Exhibit 4.8
REGISTERED PRINCIPAL AMOUNT No.:
$
CUSIP No.: _________
CORNERSTONE REALTY INCOME TRUST, INC.
[Designation of Subordinated Security]
CORNERSTONE REALTY INCOME TRUST, INC., a Virginia corporation
(hereinafter called the "Trust," which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to
, or registered assigns, upon presentation, the principal sum of DOLLARS on
_____________, and to pay interest on the outstanding principal amount thereon
from _____________, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually in arrears on _______
and _________ in each year, commencing _______________, at the rate of __% per
annum, until the entire principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Subordinated Security (or one or more Predecessor
Subordinated Securities) is registered at the close of business on the Regular
Record Date for such interest which shall be the ________ or ________ (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date, and may
either be paid to the Person in whose name this Subordinated Security (or one or
more Predecessor Subordinated Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Subordinated
Securities of this series not more than 15 days and not less than 10 days prior
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Subordinated Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture. Payment
of the principal of, Make-Whole Amount, if any, on, and interest on this
Subordinated Security will be made at the office or agency of the Trust
maintained for that purpose in the City of Richmond, State of Virginia, or
elsewhere as provided in the Indenture, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Trust
payment of interest may be made by (i) check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register kept for
the Subordinated Securities pursuant to Section 305 of the Indenture (the
"Security Register") or (ii) transfer to an account of the Person entitled
thereto located inside the United States.
This Subordinated Security is one of a duly authorized issue of
securities of the Trust (herein called the "Subordinated Securities"), issued
and to be issued in one or more series under an Indenture, dated as of
____________, 1997 (herein called the "Indenture"), between the Trust and
____________ (herein called the "Trustee," which term includes any successor
trustee under the Indenture with respect to the Subordinated Securities), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Trust, the Trustee and the Holders of the
Subordinated Securities and of the terms upon which the Subordinated Securities
are, and are to be, authenticated and delivered. This Subordinated Security is
one of the series designated as the "[designation of Subordinated Securities],"
limited in aggregate principal amount to $__________.
The Subordinated Securities may be redeemed at any time at the option
of the Trust, in whole or in part, upon notice of not more than 60 nor less than
30 days prior to the Redemption Date, at a redemption price equal to the sum of
(i) the principal amount of the Subordinated Securities being redeemed plus
accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount,
if any, with respect to such Subordinated Securities.
The following definitions apply with respect to any redemption of the
Subordinated Securities of this series at the option of the Trust:
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Subordinated Security, the excess, if any, of (i)
the aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of any interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had not been made, determined by
discounting, on a semiannual basis, such principal and interest at the
Reinvestment Rate (determined on the third Business Day preceding the date such
notice of redemption is given or declaration of acceleration is made) from the
respective dates on which such principal and interest would have been payable if
such redemption or accelerated payment had not been made, over (ii) the
aggregate principal amount of the Subordinated Securities being redeemed or
paid.
"Reinvestment Rate" means .25% (one-fourth of one percent) plus the
arithmetic mean of the yields under the respective headings "This Week" and
"Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly
2
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make- Whole Amount shall be used.
"Statistical Release" means the statistical release designated "H.15
(519)" or any successor publication which is published weekly by the Federal
Reserve System and which establishes yields on actively traded United States
government securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Trust.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Trust on this Subordinated Security and (b) certain
restrictive covenants and the related defaults and Events of Default applicable
to the Trust, in each case, upon compliance by the Trust with certain conditions
set forth in the Indenture, which provisions apply to this Subordinated
Security.
If an Event of Default with respect to the Subordinated Securities
shall occur and be continuing, the principal of, and the Make-Whole Amount, if
any, on, the Subordinated Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Subordinated Security shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Subordinated Securities, the Holders of not less than 25% in
principal amount of the Subordinated Securities at the time Outstanding shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable indemnity
and the Trustee shall not have received from the Holders of a majority in
principal amount of the Subordinated Securities at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Subordinated Security for the enforcement of any payment of principal
hereof or any interest on or after the respective due dates expressed herein.
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The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the Holders of the Subordinated Securities under the
Indenture at any time by the Trust and the Trustee with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Subordinated Securities. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Subordinated
Securities at the time Outstanding, on behalf of the Holders of all Subordinated
Securities, to waive compliance by the Trust with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Subordinated Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Subordinated Security and of any Subordinated Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Subordinated
Security.
No reference herein to the Indenture and no provision of this
Subordinated Security or of the Indenture shall alter or impair the obligation
of the Trust, which is absolute and unconditional, to pay the principal of,
Make-Whole Amount, if any, on, and interest on this Subordinated Security at the
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Subordinated Security is registrable in the
Security Register, upon surrender of this Subordinated Security for registration
of transfer at the office or agency of the Trust in any Place of Payment where
the principal of, Make-Whole Amount, if any, on, and interest on this
Subordinated Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trust and the Security
Registrar for the Subordinated Securities (the "Security Registrar") duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Subordinated Securities of this series, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Subordinated Securities of this series are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Subordinated Securities of this series are
exchangeable for a like aggregate principal amount of Subordinated Securities of
this series of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Trust may require payment of a sum
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sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Subordinated Security for registration
of transfer, the Trust, the Trustee and any agent of the Trust or the Trustee
may treat the Person in whose name this Subordinated Security is registered as
the owner hereof for all purposes, whether or not this Subordinated Security be
overdue, and neither the Trust, the Trustee nor any such agent shall be affected
by notice to the contrary.
The Holder of this Subordinated Security by the acceptance thereof
agrees that the indebtedness evidenced by this Subordinated Security is
subordinated in right of payment, to the extent and in the manner provided in
Article Sixteen of the Indenture, to the prior payment in full of all Senior
Debt and that the subordination is for the benefit of the holders of Senior
Debt. The Holder hereof authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effect such subordination as
provided in the Indenture and appoints the Trustee his attorney-in-fact for such
purpose. "Senior Debt" is defined in the Indenture as the principal of and
interest on, or substantially similar payments to be made by the Trust in
respect of, the following, whether outstanding at the date of execution of this
Indenture or thereafter incurred, created or assumed: (a) indebtedness of the
Trust for money borrowed or represented by purchase-money obligations, (b)
indebtedness of the Trust evidenced by notes, debentures, or bonds, or other
securities issued under the provisions of an indenture, fiscal agency agreement
or other instrument, (c) obligations of the Trust as lessee under leases of
property either made as part of any sale and lease-back transaction to which the
Trust is a party or otherwise, (d) indebtedness of partnerships and joint
ventures which is included in the Trust's consolidated financial statements, (e)
indebtedness, obligations and liabilities of others in respect of which the
Trust is liable contingently or otherwise to pay or advance money or property or
as guarantor, endorser or otherwise or which the Trust has agreed to purchase or
otherwise acquire, and (f) any binding commitment of the Trust to fund any real
estate investment or to fund any investment in any entity making such real
estate investment; but excluding, however, (1) any such indebtedness, obligation
or liability referred to in clauses (a) through (f) above as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness, obligation or liability is
not superior in right of payment to the Subordinated Securities, or ranks pari
passu with the Subordinated Securities, (2) any such indebtedness, obligation or
liability which is subordinated to indebtedness of the Trust to substantially
the same extent as or to a greater extent than the Subordinated Securities are
subordinated and (3) the Subordinated Securities. As used in the preceding
sentence the term "purchase-money obligations" shall mean indebtedness or
obligations evidenced by a note, debenture,
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bond or other instrument (whether or not secured by any lien or other security
interest but excluding indebtedness or obligations for which recourse is limited
to the property purchased) issued or assumed as all or a part of the
consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise, but shall not include any trade accounts payable. A
distribution may consist of cash, securities or other property.
No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Subordinated Security, or because of any
indebtedness evidenced thereby, shall be had against any promoter, as such or,
against any past, present or future shareholder, officer or director, as such,
of the Trust or of any successor, either directly or through the Trust or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of this Subordinated Security by the Holder thereof and as part of
the consideration for the issue of the Subordinated Securities.
All terms used in this Subordinated Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SUBORDINATED SECURITIES, INCLUDING THIS
SUBORDINATED SECURITY, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE COMMONWEALTH OF VIRGINIA.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Trust has caused "CUSIP" numbers to be
printed on the Subordinated Securities as a convenience to the Holders of the
Subordinated Securities. No representation is made as to the correctness or
accuracy of such CUSIP numbers as printed on the Subordinated Securities, and
reliance may be placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee by manual signature, this Subordinated Security shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Trust has caused this instrument to be duly
executed under its corporate seal this day of , .
CORNERSTONE REALTY INCOME TRUST, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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Attest:
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Subordinated Securities of the series designated
"[designation of Subordinated Securities]" pursuant to the within-mentioned
Indenture.
---------------------------,
as Trustee
By:
------------------------
Authorized Signatory
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Please Print or Typewrite Name and Address including
Zip Code of Assignee)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . the
within Subordinated Security of Cornerstone Realty Income Trust,
Inc. and __________ hereby does irrevocably constitute and
appoint
. . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney
to transfer said Subordinated Security on the books of the
within-named Trust with full power of substitution in the
premises.
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
NOTICE: The signature to this assignment must correspond with the name as it
appears on the first page of the within Subordinated Security in every
particular, without alteration or enlargement or any change whatever.
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