UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 1, 2006
AMERICAN CAMPUS COMMUNITIES, INC.
(Exact name of Registrant as specified in its Charter)
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Maryland
(State or other jurisdiction of
incorporation or organization)
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001-32265
(Commission file number)
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760753089
(I.R.S. Employer
Identification Number)
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805 Las Cimas Parkway, Suite 400
Austin, TX 78746
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (512) 732-1000
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement
The information set forth in Item 5.02 is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
On March 1, 2006, the acquisition (the Acquisition) of Royal Properties portfolio of 13
student housing properties (the Royal Portfolio) pursuant to a Contribution and Sale Agreement,
dated as of December 2, 2005, as amended, among American Campus Communities, Inc. (the Company),
and American Campus Communities Operating Partnership LP, the Companys operating partnership (the
Operating Partnership), on one hand, and entities affiliated with Royal Properties (the
Contributors), on the other hand (as amended, the Contribution Agreement), was completed.
Consideration for the Acquisition was paid as follows:
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(i)
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the issuance of 2,090,601 common units of limited partnership interest in the
Operating Partnership (Units) valued at $23.50 per Unit and 114,965 preferred Units
valued at $26.75 per Unit, each of which Unit is exchangeable after a one-year lockout
period into one share of common stock of the Company;
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(ii)
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the assumption of approximately $123.6 million in property level debt; and
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(iii)
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$68.5 million in cash.
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The Units issued in the Acquisition were not registered under the Securities Act of 1933, as
amended (the Securities Act), or any state securities laws, and may not be offered and sold in
the United States absent registration or an applicable exemption from registration. The Company
and the Operating Partnership relied upon exemptions contained in Regulation D promulgated under
the Securities Act to issue the shares without registration. The Company has agreed to file a
registration statement registering the resale of shares of common stock issuable upon the exchange
of such Units pursuant to a registration rights agreement, the form of which is filed as Exhibit
99.3 to this Report and incorporated herein by reference.
The Contribution Agreement and the First, Second, Third and Fourth Amendments thereto, which
have been filed as Exhibits 99.1, 99.2, 99.3, 99.4 and 99.5, respectively, to the Current Report on
Form 8-K of the Company filed on February 13, 2006, are incorporated into this Item 2.01 by
reference.
Item 3.02 Unregistered Sales of Equity Securities.
As indicated under Item 2.01, on March 1, 2006, the Operating Partnership issued 2,090,601
common Units and 114,965 preferred Units in the Acquisition that were not registered under the
Securities Act. See Item 2.01 for additional information regarding the Units.
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Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
Pursuant to the Contribution Agreement, effective March 1, 2006, Michael J. Henneman, who is a
principal of the Contributors and certain other entities affiliated with the Contributors, was
appointed to the Board of Directors of the Company. In connection therewith, Mr. Henneman and the
Company entered into an agreement pursuant to which, among other things, Mr. Henneman agreed to
comply with the Companys policies applicable to all directors and the Company agreed to cause Mr.
Henneman to be nominated for reelection by the stockholders of the Company as a member of the Board
so long as recipients of Units issued at the closing of the Acquisition continue to Beneficially
Own (as defined in the Securities Exchange Act of 1934, as amended), on an as if converted basis,
Units comprising at least 10% of the then outstanding fully diluted shares of common stock of the
Company. A copy of such agreement is filed as Exhibit 99.1 to this Report and incorporated herein
by reference.
Mr. Henneman received 532,263 common Units at the closing of the Acquisition. In his capacity
as a limited partner of the Operating Partnership, on March 1, 2006, Mr. Henneman entered into the
First Amendment to Amended and Restated Agreement of Limited Partnership of the Operating
Partnership that, among other things, sets forth the rights and preferences of such Units; a
Registration Rights Agreement pursuant to which the Company has agreed to register common shares
into which such Units are exchangeable; and a Tax Matters Agreement that, among other things, will
prevent the Operating Partnership from selling the properties comprising the Royal Portfolio under
certain circumstances if the limited partners would recognize a taxable gain in such a disposition,
copies of which are filed as Exhibits 99.2, 99.3 and 99.4 to this Report, respectively, and
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The required financial statements of the Royal Portfolio as of and for the years ended
December 31, 2004, 2003 and 2002 will be filed by amendment to this Current Report on Form 8-K no
later than 71 calendar days after the date on which this Current Report on Form 8-K is due.
(b) Pro Forma Financial Information
The required pro forma financial information as of December 31, 2005 and for the twelve months
ended December 31, 2005 will be filed by amendment to this Current Report on Form 8-K no later than
71 calendar days after the date on which this Current Report on Form 8-K is due.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
The Exhibits to this Report are listed on the Exhibit Index attached hereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Date: March 7, 2006
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AMERICAN CAMPUS COMMUNITIES, INC.
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By:
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/s/ William C. Bayless, Jr.
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William C. Bayless, Jr.
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President and Chief Executive Officer
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EXHIBIT INDEX
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Exhibit
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Number
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Title
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2.1
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Form of Contribution and Sale Agreement, dated as of December 2, 2005, among Royal
Tallahassee Partnership, Royal Tallahassee Partnership II Limited Partnership, Royal
Tallahassee III Partnership, Royal Gainesville Limited Partnership, Royal Orlando Limited
Partnership, Royal Lexington Limited Partnership, Royal Tucson Entrada Real Limited
Partnership, Royal Texas-Tennessee Limited Partnership, Royal Texas-Tennessee II Limited
Partnership, Raiders Pass Phase II Limited Partnership, Royal San Marcos Limited Partnership
and Royal San Antonio Limited Partnership (collectively, the Contributors), on the one hand,
and the Company and the Operating Partnership, on the other hand. Incorporated by reference
to Exhibit 99.1 to the Current Report on Form 8-K of the Company filed on February 13, 2006
(File No. 001-32265).
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2.2
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Form of First Amendment to Contribution and Sale Agreement, dated as of December 16, 2005,
among the Contributors, on the one hand, and the Company and the Operating Partnership, on the
other hand. Incorporated by reference to the Exhibit 99.2 to the Current Report on Form 8-K
of the Company filed on February 13, 2006 (File No. 001-32265).
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2.3
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Form of Second Amendment to Contribution and Sale Agreement, dated as of January 30, 2006,
among the Contributors, on the one hand, and the Company and the Operating Partnership, on the
other hand. Incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K of
the Company filed on February 13, 2006 (File No. 001-32265).
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2.4
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Form of Third Amendment to Contribution and Sale Agreement, dated as of February 7, 2006,
among the Contributors, on the one hand, and the Company and the Operating Partnership, on the
other hand. Incorporated by reference to Exhibit 99.4 to the Current Report on Form 8-K of
the Company filed on February 13, 2006 (File No. 001-32265).
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2.5
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Form of Fourth Amendment to Contribution and Sale Agreement, dated as of February 8, 2006,
among the Contributors, on the one hand, and the Company and the Operating Partnership, on the
other hand. Incorporated by reference to Exhibit 99.5 to the Current Report on Form 8-K of
the Company filed on February 13, 2006 (File No. 001-32265).
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99.1
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Form of Agreement, dated as of March 1, 2006, between the Company and Michael J. Henneman.
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99.2
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Form of First Amendment to Amended and Restated Agreement of Limited Partnership of American
Campus Communities Operating Partnership LP, dated as of March 1, 2006, between American
Campus Communities Holdings LLC and those persons who have executed such amendment as limited
partners.
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99.3
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Form of Registration Rights and Lock-Up Agreement, dated as of March 1, 2006, between the
Company and each of the persons who are signatory thereto.
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99.4
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Form of Tax Matters Agreement, dated as of March 1, 2006, among the Operating Partnership,
The Company, American Campus Communities Holdings LLC and each of the limited partners of the
Operating Partnership who have executed a signature page thereto.
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99.5
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Form of Right of First Offer Agreement, dated as of March 1, 2006, between Royal Apartments USA, Inc. and the Company.
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99.6
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Press release and supplemental analyst package dated March 2, 2005.
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99.7*
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Audited financial statements of the Royal Portfolio as of and for the years ended December 31, 2003, 2004 and 2005.
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99.8*
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Unaudited Pro Forma Financial Information as of December 31, 2005.
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23.1*
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Consent of Ernst & Young LLP.
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To be filed by amendment.
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5
Exhibit 99.1
HENNEMAN AGREEMENT
This Agreement is made and entered into as of March 1, 2006 by and between Michael J. Henneman
(Director) and American Campus Communities, Inc., a Maryland corporation (the Company).
WHEREAS, pursuant to the Contribution and Sale Agreement, dated as of December 2, 2005 (the
Contribution Agreement), among the Company, American Campus Communities Operating Partnership LP,
a Maryland limited partnership (the Operating Partnership), and the Contributors (as defined
therein), the Company agreed that Director will be appointed as a member of the Board of Directors
of the Company (the Board) at the closing of the transactions contemplated by the Contribution
Agreement (the Closing); and
WHEREAS, it is a condition to the Closing that Director enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein and in the
Contribution Agreement, the Company and Director hereby agree as follows:
1.
Compensation
. Notwithstanding any policy of the Company or the Board with
respect to compensation of members of the Board, Director shall not receive any compensation
from the Company with respect to his service as a member of the Board;
provided
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however
, that the Company shall reimburse Director for his reasonable travel
expenses relating to his Board membership on the same basis that the Company reimburses
other members of the Board;
provided
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further
, that Director shall be
entitled to compensation, if any, as may be approved by the Board expressly for his benefit.
2.
Nomination for Re-Election; Observation Rights
. For so long as recipients
of units of limited partnership interest in the Operating Partnership (Units) at the
Closing continue to Beneficially Own (as defined in the Securities Exchange Act of 1934, as
amended), on an as if converted basis, Units comprising at least 10% of the then outstanding
fully diluted shares of common stock of the Company, the Company shall cause Director to be
nominated for reelection by the stockholders of the Company as a member of the Board.
Thereafter, Director shall have full observation rights with respect to the Board, other
than with respect to executive sessions of independent directors and meetings of its
committees (Observation Rights), including the right to obtain full and timely notice of
all meetings of the Board and to obtain copies of all written and other materials
disseminated to the Board;
provided
that Director execute and deliver to the Company
a confidentiality agreement pursuant to which he will agree, among other things, to treat
confidentially any information furnished to him in connection with his exercise of
Observation Rights and to use all such information for informational purposes only. The
Observation Rights shall terminate upon the earlier of (i) the occurrence of the Companys
annual meeting in 2008 or (ii) such time that the holders of Units issued at the Closing
Beneficially Own less than 50% of the Units issued at Closing.
3.
Compliance with Company Policies
. Director hereby agrees (a) to fully
comply with the Companys Code of Business Conduct and Ethics and Corporate Governance
Guidelines, as they may be amended from time to time, and
(b) not to enter into any financial instrument with any public
or private entity to mitigate the financial
price risk associated with Units held by Director until such time as he ceases to
be a member of the Board or to possess Observation Rights.
4.
Notices
. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and
receipted for by the party to whom said notice or other communication shall have been
directed, (ii) mailed by certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed, or (iii) sent by facsimile, upon
senders receipt of confirmation of transmission.
(a) If to Director, to the address set forth on the signature page hereto.
(b) If to the Company to:
American Campus Communities, Inc.
805 Las Cimas Parkway, Suite 400
Austin, TX 78746
Attn: Chief Executive Officer
or to such other address as may have been furnished to Director by the Company or to the Company by
Director, as the case may be.
5.
Miscellaneous
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(a)
Entire Agreement; Third-Party Rights
. This Agreement constitutes the
entire agreement between the parties and incorporates and supersedes all prior negotiations
and discussions between the parties. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto and their successors and assigns, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
(b)
Amendment
. This Agreement cannot be amended, waived or terminated orally,
but only by an agreement in writing signed by each party hereto.
(c)
Assignment
. No party may assign this Agreement or any interest therein to
any other person without the prior written consent of the other party hereto.
(d)
Governing Law
. The parties agree that this Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of Maryland, without
regard to its conflicts of laws rules.
(e)
Jurisdiction
. ANY LITIGATION BASED ON THIS AGREEMENT, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR ANY CLAIMS, CONTROVERSIES OR DISPUTES
ARISING OUT OF THIS AGREEMENT OR RELATED HERETO OR THE SUBJECT MATTER HEREOF, WILL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS LOCATED IN THE STATE OF MARYLAND.
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EACH PARTY HERETO EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF MARYLAND AS SET
FORTH ABOVE. EACH PARTY HERETO EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT A PARTY HERETO HAS
OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
OR EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH PARTY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
(f)
Section Headings
. The caption headings in this Agreement are for
convenience only and are not intended to be part of this Agreement and shall not be
construed to modify, explain or alter any of the terms, covenants or conditions herein
contained.
(g)
Severability
. If any term, covenant or condition of this Agreement is held
to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed
without such provision.
(h)
Counterparts
. This Agreement may be executed by the parties hereto in
counterparts, all of which together shall constitute a single Agreement.
(i)
Attorneys Fees
. In the event of any litigation or alternative dispute
resolution between the parties in connection with this Agreement or the transactions
contemplated herein, the party that fails to substantially prevail in such litigation,
proceeding or alternative dispute resolution shall be responsible for payment of all
expenses and reasonable attorneys fees incurred by the substantially prevailing party both
at the trial level and on appeal.
(j)
Waiver of Jury Trial
. The parties hereto hereby knowingly, voluntarily and
intentionally waive any right they may have to a trial by jury with respect to any
litigation based hereon, or arising out of, under, or in connection with this Agreement, or
any document contemplated to be executed in conjunction herewith, or actions of the parties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.
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AMERICAN CAMPUS COMMUNITIES, INC.
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By:
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Name:
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Title:
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DIRECTOR:
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Michael J. Henneman
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Address:
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4
Exhibit 99.2
FIRST AMENDMENT TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF AMERICAN CAMPUS
COMMUNITIES OPERATING PARTNERSHIP LP
THIS FIRST AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AMERICAN
CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP (this
Amendment
) is entered into as of the
1st day of March, 2006 (the
Effective Date
), by and between American Campus Communities
Holdings LLC, a Maryland limited liability company (the
General Partner
) and those
Persons who have executed this Amendment as Limited Partners (collectively, the
Contributor
LPs
and each in the singular a
Contributor LP
). Any capitalized terms used herein
for which a definition is not provided herein shall have the meanings assigned to such terms in
that certain Amended and Restated Agreement of Limited Partnership of American Campus Communities
Operating Partnership LP, as amended (the Agreement).
W I T N E S S E T H
:
WHEREAS, the signatories hereto desire to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth herein,
and of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree to continue the Partnership
and amend the Agreement as follows:
1. As of the date hereof (a) those persons whose names are set forth on
Exhibit A
attached hereto (collectively, the
Contributors
and each in the singular a
Contributor
) have contributed (either directly by a conveyance of real property and
related assets or indirectly by the transfer and assignment of all of the ownership interests in
the Persons that own the real property and related assets) and sold to the Partnership those
certain student housing properties further described in
Exhibit B
attached hereto
(collectively, the
Properties
and each in the singular a
Property
); (b) the
Partnership has made cash payments and issued promissory notes to the Contributors in the
respective sums set forth opposite their names on
Exhibit C
attached hereto; and (c) the
Partnership has issued to the Contributor LPs the Common Units and Series A Preferred Units set
forth opposite their names on
Exhibit D
attached hereto. The Capital Account and
Percentage Interest of each Contributor LP as of the Effective Date is set forth opposite its name
on
Exhibit D
attached hereto. The Agreed Value and Gross Asset Value of each Property as
of the Effective Dates are set forth on
Exhibit E
attached hereto. The Common Units and
Series A Preferred Units issued to the Contributor LPs have been duly issued and fully paid. The
Contributor LPs are hereby admitted to the Partnership, effective as of the Effective Date, as
Additional Limited Partners (the information set forth on
Exhibit D
attached hereto
relating to the interest of the Contributor LPs in the Partnership is hereby included in
Exhibit A
to the Agreement), and by execution of this Amendment the Contributor LPs have
agreed to be bound by all of the terms and conditions of the Agreement, as amended hereby.
2.
Article XVI
. The following new Article XVI is inserted in the Agreement after
Article XV thereof:
ARTICLE XVI
SERIES A PREFERRED UNITS
Section 16.1
Definitions
The term
Parity Preferred Units
shall be used to refer to any class or series of
Partnership Interests now or hereafter authorized, issued or outstanding expressly designated by
the Partnership to rank on a parity with Series A Preferred Units with respect to distributions and
rights upon voluntary or involuntary liquidation, winding-up or dissolution of the Partnership.
The term
Senior Preferred Units
shall be used to refer to any class or series of
Partnership Interests now or hereafter authorized, issued or outstanding expressly designated by
the Partnership to rank senior to the Series A Preferred Units with respect to distributions and
rights upon voluntary or involuntary liquidation, winding-up or dissolution of the Partnership.
The term
Junior Units
shall be used to refer to the Common Units and any other class or
series of Partnership Interests now or hereafter authorized, issued or outstanding expressly
designated by the Partnership to rank junior to the Series A Preferred Units with respect to
distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution of
the Partnership. The term
Closing Value Per Unit
means (i) with respect to each Series A
Preferred Unit issued to a Contributor LP on the Effective Date, $26.75 and (ii) with respect to
each Common Unit issued to a Contributor LP on the Effective Date, $23.50. The term
Series A
Preferred LP Return
shall mean, an amount that accrues and accumulates on each Series A
Preferred Unit commencing on the Effective Date at a per annum rate equal to 5.99% of the Closing
Value per Unit for a Series A Preferred Unit.
Section 16.2
Designation and Number
A series of Partnership Units in the Partnership designated as the Series A Preferred Units
(the
Series A Preferred Units
) is hereby established. The number of Series A Preferred
Units shall be 114,964.
Section 16.3
Distributions
A.
Payment of Distributions
. Subject to the rights of holders of Senior Preferred
Units and Parity Preferred Units as to the payment of distributions, pursuant to Sections 5.1 and
13.2 hereof, holders of Series A Preferred Units shall be entitled to receive, when, as and if
declared by the Partnership acting through the General Partner, out of Available Cash, cumulative
preferential cash distributions equal to the Series A Preferred LP Return (
Series A Preferred
Distributions
). Such distributions shall be cumulative, shall accrue with respect to each
Series A Preferred Unit from the original date of issuance and will be payable quarterly (on the
same date that the Company pays its regular quarterly dividend to holders of REIT Shares) in
arrears during the period commencing with the original date of issuance and ending upon the
Redemption or transfer of the Series A Preferred Units pursuant to Section 8.6 hereof. The amount
of the distribution payable for any period will be computed on the basis of a 360-day year of
twelve 30-day months and for any period shorter than a full monthly period for which
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distributions are computed, the amount of the distribution payable will be computed on the
basis of the actual number of days elapsed in such a 30-day month. If any date on which
distributions are to be made on the Series A Preferred Units is not a Business Day, then payment of
the distribution to be made on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay). Distributions on the
Series A Preferred Units will be made to the holders of record of the Series A Preferred Units on
the relevant record dates to be fixed by the Partnership acting through the General Partner.
B.
Distributions Cumulative
. Distributions on the Series A Preferred Units will
accrue and accumulate whether or not the Partnership has earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not such distributions are
authorized. Distributions on account of arrears for any past distribution periods may be declared
and paid at any time to holders of record of the Series A Preferred Units on the record date fixed
by the Partnership acting through the General Partner. Accumulated and unpaid distributions will
not bear interest.
C.
Priority as to Distributions
. (i) So long as any Series A Preferred Units are
outstanding, no distribution of cash or other property shall be authorized, declared, paid or set
apart for payment on or with respect to any Junior Units, unless, in each case, all distributions
accumulated on all Series A Preferred Units for all prior quarterly periods have been paid in full.
The foregoing sentence will not prohibit (a) distributions payable solely in Junior Units or, in
accordance with Section 8.6 hereof, REIT Shares (or any similar equity security) of the Company,
(b) the conversion of Junior Units or Parity Preferred Units into Junior Units or common shares of
beneficial interest (or any similar equity security) of the Company, and (c) the redemption of
Partnership Interests corresponding to any shares of stock purchased by the Company pursuant to its
Charter.
(ii) So long as distributions have not been paid in full (or a sum sufficient for such full
payment is not irrevocably deposited in trust for payment) upon the Series A Preferred Units, all
distributions authorized and declared on the Series A Preferred Units and all classes or series of
outstanding Parity Preferred Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series A Preferred Unit and such other classes or series
of Parity Preferred Units shall in all cases bear to each other the same ratio that accrued
distributions per Series A Preferred Unit and such other classes or series of Parity Preferred
Units bear to each other.
D.
No Further Rights
. Holders of Series A Preferred Units shall not be entitled to any
distributions, whether payable in cash, other property or otherwise, in excess of the full
cumulative distributions described herein.
Section 16.4
Allocations
Sections 6.2.A(1) and 6.2.A(2) of the Agreement are hereby deleted and replaced by the
following:
(1) Net Income. Except as otherwise provided in Section 6.3, Net Income for any Partnership
Year shall be allocated to the Partners in the following manner and order of priority:
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(a)
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first, to the General Partner to the extent that Net Losses
previously allocated to the General Partner pursuant to Section 6.2.A(2)(c)
below for all prior taxable years exceed Net Income previously allocated to the
General Partner pursuant to this Section 6.2.A(1)(a) for all prior taxable
years;
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(b)
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second, to holders of Partnership Interests that are entitled
to any preference in distribution with regard to invested capital to the extent
that Net Losses previously allocated to such holders pursuant to Section
6.2.A(2)(b) below for all prior taxable years exceed Net Income previously
allocated to such holders pursuant to this Section 6.2.A(1)(b) for all prior
taxable years;
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(c)
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third, to holders of Partnership Interests of a class not
entitled to preference in distribution with regard to invested capital to the
extent that Net Losses previously allocated to such holders pursuant to Section
6.2.A(2)(a) below for all prior taxable years exceed Net Income previously
allocated to such holders pursuant to this Section 6.2.A(1)(c) for all prior
taxable years;
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(d)
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fourth, to the holders of any Partnership Interests that are
entitled to any preference in distribution with regard to a preferred return in
accordance with the rights of any such class of Partnership Interests
(including Series A Preferred Units) until each such Partnership Interest has
been allocated, Net Income equal to the
excess of
(x) the cumulative
amount of preferred distributions such holders are entitled to receive (Series
A Priority Return, in the case of Series A Preferred Units) to the last day of
the current taxable year or to the date of Redemption or transfer, to the
extent such Partnership Interests are redeemed or transferred in accordance
with Section 8.6 hereof during such taxable year,
over
(y) the
cumulative Net Income allocated to such holders, pursuant to this Section
6.2.A(1)(d) for all prior taxable years, (and, within such class, pro rata in
proportion to the respective number of such Units each Holder holds as of the
last day of the period for which such allocation is being made); and
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(e)
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fifth, to each of the Partners, pro rata in proportion to their
respective Percentage Interests.
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(2) Net Losses. Except as otherwise provided in Section 6.3, Net Losses for any Partnership
Year shall be allocated to the Partners in the following manner and order of priority:
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(a)
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first, with respect to classes of Partnership Interests that
are not entitled to any preference in distribution with regard to invested
capital (including the Series A Preferred Units and the Common Units), pro rata
to each such class in accordance with the terms of such class (and, within such
class, pro rata in proportion to the respective Percentage Interests as of the
last day of the period for which such allocation is being made) until the
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Adjusted Capital Account (ignoring for this purpose any amounts a Partner is
obligated to contribute to the capital of the Partnership or is deemed
obligated to contribute pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)(2)) of each Partner in such classes is reduced to zero;
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(b)
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second, to the holders of any Partnership Interests that are
entitled to any preference in distribution with regard to invested capital in
accordance with the rights of any such class of Partnership Interests (and, if
there is more than one class of such Partnership Interests, then in the reverse
order of their preference in distribution), until the Adjusted Capital Account
(modified in the same manner as in clause (i)) of each such holder is reduced
to zero; and
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(c)
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third, to the General Partner.
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Section 16.5
Liquidation Proceeds
A.
Distributions Upon Liquidation
. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series A Preferred Units shall
be made in accordance with Section 13.2 hereof.
B.
No Further Rights
. After payment of the full amount of the liquidating
distributions to which they are entitled (whether in accordance with Section 13.2 hereof, or by
delivery of the Cash Amount or REIT Shares Amount in accordance with Section 8.6 hereof or both),
the holders of Series A Preferred Units will have no right or claim to any of the remaining assets
of the Partnership.
C.
Exercise of Redemption Rights
. Series A Preferred Units are entitled to a right of
Redemption in accordance with Section 8.6 hereof (such right to apply to Series A Preferred Units
on the same basis and in the same manner as if such Series A Preferred Units were an equivalent
number of Common Units). For purposes of determining the Cash Amount or REIT Shares Amount payable
pursuant to Section 8.6 to a Tendering Partner each Series A Preferred Unit shall be treated as one
Common Unit entitling the Tendering Partner to the Cash Amount attributable to one Common Unit or
one REIT Share (as the same may be adjusted in accordance with the definition of REIT Shares
Amount as set forth in Article 1 of the Agreement).
Section 16.6
Voting Rights
A.
General
. Holders of the Series A Preferred Units will have voting rights with
regard to any matters requiring the consent or approval of the Limited Partners as if they held an
equivalent number of Common Units.
Section 16.7
Transfer Restrictions
The Series A Preferred Units shall be subject to the provisions of Article XI of the
Agreement; provided however, that in addition to the transfers of all or any portion of a Limited
Partners Partnership Interest that may be transferred without the consent of the General Partner,
pursuant to Section 11.4.A. of the Agreement shall be added any transfer of Common Units or
5
Series A Preferred Units (i) to members or partners of the Contributor LPs; (ii) to the
subsequent transfer by a transferee to a self-settled trust, the assets of which are treated as
owned by the settler of the trust under Code Section 676(a); (iii) to a legal guardian in the case
of any mental incapacity of such transferor in each case (being transfers pursuant to (i), (ii) or
(iii) above), subject to the provisions of Section 11.7 of the Agreement; provided further that any
such assignee under this Section 16.7 shall be admitted as a Limited Partner pursuant to Section
11.5 of the Agreement (provided that such assignment is not prohibited by Section 11.7 of the
Agreement).
Section 16.8
No Conversion Rights
The holders of the Series A Preferred Units shall not have any rights to convert such
Partnership Units into any other securities of, or interest in, the Partnership.
Section 16.9
No Sinking Fund
No sinking fund shall be established for the retirement or redemption of Series A Preferred
Units.
11. The Agreement is hereby amended by adding to Exhibit A of said Agreement the addendum to
Exhibit A as set forth in
Exhibit F
hereto, so that all references to Exhibit A in the
Agreement shall be deemed to be references to Exhibit A which shall include the addendum to Exhibit
A attached hereto.
12. The Contributor LPs agree and acknowledge that they shall have no right to exercise the
right of Redemption set forth in Section 8.6 of the Agreement with respect to any Series A
Preferred Units or Common Units held by them at any time prior to the first anniversary of the
Effective Date.
13. Except as amended by the provisions hereof, the Agreement, as previously amended, shall
remain in full force and effect in accordance with its terms and is hereby ratified, confirmed and
reaffirmed by the undersigned for all purposes and in all respects.
14. Each Contributor LP hereby makes those certain representations and warranties (and
covenants) set forth in Section 3.4 of the Agreement which shall be binding upon such Contributor
LPs as if such representations and warranties (and covenants) were set forth herein.
15. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto,
their respective legal representatives, successors and assigns.
16. Except as expressly amended or modified herein, the rights and obligations of the
Contributor LPs with respect to the Common Units and Series A Preferred Units shall be as set forth
in the Agreement.
17. This Amendment may be executed in counterparts, all of which together shall constitute one
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
6
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first
written above.
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GENERAL PARTNER:
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AMERICAN CAMPUS COMMUNITIES
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HOLDINGS LLC,
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a Maryland limited liability company
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By:
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Name:
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Title:
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ADDITIONAL LIMITED PARTNERS:
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Keeling Family Irrevocable Trust
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Rita Henneman Trust
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Jeffrey M. Fenster
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David Diana Revocable Trust
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Sherryl Marsh
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Mary Jane Diana Revocable Trust
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Roger & Sherryl Marsh
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Dennis E. Smith
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Kent P. Dauten
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Rodrick Schmidt
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Dan Jaworski
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David Keeling
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Vernon Holland
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Michael Henneman
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Jeanette Holland
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Michael Sheppard
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Lucille Frasca Trust
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Rodney Poole
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Paul & Barbara Koch
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Chad Worner
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Donna Worner
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Joseph Giblin
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Eric Worner
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Schmidt Family Investments LLC
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HSW Properties LLC
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Henneman Family LLC
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Ralph J. Henneman Trust
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Delores M. Henneman Trust B & C
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By:
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Michael J. Henneman, Attorney in Fact
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7
Exhibit 99.3
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
This Registration Rights and Lock-Up Agreement (this
Agreement
) is entered into
as of March 1, 2006 by and between American Campus Communities, Inc., a Maryland corporation (the
Company
), and each of the persons who are signatories hereto (each, a
Holder
and collectively, the
Holders
).
WHEREAS, each Holder on the date of this Agreement received the number of units of limited
partnership interest (
Units
) in American Campus Communities Operating Partnership, L.P.,
a Maryland limited partnership (the
Operating Partnership
), set forth next to such
Holders name on Schedule A hereto, issued without registration under the Securities Act of 1933,
as amended (the
Securities Act
) pursuant to a Contribution and Sale Agreement dated as of
December 2, 2005 by and among the Contributors (as defined therein), the Company and the Operating
Partnership (the
Contribution Agreement
);
WHEREAS, under the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership dated as of August 17, 2004 (the
Partnership Agreement
), on or after the
first anniversary of the date of this Agreement, the holders of Units may present such Units to the
Operating Partnership for redemption (the
Redemption Right
), the consideration for which
redemption will be, at the Companys option, either cash or shares of common stock, par value $.01
per share (
Common Shares
), of the Company; and
WHEREAS, the Company has agreed to provide certain registration rights to the Holders in
respect of the Common Shares as set forth in this Agreement.
NOW, THEREFORE
, in consideration of the foregoing, the mutual promises and agreements set
forth herein, and other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Certain Definitions
. As used in this Agreement, in addition to the other terms
defined herein, the following capitalized defined terms shall have the following meanings:
NASD
shall mean the National Association of Securities Dealers, Inc.
Person
shall mean an individual, partnership, corporation, limited liability
company, trust, or unincorporated organization, or other similar entity, or a government or agency
or political subdivision thereof.
Prospectus
shall mean the prospectus included in a Registration Statement, including
any preliminary prospectus, as amended or supplemented by any prospectus supplement with respect to
the terms of the offering of all or any portion of the Registrable Shares covered by such
Registration Statement, and by all other amendments and supplements to such prospectus, including
post effective amendments, and in each case including all material incorporated by reference
therein.
Registrable Shares
shall mean the Shares, excluding (i) Shares for which a
Registration Statement relating to the sale thereof shall have become effective under the
Securities Act and
which have been disposed of under such Registration Statement, (ii) Shares sold pursuant to
Rule 144 under the Securities Act or (iii) Shares eligible for sale pursuant to Rule 144(k) under
the Securities Act. All references in this Agreement to Rule 144 and subsections thereof shall
refer to corresponding provisions of future law.
Registration Expenses
shall mean any and all expenses incident to performance of or
compliance with this Agreement, including, without limitation: (i) all SEC, stock exchange or NASD
registration and filing fees; (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualification of any of the Registrable Shares and the preparation of a
Blue Sky Memorandum) and compliance with the rules of the NASD; (iii) all expenses of any Persons
in preparing or assisting in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in connection with the listing,
if any, of any of the Registrable Shares on any securities exchange or exchanges pursuant to
Section 5 hereof; and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any special audit or cold
comfort letters required by or incident to such performance and compliance. Registration Expenses
shall specifically exclude underwriting discounts and commissions relating to the sale or
disposition of Registrable Shares by a selling Holder, the fees and disbursements of counsel
representing a selling Holders and transfer taxes, if any, relating to the sale or disposition of
Registrable Shares by a selling Holder, each of which shall be borne by such Holder in all cases.
Registration Statement
shall mean any registration statement of the Company and any
other entity required to be a registrant with respect to such registration statement pursuant to
the requirements of the Securities Act which covers the resale of any of the Registrable Shares on
an appropriate form, and all amendments and supplements to such registration statement, including
post effective amendments, in each case including the Prospectus contained therein, all exhibits
thereto and all materials incorporated by reference therein.
SEC
shall mean the Securities and Exchange Commission.
Shares
shall mean any Common Shares issued or to be issued to the Holders by the
Company upon the Holders redemption of their Units in the Operating Partnership and any additional
shares of Common Stock which become issuable by reason of any stock dividend, stock split,
recapitalization or any other similar transaction effected without the receipt of consideration
that results in an increase in the number of shares of outstanding Common Stock.
2.
Lock-up Agreement
. Each Holder hereby agrees that for one year from the date
hereof, without the prior written consent of the Company, it will not offer, pledge, sell, contract
to sell, grant any options for the sale of, seek the redemption of or otherwise transfer of dispose
of, directly or indirectly, any Units (the
Lock-up Period
).
2
3.
Registration
.
(a)
Filing of Shelf Registration Statement
. Subject to the conditions set forth in
this Agreement, within 12 months of the date hereof, the Company shall cause to be filed a
Registration Statement (the
Shelf Registration Statement
) under Rule 415 under the
Securities Act relating to the sale by the Holders of all of the Registrable Shares in accordance
with the terms hereof, and shall use all commercially reasonable efforts to cause the Shelf
Registration Statement to be declared effective by the SEC by the expiration of the Lock-up Period.
Common Shares (other than Registrable Shares) may, at the Companys option, be included among the
securities covered by the Shelf Registration Statement. The Company may use an existing, effective
registration statement under Rule 415 under the Securities Act as the Shelf Registration Statement
if such registration statement otherwise complies with this Section 3(a). The Company agrees to
use its commercially reasonable efforts to keep the Shelf Registration Statement continuously
effective until the earliest of (a) such time as the Company does not meet the requirements to
register the Registrable Shares on Form S-3 (or similar successor form of registration statement),
(b) the date on which the Holders no longer hold any Registrable Shares, or (c) the date on which
all of the Registrable Shares held or subsequently acquired by the Holders have become eligible for
sale pursuant to Rule 144(k) promulgated under the Securities Act (hereinafter referred to as the
Shelf Registration Expiration Date
).
(b)
Demand Registration
. Subject to the conditions set forth in this Agreement, at
any time after the Shelf Registration Expiration Date and while any Registrable Shares are
outstanding, each Holder who is unable to sell its Registrable Shares pursuant to Rule 144(k) under
the Securities Act may make a written request for registration under the Securities Act (each, a
Demand Registration
) of all or part of such Holders Registrable Shares so long as such
Registrable Shares, together with the securities requested by other Holders to be included in such
Demand Registration, constitute at least the greater of: (i) 30% of the total number of
Registrable Shares held by the Holders, or (ii) Registrable Shares held by the Holders having a
market value (based upon the market quotation for the Common Shares attributable thereto as of the
date of such request) greater than $100,000. The written request for Demand Registration shall
specify the aggregate number of Registrable Shares to be registered and the intended method of
disposition. Notwithstanding the foregoing, the Company shall not be required to file any
Registration Statement pursuant to this Section 3(b) on behalf of any Holder within six months
after the effective date of any earlier Registration Statement so long as the Holder requesting the
Demand Registration was given a notice offering such Holder the opportunity to sell Registrable
Shares under such earlier Registration Statement;
provided
,
however
, that this
six-month limitation shall not apply if a Holder requested that all or a part of the Holders
Registrable Shares be included in the earlier Registration Statement but not all or such part were
so included through no fault of the Holder, in which case the Holder may require the Company to
file another registration statement pursuant to an additional Demand Registration (subject, in the
event of a Demand Registration for less than all remaining Registrable Shares, to the same
30%/minimum value limitation set forth above). The Company may elect, at its option, to file such
Demand Registration as a shelf registration pursuant to Rule 415 promulgated under the Securities
Act. Within ten days after receipt of a request for a Demand Registration, the Company shall give
written notice (the
Company Notice
) of such request to all other Holders, and may give
such notice to other holders of Common Shares or securities convertible into or exchangeable for
Common Shares, if any, and shall include in such Demand Registration
3
statement all Registrable Shares with respect to which the Company has received written
requests for inclusion therein within 30 days after the Company Notice is sent. Thereafter, the
Company may elect to include in such registration additional Common Shares to be issued by the
Company. In addition, the Holders consent to the inclusion in any Demand Registration of Common
Shares of any other holders of Common Shares or securities convertible into or exchangeable for
Common Shares. The Company may, in its sole discretion, elect to file the Registration Statement
before receipt of notice from any Holder. The Company agrees to use its reasonable commercial
efforts to cause such Registration Statement to be declared effective by the SEC as soon as
practicable after the filing thereof and to keep the Registration Statement continuously effective
for a period of at least 120 days thereafter, which period shall automatically be extended by the
number of days, if any, during which the Registration Statement was suspended due to a Suspension
Event (as defined below). A registration shall not constitute a Demand Registration until it has
become effective.
(c)
Piggyback Registration
. If at any time after the Shelf Registration Expiration
Date and while any Registrable Shares are outstanding and a Registration Statement applicable to
Holders under Sections 3(a) or 3(b) is not effective, the Company (in its sole discretion and
without any obligation to do so) proposes to file a registration statement under the Securities Act
with respect to an offering solely of Common Shares solely for cash (other than a registration
statement (i) on Form S-8 or any successor form to such Form or in connection with any employee or
director welfare, benefit or compensation plan, (ii) on Form S-4 or any successor form to such Form
or in connection with an exchange offer, (iii) in connection with a rights offering exclusively to
existing holders of Common Shares, (iv) in connection with an offering solely to employees of the
Company or its subsidiaries, or (v) relating to a transaction pursuant to Rule 145 of the
Securities Act), whether or not for its own account, the Company shall give prompt written notice
of such proposed filing to the Holders. The notice referred to in the preceding sentence shall
offer Holders the opportunity to register such amount of Registrable Shares as each Holder may
request (a
Piggyback Registration
). Subject to the provisions of Section 4 below, the
Company shall include in such Piggyback Registration all Registrable Shares for which the Company
has received written requests for inclusion therein within 30 calendar days after the notice
referred to above has been given by the Company to the Holders. Holders of Registrable Shares
shall be permitted to withdraw all or part of the Registrable Shares from a Piggyback Registration
at any time prior to the effective date of such Piggyback Registration. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company and the managing
underwriter advises the Company that the total number of Common Shares requested to be included in
such registration exceeds the number of Common Shares that can be sold in such offering without
impairing the pricing or other commercial practicality of such offering, the Company will include
in such registration Common Shares in the following priority: (i) first, the full number of Common
Shares requested to be included in such registration by holders of Common Shares with piggyback
registration rights prior or superior to those of the Holders, and (ii) second, (A) Common Shares
the Company proposes to sell, (B) Common Shares requested to be included in such registration by
any Holders, and (C) Common Shares requested to be included in such registration by other holders
of Common Shares with piggyback registration rights of priority similar to the Holders (with the
number of such Common Shares of the Company, the Holders, and such other holders, respectively, to
be included in the Piggyback Registration to be allocated pro rata among the Company, the Holders,
and such other holders of Common Shares on the basis of the total number of Common Shares
4
requested to be included in such registration by all of the Company, the Holders and such
other holders of Common Shares).
(d)
Distribution of Materials
. The Company shall furnish without charge to each such
Holder such number of copies of the Registration Statement (including any amendments, supplements
and exhibits), the Prospectus contained therein (including each preliminary prospectus and all
related amendments and supplements) and any documents incorporated by reference in the Registration
Statement or such other documents as such Holder may reasonably request in order to facilitate its
sale of the Registrable Shares in the manner described in the Registration Statement.
(e)
Amendments and Supplements
. The Company shall prepare and file with the SEC from
time to time such amendments and supplements to the Registration Statement and Prospectus used in
connection therewith as may be necessary to keep the Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all the Registrable
Shares until the earlier of (a) such time as all of the Registrable Shares have been disposed of in
accordance with the intended methods of disposition by the Holders as set forth in the Registration
Statement or (b) the date on which the Registration Statement ceases to be effective in accordance
with the terms of this Section 3. Upon five business days notice, the Company shall file any
supplement or post effective amendment to the Registration Statement with respect to the plan of
distribution or such Holders ownership interests in Registrable Shares that is reasonably
necessary to permit the sale of the Holders Registrable Shares pursuant to the Registration
Statement. The Company shall file any necessary listing applications or amendments to the existing
applications to cause the Shares registered under any Registration Statement to be then listed or
quoted on the primary exchange or quotation system on which the Common Shares are then listed or
quoted.
(f)
Notice of Certain Events
. The Company shall promptly notify each Holder of, and
confirm in writing, the filing of the Prospectus. At any time when a Prospectus relating to the
Registration Statement is required to be delivered under the Securities Act by a Holder to a
transferee, the Company shall immediately notify each Holder of the happening of any event as a
result of which the Prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading. In such event, the Company shall promptly prepare and furnish to each
Holder a reasonable number of copies of a supplement to or an amendment of such Prospectus as may
be necessary so that, as thereafter delivered to the purchasers of Registrable Shares, such
Prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will, if necessary, amend or
supplement the Registration Statement of which such Prospectus is a part to reflect such amendment
or supplement.
4.
State Securities Laws
. Subject to the conditions set forth in this Agreement, the
Company shall, in connection with the filing of any Registration Statement hereunder, file such
documents as may be necessary to register or qualify the Registrable Shares under the securities or
Blue Sky laws of such states as any Holder may reasonably request, and the Company shall
5
use its commercially reasonable efforts to cause such filings to become effective;
provided
,
however
, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such state in which it is not then qualified or to
file any general consent to service of process in any such state. Once effective, the Company
shall use its commercially reasonable efforts to keep such filings effective until the earlier of
(a) such time as all of the Registrable Shares have been disposed of in accordance with the
intended methods of disposition by the Holder as set forth in the Registration Statement, (b) in
the case of a particular state, a Holder has notified the Company that it no longer requires an
effective filing in such state in accordance with its original request for filing or (c) the date
on which the Registration Statement ceases to be effective. The Company shall promptly notify each
Holder of, and confirm in writing, the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Shares for sale under the securities or
Blue Sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose.
5.
Expenses
. The Company shall bear all Registration Expenses incurred in connection
with the registration of the Registrable Shares pursuant to this Agreement, except that each Holder
shall be responsible for any brokerage or underwriting commissions and taxes of any kind
(including, without limitation, transfer taxes) with respect to any disposition, sale or transfer
of Registrable Shares sold by it and for any other legal, accounting and other expenses incurred by
it.
6.
Indemnification by the Company
. The Company agrees to indemnify each of the
Holders and their respective officers, directors, employees, agents, representatives and
affiliates, and each person or entity, if any, that controls a Holder within the meaning of the
Securities Act, and each other person or entity, if any, subject to liability because of his, her
or its connection with a Holder, and any underwriter and any person who controls the underwriter
within the meaning of the Securities Act (each an
Indemnitee
) against any and all losses,
claims, damages, actions, liabilities, costs and expenses (including without limitation reasonable
fees, expenses and disbursements of attorneys and other professionals), joint or several, arising
out of or based upon any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction required of the Company
in connection with any Registration Statement or Prospectus, or upon any untrue or alleged untrue
statement of material fact contained in the Registration Statement or any Prospectus, or any
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading; provided that the Company shall not be liable to such Indemnitee or any person who
participates as an underwriter in the offering or sale of Registrable Shares or any other person,
if any, who controls such underwriter within the meaning of the Securities Act, in any such case
to the extent that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or in any such
Prospectus in reliance upon and in conformity with information regarding such Indemnitee or its
plan of distribution or ownership interests which was furnished to the Company for use in
connection with the Registration Statement or the Prospectus contained therein by such Indemnitee
or (ii) such Holders failure to send or give a copy of the final, amended or supplemented
prospectus furnished to the Holder by the Company at or prior to the time such action is required
by the Securities Act to the person claiming an untrue
6
statement or alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final, amended or supplemented prospectus.
7.
Covenants of Holders
. Each of the Holders hereby agrees (a) to cooperate with the
Company and to furnish to the Company all such information concerning its plan of distribution and
ownership interests with respect to its Registrable Shares in connection with the preparation of a
Registration Statement with respect to such Holders Registrable Shares and any filings with any
state securities commissions as the Company may reasonably request, (b) to deliver or cause
delivery of the Prospectus contained in the Registration Statement to any purchaser of the shares
covered by such Registration Statement from the Holder and (c) to indemnify the Company, its
officers, directors, employees, agents, representatives and affiliates, and each person, if any,
who controls the Company within the meaning of the Securities Act, and each other person, if any,
subject to liability because of his connection with the Company, against any and all losses,
claims, damages, actions, liabilities, costs and expenses arising out of or based upon (i) any
untrue statement or alleged untrue statement of material fact contained in either such Registration
Statement or the Prospectus contained therein, or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, if and to the extent that such
statement or omission occurs from reliance upon and in conformity with written information
regarding the Holder, its plan of distribution or its ownership interests, which was furnished to
the Company by the Holder for use therein unless such statement or omission was corrected in
writing to the Company not less than two business days prior to the date of the final prospectus
(as supplemented or amended, as the case may be) or (ii) the failure by the Holder to deliver or
cause to be delivered the Prospectus contained in such Registration Statement (as amended or
supplemented, if applicable) furnished by the Company to the Holder to any purchaser of the shares
covered by such Registration Statement from the Holder through no fault of the Company.
8.
Suspension of Registration Requirement
.
(a) The Company shall promptly notify each Holder of, and confirm in writing, the issuance by
the SEC of any stop order suspending the effectiveness of a Registration Statement with respect to
such Holders Registrable Shares or the initiation of any proceedings for that purpose. The
Company shall use its commercially reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such a Registration Statement at the earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this Agreement, the Companys
obligation under this Agreement to use its commercially reasonable efforts to cause the
Registration Statement and any filings with any state securities commission to become effective or
to amend or supplement the Registration Statement shall be suspended in the event and during such
period as unforeseen circumstances exist (including without limitation (i) an underwritten primary
offering by the Company if the Company is advised in writing by the underwriters that the sale of
Registrable Shares under the Registration Statement would impair the pricing or other commercial
practicality of the primary offering or (ii) pending negotiations relating to, or consummation of,
a transaction or the occurrence of an event that would require additional disclosure of material
information by the Company in the Registration Statement or
7
such filing, as to which the Company has a bona fide business purpose for preserving
confidentiality or which renders the Company unable to comply with SEC requirements) (such
unforeseen circumstances being hereinafter referred to as a
Suspension Event
) that would
make it impractical or unadvisable to cause the Registration Statement or such filings to become
effective or to amend or supplement the Registration Statement, but such suspension shall continue
only for so long as such event or its effect is continuing but in no event will that suspension
exceed 90 days. The Company shall notify the Holders of the existence and, in the case of
circumstances referred to in clause (i) of this Section 8(b), the nature of any Suspension Event.
(c) Each Holder of Registrable Shares agrees, if requested by the Company in the case of a
Company-initiated nonunderwritten offering or if requested by the managing underwriter or
underwriters in a Company-initiated underwritten offering, not to effect any public sale or
distribution of any of the securities of the Company of any class included in a Registration
Statement, including a sale pursuant to Rule 144 or Rule 144A under the Securities Act (except as
part of such Company-initiated registration), during the 15-day period prior to (as reasonably
estimated by the Company in good faith), and during the 60-day period beginning on, the effective
date of each Company-initiated offering made pursuant to the registration statement relating to
such Company-initiated offering, to the extent timely notified in writing by the Company or the
managing underwriters;
provided
,
however
, that such 60-day period shall be extended
by the number of days from and including the date of the giving of any notice pursuant to Section
3(f) or (g) hereof to and including the date when each seller of Registrable Shares covered by such
Registration Statement shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 3(g) hereof.
9.
Black-Out Period
. Each Holder agrees that, following the effectiveness of any
Registration Statement relating to the Registrable Shares of such Holder, such Holder will not
effect any sales of the Registrable Shares pursuant to such Registration Statement or any filings
with any state securities commission at any time after such Holder has received notice from the
Company to suspend sales as a result of the occurrence or existence of any Suspension Event or so
that the Company may correct or update the Registration Statement or such filing. The Holder may
recommence effecting sales of the Shares pursuant to the Registration Statement or such filings
following further notice to such effect from the Company, which notice shall be given by the
Company not later than five days after the conclusion of any such Suspension Event.
10.
Additional Shares
. The Company, at its option, may register, under any
Registration Statement and any filings with any state securities commissions filed pursuant to this
Agreement, any number of unissued Common Shares of the Company or any Common Shares of the Company
owned by any other shareholder or shareholders of the Company.
11.
Contribution
. If the indemnification provided for in Sections 6 and 7 is
unavailable to an indemnified party with respect to any losses, claims, damages, actions,
liabilities, costs or expenses referred to therein or is insufficient to hold the indemnified party
harmless as contemplated therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses in such proportion
as
8
is appropriate to reflect the relative fault of the Company, on the one hand, and the
Indemnitee, on the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, actions, liabilities, costs or expenses as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether
the untrue or alleged untrue statement of a material fact or omission to state a material fact
relates to information supplied by the Company or by the Indemnitee and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission;
provided
,
however
, that in no event shall the obligation of any
indemnifying party to contribute under this Section 11 exceed the amount that such indemnifying
party would have been obligated to pay by way of indemnification if the indemnification provided
for under Sections 6 or 7 hereof had been available under the circumstances.
The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 11 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred to in the
immediately preceding paragraph.
Notwithstanding the provisions of this Section 11, no Holder shall be required to contribute
any amount in excess of the amount by which the gross proceeds from the sale of Shares exceeds the
amount of any damages that the Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.
12.
No Other Obligation to Register
. Except as otherwise expressly provided in this
Agreement, the Company shall have no obligation to the Holders to register the Registrable Shares
under the Securities Act.
13.
Rule 144 Sales
. The Company covenants that it will file the reports required to
be filed by the Company under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder (or, if the Company is not required to file such reports, it
will, upon the request of the Holder(s), make publicly available such information as necessary so
as to enable the Holder(s) to sell Shares pursuant to Rule 144 under the Securities Act) and it
will do all such other acts and things from time to time reasonable requested by the Holder(s) of
the Shares to the extent required to enable the Holder(s) to sell the Shares without registration
under the Securities Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation
adopted by the Commission.
14.
Amendments and Waivers
. The provisions of this Agreement may not be amended,
modified, or supplemented or waived without the prior written consent of the Company and Holders
holding in excess of two-thirds of the aggregate of all Registrable Shares then outstanding.
Notwithstanding the foregoing, the Company may amend Schedule A hereto without the consent of
Holders to reflect (i) a transfer of Units or Registrable Shares to a substitute or additional
Holder in accordance with the terms hereof; or (ii) a reduction in the
9
number of Registrable Shares then held by the Holders.
15.
Notices
. Except as set forth below, all notices and other communications provided
for or permitted hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by facsimile, registered or certified mail (return receipt requested),
postage prepaid or courier or overnight delivery service to the respective parties at the following
addresses (or at such other address for any party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt thereof), and further
provided that in case of directions to amend the Registration Statement pursuant to Section 3(e)
or Section 7, a Holder must confirm such notice in writing by overnight express delivery with
confirmation of receipt:
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If to the Company:
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American Campus Communities, Inc.
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805 Las Cimas Pkwy., Suite 400
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Austin, Texas 78746
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Attention: Brian B. Nickel
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Facsimile: (512) 732-2450
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with a copy to:
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Locke Liddell & Sapp LLP
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2200 Ross Avenue, Suite 2200
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Dallas, Texas 75201
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Attention: Bryan L. Goolsby, Esq.
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Facsimile: (214) 740-8800
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If to the Holders:
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As listed on Schedule A hereto
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In addition to the manner of notice permitted above, notices given pursuant to Sections 3, 8 and 9
hereof may be effected telephonically and confirmed in writing thereafter in the manner described
above.
16.
Successors and Assigns
. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure to the benefit of the parties hereto
and their respective successors and assigns. This Agreement and the rights granted hereunder may
not be assigned by any Holder;
provided
,
however
, that a Holder may assign its
rights and obligations hereunder, following at least ten days prior written notice to the Company,
to a permitted transferee in connection with a transfer of Units in accordance with the terms of
the Partnership Agreement, if such transferee agrees in writing to be bound by all of the
provisions hereof. Any attempted assignment hereof by any Holder that is not in accordance with
the foregoing will be void and of no effect and shall terminate all obligations of the Company
hereunder.
17.
Counterparts
. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.
18.
Governing Law
. This Agreement shall be governed by and construed in
10
accordance with the laws of the State of Maryland applicable to contracts made and to be
performed wholly within said State.
19.
Severability
. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
20.
Entire Agreement
. This Agreement is intended by the parties as a final expression
of their agreement and intended to be the complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
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AMERICAN CAMPUS COMMUNITIES, INC.
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By:
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Name:
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Title:
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HOLDERS:
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Keeling Family Irrevocable Trust
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Jeffrey M. Fenster
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Sherryl Marsh
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Roger & Sherryl Marsh
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Kent P. Dauten
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Dan Jaworski
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Vernon Holland
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Jeanette Holland
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Lucille Frasca Trust
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Paul & Barbara Koch
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Donna Worner
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Eric Worner
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HSW Properties LLC
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Ralph J. Henneman Trust
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Delores M. Henneman Trust B & C
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Rita Henneman Trust
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David Diana Revocable Trust
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Mary Jane Diana Revocable Trust
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Dennis E. Smith
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Rodrick Schmidt
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David Keeling
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Michael Henneman
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Michael Sheppard
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Rodney Poole
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Chad Worner
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Joseph Giblin
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Schmidt Family Investments, LLC
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Henneman Family LLC
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By:
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Michael J. Henneman, Attorney in Fact
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12
Exhibit 99.4
AGREEMENT REGARDING
TAX MATTERS
This AGREEMENT REGARDING TAX MATTERS (this
Agreement
) is dated as of March 1, 2006,
by and among American Campus Communities Operating Partnership LP, a Maryland limited partnership
(the
Partnership
), American Campus Communities Holdings LLC, a Maryland limited liability
company (the
General Partner
), American Campus
Communities, Inc., a Maryland
corporation, (
REIT
) and each of the limited partners of the Partnership who have executed
a signature page hereto (each, a
Limited Partner
and collectively, the
Limited
Partners
). Unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to them in Section 1 of this Agreement.
RECITALS:
A. As of the date hereof, the Limited Partners have transferred the Property Interests to the
Partnership, partially selling a portion of the Property Interests (Sale Property) in exchange
for $14,859,311 in cash and $40,559,611 in promissory notes (Sale Consideration), and partially
contributing the remaining portion of the Property Interests (Contributed Property) in exchange
for (i) 2,090,602 Common Units in the Partnership, (ii) 114,964 Series A Preferred Units in the
Partnership and (iii) $5,344,944 in cash (the Cash Reimbursement Amount, as defined in Section 1)
((i), (ii) and (iii) together the Contribution Consideration), which transactions together are
referred to as the Contribution and Sale Transaction;
B. The parties to this Agreement acknowledge and agree that, to the extent permitted by
applicable tax law, the Contribution and Sale Transaction will be treated for Federal and state and
local income tax purposes as (i) a tax-free contribution under Section 721(a) of the Code (and
Section 1.707-4(d) of the Treasury Regulations) of the Contributed Property in exchange for the
Contribution Consideration, and (ii) a sale of the Sale Property in exchange for the Sale
Consideration; and
C. The Partnership, the General Partner and the REIT have agreed to enter into this Agreement
with the Limited Partners to provide protection with respect to certain tax matters relating to the
Partnership Agreement.
NOW THEREFORE, in consideration of the mutual agreements and covenants herein contained, and
for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned parties hereby agree as follows:
Section 1. Defined Terms
Agreed Value
shall mean with respect to each Property the value set forth opposite
the name of such Property on
Exhibit A
hereto.
Business Day
means any day other than Saturday or Sunday or other day upon which
national banks in Austin, Texas are required or permitted by applicable law to be closed.
1
Cash Consideration
has the meaning assigned to it in the Contribution and Sale
Agreement.
Cash Reimbursement Amount
means an amount of cash equal to the sum of (i) capital
expenditures that are attributable to partnership organization and syndication costs (as described
in Section 709 of the Code) treated for Federal income tax purposes as having been paid by the
Limited Partners during the two year period preceding the Closing Date, and (ii) capital
expenditures incurred with respect to the Properties within the two (2) year period preceding the
Closing Date, in each case which are permitted to be reimbursed by the Partnership (without
recognition of gain by the Limited Partners) under Treasury Regulation Section 1.707-4(d) and which
are set forth in a schedule to be provided by the Contributors Representatives to the Partnership
at least fifteen (15) days prior to the Closing Date (and which are subject to substantiation as
described in Section 14 hereof). However, in no event shall the Cash Reimbursement Amount exceed
$12,000,000.
Closing Date
shall mean the date of this Agreement.
Code
shall have the meaning assigned to it in Section 2.1 of this Agreement.
Common Unit
shall have the meaning assigned thereto in the Partnership Agreement.
Contributed Property
has the meaning assigned to it in the Recitals to this
Agreement.
Contributee
shall have the meaning assigned to it in the Contribution and Sale
Agreement.
Contribution Consideration
has the meaning assigned to it in the Recitals to this
Agreement.
Contribution and Sale Agreement
means that certain Contribution and Sale Agreement
dated as of December 2, 2005 entered into by the parties to this Agreement.
Contribution and Sale Transaction
has the meaning assigned to it in the Recitals to
this Agreement.
Contributors Representatives
shall have the meaning assigned to it in the
Contribution and Sale Agreement.
Debt Amount
has the meaning assigned to it in Section 2.4(a) of this Agreement.
Debt/Election Event
has the meaning assigned to it in Section 2.5(c) of this
Agreement.
Debt Protected Period
means the period beginning on the Closing Date and ending on
the sixth anniversary of the Closing Date.
Disposition
has the meaning assigned to it in Section 2.2 of this Agreement.
2
Disposition Transaction
has the meaning assigned to it in Section 2.5(b) of this
Agreement.
Fair Market Value
shall have the meaning assigned thereto in the Partnership
Agreement.
Limited Partner
has the meaning assigned to it in the preamble to this Agreement
(the names and addresses of the Limited Partners are set forth on
Exhibit B
hereto).
Negative Balance
has the meaning assigned to it in Section 2.4(a) of this Agreement.
Net Income
shall have the meaning assigned to it in the Partnership Agreement.
Nonrecourse Liabilities
has the meaning assigned to it in the Partnership Agreement.
Partnership
shall have the meaning assigned to it in the preamble to this Agreement.
Partnership Agreement
means the Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of August 17, 2004, as amended.
Partnership Minimum Gain
has the meaning assigned to it in the Partnership
Agreement.
Partnership Units
means collectively (i) the Common Units and (ii) the Series A
Preferred Units issued by the Partnership to the Limited Partners.
Partnership Year
has the meaning assigned to it in the Partnership Agreement.
Percentage Interest
has the meaning assigned to it in the Partnership Agreement.
Person
shall mean an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or group (as defined in
Section 13(d) of the Exchange Act) and such Persons successors and assigns.
Properties
means, collectively, those certain student housing properties further
described in
Exhibit C
hereto.
Property Interests
means collectively, (i) those certain ownership interests in one
or more Persons (that own directly or indirectly one or more of the Properties) and (ii) those
certain fee simple interests in one or more of the Properties, in each case as further described in
Exhibit D
hereto.
Protected Parties
has the meaning assigned to it in Section 2.1 of this Agreement.
Redemption
has the meaning assigned to it in the Partnership Agreement.
Replacement Asset(s)
has the meaning assigned to it in Section 2.3 of this
Agreement.
REIT
has the meaning assigned to it in the preamble to this Agreement.
3
REIT Share
has the meaning assigned to it in the Partnership Agreement.
Retained Amount
shall have the meaning assigned to it in the Contribution and Sale
Agreement.
Sale Consideration
has the meaning assigned to it in the Recitals to this Agreement.
Sale Property
has the meaning assigned to it in the Recitals to this Agreement.
Series A Preferred LP Return
has the meaning assigned to it in the Partnership
Agreement.
704(c) Protected Period
means the period beginning on the Closing Date and ending on
the fourth anniversary of the Closing Date.
704(c) Gain
shall have the meaning set forth in Section 2.2 of this Agreement.
Statement
shall have the meaning assigned to it in Section 2.15 of this Agreement.
Subsidiary
shall mean any Person more than fifty percent (50%) of the ownership
interests in which are owned directly or indirectly by the Partnership.
Tax Items
shall have the meaning assigned to it in the Partnership Agreement.
Section 2. Tax Matters
2.1
Section
704(c)
Method
.
For the benefit of the direct and indirect beneficial
owners of the Partnership Units issued at the Closing and any successor or assign thereof who
acquires any of the Partnership Units in a transaction pursuant to which the Partnership Units are
substituted basis property (as such term is used in Section 7701(a)(42) of the Code) for federal
income tax purposes (the Protected Parties), the General Partner and the Partnership agree that
the Partnership and any entity in which the Partnership holds a direct or indirect interest, shall,
with respect to the Contributed Property use the traditional method under Section 704(c) of the
Internal Revenue Code of 1986, as amended (the Code) and the regulations thereunder with no
curative or remedial allocations under Section 704(c) of the Code. The General Partner agrees to
cause any entity that is treated as a partnership for federal income tax purposes to which any of
the Contributed Property is transferred in a transaction that is wholly or partially nontaxable (a)
to use the traditional method without curative or remedial allocations under Section 704(c) of the
Code with respect to such Contributed Property and (b) to agree, for the benefit of the Protected
Parties, to be bound by the provisions of this Section 2.1 as though such entity were the
Partnership.
2.2
7
04(c)
Protected Period
.
The General Partner and the Partnership agree with the
Protected Parties that neither the Partnership nor any entity in which the Partnership holds a
direct or indirect interest will, directly or indirectly, sell, transfer or dispose of any of the
Contributed Property or any direct or indirect interest therein (a Disposition) during the 704(c)
Protected Period in any transaction pursuant to which any Protected Party would recognize taxable
income pursuant to Code Section 704(c) due to the difference between the Agreed Value
4
of such Contributed Property and the Protected Partys adjusted basis in the Contributed
Property for federal income tax purposes as of the Closing Date (704(c) Gain), unless (i) the
Partnership or the entity in which it holds a direct or indirect interest obtains the prior written
consent of each Protected Party who would recognize 704(c) Gain as a result of such Disposition or
(ii) the Partnership or the entity in which it owns a direct or indirect interest indemnifies each
Protected Party that recognizes any such 704(c) Gain as a result of such Disposition in accordance
with Section 2.5(b) hereof. Replacement Assets (as defined in section 2.3 of this Agreement)
received as substituted basis property (as such term is used in Section 7701(a)(42) of the Code)
with respect to the nontaxable Disposition of any interest in the Contributed Property shall be
treated as Contributed Property for purposes of the provisions of this Agreement.
2.3
Certain Permitted Transactions
.
The restrictions set forth in Section 2.2 hereof
shall not apply to a transaction involving any interest in the Contributed Property to the extent
(i) that such transaction qualifies as a like-kind exchange under Section 1031 of the Code in which
no income or gain is recognized by or allocated to any of the Protected Parties as a result of the
exchange (including as a result of Section 1031(f) of the Code or any successor provision), (ii)(A)
the transaction is treated for federal income tax purposes as either (x) a transfer to an entity
whose separate existence from the Partnership is disregarded for federal income tax purposes or (y)
a transfer to an entity that is treated as a partnership for federal income tax purposes, and (B)
no gain is recognized by or allocable to any or the Protected Parties as a result of the
transaction or (iii) such transaction is a nonrecognition transaction giving rise to no recognition
of income to the Protected Parties for federal income tax purposes. The property or interests in a
transferee received in any of the nontaxable transactions described in this section 2.3 by the
Partnership or any entity in which the Partnership holds a direct or indirect interest in exchange
for an interest in the Contributed Property is referred to herein as the Replacement Asset(s).
The provisions of this Agreement shall apply to any Replacement Asset as if such Replacement Asset
was a Contributed Property.
2.4
Debt Protected Period
.
(a) The General Partner covenants and agrees to and for the benefit of the Protected Parties,
that at all times during the Debt Protected Period the Partnership will maintain, and will cause
each entity in which the Partnership holds a direct or indirect interest to maintain, sufficient
nonrecourse indebtedness (the Nonrecourse Indebtedness) so that the liabilities of the
Partnership that are allocated under Treasury Regulations Section 1.752-3(a)(1), (2) and (3) to the
Limited Partners indicated on
Exhibit E
hereto (or any successors or assigns thereof that
are Protected Parties), shall be in each case not less than the lesser of (i) the deficit tax basis
capital accounts specified on
Exhibit E
, as adjusted from time to time for income or loss
allocated, and cash distributed, to the Limited Partners by the Partnership (each such negative
balance as so adjusted is referred to herein as a Negative Balance), and (ii) $20,000,000 (the
lesser of (i) and (ii) being referred to herein as the Debt Amount). Such Nonrecourse
Indebtedness so allocated will, as permitted by applicable law, represent qualified nonrecourse
financing within the meaning of Section 465(d)(6) of the Code. For the avoidance of doubt, the
parties agree that the Partnerships obligations under this Agreement to provide sufficient
allocations of indebtedness shall continue through the Debt Protected Period. During the six year
period following the Debt Protected Period, the General Partner shall either (i) maintain
Nonrecourse Indebtedness at least equal to the Debt Amount or (ii) maintain partner nonrecourse
5
debt within the meaning of Section 1.704-2(b)(4) of the Treasury Regulations and/or
nonrecourse debt within the meaning of Section 1.752-1(a) of the Treasury Regulations at least
equal to the sum of the Negative Balances and afford each Protected Party with a reasonable
opportunity to provide a bottom guaranty with respect to a portion of such debt equal to its
respective Negative Balance (such bottom guaranty to be in substantially the form attached hereto
as Exhibit F).
(b) The parties acknowledge and agree that prior to the delivery by Contributors
Representatives of final Negative Balances (and the required debt allocations) for
Exhibit
E
, the amounts set forth in
Exhibit E
shall be an estimate only of the required debt
allocations, and during the period described in the next sentence, the Partnership shall be
responsible for maintaining, and causing the entities in which the Partnership holds a direct or
indirect interest to maintain, sufficient nonrecourse indebtedness so that the liabilities of the
Partnership that are allocated under Treasury Regulations Section 1.752-3(a)(1), (2) and (3) to the
Limited Partners indicated on
Exhibit E
(or any successors or assigns thereof that are
Protected Parties) shall be, in each case, not less than 110% of the amounts specified in the
estimates specified on
Exhibit E
. The Contributors Representatives will be required to
provide the final Negative Balances within 90 days after the Closing Date (and such Negative
Balances as provided by the Contributors Representatives shall be binding upon the Limited
Partners). In no event shall the Negative Balances set forth on
Exhibit E
(whether as
initial estimates or as the final Negative Balances) exceed $18,000,000.
2.5
Indemnity
.
Sections 2.1, 2.2 and 2.4 hereof shall not apply to any transaction or
event if:
(a) In the case of the use of any allocation method with respect to the Contributed Property
other than permitted by Section 2.1 hereof, concurrently with the occurrence of such event (or if
later, ten days before the date upon which the estimated payment of the taxes subject to the
indemnity hereunder is due), the Partnership pays to each of the Protected Parties (1) an amount
equal to the aggregate federal, state and local income taxes payable by such Protected Party as a
result of the use of such allocation method (including, for the avoidance of doubt, all taxes
imposed in respect of items allocated to Protected Parties as a result of curative allocations not
permitted by Section 2.1, allocations of remedial items or similar allocations by the Partnership
or an entity in which the Partnership owns a direct or indirect interest) plus (2) any interest,
penalties and reasonable fees of accountants and attorneys attributable to the use of such
allocation method, plus (3) an amount equal to the aggregate federal, state and local income taxes
payable by the Protected Parties as a result of the receipt of the payments required by this
Section 2.5(a) (including for this purpose all taxes on payments hereunder intended to compensate
or indemnify the recipient hereof for tax liability and other costs and expenses);
(b) In the case of a transaction or event that would otherwise have been prohibited by Section
2.2 hereof (a Disposition Transaction), concurrently with the consummation of such Disposition
Transaction or the occurrence of such event (or if later, ten days before the date upon which the
estimated payment of the taxes subject to the indemnity hereunder is due), the Partnership pays to
each of the Protected Parties (1) an amount equal to the lesser of (i) the aggregate federal, state
and local income taxes payable by such Protected Party
6
on the Section 704(c) Gain recognized by the Protected Party as a result of, or in connection
with, such Disposition Transaction, or (ii) the aggregate federal, state and local income taxes
that would have been payable by such Protected Party if the Contributed Assets that are the direct
or indirect subject of the Disposition Transaction had been sold on the Closing Date with respect
to such Contributed Assets for their fair market value determined in a manner consistent with the
final allocations of the Sale Consideration and the Contribution Consideration made pursuant to
Section 2.14 hereof; plus, in the case of both (i) and (ii), (2) any interest, penalties and
reasonable fees of accountants and attorneys attributable to the Disposition Transaction, plus (3)
an amount equal to the aggregate federal, state and local income taxes payable by the Protected
Parties as a result of the receipt of the payments required by this Section 2.5(b) (including for
this purpose all taxes on payments hereunder intended to compensate or indemnify the recipient
hereof for tax liability and other costs and expenses); and
(c) In the case of any transaction or event that would otherwise have been prohibited by
Section 2.4 hereof or constitutes a breach of the General Partner or the Partnerships obligations
under Section 2.10 below (either, a Debt/Election Event), concurrently with the consummation of
such transaction or the occurrence of such event (or, if later, ten days before the date upon which
the estimated payment of the taxes subject to the indemnity hereunder is due), the Partnership pays
to each of the Protected Parties (1) an amount equal to the aggregate federal, state and local
income taxes payable by such Protected Party as a result of, or in connection with, such
Debt/Election Event, plus (2) any interest, penalties and reasonable fees of accountants and
attorneys attributable to the Debt/Election Event, plus (3) an amount equal to the aggregate
federal, state and local income taxes payable by the Protected Parties as a result of the receipt
of the payments required by this Section 2.5(c) (including for this purpose all taxes on payments
hereunder intended to compensate or indemnify the recipient hereof for tax liability and other
costs and expenses).
For purposes of the preceding clauses (a), (b) and (c), (i) all income arising from the transaction
or event that is treated as ordinary income under the applicable provisions of the Code and all
payments provided for in this Section 2.5 shall be treated as subject to federal, state and local
income tax at the applicable effective tax rates imposed on ordinary income by the Code and the tax
laws of the applicable states in which such income is taxable (assuming for these purposes that
such income is the last income recognized by each Protected Party), (ii) all other income arising
from the transaction or event shall be treated as subject to federal, state and local income tax at
the applicable effective tax rates imposed on long-term capital gains by the Code and the tax laws
of the applicable states in which such income is taxable (assuming for these purposes that such
income is the last income recognized by each Protected Party), (iii) any amounts payable pursuant
to the indemnity provided for in this Section will be determined without giving effect to any loss
carry forwards or loss carry backs available to the Protected Party and (iv) any amounts payable
under the indemnity with respect to state and local income taxes shall not be deducted for purposes
of calculating federal income taxes hereunder unless the Partnership, upon advice of its tax
advisors, shall reasonably determine that such amounts are deductible for federal income tax
purposes on the Protected Partys return. The provisions of this Section 2.5 shall be subject to
the provisions of Section 6 hereof.
2.6
Initial Capital Accounts
.
The General Partner agrees that the initial capital
accounts of the Contributors in the Partnership shall be as set forth on Exhibit G. The
7
initial capital accounts shall be determined based on the Fair Market Value of the REIT Shares
and the number of Partnership Units issued to each Limited Partner on the Closing Date.
2.7
Third Party Beneficiaries
.
The General Partner and the Partnership agree that
each of the Protected Parties is an intended third party beneficiary of the provisions of this
Agreement and that the provisions of this Agreement are enforceable by any of them.
2.8
Preservation of Tax Status
.
The General Partner and the Partnership agree with
the Protected Parties that (i) at no time during the Debt Protected Period will the REIT or the
Partnership take any action that would cause the Partnership to be treated as an entity that would
be taxable as a corporation for federal income tax purposes and (ii) during the Debt Protected
Period the REIT and the Partnership will use commercially reasonable efforts to maintain the REITs
status as a real estate investment trust under the Code.
2.9
Income Tax Audits; Debt Allocation Information
.
(a) The Partnership agrees to (i) consult in good faith with Contributors Representatives
regarding the filing of a Code Section 6227(b) administrative adjustment request with respect to
any Contributed Property directly or indirectly owned by it before filing such request, (ii)
consult in good faith with Contributors Representatives regarding the filing of a petition for
judicial review of an administrative adjustment request under Section 6228 of the Code, or a
petition for judicial review of a final partnership administrative judgment under Section 6226 of
the Code relating to any Contributed Property before filing such petition, (iii) give Contributors
Representatives prompt notice of the receipt of any written notice that the Internal Revenue
Service or any state or local taxing authority intends to examine income tax returns of the
Partnership or any subsidiary (with respect to any Contributed Property) for any year, receipt of
written notice of the beginning of an administrative proceeding at the Partnership level relating
to any Contributed Property under Section 6223 of the Code, receipt of written notice of the final
partnership administrative adjustment relating to any Contributed Property pursuant to Section 6223
of the Code, and receipt of any request from the Internal Revenue Service for waiver of any
applicable statute of limitations with respect to the filing of any tax return by the Partnership
or any subsidiary (to the extent that the Partnership reasonably determines that the Internal
Revenue Service is likely to examine federal income tax issues that could reasonably be expected to
have a material adverse effect on the Protected Parties), and (iv) notify Contributors
Representatives if the Partnership does not intend to file for judicial review with respect to any
Contributed Property.
(b) The General Partner agrees to provide each Protected Party with such information as is
reasonably available to the Partnership regarding allocations of the Partnerships indebtedness
under Section 752 of the Code and the Treasury Regulations thereunder, as such parties may
reasonably request from time to time.
(c) The Protected Parties have retained qualified tax counsel to advise them in connection
with the negotiation and execution of this Agreement and the transactions described herein. The
Protected Parties agree and acknowledge that neither the Partnership, the General Partner nor the
REIT has made any representations to them regarding the application or interpretation of the
applicable provisions of federal and state tax laws to this Agreement or the
8
transactions described herein; provided, that, the provisions of this Section 2.9(c) shall
have no effect upon the representations and warranties of the REIT and the Partnership set forth in
the Contribution and Sale Agreement.
2.10
Code Section 754 Election
.
If the Partnership does not already have a Code
Section 754 election in effect, upon the request of a Protected Party it will make such an
election.
2.11
Distribution Deferral
.
At the election of the Contributors Representatives, the
Partnership shall limit distributions to the Protected Parties for 2 years to meet the safe-harbor
requirements of Section 1.707-4 of the Treasury Regulations. Any amount by which a distribution
during such 2 year period is limited (reduced) shall be deferred and paid to the Protected Parties
within thirty days after the end of such two year period.
2.12
Transfer Taxes
.
The Protected Parties shall have no liability for any state
transfer taxes paid as a result of the subsequent transfer of any Contributed Property or Sale
Property (or any of the Properties) by or at the direction of the Partnership after the Closing
Date.
2.13
Basis Allocation
. Each Limited Partner and the Partnership agree to allocate the
basis of the Contributed Property in the manner as set forth on Exhibit H by allocating between
Contributed Property and Sale Property based on (i) the Fair Market Value of the Contribution
Consideration as of the Closing Date and (ii) the amount of cash comprising the Sale Consideration.
2.14
Allocation of Consideration
.
Each Limited Partner and the Partnership agree,
subject to provision by the Contributors Representatives of reasonable support for such allocation
prior to the Closing (and the consent of the auditors of the Partnership and the REIT), to allocate
the aggregate consideration received for the Contributed Property and the Sale Property as set
forth on Exhibit I (with such allocation providing (i) an allocation of 25% of the aggregate
consideration to land and (ii) an allocation to personal property of an amount equal to or less
than its adjusted tax basis).
2.15
Tax Treatment; Reporting
. To the extent permitted by applicable tax law, the
parties to this Agreement agree to treat the Contribution and Sale Transaction for Federal and
state and local income tax purposes as (i) a tax-free contribution under Section 721(a) of the Code
of the Contributed Property in exchange for the Contribution Consideration, and (ii) the transfer
of the Sale Property in exchange for the Sale Consideration received pursuant to each of the
Purchase and Sale Agreements that are exhibits to the Contribution and Sale Agreement as sales both
in form and pursuant to Federal Treasury Regulations Section 1.707-3. Further, to the extent
permitted by applicable tax law, the parties to this Agreement agree to treat any conveyances of
equity interests pursuant to Section 2 of the Contribution and Sale Agreement as conveyances of
interests in one or more entities that are disregarded entities for Federal income tax purposes as
provided in Treasury Regulation Section 301.7701-3, such that for Federal income tax purposes such
conveyances will be treated as conveyances of undivided interests in the Properties. Each party
agrees to prepare all Federal, state and local income tax returns, reports, disclosure statements
and other information consistent with the foregoing. If the Partnership determines that it is
required to prepare and file any tax shelter
9
disclosure statement, such as Federal Form 8886 or any similar form or disclosure statement for
state or local tax purposes (a Statement), it shall first submit a draft of such Statement to the
Contributors Representatives for its review and approval (which approval will not be unreasonably
withheld, conditioned or delayed) before filing such Statement with the tax authorities.
Section 3. Notices.
Except as otherwise specifically provided herein, all notices, requests,
claims, demands and other communications under this Agreement will be in writing and will be deemed
given upon delivery if delivered personally or one Business Day after being sent by overnight
courier (providing proof of delivery) to the Partnership, the General Partner or the REIT at the
address of such party set forth below, and to any Limited Partner at the address set forth on the
signature pages hereto (or at such other address for a party as specified by like notice):
if to the Partnership, the General Partner or the REIT
:
c/o American Campus Communities, Inc.
805 Las Cimas Parkway, Suite 400
Austin, Texas 87846
Attention: William C. Bayless, Jr.
Facsimile: (512) 494-0603
with a copy to:
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Attention: Bryan L. Goolsby
Facsimile: (214) 740-8800
Any party may give any notice, request, demand, claim or other communication hereunder using any
other means (including personal delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail or electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party or its assignee may change the address to which
notices, requests, demands, claims and other communications hereunder are to be delivered by giving
the other parties notice in the manner herein set forth.
Section 4. Interpretation.
When a reference is made in this Agreement to a Section, or an
Exhibit, such reference will be to a Section of, or an Exhibit to, this Agreement unless otherwise
indicated. Whenever the words include, includes or including are used in this Agreement,
they will be deemed to be followed by the words without limitation. The words hereof, herein
and hereunder and words of similar import when used in this Agreement will refer to this
Agreement as a whole and not to any particular provision of this Agreement. The definitions
contained in this Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such term.
10
Section 5. Counterparts.
This Agreement may be executed in one or more counterparts, all of
which will be considered one and the same agreement and will become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties. An
executed counterpart of this Agreement (or any amendment hereto in accordance with Section 6 below)
may be delivered by facsimile, and a signature delivered by facsimile shall be deemed to constitute
an original signature for all purposes.
Section 6. Amendment; Change in Law.
Except as expressly provided to the contrary in this
Section 6, this Agreement may only be amended or modified in an instrument in writing signed by, or
on behalf of, the Partnership, the General Partner, the REIT and each Protected Party whose
interest would be adversely affected by such amendment or modification. Notwithstanding the
foregoing, in the event that there is a change in applicable tax laws (regardless of whether such
change in applicable tax laws is attributable to any amendment or modification to the Code or the
Treasury Regulations or the promulgation of any rulings or any judicial precedent) following the
Closing Date (a Change in Law) that would prohibit the Partnership from satisfying any of its
obligations hereunder then the Partnership and the Contributors Representatives are hereby
authorized and directed to amend this Agreement as necessary to provide the Protected Parties with
the same tax treatment with regard to the matters described herein (or as near thereto as possible)
as they would have received if there were no such Change in Law. Notwithstanding any provision of
this Agreement to the contrary, neither the Partnership, the General Partner nor the REIT shall
have any liability hereunder with respect to any liability, costs or expenses incurred by the
Protected Parties as a result of a Change in Law.
Section 7. Debt Allocation.
The Partnership covenants and agrees that it shall comply with
Section 1.752-3 of the Treasury Regulations (and any successor provisions of the Treasury
Regulations) in determining each Protected Partys share of the Nonrecourse Liabilities of the
Partnership and that, subject to any change in applicable tax law that would require the
Partnership to use a different method of determining each Protected Partys share of the
Nonrecourse Liabilities of the Partnership, each Protected Partys share of the Nonrecourse
Liabilities of the Partnership shall be equal to the sum of (i) the Protected Partys share of
Partnership Minimum Gain, plus (ii) the amount of any taxable gain that would be allocated to the
Protected Party under Section 704(c) of the Code (or in the same manner as Section 704(c) of the
Code in connection with a revaluation of Partnership property) if the Partnership disposed of (in a
taxable transaction) all Partnership property subject to one or more Nonrecourse Liabilities of the
Partnership in full satisfaction of the liabilities and for no other consideration, plus (iii) the
Protected Partys pro rata share of excess nonrecourse liabilities not allocated under clauses (i)
and (ii) of this Section 7 to be determined by (x) allocating an excess nonrecourse liability to a
Protected Party up to the amount of built-in gain that is allocable to the Protected Party on
Section 704(c) property (as defined under Treasury Regulation Section 1.704-3(a)(3)(ii)) or
property for which reverse Section 704(c) allocations are applicable (as described in Treasury
Regulation Section 1.704-3(a)(6)(i)) where such property is subject to the nonrecourse liability,
to the extent that such built-in gain exceeds the gain described in Treasury Regulation Section
1.752-3(a)(2) with respect to such property, then (y) allocating the amount, if any, of the excess
nonrecourse liability that is not allocated under (x) to each Protected Party in accordance with
their respective Percentage Interests.
11
Section 8. Entire Agreement.
This Agreement constitutes, the entire agreement and supersedes
all of the prior agreements and understandings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
Section 9. Governing Law.
This Agreement will be governed by, and construed in accordance
with, the internal laws of the State of Maryland regardless of the laws that might otherwise govern
under applicable principles of conflict of laws.
Section 10. Severability.
If any provision of this Agreement, or the application thereof to
any person or circumstance is held invalid or unenforceable, the remainder of this Agreement, and
the application of such provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 11. Allocation of Net Income.
The Partnership covenants and agrees that is shall not
allocate items of Net Income for any Partnership Year pursuant to Section 6.2.A(1)(d) of the
Partnership Agreement to the holders of the Series A Preferred Units to the extent that such items
of Net Income when added to prior allocations of Net Income made pursuant to Section 6.2.A(1)(d)
would exceed the cumulative distributions received by the holders of the Series A preferred Units
with respect to their Series A Preferred LP Return during the Partnership Year and all prior
Partnership Years. For purposes hereof, any distribution made by the Partnership with respect to
the Series A LP Return of the holders of the Series A Preferred Units upon or prior to the sixtieth
(60
th
) day following the end of any Partnership Year shall be treated as if such
distribution were made during such Partnership Year.
Section 12. Retained Amount
. The parties hereto agree and acknowledge that for purposes of
Article 5 and Article 6 of the Partnership Agreement any Partnership Units retained by the
Contributee (as all or part of the Retained Amount) pursuant to Section 3.7 of the Contribution and
Sale Agreement shall be treated as if such Partnership Units were owned by the applicable Limited
Partners unless and until such Partnership Units are used for offset as provided in Section 19.5 of
the Contribution and Sale Agreement.
Section 13. Redemption.
The Limited Partners agree and acknowledge that they shall not be
entitled to exercise the right of Redemption set forth in Section 8.6 of the Partnership Agreement
with respect to their Partnership Units prior to the first anniversary of the Closing Date.
Section 14. Cash Reimbursement Amount.
Notwithstanding any contrary provision of the
Contribution and Sale Agreement, the portion of the Cash Consideration that is designated as the
Cash Reimbursement Amount pursuant to this Agreement and which qualifies for the exception to
disguised sale treatment set forth in Section 1.707-4(d) of the Treasury Regulations shall be
considered as a reimbursement of preformation expenditures with respect to property contributed to
the Partnership in accordance with Section 1.707-4(d) of the Treasury Regulations and not as
consideration for property sold to the Partnership. The Contributor Representatives shall provide
the Partnership and its attorneys and accountants with such further information and data as may be
reasonably required to substantiate the amount and character of expenditures comprising the Cash
Reimbursement Amount.
12
Section 15. Relationship with Other Agreements
.
If any provision of this Agreement is in
conflict with any provision of the Contribution and Sale Agreement or the Partnership Agreement,
the provisions of this Agreement shall control.
Section 16. Allocation of Sale Consideration.
Attached hereto as
Exhibit J
is an
example reflecting the allocation of Sale Consideration and Contribution Consideration. The
parties hereto agree that the final allocation of Sale Consideration and Contribution Consideration
shall be calculated in a manner generally consistent with the example attached hereto as
Exhibit J
.
Section 17.
Book Up.
The Partnership covenants and agrees that it shall either (i) perform a
book up of the capital accounts of its partners and a revaluation of its property as described in
Treasury Regulations Section 1.704-1(b)(2)(iv)(f) effective as of July 5, 2005 (based on a
valuation of its property derived from a price per share of REIT Shares of $22.50) or (ii) perform
a book up of the capital accounts of its partners and a revaluation of its property as described
in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) effective as of the Closing Date (immediately
prior to the delivery of the Contribution Consideration by the Partnership to the Limited Partners)
based upon the then market value of REIT Shares. In either event, the book up shall include
property held by the Partnership directly and indirectly through subsidiary partnerships, provided
that (i) the Partnership or the REIT, directly or indirectly through one or more affiliated
entities, controls the applicable subsidiaries (and the decision to perform such a book up) and
(ii) such book up is permitted by and shall be made in accordance with Code Section 704(b) and
the Treasury Regulations thereunder.
[Remainder of page intentionally left blank]
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date
first written above.
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THE PARTNERSHIP:
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AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP,
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a Maryland limited partnership
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By:
AMERICAN CAMPUS COMMUNITIES HOLDINGS LLC,
its general partner
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By:
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Name:
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Title:
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AMERICAN CAMPUS COMMUNITIES, INC., a Maryland corporation
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By:
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Name:
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Title:
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THE LIMITED PARTNERS:
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See signature pages attached hereto.
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14
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The former Contributor Limited Partners as set
forth on Schedule 1 attached hereto who are
receiving Common and/or Preferred ACC OP
Units:
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By:
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Name:
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Title:
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15
SCHEDULE 1
Former Contributor Limited Partners
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Keeling Family Irrevocable Trust
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Jeffrey M. Fenster
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Sherryl Marsh
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Roger & Sherryl Marsh
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Kent P. Dauten
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Dan Jaworski
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Vernon Holland
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Jeanette Holland
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Lucille Frasca Trust
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Paul & Barbara Koch
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Donna Worner
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Eric Worner
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HSW Properties LLC
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Ralph J. Henneman Trust
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Delores M. Henneman Trust B & C
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Rita Henneman Trust
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David Diana Revocable Trust
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Mary Jane Diana Revocable Trust
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Dennis E. Smith
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Rodrick Schmidt
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David Keeling
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Michael Henneman
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Michael Sheppard
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Rodney Poole
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Chad Worner
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Joseph Giblin
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Schmidt Family Investments LLC
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Henneman Family LLC
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Exhibit 99.5
RIGHT OF FIRST OFFER AGREEMENT
THIS RIGHT OF FIRST OFFER AGREEMENT (this Agreement) is dated and effective as of March 1,
2006 by and between ROYAL APARTMENTS USA, INC., an Illinois corporation (Royal Apartments), and
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP, a Maryland limited partnership (the
Operating Partnership).
Recitals
A. Royal Apartments facilitates and coordinates the acquisition and development of properties
for student housing on behalf of certain of its Affiliates (as defined below).
B. The Operating Partnership is in the business of acquiring, owning and operating student
housing facilities.
C. The Operating Partnership and American Campus Communities, Inc. (the Company) have
entered into a Contribution and Sale Agreement dated as of December 2, 2005 (the Contribution
Agreement) with ROYAL WACO APARTMENTS, LLC, an Illinois limited liability company, an Affiliate of
Royal Apartments, relating to the student housing property commonly referred to as The Outpost in
Waco, Texas.
D. The Operating Partnership desires to obtain a right of first offer on all properties owned
or developed by Royal Apartments or any person or entity controlling, controlled by or under common
control with Royal Apartments, or any person or entity that constitute a beneficial owner of Royal
Apartments, or of an interest in Royal Apartments (each, an Affiliate and collectively,
Affiliates), from time to time for student housing and Royal Apartments, on behalf of itself and
its Affiliates, is willing to grant such a right of first offer to the Operating Partnership,
subject to the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1.
Obligation to Offer
. During the period commencing on the date hereof and ending on
the later of (i) four years from the date hereof or (ii) the date that Michael Henneman ceases (A)
to be a member of the Board of Directors of the Company or (B) to have observation rights with
respect to such Board, each time Royal Apartments or one of its Affiliates (each, an Offering
Developer) acquires one or more parcels of real estate for the purpose of developing student
housing thereon (each, a Project), Royal Apartments shall cause such Offering Developer to first
offer the Operating Partnership the right to acquire the Project (each, an Offer) by delivery of
written notice thereof (the Offer Notice); provided, however, that in no event shall an Offering
Developer be required to make an Offer to the Operating Partnership unless and until the earlier of
the time that the Offering Developer directly or indirectly (1) obtains building permits for the
Project or (2) enters into an agreement with a general contractor for the construction of the
Project, and in any event prior to the time that the Offering Developer enters into an agreement
relating to a joint venture or pre-sale of the Project. The Offer Notice shall set forth (a) the
address and legal description for the Project, (b) the number of units and beds contemplated to be
included in the Project, along with a general description of the
facilities and amenities contemplated to be included in the Project, (c) the acquisition price
which the Offering Developer would require in exchange for the contribution and/or sale of the
Project to the Operating Partnership (the Offer Consideration), (d) the date the Offering
Developer estimates construction of the Project will be substantially completed and ready for
occupancy and (e) any other terms and conditions the Offering Developer will require.
2.
Acceptance of Offer
.
(a) The Operating Partnership shall have 30 days after receipt of an Offer Notice within which
to accept, reject or make a counter offer (a Counter Offer) to the Offer therein contained. If
the Operating Partnership elects to accept the Offer or to make a Counter Offer, it shall notify
Royal Development in writing, which writing (the Counter Offer Notice) in the case of a Counter
Offer, shall contain (i) the acquisition price which the Operating Partnership would require in
exchange for the contribution and/or sale of the Project to the Operating Partnership (the Counter
Offer Consideration) and (ii) any other material terms and conditions the Operating Partnership
will require. If the Operating Partnership fails to respond within said 30-day period, the
Operating Partnership shall be deemed to have rejected the Offer therein contained and thereafter,
neither party shall have any further obligations in respect of the Project that was the subject of
the Offer.
(b) If the Operating Partnership delivers a Counter Offer Notice within said 30-day period,
Royal Apartments, on behalf of the Offering Developer, shall have five business days after receipt
of such Counter Offer Notice within which to accept or reject the Counter Offer contained therein.
If Royal Apartments, on behalf of such Offering Developer, elects to accept the Counter Offer, it
shall notify the Operating Partnership in writing. If Royal Apartments, on behalf of such Offering
Developer, fails to respond within said five business day-period, Royal Apartments, on behalf of
such Offering Developer, shall be deemed to have rejected such Counter Offer and thereafter,
neither party shall have any further obligations in respect of the Project that was the subject of
such Counter Offer.
(c) Notwithstanding the foregoing, if the Offering Developer, or Royal Apartments, on behalf
of the Offering Developer, subsequently reaches an agreement in principle to sell and /or
contribute and convey the Project to a third party (i) for an acquisition price that is 95% or less
than the Counter Offer Consideration set forth in the Operating Partnerships Counter Offer Notice,
if any, or (ii) for an acquisition price that is 90% or less than the Offer Consideration if the
Operating Partnership rejects or is deemed to have rejected the Offer (such consideration, in
either such case, the Modified Offer Consideration), then prior to becoming legally bound to sell
and/or contribute and convey the Project to said third party for the Modified Offer Consideration,
Royal Apartments, on behalf of the Offering Developer, shall offer the Operating Partnership the
right to acquire the Project for the Modified Offer Consideration (the Second Offer) by delivery
of an Offer Notice that shall include the items described in clauses (a) through (e) of Paragraph
1, except that the acquisition price shall be the Modified Offer Consideration and if any other
terms in the original Offer Notice have been modified by the subsequent agreement in principle with
said third party, the modified terms shall be included in the second Offer Notice. If the
Operating Partnership elects to accept the Second Offer, it shall notify Royal Apartments, on
behalf of the Offering Developer, in writing within seven business days after receipt of the second
Offer Notice. If the Operating Partnership fails to respond within
2
said seven business-day period, it shall be deemed to have rejected the Second Offer and
thereafter, neither party shall have any further obligations in respect of the Project that was the
subject of the Second Offer.
3.
Contribution and Sale Agreement
. If the Operating Partnership accepts an Offer or
a Second Offer as provided in Paragraphs 2(a) or (c) above, or Royal Apartments, on behalf of an
Offering Developer, accepts a Counter Offer as provided in Paragraph 2(b) above, the Operating
Partnership shall, and Royal Apartments shall cause the Offering Developer to, execute and deliver
a Contribution and Sale Agreement for the Project substantially in the form of the Contribution
Agreement, modified to incorporate the terms set forth in the applicable Offer Notice or Counter
Offer Notice, as the case may be. Thereafter, said Contribution and Sale Agreement shall govern
and be controlling with the respect to the contribution and sale of the Project that is the subject
matter thereof.
4.
Notices
. All notices, requests, demands and other communications hereunder shall
be in writing and shall be delivered by hand, facsimile or overnight courier service, or mailed by
registered or certified mail, return receipt requested, first class postage prepaid, addressed as
follows:
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If to a Developer
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c/o Royal Apartments USA, Inc.
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1605 S. State St, Suite 112
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Champaign, Illinois 61820
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Attention: Mr. Michael Henneman
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Facsimile: (217) 356-9205
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If to the Operating Partnership
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c/o American Campus Communities, Inc.
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805 Las Cimas Parkway, Suite 400
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Austin, Texas 78746
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Attention: Mr. James C. Hopke, Jr.
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Facsimile: (512) 732-2450
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If delivered by hand, facsimile or overnight courier service, the date on which a notice,
request, instruction or document is delivered shall be deemed the date of delivery and, if
delivered by mail, the fifth business day after which such notice, request, instruction or document
is deposited in the mails shall be deemed the date of delivery. Any party hereto may change its
address specified above for notices by designating a new address by notice given in accordance with
this Paragraph 4.
5.
Miscellaneous
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(a) The Paragraph headings, exhibit captions and other headings in this Agreement are inserted
solely as a matter of convenience and for reference, and are not a part of this Agreement. All
references herein to Paragraphs shall mean the Paragraphs of this Agreement.
(b) This Agreement constitute the entire agreement among the parties hereto and supersede and
cancel any prior agreements, representations, warranties, or communications,
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whether oral or written, between Royal Apartments and the Operating Partnership, or their
representatives, regarding the transactions contemplated hereby and the subject matter hereof.
(c) This Agreement, the rights and remedies of the parties hereunder, and all claims, disputes
and controversies related hereto, shall be governed by and construed in accordance with the laws of
the State of Maryland without reference to the principles of conflict of laws.
(d) In the event that any provision of this Agreement shall be held to be unenforceable or
invalid, the remaining provisions of this Agreement shall nonetheless continue to be valid and
enforceable as though the unenforceable or invalid provisions were not a part hereof.
(e) This Agreement may be executed in multiple counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. To facilitate execution
of this Agreement, the parties hereto may execute and exchange facsimile counterparts of the
signature pages to this Agreement.
(f) This Agreement may be amended or modified only by a written instrument executed by Royal
Apartments and the Operating Partnership.
(g) This Agreement shall be binding upon, and inure to the benefit of the parties hereto and
their respective successors and assigns.
(h) This Agreement is for the sole benefit of the parties hereto and no other person or entity
shall be entitled to rely upon or receive any benefit from this Agreement or any provision hereof.
(i) Neither party hereto may assign its interest in this Agreement without the express written
consent of the other party. Any purported assignment of a partys interest herein, whether
voluntarily or by operation of any applicable laws or otherwise, shall be ineffective as to the
other party. No consent to an assignment of this Agreement shall release the assignee of the
obligation to obtain consent to a subsequent assignment if such consent is otherwise required under
the terms of this Paragraph 5(i).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date
first written above.
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ROYAL APARTMENTS USA, INC.
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By:
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Name:
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Title:
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AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP
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By:
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American Campus Communities Holdings LLC, its general partner
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By:
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Name:
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Title:
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