<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
-------------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________________ to __________________
Commission File Number 1-7859
- --------------------------------------------------------------------------------
IRT PROPERTY COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1366611
- --------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Galleria Parkway, Suite 1400
Atlanta, Georgia 30339
- --------------------------------- ---------------------
(Address of principal (Zip Code)
executive offices)
(770) 955-4406
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 28, 1997
- -------------------------- ----------------------------
Common Stock, $1 Par Value 32,079,448 Shares
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CERTAIN MATTERS DISCUSSED UNDER "ITEM 1. FINANCIAL STATEMENTS -- NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS" and "ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" CONTAIN
FORWARD-LOOKING STATEMENTS, WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, INCLUDING,
WITHOUT LIMITATION, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, DISCUSSION AND
ANALYSIS OF THE FINANCIAL CONDITION AND LIQUIDITY OF THE COMPANY AND CERTAIN
OTHER MATTERS. READERS OF THIS REPORT SHOULD BE AWARE THAT THERE ARE VARIOUS
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-
LOOKING STATEMENTS MADE IN THIS REPORT, WHICH INCLUDE, WITHOUT LIMITATION,
CHANGES IN TAX LAWS OR REGULATIONS; VACANCIES AND LEASE RENEWALS; TENANT
CLOSINGS; THE FINANCIAL CONDITION (INCLUDING POSSIBLE MERGERS OR BANKRUPTCIES)
OF TENANTS; COMPETITION; CHANGES IN NATIONAL AND LOCAL ECONOMIC CONDITIONS AND
POSSIBLE ENVIRONMENTAL LIABILITIES.
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
IRT PROPERTY COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate investments:
Rental properties $ 495,051,380 $ 463,392,557
Accumulated depreciation (62,463,715) (56,881,888)
------------- -------------
432,587,665 406,510,669
Net investment in direct financing leases 4,770,180 4,826,059
Investment in joint venture 355,832 355,832
Mortgage loans, net of interest discounts of $200,843
in 1997 and $222,881 in 1996 13,125,505 13,182,520
------------- -------------
Net real estate investments 450,839,182 424,875,080
Cash and cash equivalents 1,620,194 3,174,342
Accrued interest receivable 525,473 488,663
Prepaid expenses and other assets 6,757,646 9,156,606
------------- -------------
$ 459,742,495 $ 437,694,691
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable plus interest premium of
$22,278 in 1997 and $34,928 in 1996 $ 87,414,024 $ 84,000,628
7.3% convertible subordinated debentures due
August 15, 2003 29,971,000 84,905,000
7.45% senior notes due April 1, 2001, net of interest
discount of $62,550 in 1997 and $70,890 in 1996 49,937,450 49,929,110
Indebtedness to banks 26,700,000 15,000,000
Accrued interest on debentures 826,534 2,341,488
Accrued interest on senior notes 931,250 931,250
Accrued expenses and other liabilities 7,180,666 6,177,293
Deferred income taxes 1,055,000 1,055,000
------------- -------------
Total liabilities 204,015,924 244,339,769
------------- -------------
Commitments and Contingencies (Note 8)
Shareholders' Equity:
Common stock, $1 par value, authorized 75,000,000
shares; 32,075,298 shares issued and outstanding in
1997 and 25,807,302 shares in 1996 32,075,298 25,807,302
Preferred stock, $1 par value, authorized 10,000,000
shares; none issued -- --
Additional paid-in capital 260,659,708 201,273,343
Cumulative distributions in excess of net earnings (37,008,435) (33,725,723)
------------- -------------
Total shareholders' equity 255,726,571 193,354,922
------------- -------------
$ 459,742,495 $ 437,694,691
============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
3
<PAGE> 4
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
For the Three- and Six-Month Periods Ended
June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Income from rental properties $16,071,612 $14,389,235 $31,541,382 $28,751,489
Interest 340,861 410,610 722,544 636,270
Interest on direct financing leases 131,367 230,411 312,126 506,050
----------- ----------- ----------- -----------
16,543,840 15,030,256 32,576,052 29,893,809
----------- ----------- ----------- -----------
Expenses:
Operating expenses of real estate
investments 3,346,018 2,936,523 6,516,878 5,785,294
Interest on mortgages 1,833,733 1,924,665 3,642,333 4,021,854
Interest on debentures 546,971 1,549,515 1,272,942 3,099,030
Interest on senior notes 935,420 927,007 1,870,840 989,190
Interest on indebtedness to banks 358,619 62,051 571,275 714,526
Depreciation 2,819,981 2,532,253 5,581,827 5,187,898
Amortization of debt costs 96,220 155,334 203,661 284,738
General & administrative 948,164 955,350 1,799,308 1,921,195
----------- ----------- ----------- -----------
10,885,126 11,042,698 21,459,064 22,003,725
----------- ----------- ----------- -----------
Earnings before gain (loss) on real
estate investments and
extraordinary item 5,658,714 3,987,558 11,116,988 7,890,084
Gain (loss) on real estate investments:
Gain (loss) on sales of properties -- (12,874) -- 194,622
----------- ----------- ----------- -----------
Earnings before extraordinary item 5,658,714 3,974,684 11,116,988 8,084,706
Extraordinary loss on extinguishment of -- (16,500) -- (16,500)
debt ----------- ----------- ----------- -----------
Net earnings $ 5,658,714 $ 3,958,184 $11,116,988 $ 8,068,206
=========== =========== =========== ===========
Per Share:
Earnings before extraordinary item $ 0.17 $ 0.15 $ 0.35 $ 0.31
Extraordinary item -- -- -- --
----------- ----------- ----------- -----------
Net earnings $ 0.17 $ 0.15 $ 0.35 $ 0.31
=========== =========== =========== ===========
Weighted average number of shares
outstanding 32,041,622 25,737,741 31,515,722 25,720,717
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Distributions Total
Common Paid-In in Excess of Shareholders'
Stock Capital Net Earnings Equity
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ 25,689,002 $ 200,318,168 $ (27,377,023) $ 198,630,147
Net earnings for period -- -- 8,068,206 8,068,206
Cash dividends paid -
$.45 per share -- -- (11,569,769) (11,569,769)
Issuance of shares under
Dividend Reinvestment
Plan, net 62,051 481,557 -- 543,608
Exercise of Incentive Stock
Options, net 2,300 15,238 -- 17,538
Issuance of shares for the
acquisition of properties 3,339 27,378 -- 30,717
------------- ------------- ------------- -------------
Balance at June 30, 1996 $ 25,756,692 $ 200,842,341 $ (30,878,586) $ 195,720,447
============= ============= ============= =============
Balance at December 31, 1996 $ 25,807,302 $ 201,273,343 $ (33,725,723) $ 193,354,922
Net earnings for period -- -- 11,116,988 11,116,988
Cash dividends paid -
$.45 per share -- -- (14,399,700) (14,399,700)
Issuance of shares under
Dividend Reinvestment
Plan, net 88,698 855,983 -- 944,681
Conversion of debentures, net 11,998 119,200 -- 131,198
Exercise of Incentive Stock
Options, net 13,553 53,288 -- 66,841
Issuance of common stock,
net 4,653,747 44,880,749 -- 49,534,496
Issuance of shares for the
acquisition of convertible
debentures, net 1,500,000 13,477,145 -- 14,977,145
------------- ------------- ------------- -------------
Balance at June 30, 1997 $ 32,075,298 $ 260,659,708 $ (37,008,435) $ 255,726,571
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE> 6
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 11,116,988 $ 8,068,206
Adjustments to reconcile earnings to net cash from
operating activities:
Depreciation 5,581,827 5,187,898
Gain on real estate investments -- (194,622)
Extraordinary loss -- 16,500
Amortization of debt costs and discount 212,001 289,008
Amortization of capital leasing income 55,879 107,270
------------ ------------
16,966,695 13,474,260
Changes in accrued assets and liabilities:
Decrease in accrued interest on debentures (1,514,954) --
Increase in accrued interest on senior notes -- 993,334
Decrease in interest receivable, prepaid
expenses and other assets 602,193 333,643
Increase in accrued expenses and other
liabilities 1,003,373 717,453
------------ ------------
Net cash flows from operating activities 17,057,307 15,518,690
------------ ------------
Cash flows from (used in) investing activities:
Proceeds from sales of properties, net -- 1,589,442
Additions to real estate investments, net -
Acquisitions, expansions and renovations (22,937,323) (787,480)
Improvements (678,809) (1,465,519)
Collections of mortgage loans, net 57,015 52,642
------------ ------------
Net cash flows used in investing activities (23,559,117) (610,915)
------------ ------------
Cash flows from (used in) financing activities:
Cash dividends paid, net (13,455,019) (11,026,161)
Issuance of common stock, net 49,534,496 --
Exercise of Incentive Stock Options 66,841 17,538
Principal amortization of mortgage notes payable, net (665,326) (653,831)
Repayment of mortgage notes payable, net (3,963,969) (10,098,751)
Increase (decrease) in bank indebtedness, net 11,700,000 (36,000,000)
Issuance of 7.45% senior notes, net -- 49,394,325
Repurchase of 7.3% convertible subordinated
debentures, net (38,269,338) --
Cash in lieu of fractional shares on conversion of
debentures (23) --
Extraordinary item -
Loss on extinguishment of debt -- (16,500)
------------ ------------
Net cash flows from (used in) financing
activities 4,947,662 (8,383,380)
------------ ------------
Net increase (decrease) in cash and cash equivalents (1,554,148) 6,524,395
Cash and cash equivalents at beginning of period 3,174,342 16,400
------------ ------------
Cash and cash equivalents at end of period $ 1,620,194 $ 6,540,795
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE> 7
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
- --------------------------------------------------
Cash paid during the period for interest related to:
Mortgage notes payable $ 3,617,763 $ 4,080,549
Convertible subordinated debentures 2,787,896 3,099,032
Senior notes, including $8,414 capitalized in 1996 1,862,500 83,500
Indebtedness to banks, including $2,853
capitalized in 1996 744,763 836,593
------------ ------------
Total cash paid during the period for interest $ 9,012,922 $ 8,099,674
============ ============
Supplemental schedule of noncash investing and
financing activities:
- ----------------------------------------------
Acquisitions, expansions and renovations:
Cost of acquisitions, expansions and renovations $ 30,980,014 $ 818,197
Additions to mortgage notes payable (8,042,691) --
Issuance of common stock -- (30,717)
------------ ------------
Cash paid for acquisitions, expansions and
renovations of real estate investments $ 22,937,323 $ 787,480
============ ============
Sales of Properties:
Gross proceeds from sales of properties $ -- $ 5,389,442
Additions to mortgage loans -- (3,800,000)
------------ ------------
Cash proceeds from sales of properties, net $ -- $ 1,589,442
============ ============
Repurchase of convertible debentures:
Convertible debentures repurchased $ 54,799,000 $ --
Issuance of common stock, net (16,529,662) --
------------ ------------
Cash paid for repurchase of convertible debentures $ 38,269,338 $ --
============ ============
Issuance of common stock, net $ 16,529,662 $ --
Associated unamortized debenture costs (1,552,517) --
------------ ------------
Net increase in shareholders' equity $ 14,977,145 $ --
============ ============
Conversion of debentures:
Debentures converted $ 135,000 $ --
Associated unamortized debenture costs (3,779) --
Equity issued on conversion (131,198) --
------------ ------------
Cash paid in lieu of fractional shares $ 23 $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
7
<PAGE> 8
IRT PROPERTY COMPANY
Notes to Consolidated Financial Statements
June 30, 1997 and 1996
1. Unaudited Financial Statements
These consolidated financial statements for interim periods are
unaudited and should be read in connection with the Company's Annual Report to
Shareholders for the year ended December 31, 1996. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to a
fair presentation of the financial statements as of June 30, 1997 and 1996 have
been recorded. The results of operations for the interim periods are not
necessarily indicative of the results that may be expected for future interim
periods or for the full year.
2. Earnings Per Share
Earnings per share have been computed based on the weighted average
number of shares of common stock outstanding. The effect on earnings per share
assuming conversion of the 7.3% convertible subordinated debentures would be
anti-dilutive. Exercise of the outstanding stock options would not have a
material dilutive effect on earnings per share.
3. Recent Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 128 ("FAS 128") "Earnings Per Share,"
which is effective for financial statements issued for periods ending after
December 15, 1997. FAS 128 establishes standards for computing and presenting
earnings per share. The Company does not expect this standard to have a
material impact on the earnings per share calculation. The Company intends to
adopt FAS 128 in the fourth quarter of 1997.
4. Issuance of Common Stock
On January 14 and 22, 1997, the Company completed the offering of
4,653,747 shares of its common stock at $11.25 per share. The net proceeds from
the offering totaled approximately $49,534,000.
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5. 7.3% Convertible Subordinated Debentures
On January 17, 1997, the Company completed the repurchase of
$54,799,000 of its 7.3% convertible subordinated debentures due August 15, 2003
in a private transaction with a single debenture holder. The debentures were
repurchased by the Company at par plus $1,689,000 of accrued interest. The
seller had informed the Company that the seller had both $54,799,000 par value
of the debentures and a short position of 1,500,000 shares in the Company's
common stock. The consideration paid by the Company was comprised of 1,500,000
shares of common stock, valued for purposes of the exchange at $11.05 per share,
and cash in the amount of $38,224,000. Additional paid-in-capital was reduced by
approximately $1,553,000 of unamortized issuance costs associated with the
debentures repurchased and canceled and by approximately $45,000 of costs
associated with the transaction.
The repurchase of the debentures was transacted pursuant to a Purchase
and Standstill Agreement under which the seller agreed to eliminate its short
position in Company common stock, after which the seller did not own any Company
securities. The seller further agreed not to take any position with respect to
any Company securities or to attempt to influence Company policies or management
in the future.
During February and March 1997, $135,000 of the 7.3% convertible
debentures were converted into 11,998 shares of common stock at $11.25 per
share.
Based upon the $11.25 conversion price, 2,664,089 authorized but
unissued common shares have been reserved for possible issuance if the remaining
$29,971,000 of debentures outstanding June 30, 1997 are converted.
6. Indebtedness to Banks
Effective June 30, 1997, the Applicable Margins charged for LIBOR-based
borrowings under the Company's $100,000,000 unsecured revolving term loan were
reduced from a range of 1.3%-1.5% to a range of .95%-1.25%. The Applicable
Margin is based upon the rating of the senior unsecured long-term debt
obligations of the Company. The Applicable Margin based on the Company's current
rating is 1.25%.
The Company pays a fee of 0.25% per annum of the aggregate
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unused portion of the commitment. Effective July 1, 1997, this fee will be
reduced to 0.15% per annum whenever the unused portion is less than fifty
percent of the total commitment.
On July 22, 1997, in accordance with the terms of the $100,000,000
unsecured revolving term loan agreement dated December 15, 1995, the Company
extended the maturity date for an additional twelve-month period to January 4,
2001.
7. Purchase of Rental Properties
On February 6, 1997, the Company acquired Grassland Crossing in
Alpharetta, Georgia for a total cost of $9,907,000, consisting of the initial
purchase price of $9,890,000 and approximately $17,000 of acquisition costs.
This acquisition was funded by cash of $3,114,000 and the assumption of the
$6,793,000 existing mortgage debt with an interest rate of 7.865% maturing
December 1, 2016.
On April 16, 1997, the Company acquired Market Place Shopping Center in
Norcross, Georgia for $7,069,000 cash, consisting of the initial purchase price
of $6,800,000, $250,000 of capital expenditures and approximately $19,000 of
acquisition costs.
On May 13, 1997, the Company acquired Powers Ferry Plaza in Marietta,
Georgia for a total cost of $6,894,000, consisting of the initial purchase price
of $6,800,000 and approximately $94,000 of acquisition costs. This acquisition
was funded by cash of $5,644,000 and a $1,250,000 purchase-money mortgage with
an annual interest rate of 9.00% maturing January 31, 1999.
On June 17, 1997, the Company acquired Fairview Oaks Shopping Center in
Ellenwood, Georgia for $7,109,000 cash, consisting of the initial purchase price
of $7,100,000 and approximately $9,000 of acquisition costs.
8. Commitments and Contingencies
IRT Capital Corporation has entered into a co-development agreement for
the development of a Kroger anchored shopping center in Decatur, Georgia. The
project will be developed in two phases totaling approximately 140,000 square
feet, not including two outparcels, at a total anticipated cost of approximately
$14,100,000. The venture may require IRT Property Company to purchase the
shopping center upon completion of phase I at cost or
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upon the completion of phase II at the greater of cost or a 10.75%
capitalization rate. It is anticipated that IRT Property Company will
ultimately acquire the project upon completion.
On June 26, 1996, the Company purchased 1.97 acres of land adjacent to
its Lawrence Commons Shopping Center investment in Lawrenceburg, Tennessee for
approximately $100,000 cash. The parcel of land was purchased to allow for an
expansion of the anchor tenant space by approximately 20,000 square feet. The
anchor tenant's annual rent increased by 11% of the land cost from the date of
purchase. The Company committed to reimburse the anchor tenant for the cost of
the expansion, not to exceed $2,100,000, however, the tenant has elected to fund
the expansion and not seek reimbursement from the Company.
The Company has entered into a contract to purchase a shopping center
investment for a purchase price of $5,750,000 which is scheduled to close during
the third quarter of 1997.
9. Subsequent Events
On July 1, 1997, the Company acquired Greenwood Shopping Center in Palm
Springs, Florida for $13,006,000 cash, consisting of the initial purchase price
of $12,950,000 and approximately $56,000 of acquisition costs.
On July 17, 1997, the Company repaid four mortgage notes payable
aggregating approximately $30,881,000 which were scheduled to mature on August
1, 1997. The interest rate on three of such mortgages aggregating $27,821,000
was 7.6% and the rate on the fourth mortgage was 9.375%. The repayment of these
mortgages was funded by borrowings under the Company's revolving term loan.
11
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Material Changes in Financial Condition. During the six months ended
June 30, 1997, the Company received cash proceeds of approximately $49,534,000
from the issuance of 4,653,747 shares of its common stock at $11.25 per share
and borrowed $11,700,000 under its revolving term loan. It utilized funds of a)
$54,799,000 to repurchase $54,799,000 of its 7.3% convertible subordinated
debentures due August 15, 2003, consisting of cash of approximately $38,224,000
and the issuance of 1,500,000 shares of common stock, valued for the purposes of
the exchange at $11.05 per share, b) $30,979,000 for the acquisition of four
shopping center investments, consisting of cash of approximately $22,936,000 and
mortgage debt of approximately $8,043,000 secured by two of the centers, and c)
$3,800,000 to repay a 9.75% mortgage at maturity. Additionally, $135,000 of the
Company's 7.3% convertible subordinated debentures were converted into 11,998
shares of common stock at $11.25 per share.
During the six months ended June 30, 1996, the Company received cash
proceeds of approximately $49,394,000 from the issuance of $50,000,000 of senior
notes due April 2001 and net cash proceeds of approximately $1,589,000 on the
sale of Valley West Mall. It utilized funds of a) $36,000,000 to repay the
outstanding balance of its unsecured revolving term loan, b) $6,263,000 to repay
a 9.78% mortgage at maturity, c) $1,052,000 to repay a 13.875% mortgage
(discounted to 9.5% for financial reporting purposes) at maturity, d) $2,727,000
to prepay a 9.375% mortgage, e) $57,000 to prepay an 8.5% mortgage and f)
$777,000 to fund expansion or redevelopment costs of four existing investments.
Material Changes in Results of Operations. During the quarter ended
June 30, 1997, rental income from the Company's core portfolio of shopping
center investments increased approximately $516,000. This increase includes
approximately $118,000 of additional income earned from two property expansions
completed during 1996. The increase in the Company's core portfolio income was
supplemented by approximately $1,167,000 of income earned from two shopping
center investments acquired in August and November 1996 and four shopping center
investments acquired during the first six months of 1997. Percentage rentals
received from shopping center investments, excluding percentage rentals received
from the Wal-Mart investments classified as direct financing leases, totaled
approximately $176,000 and $170,000 during the quarters ended June
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<PAGE> 13
30, 1997 and 1996, respectively. Percentage rental income is recorded upon
collection based on the tenant's lease years.
During the first six months of 1997, rental income from the Company's
core portfolio of shopping center investments increased approximately $959,000.
This increase includes approximately $229,000 of additional income earned from
two property expansions completed during 1996. The increase in the Company's
core portfolio income was offset by approximately $65,000 less income earned on
one investment sold during the first quarter of 1996 and was supplemented by
approximately $1,896,000 of income earned from the six shopping center
investments acquired in 1996 and the first six months of 1997. Percentage
rentals received from shopping center investments, excluding percentage rentals
received from the Wal-Mart investments classified as direct financing leases,
totaled approximately $460,000 and $363,000 during the quarters ended June 30,
1997 and 1996, respectively. Percentage rental income is recorded upon
collection based on the tenant's lease years.
The $70,000 decrease in interest income during the quarter ended June
30, 1997 was primarily due to approximately $83,000 less income earned on
short-term money market investments offset by interest income earned on
purchase-money mortgages taken back on the sales of two investments in December
1996.
The $86,000 increase in interest income during the six months ended
June 30, 1997 was primarily due to interest income earned on purchase-money
mortgages taken back on the sales of three investments during 1996 offset by
approximately $26,000 less income earned on short-term money market investments.
During the quarter and six months ended June 30, 1997, interest income
on direct financing leases decreased approximately $99,000 and $194,000,
respectively. These decreases were primarily due to the sale of two Wal-Mart
investments in December 1996. During 1997, the Company received percentage
rental of approximately $49,000 from one of its remaining Wal-Mart investments,
compared to approximately $44,000 received in 1996.
Operating expenses related to the Company's core portfolio of real
estate investments increased approximately $138,000 and $251,000 for the quarter
and six months ended June 30, 1997, respectively. Additionally, approximately
$261,000 and $404,000 of operating expenses were incurred during the quarter and
six months ended June 30, 1997, respectively, by the six shopping center
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investments acquired by the Company during 1996 and the first six months of
1997.
The $91,000 and $380,000 net decreases in interest expense on mortgages
during the quarter and six months ended June 30, 1997, respectively, were
primarily due to various mortgages repaid or refinanced during 1996 and the
first six months of 1997, partially offset by the assumption of a $6,793,000
mortgage bearing interest at 7.865% upon the acquisition of Grassland Crossing
in February 1997 and the $1,250,000 purchase-money mortgage bearing interest at
9.00% taken upon the acquisition of Powers Ferry Plaza in May 1997. During the
first quarter of 1997, the Company repaid at maturity a $3,800,000 mortgage
bearing interest at 9.75%. During 1996, the Company (a) repaid at maturity a
$6,263,000 mortgage bearing interest at 9.78%, (b) repaid at maturity a
$1,052,000 mortgage bearing interest at 13.875% (discounted to 9.5% for
financial reporting purposes), (c) prepaid a $2,727,000 mortgage bearing
interest at 9.375%, (d) prepaid a $57,000 mortgage bearing interest at 8.50% and
(e) repaid at maturity a $3,850,000 mortgage bearing interest at 9.50%.
Interest on debentures decreased approximately $1,002,000 and
$1,826,000 during the quarter and six months ended June 30, 1997, respectively,
due to the repurchase of $54,799,000 and the conversion of $135,000 of the
debentures during the first quarter of 1997.
The increase in interest on senior notes during the six months ended
June 30, 1997 was due to the issuance in March 1996 of $50 million of 7.45%
senior notes due April 2001.
Interest expense on bank indebtedness increased approximately $297,000
for the quarter ended June 30, 1997. The Company had average borrowings of
approximately $16,732,000 at an effective interest rate of 7.25% under its bank
credit facility during the quarter ended June 30, 1997 and no amounts
outstanding during the quarter ended June 30, 1996. In addition, the Company
incurred commitment fees of approximately $52,000 and $62,000 for the quarters
ended June 30, 1997 and 1996, respectively, based on the aggregate unused
portion of the commitment.
Interest expense on bank indebtedness decreased approximately $143,000
for the six months ended June 30, 1997. The Company had average borrowings of
approximately $12,863,000 and $15,063,000 at effective interest rates of 7.16%
and 8.05%, respectively, under
14
<PAGE> 15
its bank credit facility during the six months ended June 30, 1997 and 1996,
respectively. In addition, the Company incurred commitment fees of approximately
$108,000 and $101,000 for the six months ended June 30, 1997 and 1996,
respectively, based on the aggregate unused portion of the commitment.
The increases in depreciation expense during the quarter and six months
ended June 30, 1997 were primarily due to the six shopping center investments
acquired during 1996 and the first six months of 1997.
Amortization of debt costs decreased during the quarter and six months
ended June 30, 1997 due to the repurchase of $54,799,000 and the conversion of
$135,000 of the Company's convertible subordinated debentures during the first
quarter of 1997.
The decrease in general and administrative expenses during the six
months ended June 30, 1997 was primarily due to decreases in employee benefit
costs and insurance costs.
Funds from Operations. The Company defines funds from operations,
consistent with the NAREIT definition, as net earnings before gains (losses) on
real estate investments and extraordinary items plus depreciation and
amortization of capitalized leasing costs. Interest on debentures and
amortization of convertible debenture costs is added to funds from operations
when assumed conversion of the debentures is dilutive. Conversion of the
debentures is dilutive and therefore assumed for the quarter and six months
ended June 30, 1997 and 1996. Management believes funds from operations should
be considered along with, but not as an alternative to, net income as defined by
generally accepted accounting principles as a measure of the Company's operating
performance. Funds from operations does not represent cash generated from
operating activities in accordance with generally accepted accounting principles
and is not necessarily indicative of cash available to fund cash needs.
15
<PAGE> 16
The following data is presented with respect to the calculation of
funds from operations under the NAREIT definition for the quarters and six month
periods ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings $ 5,658,714 $ 3,958,184 $ 11,116,988 $ 8,068,206
Loss (gain)on real estate
investments -- 12,874 -- (194,622)
Loss on extinguishment
of debt -- 16,500 -- 16,500
Depreciation 2,819,981 2,532,253 5,581,827 5,187,898
Amortization of
capitalized leasing fees 63,693 55,145 123,890 108,355
Amortization of
capitalized leasing income 30,286 54,348 55,879 107,270
------------ ------------ ------------ ------------
Funds from operations 8,572,674 6,629,304 16,878,584 13,293,607
Interest on debentures 546,971 1,549,515 1,272,942 3,099,030
Amortization of
convertible debenture costs 32,277 91,440 75,774 182,880
------------ ------------ ------------ ------------
Fully diluted funds from
operations $ 9,151,922 $ 8,270,259 $ 18,227,300 $ 16,575,517
============ ============ ============ ============
Fully diluted weighted
average shares 34,705,711 33,284,852 34,613,984 33,267,829
============ ============ ============ ============
</TABLE>
16
<PAGE> 17
Additional Information. The following data is presented with respect to
amounts incurred for improvements to the Company's real estate investments and
for leasing fees during the quarters and six-month periods ended June 30, 1997
and 1996:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Tenant Improvements:
Shopping Centers $ 142,295 $ 181,225 $ 232,123 $ 375,492
Industrial 5,483 170,739 9,065 348,399
---------- ---------- ---------- ----------
Total Tenant
Improvements 147,778 351,964 241,188 723,891
---------- ---------- ---------- ----------
Capital Expenditures:
Shopping Centers 258,485 409,946 375,629 497,276
Apartment 56,618 33,109 61,992 86,360
Industrial -- 157,690 -- 157,992
---------- ---------- ---------- ----------
Total Capital
Expenditures 315,103 600,745 437,621 741,628
---------- ---------- ---------- ----------
Total Improvements $ 462,881 $ 952,709 $ 678,809 $1,465,519
========== ========== ========== ==========
Leasing Fees $ 76,040 $ 41,535 $ 119,158 $ 143,739
========== ========== ========== ==========
</TABLE>
Tenant improvements reflected above do not include leasing fees.
Leasing fees are recorded as deferred assets and expensed on the straight line
basis over the lives of the respective leases in operating expenses of real
estate investments.
17
<PAGE> 18
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders.
The Annual Meeting of Shareholders of the Company was held May 9, 1997
with 28,079,816 shares represented by proxy, or approximately 88% of the
32,016,752 shares outstanding as of the March 21, 1997 record date. The
following matters were voted upon by shareholders of the Company:
1. The election of seven directors to hold office until their
successors are elected and qualified. All seven directors were
elected, with at least 99.38% of the shares represented at the
meeting voting in favor of all the nominees as directors. The
following table lists the votes cast for and against each
director:
<TABLE>
<CAPTION>
DIRECTOR FOR AGAINST
-------- --- -------
<S> <C> <C>
Donald W. MacLeod 27,909,434 170,382
Thomas H. McAuley 27,915,464 164,352
Mary M. Thomas 27,913,770 166,046
Homer B. Gibbs, Jr. 27,913,471 166,345
Samuel W. Kendrick 27,913,808 166,013
Bruce A. Morrice 27,912,947 166,869
James H. Nobil 27,905,820 173,996
</TABLE>
2. The amendment of Article XIII of the Company's Articles of
Incorporation, in accordance with recently adopted policies of
the New York Stock Exchange, to indicate that nothing in the
Articles of Incorporation will preclude the settlement of any
trade entered into through the facilities of the New York
Stock Exchange. The amendment was approved with 27,621,864
shares, or 86.27%, of the shares outstanding voting for and
125,095 shares, or .39%, voting against with 332,857 shares,
or 1.04%, abstaining.
The Annual Meeting of Shareholders of the Company was reconvened on
June 5, 1997 with 19,229,346 shares represented by proxy, or approximately
60.06% of the shares outstanding as of the March 21, 1997 record date. The only
matter voted upon by shareholders of the Company was the amendment of Article VI
of the Company's Articles of Incorporation to authorize the Company to
18
<PAGE> 19
issue, in one or more series, up to 10,000,000 shares of $1.00 par value
Preferred Stock which shall not have more than one vote per share. The amendment
was approved with 16,713,756 shares, or 52.20%, of the shares outstanding voting
for and 2,070,220 shares, or 6.47%, voting against with 445,370 shares, or
1.39%, abstaining.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(3)(a) Amended and Restated Articles of
Incorporation.
(10)(f.1) Consulting Agreement between the Company and Donald
W. MacLeod dated June 12, 1997.
(10)(h.1) First Amendment to Loan Agreement dated June 30,
1997 amending the Company's $100 million revolving
term loan agreement dated December 15, 1995 which
was filed as an exhibit to the Company's Form
8-K dated January 2, 1996, to which reference is
hereby made.
(10)(h.2) Second Amendment to Loan Agreement dated July 1,
1997 amending the Company's Company's $100 million
revolving term loan agreement dated December 15,
1995 which was filed as an exhibit to the Company's
Form 8-K dated January 2, 1996, to which reference
is hereby made.
(27) Financial Data Schedule (for S.E.C. use only).
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the quarter ended June 30, 1997.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
IRT PROPERTY COMPANY
Date: July 28, 1997 /s/ Thomas H. McAuley
------------- ----------------------------------------
Thomas H. McAuley
President & Chief Executive
Officer
Date: July 28, 1997 /s/ Mary M. Thomas
------------- ----------------------------------------
Mary M. Thomas
Executive Vice President &
Chief Financial Officer
20
<PAGE> 1
EXHIBIT (3)(a)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
IRT PROPERTY COMPANY
Pursuant to Section 14-2-1007 of the Georgia Business Corporation Code,
IRT Property Company hereby amends and restates its Articles of Incorporation in
their entirety as follows:
I.
The name of the corporation is IRT Property Company.
II.
The corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
III.
The corporation shall have perpetual duration.
IV.
The nature of the business or purposes proposed to be transacted or
promoted are as follows:
(a) To acquire, manage, improve, deal with and dispose of interests in
real and personal property.
(b) To engage in any lawful act or activity for which corporations may
be organized under the Georgia Business Corporation Code.
V.
5.1 The total number of shares of capital stock which the corporation
shall have authority to issue is 85,000,000, of which 75,000,000 shall be Common
Stock of the par value of $1.00 per share (hereinafter called the "Common
Stock") and 10,000,000 shall be Preferred Stock of the par value of $1.00 per
share (hereinafter called the "Preferred Stock").
5.2 The Preferred Stock may be issued from time to time by the
corporation in one or more distinct series, with such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated and expressed in the
<PAGE> 2
resolution or resolutions providing for the issuance of such stock adopted by
the Board of Directors of the corporation pursuant to authority to do so which
is hereby vested in the Board of Directors. Each such series of Preferred Stock
shall be distinctly designated. Shares of Preferred Stock of each series shall
be alike in every particular, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon may
cumulate, if made cumulative. The voting rights, if any, of each such series and
the preferences and relative, participating, optional and other special rights
of each such series and the qualifications, limitations and restrictions
thereof, if any, may differ from those of any and all other series at any time
outstanding; and the Board of Directors of the corporation is hereby expressly
granted authority to fix, by resolutions duly adopted prior to the issuance of
any shares of a particular series of Preferred Stock so designated by the Board
of Directors, the voting powers of stock of such series, if any, and the
designations, preferences and relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof, if
any, for such series, including without limitation the following:
(a) The distinctive designation of and the number of shares of
Preferred Stock which shall constitute such series; provided that
such number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number of
shares thereof then outstanding) from time to time by like action
of the Board of Directors;
(b) The rate or rates and times at which, and the terms and conditions
upon which, dividends, if any, on Preferred Stock of such series
shall be payable upon declaration by the Board of Directors,
whether such dividends shall be cumulative or noncumulative, and
the extent of the preference, subordination or other relation, if
any, of such dividends to the dividends payable on any other
series of Preferred Stock or any other class of stock of the
corporation;
(c) Conversion, exchange, purchase or other privileges, if any, to
acquire shares or other securities of any class or series, whether
at the option of the corporation or of the holder, and if subject
to conversion, exchange, purchase or similar privileges, the
conversion, exchange or purchase prices or rates and such
adjustments thereto as may be determined, the manner and time or
times at which such privileges may be exercised, and the terms and
conditions of such conversion, exchange, purchase or other
privileges;
(d) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices, redemption rate or
rates, and any adjustments to such redemption prices or redemption
rates as may be determined and the time or times at which, and the
terms and conditions upon which, Preferred Stock of such series
may be redeemed;
(e) The rights, including the amount or amounts, if any, of
preferential or other payments to which holders of shares of any
series are entitled upon the
<PAGE> 3
dissolution, winding-up, voluntary or involuntary liquidation,
distribution or sale or lease of all or substantially all of the
assets of the corporation;
(f) The terms of the sinking fund, retirement or redemption or
purchase account, if any, to be provided for the Preferred Stock
of such series; and
(g) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing, include the right, voting as a series by itself or
together with any other series of the Preferred Stock as a class,
(i) to vote not more than one vote per share of Preferred Stock on
any or all matters voted upon by the shareholders and/or (ii) to
elect one or more directors of the corporation if there has been a
default in the payment of dividends on any one or more series of
the Preferred Stock or under other circumstances and upon such
other conditions as the Board of Directors may fix.
5.3 Except as otherwise provided herein, the Board of Directors shall
have authority to authorize the issuance, from time to time, without any vote or
other action by the shareholders, of any or all shares of stock of the
corporation of any class or series at any time authorized, and any securities
convertible into or exchangeable for any such shares, and any options, rights or
warrants to purchase or acquire any such shares, in each case to such persons
and on such terms (including as a dividend or distribution on or with respect
to, or in connection with a split or combination of, the outstanding shares of
stock of the same or any other class or series) as the Board of Directors from
time to time in its discretion lawfully may determine; provided, that the
consideration for the issuance of shares of stock of the corporation (unless
issued as such a dividend or distribution or in connection with such a split or
combination) shall not be less than the par value of such shares. Shares so
issued shall be fully paid stock, and the holders of such stock shall not be
liable to any further call or assessments thereon.
VI.
All Directors shall hold office until the annual meeting of shareholders
next ensuing and until their successors shall be elected and qualified, subject
to earlier resignation or removal. Elections of Directors need not be by written
ballot unless the By-Laws of the corporation so provide.
VII.
The Board of Directors, as well as the Stockholders, may make, alter or
repeal the By-Laws of the corporation, to the extent permitted by such By-Laws.
VIII.
The Board of Directors is expressly authorized and empowered:
<PAGE> 4
(a) To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve.
(b) To distribute ratably among the Stockholders such proportion of
the cash available from operations, net profits, capital surplus
or assets as they may from time to time deem proper.
(c) To purchase for the corporation shares of its capital stock out of
unreserved and unrestricted earned surplus and capital surplus
available therefor and as otherwise provided by law.
(d) To conduct the business of the corporation in such manner as to be
eligible to qualify from time to time at the discretion of the
Directors as a "real estate investment trust" under the provisions
of the U.S. Internal Revenue Code.
IX.
No holder of any stock of the corporation, now or hereafter authorized,
shall have preemptive rights with respect to any shares of capital stock of the
corporation.
X.
If the Directors shall, at any time when the corporation is being, or
intended to be, operated in a manner so as to qualify as a real estate
investment trust under the Internal Revenue Code, be of the good faith opinion
that direct or indirect ownership of shares of the corporation has or may become
concentrated to an extent which is contrary to the requirements of Section
856(a)(5) and (6) of the Internal Revenue Code, then the Directors shall have
the power (i) to call for redemption a number of such concentrated shares
sufficient, in the opinion of the Directors, to maintain or bring the direct or
indirect ownership of shares of the corporation into conformity with the
requirements of said Section 856(a)(5) and (6) and (ii) to refuse to transfer
shares to any person whose acquisition of the shares in question would, in the
opinion of the Directors, result in a violation of said Section 856(a)(5) or
(6). The redemption price shall be equal to the fair market value of the shares
as reflected in the latest bid quotation for the shares (if then traded
over-the-counter) or the closing price (if then listed on a national securities
exchange) on the business day preceding the day on which notice of redemption is
sent, or, if no quotations or closing sale price for the shares are available as
otherwise determined in good faith by the Directors. From and after the date
fixed for redemption by the Directors, the holder of any shares so called for
redemption shall cease to be entitled to dividends, voting rights and other
benefits with respect to such shares excepting only the right to payment of the
redemption price fixed as aforesaid. For the purposes of this Article, (a) the
term "person" shall include any "individual" which term, in turn, shall be
construed as defined in Section 542(a)(2) of the Internal Revenue Code, and (b)
"ownership" of shares shall be determined as provided in Section 544 of the
Internal Revenue Code. References herein to provisions of the Internal
<PAGE> 5
Revenue Code as in effect on the date of the incorporation of the corporation
shall include references to any successor provision of said Code as subsequently
amended of similar import.
Notwithstanding the provisions of this Article X, nothing in these
Articles of Incorporation will preclude the settlement of any trade entered into
through the facilities of the New York Stock Exchange.
XI.
11.1 A director of the corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for breach of duty of
care or other duty as a director, except for liability (i) for any
appropriation, in violation of his duties, of any business opportunity of the
corporation; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) of the types set
forth in Section 14-2-154 of the Georgia Business Corporation Code; or (iv) for
any transaction from which the director derived an improper personal benefit.
The provisions of this article shall not apply with respect to acts or omissions
occurring prior to the effective date of this article.
11.2 Any repeal or modification of the provisions of this Article by
the shareholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
corporation with respect to any act or omission occurring prior to the effective
date of such repeal or modification.
11.3 If the Georgia Business Corporation Code hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Georgia Business Corporation Code.
Specifically, and not in limitation of the foregoing sentence, it is anticipated
that the Georgia Business Corporation Code will be amended in 1989 so as, among
other things, to permit the elimination of the reference to a lack of "good
faith" in clause (ii) of Section 11.1 above; therefore, effective immediately
upon the effective date, if any, of such anticipated amendment, clause (ii) of
Section 11.1 above shall be deemed amended to read exactly as the corresponding
provisions of the Georgia Business Corporation Code, as so amended.
11.4 In the event that any of the provisions of this Article (including
any provision within a single sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, the remaining
provisions are severable and shall remain enforceable to the fullest extent
permitted by law.
-----------------
<PAGE> 6
These Amended and Restated Articles of Incorporation do not contain
amendments requiring shareholder approval, and were duly adopted in accordance
with the applicable provisions of Sections 14-2-1002 and 14-2-1007 of the
Georgia Business Corporation Code by the directors of the corporation effective
as of July 23, 1997.
These Amended and Restated Articles of Incorporation supersede the
original Articles of Incorporation of the corporation as heretofore amended;
provided that the term "effective date" relating to the limitation of director
liability in Article XI shall refer to the date on which any such provision
originally became effective rather than the date of this amendment and
restatement.
IN WITNESS WHEREOF, the undersigned executes these Amended and Restated
Articles of Incorporation this 23rd day of July, 1997.
IRT PROPERTY COMPANY
By:/s/W. Benjamin Jones
------------------------------
Name:/s/W. Benjamin Jones
-------------------------
Title:Executive Vice President
------------------------
<PAGE> 7
EXHIBIT E
FORM OF SWING LINE NOTE
$5,000,000.00 As of June 30, 1997
FOR VALUE RECEIVED, the undersigned, IRT PROPERTY COMPANY, a Georgia
corporation (the "Borrower"), promises to pay to the order of NATIONSBANK, N.A.
(hereinafter, together with its successors and assigns, called the "Swing Line
Lender"), at the office of the Administrative Agent the principal sum of FIVE
MILLION AND 00/100s DOLLARS ($5,000,000.00) of United States funds, or, if less,
so much thereof as may from time to time be advanced by the Swing Line Lender to
the Borrower and is outstanding hereunder, plus interest as hereinafter
provided. Such Swing Line Advances may be endorsed from time to time on the grid
attached hereto, but the failure to make such notations (or any error in such
notation) shall not affect the obligation of the Borrower to repay unpaid
principal and interest hereunder.
Except as otherwise defined or limited herein, capitalized terms used
herein shall have the meanings ascribed to them in that certain Loan Agreement
dated December 15, 1995 (as heretofore and hereafter amended from time to time,
the "Loan Agreement") by and among the Borrower, the bank signatories thereto
(together with their successors and assigns, the "Banks"), the Swing Line Lender
and NationsBank, N.A. (formerly, NationsBank of Georgia, N.A.), as
administrative agent for the Banks (the "Administrative Agent").
The principal amount of this promissory note (this "Swing Line Note")
shall be paid in such amounts and at such times as are set forth in the Loan
Agreement. The entire principal balance of this Swing Line Note then outstanding
shall be due and payable on the Maturity Date. This Swing Line Note may be
prepaid at the option of the Borrower, and is subject to certain mandatory
prepayments by the Borrower, on the terms set forth in the Loan Agreement.
The Borrower shall be entitled to borrow, repay and reborrow hereunder
pursuant to the terms, and subject to the conditions, of the Loan Agreement.
Prepayment of the principal amount hereof may be made only as provided in the
Loan Agreement.
The Borrower shall pay interest from the date hereof on the daily
amount of the unpaid principal balance hereof from time to time outstanding as
provided in Article 2 of the Loan Agreement. Interest under this Swing Line Note
shall also be due and payable when the entire principal amount of this Swing
Line Note then outstanding shall become due and payable (whether at maturity, by
reason of acceleration or otherwise). Except as expressly provided to the
contrary in the Loan Agreement, the entire principal balance of this Swing Line
Note then outstanding shall bear interest at the Default Rate upon the
occurrence and during the continuance of an Event of Default, which Default Rate
interest shall be payable on the earlier of DEMAND or the Maturity Date.
<PAGE> 8
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by Applicable Law. In the event any
such payment is inadvertently made by the Borrower or inadvertently received by
the Swing Line Lender, then, if an Event of Default then exists, such excess sum
shall be credited as a payment of principal, and, if no Event of Default then
exists, such excess shall be returned to the Borrower forthwith. It is the
express intent hereof that the Borrower not pay and the Swing Line Lender not
receive, directly or indirectly, in any manner whatsoever, interest in excess of
that which may be lawfully paid by the Borrower under Applicable Law. In
determining whether or not the amount of interest paid or payable, under any
contingency, exceeds the amount of interest paid or payable if the Obligations
had at all times accrued interest at the maximum rate permitted under Applicable
Law, the Borrower and the Swing Line Lender agree that, to the maximum extent
permitted under Applicable Law, (a) any nonprincipal payment shall be
characterized as an expense, fee or premium rather than as interest, (b)
prepayments and the effects thereof shall be excluded, (c) the total amount of
interest shall be "spread" throughout the entire contemplated term of the Swing
Line Loans to and including the Maturity Date, and (d) if the Obligations are
paid and performed in full prior to the Maturity Date and if the aggregate
amount of interest received by the Swing Line Lender for the actual period of
existence thereof exceeds the amount of interest that would have accrued on the
Obligations had the Obligations at all times from the inception thereof borne
interest at the maximum rate permitted under Applicable Law, the Swing Line
Lender shall refund to the Borrower the amount of such excess, and, in such
event, the Swing Line Lender shall not be subject to any penalties provided by
any Applicable Laws for contracting for, charging, reserving, taking or
receiving interest in an amount in excess of the amount which would have accrued
on the Obligations if the Obligations had, at all times from the inception
thereof, borne interest at the maximum rate permitted under Applicable Law.
This Swing Line Note evidences the Swing Line Lender's portion of the
Swing Line Loans under, and is entitled to the benefits and subject to the terms
of, the Loan Agreement which contains provisions with respect to the
acceleration of the maturity of this Swing Line Note upon the happening of
certain stated events. This Swing Line Note is also entitled to the benefits of
the Loan Documents and any other agreement or instrument providing collateral
for the Obligations, whether now or hereafter in existence, and any filings,
instruments, agreements and documents related thereto and providing collateral
for the Obligations. This Swing Line Note evidences the obligation of the
Borrower to repay the aggregate principal amount of the Swing Line Loan made or
to be made by the Swing Line Lender in accordance with the terms and provisions
of this Swing Line Note and the Loan Agreement.
Should any installment of interest or any installment of principal not
be paid when due (and after the lapse of any applicable cure period), or should
any other Event of Default occur under the Loan Agreement or any other Loan
Document, then, and at any time thereafter, the Administrative Agent on behalf
of the Swing Line Lender (but subject to the terms and provisions contained in
the Loan Agreement) shall have the right and option, in its sole
2
<PAGE> 9
discretion, to exercise any and all of the remedies provided and available to it
hereunder and under the Loan Agreement.
All parties now or hereafter liable with respect to this Swing Line
Note, whether the Borrower, any guarantor, endorser or any other person or
entities, hereby waive presentment for payment, demand, notice of nonpayment or
dishonor, protest and notice of protest, or any other notice of any kind with
respect thereto.
No delay or failure on the part of the Swing Line Lender in the
exercise of any right or remedy hereunder, under the Loan Agreement or any
security document pledging collateral or any guaranty or surety given to secure
this Swing Line Note, or at law or in equity, shall operate as a waiver thereof,
and no single or partial exercise by the Swing Line Lender (or the
Administrative Agent on behalf of the Swing Line Lender) of any right or remedy
hereunder, under the Loan Agreement or any security document pledging collateral
or any guaranty or surety given to secure this Swing Line Note, or at law or in
equity, shall preclude or estop another or further exercise thereof or the
exercise of any other right or remedy.
Principal and interest on this Swing Line Note shall be payable and
paid in lawful money of the United States of America.
The Borrower promises to pay all reasonable costs of collection,
including, but not limited to, reasonable attorneys' fees and expenses actually
incurred, should this Swing Line Note be collected by or through an
attorney-at-law or under advice therefrom.
Time is of the essence of this Swing Line Note.
The Swing Line Lender shall be under no duty to exercise any or all of
the rights and remedies given by this Swing Line Note and the Loan Agreement or
under any of the other Loan Documents, and no party to this instrument shall be
discharged from the obligations or undertaking hereunder, (a) should the Swing
Line Lender (or the Administrative Agent on behalf of the Swing Line Lender)
release or agree not to sue any Person against whom the party has, to the
knowledge of the Swing Line Lender, a right to recourse (or be deemed to have so
agreed), or (b) should the Swing Line Lender (or the Administrative Agent on
behalf of the Swing Line Lender) agree to suspend the right to enforce this
Swing Line Note or the Swing Line Lender's interest in any collateral pledged or
any guaranty given to secure this Swing Line Note against such Person or
otherwise discharge such Person (or be deemed to have so agreed).
THIS SWING LINE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF).
3
<PAGE> 10
IN WITNESS WHEREOF, the duly authorized officers of the Borrower have
executed this Swing Line Note as of the day and year first above written.
IRT PROPERTY COMPANY
By:
-------------------------------------
Its:
---------------------------------
Attest:
---------------------------------
Its:
-----------------------------
4
<PAGE> 1
EXHIBIT (10)(f.1)
CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 12th day of June 1997,
by and between IRT Property Company, a Georgia corporation (the "Company"), and
Donald W. MacLeod ("Executive").
The Executive has requested that the Company allow him to retire and
continue to enjoy certain benefits under his Employment Agreement in recognition
of his long service and successful leadership of the Company. The Company
believes it is desirable and in its best interest to provide for the continued
orderly succession of management and to reward and acknowledge the Executive's
long-term contributions to the Company.
For good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the Company and the Executive, intending to be legally bound,
agree as follows:
1. Retirement as a Full-Time Employee. The Executive will retire as a
full-time employee of the Company effective June 30, 1997, but will
remain as a non-employee director and Chairman of the Board until the
annual meeting of shareholders in 1998. Nothing contained herein shall
preclude Mr. MacLeod from being renominated or reelected as a director or
as Chairman of the Company at the 1998 Annual Meeting.
2. Consulting. Mr. MacLeod will be available to the Company upon reasonable
request, to consult on special projects and otherwise provide advice for
the period from July 1, 1997 through June 30, 1998 (the "Consulting
Term"). In consideration for such consulting work, and his past services,
Mr. MacLeod shall receive $150,000 during the Consulting Term, plus
$18,000 cash. Such amount shall be paid in equal monthly installments,
unless otherwise requested by the Executive. The Executive shall be
entitled to all fringe benefits to which he is currently entitled through
December 31, 1997, including all welfare plan and health benefits to
which he and his dependents would be entitled under Company practices as
of the date hereof, including amounts paid by the employee for health and
welfare benefits and which would otherwise be paid by the Company if the
Executive had remained an employee of the Company, whether under COBRA,
Medicare and/or Medicaid, grossed up to reflect federal income taxes
payable by the Executive at a marginal federal income tax rate of 39%.
3. Change-In-Control Payment. As provided in the Agreement between Executive
and the Company dated October 1, 1995, as amended by Board action of the
Company's Compensation Committee (the "Change in Control Agreement"), in
the event of a "change-in-control" as defined in the Change in Control
Agreement, between July 1, 1997 and June 30, 1999, Mr. MacLeod will
receive a bonus to which he is presently entitled, equal to a total of
$600,000, which shall be paid in equal monthly
<PAGE> 2
installments, or as the Executive may otherwise request. Notwithstanding
anything to the contrary contained in the Change in Control Agreement, no
other amount shall be due Executive as a result of a change-in-control.
4. Termination of Employment Agreement. The July 1, 1980 Employment
Agreement between the Company and the Executive has been amended from
time to time (as amended, the "Employment Agreement"). Beginning July 1,
1997, no salary or bonus pursuant to such Employment Agreement shall be
paid or payable to the Executive, but the Executive shall be entitled to
all deferred compensation provided for therein, and all retirement and
pension plan benefits, provided therein or otherwise by the Company to
the Executive and to which Executive is currently entitled immediately
prior to retirement on June 30, 1997, all of which shall be fully vested
and payable as provided in the Employment Agreement or related plans.
Otherwise, except as expressly provided in this Agreement, the Executive
shall not be entitled to any further or other salary or benefits pursuant
to the Change-In- Control Agreement or the Employment Agreement.
5. Miscellaneous. This Agreement is governed by and shall be construed in
accordance with the laws of the State of Georgia. Except to the extent
provisions of the Employment Agreement and the Change-In-Control
Agreement are incorporated herein or otherwise are continuing in force
and effect as provided herein, whether or not modified hereby, this
Agreement contains the complete understanding and agreement of the
parties.
IN WITNESS WHEREOF, the undersigned has executed or caused this Agreement
to be executed by its officers thereunto duly authorized as of the day and year
first above written.
EXECUTIVE:
By:/s/DONALD W. MACLEOD
--------------------
DONALD W. MACLEOD
IRT PROPERTY COMPANY
By:/s/THOMAS H. MCAULEY
--------------------
Name: THOMAS H. MCAULEY
Title: PRESIDENT & CEO
<PAGE> 1
EXHIBIT (10)(h.1)
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT dated as of the 30th day of June,
1997 (the "Amendment") by and among IRT PROPERTY COMPANY, a Georgia corporation
(the "Borrower"), NATIONSBANK, N.A. (formerly NationsBank of Georgia, N.A. and
NationsBank, N.A. (South)), CORESTATES BANK, N.A., AMSOUTH BANK OF ALABAMA,
SIGNET BANK\VIRGINIA and SOUTHTRUST BANK, NATIONAL ASSOCIATION, as banks
(collectively, and with any financial institution which subsequently becomes a
'Bank' under the Loan Agreement, as such term is defined therein, the "Banks");
and NATIONSBANK, N.A. (formerly NationsBank of Georgia, N.A. and NationsBank,
N.A. (South)), as administrative agent for the Banks (the "Administrative
Agent"),
WITNESSETH:
WHEREAS, the Borrower, the Banks and the Administrative Agent are parties
to that certain Loan Agreement dated as of December 15, 1995 (as heretofore and
hereafter amended, the "Loan Agreement"); and
WHEREAS, the Borrower, the Banks and the Administrative Agent have agreed
to amend the Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
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 that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
(a) Article 1 of the Loan Agreement, Definitions, is hereby
amended by deleting the definitions of "Available Commitment," "LIBOR," "LIBOR
Advance," "Majority Banks," and "Obligations" in their entireties and by
substituting the following definitions in lieu thereof:
"'Available Commitment' shall mean, as of any particular time, (a)
the lesser of (i) the Commitment and (ii) the Availability Restriction
minus (b) the sum of (i) the Loans then outstanding and (ii) the Swing
Line Loans then outstanding; provided, however, that the Available
Commitment may not at any time exceed the Availability Restriction."
"'LIBOR' shall mean, for any Interest Period, the rate per annum
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If
<PAGE> 2
for any reason such rate is not available, the term LIBOR shall mean, for
any LIBOR Advance for any Interest Period therefor, the rate per annum
appearing on the Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two (2) Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period; provided, however, if more
than one rate is specified on the Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates."
"'LIBOR Advance' shall mean an Advance which the Borrower requests
to be made as a LIBOR Advance or which is deemed to be a LIBOR Advance in
accordance with the provisions of Section 2.2 hereof, and which shall be
in a principal amount of at least $1,000,000 and in an integral multiple
of $1,000,000."
"'Majority Banks' shall mean, at any time, Banks the total of
whose Commitment Ratios exceeds sixty-six and two-thirds percent
(66-2/3%) of the Commitment Ratios of all Banks entitled to vote with
respect thereto."
"'Obligations' shall mean (a) all payment and performance
obligations of the Borrower and all other obligors to the Banks, the
Swing Line Lender and the Administrative Agent under this Agreement and
the other Loan Documents, as they may be amended from time to time, or as
a result of making the Loans and the Swing Line Loans, and (b) the
obligation to pay an amount equal to the amount of any and all damages
which the Banks, the Swing Line Lender and the Administrative Agent, or
any of them, may suffer by reason of a breach by either the Borrower or
any obligor of any obligation, covenant or undertaking with respect to
this Agreement or any other Loan Document."
(b) Article 1 of the Loan Agreement, Definitions, is hereby
further amended by amending the definitions of "Administrative Agent," "Loan
Documents," "Prime Rate Advance" and "Request for Advance" and as follows:
(i) The definition of "Administrative Agent" is hereby
amended by adding thereto the phrase "and the Swing Line Lender" before
the period at the end of the definition.
(ii) The definition of "Loan Documents" is hereby amended
by adding thereto the phrase ", Swing Line Note" immediately after the
phrase "the Notes."
(iii) The definition of "Prime Rate Advance" is hereby
amended by adding thereto the following sentence at the end of the
definition:
"Prime Rate Advances may be in any amount designated by the
Borrower, provided that such amount is a whole dollar amount."
<PAGE> 3
(iv) The definition of "Request for Advance" is hereby
amended (A) by adding thereto the phrase "and the Swing Line Loans
outstanding" immediately after the phrase therein "the Loans outstanding"
in the first sentence of the definition; (B) by deleting the "and" before
subsection (f) thereof; and (C) by adding the following subsection (g)
before the period at the end of the definition:
"and (g) certify that the aggregate amount of the Swing Line Loans
and the Loans, together with the requested Advance (or Swing Line
Advance), does not exceed the Available Commitment."
(c) Article 1 of the Loan Agreement, Definitions, is hereby
further amended by adding thereto the following definitions of "Available Swing
Line Commitment," "Bank Loans Outstanding," "Lender's Available Commitment,"
"Request for Swing Line Advance," "Swing Line Advance," "Swing Line Commitment,"
"Swing Line Lender," "Swing Line Loans" and "Swing Line Note" in their
appropriate alphabetic order:
"'Available Swing Line Commitment' shall mean, as of any
particular time, the lesser of (i) the Swing Line Commitment minus Swing
Line Advances then outstanding, (ii) (A) the Lender's Available
Commitment of the Swing Line Lender minus (B) the sum of the Bank Loans
Outstanding of the Swing Line Lender and the aggregate principal amount
of all Swing Line Loans then outstanding, (iii) the Availability
Restriction and (iv) the Available Commitment."
"'Bank Loans Outstanding' shall mean, as of any particular time,
with respect to any Bank hereunder, the aggregate amount of the Loans
(exclusive of Swing Line Loans) then outstanding made by such Bank to the
Borrower."
"'Lender's Available Commitment' shall mean, as of any particular
time, for any Bank, such Bank's portion of the lesser of (i) the
Availability Restriction and (ii) the Commitment on such date (based on
such Bank's Commitment Ratio)."
"'Request for Swing Line Advance' shall mean any certificate
signed by an Authorized Signatory of the Borrower requesting a Swing Line
Advance hereunder which will increase the aggregate amount of the Swing
Line Loans outstanding, which certificate shall be denominated a "Request
for Swing Line Advance," and shall be in substantially the form of
Exhibit B-2 attached hereto. Each Request for Swing Line Advance shall,
among other things, (a) specify the date of the Swing Line Advance, which
shall be a Business Day, (b) specify the amount of the Swing Line Advance
and certify that the use of the proceeds thereof will be in compliance
with the terms of the Loan Agreement, (c) state that there shall not
exist, on the date of the requested Swing Line Advance and after giving
effect thereto, a Default or an Event of Default, (d) state that all
conditions precedent to the making of the Swing Line Advance have been
satisfied and (e) certify that the aggregate amount of the Swing Line
Loans and the Loans, together with the amount of the Swing Line Advance,
does not exceed the Available Commitment and the Available Swing Line
Commitment."
<PAGE> 4
"'Swing Line Advance' or 'Swing Line Advances' shall mean amounts
advanced by the Swing Line Lender to the Borrower pursuant to Section
2.15 hereof on the occasion of any borrowing. Swing Line Advances may be
in any amount designated by the Borrower, provided that such amount is a
whole dollar amount.
"'Swing Line Commitment' shall mean the obligation of the Swing
Line Lender to advance funds in the aggregate sum of up to $5,000,000 to
the Borrower pursuant to the terms hereof."
"'Swing Line Lender' shall mean NationsBank, N.A."
"'Swing Line Loans' shall mean the aggregate principal amount of
all Swing Line Advances."
"'Swing Line Note' shall mean that certain promissory note in the
principal amount of $5,000,000 issued by the Borrower to the Swing Line
Lender, substantially in the form of Exhibit E attached hereto, any other
swing line note issued pursuant to this Agreement in respect of the Swing
Line Commitment, and any extensions, renewals or amendments to any of the
foregoing."
2. Amendments to Article 2.
(a) Section 2.1 of the Loan Agreement, The Loans, is hereby
amended by deleting such Section in its entirety and by substituting the
following new Section 2.1 in lieu thereof:
"Section 2.1 The Loans.
"(a) Loans by the Banks. Subject to the terms and conditions of
this Agreement, the Banks agree, severally in accordance with their
Commitment Ratios, and not jointly, upon the terms and subject to the
conditions of this Agreement, to lend and relend to the Borrower, prior
to the Maturity Date, amounts which in the aggregate at any one time
outstanding do not exceed the Available Commitment.
"(b) Swing Line Loans by the Swing Line Lender. Subject to the
terms and conditions of this Agreement, the Swing Line Lender agrees upon
the terms and subject to the conditions of this Agreement to lend and
relend to the Borrower, prior to the Maturity Date, Swing Line Advances
which in the aggregate at any one time outstanding do not exceed the
Available Swing Line Commitment."
(b) Section 2.4(b) of the Loan Agreement, Utilization Fee, is
hereby amended by deleting the existing subsection in its entirety and by
substituting the following in lieu thereof:
<PAGE> 5
"(b) Utilization Fee. The Borrower agrees to pay to the
Administrative Agent for the benefit of the Banks, in accordance with
their respective Commitment Ratios, a utilization fee on the average
unborrowed amount which is (i) the lesser of (A) the Commitment and (B)
the Availability Restriction minus (ii) the Loans and the Swing Line
Loans then outstanding for each day from the Agreement Date through the
Maturity Date, at a rate of one-quarter of one percent (.25%) per annum.
Such utilization fee shall be computed on the basis of a year of 365/366
days for the actual number of days elapsed, shall be payable quarterly in
arrears on the first day of each calendar quarter, commencing on July 1,
1997 (for the period from and including April 1, 1997 through June 30,
1997), and if then unpaid, on the Maturity Date, and shall be fully
earned when due and nonrefundable when paid."
(c) Section 2.4(d) of the Loan Agreement, Late Payment Charge,
is hereby amended by adding thereto the phrase "or the Swing Line Lender, as the
case may be," immediately after the phrase "for the ratable benefit of the
Banks."
(d) Section 2.7(a) of the Loan Agreement, Loans Exceeding
Commitment, is hereby amended by deleting the existing Section 2.7(a) in its
entirety and by substituting the following in lieu thereof:
"(a) Loans Exceeding Commitment. If, at any time, the aggregate
amount of the Loans and the Swing Line Loans then outstanding shall
exceed the lesser of (i) the Commitment and (ii) the Availability
Restriction, the Borrower shall make a repayment of the principal amount
of the Loans and the Swing Line Loans in an amount equal to such excess
(which payment shall be applied first to the Swing Line Loans then
outstanding). If, at any time, the aggregate amount of the Swing Line
Loans then outstanding shall exceed the lesser of (x) the Swing Line
Commitment and (y) the Lender's Available Commitment for the Swing Line
Lender minus the Bank Loans Outstanding for the Swing Line Lender, the
Borrower shall make a repayment of the principal amount of the Swing Line
Loans in an amount equal to such excess (which repayment may, in
accordance with the terms hereof, be by way of an Advance in accordance
with Section 2.15 hereof)."
(e) Section 2.10 of the Loan Agreement, Application of
Payments, is hereby amended by deleting such Section in its entirety and by
substituting the following in lieu thereof:
"Section 2.10 Application of Payments. Payments made to the
Administrative Agent, the Swing Line Lender or the Banks, or any of them,
or otherwise received by the Administrative Agent, the Swing Line Lender
or the Banks, or any of them (from realization on collateral for the
Obligations or otherwise), shall be distributed (subject to Section
2.2(e) hereof) as follows: First, to the costs and expenses, if any,
incurred by the Administrative Agent, the Swing Line Lender or the Banks,
or any of them, to the extent permitted by Section 11.2 hereof in the
collection of such amounts under this Agreement or any of the other Loan
Documents, including, without limitation, any
<PAGE> 6
reasonable costs incurred in connection with the sale or disposition of
any collateral for the Obligations; Second, pro rata among the
Administrative Agent, the Swing Line Lender and the Banks based on the
total amount of fees then due and payable hereunder or under any other
Loan Document and to any other fees and commissions then due and
payable by the Borrower to the Banks, the Swing Line Lender and the
Administrative Agent under this Agreement or any Loan Document; Third,
to any unpaid interest of the Borrower which may have accrued (i) first
on the Swing Line Loans and (ii) thereafter on the Loans, pro rata
among the Banks based on the outstanding principal amount of the Loans
of the Borrower outstanding immediately prior to such payment; Fourth,
to the Swing Line Lender, to any unpaid principal of the Swing Line
Loans then outstanding; Fifth, pro rata among the Banks based on the
outstanding principal amount of the Loans of the Borrower outstanding
immediately prior to such payment, to any unpaid principal of the
Loans; Sixth, to any other Obligations not otherwise referred to in
this Section 2.10 until all such Obligations are paid in full; Seventh,
to damages incurred by the Administrative Agent, the Swing Line Lender
or the Banks, or any of them, by reason of any breach hereof or of any
other Loan Documents; and Eighth, upon satisfaction in full of all
Obligations, to the Borrower or as otherwise required by law. If any
Bank shall obtain any payment (whether involuntary or otherwise) on
account of the Loans made by it in excess of its ratable share of the
Loans then outstanding and such Bank's share of any expenses, fees and
other items due and payable to it hereunder, such Bank shall forthwith
purchase a participation in the Loans from the other Banks as shall be
necessary to cause such purchasing Bank to share the excess payment
ratably based on the Commitment Ratios with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, such purchase from each
Bank shall be rescinded and such Bank shall repay to the purchasing
Bank the purchase price to the extent of such recovery. The Borrower
agrees that any Bank so purchasing a participation from another Bank
pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment with respect to such participation
as fully as if such Bank were the direct creditor of the Borrower in
the amount of such participation so long as the Borrower's Obligations
are not increased. If the Swing Line Lender shall obtain any payment
(whether involuntary or otherwise) on account of the Swing Line Loans
made by it in excess of the Swing Line Loans then outstanding and the
Swing Line Lender's share of any expenses, fees and other items due and
payable to it hereunder, the Swing Line Lender shall forthwith return
such excess payment to the Administrative Agent for distribution among
the Banks based on the provisions of this Section."
(f) Section 2.12 of the Loan Agreement, Capital Adequacy, is
hereby amended by deleting such Section in its entirety and by substituting the
following in lieu thereof:
"Section 2.12 Capital Adequacy. If after the date hereof, any Bank
or the Swing Line Lender shall have determined that the adoption of any
Applicable Law regulating United States banks and regarding the capital
adequacy of banks or bank
<PAGE> 7
holding companies, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency of the U.S. charged with the
interpretation or administration thereof, or compliance by the Bank or
the Swing Line Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has the effect
of reducing the rate of return on such Bank's or the Swing Line Lender's
capital as a consequence of its obligations hereunder to a level below
that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or the Swing Line
Lender's policies with respect to capital adequacy immediately before
such adoption, change or compliance and assuming that such Bank's or the
Swing Line Lender's capital was fully utilized prior to such adoption,
change or compliance) by a material amount, then, upon the earlier of
demand by such Bank or the Swing Line Lender or the Maturity Date, the
Borrower agrees to pay immediately to such Bank or the Swing Line Lender,
as the case may be, such additional amounts as shall be sufficient to
compensate such Bank or the Swing Line Lender for such reduced return
beginning as of the date of written notice to the Borrower described
above, together with interest on such amount from the fourth (4th) day
after the date of demand or the Maturity Date, as applicable, until
payment in full thereof at the Default Rate. A certificate of such Bank
or the Swing Line Lender, as the case may be, setting forth the amount to
be paid to such Bank or the Swing Line Lender by the Borrower as a result
of any event referred to in this paragraph shall, absent manifest error,
be conclusive. Each Bank and the Swing Line Lender agree that if any
amount or any portion of any amount described in this Section is
subsequently recovered by such Bank or the Swing Line Lender, such Bank
and the Swing Line Lender, as the case may be, shall promptly reimburse
the Borrower to the extent of the amount so recovered. A certificate of
such Bank or the Swing Line Lender, as the case may be, setting forth the
amount of such recovery and the basis therefor shall be provided to the
Borrower."
(g) Section 2.14 of the Loan Agreement, Extension of the
Maturity Date, is hereby amended by deleting such Section in its entirety and by
substituting the following in lieu thereof:
"Section 2.14 Extension of the Maturity Date. Not later than June
30th of each year commencing June 30, 1997, the Borrower may request that
the Administrative Agent, the Swing Line Lender and the Banks extend the
Maturity Date for an additional twelve (12) month period beyond the
existing Maturity Date. Any decision to extend the Maturity Date shall be
in the sole and absolute discretion of the Administrative Agent, the
Swing Line Lender and the Banks and shall be evidenced in a writing
executed by each of them, as appropriate. The failure of any such Person
to respond to a request for such extension within sixty (60) days of such
request shall be presumed to be a decision not to so extend the Maturity
Date. Upon any agreement by the Administrative Agent and all of the Banks
to extend the Maturity Date as described in this Section with respect to
the Loans, the term "Maturity Date" set forth in Article 1 hereof shall
thereafter be the anniversary of the Maturity Date previously in effect
<PAGE> 8
hereunder (or such earlier date as payment of the Loans shall be due,
whether by acceleration or otherwise). Any such extension granted
hereunder with respect to the Loans shall be conditioned upon the receipt
by the Banks of the Extension Fee referenced in Section 2.4(c) hereof.
Extension of the Maturity Date with respect to the Swing Line Loans shall
be at the sole and absolute discretion of the Swing Line Lender and shall
be evidenced in a writing as described above in this Section 2.14."
(h) Article 2 of the Loan Agreement, Loans, is hereby amended
by adding thereto the following new Section 2.15, Swing Line Loans:
"Section 2.15 Swing Line Loans.
"(a) Swing Line Advances. The Borrower, prior to 12:00
p.m. (noon) (Eastern time) on the Business Day of funding any Swing Line
Advance, shall give to the Swing Line Lender an irrevocable written
notice in the form of a Request for Swing Line Advance, or notice by
telecopy followed immediately by a Request for Swing Line Advance;
provided, however, that the failure by the Borrower to confirm any notice
by telecopy with a Request for Swing Line Advance shall not invalidate
any notice so given; provided further that in no case will the Swing Line
Lender be required to fund such Request for Swing Line Advance under the
Swing Line Commitment if such funding would increase the aggregate Swing
Line Loans to an amount in excess of the Available Swing Line Commitment
or if aggregate amounts of all Loans and Swing Line Loans outstanding
exceed the lesser of the Commitment or the Availability Restriction.
"(b) Prepayment and Repayment.
"(i) Upon irrevocable prior written notice delivered to
the Swing Line Lender prior to 12:00 p.m. (noon) (Eastern time) on
the day of payment under this Section, the Borrower may repay a
Swing Line Advance. In addition, upon demand of the Swing Line
Lender, if such demand is delivered prior to 11:00 a.m. (Eastern
time) on a Business Day, the Borrower shall on the following
Business Day make a repayment of the Swing Line Loans then
outstanding in the amount so requested by the Swing Line Lender;
provided, however, that if such demand is delivered to the
Borrower at or after 11:00 a.m. (Eastern time) on a Business Day,
the Borrower shall on the second Business Day following receipt of
such demand make such repayment. In order to facilitate repayment
of the Swing Line Loans, the Borrower hereby irrevocably requests
the Banks, and the Banks hereby severally agree, on the terms and
conditions of this Agreement (other than as provided in Article 2
hereof with respect to the amounts of, the time of requests for,
and the repayment of Advances hereunder and in Article 3 hereof
with respect to conditions precedent to Advances hereunder), with
respect to Swing Line Loans outstanding, upon request of the Swing
Line Lender or the Borrower (including without limitation after
any Default or Event of Default, but prior to the occurrence of an
event
<PAGE> 9
described in clauses (g) or (h) of Section 8.1 hereof), to make an
Advance to the Borrower in the amount of such outstandings, and to
pay the proceeds of such Advance directly to the Administrative
Agent to reimburse the Swing Line Lender for the amount of the
Swing Line Loans then outstanding. Each Bank shall pay its share
of such Advance by paying its portion of such Advance to the
Administrative Agent in accordance with Section 2.2(e) hereof and
its Commitment Ratio, without reduction for any set-off or
counterclaim of any nature whatsoever and regardless of whether
any Default or Event of Default (other than with respect to an
event described in clauses (g) or (h) of Section 8.1 hereof) then
exists or would be caused thereby. If at any time that the Swing
Line Loans are outstanding, any of the events described in clauses
(g) or (h) of Section 8.1 hereof shall have occurred and be
continuing, then each Bank shall, automatically upon the
occurrence of any such event and without any action on the part of
the Swing Line Lender, the Borrower, the Administrative Agent or
the Banks, be deemed to have purchased an undivided participation
in the then outstanding principal amount of the Swing Line Loans
then outstanding in an amount equal to such Bank's Commitment
Ratio, and each Bank shall, notwithstanding such Event of Default,
immediately pay to the Administrative Agent for the account of the
Swing Line Lender, in immediately available funds, the amount of
such Bank's participation (and the Swing Line Lender shall deliver
to such Bank a written confirmation of such loan participation
dated the date of the occurrence of such event and in the amount
of such Bank's Commitment Ratio).
"(ii) If any payment under this Agreement or the Swing
Line Note shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is
a Business Day, and such extension of time shall in such case be
included in computing interest and fees, if any, in connection
with such payment.
"(iii) The Borrower agrees to pay principal, interest,
fees, and all other amounts due hereunder or under the Swing Line
Note without set-off or counterclaim or any deduction whatsoever.
"(iv) If the Borrower is required by Applicable Law to
deduct any taxes from or in respect of any sum payable to the
Swing Line Lender hereunder, under the Swing Line Note or under
any other Loan Document: (i) the sum payable hereunder or
thereunder, as applicable, shall be increased to the extent
necessary to provide that, after making all required deductions
(including deductions applicable to additional sums payable under
this Section 2.15(e)), the Swing Line Lender receives an amount
equal to the sum it would have received had no such deductions
been made; (ii) the Borrower shall make such deductions from such
sums payable hereunder or thereunder, as applicable, and pay the
amount so deducted to the relevant taxing authority as required by
Applicable Law; and (iii) the Borrower shall provide the Swing
Line Lender with evidence
<PAGE> 10
satisfactory to the Swing Line Lender that such deducted amounts
have been paid to the relevant taxing authority. Before making any
such deductions, the Swing Line Lender shall designate a different
lending office and shall take such alternative courses of action
if such designation or alternative courses of action will avoid
the need for such deductions and will not in the good faith
judgment of the Swing Line Lender be otherwise disadvantageous to
the Swing Line Lender.
"(c) Interest and Payments on Swing Line Advances. Interest on
each Swing Line Advance shall be computed in the same manner and shall be
payable on the same terms as interest on each Prime Rate Advance;
provided, however, that Swing Line Advances may be repaid without notice
(and payments received after 12:00 noon eastern time will be deemed
received on the next Business Day).
"(d) Amendment to Section 2.15. Notwithstanding anything to the
contrary contained herein, the parties hereto hereby agree that the
provisions of this Section 2.15 may be modified or waived only by a
writing signed by the Borrower, the Administrative Agent and the Swing
Line Lender and that the terms "Swing Line Commitment" and "Available
Swing Line Commitment" may only be modified or amended by a writing
signed by the Borrower, the Swing Line Lender and the Majority Banks."
3. Amendments to Section 3.2. Section 3.2 of the Loan Agreement,
Conditions Precedent to Each Advance, is hereby amended by deleting such Section
in its entirety and by substituting the following in lieu thereof:
"Section 3.2 Conditions Precedent to Each Advance. The obligation
of each Bank to make each Advance, including the initial Advance
hereunder, and the Swing Line Lender to make a Swing Line Advance is
subject to the fulfillment of each of the following conditions
immediately prior to or contemporaneously with such Advance or Swing Line
Advance:
"(a) All of the representations and warranties of the
Borrower under this Agreement, which, in accordance with Section 4.2
hereof, are made at and as of the time of the Advance or Swing Line
Advance, as the case may be, shall be true and correct in all material
respects at such time, both before and after giving effect to the
application of the proceeds of the Advance or the Swing Line Advance;
"(b) The incumbency of the Authorized Signatories shall
be as stated in the applicable certificate of incumbency contained in the
certificate of the Borrower delivered pursuant to Section 3.1(a) hereof
or as subsequently modified and reflected in a certificate of incumbency
delivered to the Administrative Agent and the Banks and, in the case of a
Swing Line Advance, to the Swing Line Lender;
<PAGE> 11
"(c) There shall not exist, on the date of the making of
the Advance or the Swing Line Advance, as the case may be, and after
giving effect thereto, a Default or an Event of Default hereunder, and
the Administrative Agent shall have received a Request for Advance so
certifying; and
"(d) The Administrative Agent shall have received all
such other certificates, reports, statements, opinions of counsel or
other documents as they may reasonably request."
4. Amendments to Article 5.
(a) Section 5.9 of the Loan Agreement, Use of Proceeds, is
hereby amended by deleting such existing Section in its entirety and by
substituting the following in lieu thereof:
"Section 5.9 Use of Proceeds. The Borrower will use the proceeds
of the Loans and the Swing Line Loans solely for (a) property
acquisitions, (b) rehabilitation of existing retail centers and (c)
general business purposes; provided, however, that no Loans or Swing Line
Loans in excess of twenty percent (20%) of the Commitment may be used for
new property development (whether through joint ventures or self-
developed)."
(b) Section 5.11 of the Loan Agreement, Indemnity, is hereby
amended by deleting such existing Section in its entirety and by substituting
the following in lieu thereof:
"Section 5.11 Indemnity. The Borrower will indemnify and hold
harmless each Bank, the Swing Line Lender and the Administrative Agent,
and each of their respective employees, representatives, officers and
directors from and against any and all claims, liabilities, losses,
damages, actions, attorneys' fees and demands by any party, (a) resulting
from any breach by the Borrower of any representation or warranty made
hereunder, or (b) arising out of (i) the Commitment and the Swing Line
Commitment or the making or administration of the Loans and the Swing
Line Loans, or (ii) allegations of any participation by the Banks, the
Swing Line Lender or the Administrative Agent, or any of them, in the
affairs of the Borrower or allegations that the Banks, the Swing Line
Lender or the Administrative Agent, or any of them, has any joint
liability of the Borrower for any reason whatsoever; unless, in any case
referred to above, the Person seeking indemnification hereunder is
determined in such case to have acted or failed to act with gross
negligence or willful misconduct by a non-appealable judicial order. The
provisions of this Section shall survive the termination of this
Agreement."
<PAGE> 12
5. Amendment to Article 7. Section 7.11 of the Loan Agreement,
Collateral Value, is hereby amended by deleting such Section in its entirety and
by substituting the following in lieu thereof:
"Section 7.11 Collateral Value. The Borrower will not at any time
permit the aggregate amount of the outstanding Loans and the Swing Line
Loans to exceed sixty- five percent (65%) of the Value of Negative Pledge
Property."
6. Amendments to Article 8.
(a) Subsection 8.1(b) of the Loan Agreement is hereby amended
by deleting such existing subsection in its entirety and by substituting the
following in lieu thereof:
"(b) The Borrower shall default in the payment of any
principal, interest or fees payable hereunder, under the Notes or under
the Swing Line Note, or any of them, or under the other Loan Documents
and such default shall continue for a period of ten (10) days;"
(b) Section 8.2(a) of the Loan Agreement is hereby amended by
deleting such existing subsection in its entirety and by substituting the
following in lieu thereof:
"(a) With the exception of an Event of Default, specified
in Sections 8.1(g) or (h), the Administrative Agent shall at the request,
or may with the consent, of the Majority Banks, by notice to the Borrower
(i) declare the Notes and the Swing Line Note, all interest thereon and
all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes and the
Swing Line Note, all such interest and all such amounts shall become and
be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
the Borrower and/or (ii) terminate the Commitment and the Swing Line
Commitment."
(c) Section 8.2(b) of the Loan Agreement is hereby amended by
deleting such existing subsection in its entirety and by substituting the
following in lieu thereof:
"(b) Upon the occurrence of an Event of Default under
Sections 8.1(g) and (h) hereof, the Commitment and the Swing Line
Commitment shall automatically terminate and such principal, interest
(including without limitation, interest which would have accrued but for
the commencement of a case or proceeding under the federal bankruptcy
laws) and other amounts payable under this Agreement, the Notes or the
Swing Line Note shall thereupon and concurrently therewith become due and
payable, all without any action by the Administrative Agent, or the Banks
or the holders of the Notes and Swing Line Note, and all without
presentment, demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement, in the Notes or in the
Swing Line Note to the contrary notwithstanding."
<PAGE> 13
(d) Section 8.2(d) of the Loan Agreement is hereby amended by
deleting such existing subsection in its entirety and by substituting the
following in lieu thereof:
"(d) The rights and remedies of the Administrative Agent,
the Banks and the Swing Line Lender hereunder shall be cumulative, and
not exclusive."
7. Amendments to Article 11.
(a) Subsection 11.1(a)(ii) of the Loan Agreement is hereby
amended by deleting such subsection in its entirety and by substituting the
following in lieu thereof:
"(ii) If to the Administrative Agent, to it at:
NationsBank, N.A.
600 Peachtree Street, N.E.
Suite 600
Atlanta, Georgia 30308
Attn: Donna W. Friedel
Telecopy No.: (404) 607-4145
with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Attn: Douglas S. Gosden
Telecopy No.: (404) 572-6999"
(b) Subsection 11.1(a)(iii) of the Loan Agreement is hereby
amended by deleting the address block for NationsBank of Georgia, N.A. in its
entirety and by substituting the following in lieu thereof:
"NationsBank, N.A.
600 Peachtree Street, N.E.
Suite 600
Atlanta, Georgia 30308
Attn: Donna W. Friedel
Telecopy No.: (404) 607-4145"
(c) Section 11.4 of the Loan Agreement, Set-Off, is hereby
amended by deleting the existing Section in its entirety and by substituting the
following in lieu thereof:
"Section 11.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such
rights, after the Maturity Date
<PAGE> 14
(whether by acceleration or otherwise), the Banks, the Swing Line Lender
and any subsequent holder or holders of the Notes and the Swing Line Note
are hereby authorized by the Borrower at any time or from time to time,
without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set-off and to appropriate and apply
any and all deposits (general or special, time or demand, including, but
not limited to, Indebtedness evidenced by certificates of deposit, in
each case whether matured or unmatured) and any other Indebtedness at any
time held or owing by the Banks, the Swing Line Lender or such holder to
or for the credit or the account of the Borrower, against and on account
of the obligations and liabilities of the Borrower, to the Banks, the
Swing Line Lender or such holder under this Agreement, the Notes, the
Swing Line Note, and any other Loan Document, including, but not limited
to, all claims of any nature or description arising out of or connected
with this Agreement, the Notes, the Swing Line Note, or any other Loan
Document, irrespective of whether or not (a) the Banks, the Swing Line
Lender or the holders of the Notes and the Swing Line Note shall have
made any demand hereunder or (b) the Banks and the Swing Line Lender
shall have declared the principal of and interest on the Loans, Notes and
the Swing Line Note and other amounts due hereunder to be due and payable
as permitted by Section 8.2 hereof and although said obligations and
liabilities, or any of them, shall be contingent or unmatured. Any sums
obtained by any Bank, the Swing Line Lender or by any subsequent holder
of the Notes and the Swing Line Note shall be subject to the application
of payments provisions of Article 2 hereof. Upon direction by the
Administrative Agent, with the consent of the Majority Banks, after the
Maturity Date (whether by reason of acceleration or otherwise) each Bank
and the Swing Line Lender holding deposits of the Borrower shall exercise
its set-off rights as so directed."
(d) Section 11.5 of the Loan Agreement, Assignment, is hereby
amended by adding thereto a new subsection (f) as follows:
"(f) No assignment, participation or other transfer of any
rights under the Swing Line Note shall be effected without the consent of
both the Swing Line Lender and the Borrower, which consent shall not be
unreasonably withheld."
(e) Subsection 11.10(a) of the Loan Agreement is hereby amended
by deleting the existing subsection 11.10(a) in its entirety and by substituting
the following in lieu thereof:
"(a) In no event shall the amount of interest due or payable
hereunder or under the Notes and the Swing Line Note exceed the maximum
rate of interest allowed by Applicable Law, and in the event any such
payment is inadvertently made by the Borrower or is inadvertently
received by any Bank or the Swing Line Lender, then such excess sum shall
be returned forthwith to the Borrower; provided, however, that if an
Event of Default then exists, such amounts shall be credited to principal
of the Obligations. It is the express intent hereof that the Borrower not
pay and the Banks and Swing Line Lender not receive, directly or
indirectly in any manner whatsoever,
<PAGE> 15
interest in excess of that which may legally be paid by the Borrower
under Applicable Law."
(f) Section 11.12 of the Loan Agreement, Amendment and Waiver,
is hereby amended by adding thereto at the end of such Section the following
sentence:
"Any amendment to any provision hereunder governing the rights,
obligations, or liabilities of the Swing Line Lender may be made only by
an instrument in writing signed by the Swing Line Lender and the
Borrower."
8. Amendment to Exhibit B. Exhibit B to the Loan Agreement, Form of
Request for Advance, is hereby amended by deleting the existing Exhibit B in its
entirety and by substituting the attached Exhibits B-1 and B-2, Form of Revised
Request for Advance/ Payment/Interest Rate Conversion and Form of Request for
Swing Line Advance/Payment, respectively, in lieu thereof. The parties agree
that such forms may be modified from time to time, as applicable, by the
Administrative Agent, the Borrower and, if applicable, the Swing Line Lender, so
long as the modified forms substantially conform to the requirements set forth
in Sections 2.15 and 3.2 of the Loan Agreement, as amended hereby.
9. No Other Amendment or Waiver. Notwithstanding the agreement of the
Administrative Agent and the Banks to the terms and provisions of this
Amendment, the Borrower acknowledges and expressly agrees that this Amendment is
limited to the extent expressly set forth herein and shall not constitute a
modification of the Loan Agreement or a course of dealing at variance with the
terms of the Loan Agreement (other than as expressly set forth above) so as to
require further notice by the Administrative Agent or the Banks, or any of them,
of its or their intent to require strict adherence to the terms of the Loan
Agreement in the future. All of the terms, conditions, provisions and covenants
of the Loan Agreement and the other Loan Documents shall remain unaltered and in
full force and effect except as expressly modified by this Amendment.
10. Representations and Warranties. The Borrower hereby represents and
warrants in favor of the each of the Administrative Agent, the Swing Line Lender
and each Bank as follows:
(a) Each representation and warranty set forth in Article 4 of
the Loan Agreement is hereby restated and affirmed as true and correct in all
material respects as of the date hereof, except to the extent previously
fulfilled in accordance with the terms of the Loan Agreement, as amended hereby,
and to the extent relating specifically to the Agreement Date or otherwise
inapplicable;
(b) The Borrower has the corporate power and authority to enter
into this Amendment and to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it; and
<PAGE> 16
(c) This Amendment has been duly authorized, validly executed
and delivered by Authorized Signatories, and constitutes the legal, valid and
binding obligation of the Borrower enforceable against it in accordance with its
terms, subject, as to enforcement of remedies, to the following qualifications:
(i) an order of specific performance and an injunction are discretionary
remedies and, in particular, may not be available where damages are considered
an adequate remedy at law, and (ii) enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors' rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of the Borrower).
11. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to the following:
(a) the truth and accuracy of the representations and
warranties contained in Section 10 hereof;
(b) receipt by the Swing Line Lender of a duly executed Swing
Line Note in the principal amount of $5,000,000, substantially in the form of
Exhibit E attached hereto;
(c) receipt by the Administrative Agent of execution pages to
this Amendment from the Majority Banks and the Borrower; and
(d) receipt by the Administrative Agent of all other documents
as the Administrative Agent shall reasonably request.
12. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.
13. Loan Documents. Each reference in the Loan Agreement and in any
other Loan Document to the term "Loan Documents" shall hereafter include the
Swing Line Note; and each reference in the Loan Agreement and in any other Loan
Document to the term "Loan Agreement" shall hereafter mean and refer to the Loan
Agreement as amended hereby or as the same may hereafter be amended.
14. Governing Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Georgia, without giving effect to
any conflict of laws principles.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto cause their respective duly
authorized officers or representatives to execute and deliver this Amendment as
of the day and year first above written, to be effective as of the day and year
first above written.
BORROWER: IRT PROPERTY COMPANY, a Georgia corporation
By:/s/Thomas H. McAuley
----------------------------------------------
Title:Chief Executive Officer
------------------------------------
Attest:/s/James G. Levy
----------------------------------------------
Title:Vice President & Treasurer
------------------------------------
ADMINISTRATIVE AGENT, NATIONSBANK, N.A. (formerly NationsBank of
SWING LINE LENDER Georgia, N.A. and NationsBank, N.A. (South)), as
AND BANKS: Administrative Agent, Swing Line Lender and a Bank
By:/s/Donna W. Friedel
----------------------------------------------
Title:Senior Vice President
------------------------------------
CORESTATES BANK, N.A., as a Bank
By:/s/Glenn Gallagher
----------------------------------------------
Title:Vice President
------------------------------------
AMSOUTH BANK OF ALABAMA, as a Bank
By:/s/Arthur J. Sharbel, III
----------------------------------------------
Title:Vice President
------------------------------------
IRT PROPERTY COMPANY
FIRST AMENDMENT TO LOAN AGREEMENT
Signature Page 1
<PAGE> 18
SIGNET BANK\VIRGINIA, as a Bank
By:/s/Eric Lawrence
---------------------------------------
Title:Senior Vice President
------------------------------
SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION, as a Bank
By:/s/Scott Gerlach
---------------------------------------
Title:Vice President
------------------------------
IRT PROPERTY COMPANY
FIRST AMENDMENT TO LOAN AGREEMENT
Signature Page 2
<PAGE> 1
EXHIBIT (10)(h.2)
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT dated as of the 1st day of July,
1997 (the "Amendment") by and among IRT PROPERTY COMPANY, a Georgia corporation
(the "Borrower"), NATIONSBANK, N.A. (formerly NationsBank of Georgia, N.A. and
NationsBank, N.A. (South)), CORESTATES BANK, N.A., AMSOUTH BANK OF ALABAMA, and
SIGNET BANK\VIRGINIA, as banks (collectively, and with any financial institution
which subsequently becomes a 'Bank' under the Loan Agreement, as such term is
defined therein, the "Banks"); NATIONSBANK, N.A., as swing line lender (in such
capacity, the "Swing Line Lender"), and NATIONSBANK, N.A. (formerly NationsBank
of Georgia, N.A. and NationsBank, N.A. (South)), as administrative agent for the
Banks (in such capacity, the "Administrative Agent"),
WITNESSETH:
WHEREAS, the Borrower, the Banks, the Swing Line Lender and the
Administrative Agent are parties to that certain Loan Agreement dated as of
December 15, 1995 (as heretofore and hereafter amended, the "Loan Agreement");
and
WHEREAS, the Borrower, the Banks, the Swing Line Lender and the
Administrative Agent have agreed to amend the Loan Agreement as set forth
herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
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 that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
(a) Article 1 of the Loan Agreement, Definitions, is hereby
amended (which amendment shall be effective as of June 30, 1997) by deleting the
definition of "Applicable Margin" in its entirety and by substituting the
definition in lieu thereof:
"'Applicable Margin' shall mean, in the case of the LIBOR Basis,
as of any calculation date, the Applicable Margin set forth below
opposite the rating then
<PAGE> 2
assigned by S&P and Moody's to the senior unsecured long-term debt
obligations of the Borrower set forth below (changes in the Applicable
Margin shall be effective on the date any such rating changes):
<TABLE>
<CAPTION>
"RATINGS ASSIGNED BY S&P APPLICABLE
AND MOODY'S MARGIN
----------- ------
<S> <C>
(i) A- or greater 0.95%
(ii) BBB+/Baa1 1.05%
(iii) BBB/Baa2 1.15%
(iv) BBB-/Baa3 1.25%
(v) less than BBB-/Baa3 1.40%
</TABLE>
provided, however, that on any calculation date that the ratings
assigned fall in more than one level, the higher Applicable Margin
shall apply."
(b) Article 1 of the Loan Agreement, Definitions, is hereby
further amended by adding, appropriately alphabetized, the following definition
of "Moody's":
"'Moody's' shall mean Moody's Investors Service, Inc."
2. Amendment to Article 2. Subsection 2.4(b) of the Loan Agreement,
Utilization Fee, is hereby amended by deleting such subsection in its entirety
and by substituting the following new subsection 2.4(b) in lieu thereof:
"(b) Utilization Fee. The Borrower agrees to pay to the
Administrative Agent for the benefit of the Banks, in accordance with
their respective Commitment Ratios, a utilization fee on the actual daily
unborrowed amount which is (i) the lesser of (A) the Commitment and (B)
the Availability Restriction minus (ii) the Loans and the Swing Line
Loans then outstanding for each day from July 1, 1997 through the
Maturity Date, at a rate of (X) twenty-five one-hundredths of one percent
(.25%) per annum for each day that such unborrowed amounts are greater
than or equal to fifty percent (50%) of the lesser of (1) the Commitment
and (2) the Availability Restriction and (Y) fifteen one-hundredths of
one percent (.15%) per annum for each day that such unborrowed amounts
are less than fifty percent (50%) of the lesser of (1) the Commitment and
(2) the Availability Restriction. Such utilization fee shall be computed
on the basis of a year of 365/366 days for the actual number of days
elapsed, shall be payable quarterly in arrears on the first day of each
calendar quarter, commencing on October 1, 1997 (for the period from and
including July 1, 1997 through September 30, 1997), and if then unpaid,
on the Maturity Date, and shall be fully earned when due and
nonrefundable when paid."
3. Amendment to Article 4. Subsection 4.1(c) of the Loan Agreement,
Subsidiaries, is hereby amended by deleting the existing subsection 4.1(c) in
its entirety and by substituting the following new subsection 4.1(c) in lieu
thereof:
<PAGE> 3
"(c) Subsidiaries. The Borrower has no Subsidiaries
except for IRT Management Company, a Georgia corporation, and VW Mall,
Inc., a Georgia corporation, and IRT Capital Corporation, a Georgia
corporation."
4. No Other Amendment or Waiver. Notwithstanding the agreement of the
Administrative Agent, the Swing Line Lender and the Banks to the terms and
provisions of this Amendment, the Borrower acknowledges and expressly agrees
that this Amendment is limited to the extent expressly set forth herein and
shall not constitute a modification of the Loan Agreement or a course of dealing
at variance with the terms of the Loan Agreement (other than as expressly set
forth above) so as to require further notice by the Administrative Agent, the
Swing Line Lender or the Banks, or any of them, of its or their intent to
require strict adherence to the terms of the Loan Agreement in the future. All
of the terms, conditions, provisions and covenants of the Loan Agreement and the
other Loan Documents shall remain unaltered and in full force and effect except
as expressly modified by this Amendment.
5. Representations and Warranties. The Borrower hereby represents and
warrants in favor of the each of the Administrative Agent, the Swing Line Lender
and each Bank as follows:
(a) Each representation and warranty set forth in Article 4 of
the Loan Agreement is hereby restated and affirmed as true and correct in all
material respects as of the date hereof, except to the extent previously
fulfilled in accordance with the terms of the Loan Agreement, as amended hereby,
and to the extent relating specifically to the Agreement Date or otherwise
inapplicable;
(b) The Borrower has the corporate power and authority to enter
into this Amendment and to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it; and
(c) This Amendment has been duly authorized, validly executed
and delivered by Authorized Signatories, and constitutes the legal, valid and
binding obligation of the Borrower enforceable against it in accordance with its
terms, subject, as to enforcement of remedies, to the following qualifications:
(i) an order of specific performance and an injunction are discretionary
remedies and, in particular, may not be available where damages are considered
an adequate remedy at law, and (ii) enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors' rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of the Borrower).
6. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to the following:
(a) the truth and accuracy of the representations and
warranties contained in Section 5 hereof;
(b) receipt by the Administrative Agent of execution pages to
this Amendment from the Swing Line Lender, the Banks and the Borrower;
<PAGE> 4
(c) receipt by the Administrative Agent of an incumbency
certificate in form and substance satisfactory to the Administrative Agent and a
certified copy of any amendments to the articles of incorporation for the
Borrower since the date of the most recent loan certificate delivered to the
Administrative Agent; and
(d) receipt by the Administrative Agent of all other documents
as the Administrative Agent shall reasonably request.
7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.
8. Loan Documents. Each reference in the Loan Agreement and in any
other Loan Document to the term "Loan Agreement" shall hereafter mean and refer
to the Loan Agreement as amended hereby or as the same may hereafter be amended.
9. Consent. Each of the parties hereto consents to the assignment by
SouthTrust Bank, National Association (formerly SouthTrust Bank of Alabama,
National Association) ("ST") to NationsBank, N.A. of all of ST's interest in the
Loans and Commitment (the "Acquired Commitment and Loans"). Each of the parties
hereto further consents that the assignment by NationsBank, N.A. of all or a
portion of the Acquired Commitment and Loans after the date hereof shall be
considered approved assignments notwithstanding anything in the contrary
contained in the Loan Agreement.
10. Governing Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Georgia, without giving effect to
any conflict of laws principles.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto cause their respective duly
authorized officers or representatives to execute and deliver this Amendment as
of the day and year first above written, to be effective as of the day and year
first above written.
BORROWER: IRT PROPERTY COMPANY, a Georgia corporation
By:/s/Mary M. Thomas
----------------------------------------------
Title:Executive Vice President & CFO
--------------------------------------
Attest:/s/W. Benjamin Jones
------------------------------------------
Title:Assistant Secretary
--------------------------------------
ADMINISTRATIVE AGENT, NATIONSBANK, N.A. (formerly NationsBank of
SWING LINE LENDER Georgia, N.A. and NationsBank, N.A. (South)), as
AND BANKS: Agent, Swing Line Lender and a Bank
By:/s/Donna W. Friedel
----------------------------------------------
Title:Senior Vice President
--------------------------------------
CORESTATES BANK, N.A., as a Bank
By:/s/Glenn Gallagher
----------------------------------------------
Title:Vice President
--------------------------------------
AMSOUTH BANK OF ALABAMA, as a Bank
By:/s/Arthur J. Sharbel, III
----------------------------------------------
Title:Vice President
--------------------------------------
IRT PROPERTY COMPANY
SECOND AMENDMENT TO LOAN AGREEMENT
Signature Page 1
<PAGE> 6
SIGNET BANK\VIRGINIA, as a Bank
By:/s/Eric Lawrence
----------------------------------------------
Title:Senior Vice President
--------------------------------------
IRT PROPERTY COMPANY
SECOND AMENDMENT TO LOAN AGREEMENT
Signature Page 2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF IRT PROPERTY COMPANY AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,620
<SECURITIES> 0
<RECEIVABLES> 525
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,903
<PP&E> 499,822
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0
0
<COMMON> 32,075
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<EPS-PRIMARY> .35
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</TABLE>
