousand, Five Hundred Fifty Five and No/100 Dollars ($3,555.00). 3. EXECUTION. This Amendment may be executed in any number of counterparts, all of which shall have the effect of a single document. A copy of an executed counterpart delivered by telecopy transmission shall have the same effect as an original. 4. FULL FORCE AND EFFECT. Except as amended and modified hereby, the Agreement is, and shall be, in full force and effect. The rest of this page is intentionally left blank. Signature pages to follow. Page 1 PURCHASER: SELLERS CONTINUED: AMLI RESIDENTIAL PROPERTIES, L.P., M&B HOLDINGS GENERAL PARTNERSHIP, a Delaware Limited partnership a Texas general partnership By: AMLI RESIDENTIAL PROPERTIES By: /s/ R.P. BRATTY TRUST, A Maryland real estate ----------------------- investment trust, its general Printed partner Name: R.P. Bratty ----------------------- By: /s/ FRED SHAPIRO Title: Director ----------------------- ----------------------- Printed Name: Fred Shapiro ----------------------- FAIRGROWTH INTERNATIONAL, INC. Title: Vice President an Ontario, Canada Corporation By: /s/ THOMAS WU ----------------------- VERANDAH HOLDINGS PHASE I, INC., Printed an Ontario, Canada corporation Name: Thomas Wu ----------------------- By: /s/ R.P. BRATTY Title: President ----------------------- ----------------------- Printed Name: R.P. Bratty ----------------------- TVA SP PARTNERSHIP, a Texas Title: Director general partnership ----------------------- By: /s/ DONALD L. PILKINTON ----------------------- Donald L. Pilkinton JSDP, INC., A Texas corporation By: By: /s/ DONALD L. PILKINTON ----------------------- ----------------------- James E. Sowell Printed Name: Donald L. Pilkinton ----------------------- Title: President ----------------------- Page 2 EX-99.4 8 EXHIBIT 99.4 - ------------ (Form S-3) SALES AGREEMENT --------------- THIS SALES AGREEMENT, made and entered into on this 29th day of February, 1996, among Virgil R. Williams and James N. Williams as Seller (hereinafter referred to as "Seller"), EASLAN CAPITAL OF ATLANTA, INC., as purchaser (hereinafter referred to a s "Purchaser"), and Belkofer & Company, Inc. and Williams-Adair Realty Corp. as licensed real estate brokers in the state of Georgia (hereinafter referred to as "Brokers"). WITNESSETH FOR AND CONSIDERATION of the sum of Twenty Five Thousand and No/100 Dollars ($25,000) in check paid to an interest bearing account of Belkofer & Company, Inc. within three (3) business days of Seller's execution, as Purchaser's Earnest Money and in further consideration of the covenants and agreements contained in this Agreement, IT IS HEREBY COVENANTED AND AGREED among the parties hereto as follows: 1. PURCHASE AND SALE. Upon all the terms and conditions hereinafter set forth, Seller shall sell and Purchaser shall purchase from Seller all that tract or parcel of land being approximately 21,584 acres and 40 rental units being more particularly described in Exhibit "A" attached hereto and incorporated herein by reference, together with any and all improvements and appurtenances located thereon; said land, together with such improvements, is hereinafter referred to as "the Property". 2. PURCHASE PRICE. The purchase price of the Property shall be Four Million Three Hundred Thousand dollars ($4,300,000), subject to adjustment as hereinafter provided. 3. SURVEY. Purchaser, at Purchaser's sole cost and expense, may cause a survey of the Property to be prepared by a land surveyor registered under the laws of Georgia and designated by Purchaser. The survey shall show the location of the flood plain and the acreage of the Property to the nearest one-thousandth (1/1000th) of an acre. The description of the Property used in Seller's Limited Warranty Deed conveying the Property to Purchaser shall be the legal description contained in Exhibit "A" and, in addition, Seller shall convey title to the Property to Purchaser pursuant to a Quitclaim Deed according to such new survey legal description, if applicable. 4. METHOD OF PAYMENT. The Purchase Price shall be paid in cash, good funds or cashier's check at closing, or Purchaser agrees that, upon request by Seller, Purchaser will cooperate with Seller in such a manner as to permit Seller to convey the Property as part of a tax free exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended; provided, however, that Purchaser shall not incur any 5. TITLE. Seller warrants that Seller presently has title to the Property, and, at the time the sale is closed, Seller shall convey good and marketable title 1 to the Property to Purchaser by Limited Warranty Deed subject only to the following exceptions (the "Permitted Title Exceptions"); (1) Zoning ordinances affecting the Property; and (2) general utility easements serving the Property. Good and marketable title is hereby defined as title which is insurable by a national title insurance company at its standard rates and without exception. Thirty (30) days prior to closing, Purchaser shall furnish Seller with a written statement of objections affecting the marketability of said title. Seller shall have a reasonable time (not to exceed twenty (20) days) after receipt of such objections within which to satisfy all valid objections. Seller shall use Seller's best efforts to satisfy such valid objections within said time. If Seller fails to satisfy such valid objections within said time, then, at the option of the Purchaser, to be exercised by written notice to Seller, Purchaser may (i) accept the title to the Property with such defects and close, or (ii) all Earnest Money shall be returned to Purchaser and Purchaser may exercise its rights as provided in Paragraph 7. 6. CLOSING. This sale shall be closed at the offices of Purchaser's attorney in Atlanta, Georgia, at a date and time selected by Purchaser, on or before May 30, 1996 (i.e., "date of Closing" or "Closing"). Notwithstanding the above, at the option of Purchaser, exercisable by written notice to Seller, the Closing date may be extended for thirty (30) calendar days for an additional Twenty Five Thousand Dollars ($25,000) in non-refundable earnest money. Said money shall be applied to Purchase Price. At Closing hereunder, the Property shall be conveyed free and clear of all liens, encumbrances, restrictions, assessments, and encroachments, except Permitted Title Exceptions. At Closing hereunder, Seller shall convey the Property to Purchaser by Limited Warranty Deed, which Deed shall be duly witnessed and notarized for recording in the State of Georgia. Possession of the Property shall be granted to Purchaser at Closing. Seller shall pay the Georgia transfer tax on said Limited Warranty Deed. Seller and Purchaser shall prorate between themselves as of the date of Closing, all real estate taxes on the Property, provided, however, that any and all assessments for work completed prior to Closing shall not be prorated, but shall be paid by Seller at Closing. 7. DEFAULT. If the purchase and sale of the Property contemplated hereby is not consummated in accordance with the terms and conditions of this Agreement due to circumstances or conditions which constitute a default by Purchaser hereunder, the Earnest Money then, on deposit, shall be delivered to Seller as full liquidated damages for such default, the parties acknowledging that Seller's actual damages in the event of a default by Purchaser hereunder will be difficult or impossible to accurately estimate, and the parties expressly acknowledge that retention of the Earnest Money, and any interest earned thereon, is intended not as a penalty, but as full liquidated damages, and a reasonable pre-estimate of the probable loss resulting from such a default. The parties expressly acknowledge that the delivery of the Earnest Money to Seller shall be the sole and exclusive remedy of Seller by reason of any default by Purchaser hereunder, and Seller shall not sue Purchaser for specific 2 performance of this Agreement or to prove that Seller's actual damages exceed the Earnest Money which is herein provided. If sale of the Property contemplated hereby is not consummated in accordance with the terms and conditions of this Agreement due to any circumstances or conditions other than a default by Purchaser hereunder, the Earnest Money shall be refunded to Purchaser promptly upon request, and Purchaser may exercise such rights and remedies as may be provided for in this Agreement or as may be provided for or allowed by law or in equity, including but not limited to specific performance. 8. AGREEMENTS AFFECTING THE PROPERTY. Seller hereby covenants and agrees with Purchaser that, so long as this Agreement remains in full force and effect, Seller shall not sell, rent, lease, convey (absolutely or as security), grant a security interest in, or otherwise encumber or dispose of, any portion of the Property or any interest or rights therein, without the express consent of Purchaser. Said consent not to be unreasonably withheld. 9. CONDITION OF PROPERTY. Commencing upon the date of this Agreement and extending through Closing hereunder, the Property shall remain in the same condition as on the date hereof, except, however, for natural wear and tear, condemnation, acts of God and occurrences over which Seller has no control. Except as may be necessary for the examination provided in Paragraph 10, neither Seller nor Purchaser shall in any manner disturb, cut or remove any trees, shrubs, bushes or dirt from the Property during said period, and the risk of loss for any casualty to said Property shall remain upon Seller. 10. ACCESS TO EXAMINATION OF THE PROPERTY. Subject to the provision of Paragraph 9 above, Purchaser, personally or through agents, employees, or contractors, may go upon the Property at any time or from time to time prior to the Closing to make boundary line or topographical surveys and to conduct such soil, engineering, environmental, other tests, investigations, and analyses of the Property as Purchaser deems desirable, provided, same is done in a reasonable manner consistent with good engineering, surveying or similar practices. Purchaser hereby indemnifies and saves Seller harmless from any claim liability, cost, or expenses (including attorneys fees), that may arise against Seller by reason of Purchaser's physical access to the Property for such surveys, tests, analyses and investigations. 11. BROKERAGE DISCLOSURE AND COMMISSION. Seller and Purchaser each represent and warrant to the other that neither has employed, retained or consulted any broker, agent or other finder with respect to the Property or in carrying on negotiations relative to this Agreement except as provided for below, and Seller and Purchaser shall indemnify and hold the other harmless from and against any and all claims, demands, causes or action, debts, liabilities, judgments and damages (including costs and reasonable attorneys fees incurred in connection with the enforcement of this indemnity) which may be asserted or recovered against the other on account of any brokerage fee, 3 commission or other compensation arising in breach of this representation and warranty. Seller and Purchaser hereby acknowledge that Williams-Adair Realty Corp. has acted as agent for Seller and Belkofer & Company, Inc. has acted as agent for Purchaser. Seller hereby agrees that all commissions due Brokers shall be paid by Seller at Closing. Seller shall pay a commission of six percent (6%) of the total purchase price and said commission shall be divided equally between Belkofer & Company, Inc. and Williams-Adair Realty Corp. Seller acknowledges that Easlan Capital of Atlanta, Inc. is a licensed real estate broker acting as a principal in this transaction. The commission shall be earned and paid if and only if the closing of this sale actually occurs. 12. GENERAL WARRANTIES. Seller warrants and represents that: (a) Seller knows of no public improvements which have been ordered to be made and/or which have not hereto been completed, assessed and paid for; (b) There is no litigation or proceeding pending, or to Seller's knowledge threatened, against Seller, or against or relating to all or any part of the Property, nor does Seller know or have reasonable grounds to know of any basis for any such action. (c) Seller has no knowledge of any pending or threatening condemnation or eminent domain proceedings which would affect any of the Property; and (d) Seller is the owner in fee simple of the Property and has full right, power and authority to enter into this Agreement and to execute all documents required hereby to be executed by the Seller herein. 13. FEASIBILITY. Notwithstanding anything contained herein, this Agreement and the obligations of Purchaser hereunder are conditioned upon Purchaser determining the feasibility of his proposed development or intended purpose for the property. Purchaser shall have Sixty (60) days from the date of Contract execution to investigate the feasibility of utilizing the Property for the intended purpose or proposed development. If Purchaser determines, in Purchaser's sole discretion, that the Property is not suitable to his proposed development, or intended purpose, then he shall notify Seller on or before the expiration of said Sixty (60) day period and all Earnest Money together with interest earned thereon shall be refunded to Purchaser and this agreement shall become null and void and neither of the parties shall thereafter have any further obligation to one another. Purchaser shall turn over to Seller all surveys, plans, studies and/or reports that he has in his possession relating to the Property. If no such notice shall be timely given by Purchaser as provided above, then Purchaser shall be deemed to have waived his right to terminate this agreement as provided, in this paragraph, and the Earnest Money shall become non-refundable except for Seller's default or as otherwise provided in this agreement. Should Purchaser close on said Property, than all Earnest Money paid to date shall be credited against the Purchase Price. 4 14. CONDEMNATION. In the event of the institution of any proceedings, judicial, administrative or otherwise, which shall relate to the proposed taking of any portion of the Property by eminent domain prior to Closing, Purchaser shall have the right and option to terminate this Agreement at any time prior to Closing by giving the Seller notice to such effect at any time after Purchaser's receipt of any such occurrence or occurrences. Seller hereby agrees to furnish Purchaser written notification in respect thereof within forty eight (48) hours from the Seller's receipt of any such notification. Should Purchaser so terminate this Agreement, then all Ernest Money paid by Purchaser hereunder shall immediately be returned to Purchaser and, thereupon, the parties hereto shall be released from their respective obligations and liabilities hereunder. In the event Purchaser does not elect to terminate this agreement because of such taking, at the Closing hereof, Seller shall assign to Purchaser all of Seller's right, title and interest in any award arising out of such taking. 15. MISCELLANEOUS DOCUMENTS. contemporaneously with the execution by Seller, Seller agrees to deliver to Purchaser a copy of any title policy, survey and any and all letters from municipal or county authorities concerning or relating to right of ways, zoning, curb cuts, utilities, assessments, rock and soil tests and taxes affecting the Property which are in the possession of Seller. 16. HEIRS AND ASSIGNS. The Agreement shall bind and inure to the benefit of Seller and Purchaser and their respective heirs, executors, legal representatives, successors, and assigns. 17. NOTICES. Any notice required or permitted to be given hereunder shall be sufficient if in writing and sent by U.S. Certified Mail, prepaid postage, to the party being given such notice at the following addresses: SELLER: SELLER'S BROKER: Mr. Virgil R. Williams Forrest Adair Corp. Mr. James N. Williams Williams-Adair Realty Place c/o Forrest Adair 2056 West Park Williams-Adair Realty Corp. Suite A Suite A Stone Mountain, GA 30087 Stone Mountain, GA 30087 Telecopy No: (404) 469-3089 Telecopy No: (404) 469-3089 PURCHASER: PURCHASER'S BROKER: Easlan Capital of Atlanta, Inc. George W. Belkofer 1995 North Park Place Belkofer & Company, Inc. Suite 100 2700 Delk Road Atlanta, GA 30339 Suite 100 Attn: Kent S. Levenson Marietta, GA 30067 Telecopy No: (770) 952-4670 Telecopy No: (770) 952-5922 5 Any party may change such address by giving the other parties hereto notice of such change of address. Notice given as hereinabove provided shall be deemed received by the party to whom it is addressed on the calendar day following the date on which said notice is deposited in the mail. 18. MISCELLANEOUS. If all or any portion of any of the provisions of this Agreement shall be declared invalid by laws applicable thereto, then the performance of said offending provision shall be excused by the parties hereto; provided, however, that if the performances of such excused provision materially affect any aspect of this transaction, then the party hereto for whose benefit such excused provision was inserted in the Agreement shall have the right, exercisable by written notice given to the other party within ten (10) days after such provision is so declared invalid, to terminate this Agreement; thereupon this Agreement shall be null and void, and Purchaser's said Earnest Money deposit shall be promptly refunded to Purchaser. 19. OFFER AND EFFECTIVE DATE. The instrument shall be regarded as an offer by Purchaser to Seller and is open for acceptance and delivery thereby until the 29th day of February, 1996, after which date this Agreement, if unaccepted, shall be null and void and of no force and effect whatsoever; the date of an acceptance shall be inserted at such time of acceptance and delivery in the space provided therefore on the first page of this Agreement. 20. CONDITIONS OF CLOSING. The Closing contemplated by the agreement shall be subject to Purchaser's verification during the first sixty (60) days after mutual execution of the Agreement that: a) The Property can and will be zoned for Buyer's intended use to develop as a multi-family apartment project having 13 units per acre. b) All utilities are available in sufficient capacity and at Closing will be accessible to the Property at the property lines, without constructing any lift stations, or incurring any other extraordinary costs or fees associated with Buyer connecting to the utilities. Buyer to satisfy this condition during (60) day feasibility period as provided in Paragraph 13. c) The appropriate authorities will issue building permits for multi-family apartments. d) Buyer finds no unrippable rock or non-compatible soils on the site. e) Buyer will obtain a Phase I environmental report satisfactory to Buyer, and a Phase II if Buyer deems necessary based on Phase I. f) Buyer determines that there are no archeological finds or endangered species that may affect development. 6 g) Buyer is not restricted by any tree ordinance from removing all trees necessary for construction of Buyer's development. h) Buyer obtains an acceptable wetlands delineation showing no wetlands on the Property. i) The appropriate authorities will allow Buyer signage rights on GA Hwy. (78). j) Seller will convey free and clear fee simple title to the Property by Limited Warranty Deed. k) The exact delineation of the 21.58 acres to be agreed upon. l) Other than existing leases, there are no other contracts related to the Property that cannot be terminated. IN WITNESS WHEREOF, the parties hereto have set their hand and seals hereunder and have caused this Agreement to be executed in their names and their corporate seals to be affixed by their officers duly authorized thereunto, the day and year first above written. "SELLER" "SELLER" Virgil R. Williams James M. Williams, Jr. By: /s/ VIRGIL R. WILLIAMS By: /s/ JAMES M. WILLIAMS, JR. ------------------------- ------------------------------ "PURCHASER" Easlan Capital of Atlanta, Inc. BY: /s/ KENT S. LEVENSON ------------------------- TITLE: President ------------------------- "BROKER" "BROKER" Belkofer & Company, Inc. Williams-Adair Realty, Inc. By: /s/ GEORGE BELKOFER, JR. By: /s/ FOREST L. ADAIR -------------------------- ------------------------------ Title: President By: President -------------------------- ------------------------------ 7 FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "First Amendment") is made and entered into as of this 25th day of April, 1996, by and between EASLAN CAPITAL OF ATLANTA, INC., a Georgia corporation (hereinafter referred to as the "Purchaser"), VIRGIL R. WILLIAM and JAMES N. WILLIAMS, individual residents of the State of Georgia (hereinafter referred to as the "Seller") and BELKOFER AND COMPANY, INC., a Georgia corporation, and WILLIAMS-ADAIR REALTY CORP., a Georgia corporation (hereinafter referred to as the "Brokers"). WITNESSETH: WHEREAS Seller, Purchaser and Brokers entered into that certain Sales Agreement having an effective date of February 29, 1996 (the "Agreement") relating to that certain parcel of real property, containing 21.58 acres of land and 40 rental units lying in Land Lot 54 of the 6th District of Gwinnett County, Georgia and being more particularly described on EXHIBIT "A" attached to the Agreement (the "Property"); and WHEREAS, the parties desire to amend the Agreement pursuant to the terms hereinafter provided. NOW, THEREFORE, for and in consideration of Ten and No/100 ($10.00) Dollars, and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties hereto do agree as follows: 1. DEFINITIONS. Terms which are used herein with an initial capital letter, shall have the meaning ascribed herein, or if not defined herein, the meaning ascribed in the Agreement. 2. FIRST AMENDMENT. The Agreement is hereby amended by adding the following paragraphs at the end of Section 2 of the Agreement: "it is expressly understood and agreed, however, that the Purchase price to be paid at Closing shall be reduced as provided in subparagraphs (a) and (b) below: (a) The Purchase Price is based on Purchaser's being able to develop 212 apartment units on the Property. Said capacity to be determined during feasibility study per Section 13. (b) The Purchase Price shall be reduced by an amount equal to the cost of repairs to be made to the existing building in accordance with the report of Purchaser and Seller to negotiate, in good faith, the cost of repairs noted on report of Newbanks & Associates. The agreed amount to be an adjustment of purchase price. 8 3. SECOND AMENDMENT. Section 6 of the Agreement is hereby amended by deleting the first sentence thereof in its entirety and substituting in lieu thereof the following: "This sale shall be closed at the offices of Purchaser's attorney in Atlanta, Georgia on or before thirty (30) days following the expiration of the Inspection Period (as hereinafter defined) at a date and time selected by Purchaser (the "Date of Closing" or "Closing"). 4. THIRD AMENDMENT. Section 13 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof. "13. FEASIBILITY. Notwithstanding anything contained herein, this Agreement and the obligations of Purchaser hereunder are conditioned upon Purchaser determining the feasibility of the proposed development or intended purpose for the Property. Purchaser shall have ninety (90) days from the date of Contract execution to investigate the feasibility of utilizing the Property for the intended purpose or proposed development (the "Inspection Period"). If Purchaser determines, in Purchaser's sole discretion, that the Property is not suitable to his proposed development or intended purpose, then he shall notify Seller on or before the expiration of the Inspection Period and all Earnest Money together with interest earned thereon shall be refunded to Purchase and this Agreement shall become null and void and neither of the parties shall thereafter have any further obligation to the other. Purchaser shall turn over to Seller all surveys, plans, studies and/or reports that he has in his possession relating to the Property. If no such notice shall be timely given by Purchaser as provided above, then Purchaser shall be deemed to have waived his right to terminate this Agreement as provided in this paragraph and the Earnest Money shall become non-refundable except for Seller's default or as otherwise provided in this Agreement. Should Purchaser close on said Property, then all Earnest Money paid to date shall be credited against the Purchase Price." 5. FOURTH AMENDMENT. The Agreement is hereby amended by added an additional section (Section 21) at the end of the Agreement to read as follows: "21. SELLER'S OBLIGATIONS. It is expressly understood and agreed that the Sellers' and Purchasers' Cost shall endeavor to cause Gwinnett County to abandon the public road located on the Property. The date of recordation of the applicable abandonment documentation is herein referred to as the "Road Abandonment Date". In addition, the Seller shall endeavor to cause the removal of asbestos from the existing buildings on the Property. The date of completion of removal of the asbestos from the existing buildings on the Property is referred to herein as the "Asbestos Removal date". Notwithstanding anything contained herein to the contrary, the Closing shall occur on the later of (i) thirty (30) days following the Road Abandonment Date and the Asbestos Removal Date or (ii) thirty (30) days following the expiration of the Inspection Period. 9 6. EFFECT. Except as hereby amended, and as so amended, the Agreement is and shall remain in full force and effect. 7. MISCELLANEOUS. This First Amendment shall be governed by and construed in accordance with the laws in the State of Georgia and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, representatives and assigns. This Amendment may be executed in one or more counterparts, which when signed by the parties hereto shall be collectively deemed to be one and the same Amendment. Original signatures transmitted via facsimile shall be acceptable for purposes of executing this First Amendment provided that executed counterpart originals are delivered within five (5) business days from the date hereof. IN WITNESS WHEREOF, Seller and Purchaser have caused this First Amendment to be duly authorized, executed, and delivered as of the day and year first above written. SELLER /s/ VIRGIL R. WILLIAMS ------------------------------ Virgil R. Williams /s/ JAMES M. WILLIAMS ------------------------------ James M. Williams PURCHASER: EASLAN CAPITAL OF ATLANTA, INC. By: /s/ KENT S. LEVENSON ------------------------------ Kent S. Levenson, President BROKERS: BELKOFER AND COMPANY, INC. By: /s/ GEORGE BELKOFER, JR. ------------------------------ George Belkofer, Jr. WILLIAMS-ADAIR REALTY CORP. BY: /s/ FOREST L. ADAIR ------------------------------ Forest L. Adair 10 SECOND AMENDMENT TO SALES AGREEMENT THIS SECOND AMENDMENT TO SALES AGREEMENT (the "Agreement" or the "Second Amendment"), is made and entered into as of ______ day of September, 1996, by and between VIRGIL R. WILLIAMS AND JAMES N. WILLIAMS, individual residents of the State of Georgia (hereinafter called "Seller"), and EASLAN CAPITAL OF ATLANTA, INC., a Georgia corporation (hereinafter called "Buyer"). STATEMENT OF BACKGROUND Seller and Buyer entered into that certain Sales Agreement dated February 28, 1996 (the "Original Contract"), concerning the sale and purchase of certain real property located in Gwinnett County, Georgia, known as Country Walk Apartments, and certain adjacent unimproved property, which property is more fully and particularly described in the Original Contract (the "Property"). Seller and Buyer have previously agreed to modify and amend the Original Contract pursuant to the terms of that certain First Amendment to Purchase and Sale Agreement dated April 25, 1996 (the "First Amendment", the Original Contract as amended by the First Amendment, hereinafter referred to as the "Contract"). Buyer and Seller have agreed to further modify and amend the Contract in accordance with this Second Amendment. STATEMENT OF AGREEMENT NOW, THEREFORE, for and in consideration of the mutual promises contained herein and the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby covenant and agree as follows: 1. AMENDMENT OF CONTRACT. Seller and Buyer do hereby modify and amend the Contract to provide the following: (a) The Contract shall be amended by deleting Section 2 of the Contract in its entirety and substituting in lieu thereof as follows: 2. PURCHASE PRICE. The Purchase Price of the Property shall be Three Million Six Hundred Thousand Dollars ($3,600,000), subject to adjustment as follows: (a) The Purchase Price is based on Purchaser's development plan for construction of 200 new apartment units on the Property. If Purchaser, during the development of its project or at any time during the five (5) years following Closing (as hereafter defined), constructs any inhabitable apartment units for which Purchaser receives a certificate of occupancy in excess of 200 new apartment units (not counting the existing 40 units that Purchaser is acquiring as part of the transaction), then Purchaser shall be obligated to pay Seller, as an additional component of the Purchase Price, an amount equal to the product of $8,000 multiplied by the number of new units in excess of 200. Such additional Purchase Price shall be payable upon Purchaser's receipt of a certificate of occupancy for such units. For purposes of this section, Purchaser shall be deemed to include Purchaser and any successor-in-interest to Purchaser and shall include any and all parties owning any interest in the Property during the five (5) year period described above; and any liability for additional compensation hereunder shall be joint and several among the parties, if more than one, owning an interest in the Property at the time the additional compensation becomes due and payable. (b) The Purchaser Price shall be increased by fifty (50%) percent of any amount by which the Adverse Site Reserve (hereafter defined) exceeds the total costs (subject to the following conditions) associated with satisfaction of the Adverse Site Conditions (hereafter defined). As used herein, "Adverse Site Reserve" shall be an amount equal to $352,402.00, which is Purchaser's estimated amount of costs that it will incur to satisfy the Adverse Site Conditions. As used herein, "Adverse Site Conditions" shall mean all conditions that cause the cost incurred by Purchaser for all site-related elements of its project to be in excess of the cost that Purchaser would incur if all site-related elements were hypothetically consistent with the assumptions normally utilized by contractors in the Atlanta market (e.g., all soils are clean, compatible and, once stripped and grubbed, free of organic materials; the cuts and fills balance; topsoil does not exceed 6 inches on average, etc.). Adverse Site Conditions shall include without limitation areas in need of demucking or soil stabilization measures, rippable rock, mass rock, undercutting and an imbalance in available compatible soils. The site-related elements of the project shall include without limitation the process of clearing, grubbing, grading, installing all utility lines of any type, constructing improvements, and landscaping on the Property. As to Purchaser's use of funds in the Adverse Site Reserve, the following conditions shall apply: (i) Purchaser shall use reasonable best efforts to minimize the costs incurred in performing the work required by Purchaser to correct any Adverse Soil Conditions (the "Work"). In its efforts to minimize the costs incurred in performing the Work, Purchaser shall, at a minimum, solicit bids from at least two contractors suggested by Seller (such contractors to be qualified to perform the Work both financially and in terms of quality of work) in addition to any other bids Purchaser shall choose to solicit. Seller 2 acknowledges that the Work is a portion of other site work to be performed on the Property and that the cost of the Work will be only one portion of the overall cost for site work at the Property; Seller further acknowledges that the bids solicited shall be for the entire site work. Purchaser agrees that the bids solicited shall set forth by line item/unit pricing within the overall bid the costs associated with the Work. Seller shall have the right to review any and all information available to Purchaser in connection with such work, and shall, specifically, have the right to review all bids and other proposals solicited by or otherwise available to Purchaser in connection with the Work, but Seller shall not have any right to prevent Purchaser from proceeding with any part of the Work. Purchaser covenants and agrees to use good faith in soliciting the bids for the Work and the other site work such that the line item/unit pricing for each portion of the site work, including the Work, accurately reflects the actual costs for such work in relation to the costs for all of the site work. Purchaser shall insure that the Work shall be performed in a good and workmanlike manner and in substantial compliance with all applicable governmental requirements. Purchaser acknowledges that in connection with Seller's execution hereof and Seller's agreement to the terms and provisions hereof with respect to the Adverse Site Reserve, Seller has reviewed and has relied upon the soil report dated May 23, 1996, prepared by Atlanta Testing & Engineering. Purchaser shall obtain lien waivers in connection with such Work. (ii) Should the costs for the Work exceed the amount in the Adverse Site Reserve, Purchaser shall be responsible for the excess, Seller having no obligations whatsoever to expend any funds for such Work. Notwithstanding the above, Purchaser shall be obligated to complete and pay for the Work. (iii) Should the Work be completed at a price less than the amounts held in the Adverse Site Reserve, fifty (50%) percent of the balance shall be disbursed to Seller at such time as the Work is completed in full. (iv) Documentation reasonably satisfactory to Seller and Purchaser shall be executed at Closing setting forth the aforementioned terms. 3 (b) The Contract shall be further amended by deleting Section 21 of the Contract in its entirety and substituting in lieu thereof the following: 21. SELLER'S OBLIGATIONS. It is expressly understood and agreed that the Seller and Purchaser, at Purchaser's cost (not to be unreasonably incurred by Seller), shall endeavor using reasonable best efforts to cause Gwinnett County to abandon the public road located on the Property (the "Road Abandonment"). The date of recordation of the applicable abandonment documentation is herein referred to as the "Road Abandonment Date". In addition, Seller shall endeavor using reasonable best efforts to cause the removal of asbestos from the existing buildings on the Property. All such asbestos shall have been removed from the existing buildings on the Property in accordance with all federal, state and local laws and regulations through an asbestos removal contractor reasonably satisfactory to Purchaser before Purchaser shall have an obligation to close the purchase of the Property. the date of the completion of removal of the asbestos from the existing buildings on the Property in accordance with all federal, state and local laws and regulations through an asbestos removal contractor reasonably satisfactory to Purchaser is referred to herein as the "Asbestos Removal Date". (c) The Contract shall be further amended to provide that as of the date of the execution of the Second Amendment all Earnest Money (totaling $25,000.00) shall be deemed to be and shall be non-refundable to Purchaser for any reason other than (i) failure of Seller to consummate the transaction by delivery of a Limited Warranty Deed to Purchaser or any other closing document required under the Contract or (ii) failure of Seller to complete the Road Abandonment or the asbestos removal on or before October 31, 1996, it being agreed and acknowledged by Purchaser that Purchaser has waived any and all contingencies in connection with the Contract, including, without limitation, all title matters previously objected to by Purchaser, any and all survey objections under the Contract, the feasibility contingency set forth in Section 13 of the Contract and the contingencies set forth in Section 20 of the Contract. The parties acknowledge and agree that the intent of the amendment set forth hereinabove is that all Earnest Money shall be nonrefundable except in the case of (i) failure of Seller to deliver title (in the status as held by Seller) to the Property to Purchaser or any other closing document required under the Contract or (ii) failure of Seller to complete the Road Abandonment or the asbestos removal on or before October 31, 1996. (d) The Contract shall be further amended by amending Section 6 of the Contract to provide that the "date of closing" or "Closing" shall be the latest of thirty (30) days after the (i) Road Abandonment Date; (ii) the Asbestos Removal date; or (iii) the date of execution of the Second Amendment. Time is of the essence hereof. (e) The Contract shall be further amended by adding a new Section 22 as follows: 4 22. SELLER'S OPTION TO CONVERT SALE CONTRACT INTO SUBSCRIPTION FOR OWNERSHIP INTEREST. It is contemplated that at or prior to Closing, Purchaser will assign all of its right, title and interest in this Contract to Amli Residential Properties, L.P. ("Amli"). Notwithstanding anything to the contrary contained herein, and as inducement to enter into the Second Amendment, without which inducement Seller would be unwilling to do so, the parties acknowledge and agree that Seller shall have the option, exercisable in its sole discretion, which may be exercised arbitrarily, to convert by November 8, 1996, the purchase and sale of real estate obligations contained in this Contract into a subscription agreement to contribute its interest in the Property to Amli in consideration for operating units ("Units") of Amli upon the following terms and conditions and subject to the approval of the following by the board of trustees for Amli Residential Properties Trust (the "Trust"), which approval shall be obtained by and evidence thereof delivered to Seller by no later than November 7, 1996: (a) Seller shall be entitled to contribute the Property, valued for contribution purposes at $3,600,000, to Amli, and in lieu of cash, become an owner of units in Amli. (b) The value of the Property for purposes of determining Seller's equity participation shall be reduced by (i) any current debt on the Property, (ii) any costs which would have been the responsibility of Seller in a sale transaction, e.g., brokerage commission, Georgia real estate transfer tax, credits for prorations, et al., and shall be increased by any amounts added to the compensation due Seller pursuant to Section 2(a) and (b) above (the value as adjusted pursuant to this provision herein referred to as the "Adjusted Value"). All such costs, including the satisfaction of any existing mortgage on the Property, shall be paid by Amli at Closing. (c) In consideration for the contribution of the Property, Amli shall issue to Seller the number of whole or fractional Units, valued at the average closing price for Amli Shares (defined below) as reported in the Wall Street Journal for the five (5) business day period immediately preceding Closing, necessary to equal the Adjusted Value of the Property. Seller, as owner of the Units, shall be entitled to a dividend equal in all respects, including without limitation, amount, payment preference, and reinvestment rights, to the dividends (prorated for the initial quarter of Seller's ownership of such Units) payable to owners of common shares of beneficial interest in the Trust as are currently traded on the New York Stock Exchange ("Amli Shares"), so long as the Units are outstanding. (d) Such Units shall be convertible at any time into Amli Shares. Except as set forth below, the aforesaid conversion right shall be on a one 5 for one basis and shall be absolute and unconditional upon notice for Seller. In the event that, upon Seller's request for conversion, the Amli Shares to be received in conversion of the Units are "restricted securities" within the meaning of Rule 144 promulgated by the Securities Act of 1933, as amended (the "Securities Act"), and during the 90 day period after Seller's request for conversion of such Units by Seller if the Trust does not successfully file a Registration Statement under the Securities Act for the resale of the Amli Shares to be issued to Seller upon conversion, the Seller shall have the right, but not the obligation, to purchase such shares in Purchaser for cash in an amount equal to the number of shares so put, multiplied by the average closing price on the New York Stock Exchange for such shares for the five (5) business day period immediately preceding the first business day prior to the date of Seller's exercise of the conversion right, and the cash shall be paid to Seller within thirty (30) days of receipt of written notice to Seller of such put. Further, should the Amli Shares to be received in conversion of the Units be "restricted securities" as described above and during the 90 day period after Seller's request for conversion of such Units by Seller if the Trust does successfully file a Registration Statement under the Securities Act for the resale of the Amli Shares to be issued to Seller upon conversion, then the rate of conversion, instead of being a one for one exchange, will be calculated such that the number of whole or fractional Amli Shares received by Purchaser shall be adjusted to reflect any difference in the average closing price on the New York Stock Exchange for such shares for the five (5) business day period immediately preceding the first business day prior to the date of (i) Seller's exercise of the conversion right and (ii) the successful registration under the Securities Act of the Amli Shares, it being the intention of the parties that Seller will receive Amli Shares in total aggregate value equal to the value that would have been received (on the basis of number of Units owned immediately prior to conversion multiplied by average closing price for the previous five business day period) on the date of Seller's exercise of the conversion right. The Trust will, within 90 days after the Closing Date, endeavor using reasonable best efforts to file a Registration Statement under the Securities Act for the resale of the Amli Shares issued to Seller upon conversion. Seller's conversion and put rights shall be embodied in final form either in the Contract or in an agreement to be delivered at the Closing. Seller's put rights shall terminate at such time as the Amli Shares to be issued to Seller upon conversion have been registered and are no longer "restricted securities". Seller shall represent and warrant to Purchaser that it is an "accredited investor" as defined under Regulation D promulgated under the Securities Act and shall made such additional representations and warranties to Purchaser as Purchaser may deem reasonable necessary to confirm that the issuance of the Units pursuant to the terms hereof complies with the Securities Act and all applicable securities laws. Any transfer or pledge of the Units by Seller shall be 6 subject to the restrictions set forth in Article XI of the Partnership Agreement of Amli Residential Properties, L.P. and to compliance with applicable laws including securities laws. (e) The Units issued to Seller shall be in form and substance satisfactory to Seller and its counsel, and written documentation regarding the conversion right from Units to Amli Shares whether in the form of a warrant, option or other such document, shall be subject to the approval of Seller and its counsel. Seller shall be made a party to the partnership agreement for Amli, which document shall be in form and substance satisfactory to Seller and its counsel. Amli agrees to make available to Seller any documentation reasonably necessary in order for Seller to make an informed decision as to its rights under this Section 22. (f) Should Purchaser or Amli be unable to comply with the terms of this Section 22 by Closing for any reason whatsoever, Seller shall have the right to terminate the Contract by written notice to Purchaser given at any time prior to Closing. 2. RATIFICATION. Seller and Purchaser do hereby ratify and confirm their respective obligations under the Contract, as modified and amended by the Amendment and by this Second Amendment, and agree that except as modified and amended by the Amendment and this Second Amendment, the Contract is and shall remain in full force and effect in the form as previously executed and delivered. 3. MISCELLANEOUS. Time is of the essence of this Agreement, This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia. This Agreement amy be executed in several counterparts, each of which shall be deemed an original and all of which counterparts together will constitute one and the same instrument. Should any provision of this Agreement require judicial interpretation, it is agreed that the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or thorough its agents prepared the same, it being agreed that the agents of all parties have participated in the preparation hereof. This Agreement may not be modified or amended unless such amendment is set forth in writing and signed by both Seller and Purchaser. This Agreement shall apply to, inure to the benefit of and be binding upon and enforceable against Seller and Purchaser and their respective heirs, legal representatives, successors and assigns, as the case may be. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 7 IN WITNESS WHEREOF, Seller and Purchaser have caused this Second Amendment to be executed and delivered under seal by their duly authorized officers of representatives as of the date set forth hereinabove. SELLER: /s/ VIRGIL R. WILLIAMS [SEAL] ------------------------------ Virgil R. Williams /s/ JAMES M. WILLIAMS [SEAL] ------------------------------ James M. Williams BUYER: EASLAND CAPITAL OF ATLANTA, INC. By: /s/ KENT S. LEVENSON ------------------------------ Kent S. Levenson, President [ CORPORATE SEAL ] [SIGNATURES CONTINUE ON NEXT PAGE] 8 Solely for the purpose of acknowledging its obligations under Section 22 of the Contract, but only effective upon assignment by Purchaser of its rights under the Contract to the undersigned. AMLI RESIDENTIAL PROPERTIES, L.P. By: Amli Residential Properties Trust, a real estate investment trust By: /s/ PHILIP N. TAGUE ------------------------------ Philip N. Tague Title: Executive Vice President ------------------------------ 9 THIRD AMENDMENT TO SALES AGREEMENT THIS THIRD AMENDMENT TO SALES AGREEMENT (the "Agreement" or the "Second Amendment"), is made and entered into as of the ______ day of , 1997, by and between VIRGIL R. WILLIAMS AND JAMES N. WILLIAMS, individual residents of the State of Georgia (hereinafter called "Seller"), and EASLAN CAPITAL OF ATLANTA, INC., a Georgia corporation (hereinafter called "Purchaser"). STATEMENT OF BACKGROUND Seller and Purchaser entered into that certain Sales Agreement dated February 28, 1996 (the "Original Contract"), concerning the sale and purchase of certain real property located in Gwinnett County, Georgia, known as Country Walk Apartments, and certain adjacent unimproved property, which property is more fully and particularly described in the Original Contract (the "Property"). Seller and Purchaser have previously agreed to modify and amend the Original Contract pursuant to the terms of (i) that certain First Amendment to Purchase and Sale Agreement dated April 25, 1996 (the "First Amendment") and (ii) that certain Second Amendment to Sales Agreement dated September 1996, among Seller, Purchaser and (for certain purposes), Amli Residential Properties, L.P. ("Amli") (the "Second Amendment"; and together with the First Amendment, the "Prior Amendments"; the Original Contract as amended hereinafter referred to as the "Contract"). Purchaser, Amli and Seller have agreed to further modify and amend the Contract in accordance with this Third Amendment. STATEMENT OF AGREEMENT NOW, THEREFORE, for and in consideration of the mutual promises contained herein and the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby covenant and agree as follows: 1. AMENDMENT OF CONTRACT. Seller and Purchaser do hereby modify and amend the Contract to provide the following: (a) The Contract shall be amended by deleting Section 2 of the Contract in its entirety and substituting in lieu thereof the following: 2. PURCHASE PRICE. The Purchase Price of the Property shall be Three Million Six Hundred Twenty Thousand Dollars ($3,620,000), subject to adjustment as follows: (a) The Purchase Price is based on Purchaser's development plan for construction of 216 new apartment units on the Property. If Purchaser, during the 1 development of its project or at any time during the five (5) years following Closing (as hereafter defined), construction any inhabitable apartment units for which Purchaser receives a certificate of occupancy in excess of 216 new apartment units (not counting the existing 40 units that Purchaser is acquiring as part of the transaction), then Purchaser shall be obligated to pay Seller, as an additional component of the Purchase Price, an amount equal to the Product of $8,000 multiplied by the number of new units in excess of 216. Such additional Purchase Price shall be payable upon Purchaser's receipt of a certificate of occupancy for such units. For purposes of this section, Purchaser shall be deemed to include Purchaser and any successor-in-interest to Purchaser and shall include any and all parties owning any interest in the Property during the five (5) year period described above; and any liability for additional compensation hereunder shall be joint and several among the parties, if more than one, owning an interest in the Property at the time the additional compensation becomes due and payable. This obligation shall be documented in a manner satisfactory to Seller in its sole discretion. (b) The Contract shall be amended by deleting Section 4 of the Contract in its entirety and substituting in lieu thereof the following: 4. METHOD OF PAYMENT. The Purchase Price shall be paid in cash, good funds or cashier's check at closing, or Purchaser agrees that, upon request by Seller, Purchaser will cooperate with Seller in such a manner as to permit Seller to convey the Property or undivided interests therein as (i) part of a tax-free exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, or (ii) as a capital contribution to Amli in exchange for partnership units, or both. (c) The Contract shall be further amended to provide that on or prior to the date of the execution of the Third Amendment, Purchaser shall make an additional earnest money deposit of $50,000, and that following such deposit, all Earnest Money (totaling $75,000.00) shall be deemed to be and shall be non-refundable to Purchaser for any reason other than Purchaser's failure to obtain an agreement executed by the Owners and Mortgagee of Gwinnett Garden Apartments to grant Purchaser an easement across their Property to Bethany Church Road, in form acceptable to Amli, or failure of Seller to consummate the transaction by delivery of a Limited Warranty Deed to Purchaser or any other closing document required under the Contract. It is agreed and acknowledged by Purchaser that Purchaser has waived any and all other contingencies in connection with the Contract, including, without limitation, all title matters previously objected to by Purchaser (all of which are hereby expressly deemed part of the "Permitted Title Exceptions" hereunder), any and all survey objections under the Contract, the feasibility contingency set forth in Section 13 of the Contract, the contingencies set forth in Section 20 of the Contract, and the performance of the Seller's Obligations as set forth in Section 21 of the Contract. The parties acknowledge and agree that the intent of the amendment set forth hereinabove is that all Earnest Money shall be nonrefundable except in the case of Purchaser's failure to obtain an agreement executed by the Owners and Mortgagee of Gwinnett Garden Apartments to grant Purchaser an easement across their property to Bethany Church Road, in form acceptable to Amli, or failure of Seller to deliver title (in the status as held by Seller) to the Property to Purchaser or any other closing document required under the Contract. 2 (d) The Contract shall be further amended by amending Section 6 of the Contract to provide that the "date of closing" or "Closing" shall be on or before March 12, 1997. Time is of the essence hereof. (e) The Contract shall be further amended by deleting the fourth sentence of Section 11 of the Contract in its entirety and substituting in lieu thereof the following: "Seller shall pay a commission in the amount of $186,000 and said commission shall be divided equally between Belkofer & Company, Inc. and Williams-Adair Realty Corp." (f) The Contract shall be further amended Section 22 of the Contract to provide the following: (i) Seller has elected, and Purchaser and Amli acknowledge and accept such election, for James N. Williams to contribute to Amli as part of the conveyance contemplated by the Contract and in Lieu of receipt of cash proceeds from Purchaser as to the amount described below, an undivided 30% interest in the Property valued at $1,100,000 in exchange for Units in a number to be determined pursuant to Section 22(c) of the Contract. (ii) The remainder of the undivided interest in the Property shall be conveyed by Seller a 50% undivided interest to be conveyed by Virgil R. Williams and a 20% undivided interest to be conveyed by James N. Williams) for cash proceeds based on the Purchase Price, less $1,100,000, as adjusted pursuant to Section 6 of the Contract related to closing costs and property assessments. (iii) Amli represents and warrants that such the capital contribution described above has been approved by the board of trustees for Amli Residential Properties Trust (the "Trust"), and evidence thereof shall be delivered to Seller no later than two (2) business days following the execution of the Third Amendment by all parties. (iv) Except as modified hereby, all terms of Section 22 shall remain in full force and effect. (g) The Contract shall be further amended by adding a new Section 23 as follows: 23. CONVEYANCE BY MULTIPLE LIMITED WARRANTY DEEDS. Purchaser acknowledges and agrees that in order to effectuate the various tax effects that Seller desires by use of some combination of cash, Section 1031 exchanges, and capital contributions, Seller may, at its sole option, convey the Property to Purchaser in one or more limited warranty deeds conveying undivided interests in the Property so long as Seller shall, in the aggregate, convey 100% of the undivided interests in the Property and Purchaser's title insurer will 3 insure to Purchaser that it has a 100% undivided interest in fee simple to the Property subject only to the Permitted Title Exceptions. 2. RATIFICATION. Seller and Purchaser do hereby ratify and confirm their respective obligations under the Contract, as modified and amended by the Prior Amendments and by this Third Amendment, and agree that except as modified and amended by the Prior Amendments and this Third Amendment, the Contract is and shall remain in full force and effect in the form as previously executed and delivered. 3. MISCELLANEOUS. Time is of the essence of this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which counterparts together shall constitute one and the same instrument. Should any provision of this Agreement require judicial interpretation, it is agreed that the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agents prepared the same, it being agreed that the agents of all parties have participated in the preparation hereof. This Agreement may not be modified or amended unless such amendment is set forth in writing and signed by both Seller and Purchaser. This Agreement shall apply to, inure to the benefit of and be binding upon and enforceable against Seller and Purchaser and their respective heirs, legal representatives, successors and assigns, as the case may be. IN WITNESS WHEREOF, Seller and Purchaser have caused this Third Amendment to be executed and delivered under seal by their duly authorized officers or representatives as of the date set forth hereinabove. SELLER: /s/ VIRGIL R. WILLIAMS [SEAL] ------------------------------ Virgil R. Williams /s/ JAMES M. WILLIAMS [SEAL] ------------------------------ James M. Williams [SIGNATURES CONTINUE ON NEXT PAGE] 4 PURCHASER: EASLAND CAPITAL OF ATLANTA, INC. By: /s/ KENT S. LEVENSON ------------------------------ Kent S. Levenson, President [ CORPORATE SEAL ] Solely for the purpose of acknowledging its obligations under Section 22 of the Contract, but only effective upon assignment by Purchaser of its rights under the Contract to the undersigned. AMLI RESIDENTIAL PROPERTIES, L.P. By: Amli Residential Properties Trust, a real estate investment trust By: ------------------------------ Philip N. Tague Title: ------------------------------ Solely for the purpose of acknowledging and agreeing to the amendment of Section 111 of the Contract: BELKOFER AND COMPANY, INC. By: /s/ GEORGE BELKOFER, JR. ------------------------------ George Belkofer, Jr. WILLIAMS-ADAIR REALTY CORP. BY: /s/ FOREST L. ADAIR ------------------------------ Forest L. Adair ASSIGNMENT OF CONTRACT FOR VALUE RECEIVED, Easlan Capital of Atlanta, Inc. ("Purchaser") hereby transfers and assigns all of its right, title and interest in and to that certain Sales Agreement for the purchase and sale of real estate located in Land Lot 54 of the 6th District, Gwinnett County, Georgia dated as of February 29, 1996 together with any and all amendments and/or modifications thereto including but not limited to First Amendment to Purchase and Sale Agreement dated as of April 26, 1996, Second Amendment to Sales Agreement dated as of September _____, 1996, and Third Amendment to Sales Agreement dated as of ___________________________, 1997 ("Agreement"), by and among Purchaser and Virgil R. Williams and James M. Williams ("Sellers") to Amli Residential Properties, L.P., a Delaware limited partnership ("Assignee"). Assignee hereby accepts such assignment and assumes all of the obligations of Purchaser under the Agreement that survive the closing or settlement of same. This ______ day of March, 1997. PURCHASER: EASLAN CAPITAL OF ATLANTA, INC. a Georgia corporation By: /s/ KENT S. LEVENSON ------------------------------ Kent S. Levenson, President March 12, 1997 (Corporate Seal) ASSIGNEE: AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership, whose sole general partner is Amli Residential Properties Trust, a Maryland real estate investment trust. By: Amli Residential Properties Trust, a Maryland real estate investment trust, General Partner By: /s/ PHILIP N. TAGUE ------------------------------ Philip N. Tague Title: Executive Vice President ------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----