<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, 1998
-----------------------------------------------
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 27, 1998
- ---------------------------------- ----------------------------
Common Stock, $1 Par Value 33,251,763 Shares
<PAGE> 2
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, INCLUDING
INTEREST RATES AND CREDIT AVAILABILITY, AND POSSIBLE ENVIRONMENTAL LIABILITIES.
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
IRT PROPERTY COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) ------------
------------
<S> <C> <C>
ASSETS
Real estate investments:
Rental properties, at cost $574,070,845 $537,160,220
Accumulated depreciation (68,396,936) (62,526,989)
------------ ------------
505,673,909 474,633,231
Net investment in direct financing leases 4,638,117 4,704,295
Investment in joint venture - 355,832
Mortgage loans, net 4,246,795 9,321,205
------------ ------------
Net real estate investments 514,558,821 489,014,563
Cash and cash equivalents 477,700 275,349
Accrued interest receivable 54,095 528,094
Prepaid expenses and other assets 11,271,094 8,334,792
------------ ------------
$526,361,710 $498,152,798
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable, net $ 58,394,123 $ 59,558,650
7.3% convertible subordinated debentures due August
15, 2003 23,275,000 28,453,000
7.45% senior notes due April 1, 2001, net 49,954,130 49,945,790
7.25% senior notes due August 15, 2007, net 74,611,275 74,589,975
Indebtedness to banks 42,000,000 14,400,000
Accrued interest on debentures 641,873 784,671
Accrued interest on senior notes 2,970,313 2,970,313
Accrued expenses and other liabilities 10,399,216 6,719,244
Deferred income taxes - 1,055,000
------------ ------------
Total liabilities 262,245,930 238,476,643
------------ ------------
Commitments and Contingencies (Note 8)
Shareholders' Equity:
Common stock, $1 par value, authorized 75,000,000
shares; 33,249,763 shares issued and outstanding in
1998 and 32,385,664 shares in 1997 33,249,763 32,385,664
Preferred stock, $1 par value, authorized10,000,000
shares; none issued - -
Additional paid-in capital 272,228,218 263,786,165
Deferred compensation (1,187,500) -
Stock loans (1,250,000) -
Cumulative distributions in excess of net earnings (38,924,701) (36,495,674)
------------ ------------
Total shareholders' equity 264,115,780 259,676,155
------------ ------------
$526,361,710 $498,152,798
============ ============
</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, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Income from rental properties $19,662,904 $16,071,612 $37,887,151 $31,541,382
Interest 115,776 340,861 229,332 722,544
Interest on direct financing leases 127,804 131,367 317,191 312,126
----------- ----------- ----------- -----------
19,906,484 16,543,840 38,433,674 32,576,052
----------- ----------- ----------- -----------
Income from unconsolidated joint ventures - - 54,021 -
----------- ----------- ----------- -----------
Expenses:
Operating expenses of real estate
investments 4,515,379 3,346,018 8,503,725 6,516,878
Interest on mortgages 1,257,039 1,833,733 2,555,091 3,642,333
Interest on debentures 424,769 546,971 895,737 1,272,942
Interest on 7.45% senior notes 935,420 935,420 1,870,840 1,870,840
Interest on 7.25% senior notes 1,370,025 - 2,740,050 -
Interest on indebtedness to banks 670,027 358,619 1,019,936 571,275
Depreciation 3,185,602 2,819,981 6,271,496 5,581,827
Amortization of debt costs 107,930 96,220 219,308 203,661
General & administrative 1,807,099 948,164 2,723,574 1,799,308
----------- ----------- ----------- -----------
14,273,290 10,885,126 26,799,757 21,459,064
----------- ----------- ----------- -----------
Earnings before gain on real
estate investments 5,633,194 5,658,714 11,687,938 11,116,988
Gain on real estate investments:
Gain on sale of property 744,074 - 744,074 -
----------- ----------- ----------- -----------
Net earnings $ 6,377,268 $ 5,658,714 $12,432,012 $11,116,988
=========== =========== =========== ===========
Per Share:
Basic $ 0.19 $ 0.17 $ 0.38 $ 0.35
=========== =========== =========== ===========
Diluted $ 0.19 $ 0.17 $ 0.38 $ 0.35
=========== =========== =========== ===========
Weighted average number of shares
outstanding:
Basic 32,991,715 32,041,622 32,754,232 31,515,722
=========== =========== =========== ===========
Diluted 33,010,081 32,084,306 32,788,257 31,558,406
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 5
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Additional Deferred Distributions Total
Common Paid-In Compensation/ in Excess of Shareholders'
Stock Capital Stock Loans Net Earnings Equity
----------- ------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
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 -
$.450 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 stock options 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
=========== ============ =========== ============ ============
Balance at December 31, 1997 $32,385,664 $263,786,165 $ - $(36,495,674) $259,676,155
Net earnings for period - - - 12,432,012 12,432,012
Cash dividends paid -
$.455 per share - - - (14,861,039) (14,861,039)
Issuance of shares under
Dividend Reinvestment
Plan, net 163,505 1,584,761 - - 1,748,266
Conversion of debentures, net 460,263 4,595,696 - - 5,055,959
Exercise of stock options, net 811 1,116 - - 1,927
Issuance of restricted stock to
employees 119,760 1,130,240 (1,250,000) - -
Deferred compensation - - 62,500 - 62,500
Issuance of shares subject to
employee loans 119,760 1,130,240 (1,250,000) - -
----------- ------------ ----------- ------------ ------------
Balance at June 30, 1998 $33,249,763 $272,228,218 $(2,437,500) $(38,924,701) $264,115,780
=========== ============ =========== ============ ============
</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, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 12,432,012 $ 11,116,988
Adjustments to reconcile earnings to net cash from
operating activities:
Income from unconsolidated joint ventures (54,021) -
Operating distributions from unconsolidated joint venture 54,021 -
Gain on sale of property (744,074) -
Depreciation 6,271,496 5,581,827
Amortization of debt cost and discount 248,948 212,001
Amortization of capitalized leasing income 66,178 55,879
Amortization of deferred compensation 62,500 -
------------ ------------
18,337,060 16,966,695
Changes in accrued assets and liabilities:
Decrease in accrued interest on debentures (142,798) (1,514,954)
Increase (decrease) in interest receivable, prepaid
expenses and other assets (3,247,731) 602,193
Increase in accrued expenses and other liabilities 3,679,972 1,003,373
------------ ------------
Net cash flows from operating activities 18,626,503 17,057,307
------------ ------------
Cash flows from (used in) investing activities:
Proceeds from sale of property, net 825,464 -
Non-operating distributions from unconsolidated joint venture 355,832 -
Additions to real estate investments, net -
Acquisitions, expansions and renovations (28,983,755) (22,937,323)
Improvements (1,733,367) (678,809)
Collections of mortgage loans, net 18,650 57,015
------------ ------------
Net cash flows used in investing activities (29,517,176) (23,559,117)
------------ ------------
Cash flows from (used in) financing activities:
Cash dividends paid, net (13,112,773) (13,455,019)
Issuance of common stock, net - 49,534,496
Exercise of stock options 1,927 66,841
Principal amortization of mortgage notes payable, net (546,866) (665,326)
Repayment of mortgage notes payable, net (2,849,221) (3,963,969)
Increase (decrease) in bank indebtedness, net 27,600,000 11,700,000
Repurchase of 7.3% convertible subordinated debentures, net - (38,269,338)
Cash in lieu of fractional shares on conversion of debentures (43) (23)
------------ ------------
Net cash flows from financing activities 11,093,024 4,947,662
------------ ------------
Net increase in cash and cash equivalents 202,351 (1,554,148)
Cash and cash equivalents at beginning of period 275,349 3,174,342
------------ ------------
Cash and cash equivalents at end of period $ 477,700 $ 1,620,194
============ ============
</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, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for interest related to:
Mortgage notes payable $ 2,605,851 $ 3,617,763
Convertible subordinated debentures 1,038,535 2,787,896
Senior notes 4,581,250 1,862,500
Indebtedness to banks 829,977 744,763
----------- -----------
Total cash paid during the period for interest $ 9,055,613 $ 9,012,922
=========== ===========
Supplemental schedule of noncash investing and
financing activities:
Acquisitions, expansions and renovations:
Cost of acquisitions, expansions and renovations $31,215,315 $30,980,014
Additions to mortgage notes payable - Assumed (2,231,560) (8,042,691)
----------- -----------
Cash paid for acquisitions, expansions and
renovations of real estate investments $28,983,755 $22,937,323
=========== ===========
Foreclosure of mortgage loan:
Addition to properties $ 4,444,882 $ -
Basis in mortgage loan (4,444,882) -
----------- -----------
Cash proceeds from foreclosure of mortgage loan $ - $ -
=========== ===========
Conversion of debentures:
Debentures converted $ 5,178,000 $ 135,000
Associated unamortized debenture costs (121,998) (3,779)
Equity issued on conversion (5,055,959) (131,198)
----------- -----------
Cash paid in lieu of fractional shares $ 43 $ 23
=========== ===========
Repurchase of convertible debentures:
Convertible debentures repurchased $ - $54,799,000
Issuance of common stock, net of expense - (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
=========== ===========
</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, 1998 and 1997
1. Unaudited Financial Statements
These consolidated financial statements for interim periods are
unaudited and should be read in conjunction with the Company's Annual Report to
Shareholders for the year ended December 31, 1997. 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,
1998 and 1997 have been recorded. The results of operations for the interim
period are not necessarily indicative of the results that may be expected for
future interim periods or for the full year.
2. Earnings Per Share
Basic earnings per share is computed by dividing net earnings by the
weighted average number of shares outstanding during the period consistent with
the guidelines of Statement of Accounting Standards No. 128, "Earnings Per
Share." The effect on diluted earnings per share assuming conversion of the
7.3% convertible subordinated debentures would be anti-dilutive. Options issued
to executives and directors with exercise prices less than the average market
price for the respective periods were considered dilutive.
8
<PAGE> 9
<TABLE>
<CAPTION>
Per-Share
Income Shares Amount
------ ------ ---------
<S> <C> <C> <C>
For the quarter ended June 30, 1998
- -----------------------------------
Basic Earnings Per Share
Net Earnings available to shareholders $ 6,377,268 32,991,715 $0.19
=====
Effect of options and restricted
shares - 18,366
----------- ----------
Diluted Earnings per Share
Net Earnings available to shareholders $ 6,377,268 33,010,081 $0.19
=========== ========== =====
For the quarter ended June 30, 1997
- -----------------------------------
Basic Earnings Per Share
Net Earnings available to shareholders $ 5,658,714 32,041,622 $0.18
=====
Effect of options and restricted
shares - 42,684
----------- ----------
Diluted Earnings per Share
Net Earnings available to shareholders $ 5,658,714 32,084,306 $0.18
=========== ========== =====
For the six months ended June 30, 1998
- --------------------------------------
Basic Earnings Per Share
Net Earnings available to shareholders $12,432,012 32,754,232 $0.38
=====
Effect of options and restricted
shares - 34,025
----------- ----------
Diluted Earnings per Share
Net Earnings available to shareholders $12,432,012 32,788,257 $0.38
=========== ========== =====
For the six months ended June 30, 1997
- --------------------------------------
Basic Earnings Per Share
Net Earnings available to shareholders $11,116,988 31,515,722 $0.35
=====
Effect of options and restricted
shares - 42,684
----------- ----------
Diluted Earnings per Share
Net Earnings available to shareholders $11,116,988 31,558,406 $0.35
=========== ========== =====
</TABLE>
9
<PAGE> 10
The Company adopted SFAS No. 128, "Earnings Per Share," effective
December 15, 1997. This accounting change had no effect on previously reported
earnings per share (EPS) data for the quarter and six months ended June 30,
1997.
3. 7.3% Convertible Subordinated Debentures
During February and March 1998, $5,178,000 of the 7.3% convertible
subordinated debentures were converted into 460,263 shares of common stock at
$11.25 per share.
Based upon the $11.25 conversion price, 2,068,889 authorized but
unissued common shares have been reserved for possible issuance if the
remaining $23,275,000 of debentures outstanding June 30, 1998 are converted.
4. Rental Properties
On January 13, 1998, the Company acquired Town and Country Shopping
Center in Kissimmee, Florida for a total cost of $4,265,000, consisting of the
initial purchase price of $4,200,000 and approximately $65,000 of acquisition
costs. This acquisition was funded by the assumption of the $2,232,000 existing
mortgage debt and cash of $2,033,000.
On March 12, 1998, the Company acquired Spring Valley Commons in
Columbia, South Carolina for $6,100,000 cash, consisting of the initial
purchase price of $6,075,000 and approximately $25,000 of acquisition costs.
On March 31, 1998, the Company acquired Daniel Village in Augusta,
Georgia for $12,240,000 cash, consisting of the initial purchase price of
$12,200,000 and approximately $40,000 of acquisition costs.
On June 11, 1998, the Company acquired Mableton Crossing Shopping
Center in Mableton, Georgia for $8,170,000 cash, consisting of the initial
purchase price of $8,150,000 and approximately $20,000 of acquisition costs.
Effective June 30, 1998, the Company sold its Ohio industrial facility
for $827,000. The Company received net cash proceeds from the sale of
approximately $825,000 and recognized a gain of approximately $744,000 for
financial reporting purposes.
10
<PAGE> 11
5. Investment in Joint Venture
IRT Capital Corporation ("IRTCC"), a taxable subsidiary of the
Company, was a 50% owner of a joint venture which purchased in 1996 a 1.31 acre
parcel of land located in Savannah, Georgia, for development or sale. During
March 1998, this parcel was sold for a total sales price of $465,000. IRTCC,
which is included in the consolidated financial statements of the Company,
recognized income from the joint venture of $54,000.
6. Mortgage Loans
During the fourth quarter of 1997, the borrower under the Spanish
Quarter Apartments wrap-around mortgage loan defaulted under the terms of the
mortgage, and on February 18, 1998, the Company obtained title to the property
through foreclosure. Management believes the market value of the property
equals or exceeds the net carrying value of the wrap-around mortgage.
7. Deferred Compensation and Stock Loans
On June 18, 1998, 119,760 restricted shares of common stock (the
"Restricted Shares") were granted and 119,760 shares (the "Loan Shares") were
issued pursuant to loans made to certain Company officers as incentives for
future services. The Restricted Shares and the Loan Shares were valued at the
closing price of the Company's common stock on June 18, 1998 of $10.437.
The Restricted Shares vest in ten equal annual installments beginning
on January 31, 1999. Upon issuance, the $1,250,000 value of the Restricted
Shares was recorded in shareholders' equity both as shares issued and as a
deferred compensation offset. Such deferred compensation is being amortized
ratably over the ten-year vesting period.
The loans, aggregating $1,250,000, are secured by both the Loan Shares
and the Restricted Shares, carry a 7% annual interest rate, and are due the
earlier of July 1, 2008 or 90 days following the death, disability or
termination of employment of the officers.
8. Commitments and Contingencies
IRTCC 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
11
<PAGE> 12
140,000 square feet, not including two outparcels, at a total anticipated cost
of approximately $14,100,000. The venture may require the Company to purchase
the shopping center upon the completion of Phase I at cost or upon the
completion of Phase II at the greater of cost or a 10.75% capitalization rate.
It is anticipated that the Company will ultimately acquire the project upon
completion.
The Company has entered into contracts to acquire ownership positions
in four shopping center investments valued at approximately $38,700,000. These
properties are subject to existing mortgage debt aggregating approximately
$24,806,000. The Company would pay cash of approximately $4,694,000 for one
center and issue convertible operating partnership units in IRT Partners L.P.
("IRTLP"), a Georgia limited partnership being organized by the Company, for the
net value of the three remaining properties. In connection with these
transactions, the Company will contribute various of its properties to IRTLP in
exchange for a majority of the partnership interests of IRTLP. These
transactions are scheduled to close during the third quarter of 1998 if all
closing contingencies are met.
9. Subsequent Event
On July 1, 1998 the Company prepaid two mortgages aggregating
$3,525,000 bearing interest at 9.875% and recognized a $35,000 loss on
extinguishment of debt. These mortgages had a maturity date of January 1, 2001
and were secured by Pinhook Plaza.
12
<PAGE> 13
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, 1998, the Company borrowed $27,600,000 under its unsecured revolving
term loan. It utilized funds of a) $30,775,000 for the acquisition of four
shopping center investments, consisting of cash of approximately $28,984,000
and mortgage debt of approximately $2,232,000 secured by one of the centers, b)
$2,224,000 to repay at maturity an 11% mortgage (discounted to 9.75% for
financial reporting purposes) and c) $625,000 to make a scheduled principal
payment under a 9% purchase-money mortgage. Additionally, $5,178,000 of the
Company's 7.3% convertible subordinated debentures were converted into 460,263
shares of common stock at $11.25 per share.
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.
Material Changes in Results of Operations. Rental income related to
the Company's core portfolio of real estate investments increased approximately
$282,000 and $645,000 during the quarter and six months ended June 30, 1998,
respectively. These increases are net of approximately $114,000 and $165,000
less income earned during the quarter and six months, respectively, due to two
lease rejections in 1997 and 1998 by tenants in bankruptcy. Additionally,
rental income for the quarter and six months a) increased approximately
$2,597,000 and $5,170,000, respectively, as a result of the 13 shopping centers
acquired in 1997 and 1998, b) increased approximately $303,000 and $436,000,
respectively, as a result of the apartment investment obtained through
foreclosure of the wrap-around mortgage loan in February 1998, and c) decreased
by approximately $382,000 and $698,000, respectively, as a result of two
investments sold in 1997. The Company also recognized approximately $792,000 of
income upon termination of an anchor tenant's lease necessitated by the
redevelopment of McAlpin Square.
13
<PAGE> 14
Percentage rentals received from shopping center investments,
excluding percentage rentals received from the Wal-Mart investments classified
as direct financing leases, totaled approximately $188,000 and $176,000 during
the quarters and $599,000 and $460,000 during the six months ended June 30,
1998 and 1997, respectively. Percentage rental income is recorded upon
collection based on the tenants' lease years.
Interest income decreased approximately $225,000 and $493,000 for the
three and six months ended June 30, 1998, respectively, due primarily to the
repayment of one purchase-money mortgage in September 1997 and the foreclosure
of the wrap-around mortgage during the first quarter of 1998. Additionally the
Company earned approximately $13,000 and $60,000 less interest on short-term
money market investments for the quarter and six months ended June 30, 1998,
respectively.
The increase in interest on direct financing leases resulted from an
increase in percentage rental from one of the Company's two Wal-Mart
investments accounted for as direct financing leases. Approximately $61,000 of
percentage rental was received in 1998 compared to approximately $49,000 in
1997.
IRTCC, which is included in the consolidated financial statements of
the Company, recognized $54,000 of income from a joint venture upon the sale
during the first quarter of 1998 of the 1.31 acre parcel of land held by the
joint venture.
Operating expenses related to the Company's core portfolio of real
estate investments increased approximately $587,000 and $934,000 for the
quarter and six months ended June 30, 1998, respectively. Additionally, during
the quarter and six months of 1998, operating expenses a) increased
approximately $600,000 and $1,170,000, respectively, as a result of the 13
shopping centers acquired in 1997 and 1998 b) increased approximately $159,000
and $209,000, respectively, as a result of the apartment investment obtained
through foreclosure in February 1998, and c) decreased approximately $177,000
and $327,000, respectively, as a result of two investments sold in 1997.
The $577,000 and $1,087,000 net decreases in interest expense on
mortgages during the quarter and six months ended June 30, 1998, respectively,
were primarily due to various mortgages repaid during 1997 and the first three
months of 1998, 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, the $1,250,000 purchase-money mortgage bearing interest at 9%
taken upon the acquisition of Powers Ferry Plaza in May 1997, the assumption of
a $3,502,000 mortgage bearing interest at 7.75% upon the acquisition of Shoppes
of Silverlakes in November 1997 and the assumption of a $2,232,000 mortgage
bearing
14
<PAGE> 15
interest at 7.675% upon the acquisition of Town and Country Shopping Center in
January 1998. During the first quarter of 1998, the Company repaid at maturity
a $2,224,000 mortgage bearing interest at 11% (discounted to 9.75% for
financial reporting purposes) and made a $625,000 scheduled principal payment
on a 9% purchase-money mortgage. During 1997, the Company a) repaid at maturity
a $3,800,000 mortgage bearing interest at 9.75%, b) repaid at maturity three
mortgages aggregating $27,721,000 bearing interest at 7.6% and, c) repaid at
maturity a $3,155,000 mortgage bearing interest at 9.375%.
Interest on debentures decreased due to the repurchase of $54,799,000
of the debentures in January 1997 and the conversion of $5,178,000 of the
debentures during the first quarter of 1998 and $1,653,000 during 1997.
The increase in interest on 7.25% senior notes is due to the issuance
in August 1997 of $75 million of 7.25% senior notes due August 2007.
Interest expense on bank indebtedness increased approximately $311,000
and $449,000 for the quarter and six months ended June 30, 1998, respectively,
reflecting increased average borrowings at lower effective interest rates. The
Company had average borrowings under its revolving term loan of $35,826,000 and
$26,488,000 for the three and six months ended June 30, 1998, respectively, at
effective interest rates of 6.95% and 6.97%, respectively, as compared to
average borrowings of $16,732,000 and $12,863,000 at effective interest rates
of 7.25% and 7.16% for the respective comparable periods in 1997. In addition,
the Company incurred commitment fees of approximately $41,000 and $91,000 for
the quarter and six months ended June 30, 1998, respectively, as compared to
$52,000 and $108,000 for the respective comparable periods in 1997.
The net increases in depreciation expense in 1998 were primarily due
to the 13 shopping center investments acquired during 1997 and 1998 and the
mortgage loan foreclosed during February 1998, partially offset by the two
investments sold during 1997.
The increases in general and administrative expenses in the quarter
and six months ended June 30, 1998 were primarily due to the write off of
approximately $373,000 of diligence and other costs related to merger
negotiations that did not result in a transaction; the accrual of approximately
$356,000 of incentive compensation expense, $281,000 of which will be paid only
if certain per share funds from operations and shareholder return goals are
reached in 1998; and amortization of $62,500 of deferred compensation expense
associated with the restricted stock awards granted in June 1998. Increases in
the management staff and related employee benefit costs and expanded corporate
insurance coverage
15
<PAGE> 16
also contributed to the 1998 increases. These increases were partially offset
by the allocation of management fees on the thirteen centers acquired during
1997 and 1998, which resulted in decreases in general and administrative
expenses of approximately $58,000 and $126,000 for the quarter and six months
ended June 30, 1998.
Further increases in general and administrative expenses will be
reflected in future quarters, as the Company ceased capitalizing overhead costs
related to acquisitions effective January 1, 1998 in compliance with the new
policy issued by the Emerging Issues Task Force. From July 1, 1997 through
December 31, 1997, the Company capitalized approximately $255,000 of
acquisition overhead 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, adjusted for nonrecurring items.
Interest on debentures and amortization of convertible debenture costs are
added to funds from operations when assumed conversion of the debentures is
dilutive. Conversion of the debentures is dilutive and therefore assumed for
the quarters and six months ended June 30, 1998 and 1997. 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.
16
<PAGE> 17
The following data is presented with respect to the calculation of
funds from operations under the NAREIT definition for the three- and six-month
periods ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings $ 6,377,268 $ 5,658,714 $12,432,012 $11,116,988
Gain on real estate
investments (744,074) - (744,074) -
Depreciation 3,185,603 2,819,981 6,271,497 5,581,827
Amortization of capitalized
leasing fees 69,103 63,693 130,912 123,890
Amortization of
capitalized leasing
income 33,552 30,286 66,178 55,879
Nonrecurring merger
expenses 373,357 - 373,357 -
----------- ----------- ----------- -----------
Funds from operations 9,294,809 8,572,674 18,529,882 16,878,584
Interest on convertible
debentures 424,769 546,971 895,737 1,272,942
Amortization of
convertible debenture
costs 25,065 32,277 53,579 75,774
----------- ----------- ----------- -----------
Fully diluted funds from
operations $ 9,744,643 $ 9,151,922 $19,479,198 $18,227,300
=========== =========== =========== ===========
Fully diluted weighted
average shares 35,078,970 34,748,395 35,036,859 34,656,668
=========== =========== =========== ===========
</TABLE>
17
<PAGE> 18
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 three- and six-month periods ended June 30,
1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Tenant Improvements:
Shopping Centers $ 447,966 $142,295 $ 571,787 $ 232,123
Industrial 16,967 5,483 16,967 9,065
---------- -------- ---------- ---------
Total Tenant
Improvements 464,933 147,778 588,754 241,188
---------- -------- ---------- ---------
Capital Expenditures:
Shopping Centers 657,524 258,485 1,092,557 375,629
Apartment - 56,618 - 61,992
Industrial 50,556 - 52,056 -
---------- -------- ---------- ---------
Total Capital
Expenditures 708,080 315,103 1,144,613 437,621
---------- -------- ---------- ---------
Total Improvements $1,173,013 $462,881 $1,733,367 $ 678,809
========== ======== ========== =========
Leasing Fees $ 139,118 $ 76,040 $ 231,895 $ 119,158
========== ======== ========== =========
</TABLE>
Proposed Tax Legislation. On February 2, 1998 the Clinton
Administration released the fiscal 1999 budget, which contains certain proposals
that may adversely affect REITs (the "Administration Proposals"). Under current
law, the Company cannot own more than 10% of the outstanding voting securities
of any one issuer and qualify for taxation as a REIT. The Administration
Proposals include a provision that would expand the ownership limitation from no
more than 10% of the voting securities of an issuer to no more than 10% of the
vote or value of all classes of the issuer's stock. The Administrative
Proposals, however, will not become effective until legislation is duly passed
by Congress and signed by the President. Consequently, it is impossible to
determine at this time all of the possible ramifications that may result from
the legislation based on the Administration Proposals. Management does not
believe the Administration Proposals will have a material adverse effect upon
its operations although they may restrict future non-qualified REIT activities,
such as development for sale, by IRT Capital Corporation.
18
<PAGE> 19
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders.
The Annual Meeting of Shareholders of the Company was held June 18,
1998 with 27,986,978 shares represented by proxy, or approximately 85% of the
32,931,557 shares outstanding as of the May 6, 1998 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 98.72% 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 27,629,246 357,732
Thomas H. McAuley 27,705,273 281,705
Mary M. Thomas 27,716,598 270,380
Patrick L. Flinn 27,716,024 270,954
Homer B. Gibbs, Jr. 27,708,894 278,084
Samuel W. Kendrick 27,717,298 269,680
Bruce A. Morrice 27,699,692 287,286
</TABLE>
2. The approval of the IRT Property Company 1998 Long-Term
Incentive Plan. This plan was approved with 22,787,617
shares, or 81.42% of the shares represented at the meeting,
voting for; 4,626,250 shares, or 16.53%, voting against; and
573,110 shares, or 2.05%, abstaining.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1.1 Secured Promissory Note from Thomas H. McAuley to
IRT Property Company dated June 18, 1998.
10.1.2 Pledge Agreement by and between Thomas H. McAuley
and IRT Property Company dated June 18, 1998.
10.1.3 Restricted Stock Award Agreement by and between
Thomas H. McAuley and IRT Property Company dated
June 18, 1998.
19
<PAGE> 20
]
10.2.1 Secured Promissory Note from Mary M. Thomas to
IRT Property Company dated June 18, 1998.
10.2.2 Pledge Agreement by and between Mary M. Thomas
and IRT Property Company dated June 18, 1998.
10.2.3 Restricted Stock Award Agreement by and between
Mary M. Thomas and IRT Property Company dated
June 18, 1998.
10.3.1 Secured Promissory Note from W. Benjamin Jones III
to IRT Property Company dated June 18, 1998.
10.3.2 Pledge Agreement by and between W. Benjamin Jones
III and IRT Property Company dated June 18, 1998.
10.3.3 Restricted Stock Award Agreement by and between
W. Benjamin Jones III and IRT Property Company
dated June 18, 1998.
10.4.1 Secured Promissory Note from Robert E. Mitzel to
IRT Property Company dated June 18, 1998.
10.4.2 Pledge Agreement by and between Robert E. Mitzel
and IRT Property Company dated June 18, 1998.
10.4.3 Restricted Stock Award Agreement by and between
Robert E. Mitzel and IRT Property Company dated
June 18, 1998.
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, 1998.
20
<PAGE> 21
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 27, 1998 /s/ Thomas H. McAuley
------------- -----------------------------------
Thomas H. McAuley
President & Chief Executive
Officer
Date: July 27, 1998 /s/ Mary M. Thomas
------------- -----------------------------------
Mary M. Thomas
Executive Vice President &
Chief Financial Officer
21
<PAGE> 1
EXHIBIT 10.1.1
SECURED PROMISSORY NOTE
U.S. $500,000.00 June 18, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, Thomas H. McAuley, an individual
resident of the State of Georgia (the "Borrower") promises to pay to the order
of IRT Property Company, a Georgia corporation (together with any holder hereof,
the "Holder") at the main offices of the Holder located at 200 Galleria Parkway,
N.W., Suite 1400, Atlanta, Georgia 30339, or at such other place as the Holder
may designate in writing to the Borrower, in lawful money of the United States
of America, the principal sum of FIVE HUNDRED THOUSAND and NO/100 DOLLARS
($500,000).
Interest shall accrue on the outstanding principal amount of this Note
at a rate equal to seven percent (7.00%) per annum, and shall be calculated and
paid based upon a year consisting of 12 months of 30 days each. Interest shall
be due and payable quarterly in arrears on the first day of April, July, October
and January of each year, commencing on October 1, 1998, at maturity and upon
any acceleration of the principal amount due hereunder, if earlier.
Interest shall accrue on any amount past due hereunder at a rate equal
to the "Prime Rate" of interest quoted in The Wall Street Journal, as in effect
from time to time, plus two percent per annum. All such interest shall be due
and payable on demand.
The entire outstanding principal balance hereunder shall be due and
payable on July 1, 2008, or if sooner, 90 days following the death or
Disability of the Borrower or the termination of employment of the Borrower with
IRT Property Company or an affiliated company. The Borrower may prepay the
principal amount outstanding under this Note in whole or in part at any time,
and from time to time, without penalty or charge. For purposes of this Note,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative.
In no event shall the amount of interest due or payable under this Note
exceed the maximum rate of interest allowed by the laws of the State of Georgia
and, in the event any such payment is inadvertently paid by the Borrower or
inadvertently received by the Holder, then such excess sum shall be credited as
a payment of principal, unless the Borrower shall notify the Holder in writing
that the Borrower elects to have such excess sum returned to it forthwith. It is
the express intent of the parties hereto that the Borrower not pay and the
Holder 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.
<PAGE> 2
This Note shall constitute a general, secured full recourse obligation
of the Borrower through July 1, 2003, but thereafter, following an Event of
Default (as defined below), the Borrower's liability hereunder shall be limited
to the Collateral and the Borrower shall have no liability or obligation for any
deficiency arising from a foreclosure and/or sale of the Collateral by the
Holder.
The Borrower shall pay all expenses incurred by the Holder in the
collection of this Note, including, without limitation, the fees and
disbursements of counsel to the Holder in the amount of fifteen percent (15%) of
the unpaid principal balance and accrued interest, if this Note is collected by
or through an attorney-at-law.
Each of the following events shall constitute an "Event of Default"
under this Note: (i) failure of the Borrower to pay any principal, interest or
other amount due hereunder within five business days of the due date, or the
Borrower shall in any way fail to comply with the other terms, covenants or
conditions contained in this Note; (ii) any written representation or warranty
made at any time by the Borrower to the Holder shall prove to have been
incorrect or misleading in any material respect when made; (iii) a default,
event of default, or event which with the giving of notice or the passage of
time or both would constitute a default or event of default, shall have occurred
and be continuing for 60 days under any document, instrument, contract or
agreement (a) evidencing or securing indebtedness of the Borrower for borrowed
money and (b) which is material to the financial condition of the Borrower; (iv)
a final judgment or order for the payment of money, or any final order granting
equitable relief, shall be entered against the Borrower and such judgment or
order has or will have a materially adverse effect on the financial condition of
the Borrower; (v) a warrant, writ of attachment, levy or other similar process
shall be issued against any property of the Borrower; (vi) the Borrower shall
(a) commence a voluntary case under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect); (b) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, or adjustment of debts; (c) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy, insolvency or adjustment of debts laws;
(d) apply for or consent to, or fail to contest in a timely and appropriate
manner, the taking of possession by, a receiver, custodian, trustee, or
liquidator of itself or of a substantial part of his property; (e) be unable to,
or admit in writing his inability to, pay his debts as they become due; (f) make
a general assignment for the benefit of creditors; or (g) make a conveyance
fraudulent as to creditors under any state or federal law; (vii) a case or other
proceeding shall be commenced against the Borrower in any court of competent
jurisdiction seeking (a) relief under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, or adjustment of debts
or (b) the appointment of a trustee, receiver, conservator, custodian,
liquidator for the Borrower or all or any substantial part of the assets,
domestic or foreign, of the Borrower; (viii) Borrower sells, pledges,
hypothecates, grants a security interest in or lien on, encumbers, or in any
manner transfers or disposes of any shares of IRT Property Company
-2-
<PAGE> 3
$1.00 par value common stock ("Common Stock") securing this Note and all
proceeds and products, together with any and all substitutions and replacements
therefore or other collateral (collectively, "Collateral") specified in the
Pledge Agreement.
Upon the occurrence of an Event of Default, all of the Borrower's
obligations hereunder, without demand or notice of any kind, may be immediately
declared, and thereupon shall immediately become in default and due and payable
and the Holder may exercise any and all rights and remedies available to it at
law, in equity or otherwise.
THE BORROWER AGREES THAT ALL OF THE PAYMENT OBLIGATIONS HEREUNDER SHALL
BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS HEREUNDER,
THE BORROWER HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM.
No delay or failure on the part of the Holder in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy.
All amendments to this Note, and any waiver or consent of the Holder,
must be in writing and signed by the Holder and the Borrower, and any waivers or
consents shall be limited to the express matters and periods provided therein,
and shall not constitute a waiver of any other terms.
The Borrower hereby waives presentment, demand, notice of dishonor,
protests and all other notices whatever.
This Note shall be binding upon the estate, heirs, trustees, successors
and assigns of the Borrower. A Holder of this Note may assign or transfer this
Note to any person or entity without notice to, or the consent of, the Borrower.
This Note shall be secured by and entitled to the benefits of that
certain Pledge Agreement dated as of the date hereof (the "Pledge Agreement") by
and between the Holder and the Borrower.
Any notice to be given hereunder shall be in writing, shall be sent to
the Holder's address as specified in the first paragraph hereof or the
Borrower's address set forth below its signature hereto, as the case may be, and
shall be deemed received (i) on the earlier of the date of receipt or the date
three business days after deposit of such notice in the United States mail, if
sent postage prepaid, certified mail, return receipt requested or (ii) when
actually received, if personally delivered.
-3-
<PAGE> 4
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
under seal as of the date and year first written above.
/s/ Thomas H. McAuley (SEAL)
---------------------------
Name: Thomas H. McAuley
Address for Notices:
3095 Brandy Station
Atlanta, Georgia 30339
-4-
<PAGE> 1
EXHIBIT 10.1.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of June 18, 1998 by and between Thomas
H. McAuley, an individual resident of the State of Georgia (the "Pledgor") and
IRT PROPERTY COMPANY, a Georgia corporation (the "Secured Party").
The Secured Party has extended a loan (the "Loan") to the Pledgor, to
enable the Pledgor to purchase shares of IRT Property Company ("Company") $1.00
par value common stock ("Common Stock").
Such loan is evidenced by that certain Promissory Note dated as of the
date hereof (as it may be amended, restated, refinanced or otherwise modified
from time to time, the "Note") in the original principal amount of Five Hundred
Thousand Dollars ($500,000) executed by the Pledgor in favor of the Secured
Party, and is to be secured by all shares of Common Stock purchased within the
proceeds of such Loan and all shares of Common Stock granted to the Pledgor as
Restricted Stock pursuant to the Restricted Stock Award Agreement of even date
herewith (collectively, all such shares are referred to as the "Pledged Stock")
and shown on Schedule 1 hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Pledge. The Pledgor hereby pledges to the Secured Party and
grants to the Secured Party a first priority security interest in all of the
Pledgor's right, title and interest in, to and under the following
(collectively, the "Collateral"): (a) all of the Pledged Stock and all
substitutions and replacements therefor, and (b) any and all products and
proceeds of the foregoing, including all shares or other securities, interests
or property issued in respect of and/or in substitution of such Collateral
together with any and all other rights, titles, interests, powers, privileges
and preferences pertaining thereto.
Section 2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to the Secured Party, to secure the
prompt payment of the Note and all obligations of the Pledgor under this
Agreement (collectively, the "Obligations").
Section 3. Release of Collateral. Upon payment in full by the Pledgor
of obligations arising under the Note, all of the Pledged Stock and other
Collateral immediately and automatically shall be released from the security
interest created by this Agreement without any action by the Pledgor or Secured
Party. The Secured Party agrees to take such actions as the Pledgor may request
to return such released Pledged Stock and other Collateral to the Pledgor, and
to evidence further any such release. The Secured Party also, at the request of
<PAGE> 2
the Pledgor may at any time after July 10, 2003 release any Collateral, provided
the then fair market value of the remaining Collateral shall be not less than
200% of the then outstanding principal balance of the Note, provided all
interest payments are current.
Section 4. No Liens; No Sale of Collateral. The Pledgor will not
create, assume, incur, permit or suffer to exist, or to be created, assumed or
incurred, any lien, security interest, pledge, hypothecation or other
encumbrance (each a "Lien") on any of the Collateral (or any interest therein),
and will not, without the prior written consent of the Secured Party, sell,
assign, transfer or otherwise dispose of (or enter into any agreement or
understanding to do any of the foregoing), all or any portion of the Collateral
(or any interest therein).
Section 5. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of the
Collateral for any purpose;
(ii) the Pledgor shall be entitled to retain and use any
and all cash dividends paid on the Collateral, but any and all stock
and/or liquidating dividends, other distributions in property, or other
distributions made on or in respect of Collateral, whether as a result
of any merger, consolidation, acquisition or other exchange of assets,
or otherwise, shall be and become part of the Collateral pledged
hereunder and, if received by the Pledgor, shall be delivered to the
Secured Party and held by the Secured Party as collateral subject to
the terms and conditions of this Agreement.
The Secured Party agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, all such proxies, powers
of attorney, and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and/or consensual rights
and powers which Pledgor is entitled to exercise pursuant to clause (i) above
and/or to receive the dividends which Pledgor is authorized to retain pursuant
to clause (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to exercise the voting and/or consensual
rights and powers which Pledgor is entitled to exercise pursuant to subsection
(a)(i) above and/or to receive the dividends which Pledgor is authorized to
receive and retain pursuant to subsection (a)(ii) above shall cease, and all
such rights thereupon shall become immediately vested in the Secured Party. Any
and all money and other property paid over to or received by the Secured Party
pursuant to the provisions of this subsection (b) shall be retained by the
Secured Party as additional collateral hereunder.
- 2 -
<PAGE> 3
Section 6. Remedies upon Default. In addition to any right or remedy
that the Secured Party may have under the Note, if an Event of Default shall
have occurred, the Secured Party may exercise any and all rights and remedies of
a secured party under the Uniform Commercial Code as in effect in any applicable
jurisdiction. The Secured Party agrees to give at least 10 days' prior written
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale of any of the Collateral is to be made.
Section 7. Further Assurances. The Pledgor agrees to take all action
that may be reasonably necessary to maintain the validity and enforceability of
the Secured Party's security interest in the Collateral.
Section 8. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until it terminates in accordance with its terms.
Section 9. Notices. Notices, requests and other communications required
or permitted hereunder shall be in writing and shall be made by personal
delivery, telecopy or certified or registered mail, return receipt requested, at
the addresses indicated in the Note or at such other address a party may specify
to the other party by like notice. All such notices and other communications
shall be effective only upon receipt.
Section 10. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
Section 11. Assignment. The Secured Party may assign this Agreement, or
any of the Secured Party's rights and benefits hereunder, to any holder of the
Note.
Section 12. Termination. Upon payment in full of the Note, this
Agreement shall terminate. Upon termination of this Agreement in accordance with
its terms, the Secured Party agrees to take such actions as the Pledgor may
reasonably request (a) to return the Collateral to the Pledgor, and (b) to
evidence the termination of this Agreement.
Section 13. Definitions. Capitalized terms used herein and not defined
herein are used herein with the respective meanings given such terms in the
Note.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
[Signatures on following page]
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge
Agreement under seal as of the date first written above.
THOMAS H. MCAULEY
PLEDGOR
/s/ Thomas H. McAuley (SEAL)
------------------------
Agreed to, accepted and
acknowledged by the Secured Party
as of the date first written above.
IRT PROPERTY COMPANY
By:/s/ Thomas H. McAuley
---------------------------------------------
Name: Thomas H. McAuley
Title: President and Chief Executive Officer
- 4 -
<PAGE> 1
EXHIBIT 10.1.3
IRT PROPERTY COMPANY
RESTRICTED STOCK AWARD AGREEMENT
IRT Property Company (the "Company") hereby grants to Thomas H. McAuley
(the "Executive") 47,904 shares of the Company's $1.00 par value common stock
("Common Stock") set forth herein ("Restricted Stock") pursuant to the IRT
Property Company 1998 Long Term Incentive Plan, and the Executive hereby accepts
such grant upon such terms and conditions. Capitalized terms used but not
defined herein shall have the meanings specified in the Plan.
RESTRICTED STOCK GRANT
Number of shares of Restricted Stock granted: 47,904
Date of Grant: June 18, 1998
Vesting Date(s) of Restricted Stock: 4,790 (10% of the total shares
of Restricted Stock granted
hereby shall vest on January 31
of each year commencing 1999,
with the balance vesting on
January 31, 2008)
Restrictions applicable to Restricted Stock:
(a) The Executive must remain in the continuous employ of the
Company or a Subsidiary of the Company until the respective vesting dates shown
above (the "Restricted Period"). For example, if on January 31, 1999 the
Executive has since the grant date been in the continuous employ of the Company
or an affiliate that is consolidated with the Company in the Company's
consolidated financial statements, 4,790 shares will vest and no longer be
subject to forfeiture. The foregoing notwithstanding, all shares of Restricted
Stock held at death or Disability shall immediately vest upon the death or
Disability of the Executive, or upon any action of the Board of Directors or the
Compensation Committee to vest such shares earlier than the scheduled vesting
date. For purposes hereof, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive's legal
representative.
(b) The shares of Common Stock will be issued in the name of the
Executive as Restricted Stock and the certificates representing such shares will
be held by the Company during the Restricted Period until vested and until
released from any pledge of such shares of Common Stock of the Company.
<PAGE> 2
(c) The Executive, as beneficial owner of the Restricted Shares,
shall have full voting and dividend rights with respect to the Restricted Shares
during the Restricted Period.
(d) Certificates representing shares of Restricted Stock shall
bear the following legend:
THE SHARES ARE SUBJECT TO A RESTRICTED STOCK AWARD AGREEMENT DATED AS
OF JUNE 18, 1998 (THE "AWARD AGREEMENT"), AND NO SHARES OR ANY RIGHTS
OR INTERESTS THEREIN MAY BE SOLD, TRANSFERRED OR DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE AWARD AGREEMENT.
******************************************************************
The following additional terms shall apply to this Restricted Stock
Agreement:
1. TAX WITHHOLDING. Prior to the delivery of any certificate or
certificates for shares acquired upon the vesting of Restricted Stock hereunder,
the Executive must satisfy federal, state and local withholding tax obligations
by either (a) delivering to the Company shares of Common Stock, or (b) directing
the Company to withhold certain of such shares, or (c) remitting to the Company
a sufficient amount of cash to satisfy the withholding requirements. No election
to satisfy withholding under (a) or (b) shall be effective unless approved by
the Board of Directors of the Company, in its sole discretion. If withholding is
to be satisfied under either (a) or (b), the Common Stock used for payment shall
have a fair market value (as determined by the Board) on the date of delivery or
withholding, which shall be the date the withholding tax is determined, equal to
the amount of the taxes to be withheld. Any election by the Executive to satisfy
withholding under (a) or (b) must be made in writing, signed by the Executive
and delivered by the Executive prior to the date the amount of the withholding
tax is determined, and shall be irrevocable. The portion of any withholding tax
represented by a fractional share must be paid in cash.
2. PAYMENT OF WITHHOLDING OBLIGATIONS. Prior to the delivery of
stock certificates to the Executive pursuant to vesting of shares of Restricted
Stock, the Executive shall deliver to the Company his check and/or a stock
certificate registered in the name of the Executive duly assigned to the Company
(with the assignment guaranteed by a bank, trust company, member firm of the New
York Stock Exchange ("NYSE") or other participant in a Signature Guarantee
Medallion Program), or directions for withholding of shares (as applicable)
which the Board of Directors has permitted the Executive to transfer for
satisfying federal and state withholding tax obligations.
3. TRANSFERABILITY. None of the shares of Restricted Stock
granted hereby or any interest therein are transferable or assignable prior to
vesting. The shares of Restricted Stock have not been registered under the 1933
Act, and, even after vesting, unless registered under the Securities Act of
1933, as amended (the "1933 Act"), may not be sold or transferred, nor will any
assignee thereof be recognized as an owner by the Company for any
-2-
<PAGE> 3
purpose, unless a registration statement under the 1933 Act with respect to such
shares shall then be in effect or unless the availability of an exemption from
registration with respect to any proposed disposition or transfer of such shares
is established to the satisfaction of counsel to the Company.
4. DELIVERY OF SHARES. Certificates representing the shares of
Common Stock will be held in pledge by the Company and shall be delivered as
soon as practicable after vesting of the Restricted Stock and any release from
pledge, but such delivery may be postponed for such period as may be required
for the Company with reasonable diligence to comply if deemed advisable by the
Company, with registration requirements under the 1933 Act, listing requirements
under the rules of the NYSE, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
5. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company, in accordance with the terms of
this Restricted Stock Award Agreement.
6. MISCELLANEOUS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia. All shares of
Restricted Stock, and shares of Common Stock resulting after the Restricted
Period from such shares of Restricted Stock are hereby pledged to secure the
Executive's obligations under a Secured Promissory Note and a Pledge Agreement
of even date herewith and all certificates representing all such shares shall be
held by the Company until all of the Executive's obligations under the Secured
Promissory Note and Pledge Agreement have been irrevocably paid in full, or
otherwise in the Company's sole discretion, as and to the extent such shares are
released.
IRT PROPERTY COMPANY
By: /s/ Thomas H. McAuley
----------------------------
Name: Thomas H. McAuley
Date: June 18, 1998
As of the day and year first above written, I hereby accept the above
Restricted Stock grant in accordance with and subject to the terms and
conditions set forth above, and pledge all such Restricted Stock to the Company,
and I agree that any shares of Common Stock, together with all substitutions and
replacements therefore received by me hereunder will not be sold or otherwise
disposed of by me except in a manner in compliance with applicable securities
laws. I agree to notify the Company at least five business days in advance of
any proposed sale or other disposition of any such shares following the vesting
thereof and as permitted by the Pledge Agreement.
/s/ Thomas H. McAuley
----------------------------
Executive
Date: June 18, 1998
-3-
<PAGE> 1
EXHIBIT 10.2.1
SECURED PROMISSORY NOTE
U.S. $250,000.00 June 18, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, Mary M. Thomas, an individual
resident of the State of Georgia (the "Borrower") promises to pay to the order
of IRT Property Company, a Georgia corporation (together with any holder hereof,
the "Holder") at the main offices of the Holder located at 200 Galleria Parkway,
N.W., Suite 1400, Atlanta, Georgia 30339, or at such other place as the Holder
may designate in writing to the Borrower, in lawful money of the United States
of America, the principal sum of TWO HUNDRED FIFTY THOUSAND and NO/100 DOLLARS
($250,000).
Interest shall accrue on the outstanding principal amount of this Note
at a rate equal to seven percent (7.00%) per annum, and shall be calculated and
paid based upon a year consisting of 12 months of 30 days each. Interest shall
be due and payable quarterly in arrears on the first day of April, July, October
and January of each year, commencing on October 1, 1998, at maturity and upon
any acceleration of the principal amount due hereunder, if earlier.
Interest shall accrue on any amount past due hereunder at a rate equal
to the "Prime Rate" of interest quoted in The Wall Street Journal, as in effect
from time to time, plus two percent per annum. All such interest shall be due
and payable on demand.
The entire outstanding principal balance hereunder shall be due and
payable on July 1, 2008, or if sooner, 90 days following the death or
Disability of the Borrower or the termination of employment of the Borrower with
IRT Property Company or an affiliated company. The Borrower may prepay the
principal amount outstanding under this Note in whole or in part at any time,
and from time to time, without penalty or charge. For purposes of this Note,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative.
In no event shall the amount of interest due or payable under this Note
exceed the maximum rate of interest allowed by the laws of the State of Georgia
and, in the event any such payment is inadvertently paid by the Borrower or
inadvertently received by the Holder, then such excess sum shall be credited as
a payment of principal, unless the Borrower shall notify the Holder in writing
that the Borrower elects to have such excess sum returned to it forthwith. It is
the express intent of the parties hereto that the Borrower not pay and the
Holder 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.
<PAGE> 2
This Note shall constitute a general, secured full recourse obligation
of the Borrower through July 1, 2003, but thereafter, following an Event of
Default (as defined below), the Borrower's liability hereunder shall be limited
to the Collateral and the Borrower shall have no liability or obligation for any
deficiency arising from a foreclosure and/or sale of the Collateral by the
Holder.
The Borrower shall pay all expenses incurred by the Holder in the
collection of this Note, including, without limitation, the fees and
disbursements of counsel to the Holder in the amount of fifteen percent (15%) of
the unpaid principal balance and accrued interest, if this Note is collected by
or through an attorney-at-law.
Each of the following events shall constitute an "Event of Default"
under this Note: (i) failure of the Borrower to pay any principal, interest or
other amount due hereunder within five business days of the due date, or the
Borrower shall in any way fail to comply with the other terms, covenants or
conditions contained in this Note; (ii) any written representation or warranty
made at any time by the Borrower to the Holder shall prove to have been
incorrect or misleading in any material respect when made; (iii) a default,
event of default, or event which with the giving of notice or the passage of
time or both would constitute a default or event of default, shall have occurred
and be continuing for 60 days under any document, instrument, contract or
agreement (a) evidencing or securing indebtedness of the Borrower for borrowed
money and (b) which is material to the financial condition of the Borrower; (iv)
a final judgment or order for the payment of money, or any final order granting
equitable relief, shall be entered against the Borrower and such judgment or
order has or will have a materially adverse effect on the financial condition of
the Borrower; (v) a warrant, writ of attachment, levy or other similar process
shall be issued against any property of the Borrower; (vi) the Borrower shall
(a) commence a voluntary case under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect); (b) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, or adjustment of debts; (c) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy, insolvency or adjustment of debts laws;
(d) apply for or consent to, or fail to contest in a timely and appropriate
manner, the taking of possession by, a receiver, custodian, trustee, or
liquidator of itself or of a substantial part of her property; (e) be unable to,
or admit in writing her inability to, pay her debts as they become due; (f) make
a general assignment for the benefit of creditors; or (g) make a conveyance
fraudulent as to creditors under any state or federal law; (vii) a case or other
proceeding shall be commenced against the Borrower in any court of competent
jurisdiction seeking (a) relief under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, or adjustment of debts
or (b) the appointment of a trustee, receiver, conservator, custodian,
liquidator for the Borrower or all or any substantial part of the assets,
domestic or foreign, of the Borrower; (viii) Borrower sells, pledges,
hypothecates, grants a security interest in or lien on,
-2-
<PAGE> 3
encumbers, or in any manner transfers or disposes of any shares of IRT Property
Company $1.00 par value common stock ("Common Stock") securing this Note and all
proceeds and products, together with any and all substitutions and replacements
therefore or other collateral (collectively, "Collateral") specified in the
Pledge Agreement.
Upon the occurrence of an Event of Default, all of the Borrower's
obligations hereunder, without demand or notice of any kind, may be immediately
declared, and thereupon shall immediately become in default and due and payable
and the Holder may exercise any and all rights and remedies available to it at
law, in equity or otherwise.
THE BORROWER AGREES THAT ALL OF THE PAYMENT OBLIGATIONS HEREUNDER SHALL
BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS HEREUNDER,
THE BORROWER HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM.
No delay or failure on the part of the Holder in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy.
All amendments to this Note, and any waiver or consent of the Holder,
must be in writing and signed by the Holder and the Borrower, and any waivers or
consents shall be limited to the express matters and periods provided therein,
and shall not constitute a waiver of any other terms.
The Borrower hereby waives presentment, demand, notice of dishonor,
protests and all other notices whatever.
This Note shall be binding upon the estate, heirs, trustees, successors
and assigns of the Borrower. A Holder of this Note may assign or transfer this
Note to any person or entity without notice to, or the consent of, the Borrower.
This Note shall be secured by and entitled to the benefits of that
certain Pledge Agreement dated as of the date hereof (the "Pledge Agreement") by
and between the Holder and the Borrower.
Any notice to be given hereunder shall be in writing, shall be sent to
the Holder's address as specified in the first paragraph hereof or the
Borrower's address set forth below its signature hereto, as the case may be, and
shall be deemed received (i) on the earlier of the date of receipt or the date
three business days after deposit of such notice in the United States mail, if
sent postage prepaid, certified mail, return receipt requested or (ii) when
actually received, if personally delivered.
-3-
<PAGE> 4
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
under seal as of the date and year first written above.
/s/ Mary M. Thomas (SEAL)
----------------------
Name: Mary M. Thomas
Address for Notices:
3011 Greenwood Trail
Marietta, Georgia 30067
-4-
<PAGE> 1
EXHIBIT 10.2.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of June 18, 1998 by and between Mary M.
Thomas, an individual resident of the State of Georgia (the "Pledgor") and IRT
PROPERTY COMPANY, a Georgia corporation (the "Secured Party").
The Secured Party has extended a loan (the "Loan") to the Pledgor, to
enable the Pledgor to purchase shares of IRT Property Company ("Company") $1.00
par value common stock ("Common Stock").
Such loan is evidenced by that certain Promissory Note dated as of the
date hereof (as it may be amended, restated, refinanced or otherwise modified
from time to time, the "Note") in the original principal amount of Two Hundred
Fifty Thousand Dollars ($250,000) executed by the Pledgor in favor of the
Secured Party, and is to be secured by all shares of Common Stock purchased
within the proceeds of such Loan and all shares of Common Stock granted to the
Pledgor as Restricted Stock pursuant to the Restricted Stock Award Agreement of
even date herewith (collectively, all such shares are referred to as the
"Pledged Stock") and shown on Schedule 1 hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Pledge. The Pledgor hereby pledges to the Secured Party and
grants to the Secured Party a first priority security interest in all of the
Pledgor's right, title and interest in, to and under the following
(collectively, the "Collateral"): (a) all of the Pledged Stock and all
substitutions and replacements therefor, and (b) any and all products and
proceeds of the foregoing, including all shares or other securities, interests
or property issued in respect of and/or in substitution of such Collateral
together with any and all other rights, titles, interests, powers, privileges
and preferences pertaining thereto.
Section 2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to the Secured Party, to secure the
prompt payment of the Note and all obligations of the Pledgor under this
Agreement (collectively, the "Obligations").
Section 3. Release of Collateral. Upon payment in full by the Pledgor
of obligations arising under the Note, all of the Pledged Stock and other
Collateral immediately and automatically shall be released from the security
interest created by this Agreement without any action by the Pledgor or Secured
Party. The Secured Party agrees to take such actions as the Pledgor may request
to return such released Pledged Stock and other Collateral to the Pledgor, and
to evidence further any such release. The Secured Party also, at the request of
<PAGE> 2
the Pledgor may at any time after July 10, 2003 release any Collateral, provided
the then fair market value of the remaining Collateral shall be not less than
200% of the then outstanding principal balance of the Note, provided all
interest payments are current.
Section 4. No Liens; No Sale of Collateral. The Pledgor will not
create, assume, incur, permit or suffer to exist, or to be created, assumed or
incurred, any lien, security interest, pledge, hypothecation or other
encumbrance (each a "Lien") on any of the Collateral (or any interest therein),
and will not, without the prior written consent of the Secured Party, sell,
assign, transfer or otherwise dispose of (or enter into any agreement or
understanding to do any of the foregoing), all or any portion of the Collateral
(or any interest therein).
Section 5. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of the
Collateral for any purpose;
(ii) the Pledgor shall be entitled to retain and use any
and all cash dividends paid on the Collateral, but any and all stock
and/or liquidating dividends, other distributions in property, or other
distributions made on or in respect of Collateral, whether as a result
of any merger, consolidation, acquisition or other exchange of assets,
or otherwise, shall be and become part of the Collateral pledged
hereunder and, if received by the Pledgor, shall be delivered to the
Secured Party and held by the Secured Party as collateral subject to
the terms and conditions of this Agreement.
The Secured Party agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, all such proxies, powers
of attorney, and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and/or consensual rights
and powers which Pledgor is entitled to exercise pursuant to clause (i) above
and/or to receive the dividends which Pledgor is authorized to retain pursuant
to clause (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to exercise the voting and/or consensual
rights and powers which Pledgor is entitled to exercise pursuant to subsection
(a)(i) above and/or to receive the dividends which Pledgor is authorized to
receive and retain pursuant to subsection (a)(ii) above shall cease, and all
such rights thereupon shall become immediately vested in the Secured Party. Any
and all money and other property paid over to or received by the Secured Party
pursuant to the provisions of this subsection (b) shall be retained by the
Secured Party as additional collateral hereunder.
- 2 -
<PAGE> 3
Section 6. Remedies upon Default. In addition to any right or remedy
that the Secured Party may have under the Note, if an Event of Default shall
have occurred, the Secured Party may exercise any and all rights and remedies of
a secured party under the Uniform Commercial Code as in effect in any applicable
jurisdiction. The Secured Party agrees to give at least 10 days' prior written
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale of any of the Collateral is to be made.
Section 7. Further Assurances. The Pledgor agrees to take all action
that may be reasonably necessary to maintain the validity and enforceability of
the Secured Party's security interest in the Collateral.
Section 8. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until it terminates in accordance with its terms.
Section 9. Notices. Notices, requests and other communications required
or permitted hereunder shall be in writing and shall be made by personal
delivery, telecopy or certified or registered mail, return receipt requested, at
the addresses indicated in the Note or at such other address a party may specify
to the other party by like notice. All such notices and other communications
shall be effective only upon receipt.
Section 10. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
Section 11. Assignment. The Secured Party may assign this Agreement, or
any of the Secured Party's rights and benefits hereunder, to any holder of the
Note.
Section 12. Termination. Upon payment in full of the Note, this
Agreement shall terminate. Upon termination of this Agreement in accordance with
its terms, the Secured Party agrees to take such actions as the Pledgor may
reasonably request (a) to return the Collateral to the Pledgor, and (b) to
evidence the termination of this Agreement.
Section 13. Definitions. Capitalized terms used herein and not defined
herein are used herein with the respective meanings given such terms in the
Note.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
[Signatures on following page]
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge
Agreement under seal as of the date first written above.
MARY M. THOMAS
PLEDGOR
/s/ Mary M. Thomas (SEAL)
----------------------
Agreed to, accepted and acknowledged by the Secured Party as of the date first
written above.
IRT PROPERTY COMPANY
By:/s/ Thomas H. McAuley
---------------------------------------------
Name: Thomas H. McAuley
Title: President and Chief Executive Officer
- 4 -
<PAGE> 1
EXHIBIT 10.2.3
IRT PROPERTY COMPANY
RESTRICTED STOCK AWARD AGREEMENT
IRT Property Company (the "Company") hereby grants to Mary M. Thomas
(the "Executive") 23,952 shares of the Company's $1.00 par value common stock
("Common Stock") set forth herein ("Restricted Stock") pursuant to the IRT
Property Company 1998 Long Term Incentive Plan, and the Executive hereby accepts
such grant upon such terms and conditions. Capitalized terms used but not
defined herein shall have the meanings specified in the Plan.
RESTRICTED STOCK GRANT
Number of shares of Restricted Stock granted: 23,952
Date of Grant: June 18, 1998
Vesting Date(s) of Restricted Stock: 2,395 (10% of the total
shares of Restricted Stock
granted hereby shall vest
on January 31 of each year
commencing 1999, with the
balance vesting on January
31, 2008)
Restrictions applicable to Restricted Stock:
(a) The Executive must remain in the continuous employ of the
Company or a Subsidiary of the Company until the respective vesting dates shown
above (the "Restricted Period"). For example, if on January 31, 1999 the
Executive has since the grant date been in the continuous employ of the Company
or an affiliate that is consolidated with the Company in the Company's
consolidated financial statements, 2,395 shares will vest and no longer be
subject to forfeiture. The foregoing notwithstanding, all shares of Restricted
Stock held at death or Disability shall immediately vest upon the death or
Disability of the Executive, or upon any action of the Board of Directors or the
Compensation Committee to vest such shares earlier than the scheduled vesting
date. For purposes hereof, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive's legal
representative.
(b) The shares of Common Stock will be issued in the name of the
Executive as Restricted Stock and the certificates representing such shares will
be held by the Company during the Restricted Period until vested and until
released from any pledge of such shares of Common Stock of the Company.
<PAGE> 2
(c) The Executive, as beneficial owner of the Restricted Shares,
shall have full voting and dividend rights with respect to the Restricted Shares
during the Restricted Period.
(d) Certificates representing shares of Restricted Stock shall
bear the following legend:
THE SHARES ARE SUBJECT TO A RESTRICTED STOCK AWARD AGREEMENT DATED AS
OF JUNE 18, 1998 (THE "AWARD AGREEMENT"), AND NO SHARES OR ANY RIGHTS
OR INTERESTS THEREIN MAY BE SOLD, TRANSFERRED OR DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE AWARD AGREEMENT.
******************************************************************
The following additional terms shall apply to this Restricted Stock
Agreement:
1. TAX WITHHOLDING. Prior to the delivery of any certificate or
certificates for shares acquired upon the vesting of Restricted Stock hereunder,
the Executive must satisfy federal, state and local withholding tax obligations
by either (a) delivering to the Company shares of Common Stock, or (b) directing
the Company to withhold certain of such shares, or (c) remitting to the Company
a sufficient amount of cash to satisfy the withholding requirements. No election
to satisfy withholding under (a) or (b) shall be effective unless approved by
the Board of Directors of the Company, in its sole discretion. If withholding is
to be satisfied under either (a) or (b), the Common Stock used for payment shall
have a fair market value (as determined by the Board) on the date of delivery or
withholding, which shall be the date the withholding tax is determined, equal to
the amount of the taxes to be withheld. Any election by the Executive to satisfy
withholding under (a) or (b) must be made in writing, signed by the Executive
and delivered by the Executive prior to the date the amount of the withholding
tax is determined, and shall be irrevocable. The portion of any withholding tax
represented by a fractional share must be paid in cash.
2. PAYMENT OF WITHHOLDING OBLIGATIONS. Prior to the delivery of
stock certificates to the Executive pursuant to vesting of shares of Restricted
Stock, the Executive shall deliver to the Company her check and/or a stock
certificate registered in the name of the Executive duly assigned to the Company
(with the assignment guaranteed by a bank, trust company, member firm of the New
York Stock Exchange ("NYSE") or other participant in a Signature Guarantee
Medallion Program), or directions for withholding of shares (as applicable)
which the Board of Directors has permitted the Executive to transfer for
satisfying federal and state withholding tax obligations.
3. TRANSFERABILITY. None of the shares of Restricted Stock
granted hereby or any interest therein are transferable or assignable prior to
vesting. The shares of Restricted Stock have not been registered under the 1933
Act, and, even after vesting, unless registered under the Securities Act of
1933, as amended (the "1933 Act"), may not be sold or transferred, nor will any
assignee thereof be recognized as an owner by the Company for any
-2-
<PAGE> 3
purpose, unless a registration statement under the 1933 Act with respect to such
shares shall then be in effect or unless the availability of an exemption from
registration with respect to any proposed disposition or transfer of such shares
is established to the satisfaction of counsel to the Company.
4. DELIVERY OF SHARES. Certificates representing the shares of
Common Stock will be held in pledge by the Company and shall be delivered as
soon as practicable after vesting of the Restricted Stock and any release from
pledge, but such delivery may be postponed for such period as may be required
for the Company with reasonable diligence to comply if deemed advisable by the
Company, with registration requirements under the 1933 Act, listing requirements
under the rules of the NYSE, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
5. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company, in accordance with the terms of
this Restricted Stock Award Agreement.
6. MISCELLANEOUS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia. All shares of
Restricted Stock, and shares of Common Stock resulting after the Restricted
Period from such shares of Restricted Stock are hereby pledged to secure the
Executive's obligations under a Secured Promissory Note and a Pledge Agreement
of even date herewith and all certificates representing all such shares shall be
held by the Company until all of the Executive's obligations under the Secured
Promissory Note and Pledge Agreement have been irrevocably paid in full, or
otherwise in the Company's sole discretion, as and to the extent such shares are
released.
IRT PROPERTY COMPANY
By: /s/ Thomas H. McAuley
-----------------------------
Name: Thomas H. McAuley
Date: June 18, 1998
As of the day and year first above written, I hereby accept the above
Restricted Stock grant in accordance with and subject to the terms and
conditions set forth above, and pledge all such Restricted Stock to the Company,
and I agree that any shares of Common Stock, together with all substitutions and
replacements therefore received by me hereunder will not be sold or otherwise
disposed of by me except in a manner in compliance with applicable securities
laws. I agree to notify the Company at least five business days in advance of
any proposed sale or other disposition of any such shares following the vesting
thereof and as permitted by the Pledge Agreement.
/s/ Mary M. Thomas
-------------------------
Executive
Date: June 18, 1998
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EXHIBIT 10.3.1
SECURED PROMISSORY NOTE
U.S. $250,000.00 June 18, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, W. Benjamin Jones III, an
individual resident of the State of Georgia (the "Borrower") promises to pay to
the order of IRT Property Company, a Georgia corporation (together with any
holder hereof, the "Holder") at the main offices of the Holder located at 200
Galleria Parkway, N.W., Suite 1400, Atlanta, Georgia 30339, or at such other
place as the Holder may designate in writing to the Borrower, in lawful money of
the United States of America, the principal sum of TWO HUNDRED FIFTY THOUSAND
and NO/100 DOLLARS ($250,000).
Interest shall accrue on the outstanding principal amount of this Note
at a rate equal to seven percent (7.00%) per annum, and shall be calculated and
paid based upon a year consisting of 12 months of 30 days each. Interest shall
be due and payable quarterly in arrears on the first day of April, July, October
and January of each year, commencing on October 1, 1998, at maturity and upon
any acceleration of the principal amount due hereunder, if earlier.
Interest shall accrue on any amount past due hereunder at a rate equal
to the "Prime Rate" of interest quoted in The Wall Street Journal, as in effect
from time to time, plus two percent per annum. All such interest shall be due
and payable on demand.
The entire outstanding principal balance hereunder shall be due and
payable on July 1, 2008, or if sooner, 90 days following the death or
Disability of the Borrower or the termination of employment of the Borrower with
IRT Property Company or an affiliated company. The Borrower may prepay the
principal amount outstanding under this Note in whole or in part at any time,
and from time to time, without penalty or charge. For purposes of this Note,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative.
In no event shall the amount of interest due or payable under this Note
exceed the maximum rate of interest allowed by the laws of the State of Georgia
and, in the event any such payment is inadvertently paid by the Borrower or
inadvertently received by the Holder, then such excess sum shall be credited as
a payment of principal, unless the Borrower shall notify the Holder in writing
that the Borrower elects to have such excess sum returned to it forthwith. It is
the express intent of the parties hereto that the Borrower not pay and the
Holder 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.
<PAGE> 2
This Note shall constitute a general, secured full recourse obligation
of the Borrower through July 1, 2003, but thereafter, following an Event of
Default (as defined below), the Borrower's liability hereunder shall be limited
to the Collateral and the Borrower shall have no liability or obligation for any
deficiency arising from a foreclosure and/or sale of the Collateral by the
Holder.
The Borrower shall pay all expenses incurred by the Holder in the
collection of this Note, including, without limitation, the fees and
disbursements of counsel to the Holder in the amount of fifteen percent (15%) of
the unpaid principal balance and accrued interest, if this Note is collected by
or through an attorney-at-law.
Each of the following events shall constitute an "Event of Default"
under this Note: (i) failure of the Borrower to pay any principal, interest or
other amount due hereunder within five business days of the due date, or the
Borrower shall in any way fail to comply with the other terms, covenants or
conditions contained in this Note; (ii) any written representation or warranty
made at any time by the Borrower to the Holder shall prove to have been
incorrect or misleading in any material respect when made; (iii) a default,
event of default, or event which with the giving of notice or the passage of
time or both would constitute a default or event of default, shall have occurred
and be continuing for 60 days under any document, instrument, contract or
agreement (a) evidencing or securing indebtedness of the Borrower for borrowed
money and (b) which is material to the financial condition of the Borrower; (iv)
a final judgment or order for the payment of money, or any final order granting
equitable relief, shall be entered against the Borrower and such judgment or
order has or will have a materially adverse effect on the financial condition of
the Borrower; (v) a warrant, writ of attachment, levy or other similar process
shall be issued against any property of the Borrower; (vi) the Borrower shall
(a) commence a voluntary case under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect); (b) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, or adjustment of debts; (c) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy, insolvency or adjustment of debts laws;
(d) apply for or consent to, or fail to contest in a timely and appropriate
manner, the taking of possession by, a receiver, custodian, trustee, or
liquidator of itself or of a substantial part of his property; (e) be unable to,
or admit in writing his inability to, pay his debts as they become due; (f) make
a general assignment for the benefit of creditors; or (g) make a conveyance
fraudulent as to creditors under any state or federal law; (vii) a case or other
proceeding shall be commenced against the Borrower in any court of competent
jurisdiction seeking (a) relief under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, or adjustment of debts
or (b) the appointment of a trustee, receiver, conservator, custodian,
liquidator for the Borrower or all or any substantial part of the assets,
domestic or foreign, of the Borrower; (viii) Borrower sells, pledges,
hypothecates, grants a security interest in or lien on, encumbers, or in any
manner transfers or disposes of any shares of IRT Property Company
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$1.00 par value common stock ("Common Stock") securing this Note and all
proceeds and products, together with any and all substitutions and replacements
therefore or other collateral (collectively, "Collateral") specified in the
Pledge Agreement.
Upon the occurrence of an Event of Default, all of the Borrower's
obligations hereunder, without demand or notice of any kind, may be immediately
declared, and thereupon shall immediately become in default and due and payable
and the Holder may exercise any and all rights and remedies available to it at
law, in equity or otherwise.
THE BORROWER AGREES THAT ALL OF THE PAYMENT OBLIGATIONS HEREUNDER SHALL
BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS HEREUNDER,
THE BORROWER HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM.
No delay or failure on the part of the Holder in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy.
All amendments to this Note, and any waiver or consent of the Holder,
must be in writing and signed by the Holder and the Borrower, and any waivers or
consents shall be limited to the express matters and periods provided therein,
and shall not constitute a waiver of any other terms.
The Borrower hereby waives presentment, demand, notice of dishonor,
protests and all other notices whatever.
This Note shall be binding upon the estate, heirs, trustees, successors
and assigns of the Borrower. A Holder of this Note may assign or transfer this
Note to any person or entity without notice to, or the consent of, the Borrower.
This Note shall be secured by and entitled to the benefits of that
certain Pledge Agreement dated as of the date hereof (the "Pledge Agreement") by
and between the Holder and the Borrower.
Any notice to be given hereunder shall be in writing, shall be sent to
the Holder's address as specified in the first paragraph hereof or the
Borrower's address set forth below its signature hereto, as the case may be, and
shall be deemed received (i) on the earlier of the date of receipt or the date
three business days after deposit of such notice in the United States mail, if
sent postage prepaid, certified mail, return receipt requested or (ii) when
actually received, if personally delivered.
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THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
under seal as of the date and year first written above.
/s/ W. Benjamin Jones III (SEAL)
-----------------------------
Name: W. Benjamin Jones III
Address for Notices:
794 Old Paper Mill Drive
Marietta, Georgia 30067
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EXHIBIT 10.3.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of June 18, 1998 by and between W.
Benjamin Jones III, an individual resident of the State of Georgia (the
"Pledgor") and IRT PROPERTY COMPANY, a Georgia corporation (the "Secured
Party").
The Secured Party has extended a loan (the "Loan") to the Pledgor, to
enable the Pledgor to purchase shares of IRT Property Company ("Company") $1.00
par value common stock ("Common Stock").
Such loan is evidenced by that certain Promissory Note dated as of the
date hereof (as it may be amended, restated, refinanced or otherwise modified
from time to time, the "Note") in the original principal amount of Two Hundred
Fifty Thousand Dollars ($250,000) executed by the Pledgor in favor of the
Secured Party, and is to be secured by all shares of Common Stock purchased
within the proceeds of such Loan and all shares of Common Stock granted to the
Pledgor as Restricted Stock pursuant to the Restricted Stock Award Agreement of
even date herewith (collectively, all such shares are referred to as the
"Pledged Stock") and shown on Schedule 1 hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Pledge. The Pledgor hereby pledges to the Secured Party and
grants to the Secured Party a first priority security interest in all of the
Pledgor's right, title and interest in, to and under the following
(collectively, the "Collateral"): (a) all of the Pledged Stock and all
substitutions and replacements therefor, and (b) any and all products and
proceeds of the foregoing, including all shares or other securities, interests
or property issued in respect of and/or in substitution of such Collateral
together with any and all other rights, titles, interests, powers, privileges
and preferences pertaining thereto.
Section 2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to the Secured Party, to secure the
prompt payment of the Note and all obligations of the Pledgor under this
Agreement (collectively, the "Obligations").
Section 3. Release of Collateral. Upon payment in full by the Pledgor
of obligations arising under the Note, all of the Pledged Stock and other
Collateral immediately and automatically shall be released from the security
interest created by this Agreement without any action by the Pledgor or Secured
Party. The Secured Party agrees to take such actions as the Pledgor may request
to return such released Pledged Stock and other Collateral to the Pledgor, and
to evidence further any such release. The Secured Party also, at the request of
<PAGE> 2
the Pledgor may at any time after July 10, 2003 release any Collateral, provided
the then fair market value of the remaining Collateral shall be not less than
200% of the then outstanding principal balance of the Note, provided all
interest payments are current.
Section 4. No Liens; No Sale of Collateral. The Pledgor will not
create, assume, incur, permit or suffer to exist, or to be created, assumed or
incurred, any lien, security interest, pledge, hypothecation or other
encumbrance (each a "Lien") on any of the Collateral (or any interest therein),
and will not, without the prior written consent of the Secured Party, sell,
assign, transfer or otherwise dispose of (or enter into any agreement or
understanding to do any of the foregoing), all or any portion of the Collateral
(or any interest therein).
Section 5. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of the
Collateral for any purpose;
(ii) the Pledgor shall be entitled to retain and use any
and all cash dividends paid on the Collateral, but any and all stock
and/or liquidating dividends, other distributions in property, or other
distributions made on or in respect of Collateral, whether as a result
of any merger, consolidation, acquisition or other exchange of assets,
or otherwise, shall be and become part of the Collateral pledged
hereunder and, if received by the Pledgor, shall be delivered to the
Secured Party and held by the Secured Party as collateral subject to
the terms and conditions of this Agreement.
The Secured Party agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, all such proxies, powers
of attorney, and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and/or consensual rights
and powers which Pledgor is entitled to exercise pursuant to clause (i) above
and/or to receive the dividends which Pledgor is authorized to retain pursuant
to clause (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to exercise the voting and/or consensual
rights and powers which Pledgor is entitled to exercise pursuant to subsection
(a)(i) above and/or to receive the dividends which Pledgor is authorized to
receive and retain pursuant to subsection (a)(ii) above shall cease, and all
such rights thereupon shall become immediately vested in the Secured Party. Any
and all money and other property paid over to or received by the Secured Party
pursuant to the provisions of this subsection (b) shall be retained by the
Secured Party as additional collateral hereunder.
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Section 6. Remedies upon Default. In addition to any right or remedy
that the Secured Party may have under the Note, if an Event of Default shall
have occurred, the Secured Party may exercise any and all rights and remedies of
a secured party under the Uniform Commercial Code as in effect in any applicable
jurisdiction. The Secured Party agrees to give at least 10 days' prior written
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale of any of the Collateral is to be made.
Section 7. Further Assurances. The Pledgor agrees to take all action
that may be reasonably necessary to maintain the validity and enforceability of
the Secured Party's security interest in the Collateral.
Section 8. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until it terminates in accordance with its terms.
Section 9. Notices. Notices, requests and other communications required
or permitted hereunder shall be in writing and shall be made by personal
delivery, telecopy or certified or registered mail, return receipt requested, at
the addresses indicated in the Note or at such other address a party may specify
to the other party by like notice. All such notices and other communications
shall be effective only upon receipt.
Section 10. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
Section 11. Assignment. The Secured Party may assign this Agreement, or
any of the Secured Party's rights and benefits hereunder, to any holder of the
Note.
Section 12. Termination. Upon payment in full of the Note, this
Agreement shall terminate. Upon termination of this Agreement in accordance with
its terms, the Secured Party agrees to take such actions as the Pledgor may
reasonably request (a) to return the Collateral to the Pledgor, and (b) to
evidence the termination of this Agreement.
Section 13. Definitions. Capitalized terms used herein and not defined
herein are used herein with the respective meanings given such terms in the
Note.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF GEORGIA.
[Signatures on following page]
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IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge
Agreement under seal as of the date first written above.
W. BENJAMIN JONES III
PLEDGOR
/s/ W. Benjamin Jones III (SEAL)
-----------------------------------
Agreed to, accepted and
acknowledged by the Secured
Party as of the date first written
above.
IRT PROPERTY COMPANY
By:/s/ Thomas H. McAuley
---------------------------------------------
Name: Thomas H. McAuley
Title: President and Chief Executive Officer
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EXHIBIT 10.3.3
IRT PROPERTY COMPANY
RESTRICTED STOCK AWARD AGREEMENT
IRT Property Company (the "Company") hereby grants to W. Benjamin
Jones III (the "Executive") 23,952 shares of the Company's $1.00 par value
common stock ("Common Stock") set forth herein ("Restricted Stock") pursuant to
the IRT Property Company 1998 Long Term Incentive Plan, and the Executive hereby
accepts such grant upon such terms and conditions. Capitalized terms used but
not defined herein shall have the meanings specified in the Plan.
RESTRICTED STOCK GRANT
Number of shares of Restricted Stock granted: 23,952
Date of Grant: June 18, 1998
Vesting Date(s) of Restricted Stock: 2,395 (10% of the total
shares of Restricted Stock
granted hereby shall vest
on January 31 of each year
commencing 1999, with the
balance vesting on January
31, 2008)
Restrictions applicable to Restricted Stock:
(a) The Executive must remain in the continuous employ of the
Company or a Subsidiary of the Company until the respective vesting dates shown
above (the "Restricted Period"). For example, if on January 31, 1999 the
Executive has since the grant date been in the continuous employ of the Company
or an affiliate that is consolidated with the Company in the Company's
consolidated financial statements, 2,395 shares will vest and no longer be
subject to forfeiture. The foregoing notwithstanding, all shares of Restricted
Stock held at death or Disability shall immediately vest upon the death or
Disability of the Executive, or upon any action of the Board of Directors or the
Compensation Committee to vest such shares earlier than the scheduled vesting
date. For purposes hereof, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive's legal
representative.
(b) The shares of Common Stock will be issued in the name of the
Executive as Restricted Stock and the certificates representing such shares will
be held by the Company during the Restricted Period until vested and until
released from any pledge of such shares of Common Stock of the Company.
<PAGE> 2
(c) The Executive, as beneficial owner of the Restricted Shares,
shall have full voting and dividend rights with respect to the Restricted Shares
during the Restricted Period.
(d) Certificates representing shares of Restricted Stock shall
bear the following legend:
THE SHARES ARE SUBJECT TO A RESTRICTED STOCK AWARD AGREEMENT DATED AS
OF JUNE 18, 1998 (THE "AWARD AGREEMENT"), AND NO SHARES OR ANY RIGHTS
OR INTERESTS THEREIN MAY BE SOLD, TRANSFERRED OR DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE AWARD AGREEMENT.
******************************************************************
The following additional terms shall apply to this Restricted Stock
Agreement:
1. TAX WITHHOLDING. Prior to the delivery of any certificate or
certificates for shares acquired upon the vesting of Restricted Stock hereunder,
the Executive must satisfy federal, state and local withholding tax obligations
by either (a) delivering to the Company shares of Common Stock, or (b) directing
the Company to withhold certain of such shares, or (c) remitting to the Company
a sufficient amount of cash to satisfy the withholding requirements. No election
to satisfy withholding under (a) or (b) shall be effective unless approved by
the Board of Directors of the Company, in its sole discretion. If withholding is
to be satisfied under either (a) or (b), the Common Stock used for payment shall
have a fair market value (as determined by the Board) on the date of delivery or
withholding, which shall be the date the withholding tax is determined, equal to
the amount of the taxes to be withheld. Any election by the Executive to satisfy
withholding under (a) or (b) must be made in writing, signed by the Executive
and delivered by the Executive prior to the date the amount of the withholding
tax is determined, and shall be irrevocable. The portion of any withholding tax
represented by a fractional share must be paid in cash.
2. PAYMENT OF WITHHOLDING OBLIGATIONS. Prior to the delivery of
stock certificates to the Executive pursuant to vesting of shares of Restricted
Stock, the Executive shall deliver to the Company his check and/or a stock
certificate registered in the name of the Executive duly assigned to the Company
(with the assignment guaranteed by a bank, trust company, member firm of the New
York Stock Exchange ("NYSE") or other participant in a Signature Guarantee
Medallion Program), or directions for withholding of shares (as applicable)
which the Board of Directors has permitted the Executive to transfer for
satisfying federal and state withholding tax obligations.
3. TRANSFERABILITY. None of the shares of Restricted Stock
granted hereby or any interest therein are transferable or assignable prior to
vesting. The shares of Restricted Stock have not been registered under the 1933
Act, and, even after vesting, unless registered under the Securities Act of
1933, as amended (the "1933 Act"), may not be sold or transferred, nor will any
assignee thereof be recognized as an owner by the Company for any
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purpose, unless a registration statement under the 1933 Act with respect to such
shares shall then be in effect or unless the availability of an exemption from
registration with respect to any proposed disposition or transfer of such shares
is established to the satisfaction of counsel to the Company.
4. DELIVERY OF SHARES. Certificates representing the shares of
Common Stock will be held in pledge by the Company and shall be delivered as
soon as practicable after vesting of the Restricted Stock and any release from
pledge, but such delivery may be postponed for such period as may be required
for the Company with reasonable diligence to comply if deemed advisable by the
Company, with registration requirements under the 1933 Act, listing requirements
under the rules of the NYSE, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
5. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company, in accordance with the terms of
this Restricted Stock Award Agreement.
6. MISCELLANEOUS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia. All shares of
Restricted Stock, and shares of Common Stock resulting after the Restricted
Period from such shares of Restricted Stock are hereby pledged to secure the
Executive's obligations under a Secured Promissory Note and a Pledge Agreement
of even date herewith and all certificates representing all such shares shall be
held by the Company until all of the Executive's obligations under the Secured
Promissory Note and Pledge Agreement have been irrevocably paid in full, or
otherwise in the Company's sole discretion, as and to the extent such shares are
released.
IRT PROPERTY COMPANY
By: /s/ Thomas H. McAuley
-----------------------
Name: Thomas H. McAuley
Date: June 18, 1998
As of the day and year first above written, I hereby accept the above
Restricted Stock grant in accordance with and subject to the terms and
conditions set forth above, and pledge all such Restricted Stock to the Company,
and I agree that any shares of Common Stock, together with all substitutions and
replacements therefore received by me hereunder will not be sold or otherwise
disposed of by me except in a manner in compliance with applicable securities
laws. I agree to notify the Company at least five business days in advance of
any proposed sale or other disposition of any such shares following the vesting
thereof and as permitted by the Pledge Agreement.
/s/ W. Benjamin Jones III
-------------------------
Executive
Date: June 18, 1998
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EXHIBIT 10.4.1
SECURED PROMISSORY NOTE
U.S. $250,000.00 June 18, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, Robert E. Mitzel, an individual
resident of the State of Georgia (the "Borrower") promises to pay to the order
of IRT Property Company, a Georgia corporation (together with any holder hereof,
the "Holder") at the main offices of the Holder located at 200 Galleria Parkway,
N.W., Suite 1400, Atlanta, Georgia 30339, or at such other place as the Holder
may designate in writing to the Borrower, in lawful money of the United States
of America, the principal sum of TWO HUNDRED FIFTY THOUSAND and NO/100 DOLLARS
($250,000).
Interest shall accrue on the outstanding principal amount of this Note
at a rate equal to seven percent (7.00%) per annum, and shall be calculated and
paid based upon a year consisting of 12 months of 30 days each. Interest shall
be due and payable quarterly in arrears on the first day of April, July, October
and January of each year, commencing on October 1, 1998, at maturity and upon
any acceleration of the principal amount due hereunder, if earlier.
Interest shall accrue on any amount past due hereunder at a rate equal
to the "Prime Rate" of interest quoted in The Wall Street Journal, as in effect
from time to time, plus two percent per annum. All such interest shall be due
and payable on demand.
The entire outstanding principal balance hereunder shall be due and
payable on July 1, 2008, or if sooner, 90 days following the death or
Disability of the Borrower or the termination of employment of the Borrower with
IRT Property Company or an affiliated company. The Borrower may prepay the
principal amount outstanding under this Note in whole or in part at any time,
and from time to time, without penalty or charge. For purposes of this Note,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative.
In no event shall the amount of interest due or payable under this Note
exceed the maximum rate of interest allowed by the laws of the State of Georgia
and, in the event any such payment is inadvertently paid by the Borrower or
inadvertently received by the Holder, then such excess sum shall be credited as
a payment of principal, unless the Borrower shall notify the Holder in writing
that the Borrower elects to have such excess sum returned to it forthwith. It is
the express intent of the parties hereto that the Borrower not pay and the
Holder 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.
<PAGE> 2
This Note shall constitute a general, secured full recourse obligation
of the Borrower through July 1, 2003, but thereafter, following an Event of
Default (as defined below), the Borrower's liability hereunder shall be limited
to the Collateral and the Borrower shall have no liability or obligation for any
deficiency arising from a foreclosure and/or sale of the Collateral by the
Holder.
The Borrower shall pay all expenses incurred by the Holder in the
collection of this Note, including, without limitation, the fees and
disbursements of counsel to the Holder in the amount of fifteen percent (15%) of
the unpaid principal balance and accrued interest, if this Note is collected by
or through an attorney-at-law.
Each of the following events shall constitute an "Event of Default"
under this Note: (i) failure of the Borrower to pay any principal, interest or
other amount due hereunder within five business days of the due date, or the
Borrower shall in any way fail to comply with the other terms, covenants or
conditions contained in this Note; (ii) any written representation or warranty
made at any time by the Borrower to the Holder shall prove to have been
incorrect or misleading in any material respect when made; (iii) a default,
event of default, or event which with the giving of notice or the passage of
time or both would constitute a default or event of default, shall have occurred
and be continuing for 60 days under any document, instrument, contract or
agreement (a) evidencing or securing indebtedness of the Borrower for borrowed
money and (b) which is material to the financial condition of the Borrower; (iv)
a final judgment or order for the payment of money, or any final order granting
equitable relief, shall be entered against the Borrower and such judgment or
order has or will have a materially adverse effect on the financial condition of
the Borrower; (v) a warrant, writ of attachment, levy or other similar process
shall be issued against any property of the Borrower; (vi) the Borrower shall
(a) commence a voluntary case under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect); (b) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, or adjustment of debts; (c) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy, insolvency or adjustment of debts laws;
(d) apply for or consent to, or fail to contest in a timely and appropriate
manner, the taking of possession by, a receiver, custodian, trustee, or
liquidator of itself or of a substantial part of his property; (e) be unable to,
or admit in writing his inability to, pay his debts as they become due; (f) make
a general assignment for the benefit of creditors; or (g) make a conveyance
fraudulent as to creditors under any state or federal law; (vii) a case or other
proceeding shall be commenced against the Borrower in any court of competent
jurisdiction seeking (a) relief under the federal Bankruptcy Code, as amended or
other bankruptcy law (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, or adjustment of debts
or (b) the appointment of a trustee, receiver, conservator, custodian,
liquidator for the Borrower or all or any substantial part of the assets,
domestic or foreign, of the Borrower; (viii) Borrower sells, pledges,
hypothecates, grants a security interest in or lien on, encumbers, or in any
manner transfers or disposes of any shares of IRT Property Company
-2-
<PAGE> 3
$1.00 par value common stock ("Common Stock") securing this Note and all
proceeds and products, together with any and all substitutions and replacements
therefore or other collateral (collectively, "Collateral") specified in the
Pledge Agreement.
Upon the occurrence of an Event of Default, all of the Borrower's
obligations hereunder, without demand or notice of any kind, may be immediately
declared, and thereupon shall immediately become in default and due and payable
and the Holder may exercise any and all rights and remedies available to it at
law, in equity or otherwise.
THE BORROWER AGREES THAT ALL OF THE PAYMENT OBLIGATIONS HEREUNDER SHALL
BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS HEREUNDER,
THE BORROWER HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM.
No delay or failure on the part of the Holder in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy.
All amendments to this Note, and any waiver or consent of the Holder,
must be in writing and signed by the Holder and the Borrower, and any waivers or
consents shall be limited to the express matters and periods provided therein,
and shall not constitute a waiver of any other terms.
The Borrower hereby waives presentment, demand, notice of dishonor,
protests and all other notices whatever.
This Note shall be binding upon the estate, heirs, trustees, successors
and assigns of the Borrower. A Holder of this Note may assign or transfer this
Note to any person or entity without notice to, or the consent of, the Borrower.
This Note shall be secured by and entitled to the benefits of that
certain Pledge Agreement dated as of the date hereof (the "Pledge Agreement") by
and between the Holder and the Borrower.
Any notice to be given hereunder shall be in writing, shall be sent to
the Holder's address as specified in the first paragraph hereof or the
Borrower's address set forth below its signature hereto, as the case may be, and
shall be deemed received (i) on the earlier of the date of receipt or the date
three business days after deposit of such notice in the United States mail, if
sent postage prepaid, certified mail, return receipt requested or (ii) when
actually received, if personally delivered.
-3-
<PAGE> 4
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
under seal as of the date and year first written above.
/s/ Robert E. Mitzel (SEAL)
--------------------------
Name: Robert E. Mitzel
Address for Notices:
971 Forest Pond Circle
Marietta, Georgia 30068
- 4 -
<PAGE> 1
EXHIBIT 10.4.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of June 18, 1998 by and between Robert
E. Mitzel, an individual resident of the State of Georgia (the "Pledgor") and
IRT PROPERTY COMPANY, a Georgia corporation (the "Secured Party").
The Secured Party has extended a loan (the "Loan") to the Pledgor, to
enable the Pledgor to purchase shares of IRT Property Company ("Company") $1.00
par value common stock ("Common Stock").
Such loan is evidenced by that certain Promissory Note dated as of the
date hereof (as it may be amended, restated, refinanced or otherwise modified
from time to time, the "Note") in the original principal amount of Two Hundred
Fifty Thousand Dollars ($250,000) executed by the Pledgor in favor of the
Secured Party, and is to be secured by all shares of Common Stock purchased
within the proceeds of such Loan and all shares of Common Stock granted to the
Pledgor as Restricted Stock pursuant to the Restricted Stock Award Agreement of
even date herewith (collectively, all such shares are referred to as the
"Pledged Stock") and shown on Schedule 1 hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Pledge. The Pledgor hereby pledges to the Secured Party and
grants to the Secured Party a first priority security interest in all of the
Pledgor's right, title and interest in, to and under the following
(collectively, the "Collateral"): (a) all of the Pledged Stock and all
substitutions and replacements therefor, and (b) any and all products and
proceeds of the foregoing, including all shares or other securities, interests
or property issued in respect of and/or in substitution of such Collateral
together with any and all other rights, titles, interests, powers, privileges
and preferences pertaining thereto.
Section 2. Obligations Secured. This Agreement is made, and the
security interest created hereby is granted to the Secured Party, to secure the
prompt payment of the Note and all obligations of the Pledgor under this
Agreement (collectively, the "Obligations").
Section 3. Release of Collateral. Upon payment in full by the Pledgor
of obligations arising under the Note, all of the Pledged Stock and other
Collateral immediately and automatically shall be released from the security
interest created by this Agreement without any action by the Pledgor or Secured
Party. The Secured Party agrees to take such actions as the Pledgor may request
to return such released Pledged Stock and other Collateral to the Pledgor, and
to evidence further any such release. The Secured Party also, at the request of
<PAGE> 2
the Pledgor may at any time after July 10, 2003 release any Collateral, provided
the then fair market value of the remaining Collateral shall be not less than
200% of the then outstanding principal balance of the Note, provided all
interest payments are current.
Section 4. No Liens; No Sale of Collateral. The Pledgor will not
create, assume, incur, permit or suffer to exist, or to be created, assumed or
incurred, any lien, security interest, pledge, hypothecation or other
encumbrance (each a "Lien") on any of the Collateral (or any interest therein),
and will not, without the prior written consent of the Secured Party, sell,
assign, transfer or otherwise dispose of (or enter into any agreement or
understanding to do any of the foregoing), all or any portion of the Collateral
(or any interest therein).
Section 5. Voting Rights; Dividends, etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of the
Collateral for any purpose;
(ii) the Pledgor shall be entitled to retain and use any
and all cash dividends paid on the Collateral, but any and all stock
and/or liquidating dividends, other distributions in property, or other
distributions made on or in respect of Collateral, whether as a result
of any merger, consolidation, acquisition or other exchange of assets,
or otherwise, shall be and become part of the Collateral pledged
hereunder and, if received by the Pledgor, shall be delivered to the
Secured Party and held by the Secured Party as collateral subject to
the terms and conditions of this Agreement.
The Secured Party agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, all such proxies, powers
of attorney, and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and/or consensual rights
and powers which Pledgor is entitled to exercise pursuant to clause (i) above
and/or to receive the dividends which Pledgor is authorized to retain pursuant
to clause (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to exercise the voting and/or consensual
rights and powers which Pledgor is entitled to exercise pursuant to subsection
(a)(i) above and/or to receive the dividends which Pledgor is authorized to
receive and retain pursuant to subsection (a)(ii) above shall cease, and all
such rights thereupon shall become immediately vested in the Secured Party. Any
and all money and other property paid over to or received by the Secured Party
pursuant to the provisions of this subsection (b) shall be retained by the
Secured Party as additional collateral hereunder.
- 2 -
<PAGE> 3
Section 6. Remedies upon Default. In addition to any right or remedy
that the Secured Party may have under the Note, if an Event of Default shall
have occurred, the Secured Party may exercise any and all rights and remedies of
a secured party under the Uniform Commercial Code as in effect in any applicable
jurisdiction. The Secured Party agrees to give at least 10 days' prior written
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale of any of the Collateral is to be made.
Section 7. Further Assurances. The Pledgor agrees to take all action
that may be reasonably necessary to maintain the validity and enforceability of
the Secured Party's security interest in the Collateral.
Section 8. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until it terminates in accordance with its terms.
Section 9. Notices. Notices, requests and other communications required
or permitted hereunder shall be in writing and shall be made by personal
delivery, telecopy or certified or registered mail, return receipt requested, at
the addresses indicated in the Note or at such other address a party may specify
to the other party by like notice. All such notices and other communications
shall be effective only upon receipt.
Section 10. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
Section 11. Assignment. The Secured Party may assign this Agreement, or
any of the Secured Party's rights and benefits hereunder, to any holder of the
Note.
Section 12. Termination. Upon payment in full of the Note, this
Agreement shall terminate. Upon termination of this Agreement in accordance with
its terms, the Secured Party agrees to take such actions as the Pledgor may
reasonably request (a) to return the Collateral to the Pledgor, and (b) to
evidence the termination of this Agreement.
Section 13. Definitions. Capitalized terms used herein and not defined
herein are used herein with the respective meanings given such terms in the
Note.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
[Signatures on following page]
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge
Agreement under seal as of the date first written above.
ROBERT E. MITZEL
PLEDGOR
/s/ Robert E. Mitzel (SEAL)
--------------------------------
Agreed to, accepted and
acknowledged by the Secured Party as
of the date first written above.
IRT PROPERTY COMPANY
By:/s/ Thomas H. McAuley
---------------------------------------------
Name: Thomas H. McAuley
Title: President and Chief Executive Officer
- 4 -
<PAGE> 1
EXHIBIT 10.4.3
IRT PROPERTY COMPANY
RESTRICTED STOCK AWARD AGREEMENT
IRT Property Company (the "Company") hereby grants to Robert E. Mitzel
(the "Executive") 23,952 shares of the Company's $1.00 par value common stock
("Common Stock") set forth herein ("Restricted Stock") pursuant to the IRT
Property Company 1998 Long Term Incentive Plan, and the Executive hereby accepts
such grant upon such terms and conditions. Capitalized terms used but not
defined herein shall have the meanings specified in the Plan.
RESTRICTED STOCK GRANT
Number of shares of Restricted Stock granted: 23,952
Date of Grant: June 18, 1998
Vesting Date(s) of Restricted Stock: 2,395 (10% of the total
shares of Restricted Stock
granted hereby shall vest on
January 31 of each year
commencing 1999, with the balance
vesting on January 31, 2008)
Restrictions applicable to Restricted Stock:
(a) The Executive must remain in the continuous employ of the
Company or a Subsidiary of the Company until the respective vesting dates shown
above (the "Restricted Period"). For example, if on January 31, 1999 the
Executive has since the grant date been in the continuous employ of the Company
or an affiliate that is consolidated with the Company in the Company's
consolidated financial statements, 2,395 shares will vest and no longer be
subject to forfeiture. The foregoing notwithstanding, all shares of Restricted
Stock held at death or Disability shall immediately vest upon the death or
Disability of the Executive, or upon any action of the Board of Directors or the
Compensation Committee to vest such shares earlier than the scheduled vesting
date. For purposes hereof, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive's legal
representative.
(b) The shares of Common Stock will be issued in the name of the
Executive as Restricted Stock and the certificates representing such shares will
be held by the Company during the Restricted Period until vested and until
released from any pledge of such shares of Common Stock of the Company.
<PAGE> 2
(c) The Executive, as beneficial owner of the Restricted Shares,
shall have full voting and dividend rights with respect to the Restricted Shares
during the Restricted Period.
(d) Certificates representing shares of Restricted Stock shall
bear the following legend:
THE SHARES ARE SUBJECT TO A RESTRICTED STOCK AWARD AGREEMENT DATED AS
OF JUNE 18, 1998 (THE "AWARD AGREEMENT"), AND NO SHARES OR ANY RIGHTS
OR INTERESTS THEREIN MAY BE SOLD, TRANSFERRED OR DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE AWARD AGREEMENT.
******************************************************************
The following additional terms shall apply to this Restricted Stock
Agreement:
1. TAX WITHHOLDING. Prior to the delivery of any certificate or
certificates for shares acquired upon the vesting of Restricted Stock hereunder,
the Executive must satisfy federal, state and local withholding tax obligations
by either (a) delivering to the Company shares of Common Stock, or (b) directing
the Company to withhold certain of such shares, or (c) remitting to the Company
a sufficient amount of cash to satisfy the withholding requirements. No election
to satisfy withholding under (a) or (b) shall be effective unless approved by
the Board of Directors of the Company, in its sole discretion. If withholding is
to be satisfied under either (a) or (b), the Common Stock used for payment shall
have a fair market value (as determined by the Board) on the date of delivery or
withholding, which shall be the date the withholding tax is determined, equal to
the amount of the taxes to be withheld. Any election by the Executive to satisfy
withholding under (a) or (b) must be made in writing, signed by the Executive
and delivered by the Executive prior to the date the amount of the withholding
tax is determined, and shall be irrevocable. The portion of any withholding tax
represented by a fractional share must be paid in cash.
2. PAYMENT OF WITHHOLDING OBLIGATIONS. Prior to the delivery of
stock certificates to the Executive pursuant to vesting of shares of Restricted
Stock, the Executive shall deliver to the Company his check and/or a stock
certificate registered in the name of the Executive duly assigned to the Company
(with the assignment guaranteed by a bank, trust company, member firm of the New
York Stock Exchange ("NYSE") or other participant in a Signature Guarantee
Medallion Program), or directions for withholding of shares (as applicable)
which the Board of Directors has permitted the Executive to transfer for
satisfying federal and state withholding tax obligations.
3. TRANSFERABILITY. None of the shares of Restricted Stock
granted hereby or any interest therein are transferable or assignable prior to
vesting. The shares of Restricted Stock have not been registered under the 1933
Act, and, even after vesting, unless registered under the Securities Act of
1933, as amended (the "1933 Act"), may not be sold or transferred, nor will any
assignee thereof be recognized as an owner by the Company for any
- 2 -
<PAGE> 3
purpose, unless a registration statement under the 1933 Act with respect to such
shares shall then be in effect or unless the availability of an exemption from
registration with respect to any proposed disposition or transfer of such shares
is established to the satisfaction of counsel to the Company.
4. DELIVERY OF SHARES. Certificates representing the shares of
Common Stock will be held in pledge by the Company and shall be delivered as
soon as practicable after vesting of the Restricted Stock and any release from
pledge, but such delivery may be postponed for such period as may be required
for the Company with reasonable diligence to comply if deemed advisable by the
Company, with registration requirements under the 1933 Act, listing requirements
under the rules of the NYSE, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
5. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company, in accordance with the terms of
this Restricted Stock Award Agreement.
6. MISCELLANEOUS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia. All shares of
Restricted Stock, and shares of Common Stock resulting after the Restricted
Period from such shares of Restricted Stock are hereby pledged to secure the
Executive's obligations under a Secured Promissory Note and a Pledge Agreement
of even date herewith and all certificates representing all such shares shall be
held by the Company until all of the Executive's obligations under the Secured
Promissory Note and Pledge Agreement have been irrevocably paid in full, or
otherwise in the Company's sole discretion, as and to the extent such shares are
released.
IRT PROPERTY COMPANY
By: /s/ Thomas H. McAuley
--------------------------
Name: Thomas H. McAuley
Date: June 18, 1998
As of the day and year first above written, I hereby accept the above
Restricted Stock grant in accordance with and subject to the terms and
conditions set forth above, and pledge all such Restricted Stock to the Company,
and I agree that any shares of Common Stock, together with all substitutions and
replacements therefore received by me hereunder will not be sold or otherwise
disposed of by me except in a manner in compliance with applicable securities
laws. I agree to notify the Company at least five business days in advance of
any proposed sale or other disposition of any such shares following the vesting
thereof and as permitted by the Pledge Agreement.
/s/ Robert E. Mitzel
------------------------
Executive
Date: June 18, 1998
-3-
<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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 478
<SECURITIES> 0
<RECEIVABLES> 54
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,803
<PP&E> 574,071
<DEPRECIATION> 68,397
<TOTAL-ASSETS> 526,362
<CURRENT-LIABILITIES> 14,011
<BONDS> 248,235
0
0
<COMMON> 33,250
<OTHER-SE> 230,866
<TOTAL-LIABILITY-AND-EQUITY> 526,362
<SALES> 0
<TOTAL-REVENUES> 38,488
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,082
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,432
<EPS-PRIMARY> 0.38<F1>
<EPS-DILUTED> 0.38<F1>
<FN>
<F1>SFAS 128 HAD NO EFFECT ON EPS-PRIMARY FOR THE THREE MONTHS AND SIX MONTHS
ENDED JUNE 30, 1997. EPS-DILUTED, CALCULATED IN ACCORDANCE WITH SFAS 128, IS
EQUAL TO EPS-PRIMARY AS REPORTED IN THE PREVIOUS FINANCIAL DATA SCHEDULE.
ACCORDINGLY, NO RESTATED FINANCIAL DATA SCHEDULE IS FILED HEREIN.
</FN>
</TABLE>
