UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 1-10524
UNITED DOMINION REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-0857512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 South Sixth Street, Richmond, Virginia 23219-3802
(Address of principal executive offices - zip code)
(804) 780-2691
(Registrant's telephone number, including area code)
Not Applicable
(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, and (2) has been subject to filing requirements
for at least the past 90 days.
Yes X No ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
88,161,626 shares of common stock outstanding as of November 5, 1997
<PAGE>
UNITED DOMINION, REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------------- -----------------
<S> <C>
Assets
Real estate owned:
Real estate held for investment (Note 3) $ 2,217,063 $ 2,007,612
Less: accumulated depreciation 200,538 173,291
-------------- ------------
2,016,525 1,834,321
Real estate under development 33,628 37,855
Real estate held for disposition 131,576 39,556
Cash and cash equivalents 5,383 13,452
Other assets 65,639 41,720
-------------- ------------
Total assets $ 2,252,751 $ 1,966,904
============== ============
Liabilities and shareholders' equity
Notes payable-secured (Note 4) $ 412,624 $ 376,560
Notes payable-unsecured (Note 5) 687,521 668,275
Distributions payable to common shareholders 22,261 19,699
Accounts payable, accrued expenses and other liabilities 62,361 49,962
-------------- ------------
Total liabilities 1,184,767 1,114,496
Minority interest of unitholders in operating partnership 10,482 2,029
Shareholders' equity:
Preferred stock, no par value; $25 liquidation preference,
25,000,000 shares authorized;
4,200,000 shares 9.25% Series A Cumulative Redeemable 105,000 105,000
6,000,000 shares 8.60% Series B Cumulative Redeemable 150,000 --
Common stock, $1 par value; 150,000,000 shares authorized
88,161,626 shares issued and outstanding (81,982,551 in 1996) 88,162 81,983
Additional paid-in capital 893,701 814,795
Notes receivable from officer-shareholders (9,168) (5,926)
Distributions in excess of net income (170,193) (147,529)
Unrealized gain on securities available-for-sale -- 2,056
-------------- ------------
Total shareholders' equity 1,057,502 850,379
============== ============
Total liabilities and shareholders' equity $ 2,252,751 $ 1,966,904
============== ============
</TABLE>
2
See accompanying notes.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -----------------------------------
1997 1996 1997 1996
------- -------- ------- -----
<S> <C>
Revenues
Rental income $ 98,816 $ 63,083 $ 284,182 $ 175,119
Interest and other non-property income 479 402 867 1,197
--------- --------- --------- -----------
99,295 63,485 285,049 176,316
Expenses
Rental expenses:
Utilities 6,166 4,425 18,290 12,810
Repairs and maintenance 14,528 10,711 40,707 29,847
Real estate taxes 8,107 4,509 23,014 12,698
Property management 3,080 1,444 9,154 4,192
Other rental expenses 10,762 6,400 30,051 16,852
Real estate depreciation 19,740 12,346 55,029 33,711
Interest 19,346 13,530 58,265 35,413
General and administrative 1,619 1,260 5,271 4,192
Other depreciation and amortization 494 356 1,339 917
Impairment loss on real estate owned (Note 3) 1,400 -- 1,400 290
--------- --------- --------- ----------
85,242 54,981 242,520 150,922
Income before gains on sales of investments and
minority interest of unitholders in operating partnership 14,053 8,504 42,529 25,394
Gains on sales of investments 9,309 1,339 12,682 2,176
Minority interest of unitholders in operating partnership (53) (25) (112) (26)
--------- -------- --------- ---------
Net income 23,309 9,818 55,099 27,544
Dividends to preferred shareholders 5,653 2,428 11,692 7,284
--------- --------- --------- ----------
Net income available to common shareholders $ 17,656 $ 7,390 $ 43,407 $ 20,260
========= ========= ========= ==========
Net income per common share $ 0.20 $ 0.13 $ 0.50 $ 0.36
========= ========= ========= ===========
Distributions declared per common share $ .2525 $ .24 $ 0.7575 $ 0.72
========= ========= ========= ===========
Weighted average number of common shares outstanding 87,853 57,793 86,602 56,978
</TABLE>
See accompanying notes.
3
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997 1996
- ---------------------------------------------------------------- ------------ ------------
<S> <C>
Operating Activities
Net income $ 55,099 $ 27,544
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 56,368 34,628
Minority interest of unitholders in operating partnership 112 26
Impairment loss on real estate owned 1,400 290
Gains on sales of investments (12,682) (2,176)
Amortization of deferred financing costs 1,306 898
Changes in operating assets and liabilities:
Increase in operating liabilities 9,837 12,720
Increase in operating assets (349) (1,330)
------------ ------------
Net cash provided by operating activities 111,091 72,600
Investing Activities
Acquisition of real estate, net of debt and liabilities assumed (206,205) (165,927)
Capital expenditures (70,722) (35,509)
Development of real estate assets (37,369) (7,593)
Net proceeds from sales of investments 27,044 18,730
Proceeds from interest rate hedge transaction 1,538 --
Other 2,143 (6)
------------ ------------
Net cash used in investing activities (283,571) (190,305)
Financing Activities
Net proceeds from the issuance of common stock 59,884 23,925
Net proceeds from the sale of preferred stock 145,275 --
Net proceeds from the sale of common stock through the
dividend reinvestment and stock purchase plan 26,685 7,975
Gross proceeds from the issuance of unsecured notes payable 125,000 152,962
Net proceeds from the issuance of secured notes payable -- 5,925
Net borrowings (repayments) of short-term bank borrowings (43,250) 30,800
Distributions paid to preferred shareholders (10,617) (7,284)
Distributions paid to common shareholders (63,511) (39,879)
Distributions paid to minority interest unitholders (102) --
Scheduled mortgage principal payments (4,573) (1,881)
Mortgage financing proceeds released from construction funds -- 2,666
Payments on unsecured notes (63,414) (50,697)
Non-scheduled payments on secured notes payable (4,350) --
Payment of financing costs (2,616) (1,908)
------------ ------------
Net cash provided by financing activities 164,411 122,604
Net increase (decrease) in cash and cash equivalents (8,069) 4,899
Cash and cash equivalents, beginning of period 13,452 2,904
------------ ------------
Cash and cash equivalents, end of period $ 5,383 $ 7,803
============ ============
Supplemental Information
Interest paid during the period $ 55,279 $ 33,699
Secured debt assumed through the acquisition of properties 48,380 129,875
Issuance of common stock in connection with acquisitions -- 22,678
Issuance of unsecured notes payable in connection with acquisitions -- 25,000
Issuance of operating partnership units 8,442 2,006
See accompanying notes.
</TABLE>
4
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997
(In thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Common Stock, $1 Par Value Preferred Stock
--------------------------------------------------- Additional
Number Number Paid-in
of Shares Amount of Shares Amount Capital
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Balance at December 31, 1996 81,982,551 $81,983 4,200,000 $105,000 $814,795
Common stock issued in public offering 4,000,000 4,000 - - 55,420
Preferred stock-Series B issued in public offering - - 6,000,000 150,000 (4,962)
Exercise of common stock options 48,197 48 - - 507
Common stock purchased by officers, net of repayments 230,000 230 - - 3,149
Common stock issued through dividend reinvestment and
stock purchase plan 1,900,346 1,900 - - 24,785
Common stock issued through employee stock purchase plan 532 1 - - 7
Net income - - - - -
Preferred stock-Series A distributions declared ($1.73 per share) - - - - -
Preferred stock-Series B distributions declared ($.56 per share) - - - - -
Common stock distributions declared ($.7575 per share) - - - - -
Realized gain on securities available-for-sale - - - - -
--------------- ---------- ----------- ----------- -------------
Balance at September 30, 1997 88,161,626 $88,162 10,200,000 $255,000 $893,701
=============== ========== =========== =========== =============
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Gain on
Receivable Distributions Securities Total
from Officer in Excess of Available- Shareholders'
Shareholders Net Income for-Sale Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Balance at December 31, 1996 ($5,926) ($147,529) $2,056 $850,379
Common stock issued in public offering - - - 59,420
Preferred stock-Series B issued in public offering - - - 145,038
Exercise of common stock options - - - 555
Common stock purchased by officers, net of repayments (3,242) - - 137
Common stock issued through dividend reinvestment and
stock purchase plan - - - 26,685
Common stock issued through employee stock purchase plan - - - 8
Net income - 55,099 - 55,099
Preferred stock-Series A distributions declared ($1.73 per share) - (7,284) - (7,284)
Preferred stock-Series B distributions declared ($.56 per share) - (4,408) - (4,408)
Common stock distributions declared ($.7575 per share) - (66,071) - (66,071)
Realized gain on securities available-for-sale - - (2,056) (2,056)
--------------- -------------- ------------ -------------
Balance at September 30, 1997 ($9,168) ($170,193) $0 $1,057,502
=============== ============== ============ =============
</TABLE>
5
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of presentation
The accompanying consolidated financial statements include the accounts of
United Dominion Realty Trust, Inc. and its subsidiaries, including United
Dominion Realty, L.P., its Operating Partnership, (collectively, the "Company").
As of September 30, 1997, United Dominion Realty Trust, Inc. and its
wholly-owned subsidiaries had a 92% interest in the Operating Partnership. The
financial statements of the Company include the minority interest of unitholders
in the operating partnership. All significant inter-company accounts and
transactions have been eliminated in consolidation. The consolidated financial
statements reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of financial position at September 30, 1997
and results of operations for the interim periods ended September 30, 1997 and
1996. Such adjustments are normal and recurring in nature. The interim results
presented are not necessarily indicative of results that can be expected for a
full year. The accompanying consolidated financial statements should be read in
conjunction with the audited financial statements and related notes appearing in
the Company's December 31, 1996 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
2. Reclassifications
Certain previously reported amounts have been reclassified to conform with the
current financial statement presentation.
3. Real estate held for investment
The following table summarizes real estate held for investment:
<TABLE>
<CAPTION>
September 30, December 31,
Dollars in thousands 1997 1996
- -----------------------------------------------------------------------------------
<S> <C>
Land and land improvements $ 384,706 $ 353,092
Buildings and improvements 1,694,997 1,537,387
Furniture, fixtures and equipment 131,436 115,308
Construction in progress 5,924 1,825
-------------- ---------------
Real estate held for investment $ 2,217,063 $ 2,007,612
========== ===========
</TABLE>
Long-lived investments held and used are periodically evaluated for impairment
and provisions for possible losses are made if required. During the third
quarter of 1997, the Company recognized a provision for possible loss of $1.4
million relating to two apartment communities included in real estate held for
investment. At September 30, 1997, the Company's real estate held for investment
is carried at cost less valuation allowance, which is not in excess of fair
market value.
4. Notes payable - secured
Notes payable-secured, which encumber $899.2 million or 37% of the Company's
real estate owned, at cost, ($1.5 billion or 63% of the Company's real estate
owned, at cost, is unencumbered) consist of the following at September 30, 1997:
<TABLE>
<CAPTION>
Principal Weighted Average Weighted Average No.Communities
Dollars in thousands Balance Interest Rate Years to Maturity Encumbered
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Fixed-Rate Mortgage Notes $ 136,330 8.3% 3.4 22
Fixed-Rate Tax-Exempt Notes 127,822 7.0% 19.8 18
Fixed-Rate REMIC Financings 89,304 7.4% 3.2 25
Fixed-Rate Secured Notes (a) 45,000 7.3% 1.9 6
----------------------------------------------------------------------------------
Total Fixed-Rate Notes 398,456 7.6% 8.6 71
Variable-Rate Secured Notes 11,968 6.3% 2.0 2
Variable-Rate Tax-Exempt Notes 2,200 5.4% 5.2 1
----------------------------------------------------------------------------------
Total Variable-Rate Notes 14,168 6.2% 2.3 3
----------------------------------------------------------------------------------
Total Notes Payable - secured $ 412,624 7.5% 8.3 74
===================================================================================
</TABLE>
(a) Variable-rate secured notes payable which have been effectively swapped
to a fixed-rate at September 30, 1997 consist of a $39 million
variable-rate secured senior credit facility which encumbers six
apartment communities and a $6 million variable-rate construction note
payable. The interest rate swap agreements have an aggregate notional
value of $45 million under which the Company pays a fixed-rate of
interest and receives a variable-
6
<PAGE>
rate on the notional amounts. The interest rate swap agreements
effectively change the Company's interest rate exposure on $45 million
from a variable-rate to a weighted average fixed-rate of approximately
7.3%.
5. Notes payable - unsecured
A summary of notes payable - unsecured is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
Dollars in thousands 1997 1996
----------------- ----------------------
<S> <C>
Commercial Banks
Borrowings outstanding under
revolving credit facilities and
other bank debt $ 82,000 (a) $125,250
Insurance Companies--Senior Unsecured Notes
7.98% due March, 1998-2003 44,571 (b) 52,000
8.72% due November, 1997-1998 (c) 4,000 4,000
--------- ---------
48,571 56,000
Other (d) 6,950 6,040
Senior Unsecured Notes - Other
7.00% Note due January 15, 1997 (e) -- 55,985
7.25% Notes due April 1, 1999 75,000 75,000
8.50% Debentures due September 15, 2024 (f) 150,000 150,000
7.95% Medium-Term Notes due July 12, 2006 125,000 125,000
7.25% Notes due January 15, 2007 125,000 --
7.07% Medium-Term Notes due November 15, 2006 25,000 25,000
7.02% Medium-Term Notes due November 15, 2005 50,000 50,000
-------- --------
550,000 480,985
------- -------
Total Notes Payable - Unsecured $687,521 $668,275
======== ========
</TABLE>
(a) The weighted average balance outstanding for the three months
ended September 30, 1997 was $68.4 million and carried a weighted
average daily interest rate of 6.1%. The weighted average balance
outstanding for the nine months ended September 30, 1997 was $95.4
million and carried a weighted average daily interest rate of
6.1%. The weighted average interest rate at September 30, 1997 was
6.1%.
(b) Payable in six equal annual principal installments of $7.4
million.
(c) Payable in two equal annual principal installments of $2 million.
(d) Includes $6.5 million and $5.6 million at September 30, 1997 and
December 31, 1996, respectively, of deferred gains from the
termination of interest rate hedge transactions.
(e) Represents an unsecured note assumed in connection with the South
West Property Trust Inc. statutory merger (the "South West
Merger") on December 31, 1996. The note was repaid on January 3,
1997.
(f) Debentures include an investor put feature which grants a one time
option to redeem debentures in September 2004.
6. Accounting Pronouncements
During the first quarter of 1997, the Financial Accounting Standards Board
issued SFAS No. 128 "Earnings per Share" (SFAS No. 128) which is effective
beginning in the fourth quarter of 1997. Early adoption is prohibited. Under the
new statement, primary and fully dilutive earnings per share are replaced with
basic and diluted earnings per share. The Company's basic earnings per share and
diluted earnings per share for the three month and nine month periods ended
September 30, 1997 and 1996 according to the new statements would not change
from the reported amounts.
In February 1997, the Financial Accounting Standards Board issued SFAS No. 129
"Disclosure Information about Capital Structure" (Statement 129) which is
effective for fiscal years beginning after December 15, 1997. Statement 129
established standards for disclosing information about an entity's capital
structure. The Company believes that its disclosures already comply with the
requirements of Statement 129.
7
<PAGE>
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130
"Reporting Comprehensive Income" (Statement 130) and SFAS No. 131 "Disclosure
about Segments of an Enterprise and Related Information" (Statement 131) which
are effective for fiscal years beginning after December 15, 1997. The Company
will adopt Statement 130 and Statement 131 with the fiscal year beginning
January 1, 1998. Statement 130 and Statement 131 do not have a material impact
on the financial results or financial condition of the Company, but will result
in certain changes in required disclosures. Management is evaluating the
additional disclosure requirements for the Company upon the implementation of
Statement 130 and Statement 131.
8
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company considers portions of the information contained in this Item 2. to
be 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.
Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved.
The Company is engaged in the ownership, acquisition, development and management
of primarily middle income apartment communities across the Sunbelt. The
Company's investment strategy focuses on acquiring apartment communities in 23
targeted major markets where it can add value. The Company seeks to be a market
leader by operating a sufficiently sized portfolio of apartments within each
market. The Company believes this market diversification increases investment
opportunity and decreases the risk associated with cyclical local real estate
markets and economies. The following table summarizes the Company's apartment
market information by market:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
As of September 30, 1997 September 30, 1997 September 30, 1997
------------------------------------ ---------------------- ------------------------
Average Average
Number of Number of % of Monthly Monthly
Apartment Apartment Apartment Economic Rental Economic Rental
Market Communities Homes Homes Occupancy** Rates* Occupancy** Rates*
- ---------------------------------------------------- ------------------------------------------------------
<S> <C>
Dallas, TX 22 8,257 14% 94.1% $ 551 93.6% $ 544
Columbia, SC 12 3,534 6% 92.6% 502 91.3% 500
Richmond, VA 11 3,518 6% 93.7% 561 91.8% 552
Raleigh, NC 12 3,484 6% 95.1% 636 95.4% 630
Tampa, FL 12 3,209 5% 92.8% 579 93.4% 572
Orlando, FL 10 3,076 5% 95.9% 578 95.5% 571
Charlotte, NC 13 3,009 5% 87.9% 579 86.7% 573
Houston, TX 7 2,847 5% 94.3% 469 93.1% 466
Eastern NC 10 2,530 4% 95.5% 560 95.1% 554
Greensboro, NC 9 2,242 4% 84.0% 548 83.9% 545
Nashville, TN 8 2,116 3% 91.4% 589 91.5% 584
San Antonio, TX 5 1,983 3% 91.8% 619 92.3% 615
Atlanta, GA 7 1,822 3% 90.8% 591 89.5% 588
Baltimore, MD 8 1,746 3% 92.9% 655 92.4% 650
Greenville, SC 8 1,718 3% 88.1% 518 86.6% 515
Hampton Roads, VA 7 1,628 3% 93.9% 545 90.6% 540
Washington, DC 6 1,483 2% 87.8% 687 87.0% 682
Jacksonville, FL 3 1,157 2% 85.9% 598 86.2% 596
Ft. Lauderdale, FL 4 960 2% 93.3% 791 94.0% 786
Memphis, TN 4 935 2% 89.3% 519 90.0% 513
Fayetteville, NC 3 884 1% 90.6% 559 88.3% 556
Austin, TX 3 867 1% 88.1% 533 89.2% 532
Eastern Shore, MD 4 784 1% 98.5% 632 97.3% 624
Phoenix, AZ 3 728 1% 91.2% 645 90.8% 644
Little Rock, AK 2 512 1% 94.5% 573 93.5% 569
Other Florida 7 1,646 3% 91.3% 552 95.8% 547
Other Virginia 6 1,036 2% 92.1% 558 94.0% 550
Other Texas 3 824 1% 93.7% 506 88.6% 509
Other Georgia 2 468 1% 88.8% 638 82.7% 638
Other South
Carolina 2 408 1% 91.2% 413 91.6% 409
Nevada 1 384 1% 88.0% 641 91.1% 635
Delaware 2 368 -- 96.0% 605 96.1% 600
Oklahoma 1 316 -- 92.6% 454 92.3% 452
Alabama 1 242 -- 85.6% 514 83.7% 511
New Mexico 1 210 -- 95.6% 550 85.9% 567
Other North
Carolina 1 168 -- 95.9% 574 89.7% 573
---------------------------------------------------------------------------------------
Total 220 61,099 100% 92.2% $ 574 91.6% $570
=======================================================================================
</TABLE>
9
<PAGE>
* Average monthly rental rates represent potential rent collections
(gross potential rents less market adjustments), which approximate net
effective rents. These figures exclude 1997 acquisitions.
** Economic occupancy is defined as rental income (gross potential rent
less vacancy loss, management units, units held out of service, move-in
concessions and credit loss) divided by potential collections (gross
potential rent less management units, units held out of service and
move-in concessions) for the period, expressed as a percentage.
Liquidity and Capital Resources
As a qualified real estate investment trust ("REIT"), the Company distributes a
substantial portion of its cash flow to its shareholders in the form of
quarterly distributions. The Company seeks to retain sufficient cash to cover
normal operating needs, including routine replacements and to help fund
additional acquisitions and development activity. For the nine months ended
September 30, 1997, the Company's cash flow from operating activities exceeded
cash distributions paid to preferred and common shareholders and operating
partnership unitholders by approximately $36.9 million. The Company utilizes a
variety of primarily external financing sources to fund portfolio growth, major
capital improvement programs and balloon debt payments. The Company's bank lines
of credit generally have been used to temporarily finance these expenditures and
subsequently this short-term bank debt has been replaced with longer term debt
or equity.
Operating Activities
For the nine months ended September 30, 1997, the Company's cash flow from
operating activities increased approximately $38.5 million over the same period
last year. This increase was primarily a result of the significant expansion of
the Company's portfolio of apartment communities as discussed below and under
"Results of Operations".
The Company considers its cash provided by operating activities adequate to meet
its operating requirements and payments of distributions to both common and
preferred shareholders and unitholders in the Operating Partnership.
Investing Activities
During the nine months ended September 30, 1997, net cash used for investing
activities was approximately $283.6 million compared to approximately $190.3
million for the same period last year. The level of investing activities
primarily reflects the increased levels of the Company's acquisition, capital
expenditure and development programs. During 1997, the Company significantly
increased both its development activity and upgrade program which was
implemented at its older communities.
Acquisitions
The Company expects to purchase between 8,000 and 11,000 apartment homes at an
aggregate purchase price between $350 million and $450 million during 1997. The
Company seeks to acquire apartment communities that can provide returns on
investment in excess of the Company's cost of capital. These acquisitions
typically are projected to provide first year weighted average returns on
investment of approximately 9-9 1/2% with the prospect for future cash flow
growth and appreciation.
During the first nine months of 1997, the Company acquired 22 apartment
communities containing 6,802 apartment homes at a total cost of approximately
$266.8 million, including closing costs. Twenty of the apartment communities
acquired were located in the Company's major markets. The apartment communities
acquired were as follows:
10
<PAGE>
<TABLE>
<CAPTION>
Purchase
Purchase No. Apt. Year Price Cost
Date Name/Location Homes Built (000's) per Home
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
02/19/97 Club at Hickory Hollow/Nashville, TN 406 1987 $17,371 $42,800
02/28/97 Stoney Pointe/Charlotte, NC (a) 400 1991 17,355 43,400
02/28/97 Crosswinds/Wilmington, NC 380 1990 19,326 50,900
02/28/97 Dominion Trinity Park/Raleigh, NC (a) 380 1994 22,155 58,300
03/25/97 Anderson Mill/Austin, TX 350 1984 14,305 40,900
03/27/97 Oak Ridge/Dallas, TX 486 1983 17,290 35,600
03/27/97 Breckenridge/Nashville, TN 190 1986 8,480 44,600
04/22/97 Northwinds II/Greensboro, NC (c) 100 1997 4,765 47,700
05/09/97 Green Oaks I/Houston, TX (d) 440 1985 15,260 34,700
05/09/97 Skyhawk/Houston, TX 224 1984 9,456 42,200
06/06/97 Cambridge Woods/Tampa, FL 274 1985 8,957 32,700
06/18/97 Kelly Crossing/Dallas, TX 304 1984 11,653 38,300
06/25/97 Green Oaks II/Houston, TX (d) 272 1985 9,680 35,600
07/01/97 Lotus Landing/Orlando, FL 260 1985 10,725 41,300
07/01/97 Lakeside/Daytona Beach, FL 210 1985 8,744 41,600
07/01/97 Mallards of Brandywine/Deland, FL 168 1985 6,117 36,400
07/01/97 Forest Creek/Largo, FL 104 1984 2,582 24,800
07/01/97 Orange Oaks/Tampa, FL 192 1986 7,832 40,800
09/26/97 Greenhouse Patio/Houston, TX (a) (b) 580 1985 18,814 32,400
09/26/97 Braesridge/Houston, TX (a) (b) 545 1982 14,010 25,700
09/26/97 Breakers/Houston, TX 272 1985 6,825 25,100
09/29/97 Waterside at Ironbridge/Richmond, VA (a) 265 1987 15,082 56,900
------------------------------------------------
1997 Total/Weighted Average 6,802 1986 $266,784 $ 39,200
==================================================
</TABLE>
(a) In connection with the acquisition of five apartment
communities, the Company assumed four mortgage notes payable
and one tax-exempt note payable aggregating $48.4 million with
a weighted average interest rate of approximately 8.3%.
(b) In connection with the acquisition of two apartment
communities, the Company issued approximately 572,000 units in
the Operating Partnership with an aggregate value of $8.4
million.
(c) Northwinds II is the second phase of an apartment community
acquired by the Company in August 1996.
(d) These two properties are operated as one apartment community
named Green Oaks Apartments.
Real estate under development
Consistent with the Company's acquisition strategy, development activity is
focused primarily in its major markets. Development capability allows the
Company to continually upgrade its apartment portfolio. During the first nine
months of 1997, the Company invested approximately $37.4 million in development
projects at nine apartment communities, including two new apartment communities
and seven additional phases to existing apartment communities. The Company
expects to spend in excess of $50 million on development activity during 1997.
At September 30, 1997, the Company had 916 apartment homes under development as
outlined below (dollars in thousands, except cost per home):
<TABLE>
<CAPTION>
Development Estimated Estimated
No. Apt. Completed Costs Development Cost Expected
Property Location Homes Apt. Homes to Date Cost Per Home Completion Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
New Apartment Communities
Dominion Franklin Nashville, TN 360 -- $ 4,673 $23,236 $ 64,500 4Q98
Additional Phases
England Run II Fredericksburg, VA 168 48 8,819 10,897 64,900 4Q97
Oak Forest II Dallas, TX 260 164 10,179 13,375 51,400 1Q98
Steeplechase II Greensboro, NC 176 20 7,470 11,784 67,000 4Q97
Greenway Park II Phoenix, AZ 20 16 858 1,282 64,100 4Q97
Mill Creek II Wilmington, NC 180 -- 1,629 12,108 67,300 3Q98
----------------------------------------------------------------------------------------
804 248 28,955 49,446 61,500
-------------------------------------------------------------------------
1,164 248 $33,628 $ 72,682 $ 62,400
=========================================================================
</TABLE>
11
<PAGE>
During 1997, the Company completed the following development projects (dollars
in thousands, except cost per home):
<TABLE>
<CAPTION>
Development Estimated
No. Apt. Costs Development Cost Date of % Leased
Property Location Homes to Date Cost Per Home Completion at 9/30/97
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
New Apartment Communities
Providence Court Charlotte, NC 420 $ 29,715 $ 30,324 $ 72,200 3Q97 68%
Additional Phases
Brantley Pines II Ft. Myers, FL 96 6,827 6,755 70,400 2Q97 100%
Oak Park II Dallas, TX 80 4,358 4,581 57,300 1Q97 100%
------------------------------------------------------
176 11,185 11,336 64,400
------------------------------------------------------
596 $ 40,900 $ 41,660 $ 69,900
======================================================
</TABLE>
During the third quarter, full lease-up at Brantley Pines was achieved.
In late September, construction on the 420 home Providence Court community in
Charlotte, North Carolina was completed. This community is currently in the
lease-up process. These additions did not have a material impact on the
Company's financial results for the three or nine months ended September 30,
1997.
Capital Expenditures
During the nine months ended September 30, 1997, the Company spent approximately
$70.7 million on capital improvements to its apartment portfolio. The Company
has a policy of capitalizing expenditures related to acquisitions, and the
enhancement of the value or the substantial extenuation of the useful life of an
existing asset. The Company acquires two types of apartment communities, both of
which typically require capital expenditures: (i) near class A properties built
since 1980 where the investment (purchase price plus planned improvements)
represent a significant discount to replacement cost and (ii) well located,
older properties that can be upgraded and repositioned for the longer term. In
addition to the Company's capital expenditures on acquisitions, a significant
portion of capital expenditures relate to an upgrade program that began in 1996
to modernize certain of the Company's older apartment communities. These
upgrades primarily involve updating kitchens and bathrooms and are designed to
enhance rent growth and add value to the apartment communities. In addition,
several initiatives are underway that either allow the Company to increase rents
by more than the inflationary rate or allow the Company to pass expenses along
to residents, including: (i) submetering of water and sewer to residents where
local and state regulations allow the cost to be passed to the resident, (ii)
gating and fencing apartment communities, (iii) installing monitoring devices
such as intrusion alarms or controlled access devices, (iv) enlarging fitness
centers and (v) adding business centers. Capital expenditures during 1997 are
expected to exceed 1996 levels as a result of the upgrade program and
initiatives discussed above.
Disposition of investments
Securities available-for-sale
During the first quarter of 1997, the Company sold its investment in the
preferred stock of First Washington Realty Trust, Inc. obtained as partial
consideration in the 1995 sale of four commercial properties. The Company
received approximately $9.9 million in cash proceeds from the sale of the stock
and recognized approximately a $2.1 million gain on the sale for financial
reporting purposes.
Real estate held for disposition
The Company continually undertakes portfolio review analyses with the objective
of identifying properties that do not meet the Company's long-term investment
objectives due to size, location, age, quality and future investment potential.
Generally, this will result in the disposition of many of the Company's older
apartment communities. The Company may sell approximately 20% of its apartment
portfolio although specific properties have not been identified as sales
candidates. These sales will allow the Company to reduce the age of its existing
portfolio which should result in lower operating expense and capital expenditure
growth associated with the older properties. Management has determined that
packaging properties in portfolios is more efficient and provides the greatest
opportunities for disposition. The Company intends to sell approximately $50-$70
million of properties each quarter through fiscal year 1998.
12
<PAGE>
Real estate held for disposition included in the Consolidated Balance Sheet in
the aggregate amount of $131.6 million, net of accumulated depreciation and
valuation allowance includes: (i) 15 apartment communities containing 4,725
apartment homes aggregating $119.0 million, (ii) two shopping centers
aggregating $8.6 million, (iii) three other commercial properties aggregating
$2.4 million and (iv) one parcel of land in the amount of $1.6 million. Real
estate held for disposition contributed net rental income (rental income less
rental expenses and depreciation expense) in the aggregate amount of
approximately $4.0 million and $13.7 million for the three and nine months ended
September 30, 1997, respectively. The Company expects to dispose of these
properties within the next twelve months.
During 1997, the Company transferred 19 apartment communities aggregating $135.5
million, net of accumulated depreciation and valuation allowance, from real
estate held for investment to real estate held for disposition. Seven properties
were subsequently sold, six in a portfolio transaction during the third quarter.
In August 1997, the Company executed a contingent contract to sell six apartment
communities in a portfolio transaction, all of which are encumbered by
tax-exempt notes payable. In October 1997, the Company executed a letter of
intent to sell five apartment communities in a portfolio transaction. There is
no assurance that either of these portfolio transactions will be consummated.
The Company does not anticipate any losses from the sales of any of these
properties.
During the second quarter of 1997, the Company sold three apartment communities
containing 822 apartment homes and one shopping center for an aggregate sales
price of $20.8 million and received net cash proceeds of approximately $17.1
million. For financial reporting purposes, the Company recognized an aggregate
$1.3 million gain on the sales. One of these dispositions was structured to
qualify as a like-kind exchange under Section 1031 of the Internal Revenue Code,
so the related capital gain will be deferred for federal income tax purposes.
On August 1, 1997, the Company sold a portfolio of six apartment communities
containing 1,204 apartment homes which had a weighted average age of 26 years
for an aggregate sales price of approximately $34.7 million. Cash proceeds of
$34.1 million were held in escrow pending subsequent apartment acquisitions by
the Company in order to complete like-kind exchange transactions. For financial
reporting purposes, the Company recognized an approximate $9.3 million gain on
the sale. Since the transaction was structured to qualify as a like-kind
exchange under Section 1031 of the Internal Revenue Code, the related capital
gains will be deferred for federal income tax purposes. In addition, the company
sold an 80 home apartment community in September 1997 for $1.7 million in a
like-kind exchange transaction.
On October 23, 1997, the Company sold two apartment communities containing 464
apartment homes with a weighted average age of 24 years for an aggregate sales
price of approximately $11.1 million and received net proceeds of approximately
$10.9 million. For financial reporting purposes, no significant gain will be
recognized on these sales.
13
<PAGE>
Financing Activities
Financial Structure
The following table outlines the Company's financial structure at September 30,
1997: (dollars in thousands)
<TABLE>
<CAPTION>
Balance at Weighted Average Capitalization
September 30, 1997 Interest Rate Percentage
------------------- ------------------ --------------
<S> <C>
Fixed Rate Secured Debt $ 398,456 7.6% 14.8%
Fixed Rate Unsecured Debt 605,521 7.5% 22.5%
---------------- ------
1,003,977 7.5% 37.3%
Variable Rate Secured Debt 14,168 6.2% 0.5%
Variable Rate Unsecured Debt 82,000 6.1% 3.1%
----------------- ------
96,168 6.1% 3.6%
----------------- ------
Total Debt 1,100,145 7.4% 40.9%
Preferred stock at market 269,400 8.9%* 10.0%
Common stock at market ($15 per share) 1,322,424 49.1%
----------------- --------
Equity capitalization at market 1,591,824 59.1%
----------------- --------
Total market capitalization (debt & equity) $ 2,691,969 100.0%
================= ========
</TABLE>
*Represents the weighted average dividend rate.
Net cash provided by financing activities during the nine months ended September
30, 1997 was approximately $164.4 million compared to $122.6 million for the
same period last year, reflecting the higher debt and equity financing
activities that were needed to fund higher acquisitions, development and capital
improvements during the first nine months of 1997.
Cash provided by financing activities
On January 28, 1997, the Company issued 4,000,000 shares of its common stock at
$15.75 per share for an aggregate value of approximately $63 million. Net
proceeds of approximately $59.7 million were used to repay an unsecured credit
facility assumed in connection with the South West Merger.
The Company also received approximately $26.7 million under its Dividend
Reinvestment and Stock Purchase Plan (the "Plan") during the nine months ended
September 30, 1997 which included approximately $19.3 million in optional cash
investments and $7.4 million of reinvested dividends. The Company expects to
generate approximately $40 million in proceeds from the Plan during 1997.
In anticipation of the issuance of unsecured debt in early 1997, the Company
entered into a $100 million (notional amount) Treasury rate lock agreement in
November 1996. On January 27, 1997, the Company issued $125 million of 7.25%
Notes due January 15, 2007 under its $462.5 million shelf registration
statement. The Notes were priced to yield 7.31% which was 79 basis points over
the 10 year Treasury rate at the time of issuance. The interest rate protection
agreement was terminated simultaneously with the $125 million Note issuance and
the Company received $1.5 million in cash. This had the economic effect of
lowering the interest rate on the Notes to approximately 7.14%. Net proceeds of
approximately $124 million were used to curtail bank debt and purchase apartment
communities.
On May 29, 1997, the Company sold 6,000,000 shares of 8.60% Series B Redeemable
Preferred Stock at $25 per share. Net proceeds of approximately $145.3 million
were primarily used to repay short-term bank debt.
Cash used in financing activities
During the first nine months of 1997, the Company paid $74.1 million in
distributions to common and preferred shareholders and unitholders in the
Operating Partnership.
The Company repaid a $56.0 million unsecured note payable on January 3, 1997
which was assumed in connection with the South West Property Trust Inc.
acquisition on December 31, 1996. In addition, the Company repaid a $7.4 million
principal installment on an unsecured notes payable in March 1997.
14
<PAGE>
Derivative Instruments
The Company has, from time to time, used derivative instruments to synthetically
alter on-balance sheet liabilities or to hedge anticipated financing
transactions. Derivative contracts did not have a material impact on the results
of operations during the three and nine months ended September 30, 1997 and
1996.
On May 1, 1997, the Company terminated an interest rate swap agreement with a
commercial lender with notional amounts from $79 million to $83 million which
effectively changed the Company's interest exposure from a variable rate to a
weighted average fixed rate of 6.45%. No gain or loss was recognized on this
termination.
Credit facilities
On August 4, 1997, the Company closed on a new $200 million three year unsecured
revolving credit facility, a $50 million one year unsecured line of credit and a
$15 million uncommitted line of credit. Under the new facility, pricing is based
upon the higher of the Company's senior unsecured debt ratings from S&P and
Moody's which are currently BBB+ and Baa1, respectively. At these rating levels,
contractual interest under the new revolving credit facility is LIBOR plus 42
1/2 basis points. The credit facility also includes a $100 million competitive
bid option which allows the Company to solicit bids from participating banks at
rates below the contractual rate.
At September 30, 1997, the Company had the following credit facilities (dollars
in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, 1997 Nine Months Ended September 30, 1997
-------------------------------------- -------------------------------------
Weighted Average Weighted Average
Amount of Amount Weighted Average Amount Weighted Average
Credit Facility Facility Outstanding Interest Rate Outstanding Interest Rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Revolving credit-3 Yr. $ 200,000 $ 42,670 6.1% $14,223 6.1%
Line of credit 50,000 -- -- -- --
Uncommitted line 15,000 2,457 6.2% 819 6.2%
Revolving credit** N/A 23,284 6.1% 80,335 6.1%
-------------------------------------------------------------------------------------------------------
$ 265,000 $ 68,411 6.1% $ 95,377 6.1%
======================================================================================================
</TABLE>
** Represents the Company's unsecured revolving credit facilities with
four commercial banks which were terminated on August 4, 1997 upon the
execution of the $200 million three year unsecured revolving credit
facility.
The Company's liquidity and capital resources are believed to be more than
adequate to meet its cash requirements for the next several years. The Company
expects to meet its short- and long-term capital requirements, such as balloon
debt maturities, property acquisitions, development activity and significant
capital improvements, primarily through the public and private sale of capital
stock and the issuance of medium and long-term unsecured notes payable. The
Company may also fund its capital requirements through (i) the assumption of
mortgage indebtedness, (ii) sales of properties, (iii) common shares sold
through the Company's Dividend Reinvestment and Stock Purchase Plan, (iv)
retained operating cash flow and (v) the issuance of operating partnership
units. The Company's senior debt is currently rated BBB+ by Standard & Poor's
and Baa1 by Moody's. As a result of its investment grade debt ratings, the
Company expects to use unsecured debt as its primary debt funding source.
Depending upon the volume and timing of acquisition activity, the Company
anticipates raising additional debt and equity capital during the next twelve
months to finance capital requirements while striving to minimize the overall
cost of capital. During the second quarter of 1997, the Company filed a shelf
registration statement for approximately $675 million of debt and preferred and
common equity securities.
Funds from Operations
Funds from operations ("FFO") is defined as income before gains (losses) on
sales of investments, minority interest of unitholders in operating partnership
and extraordinary items (computed in accordance with generally accepted
accounting principles) plus real estate depreciation, less preferred dividends
and after adjustment for significant non-recurring items, if any. The Company
computes FFO in accordance with the recommendations set forth by the National
Association of Real Estate Investment Trusts ("NAREIT"). The Company considers
FFO in evaluating property acquisitions and its operating performance, and
believes that FFO should be considered along with, but not as an alternative to,
net income and cash flows as a measure of the Company's operating performance
and liquidity.
15
<PAGE>
FFO 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.
For the three months ended September 30, 1997, FFO increased 60.3% to $29.5
million, compared with $18.4 million for the same period last year. For the nine
months ended September 30, 1997, FFO increased 67.6% to $87.3 million, compared
with $52.1 million for the same period last year. The increase in FFO was
principally due to the increased net rental income from the Company's 29,220
non-mature apartment homes in 92 apartment communities acquired and developed
subsequent to January 1, 1996.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) (In thousands)
------------------------------------ ---------------------------------
1997 1996 % Change 1997 1996 % Change
------------------------------------ ---------------------------------
<S> <C>
Calculation of funds from operations:
Income before gains on sales of
investments and minority interest of
unitholders in operating partnership $ 14,053 $ 8,504 65.3% $ 42,529 $ 25,394 67.5%
Adjustments:
Real estate depreciation 19,740 12,346 59.9% 55,029 33,711 63.2%
Dividends to preferred shareholders (5,653) (2,428) 132.8% (11,692) (7,284) 60.5%
Impairment loss on real estate
owned 1,400 -- -- 1,400 290 --
---------------------------------------- ---------------------------------
Funds from operations $ 29,540 $ 18,422 60.3% $ 87,266 $ 52,111 67.6%
======================================== =====================================
Weighted average number of common
and common equivalent shares
outstanding 88,014 57,930 51.9% 86,747 57,026 52.1%
</TABLE>
Results of Operations
The Company's net income is primarily generated from the operations of its
apartment communities. For purposes of evaluating the Company's comparative
operating performance, the Company categorizes its apartment communities into
two categories (i) mature--those communities acquired, developed and stabilized
prior to January 1, 1996 and held throughout both 1997 and 1996 and (ii)
non-mature--those communities acquired, developed or sold subsequent January 1,
1996.
For the three and nine months ended September 30, 1997, the Company reported
increases over the same period last year in rental income, income before gains
on sales of investments and minority interest of unitholders in operating
partnership and net income. For the nine months ended September 30, 1997, net
income available to common shareholders increased $23.1 million, with a
corresponding increase of $.14 per share compared to the same period last year.
For the three months ended September 30, 1997, net income available to common
shareholders increased $10.3 million, with a corresponding increase of $.07 per
share compared to the same period last year . The large per share increases over
last year are primarily attributable to gains recognized on the sales of
investments. Net income available to common shareholders for the three and nine
months ended September 30, 1997 includes aggregate gains on the sales of
investments of $9.3 million ($.11 per share) and $12.7 million ($.15 per share),
respectively. In addition, since the beginning of 1996, the Company acquired and
developed a total of 29,220 apartment homes in 92 apartment communities
(including 14,320 completed apartment homes in 44 apartment communities acquired
in the South West Merger) and sold 14 apartment communities containing 2,758
apartment homes, representing a net 76% expansion in the number of apartment
homes owned during that period. These non-mature apartment homes provided a
substantial portion of the aggregate reported increases. However, these
increases were moderated in part due to the Company's financing activities
during 1997. During the first nine months of 1997, the Company financed its
acquisition and development programs primarily with common and preferred equity
and the proceeds from property sales rather than debt which was used to finance
much of the 1996 acquisition and development programs.
16
<PAGE>
All Apartment Communities
The operating performance for the Company's 220 apartment communities containing
61,099 completed apartment homes (and 2,758 apartment homes in 14 apartment
communities sold since January 1, 1996) for the three and nine months ended
September 30, 1997 and 166 apartment communities containing 41,204 apartment
homes for the three and nine months ended September 30, 1996, respectively, is
summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) (In thousands)
----------------------------------- ---------------------------------
1997 1996 % Change 1997 1996 % Change
----------------------------------- ---------------------------------
<S> <C>
Rental income $ 98,313 $ 62,002 58.6% $ 282,176 $ 170,700 65.3%
Rental expenses (42,494) (26,993) 57.4% (120,629) (74,534) 61.8%
Real estate depreciation (19,740) (12,346) 59.9% (55,029) (33,616) 63.7%
----------------------------------- ---------------------------------
Net rental income (1) $ 36,079 $ 22,663 59.2% $ 106,518 $ 62,550 70.3%
=================================== =================================
Weighted average number
of apartment homes 60,204 38,697 55.6% 57,803 36,193 59.7%
Economic occupancy (2) 92.2% 93.4% (1.2%) 91.6% 93.2% (1.6%)
Average monthly rents $ 574 $ 554 3.6% $ 570 $ 549 3.8%
</TABLE>
(1) Net rental income for an apartment community is defined as total rental
income, less rental expenses, less real estate depreciation.
(2) Economic occupancy is defined as rental income (gross potential rent
less vacancy loss, management units, units held out of service, move-in
concessions and credit loss) divided by potential collections (gross
potential rent less management units, units held out of service and
move-in concessions) for the period, expressed as a percentage.
Due to the acquisition and development of 29,220 apartment homes since January
1, 1996 (the Company also sold 14 apartment communities containing 2,758
apartment homes during this same period), the weighted average number of
apartment homes increased 59.7% to 57,803 for the nine months ended September
30, 1997 and 55.6% to 60,204 for the three months ended September 30, 1997. As a
result of the increase in the number of apartment homes acquired since January
1, 1996, the Company has experienced significant increases in rental income,
rental expenses and real estate depreciation for the three and nine months ended
September 30, 1997.
Mature Apartment Communities
The operating performance for the Company's 128 mature apartment communities
containing 31,879 apartment homes for the three and nine months ended September
30, 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) (In thousands)
1997 1996 % Change 1997 1996 % Change
-------------------------------------------- -----------------------------------
Rental income $ 52,910 $ 51,097 3.5% $155,929 $ 150,573 3.6%
Rental expenses (22,642) (22,545) 0.4% (67,227) (65,860) 2.1%
Real estate depreciation (11,047) (10,639) 3.8% (31,760) (31,016) 2.4%
------------------------------------------ ----------------------------------
Net rental income $ 19,221 $ 17,913 7.3% $ 56,942 $ 53,697 6.0%
=========================================== ===================================
Economic occupancy 93.1% 93.3% (0.3%) 92.4% 93.2% (0.8%)
Average monthly rents $ 574 $ 554 3.7% $ 569 $ 547 3.9%
</TABLE>
For the nine months ended September 30, 1997, the Company's mature communities
provided approximately 55% of the Company's apartment rental income and 53% of
its net rental income. During the first nine months of 1997, the Company's
mature apartment communities continued to generate good rent growth and double
digit growth of other income. Compared to the same period last year, total
rental income from these apartment homes grew 3.6%, or approximately $5.4
million, reflecting an increase in average monthly rents of 3.9% to $569 per
month. In addition, other income, primarily fee income, increased approximately
$1.1 million or 20.3%. The rental rate increase was offset by a 0.8% decline in
economic occupancy to 92.4%, which resulted primarily from a decrease in
physical occupancy of 0.7%. The economic occupancy declined due to the weakening
of certain major southeastern markets
17
<PAGE>
during the last half of 1996 including Columbia and Greenville, South Carolina,
Washington DC, Jacksonville, Florida, Richmond and Hampton Roads, Virginia and
Atlanta, Georgia. The Company attributes the market softness primarily to
increased home buying, a slowdown in job growth and an oversupply of apartment
homes in certain of the southeastern markets. Overall, economic occupancy
bottomed out in January 1997 at 90.7% and has grown steadily during the
remainder of the year to 93.0% for September 1997, an improvement of 2.3% during
the year. The increase in occupancy has been accomplished without sacrificing
rent growth which was enhanced by the Company's upgrade program. For the quarter
ended September 30, 1997, total rental income from these apartment homes grew
3.5%, or approximately $1.8 million, reflecting an increase in average monthly
rents of approximately $2.0 million or 3.7% to $574. Other income increased
approximately $304,000 or 15.3%, over the same period last year while economic
occupancy declined 0.3% to 93.1%. The Company expects to maintain rent growth in
the 3.5% to 4% range and economic occupancy in the 93% range during the
remainder of 1997.
For the nine months ended September 30, 1997, rental expenses at these
communities increased 2.1%, or $1.4 million, resulting in an improvement in the
operating margin of 0.6% to 56.9%. The 2.1% increase in operating expenses is
attributable to higher personnel costs, marketing and advertising costs and the
Company's cost of self-management. Personnel costs increased 8.0% or
approximately $1.1 million primarily due to the fact that the Company was
understaffed at some of its properties during much of 1996. Marketing and
advertising costs increased 43.4% or approximately $794,000 over the same period
last year as a direct result of softening in certain major markets as discussed
above. The cost of self-management increased 37.8% or approximately $1.4 million
as the Company invested heavily in its personnel and technological
infrastructure during 1997 in response to the significant growth the Company has
experienced during the past year. These additions allow the Company to compete
more effectively in the real estate industry. However, these rental expense
increases were offset by decreases in repairs and maintenance expense and
utility expense. Repairs and maintenance expense decreased 11.5% or
approximately $1.4 million primarily as a result of less exterior painting,
extraordinary repairs and mechanical repairs. In addition, the Company has taken
advantage of economies of scale due to its increased size and centralized
purchasing during the 1997 period. Utility expense decreased primarily as a
result of submetering water and sewer to residents where local and state
regulations allow the cost to be passed to the resident. For the quarter ended
September 30, 1997, rental expenses increased only $47,000 or 0.2% over the same
period last year for the same reasons discussed above. The Company's objective
is to maintain rental expense growth below the 2% range during the remainder of
1997.
For the three and nine months ended September 30, 1997, depreciation expense
increased partly as a result of the upgrade and improvement process in place at
the Company's mature apartment communities discussed under "Capital
Expenditures" in Liquidity and Capital Resources.
Non-Mature Communities
The operating performance for the three and nine months ended September 30, 1997
for the Company's 92 non-mature apartment communities which include: (i) 7,590
apartment homes acquired during 1996, net of one resold, and a 253 home
community acquired in 1995 and not stabilized due to significant rehabilitation,
(ii) 13,671 apartment homes acquired on December 31, 1996 in connection with the
South West Merger, net of one resold, (iii) 6,802 apartment homes acquired since
January 1, 1997, (iv) 2,758 apartment homes sold since January 1, 1996 and (v)
the 739 apartment homes developed since January 1, 1996 is summarized as follows
(dollars in thousands):
Three Months Ended September 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 Acquisitions and
Former 1997 and 1996
1996 Acquisitions South West Development & Sales Total Non-Mature
----------------------- ------------ ------------------- --------------------
1997 1996 1997 1996 1997 1996 1997 1996
----------------------- ------------ ------------------- --------------------
<S> <C>
Rental income $ 12,839 $ 7,941 $ 21,934 $ -- $ 10,630 $ 2,964 $ 45,403 $ 10,905
Rental expenses (5,392) (2,944) (9,726) -- (4,734) (1,504) (19,852) (4,448)
Real estate depreciation (3,415) (1,584) (3,518) -- (1,760) (123) (8,693) (1,707)
------------------------- ------------- -------------------- --------------------
Net rental income $ 4,032 $ 3,413 $ 8,690 $ -- $ 4,136 $ 1,337 $ 16,858 $ 4,750
========================= ============== ==================== ====================
</TABLE>
18
<PAGE>
Nine Months Ended September 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 Acquisitions
Former 1997 and 1996
1996 Acquisitions South West Development & Sales Total Non-Mature
----------------------- ------------ ------------------- -----------------
1997 1996 1997 1996 1997 1996 1997 1996
----------------------- ------------ ------------------- -----------------
<S> <C>
Rental income $ 37,906 $ 11,219 $ 64,828 $-- $ 23,513 $ 8,907 $ 126,247 $ 20,126
Rental expenses (15,479) (4,211) (27,699) -- (10,224) (4,461) (53,402) (8,672)
Real estate depreciation (8,947) (2,257) (10,960) -- (3,362) (344) (23,269) (2,601)
------------------------ -------------- -------------------- ------------------
Net rental income $ 13,480 $ 4,751 $ 26,169 $-- $ 9,927 $ 4,102 $ 49,576 $ 8,853
========================= ============= ==================== ==================
</TABLE>
For the nine months ended September 30, 1997, the Company's non-mature apartment
communities provided approximately 45% of the Company's apartment rental income
and 47% of its net rental income. Rental income, rental expenses and real estate
depreciation increased from 1996 to 1997 directly as a result of the increase in
the weighted average number of apartment homes owned during 1997. For the nine
months ended September 30, 1997, average economic occupancy was 90.7% and the
operating margin was 57.7% for the non-mature apartment communities. For the
quarter ended September 30, 1997, average economic occupancy was 91.2% and the
operating margin was 56.3%.
1996 Acquisitions (excluding the South West Merger)
The 29 apartment communities containing 7,590 apartment homes that were acquired
during 1996, net of one apartment community containing 122 apartment homes
resold and a 253 home community acquired in 1995 and not stabilized due to
significant rehabilitation provided a significant increase in rental income,
rental expenses and depreciation expense for the Company's apartment portfolio
for the three and nine months ended September 30, 1997. For the first nine
months of 1997, these apartment communities had economic occupancy of 89.3% and
an operating margin of 59.2%. For the quarter ended September 30, 1997, these
apartment communities had economic occupancy of 90.3% and an operating margin of
58.0%. The first year return on investment for these communities was projected
at 9.5%, however, the actual return on investment for the nine months ended
September 30, 1997, on an average investment of approximately $324 million, was
approximately 9.0% (excluding one community under renovation). This was
primarily due to the under-performance of nine apartment communities that were
acquired in August 1996 as part of a portfolio transaction which had a
concentration of communities in the Greensboro/Winston-Salem, North Carolina
market. Occupancy levels in this region peaked in August 1996 when the Company
acquired these properties and has subsequently fallen during the first nine
months of 1997 reflecting an oversupply of apartment product in this market. The
Company believes this market is a good long-term market.
South West Property Trust Inc. (SWP)
The acquisition of the 43 apartment communities containing 13,791 apartment
homes included in the SWP Merger on December 31, 1996, net of one apartment
community containing 544 apartment homes resold, provided the largest increases
in rental income, rental expenses and depreciation expense for the Company's
entire apartment portfolio for the three and nine months ended September 30,
1997. The first year return on investment for the SWP Portfolio was projected to
be 9.5% which approximates the 9.4% return on investment posted during the first
nine months of 1997. For the nine months ended September 30, 1997, these
apartment communities had economic occupancy of 92.5% and an operating margin of
57.3%. For the quarter ended September 30, 1997, these apartment communities had
economic occupancy of 93.3% and an operating margin of 55.7%.
1997 Acquisitions, Development and Sales
Included in this category are the following: (i) the 22 apartment communities
containing 6,802 apartment homes and the second phase of an existing apartment
community containing 100 apartment homes acquired by the Company during the
first nine months of 1997 which are projected to have a first year return on
investment of approximately 9.6%, (ii) the 739 apartment homes developed since
January 1, 1996 and (iii) the 14 apartment communities containing 2,758
apartment homes sold since January 1, 1996. Excluding the third quarter
acquisitions, the third quarter return on investment for the 1997 acquisitions
on an average investment of $220.8 million was 9.1%. These communities provided
approximately 8.3% and 9.3% of the Company's rental income and net rental
income, respectively, for the nine months ended September 30, 1997. For the
quarter ended September 30, 1997, these properties provided 10.8% and 11.5% of
the Company's rental income and net rental income, respectively.
19
<PAGE>
Commercial Properties
Rental income and rental expenses from commercial properties decreased $365,000
and $124,000, respectively during the three months ended September 30, 1997,
compared to the same period last year. For the nine month period, rental income,
rental expenses and depreciation expense decreased $1.8 million, $647,000 and
$94,000 compared to the same period last year. These decreases were directly
attributable to the sale of five shopping centers and one industrial park since
the beginning of 1996.
Interest Expense
Interest expense increased $5.8 million and $22.9 million for the three and nine
months ended September 30, 1997 over the same periods last year. The weighted
average amount of debt employed during the first nine months of 1997 was higher
than it was in 1996 ($1.1 billion in 1997 versus $619.1 million in 1996). The
weighted average interest rate on this debt was slightly lower than it was
during the same period last year, decreasing from 7.6% in 1996 to 7.5% in 1997.
For the quarter ended September 30, 1997, the weighted average debt outstanding
was higher than the same period last year ($1.1 billion in 1997 versus $763.9
million in 1996). The weighted average interest rate on this debt was slightly
lower than it was during the same period last year, decreasing from 7.6% in 1996
to 7.4% in 1997. For the three and nine months ended September 30, 1997, total
interest capitalized was $851,000 and $2.1 million, respectively.
General and Administrative
During the three and nine months ended September 30, 1997, general and
administrative expenses increased by $359,000 and $1.1 million over the same
periods last year. In 1997, the Company incurred increases in most of its
general and administrative expense categories which are directly attributable to
the increased size of the Company. The largest increases occurred in payroll and
payroll related expenses and investor relations expense. General and
administrative expense as a percentage of rental revenues decreased .4% from
2.0% during the third quarter of 1996 period to 1.6% during the third quarter of
1997 primarily due to economies of scale. During the third quarter of 1997,
general and administrative expenses grew approximately 28% while rental income
grew by approximately 57% over the same period last year. For the nine month
period ended September 30, 1997, general and administrative expense as a
percentage of rental revenues decreased .5% from 2.4% to 1.9%. During this same
period, general and administrative expenses grew by approximately 26% while
rental income grew by 63%.
Gains on Sales of Investments
During the nine months ended September 30, 1997, the Company recognized gains on
the sales of investments aggregating $12.7 million as a result of the following
transactions: (i) the first quarter sale of the Company's investment in the
preferred stock of First Washington Realty Trust, Inc. obtained as partial
consideration in the 1995 sale of four commercial properties on which the
Company recognized a gain for financial reporting purposes of $2.1 million and
(ii) the second and third quarter sales of ten apartment communities containing
2,106 apartment homes and one shopping center for an aggregate sales price of
$57.5 million on which the Company recognized aggregate gains for financial
reporting purposes of $10.6 million.
Dividends to Preferred Shareholders
Dividends to preferred shareholders totaled $5.7 million and $11.7 million for
the three and nine month periods ended September 30, 1997 compared to $2.4
million and $7.3 million for the same periods last year. The increase in
dividends to preferred shareholders is a result of the issuance of six million
shares of Series B 8.60% Cumulative Redeemable Preferred Stock on May 29, 1997.
Inflation
The Company believes that the direct effects of inflation on the Company's
operations have been inconsequential.
20
<PAGE>
PART II
Item 1. LEGAL PROCEEDINGS
Neither the Company nor any of its apartment communities is presently
subject to any material litigation nor, to the Company=s knowledge, is any
litigation threatened against the Company or any of the communities, other than
routine actions arising in the ordinary course of business, some of which are
expected to be covered by liability insurance and all of which collectively are
not expected to have a material adverse effect on the business or financial
condition or results of operations of the Company.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULT UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed on the accompanying index to exhibits are filed as
part of this quarterly report.
(b) A Form 8-K dated July 1, 1997 was filed with the Securities and
Exchange Commission on July 15, 1997. The filing reported the
acquisition by the Company of properties which were in the
aggregate were "significant". The Form 8-K was subsequently
amended by Form 8-K/A No. 1 which was filed with the Securities
and Exchange Commission on September 15, 1997. This Form 8-K/A
included the statements of rental operations of twelve properties
which included Lakeside Apartments, Mallards of Brandywine
Apartments, Orange Oaks Apartments, Forest Creek Apartments, Lotus
Landing Apartments, Stoneybrooke Apartments, Trinity Place
Apartments, Tradewinds Apartments, Anderson Mill Oaks Apartments,
Post Oak Ridge Apartments, Pineloch Apartments and Seahawk Apartments.
A Form 8-K dated October 21, 1997, was filed with the Securities and
Exchange Commission on November 5, 1997. The filing reported the
acquisition by the Company of properties, of which, the aggregate
number of properties acquired exceeded the majority of properties which
were audited.
21
<PAGE>
EXHIBIT INDEX
Item 6 (a)
The exhibits listed below are filed as part of this quarter ly report.
References under the caption "Location" to exhibits, forms, or other filings
indicate that the form or other filing has been filed, that the inde xed exhibit
and the exhibit referred to are the same and that the exhibit referr ed to is
incorporated by reference.
<TABLE>
<CAPTION>
<S> <C>
Exhibit Description Location
- ---------- --------------------------------- -------------------------------
2(b) Definitive Agreement and Plan of Exhibit 2(b) to the Company's Form S-4 Registration
Merger dated as of October 1, 1996, Statement (Registration No. 333-13745) filed with
the between the Company, United Sub, Commission on October 9, 1996.
Inc. and South West Property Trust Inc.
3(a) Restated Articles of Incorporation Filed herewith.
3(b) Restated By-Laws Exhibit 3(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended
March 31, 1997.
4(i)(a) Specimen Common Stock Exhibit 4(i) to the Company's Annual Report
Certificate on Form 10-K for the year ended
December 31, 1993.
4(i)(b) Form of Certificate for Shares Exhibit 1(e) to the Company's Form 8-A
of 9 1/4% Series A Cumulative Registration Statement dated April 24, 1995.
Redeemable Preferred Stock
4(i)(c) Form of Certificate for Shares Exhibit 1(e) to the Company's Form 8-A
of 8.60% Series B Cumulative Registration Statement dated June 11, 1997.
Redeemable Preferred Stock
4(ii)(a) Loan Agreement dated as of Exhibit 6(c)(i) to the Company's Form 8-A
November 7, 1991, between the Registration Statement dated April 19, 1990.
Company and Aid Association for
Lutherans
4(ii)(e) Note Purchase Agreement dated Exhibit 6(c)(5) to the Company's Form 8-A
as of February 15, 1993, between Registration Statement dated April 19, 1990.
the Company and CIGNA Property
and Casualty Insurance Company,
Connecticut General Life Insurance
Company, Connecticut General Life
22
<PAGE>
Insurance Company, on behalf of
one or more separate accounts,
Insurance Company of North
America, Principal Mutual Life
Insurance Company and Aid
Association for Lutherans
4(ii)(f) Credit Agreement dated as of Exhibit 6 (c)(6) to the Company's
December 15, 1994 between the Form 8-A Registration Statement
Company and First Union National Bank dated April 19, 1990.
of Virginia
4(ii)(g) Three Year Credit Agreement dated Filed herewith.
As of August 4, 1997, between the
Company, United Dominion Realty, L.P.,
And other subsidiaries and affiliates
Of the Company, the Lenders named
Therein and NationsBank, N.A., as
Administrative Agent
4(ii)(h) 364 day Credit Agreement dated Filed herewith.
as of August 4, 1997, between the
Company, United Dominion Realty, L.P.,
And other subsidiaries and affiliates
Of the Company, the Lenders named
Therein and NationsBank, N.A., as
Administrative Agent
10(i) Employment Agreement between Exhibit 10(v)(i) to the Company's Annual
Report on the Company and John P. McCann Form 10-K for the year ended December 31, 1982.
dated October 29, 1982
10(ii) Employment Agreement between Exhibit 10(v)(ii) to the Company's Annual
Report on the Company and James Dolphin Form 10-K for the year ended December 31, 1982.
dated October 29, 1982.
10(iii) Employment Agreement between Exhibit 10(iii) to the Company's Annual
The Company and Barry M. Kornblau Report on Form 10-K for the year ended
dated February 1, 1991. December 31, 1990.
10(iv) Employment Agreement between Exhibit 10(iv) to the Company's Annual.
the Company and John S. Schneider Report on Form 10-K for the year ended
dated December 14, 1996. December 31, 1996.
10(v) Employment Agreement between Exhibit 10(v) to the Company's Annual.
the Company and Robert F. Sherman Report on Form 10-K for the year ended
dated December 19, 1996. December 31, 1996.
23
<PAGE>
10(vi) Employment Agreement between Exhibit 10(vi) to the Company's Annual
the Company and David L. Johnston Report on Form 10-K for the year ended
dated December 19, 1996. December 31, 1996.
10(vii) 1985 Stock Option Plan, Exhibit 10(vii) to the Company's Quarterly
as amended. Report on Form 10-Q for the quarter ended
March 31, 1997.
10(viii) 1991 Stock Purchase and Loan Plan, Exhibit 10(vii) to the Company's Quarterly
as amended. Report on Form 10-Q for the quarter ended
March 31, 1997.
10(ix) Amended and Restated Agreement Filed herewith.
of Limited Partnership of
United Dominion Realty, L.P.
Dated as of August 30, 1997.
12 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges
27 Financial Data Schedule Filed electronically with the Securities and
Exchange Commission.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Quarterly Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
United Dominion Realty Trust, Inc.
(registrant)
Date: November 14, 1997 /s/ James Dolphin
- ----------------------- -----------------
James Dolphin
Executive Vice President and Chief
Financial Officer
Date: November 14, 1997 /s/ Jerry A. Davis
- ----------------------- ------------------
Jerry A. Davis
Vice-President , Corporate Controller and
Principal Accounting Officer
25
</TABLE>
Exhibit 3(a)
RESTATED ARTICLES OF INCORPORATION
OF
UNITED DOMINION REALTY TRUST, INC.
1. The name of the corporation is UNITED DOMINION REALTY TRUST, INC.
2. The purpose for which the corporation is organized is to qualify as a "real
estate investment trust," as defined in section 856(a) and related sections of
the Internal Revenue Code of 1954, as amended (together with the Treasury
Regulations promulgated pursuant thereto, the "Code"). Except as its business
may be limited by the purpose set forth above, the corporation may transact any
and all lawful business not required to be specifically stated in these Articles
for which corporations may be incorporated under the Virginia Stock Corporation
Act (the "Act").
3. The corporation shall have authority to issue 150,000,000 shares of common
stock having a par value of $1.00 per share and 25,000,000 shares of preferred
stock without par value. The Board of Directors of the corporation, by adoption
of an amendment of these Articles of Incorporation, may fix in whole or in part
the preferences, limitations and relative rights, within the limits set forth in
the Act, of any series within the preferred stock before the issuance of any
shares of that series. Stockholders shall not have preemptive rights to acquire
unissued shares of the corporation.
(a) 9 1/4% Series A Cumulative Redeemable Preferred Stock.
(1) Designation and Number. A series of the preferred stock,
designated the "9 1/4% Series A Cumulative Redeemable Preferred Stock"
(the "Series A Preferred"), is hereby established. The number of shares
of the Series A Preferred shall be 4,600,000.
(2) Relative Seniority. In respect of rights to receive
dividends and to participate in distributions or payments in the event
of any liquidation, dissolution or winding up of the corporation, the
Series A Preferred shall rank senior to the common stock and any other
capital stock of the corporation ranking, as to dividends and upon
liquidation, junior to the Series A Preferred (collectively, "Junior
Stock").
(3) Dividends. The holders of the then outstanding Series A
Preferred shall be entitled to receive, when and as declared by the
Board of Directors out of any funds legally available therefor,
cumulative preferential cash dividends at the rate of 9 1/4% of the
liquidation preference of the Series A Preferred (equivalent to $2.3125
per share) per annum, payable quarterly in arrears in cash on the
fifteenth day, or the next succeeding business day, of January, April,
July and October in each year, beginning July 15, 1995 (each such day
being hereinafter called a "Dividend Payment Date" and each period
<PAGE>
beginning on the day next following a Dividend Payment Date and ending
on the next following Dividend Payment Date being hereinafter called a
"Dividend Period"), to shareholders of record at the close of business
on the first day of the calendar month in which the applicable Dividend
Payment Date falls on or such date as shall be fixed by the Board of
Directors at the time of declaration of the dividend (the "Dividend
Record Date"), which shall be not less than 10 nor more than 30 days
preceding the Dividend Payment Date. The amount of any dividend payable
for the initial Dividend Period and for any other partial Dividend
Period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. Dividends on the shares of Series A Preferred
shall accrue and be cumulative from and including the date of original
issue thereof, whether or not (i) the corporation has earnings, (ii)
dividends on such shares are declared or (iii) on any Dividend Payment
Date there shall be funds legally available for the payment of such
dividends. When dividends are not paid in full upon the shares of
Series A Preferred and the shares of any other series of preferred
stock ranking on a parity as to dividends with the Series A Preferred
(or a sum sufficient for such full payment is not set apart therefor),
all dividends declared upon shares of Series A Preferred and any other
series of preferred stock ranking on a parity as to dividends with the
Series A Preferred shall be declared pro rata so that the amount of
dividends declared per share on the Series A Preferred and such other
series of preferred stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the shares of Series A
Preferred and such other series of preferred stock bear to each other.
Except as provided in the immediately preceding paragraph,
unless full cumulative dividends on the Series A Preferred have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment on the Series
A Preferred for all past dividend periods and the then current dividend
period, (i) no dividends shall be declared or paid or set apart for
payment on the preferred stock of the corporation ranking, as to
dividends, on a parity with or junior to the Series A Preferred for any
period, and (ii) no dividends (other than in Junior Stock) shall be
declared or paid or set aside for payment or other distribution or
shall be declared or made upon the Junior Stock or any other capital
stock of the corporation ranking on a parity with the Series A
Preferred as to dividends or upon liquidation ("Parity Stock"), nor
shall any Junior Stock or any Parity Stock be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any shares of
Junior Stock or Parity Stock) by the corporation (except by conversion
into or exchange for Junior Stock).
Any dividend payment made on shares of the Series A Preferred
shall first be credited against the earliest accrued but unpaid
dividend due with respect to such shares which remains payable.
<PAGE>
No dividends on shares of Series A Preferred shall be declared
by the Board of Directors of the corporation or paid or set apart for
payment by the corporation at such time as the terms and provisions of
any agreement of the corporation, including any agreement relating to
its indebtedness, prohibits such declaration, payment or setting apart
for payment or provides that such declaration, payment or setting apart
for payment would constitute a breach thereof or a default thereunder,
or if such declaration or payment shall be restricted or prohibited by
law.
The amount of any dividends accrued on any shares of Series A
Preferred at any Dividend Payment Date shall be the amount of any
unpaid dividends accumulated thereon, to and including such Dividend
Payment Date, whether or not earned or declared, and the amount of
dividends accrued on any shares of Series A Preferred at any date other
than a Dividend Payment Date shall be equal to the sum of the amount of
any unpaid dividends accumulated thereon, to and including the last
preceding Dividend Payment Date, whether or not earned or declared,
plus an amount calculated on the basis of the annual dividend rate for
the period after such last preceding Dividend Payment Date to and
including the date as of which the calculation is made, based on a
360-day year of twelve 30-day months.
Accrued but unpaid dividends on the Series A Preferred will
not bear interest. Holders of the Series A Preferred will not be
entitled to any dividends in excess of full cumulative dividends as
described above.
Except as provided in these Articles, the Series A Preferred
shall not be entitled to participate in the earnings or assets of the
corporation.
(4) Liquidation Rights.
(A) Upon the voluntary or involuntary dissolution, liquidation
or winding up of the corporation, the holders of shares of the Series A
Preferred then outstanding shall be entitled to receive and to be paid
out of the assets of the corporation legally available for distribution
to its shareholders, before any distribution shall be made to the
holders of common stock or any other capital stock of the corporation
ranking junior to the Series A Preferred upon liquidation, a
liquidation preference of $25.00 per share, plus accrued and unpaid
dividends thereon to the date of payment.
(B) After the payment to the holders of the shares of the
Series A Preferred of the full liquidation preference provided for in
this paragraph (4), the holders of the Series A Preferred as such shall
have no right or claim to any of the remaining assets of the
corporation.
<PAGE>
(C) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the corporation, the amounts payable with
respect to the liquidation preference of the shares of the Series A
Preferred and any other shares of stock of the corporation ranking as
to any such distribution on a parity with the shares of the Series A
Preferred are not paid in full, the holders of the shares of the Series
A Preferred and of such other shares will share ratably in any such
distribution of assets of the corporation in proportion to the full
respective liquidation preferences to which they are entitled.
(D) Neither the sale, lease, transfer or conveyance of all or
substantially all the property or business of the corporation, nor the
merger or consolidation of the corporation into or with any other
corporation or the merger or consolidation of any other corporation
into or with the corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this paragraph (4).
(5) Redemption.
(A) Right of Optional Redemption. The Series A Preferred is
not redeemable prior to April 24, 2000. On and after April 24, 2000,
the corporation may, at its option, redeem at any time all or, from
time to time, part of the Series A Preferred at a price per share (the
"Series A Redemption Price"), payable in cash, of $25.00, together with
all accrued and unpaid dividends to and including the date fixed for
redemption (the "Series A Redemption Date"), without interest. In case
of redemption of less than all shares of Series A Preferred at the time
outstanding, the shares of Series A Preferred to be redeemed shall be
selected pro rata from the holders of record of such shares in
proportion to the number of shares of Series A Preferred held by such
holders (as nearly as may be practicable without creating fractional
shares) or by any other equitable method determined by the corporation.
(B) Procedures for Redemption.
(i) Notice of any redemption will be (a) given by publication
in a newspaper of general circulation in the City of New York, New
York, such publication to be made once a week for two successive weeks
commencing not less than 30 nor more than 60 days prior to the Series A
Redemption Date, and (b) mailed by the corporation, postage prepaid,
not less than 30 nor more than 60 days prior to the Series A Redemption
Date, addressed to the respective holders of record of the Series A
Preferred to be redeemed at their respective addresses as they appear
on the stock transfer records of the corporation. No failure to give
<PAGE>
such notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of any Series
A Preferred except as to the holder to whom the corporation has failed
to give notice or except as to the holder to whom notice was defective.
In addition to any information required by law or by the applicable
rules of any exchange upon which Series A Preferred may be listed or
admitted to trading, such notice shall state: (a) the Series A
Redemption Date; (b) the Series A Redemption Price; (c) the number of
shares of Series A Preferred to be redeemed; (d) the place or places
where certificates for such shares are to be surrendered for payment of
the Series A Redemption Price; and (e) that dividends on the shares to
be redeemed will cease to accumulate on the Series A Redemption Date.
If less than all the shares of Series A Preferred held by any holder
are to be redeemed, the notice mailed to such holder shall also specify
the number of shares of Series A Preferred held by such holder to be
redeemed.
(ii) If notice of redemption of any shares of Series A
Preferred has been published and mailed in accordance with subparagraph
(5)(B)(i) above and provided that on or before the Series A Redemption
Date specified in such notice all funds necessary for such redemption
shall have been irrevocably set aside by the corporation, separate and
apart from its other funds in trust for the benefit of any holders of
the shares of Series A Preferred so called for redemption, so as to be,
and to continue to be available therefor, then, from and after the
Series A Redemption Date, dividends on such shares of Series A
Preferred shall cease to accrue, and such shares shall no longer be
deemed to be outstanding and shall not have the status of Series A
Preferred and all rights of the holders thereof as shareholders of the
corporation (except the right to receive the Series A Redemption Price)
shall terminate. Upon surrender, in accordance with said notice, of the
certificates for any shares of Series A Preferred so redeemed (properly
endorsed or assigned for transfer, if the corporation shall so require
and the notice shall so state), such shares of Series A Preferred shall
be redeemed by the corporation at the Series A Redemption Price. In
case less than all the shares of Series A Preferred represented by any
such certificate are redeemed, a new certificate or certificates shall
be issued representing the unredeemed shares of Series A Preferred
without cost to the holder thereof.
(iii) The deposit of funds with a bank or trust company for
the purpose of redeeming Series A Preferred shall be irrevocable except
that:
(a) the corporation shall be entitled to receive from
such bank or trust company the interest or other earnings, if
any, earned on any money so deposited in trust, and the
holders of any shares redeemed shall have no claim to such
interest or other earnings; and
<PAGE>
(b) any balance of monies so deposited by the
corporation and unclaimed by the holders of the Series A
Preferred entitled thereto at the expiration of two years from
the applicable Series A Redemption Date shall be repaid,
together with any interest or other earnings earned thereon,
to the corporation, and after any such repayment, the holders
of the shares entitled to the funds so repaid to the
corporation shall look only to the corporation for payment
without interest or other earnings.
(C) Limitations on Redemption
(i) The Series A Redemption Price (other than the portion
thereof consisting of accrued and unpaid dividends) shall be payable
solely out of the sale proceeds of other capital stock of the
corporation and from no other source.
(ii) Unless full cumulative dividends on all shares of Series
A Preferred shall have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
payment for all past Dividend Periods and the then current Dividend
Period, no Series A Preferred shall be redeemed (unless all outstanding
shares of Series A Preferred are simultaneously redeemed) or purchased
or otherwise acquired directly or indirectly (except by exchange for
Junior Stock); provided, however, that the foregoing shall not prevent
the redemption of Series A Preferred pursuant to Article 4 or the
purchase or acquisition of Series A Preferred pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding
shares of Series A Preferred.
(D) Rights to Dividends on Shares Called for Redemption. If
the Series A Redemption Date is after a Dividend Record Date and before
the related Dividend Payment Date, the dividend payable on such
Dividend Payment Date shall be paid to the holder in whose name the
shares of Series A Preferred to be redeemed are registered at the close
of business on such Dividend Record Date notwithstanding the redemption
thereof between such Dividend Record Date and the related Dividend
Payment Date or the corporation's default in the payment of the
dividend due. Except as provided in this paragraph (5), the corporation
will make no payment or allowance for unpaid dividends, whether or not
in arrears, on called Series A Preferred.
(6) Voting Rights. Except as required by the Virginia Stock
Corporation Act and except as otherwise provided in this paragraph (6),
the holders of the Series A Preferred shall not be entitled to vote at
any meeting of the shareholders for election of directors or for any
other purpose or otherwise to participate in any action taken by the
corporation or the shareholders thereof, or to receive notice of any
meeting of shareholders.
<PAGE>
(A) Whenever dividends on any shares of Series A Preferred
shall be in arrears for six or more consecutive quarterly periods, the
holders of such shares of Series A Preferred (voting separately as a
class with all other series of preferred stock upon which like voting
rights have been conferred and are exercisable) will be entitled to
vote for the election of two additional directors of the corporation at
a special meeting called by the holders of record of at least 10% of
the Series A Preferred or the holders of any other series of preferred
stock so in arrears (unless such request is received less than 90 days
before the date fixed for the next annual or special meeting of the
shareholders) or at the next annual meeting of shareholders, and at
each subsequent annual meeting until all dividends accumulated on such
shares of Series A Preferred for the past Dividend Periods and the then
current Dividend Period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment. In such
case, the entire Board of Directors of the corporation will be
increased by two directors.
(B) So long as any shares of Series A Preferred remain
outstanding, the corporation shall not, without the affirmative vote of
the holders of at least a majority of the shares of the Series A
Preferred outstanding at the time, (i) authorize or create, or increase
the authorized or issued amount of, any class or series of capital
stock ranking prior to the Series A Preferred with respect to payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up or reclassify any authorized capital stock of
the corporation into any such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to
purchase any such shares; or (ii) amend, alter or repeal the provisions
of these Articles, whether by merger, consolidation or otherwise, so as
to materially and adversely affect any right, preference, privilege or
voting power of the Series A Preferred or the holders thereof;
provided, however, that any increase in the amount of the authorized
preferred stock or the creation or issuance of any other series of
preferred stock, or any increase in the amount of authorized shares of
such series, in each case ranking on a parity with or junior to the
Series A Preferred with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(C) The foregoing voting provisions will not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Series A Preferred shall have been redeemed or called for redemption
upon proper notice and sufficient funds shall have been deposited in
trust to effect such redemption.
<PAGE>
(D) So long as the Series A Preferred is listed or admitted to
trading on the New York Stock Exchange, then notwithstanding anything
to the contrary in these Articles, including without limitation Article
8, approval by the holders of at least two-thirds of the outstanding
shares of the Series A Preferred shall be required for adoption of any
amendment of these Articles or of the bylaws of the corporation that
would materially affect the existing terms of the Series A Preferred.
(7) Conversion of Series A Preferred. The Series A Preferred
is not convertible into or exchangeable for any other property or
securities of the corporation.
(b) 8.60% Series B Cumulative Redeemable Preferred Stock.
(1) Designation and Number. A series of the preferred stock,
designated the "8.60% Series B Cumulative Redeemable Preferred Stock"
(the "Series B Preferred"), is hereby established. The number of shares
of the Series B Preferred shall be 6,900,000. Such number shall include
400,000 unissued shares of the Series A Preferred, which are hereby
redesignated as 400,000 shares of the Series B Preferred.
(2) Relative Seniority. In respect of rights to receive
dividends and to participate in distributions or payments in the event
of any liquidation, dissolution or winding up of the corporation, the
Series B Preferred shall rank pari passu with the Series A Preferred
and senior to the common stock and any other capital stock of the
corporation ranking, as to dividends and upon liquidation, junior to
the Series A Preferred (collectively, "Junior Stock").
(3) Dividends. The holders of the then outstanding Series B
Preferred shall be entitled to receive, when and as declared by the
Board of Directors out of any funds legally available therefor,
cumulative preferential cash dividends at the rate of 8.60% of the
liquidation preference of the Series B Preferred (equivalent to $2.15
per share) per annum, payable quarterly in arrears in cash on the last
day, or the next succeeding business day, of February, May, August and
November in each year, beginning August 31, 1997 (each such day being
hereinafter called a "Dividend Payment Date" and each period beginning
on the day next following a Dividend Payment Date and ending on the
next following Dividend Payment Date being hereinafter called a
"Dividend Period"), to shareholders of record at the close of business
on the fifteenth day of the calendar month in which the applicable
Dividend Payment Date falls on or such date as shall be fixed by the
Board of Directors at the time of declaration of the dividend (the
"Dividend Record Date"), which shall be not less than 10 nor more than
30 days preceding the Dividend Payment Date. The amount of any dividend
<PAGE>
payable for the initial Dividend Period and for any partial Dividend
Period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. Dividends on the shares of Series B Preferred
shall accrue and be cumulative from and including the date of original
issue thereof, whether or not (i) the corporation has earnings, (ii)
dividends on such shares are declared or (iii) on any Dividend Payment
Date there shall be funds legally available for the payment of such
dividends. When dividends are not paid in full upon the shares of
Series B Preferred and the shares of any other series of preferred
stock ranking on a parity as to dividends with the Series B Preferred
(or a sum sufficient for such full payment is not set apart therefor),
all dividends declared upon shares of Series B Preferred and any other
series of preferred stock ranking on a parity as to dividends with the
Series B Preferred shall be declared pro rata so that the amount of
dividends declared per share on the Series B Preferred and such other
series of preferred stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the shares of Series B
Preferred and such other series of preferred stock bear to each other.
Except as provided in the immediately preceding paragraph,
unless full cumulative dividends on the Series B Preferred have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment on the Series
B Preferred for all past dividend periods and the then current dividend
period, (i) no dividends shall be declared or paid or set apart for
payment on the preferred stock of the corporation ranking, as to
dividends, on a parity with or junior to the Series B Preferred for any
period, and (ii) no dividends (other than in Junior Stock) shall be
declared or paid or set aside for payment or other distribution or
shall be declared or made upon the Junior Stock or any other capital
stock of the corporation ranking on a parity with the Series B
Preferred as to dividends or upon liquidation ("Parity Stock"), nor
shall any Junior Stock or any Parity Stock be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any shares of
Junior Stock or Parity Stock) by the corporation (except by conversion
into or exchange for Junior Stock).
Any dividend payment made on shares of the Series B Preferred
shall first be credited against the earliest accrued but unpaid
dividend due with respect to such shares which remains payable.
No dividends on shares of Series B Preferred shall be declared
by the Board of Directors of the corporation or paid or set apart for
payment by the corporation at such time as the terms and provisions of
any agreement of the corporation, including any agreement relating to
its indebtedness, prohibits such declaration, payment or setting apart
for payment or provides that such declaration, payment or setting apart
for payment would constitute a breach thereof or a default thereunder,
or if such declaration or payment shall be restricted or prohibited by
law.
<PAGE>
The amount of any dividends accrued on any shares of Series B
Preferred at any Dividend Payment Date shall be the amount of any
unpaid dividends accumulated thereon, to and including such Dividend
Payment Date, whether or not earned or declared, and the amount of
dividends accrued on any shares of Series B Preferred at any date other
than a Dividend Payment Date shall be equal to the sum of the amount of
any unpaid dividends accumulated thereon, to and including the last
preceding Dividend Payment Date, whether or not earned or declared,
plus an amount calculated on the basis of the annual dividend rate for
the period after such last preceding Dividend Payment Date to and
including the date as of which the calculation is made, based on a
360-day year of twelve 30-day months.
Accrued but unpaid dividends on the Series B Preferred will
not bear interest. Holders of the Series B Preferred will not be
entitled to any dividends in excess of full cumulative dividends as
described above.
Except as provided in these Articles, the Series B Preferred
shall not be entitled to participate in the earnings or assets of the
corporation.
(4) Liquidation Rights.
(A) Upon the voluntary or involuntary dissolution, liquidation
or winding up of the corporation, the holders of shares of the Series B
Preferred then outstanding shall be entitled to receive and to be paid
out of the assets of the corporation legally available for distribution
to its shareholders, before any distribution shall be made to the
holders of common stock or any other capital stock of the corporation
ranking junior to the Series B Preferred upon liquidation, a
liquidation preference of $25.00 per share, plus accrued and unpaid
dividends thereon to the date of payment.
(B) After the payment to the holders of the shares of the
Series B Preferred of the full liquidation preference provided for in
this paragraph (4), the holders of the Series B Preferred as such shall
have no right or claim to any of the remaining assets of the
corporation.
(C) If, upon any voluntary or involuntary dissolution,
liquidation or winding up of the corporation, the amounts payable with
respect to the liquidation preference of the shares of the Series B
Preferred and any other shares of stock of the corporation ranking as
to any such distribution on a parity with the shares of the Series B
Preferred are not paid in full, the holders of the shares of the Series
B Preferred and of such other shares will share ratably in any such
distribution of assets of the corporation in proportion to the full
respective liquidation preferences to which they are entitled.
<PAGE>
(D) Neither the sale, lease, transfer or conveyance of all or
substantially all the property or business of the corporation, nor the
merger or consolidation of the corporation into or with any other
corporation or the merger or consolidation of any other corporation
into or with the corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this paragraph (4).
(5) Redemption.
(A) Right of Optional Redemption. The Series B Preferred is
not redeemable prior to May 29, 2007. On and after May 29, 2007, the
corporation may, at its option, redeem at any time all or, from time to
time, part of the Series B Preferred at a price per share (the "Series
B Redemption Price"), payable in cash, of $25.00, together with all
accrued and unpaid dividends to and including the date fixed for
redemption (the "Series B Redemption Date"), without interest. In case
of redemption of less than all shares of Series B Preferred at the time
outstanding, the shares of Series B Preferred to be redeemed shall be
selected pro rata from the holders of record of such shares in
proportion to the number of shares of Series B Preferred held by such
holders (as nearly as may be practicable without creating fractional
shares) or by any other equitable method determined by the corporation.
(B) Procedures for Redemption.
(i) Notice of any redemption will be (a) given by publication
in a newspaper of general circulation in the City of New York, New
York, such publication to be made once a week for two successive weeks
commencing not less than 30 nor more than 60 days prior to the Series B
Redemption Date, and (b) mailed by the corporation, postage prepaid,
not less than 30 nor more than 60 days prior to the Series B Redemption
Date, addressed to the respective holders of record of the Series B
Preferred to be redeemed at their respective addresses as they appear
on the stock transfer records of the corporation. No failure to give
such notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of any Series
B Preferred except as to the holder to whom the corporation has failed
to give notice or except as to the holder to whom notice was defective.
In addition to any information required by law or by the applicable
rules of any exchange upon which Series B Preferred may be listed or
admitted to trading, such notice shall state: (a) the Series B
Redemption Date; (b) the Series B Redemption Price; (c) the number of
shares of Series B Preferred to be redeemed; (d) the place or places
where certificates for such shares are to be surrendered for payment of
<PAGE>
the Series B Redemption Price; and (e) that dividends on the shares to
be redeemed will cease to accumulate on the Series B Redemption Date.
If less than all the shares of Series B Preferred held by any holder
are to be redeemed, the notice mailed to such holder shall also specify
the number of shares of Series B Preferred held by such holder to be
redeemed.
(ii) If notice of redemption of any shares of Series B
Preferred has been published and mailed in accordance with subparagraph
(5)(B)(i) above and provided that on or before the Series B Redemption
Date specified in such notice all funds necessary for such redemption
shall have been irrevocably set aside by the corporation, separate and
apart from its other funds in trust for the benefit of any holders of
the shares of Series B Preferred so called for redemption, so as to be,
and to continue to be available therefor, then, from and after the
Series B Redemption Date, dividends on such shares of Series B
Preferred shall cease to accrue, and such shares shall no longer be
deemed to be outstanding and shall not have the status of Series B
Preferred and all rights of the holders thereof as shareholders of the
corporation (except the right to receive the Series B Redemption Price)
shall terminate. Upon surrender, in accordance with said notice, of the
certificates for any shares of Series B Preferred so redeemed (properly
endorsed or assigned for transfer, if the corporation shall so require
and the notice shall so state), such shares of Series B Preferred shall
be redeemed by the corporation at the Series B Redemption Price. In
case less than all the shares of Series B Preferred represented by any
such certificate are redeemed, a new certificate or certificates shall
be issued representing the unredeemed shares of Series B Preferred
without cost to the holder thereof.
(iii) The deposit of funds with a bank or trust company for
the purpose of redeeming Series B Preferred shall be irrevocable except
that:
(a) the corporation shall be entitled to receive from
such bank or trust company the interest or other earnings, if
any, earned on any money so deposited in trust, and the
holders of any shares redeemed shall have no claim to such
interest or other earnings; and
(b) any balance of monies so deposited by the
corporation and unclaimed by the holders of the Series B
Preferred entitled thereto at the expiration of two years from
the applicable Series B Redemption Date shall be repaid,
together with any interest or other earnings earned thereon,
to the corporation, and after any such repayment, the holders
of the shares entitled to the funds so repaid to the
corporation shall look only to the corporation for payment
without interest or other earnings.
<PAGE>
(C) Limitations on Redemption
(i) The Series B Redemption Price (other than the portion
thereof consisting of accrued and unpaid dividends) shall be payable
solely out of the sale proceeds of other capital stock of the
corporation and from no other source.
(ii) Unless full cumulative dividends on all shares of Series
B Preferred shall have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
payment for all past Dividend Periods and the then current Dividend
Period, no Series B Preferred shall be redeemed (unless all outstanding
shares of Series B Preferred are simultaneously redeemed) or purchased
or otherwise acquired directly or indirectly (except by exchange for
Junior Stock); provided, however, that the foregoing shall not prevent
the redemption of Series B Preferred pursuant to Article 4 or the
purchase or acquisition of Series B Preferred pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding
shares of Series B Preferred.
(D) Rights to Dividends on Shares Called for Redemption. If
the Series B Redemption Date is after a Dividend Record Date and before
the related Dividend Payment Date, the dividend payable on such
Dividend Payment Date shall be paid to the holder in whose name the
shares of Series B Preferred to be redeemed are registered at the close
of business on such Dividend Record Date notwithstanding the redemption
thereof between such Dividend Record Date and the related Dividend
Payment Date or the corporation's default in the payment of the
dividend due. Except as provided in this paragraph (5), the corporation
will make no payment or allowance for unpaid dividends, whether or not
in arrears, on called Series B Preferred.
(6) Voting Rights. Except as required by the Virginia Stock
Corporation Act and except as otherwise provided in this paragraph (6),
the holders of the Series B Preferred shall not be entitled to vote at
any meeting of the shareholders for election of directors or for any
other purpose or otherwise to participate in any action taken by the
corporation or the shareholders thereof, or to receive notice of any
meeting of shareholders.
(A) Whenever dividends on any shares of Series B Preferred
shall be in arrears for six or more consecutive quarterly periods, the
holders of such shares of Series B Preferred (voting separately as a
class with all other series of preferred stock upon which like voting
rights have been conferred and are exercisable) will be entitled to
vote for the election of two additional directors of the corporation at
a special meeting called by the holders of record of at least 10% of
the Series B Preferred or the holders of any other series of preferred
<PAGE>
stock so in arrears (unless such request is received less than 90 days
before the date fixed for the next annual or special meeting of the
shareholders) or at the next annual meeting of shareholders, and at
each subsequent annual meeting until all dividends accumulated on such
shares of Series B Preferred for the past Dividend Periods and the then
current Dividend Period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment. In such
case, the entire Board of Directors of the corporation will be
increased by two directors.
(B) So long as any shares of Series B Preferred remain
outstanding, the corporation shall not, without the affirmative vote of
the holders of at least a majority of the shares of the Series B
Preferred outstanding at the time, (i) authorize or create, or increase
the authorized or issued amount of, any class or series of capital
stock ranking prior to the Series B Preferred with respect to payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up or reclassify any authorized capital stock of
the corporation into any such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to
purchase any such shares; or (ii) amend, alter or repeal the provisions
of these Articles, whether by merger, consolidation or otherwise, so as
to materially and adversely affect any right, preference, privilege or
voting power of the Series B Preferred or the holders thereof;
provided, however, that any increase in the amount of the authorized
preferred stock or the creation or issuance of any other series of
preferred stock, or any increase in the amount of authorized shares of
such series, in each case ranking on a parity with or junior to the
Series B Preferred with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(C) The foregoing voting provisions will not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Series B Preferred shall have been redeemed or called for redemption
upon proper notice and sufficient funds shall have been deposited in
trust to effect such redemption.
(D) So long as the Series B Preferred is listed or admitted to
trading on The New York Stock Exchange, then notwithstanding anything
to the contrary in these Articles, including without limitation Article
8, approval by the holders of at least two-thirds of the outstanding
shares of the Series B Preferred shall be required for adoption of any
amendment of these Articles or of the bylaws of the corporation that
would materially affect the existing terms of the Series B Preferred.
<PAGE>
(7) Conversion of Series B Preferred. The Series B Preferred
is not convertible into or exchangeable for any other property or
securities of the corporation.
4. If the Board of Directors of the corporation shall, at any time and in good
faith, be of the opinion that direct or indirect ownership of shares of the
corporation has or may become concentrated in any individual or individuals to
an extent which would disqualify the corporation as a "real estate investment
trust" under the requirements of the Code applicable of the qualification of
"real estate investment trusts" (the "REIT provisions'), then the corporation
shall have the power.
(a) to call for redemption by lot or other means deemed equitable by
the Board of Directors and to redeem a number of concentrated shares sufficient,
in the opinion of the Board of Directors, to maintain or bring the direct or
indirect ownership of shares of the corporation into conformity with the REIT
provisions; and
(b) to stop the transfer of its shares to any person whose acquisition
thereof would, in the opinion of the Board of Directors, result in such
disqualification. The per share redemption price of any shares redeemed by the
corporation pursuant to paragraph (a) of this Article 4 shall be the highest
closing bid price quotation (if then traded over the counter) or the closing
sale price (if then listed on a national securities exchange) for the shares as
of the business day preceding the day on which notice of redemption is given as
reported by any source reasonably believed reliable by the Board of Directors,
or, if no bid price quotation or closing sale price for the shares is available,
as determined in good faith by the Board of Directors, From and after the date
fixed for redemption by the Board of Directors, the holder of any shares so
called for redemption shall cease to be entitled to dividends, voting rights and
other benefits with respect to such shares excepting only the right to payment
of the redemption price fixed as aforesaid. For the purpose of this Article 4,
the terms "individual" and "ownership" of shares shall be defined in accordance
with or by reference to the REIT provisions.
5. Holders of shares of the corporation shall upon demand disclose to the
corporation in writing such information with respect to direct and indirect
ownership thereof as the Board of Directors may deem necessary to enable the
corporation to comply with the REIT provisions or to comply with the
requirements of any other taxing authority.
6. The number of directors of the corporation shall be fixed by the By-Laws or,
in the absence of a By-Law fixing such number, shall be three.
7. (a) To the full extent that the Act, as it exists on the date hereof or may
hereafter be amended, permits the limitation or elimination of the liability of
directors or officers, a director or officer of the corporation shall not be
liable to the corporation or its stockholders for monetary damages. In the event
that the Act shall be construed to require in any case in which such liability
may be so limited or eliminated, as a condition of limitation or elimination
thereof, specification in these Articles of an amount in dollars and/or cents as
the amount of the liability of directors or officers, such amount is hereby
<PAGE>
specified at zero dollars and zero cents ($0.00), in cases in which such
liability may be eliminated, and at the minimum amount permitted by the Act,
expressed in dollars and/or cents, in cases in which such liability may be
limited.
(b) To the full extent permitted and in the manner prescribed by the
Act, as it exists on the date hereof or may hereafter be amended, and any other
applicable law, the corporation shall indemnify a director or officer of the
corporation who is or was a party to any proceeding by reason of the fact that
he is or was such a director or officer or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise. The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested directors, to contract in advance to indemnify any
director or officer.
(c) The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested directors, to cause the corporation to indemnify or
contract in advance to indemnify any person not specified in paragraph (b) of
this Article 7 who was or is a party to any proceeding, by reason of the fact
that he is or was an employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, to the same extent as if such person were required to be
indemnified by paragraph (b).
(d) The corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of its liability under this Article 7 and may
also procure insurance, in such amounts as the Board of Directors may determine,
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by such person in any such capacity or arising from
his status as such, whether or not the corporation would have power to indemnify
such person against such liability under the provisions of this Article 7.
(e) In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to paragraph (a) of this Article 7 shall be made
by special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
(f) The provisions of this Article 7 shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof by
stockholders, whether arising from any action taken or failure to act before or
after such adoption. No amendment or repeal of this Article 7 shall diminish the
<PAGE>
rights provided hereby or diminish the right to indemnification with respect to
any claim, issue or matter in any then pending or subsequent proceeding that is
based in any material respect on any alleged action or failure to act prior to
such amendment or repeal.
(g) References herein to directors, officers, employees or agents shall
include former directors, officers, employees and agents and their respective
heirs, executors and administrators.
8. Except as otherwise required by the Act, by these Articles, or by the Board
of Directors acting pursuant to Subsection C of Section 13.1-707 of the Act, or
any successor provision, the vote required to approve an amendment or
restatement of these Articles, other than an amendment or restatement that
amends or affects the shareholder vote required by the Act to approve a merger,
share exchange, sale of all or substantially all of the corporation's assets or
the dissolution of the corporation, shall be a majority of all votes entitled to
be cast by each voting group entitled to vote on the amendment.
EXHIBIT 4(ii)(g)
THREE YEAR CREDIT AGREEMENT
Dated as of August 4, 1997
among
UNITED DOMINION REALTY TRUST, INC.,
as Borrower,
UNITED DOMINION REALTY, L.P.
and Certain Other Subsidiaries and Affiliates of the Borrower,
as Guarantors,
THE LENDERS NAMED HEREIN
AND
NATIONSBANK, N.A.,
as Administrative Agent
and
FIRST UNION NATIONAL BANK,
as Co-Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1 DEFINITIONS .........................................................1
1.1 Definitions.......................................................1
1.2 Computation of Time Periods......................................20
1.3 Accounting Terms.................................................20
SECTION 2 CREDIT FACILITIES ..................................................21
2.1 Revolving Loans..................................................21
2.2 Swingline Loan Subfacility.......................................22
2.3 Competitive Loan Subfacility.....................................24
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES......................27
3.1 Default Rate.....................................................27
3.2 Extension and Conversion.........................................27
3.3 Prepayments......................................................28
3.4 Termination and Reduction of Commitments.........................28
3.5 Fees.............................................................28
3.6 Capital Adequacy.................................................29
3.7 Inability To Determine Interest Rate.............................29
3.8 Illegality.......................................................29
3.9 Requirements of Law..............................................30
3.10 Taxes...........................................................31
3.11 Indemnity.......................................................33
3.12 Pro Rata Treatment..............................................33
3.13 Sharing of Payments.............................................34
3.14 Payments, Computations, Etc.....................................35
3.15 Evidence of Debt................................................36
SECTION 4 GUARANTY ...........................................................37
4.1 The Guarantee....................................................37
4.2 Obligations Unconditional........................................37
4.3 Reinstatement....................................................38
4.4 Certain Additional Waivers.......................................39
4.5 Remedies.........................................................39
4.6 Rights of Contribution...........................................39
4.7 Continuing Guarantee.............................................40
SECTION 5 CONDITIONS .........................................................40
5.1 Conditions to Closing............................................40
5.2 Conditions to All Extensions of Credit...........................41
SECTION 6 REPRESENTATIONS AND WARRANTIES......................................42
6.1 Financial Condition..............................................42
6.2 No Material Adverse Changes......................................43
6.3 Organization; Existence; Compliance with Law.....................43
6.4 Power; Authorization; Enforceable Obligations....................43
i
<PAGE>
6.5 No Legal Bar.....................................................44
6.6 No Material Litigation...........................................44
6.7 No Default.......................................................44
6.8 Ownership of Property; Liens.....................................44
6.9 Taxes............................................................44
6.10 ERISA...........................................................45
6.11 Governmental Regulations, Etc...................................46
6.12 Subsidiaries....................................................47
6.13 Purpose of Extensions of Credit.................................47
6.14 Environmental Matters...........................................47
SECTION 7 AFFIRMATIVE COVENANTS...............................................48
7.1 Financial Statements.............................................48
7.2 Certificates; Other Information..................................49
7.3 Notices..........................................................49
7.4 Payment of Obligations...........................................51
7.5 Conduct of Business and Maintenance of Existence.................51
7.6 Maintenance of Property; Insurance...............................51
7.7 Inspection of Property; Books and Records; Discussions...........51
7.8 Environmental Laws...............................................52
7.9 Financial Covenants..............................................52
7.10 Agency Fees.....................................................53
7.11 Additional Guaranties and Stock Pledges.........................53
7.12 Ownership of Subsidiaries.......................................53
7.13 Use of Proceeds.................................................54
SECTION 8 NEGATIVE COVENANTS .................................................54
8.1 Limitations on Debt..............................................54
8.2 Restriction on Liens.............................................54
8.3 Consolidations, Mergers and Sales of Assets......................55
8.4 Loans and Investments............................................56
8.5 Transactions with Affiliates.....................................56
8.6 Transactions with Other Persons regarding this Agreement.........57
8.7 Limitation on Certain Restrictions on Subsidiaries...............57
SECTION 9 EVENTS OF DEFAULT ..................................................57
9.1 Events of Default................................................57
9.2 Acceleration; Remedies...........................................59
SECTION 10 AGENCY PROVISIONS .................................................60
10.1 Appointment.....................................................60
10.2 Delegation of Duties............................................61
10.3 Exculpatory Provisions..........................................61
10.4 Reliance on Communications......................................61
10.5 Notice of Default...............................................62
10.6 Non-Reliance on Administrative Agent and Other Lenders..........62
10.7 Indemnification.................................................63
10.8 Administrative Agent in its Individual Capacity.................63
ii
<PAGE>
10.9 Successor Administrative Agent..................................63
SECTION 11 MISCELLANEOUS .....................................................64
11.1 Notices.........................................................64
11.2 Right of Set-Off................................................65
11.3 Benefit of Agreement............................................65
11.4 No Waiver; Remedies Cumulative..................................68
11.5 Payment of Expenses, etc........................................68
11.6 Amendments, Waivers and Consents................................69
11.7 Counterparts....................................................70
11.8 Headings........................................................70
11.9 Survival........................................................70
11.10 Governing Law; Submission to Jurisdiction; Venue...............70
11.11 Severability...................................................71
11.12 Entirety.......................................................71
11.13 Binding Effect; Termination....................................71
11.14 Source of Funds................................................71
11.15 Conflict.......................................................72
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 2.1(a)............ Schedule of Lenders and Commitments
Schedule 2.1(b)(i)......... Form of Notice of Borrowing
Schedule 2.1(e)............ Form of Revolving Note
Schedule 2.2(d)............ Form of Swingline Note
Schedule 2.3(b)-1.......... Form of Competitive Bid Request
Schedule 2.3(b)-2.......... Form of Notice of Receipt of Competitive Bid
Request
Schedule 2.3(c)............ Form of Competitive Bid
Schedule 2.3(e)............ Form of Competitive Bid Accept/Reject Letter
Schedule 2.3(i)............ Form of Competitive Note
Schedule 3.2............... Form of Notice of Extension/Conversion
Schedule 5.1(e)(v)......... Officer's Certificate
Schedule 6.3............... Qualifications Concerning Organization, Existence
and Compliance with Law
Schedule 6.12.............. Subsidiaries
Schedule 7.2(b)............ Form of Officer's Compliance Certificate
Schedule 7.11.............. Form of Joinder Agreement
Schedule 8.7............... REMICs and Other Special Subsidiaries
Schedule 11.1.............. Schedule of Lender's Addresses
Schedule 11.3(b)........... Form of Assignment and Acceptance
</TABLE>
iv
<PAGE>
THREE-YEAR
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of August 4, 1997 (the "Credit
Agreement"), is by and among UNITED DOMINION REALTY TRUST, INC., a Virginia
corporation (the "Borrower"), UNITED DOMINION REALTY, L.P., a Virginia limited
partnership and the other subsidiaries and affiliates identified on the
signature pages hereto and such other subsidiaries and affiliates as may from
time to time become Guarantors hereunder in accordance with the provisions
hereof (the "Guarantors"), the lenders named herein and such other lenders as
may become a party hereto (the "Lenders"), NATIONSBANK, N.A., as Administrative
Agent (in such capacity, the "Administrative Agent") and FIRST UNION NATIONAL
BANK, as Co-Agent.
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $200
million credit facility for the purposes hereinafter set forth;
WHEREAS, the Borrower intends to use the credit facility in part to
make loans and transfers to certain of its Subsidiaries and Affiliates,
including the Guarantors;
WHEREAS, the Guarantors acknowledge that establishment of the credit
facility inures to the mutual benefit of the Borrower and the Guarantors;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"Administrative Agent" shall have the meaning assigned to such
term in the heading hereof, together with any successors or assigns.
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<PAGE>
"Administrative Agent's Fee Letter" means that certain letter
agreement, dated as of April 1, 1997, between the Administrative Agent
and the Borrower, as amended, modified, supplemented or replaced from
time to time.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agency Services Address" means NationsBank, N.A.,
NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255,
Attn: Agency Services, or such other address as may be identified by
written notice from the Administrative Agent to the Borrower.
"Aggregate Revolving Committed Amount" means the aggregate
amount of Revolving Commitments in effect from time to time, being
initially TWO HUNDRED MILLION DOLLARS ($200,000,000).
"Applicable Percentage" means for any day, the rate per annum
set forth below opposite the applicable rating for the Borrower's
senior unsecured (non-credit enhanced) long term debt then in effect,
it being understood that the Applicable Percentage for (i) Base Rate
Loans shall be the percentage set forth under the column "Base Rate
Margin", (ii) Eurodollar Loans shall be the percentage set forth under
the column "Eurodollar Margin", and (iii) the Facility Fee shall be the
percentage set forth under the column "Facility Fee":
<TABLE>
<CAPTION>
Pricing S&P Moody's Base Rate
Level Rating Rating Eurodollar Margin Margin Facility Fee
<S> <C>
I A- or above A3 or above 0.350% 0% 0.150%
II BBB+ Baa1 0.425% 0% 0.175%
III BBB Baa2 0.500% 0% 0.200%
IV BBB- Baa3 0.550% 0% 0.250%
V below BBB- below Baa3 0.750% 0% 0.500%
or unrated or unrated
</TABLE>
The numerical classification set forth under the column "Pricing Level"
shall be established based on the better of ratings by S&P and Moody's
for the Borrower's senior unsecured (non-credit enhanced) long term
debt. The Applicable Percentage shall be determined and adjusted on the
date five (5) Business Days after each change in debt rating.
Adjustments in the Applicable Percentage shall be effective as to all
Loans, existing and prospective, from the date of adjustment. The
Administrative Agent shall promptly notify the Lenders of changes in
the Applicable Percentage. Adjustments in
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<PAGE>
the Applicable Percentage shall be effective as to existing
Extensions of Credit as well as new Extensions of Credit made
thereafter.
"Attributable Debt" means, in connection with any
Sale-Leaseback Transaction occurring subsequent to the Closing Date,
the lesser of (i) the present value, discounted according to GAAP at
the debt rate implicit in the related lease, of the obligation of the
lessee for rental payments over the remaining term of such
lease(including any period for which such lease has been extended or
may, at the option of the lessor be extended) and (ii) the fair market
value of the assets subject to such Sale-Leaseback Transaction.
"Attributed Principal Amount" means, on any day, with respect
to any Securitization Transaction entered into by any member of the
Consolidated Group, the aggregate amount (with respect to any such
transaction, the "Invested Amount") paid to, or borrowed by, such
Person as of such date under such Securitization Transaction, minus the
aggregate amount received by the applicable Receivables Financier and
applied to the reduction of the Invested Amount under such
Securitization Transaction.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of ninety (90)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable after due
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<PAGE>
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Base
Rate shall be determined without regard to clause (a) of the first
sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds
Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to close, except that,
when used in connection with a Eurodollar Loan, such day shall also be
a day on which dealings between banks are carried on in U.S. dollar
deposits in London, England.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P
is at least A-2 (and not lower than A-3) or the equivalent thereof or
from Moody's is at least P-2 (and not lower than P-3) or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any
Approved Bank (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated at
least A-2 (and not lower than A-3) or the equivalent thereof by S&P or
at least P-2 (and not lower than P-3) or the equivalent by Moody's and
maturing within six months of the date of acquisition, (d) repurchase
agreements entered into by a Person with a bank or trust company
(including any of the Lenders) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which
such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations, (e) obligations of any State of the United
States or any political subdivision thereof, the interest with respect
to which is exempt from federal income taxation under Section 103 of
the Code, having a long term rating of at least AA- or Aa-3 by S&P or
Moody's, respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated A- (or the equivalent thereof) or better by S&P or A3
(or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days and (g) Investments,
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<PAGE>
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Borrower Act of
1940, as amended, which are administered by reputable financial
institutions having capital of at least $100,000,000 and the portfolios
of which are limited to Investments of the character described in the
foregoing subdivisions (a) through (f).
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control over,
voting stock of the Borrower (or other securities convertible into such
voting stock) representing 35% or more of the combined voting power of
all voting stock of the Borrower, or (ii) during any period of up to 24
consecutive months, commencing after the Closing Date, individuals who
at the beginning of such 24 month period were directors of the Borrower
(together with any new director whose election by the Borrower's Board
of Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office. As used
herein, "beneficial ownership" shall have the meaning provided in Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Commitment" means the Revolving Commitment and the Swingline
Commitment.
"Commitment Percentage" means the Revolving Commitment
Percentage.
"Commitment Period" means the period from and including the
Closing Date to but not including the earlier of (i) the Termination
Date, or (ii) the date on which the Commitments terminate in accordance
with the provisions of this Credit Agreement.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan pursuant to the terms of Section 2.3.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Lender in accordance with the provisions of Section 2.3, the fixed
rate of interest offered by the Lender making the Competitive Bid.
5
<PAGE>
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with the provisions of Section 2.4(b).
"Competitive Bid Request Fee" means such fee, if any, agreed
upon by the Borrower and the Administrative Agent payable in connection
with each Competitive Bid Request.
"Competitive Loan" means a loan made by a Lender in its
discretion pursuant to the provisions of Section 2.3.
"Competitive Loan Lenders" means, at any time, those Lenders
which have Competitive Loans outstanding.
"Competitive Loan Maximum Amount" shall have the meaning
assigned to such term in Section 2.3(a).
"Competitive Note" or "Competitive Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Competitive Loans in substantially the form attached as Schedule
2.3(i), individually or collectively, as appropriate, as such
promissory notes may be amended, modified, restated, supplemented,
extended, renewed or replaced from time to time.
"Consolidated Adjusted Capitalization" means at any date the
sum of (i) Consolidated Funded Debt plus (ii) Consolidated Adjusted
Tangible Net Worth.
"Consolidated Adjusted Tangible Net Worth" means at any date
(i) the sum of (A) the consolidated shareholders'
equity of the Consolidated Group plus (B) accumulated depreciation of
real estate owned to the extent reflected in the then book value of the
Consolidated Assets minus, without duplication,
(ii) the sum of (A) the Intangible Assets of the
Consolidated Group plus (B) all Restricted Investments (valued at the
then book value thereof) of the Consolidated Group plus (C) Minority
Interests.
"Consolidated Assets" means the assets of the members of the
Consolidated Group determined in accordance with GAAP on a consolidated
basis.
"Consolidated Attributable Debt" means at any date the
Attributable Debt of the Consolidated Group, determined on a
consolidated basis.
"Consolidated EBITDA" means for any period for the
Consolidated Group, the sum of Consolidated Net Income plus
Consolidated Interest Expense plus all provisions for any Federal,
state or other income taxes plus depreciation, amortization and other
non-cash charges, in each case on a consolidated basis determined in
accordance with GAAP applied on a consistent basis, but excluding in
any event gains and losses on Investments and extraordinary gains and
6
<PAGE>
losses, and taxes on such excluded gains and tax deductions or credits
on account of such excluded losses. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive
quarters ending as of the date of determination.
"Consolidated Funded Debt" means total Funded Debt of the
Consolidated Group on a consolidated basis determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Group" means the Borrower and its consolidated
Subsidiaries, as determined in accordance with GAAP.
"Consolidated Interest Expense" means for any period for the
Consolidated Group, all interest expense, including the amortization of
debt discount and premium, the interest component under capital leases
and the implied interest component under Securitization Transactions,
in each case on a consolidated basis determined in accordance with GAAP
applied on a consistent basis. The applicable period shall be for the
four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Mortgage Debt" means at any date the Mortgage
Debt of the Consolidated Group, determined on a consolidated basis.
"Consolidated Net Income" means for any period, the net income
of the Consolidated Group on a consolidated basis determined in
accordance with GAAP applied on a consistent basis. The applicable
period shall be for the four consecutive fiscal quarters ending as of
the date of determination.
"Consolidated Net Operating Income from Unencumbered Realty"
means for any period, earnings before deduction of interest, income
taxes, depreciation and amortization and before deduction of general
and administrative expenses and overhead, relating to Consolidated
Unencumbered Realty of the Consolidated Group on a consolidated basis
determined in accordance with GAAP on a consistent basis. The
applicable period shall be for the four consecutive fiscal quarters
ending as of the date of determination.
"Consolidated Net Worth" means total stockholders' equity for
the Consolidated Group on a consolidated basis determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Priority Claims" means at any date the sum
(without duplication) of (i) Consolidated Mortgage Debt plus (ii)
Consolidated Attributable Debt plus (iii) Consolidated Subsidiary Debt
plus (iv) all preferred stock of Subsidiaries not owned by the Borrower
and/or one or more of its Wholly-Owned Subsidiaries, valued at the
higher of the voluntary or involuntary liquidation preference thereof.
"Consolidated Senior Fixed Charges" means, as of the last day
of each fiscal quarter for the Consolidated Group, the sum of the cash
portion of Consolidated Interest Expense paid on or in respect of
Consolidated Senior Funded Debt in the period of four
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<PAGE>
consecutive fiscal quarters ending on such day plus scheduled
maturities of Consolidated Senior Funded Debt (excluding the amount by
which a final installment exceeds the next preceding principal
installment thereon) in the period of four consecutive fiscal quarters
ending on such day.
"Consolidated Senior Fixed Charge Coverage Ratio" means, for
any period, the ratio of Consolidated EBITDA to Consolidated Senior
Fixed Charges.
"Consolidated Senior Funded Debt" means Consolidated Funded
Debt (determined without including Subordinated Funded Debt).
"Consolidated Subsidiary Debt" means at any date all Debt of
Subsidiaries (exclusive of Debt owed to the Borrower), determined on a
consolidated basis.
"Consolidated Total Fixed Charge Coverage Ratio" means, for
any period, the ratio of Consolidated EBITDA to Consolidated Total
Fixed Charges.
"Consolidated Total Fixed Charges" means, as of the last day
of each fiscal quarter for the Consolidated Group, the sum of the cash
portion of Consolidated Interest Expense paid in the period of four
consecutive fiscal quarters ending on such day plus scheduled
maturities of Consolidated Funded Debt (excluding the amount by which a
final installment exceeds the next preceding principal installment
thereon) in the period of four consecutive fiscal quarters ending on
such day.
"Consolidated Total Realty" means, for the Consolidated Group
on a consolidated basis, the undepreciated cost of all Realty, whether
improved or not.
"Consolidated Unencumbered Interest Coverage Ratio" means, for
any period, the ratio of (i) Consolidated Net Operating Income from
Consolidated Unencumbered Realty to (ii) Consolidated Interest Expense
relating to Consolidated Unsecured Debt.
"Consolidated Unencumbered Realty" means, for the Consolidated
Group on a consolidated basis, all Realty which is not encumbered by
Lien securing Funded Debt.
"Consolidated Unimproved Realty" means, for the Consolidated
Group on a consolidated basis, the undepreciated cost of all raw
unimproved land held for current or future development. For purposes
hereof, property under development where construction and development
is in progress shall not be considered to be unimproved to the extent
that completed buildings are available for rent and are at least 75%
leased. In such case, the undepreciated cost of the completed
building(s) together with a proportionate cost of the related land and
land improvements shall be considered as improved for purposes hereof.
"Consolidated Unsecured Debt" means, for the Consolidated
Group on a consolidated basis, all unsecured Consolidated Funded Debt.
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<PAGE>
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or undertaking to which such Person is a party or
by which it or any of its property is bound.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, each Joinder Agreement, the Administrative
Agent's Fee Letter, and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business), (iv) all
obligations of such Person as lessee under capital leases, (v) all
obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or
substantially similar securities or property, (vi) all obligations of
such Person to reimburse any bank or other person in respect of amounts
payable under a letter of credit or similar instrument (being the
amount available to be drawn thereunder, whether or not then drawn),
(vii) all obligations of others secured by a Lien on any asset of such
Person, whether or not such obligation is assumed by such Person,
(viii) all obligations of others Guaranteed by such Person, (ix) all
obligations which in accordance with GAAP would be shown as liabilities
on a balance sheet of such Person, (x) the Attributed Principal Amount
under any Securitization Transaction and (xi) all obligations of such
Person owing under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
to which such Person is a party, where such transaction is considered
borrowed money indebtedness for tax purposes, but is classified as an
operating lease in accordance with GAAP. Debt of any Person shall
include Debt of any partnership or joint venture in such Person is a
general partner or joint venturer to the extent of recourse to such
Person for payment thereof.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at
such time, (i) has failed to make an Extension of Credit required
pursuant to the terms of this Credit Agreement, (ii) has failed to pay
to the Administrative Agent or any Lender an amount owed by such Lender
pursuant to the terms of the Credit Agreement or any other of the
Credit Documents, or (iii) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or to a receiver,
trustee or similar proceeding.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
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<PAGE>
"Domestic Credit Party" means any Credit Party which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Domestic Subsidiary" means any Subsidiary which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Transaction" means, with respect to any member of the
Consolidated Group, any issuance of shares of its capital stock or
other equity interest, other than an issuance (i) to a member of the
Consolidated Group or (ii) in connection with exercise by a present or
former employee, officer or director under a stock incentive plan,
stock option plan or other equity-based compensation plan or
arrangement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b) or (c) of
the Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (vi) the complete or
partial withdrawal of the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect
to any Plan; or (vii) the adoption of an
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<PAGE>
amendment to any Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
--------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
"Extension of Credit" means, as to any Lender, the making of,
or participation in, a Loan by such Lender.
"Facility Fee" shall have the meaning given such term in
Section 3.5(a).
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (B) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for
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such day shall be the average rate quoted to the Administrative
Agent on such day on such transactions as determined by the
Administrative Agent.
"Foreign Credit Party" means a Credit Party which is not a
Domestic Credit Party.
"Foreign Subsidiary" means a Subsidiary which is not a
Domestic Subsidiary.
"Funded Debt" means at any date, with respect to any Person,
without duplication, all Debt of such Person.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantee" by any Person, means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guaranteed Obligations" means, as to each Guarantor, without
duplication, all obligations of the Borrower to the Lenders and the
Administrative Agent, whenever arising, under this Credit Agreement,
the Notes or the Credit Documents relating to the Obligations hereunder
(including interest accruing after a Bankruptcy Event, regardless of
whether such interest is allowed as a claim under the Bankruptcy Code).
"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto, and each other Person which
may hereafter become a Guarantor by execution of a Joinder Agreement,
together with their successors and permitted assigns.
"Intangible Assets" of any Person means at any date the amount
of (i) all write-ups (other than write-ups resulting from write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) in the book value of any asset owned by
such Person and (ii) all unamortized debt discount and expense,
unamortized deferred charges, capitalized start-up costs, goodwill,
patents, licenses, trademarks, trade names, copyrights, organization or
developmental expenses, covenants not to compete and other intangible
items.
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"Interbank Offered Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
(rounded upwards, if necessary, to the nearest whole multiple of 1/100
of 1%) equal to the rate of interest, determined by the Administrative
Agent on the basis of the offered rates for deposits in dollars for a
period of time corresponding to such Interest Period (and commencing on
the first day of such Interest Period), appearing on Telerate Page 3750
(or, if, for any reason, Telerate Page 3750 is not available, the
Reuters Screen LIBO Page) as of approximately 11:00 A.M. (London time)
two (2) Business Days before the first day of such Interest Period. As
used herein, "Telerate Page 3750" means the display designated as page
3750 by Dow Jones Telerate, Inc. (or such other page as may replace
such page on that service for the purpose of displaying the British
Bankers Association London interbank offered rates) and "Reuters Screen
LIBO Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank
offered rates of major banks).
"Interest Payment Date" means (i) as to any Base Rate Loan,
the last day of each March, June, September and December and the
Termination Date and (ii) as to any Eurodollar Loan, Competitive Loan
and Swingline Loan, the last day of each Interest Period for such Loan,
the date of repayment of principal of such Loan and the Termination
Date, and in addition where the applicable Interest Period is more than
three months, then also the date three months from the beginning of the
Interest Period, and each three months thereafter. If an Interest
Payment Date falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a
period of one, two, three or six month's duration, as the Borrower may
elect, commencing in each case, on the date of the borrowing (including
conversions, extensions and renewals), (ii) as to any Swingline Loan, a
period of such duration, not to exceed 30 days, as the Borrower may
request and the Swingline Lender may agree in accordance with the
provisions of Section 2.2(b)(i), commencing in each case, on the date
of borrowing, and (iii) as to any Competitive Loan, a period of not
less than 7 nor more than 180 days' duration, as the Borrower may
request and the Competitive Lender may agree in accordance with the
provisions of Section 2.3; provided, however, (A) if any Interest
Period would end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day (except
that in the case of Eurodollar Loans where the next succeeding Business
Day falls in the next succeeding calendar month, then such Interest
Period shall end on the next preceding Business Day), (B) no Interest
Period shall extend beyond the Termination Date, and (C) in the case of
Eurodollar Loans, where an Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on
the last day of such calendar month.
"Invested Amount" shall have the meaning given such term in
the definition of Attributed Principal Amount.
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"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.11 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.11.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and their successors and assigns.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans, the Swingline
Loans and the Competitive Loans.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Consolidated Group taken as a
whole, (ii) the ability of the Credit Parties taken as a whole to
perform any material obligation under the Credit Documents to which
they are parties or (iii) the rights and remedies of the Lenders or the
Borrower under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Minority Interests" means any shares of stock of any class of
a Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Borrower and/or one or more Wholly-Owned
Subsidiaries. Minority Interests constituting preferred stock shall be
valued at the voluntary or involuntary liquidation value of such
preferred stock, whichever is greater, and by valuing common stock at
the book value of the capitalized surplus applicable thereto adjusted,
if necessary, to reflect any changes from the book value of such common
stock required by the foregoing method of valuing Minority Interests in
preferred stock.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such Borrower in the business
of rating securities.
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"Mortgage Debt" of any Person means at any date the aggregate
principal amount of all Debt of such Person secured by a Lien on any
real property owned or leased by it.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"Non-Excluded Taxes" means such term as is defined in Section
3.10.
"Note" or "Notes" means any Revolving Note, Swingline Note
and/or Competitive Note.
"Notice of Borrowing" means a written notice of borrowing or
request for Competitive Bid in substantially the form of Schedule
2.1(b)(i) or Schedule 2.3(b)-1, as required by Section 2.1(b)(i) or
Section 2.3(b), respectively.
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Operating Partnership" means United Dominion Realty, L.P.,
together with any permitted successors and assigns.
"Participation Interest" means the purchase by a Lender of a
participation in Swingline Loans as provided in Section 2.2(b)(iii),
and in Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) Investments consisting of stock,
obligations, securities or other property received in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors; (iii) acquisitions permitted by Section 8.3; (iv)
Investments by a member of the Consolidated Group or an Affiliate of a
member of the Consolidated Group in connection with a Permitted
Securitization Transaction; (v) Investments by a member of the
Consolidated Group in and to a Credit Party; and (vi) additional
Investments of a type not contemplated by the foregoing clauses in
aggregate amount outstanding, not to exceed the greater of (A)
$25,000,000 or (B) one percent (1%) of Consolidated Adjusted
Capitalization.
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"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in effect
at its principal office in Charlotte, North Carolina, with each change
in the Prime Rate being effective on the date such change is publicly
announced as effective (it being understood and agreed that the Prime
Rate is a reference rate used by NationsBank in determining interest
rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit by NationsBank to any
debtor).
"Pro Forma Basis" means, with respect to any transaction, that
such transaction shall be deemed to have occurred as of the first day
of the four fiscal-quarter period ending as of the most recent fiscal
quarter end preceding the date of such transaction with respect to
which the Administrative Agent and the Lenders have received the
officer's certificate in accordance with the provisions of Section
7.2(b). As used herein, "transaction" means and includes (i) any
corporate merger or consolidation as referred to in Section 8.3(a), and
(ii) any acquisition of capital stock or securities or any purchase,
lease or other acquisition of property as referred to in Section
8.3(c).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Quoted Rate" means, with respect to a Quoted Rate Swingline
Loan, the fixed percentage rate per annum offered by the Swingline
Lender and accepted by the Borrower with respect to such Quoted Rate
Swingline Loan in accordance with the provisions of Section 2.2.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing
interest at a Quoted Rate.
"Realty" means all real property and interests therein,
together with all improvements thereon.
"Receivables" means any right of payment from or on behalf of
any obligor, whether constituting an account, chattel paper,
instrument, general intangible or otherwise, arising from the sale or
financing by a member of the Consolidated Group or merchandise or
services, and monies due thereunder, security in the merchandise and
services financed thereby, records related thereto, and the right to
payment of any interest or finance charges and other obligations with
respect thereto, proceeds from
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claims on insurance policies related thereto, any other proceeds
related thereto, and any other related rights.
"Receivables Financier" means, in connection with a
Securitization Transaction, the Person which provides financing for
such transaction whether by purchase, loan or otherwise in respect of
Receivables.
"Register" shall have the meaning given such term in Section
11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Required Lenders" means Lenders having, at the time of
determination thereof, more than fifty percent (50%) of the
Commitments, or if the Commitments have been terminated, Lenders
having, at the time of determination thereof, more than fifty percent
(50%) of the aggregate principal amount of the Loans outstanding
(taking into account in each case Participation Interests or obligation
to participate therein); provided that the Commitments of, and
outstanding principal amount of Loans (taking into account
Participation Interests therein) owing to, a Defaulting Lender shall be
excluded for purposes hereof in making a determination of Required
Lenders.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Responsible Officer" means the Chief Financial Officer, the
Controller or the Treasurer.
"Restricted Investments" means Investments, including loans
and advances, other than Permitted Investments.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding of up to such Lender's
Revolving Commitment as specified in Schedule 2.1(a), as such amount
may be reduced from time to time in accordance with the provisions
hereof.
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"Revolving Commitment Percentage" means, for each Lender, a
fraction (expressed as a decimal) the numerator of which is the
Revolving Commitment of such Lender at such time and the denominator of
which is the Aggregate Revolving Committed Amount at such time. The
initial Revolving Commitment Percentages are set out on Schedule
2.1(a).
"Revolving Committed Amount" means, collectively, the
aggregate amount of all of the Revolving Commitments as referenced in
Section 2.1(a) and, individually, the amount of each Lender's Revolving
Commitment as specified in Schedule 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term
in Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans in substantially the form attached as Schedule 2.1(e),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale-Leaseback Transaction" means any arrangement with any
Person (other than the Borrower or a Wholly-Owned Subsidiary or the
Operating Partnership) providing for the leasing by the Borrower or any
Subsidiary (as tenant) of real or personal property which has been or
is to be sold or transferred by the Borrower or such Subsidiary to such
Person or to any Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations
of the Borrower or such Subsidiary.
"Securitization Subsidiary" shall have the meaning provided in
the definition of "Securitization Transaction".
"Securitization Transaction" means any financing transaction
or series of financing transactions that have been or may be entered
into by a member of the Consolidated Group pursuant to which such
member of the Consolidated Group may sell, convey or otherwise transfer
to (i) a Subsidiary or affiliate (a "Securitization Subsidiary"), or
(ii) any other Person, or may grant a security interest in, any
Receivables or interests therein secured by merchandise or services
financed thereby (whether such Receivables are then existing or arising
in the future) of such member of the Consolidated Group, and any assets
related thereto, including without limitation, all security interests
in merchandise or services financed thereby, the proceeds of such
Receivables, and other assets which are customarily sold or in respect
of which security interests are customarily granted in connection with
securitization transactions involving such assets.
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"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair saleable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subordinated Debt" means any Debt which by its terms is
specifically subordinated in right of payment to the prior payment of
the obligations of the Credit Parties under this Credit Agreement and
the other Credit Documents on terms and conditions satisfactory to the
Required Lenders.
"Subordinated Funded Debt" means at any date all unsecured
Funded Debt (i) no part of the principal of which is required to be
paid (whether by way of mandatory sinking fund, mandatory redemption or
otherwise) prior to the payment in full of the Loans hereunder and (ii)
the payment of the principal of and interest on which, and any other
obligations to the holder of such Debt, is subordinated to the prior
payment in full of the Loans hereunder (including interest accruing
after the date of commencement of any proceeding under any bankruptcy,
insolvency, or similar law in which such Person is a debtor).
"Subsidiary" means as to any Person, any corporation,
partnership, limited liability company or other entity of which
securities or other ownership interest having an ordinary voting power
to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly
owned by such Person. Unless otherwise provided, references to a
"Subsidiary" or "Subsidiaries" shall mean a Subsidiary or Subsidiaries
of the Borrower.
"Swingline Commitment" means the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding up to the Swingline Committed Amount and the
commitment of the Lenders to purchase participation interests in the
Swingline Loans up to their respective Revolving
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Commitment Percentages
as provided in Section 2.2(b)(iii), as such amounts may be reduced from
time to time in accordance with the provisions hereof.
"Swingline Committed Amount" means the amount of the Swingline
Lender's Commitment as specified in Section 2.2(a).
"Swingline Lender" means NationsBank or the successor
Administrative Agent appointed pursuant to the provisions of Section
2.2(a).
"Swingline Loan" means a swingline revolving loan made by the
Swingline Lender pursuant to the provisions of Section 2.2.
"Swingline Note" means the promissory note of the Borrower in
favor of the Swingline Lender evidencing the Swingline Loans in
substantially the form attached as Schedule 2.2(d), as such promissory
note may be amended, modified, supplemented, extended, renewed or
replaced from time to time.
"Termination Date" means the date three (3) years following
the Closing Date, or if extended with the written consent of each of
the Lenders, such later date as to which the Termination Date may be
extended.
"364-Day Credit Agreement" means that 364-Day Credit Agreement
dated as of the date hereof, as amended and modified, among the
Borrower, the Guarantors and Lenders identified therein and
NationsBank, N.A., as Administrative Agent.
"Wholly-Owned Subsidiary" means as to any Person, any
Subsidiary all of the voting stock or other similar voting interests
are owned directly or indirectly by such Person. Unless otherwise
provided, references to "Wholly-Owned Subsidiary" shall mean
Wholly-Owned Subsidiaries of the Borrower.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until" each mean
"to but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. Financial statements, certificates and reports delivered
hereunder shall be accompanied by a description of any changes in application of
accounting principles and an estimation of the effects thereof. All calculations
made for the purposes of determining compliance with this Credit Agreement shall
(except as otherwise expressly provided herein) be made by application of GAAP
applied on a basis consistent with the most recent annual or quarterly financial
statements delivered pursuant to Section 7.1 hereof (or, prior to the delivery
of the first financial statements pursuant to Section 7.1 hereof, consistent
with the annual audited
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financial statements referenced in Section 6.1(i) hereof); provided, however, if
(a) the Borrower shall object to determining such compliance on such basis at
the time of delivery of such financial statements due to any change in GAAP or
the rules promulgated with respect thereto or (b) the Administrative Agent or
the Required Lenders shall so object in writing within 30 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Lenders as to which no such objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans (the "Revolving Loans") to the Borrower from time to time in the
amount of such Lender's Revolving Commitment Percentage of such Revolving Loans
for the purposes hereinafter set forth; provided that (i) with regard to the
Lenders collectively, the aggregate principal amount of Loans outstanding at any
time shall not exceed the Aggregate Revolving Committed Amount, and (ii) with
regard to each Lender individually, such Lender's Revolving Commitment
Percentage of Loans outstanding at any time shall not exceed such Lender's
Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request, and may
be repaid and reborrowed in accordance with the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone notice
promptly confirmed in writing) to the Administrative Agent not later
than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day
prior to the date of the requested borrowing in the case of Base Rate
Loans, and on the third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Revolving
Loan is requested, (B) the date of the requested borrowing (which shall
be a Business Day), (C) the aggregate principal amount to be borrowed,
and (D) whether the borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if Eurodollar Loans are
requested, the Interest Period(s) therefor. If the Borrower shall fail
to specify in any such Notice of Borrowing (I) an applicable Interest
Period in the case of a Eurodollar Loan, then such notice shall be
deemed to be a request for an Interest Period of one month, or (II) the
type of Revolving Loan requested, then such notice shall be deemed to
be a request for a Eurodollar Loan with an Interest Period of one
month. The Administrative Agent shall give notice to each Lender
promptly upon receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such Lender's share of
any borrowing to be made pursuant thereto.
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(ii) Minimum Amounts. Each Revolving Loan shall be in a
minimum aggregate principal amount of $5,000,000, in the case of
Eurodollar Loans, or $1,000,000 (or the remaining Revolving Committed
Amount, if less), in the case of Base Rate Loans, and integral
multiples of $1,000,000 in excess thereof.
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the
Administrative Agent for the account of the Borrower as specified in
Section 3.14(a), or in such other manner as the Administrative Agent
may specify in writing, by 2:30 P.M. (Charlotte, North Carolina time)
on the date specified in the applicable Notice of Borrowing in Dollars
and in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the
Administrative Agent by crediting the account of the Borrower on the
books of such office with the aggregate of the amounts made available
to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due
and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the Base
Rate plus the Applicable Percentage;
(ii) Eurodollar Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Eurodollar Rate plus the Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) Revolving Notes. The Revolving Loans shall be evidenced by a duly
executed Revolving Note in favor of each Lender.
(f) Maximum Number of Eurodollar Loans. The Borrower will be limited to
a maximum number of ten (10) Eurodollar Loans outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest Periods
will be considered as separate Eurodollar Loans even if their Interest Periods
expire on the same date.
2.2 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein, the
Swingline Lender, in its individual capacity, agrees to make certain revolving
credit loans requested by the Borrower in Dollars to the Borrower (each a
"Swingline Loan" and, collectively, the "Swingline Loans") from time to time
from the Closing Date until the Termination Date for the purposes hereinafter
set forth; provided,
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however, (i) the aggregate principal amount of Swingline Loans outstanding at
any time shall not exceed FIFTEEN MILLION DOLLARS ($15,000,000) (the "Swingline
Committed Amount"), and (ii) with regard to the Lenders collectively, the
aggregate principal amount of Loans outstanding at any time shall not exceed the
Aggregate Revolving Committed Amount. Swingline Loans hereunder shall be made as
Base Rate Loans or Quoted Rate Swingline Loans, as the Borrower may request in
accordance with the provisions hereof, and may be repaid and reborrowed in
accordance with the provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrower
desires a Swingline Loan advance hereunder it shall give written notice
(or telephonic notice promptly confirmed in writing) to the Swingline
Lender not later than 11:00 A.M. (Charlotte, North Carolina time) on
the Business Day of the requested Swingline Loan advance. Each such
notice shall be irrevocable and shall specify (A) that a Swingline Loan
advance is requested, (B) the date of the requested Swingline Loan
advance (which shall be a Business Day) and (C) the principal amount of
and Interest Period for the Swingline Loan advance requested. Each
Swingline Loan shall have such maturity date as the Swingline Lender
and the Borrower shall agree upon receipt by the Swingline Lender of
any such notice from the Borrower. The Swingline Lender shall initiate
the transfer of funds representing the Swingline Loan advance to the
Borrower by 3:00 P.M. (Charlotte, North Carolina time) on the Business
Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall be in
a minimum principal amount of $1,000,000 and in integral multiples of
$500,000 in excess thereof (or the remaining amount of the Swingline
Committed Amount, if less).
(iii) Repayment of Swingline Loans. The principal amount of
all Swingline Loans shall be due and payable on the earlier of (A) the
maturity date agreed to by the Swingline Lender and the Borrower with
respect to such Loan (which maturity date shall not be a date more than
thirty (30) days from the date of advance thereof) or (B) the
Termination Date. The Swingline Lender may, at any time, in its sole
discretion, by written notice to the Borrower and the Lenders, demand
repayment of its Swingline Loans by way of a Revolving Loan advance, in
which case the Borrower shall be deemed to have requested a Revolving
Loan advance comprised solely of Base Rate Loans in the amount of such
Swingline Loans; provided, however, that any such demand shall be
deemed to have been given one Business Day prior to the Termination
Date and on the date of the occurrence of any Event of Default
described in Section 9.1 and upon acceleration of the indebtedness
hereunder and the exercise of remedies in accordance with the
provisions of Section 9.2. Each Lender hereby irrevocably agrees to
make its pro rata share of each such Revolving Loan in the amount, in
the manner and on the date specified in the preceding sentence
notwithstanding (I) the amount of such borrowing may not comply with
the minimum amount for advances of Revolving Loans otherwise required
hereunder, (II) whether any conditions specified in Section 5.2 are
then satisfied, (III) whether a Default or an Event of Default then
exists, (IV) failure of any such request or deemed request for
Revolving Loan to be made by the time otherwise required hereunder, (V)
whether the date of such borrowing is a date on which Revolving Loans
are otherwise permitted to be made
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hereunder or (VI) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the
event that any Revolving Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect
to the Borrower or any other Credit Party), then each Lender hereby
agrees that it shall forthwith purchase (as of the date such borrowing
would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase)
from the Swingline Lender such Participations Interest in the
outstanding Swingline Loans as shall be necessary to cause each such
Lender to share in such Swingline Loans ratably based upon its
Commitment Percentage of the Revolving Committed Amount (determined
before giving effect to any termination of the Commitments pursuant to
Section 3.4), provided that (A) all interest payable on the Swingline
Loans shall be for the account of the Swingline Lender until the date
as of which the respective Participation Interest is purchased and (B)
at the time any purchase of Participation Interests pursuant to this
sentence is actually made, the purchasing Lender shall be required to
pay to the Swingline Lender, to the extent not paid to the Swingline
Lender by the Borrower in accordance with the terms of subsection
(c)(ii) below, interest on the principal amount of Participation
Interests purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date
of payment for such Participation Interests, at the rate equal to the
Federal Funds Rate.
(c) Interest on Swingline Loans. Subject to the provisions of
Section 3.1,
(i) Base Rate Loans. During such periods as Swingline Loans
shall be comprised of Base Rate Loans, such Swingline Loans shall bear
interest at a per annum rate (computed on the basis of the actual
number of days elapsed over a year of 365 days) equal to the Base Rate.
(ii) Quoted Rate Swingline Loans. During such periods as
Swingline Loans shall be comprised of Quoted Rate Swingline Loans, such
Swingline Loans shall bear interest at a per annum rate (computed on
the basis of the actual number of days elapsed over a year of 360 days)
equal to the Quoted Rate.
Interest on Swingline Loans shall be payable in arrears on each applicable
Interest Payment Date. Notwithstanding any other provision to the contrary set
forth in this Credit Agreement, in the event that the principal amount of any
Quoted Rate Swingline Loan is not repaid on the last day of the Interest Period
for such Loan, then such Loan shall be automatically converted into a Base Rate
Loan at the end of such Interest Period.
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in an original
principal amount equal to the Swingline Committed Amount substantially in the
form of Exhibit 2.2(d).
2.3 Competitive Loan Subfacility.
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(a) Competitive Loans. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth
herein, the Borrower may, from time to time from the Closing Date until the
Termination Date, request and each Lender may, in its sole discretion, agree
to make, Competitive Loans in Dollars to the Borrower; provided, however, that
(i) the aggregate principal amount of outstanding Competitive Loans shall not
at any time exceed the lesser of (A) ONE HUNDRED MILLION DOLLARS
($100,000,000) or (B) the Revolving Committed Amount (the "Competitive Loan
Maximum Amount"), and (ii) with regard to the Lenders collectively, the
aggregate principal amount of Loans outstanding at any time shall not exceed
the Aggregate Revolving Committed Amount. Each Competitive Loan shall be not
less than $5,000,000 in the aggregate and integral multiples of $1,000,000 in
excess thereof (or the remaining portion of the Competitive Loan Maximum
Amount, if less).
(b) Competitive Bid Requests. The Borrower may solicit
Competitive Bids by delivery of a Competitive Bid Request substantially in the
form of Exhibit 2.3(b)-1 to the Agent by 12:00 Noon (Charlotte, North Carolina
time) on a Business Day not less than one (1) nor more than four (4) Business
Days prior to the date of a requested Competitive Loan borrowing. A
Competitive Bid Request shall specify (i) the date of the requested
Competitive Loan borrowing (which shall be a Business Day), (ii) the amount of
the requested Competitive Loan borrowing and (iii) the applicable Interest
Periods requested and shall be accompanied by payment of the Competitive Bid
Request Fee. The Agent shall, promptly following its receipt of a Competitive
Bid Request under this subsection (b), notify the affected Lenders of its
receipt and the contents thereof and invite the Lenders to submit Competitive
Bids in response thereto. A form of such notice is provided in Exhibit
2.3(b)-2. No more than three (3) Competitive Bid Requests (e.g., the Borrower
may request Competitive Bids for no more than three (3) different Interest
Periods at a time) shall be submitted at any one time and Competitive Bid
Requests may be made no more frequently than once every five (5) Business
Days.
(c) Competitive Bid Procedure. Each Lender may, in its sole
discretion, make one or more Competitive Bids to the Borrower in response to a
Competitive Bid Request. Each Competitive Bid must be received by the Agent
not later than 10:00 A.M. (Charlotte, North Carolina time) on the Business Day
next succeeding the date of receipt by the Agent of the related Competitive
Bid Request. A Lender may offer to make all or part of the requested
Competitive Loan borrowing and may submit multiple Competitive Bids in
response to a Competitive Bid Request. The Competitive Bid shall specify (i)
the particular Competitive Bid Request as to which the Competitive Bid is
submitted, (ii) the minimum (which shall be not less than $1,000,000 and
integral multiples of $500,000 in excess thereof) and maximum principal
amounts of the requested Competitive Loan or Loans as to which the Lender is
willing to make, and (iii) the applicable interest rate or rates and Interest
Period or Periods therefor. A form of such Competitive Bid is provided in
Exhibit 2.3(c). A Competitive Bid submitted by a Lender in accordance with the
provisions hereof shall be irrevocable. The Agent shall promptly notify the
Borrower of all Competitive Bids made and the terms thereof. The Agent shall
send a copy of each of the Competitive Bids to the Borrower for its records as
soon as practicable.
(d) Submission of Competitive Bids by Agent. If the Agent, in
its capacity as a Lender, elects to submit a Competitive Bid in response to
any Competitive Bid Request, it shall submit such Competitive Bid directly to
the Borrower one-half of an hour earlier than the latest
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time at which the other Lenders are required to submit their Competitive Bids to
the Agent in response to such Competitive Bid Request pursuant to subsection (c)
above.
(e) Acceptance of Competitive Bids. The Borrower may, in its
sole and absolute discretion, subject only to the provisions of this
subsection (e), accept or refuse any Competitive Bid offered to it. To accept
a Competitive Bid, the Borrower shall give written notification (or telephonic
notice promptly confirmed in writing) substantially in the form of Exhibit
2.3(e) of its acceptance of any or all such Competitive Bids to the Agent by
11:00 A.M. (Charlotte, North Carolina time) on the date on which notice of
election to make a Competitive Bid is to be given to the Agent by the Lenders;
provided, however, (i) the failure by the Borrower to give timely notice of
its acceptance of a Competitive Bid shall be deemed to be a refusal thereof,
(ii) the Borrower may accept Competitive Bids for the same Interest Period(s)
only in ascending order of rates, (iii) the aggregate amount of Competitive
Bids accepted by the Borrower shall not exceed the principal amount specified
in the Competitive Bid Request, (iv) the Borrower may accept a portion of a
Competitive Bid in the event, and to the extent, acceptance of the entire
amount thereof would cause the Borrower to exceed the principal amount
specified in the Competitive Bid Request, subject however to the minimum
amounts provided herein (and provided that where two or more Lenders submit
such a Competitive Bid at the same Competitive Bid Rate, then pro rata between
or among such Lenders) and (v) no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of $1,000,000
and integral multiples of $500,000 in excess thereof, except that where a
portion of a Competitive Bid is accepted in accordance with the provisions of
subsection (iv) hereof, then in a minimum principal amount of $500,000 and
integral multiples of $500,000 in excess thereof (but not in any event less
than the minimum amount specified in the Competitive Bid), and in calculating
the pro rata allocation of acceptances of portions of multiple bids at a
particular Competitive Bid Rate pursuant to subsection (iv) hereof, the
amounts shall be rounded to integral multiples of $100,000 in a manner which
shall be in the discretion of the Borrower. A notice of acceptance of a
Competitive Bid given by the Borrower in accordance with the provisions hereof
shall be irrevocable. The Agent shall, not later than 12:00 Noon (Charlotte,
North Carolina time) on the date of receipt by the Agent of a notification
from the Borrower of its acceptance and/or refusal of Competitive Bids, notify
each affected Lender of its receipt and the contents thereof. Upon its receipt
from the Agent of notification of the Borrower's acceptance of its Competitive
Bid in accordance with the terms of this subsection (e), each successful
bidding Lender will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid
has been accepted.
(f) Funding of Competitive Loans. Each Lender which is to make
a Competitive Loan shall make its Competitive Loan borrowing available to the
Agent for the account of the Borrower at the office of the Agent specified in
Schedule 2.1(a), or at such other office as the Agent may designate in
writing, by 1:30 P.M. (Charlotte, North Carolina time) on the date specified
in the Competitive Bid Request in Dollars and in funds immediately available
to the Agent. Such borrowing will then be made available to the Borrower by
crediting the account of the Borrower on the books of such office with the
aggregate of the amount made available to the Agent by the applicable
Competitive Loan Lenders and in like funds as received by the Agent.
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(g) Maturity of Competitive Loans. Each Competitive Loan shall
mature and be due and payable in full on the last day of the Interest Period
applicable thereto, unless accelerated sooner pursuant to Section 9.2. Unless
the Borrower shall give notice to the Agent otherwise, the Borrower shall be
deemed to have requested a Revolving Loan borrowing in the amount of the
maturing Competitive Loan, the proceeds of which will be used to repay such
Competitive Loan.
(h) Interest on Competitive Loans. Subject to the provisions
of Section 3.1, Competitive Loans shall bear interest in each case at the
Competitive Bid Rate applicable thereto. Interest on Competitive Loans shall
be payable in arrears on each Interest Payment Date.
(i) Competitive Loan Notes. The Competitive Loans made by each
Lender shall be evidenced by a duly executed promissory note of the Borrower
to such Lender in an original principal amount equal to the Competitive Loan
Maximum Amount and substantially in the form of Exhibit 2.3(i).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by law, interest on
the Loans and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate 2% greater
than the rate which would otherwise be applicable (or if no rate is applicable,
whether in respect of interest, fees or other amounts, then 2% greater than the
Base Rate).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have
the option, on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another interest
rate type; provided, however, that (i) except as provided in Section 3.8,
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or conversion,
(iii) Loans extended as, or converted into, Eurodollar Loans shall be subject to
the terms of the definition of "Interest Period" set forth in Section 1.1 and
shall be in such minimum amounts as provided in Section 2.1(b)(ii), (iv) any
request for extension or conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an Interest
Period of one month and (v) Competitive Loans may be converted to Revolving
Loans only on the last day of their Interest Periods. Each such extension or
conversion shall be effected by the Borrower by giving a Notice of
Extension/Conversion (or telephone notice promptly confirmed in writing) to the
Administrative Agent prior to 11:00 A.M. (Charlotte, North Carolina time) on the
Business Day of, in the case of the conversion of a Eurodollar Loan into a Base
Rate Loan, and on the third Business Day prior to, in the case of the extension
of a
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Eurodollar Loan as, or conversion of a Base Rate Loan into, a Eurodollar
Loan, the date of the proposed extension or conversion, specifying the date of
the proposed extension or conversion, the Loans to be so extended or converted,
the types of Loans into which such Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each request
for extension or conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrower of the matters specified in
subsections (a) through (e) of Section 5.2. In the event the Borrower fails to
request extension or conversion of any Eurodollar Loan in accordance with this
Section, or any such conversion or extension is not permitted or required by
this Section, then such Eurodollar Loan shall be automatically converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The
Administrative Agent shall give each Lender notice as promptly as practicable of
any such proposed extension or conversion affecting any Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. Revolving Loans may be repaid in
whole or in part without premium or penalty; provided that (i) Eurodollar Loans
may be prepaid only upon three (3) Business Days' prior written notice to the
Administrative Agent and must be accompanied by payment of any amounts owing
under Section 3.11, and (ii) partial prepayments shall be minimum principal
amounts of $5,000,000, in the case of Eurodollar Loans, and $1,000,000, in the
case of Base Rate Loans, and in integral multiples of $1,000,000 in excess
thereof.
(b) Mandatory Prepayments. If at any time, (i) the aggregate
principal amount of Loans shall exceed the Aggregate Revolving Committed Amount,
or (ii) the aggregate amount of Swingline Loans shall exceed the Swingline
Committed Amount, or (iii) the aggregate amount of Competitive Loans shall
exceed the Competitive Loan Maximum Amount, the Borrower shall immediately make
payment on the Loans in an amount sufficient to eliminate the excess.
(c) Application. Unless otherwise specified by the Borrower,
prepayments made hereunder shall be applied first to Swingline Loans, then to
Revolving Loans which are Base Rate Loans, then to Revolving Loans which are
Eurodollar Loans in direct order of Interest Period maturities, then to
Competitive Loans in direct order of Interest Period maturities. Amounts prepaid
hereunder may be reborrowed in accordance with the provisions hereof.
3.4 Termination and Reduction of Commitments
(a) Voluntary Reductions. The Revolving Commitments may be
terminated or permanently reduced in whole or in part by the Borrower upon three
(3) Business Days' prior written notice to the Administrative Agent, provided
that (i) after giving effect to any voluntary reduction the aggregate amount of
Loans shall not exceed the Aggregate Revolving Committed Amount, as reduced, and
(ii) partial reductions shall be minimum principal amount of $5,000,000, and in
integral multiples of $1,000,000 in excess thereof.
(b) Mandatory Reduction. The Commitments hereunder shall
terminate on the Termination Date.
3.5 Fees.
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(a) Facility Fee. In consideration of the Commitments
hereunder, the Borrower agrees to pay to the Administrative Agent for the
ratable benefit of the Lenders a facility fee (the "Facility Fee") equal to the
Applicable Percentage per annum on the average daily Revolving Committed Amount
for the applicable period. The Facility Fee shall be payable quarterly in
arrears on the 15th day following the last day of each calendar quarter for the
immediately preceding quarter (or portion thereof) beginning with the first such
date to occur after the Closing Date.
(b) Administrative Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, an annual administrative fee and such
other fees, if any, referred to in the Administrative Agent's Fee Letter.
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Administrative
Agent shall have determined (which determination shall be conclusive and binding
upon the Borrower) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the Administrative Agent shall give
telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. If such notice is given (a) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans and (b) any Loans that were to have been converted on the first
day of such Interest Period to or continued as Eurodollar Loans shall be
converted to or continued as Base Rate Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Base Rate
Loans to Eurodollar Loans.
3.8 Illegality.
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Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender, upon demand, without duplication, such amounts, if any, as may be
reasonably required pursuant to Section 3.11.
3.9 Requirements of Law.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for (i) Non-Excluded
Taxes covered by Section 3.10 (including Non-Excluded Taxes imposed
solely by reason of any failure of such Lender to comply with its
obligations under Section 3.10(b)) and (ii) changes in taxes measured
by or imposed upon the overall net income, or franchise tax (imposed in
lieu of such net income tax), of such Lender or its applicable lending
office, branch, or any affiliate thereof));
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, upon
notice to the Borrower from such Lender, through the Administrative
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Agent, in accordance herewith, the Borrower shall be obligated to promptly pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable, provided
that, in any such case, the Borrower may elect to convert the
Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving the
Administrative Agent at least one Business Day's notice of such election, in
which case the Borrower shall promptly pay to such Lender, upon demand, without
duplication, such amounts, if any, as may be reasonably required pursuant to
Section 3.11. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall provide prompt notice thereof to the
Borrower, through the Administrative Agent, certifying (x) that one of the
events described in this paragraph (a) has occurred and describing in reasonable
detail the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this subsection
submitted by such Lender, through the Administrative Agent, to the Borrower
shall be conclusive and binding on the parties hereto in the absence of manifest
error. This covenant shall survive the termination of this Credit Agreement and
the payment of the Loans and all other amounts payable hereunder.
3.10 Taxes.
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any court, or governmental body, agency or other
official, excluding taxes measured by or imposed upon the overall net income of
any Lender or its applicable lending office, or any branch or affiliate thereof,
and all franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any Lender or its applicable lending office, or
any branch or affiliate thereof, in each case imposed in lieu of net income
taxes, imposed: (i) by the jurisdiction under the laws of which such Lender,
applicable lending office, branch or affiliate is organized or is located, or in
which its principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between the jurisdiction imposing such tax and such Lender,
applicable lending office, branch or affiliate other than a connection arising
solely from such Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or any Notes. If
any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
or withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Credit Agreement and any Notes, provided, however, that the Borrower shall be
entitled to deduct and withhold any Non-Excluded Taxes and shall not be required
to increase any such amounts payable to any Lender that is not organized under
the laws of the United States of America or a state thereof if such Lender fails
to comply with the requirements of paragraph (b) of this subsection whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an
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original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X)(i) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Administrative Agent (A) two (2) duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Credit Agreement and any Notes
without deduction or withholding of any United States federal income
taxes and (B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Administrative Agent two
(2) further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent; or
(Y) in the case of any such Lender that is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i)
represent to the Borrower (for the benefit of the Borrower and the
Administrative Agent) that it is not a bank within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (ii) agree to
furnish to the Borrower on or before the date of any payment by the
Borrower, with a copy to the Administrative Agent two (2) accurate and
complete original signed copies of Internal Revenue Service Form W-8,
or successor applicable form certifying to such Lender's legal
entitlement at the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under this Credit
Agreement and any Notes (and to deliver to the Borrower and the
Administrative Agent two (2) further copies of such form on or before
the date it expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
Borrower or the Administrative Agent for filing and completing such
forms), and (iii) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower (for the
benefit of the Borrower and the Administrative Agent) such other forms
as may be reasonably required in order to establish
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the legal entitlement of such Lender to an exemption from withholding
with respect to payments under this Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Administrative Agent. Each Person that shall become a Lender or
a participant of a Lender pursuant to subsection 11.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this subsection, provided
that in the case of a participant of a Lender the obligations of such
participant of a Lender pursuant to this subsection (b) shall be determined as
if the participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and statements to
the Lender from which the related participation shall have been purchased.
3.11 Indemnity.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's gross negligence or willful misconduct) as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans and Competitive Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Credit Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan or a Competitive Loan after the Borrower has
given a notice thereof in accordance with the provisions of this Credit
Agreement or (c) the making of a prepayment of Eurodollar Loans or Competitive
Loans on a day which is not the last day of an Interest Period with respect
thereto. With respect to Eurodollar Loans and Competitive Loans, such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Percentage included therein, if
any) over (ii) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. The covenants of the Borrower set forth in this Section 3.11 shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.12 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan, each payment or prepayment of principal
of any Revolving Loan, each payment of interest on the Revolving Loans, each
payment of Facility Fees, each reduction of the Revolving Committed Amount and
each conversion or extension of any Revolving Loan, shall be allocated pro rata
among the Lenders in accordance with the respective
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principal amounts of the outstanding Revolving Loans and Participation Interests
to which such payment or prepayment is to be applied. With respect to
Competitive Loans, if the Borrower fails to specify the particular Competitive
Loan or Loans as to which any payment or other amount should be applied and it
is not otherwise clear as to the particular Competitive Loan or Loans to which
such payment or other amounts relate, or any such payment or other amount is to
be applied to Competitive Loans without regard to any such direction by the
Borrower, then each payment or prepayment of principal on Competitive Loans and
each payment of interest or other amount on or in respect of Competitive Loans,
shall be allocated pro rata among the relevant Competitive Loan Lenders in
accordance with the then outstanding amounts of their respective Competitive
Loans.
(b) Advances. No Lender shall be responsible for the failure or delay
by any other Lender in its obligation to make its ratable share of a borrowing
hereunder (and further, no Lender shall be required to fulfill any obligation of
a Defaulting Lender); provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its ratable share of such borrowing available to
the Administrative Agent, the Administrative Agent may assume that such Lender
is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by such Lender within the time period specified therefor
hereunder, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the Federal Funds Rate for a
period of two (2) Business Days, and thereafter at the Base Rate, for the period
until such Lender makes such amount immediately available to the Administrative
Agent. If such Lender does not pay such amounts to the Administrative Agent
forthwith upon demand, the Administrative Agent may notify the Borrower and
request the Borrower to immediately pay such amount to the Administrative Agent
with interest at the Base Rate. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.
3.13 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan or any other obligation owing to
such Lender under this Credit Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a participation in such Loans and other obligations in such amounts, and
make such other adjustments from time to time, as shall be equitable to the end
that all Lenders share such payment in accordance with their respective ratable
shares as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest
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payable with respect thereto) to each Lender whose payment shall have been
rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of
such Loan or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Administrative Agent shall fail to remit to the Administrative Agent or any
other Lender an amount payable by such Lender or the Administrative Agent to the
Administrative Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 3.13 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.13 to share in
the benefits of any recovery on such secured claim.
3.14 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Administrative Agent in dollars in immediately
available funds, without offset, deduction, counterclaim or withholding of any
kind, at the Administrative Agent's office specified in Section 11.1 not later
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Administrative Agent may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Borrower maintained with the
Administrative Agent (with notice to the Borrower). The Borrower shall, at the
time it makes any payment under this Credit Agreement, specify to the
Administrative Agent the Loans, Fees, interest or other amounts payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
it fails so to specify, or if such application would be inconsistent with the
terms hereof, the Administrative Agent shall distribute such payment to the
Lenders in such manner as the Administrative Agent may determine to be
appropriate in respect of obligations owing by the Borrower hereunder, subject
to the terms of Section 3.12(a)). The Administrative Agent will distribute such
payments to such Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as received
prior to the end of such Business Day and otherwise the Administrative Agent
will distribute such payment to such Lenders on the next succeeding Business
Day. Whenever any payment hereunder shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. Except as expressly provided otherwise herein, all computations of interest
and fees shall be made on the basis of actual number of days elapsed over a year
of 360 days, except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
Interest shall accrue from and include the date of borrowing, but exclude the
date of payment.
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(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received by the Administrative Agent or any Lender on account of the Guaranteed
Obligations or any other amounts outstanding under any of the Credit Documents
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Administrative Agent in connection with enforcing the rights of
the Lenders under the Credit Documents;
SECOND, to payment of any fees owed to the Administrative
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Loans owing to
such Lender;
FOURTH, to the payment of all accrued interest (pro rata based
on proportions of accrued unpaid interest on Loans) and fees on or in
respect of the Loans;
FIFTH, to the payment of the outstanding principal amount of
the Guaranteed Obligations;
SIXTH, to all other Loans and other obligations which shall
have become due and payable under the Credit Documents or otherwise and
not repaid pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
(or in the case of application under clause "FOURTH" pro rata based on accrued
unpaid interest) held by such Lender bears to the aggregate then outstanding
Loans) of amounts available to be applied pursuant to clauses "THIRD", "FOURTH",
"FIFTH" and "SIXTH" above.
3.15 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
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(b) The Administrative Agent shall maintain the Register pursuant to
Section 11.3(c) hereof, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and Interest
Period of each such Loan hereunder, (ii) the amount of any principal or interest
due and payable or to become due and payable to each Lender hereunder and (iii)
the amount of any sum received by the Administrative Agent hereunder from or for
the account of the Borrower and each Lender's share thereof. The Administrative
Agent will make reasonable efforts to maintain the accuracy of the subaccounts
referred to in the preceding sentence and to promptly update such subaccounts
from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Administrative Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any Lender or the
Administrative Agent to maintain any such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms hereof.
SECTION 4
GUARANTY
4.1 The Guarantee.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender and to the Administrative Agent as hereinafter provided the prompt
payment of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof.
The Guarantors hereby further agree that if any of the Guaranteed Obligations
are not paid in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as mandatory cash collateralization or otherwise),
the Guarantors will, jointly and severally, promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents, or any
other agreement or instrument referred to therein, or any
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substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Guaranteed Obligations for amounts paid under this
Guaranty until such time as the Lenders have been irrevocably paid in full, all
Commitments under the Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents. Without limiting the generality of the foregoing, it is
agreed that, to the fullest extent permitted by law, the occurrence of any one
or more of the following shall not alter or impair the liability of any
Guarantor hereunder which shall remain absolute and unconditional as described
above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents or any other agreement or instrument referred
to in the Credit Documents shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents or any other agreement or instrument referred to in
the Credit Documents shall be waived or any other guarantee of any of
the Guaranteed Obligations or any security therefor shall be released
or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Administrative
Agent or any Lender or Lenders as security for any of the Guaranteed
Obligations shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any of
the Credit Documents or any other agreement or instrument referred to in the
Credit Documents, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
4.3 Reinstatement.
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The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Each Guarantor agrees that such Guarantor shall have no right of
recourse to security for the Guaranteed Obligations, except through the exercise
of the rights of subrogation pursuant to Section 4.2.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, the Guaranteed Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Section 9.2) for purposes of Section 4.1 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing the
Guaranteed Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or the Guaranteed
Obligations being deemed to have become automatically due and payable), the
Guaranteed Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.
4.6 Rights of Contribution.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "Guarantied
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of
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the Guarantied Obligations; (ii) "Excess Payment" shall mean, in
respect of any Guarantied Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guarantied Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.6, shall mean, for
any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section 4.6 such subsequent Guarantor shall be deemed
to have been a Guarantor as of the Closing Date and the information pertaining
to, and only pertaining to, such Guarantor as of the date such Guarantor became
a Guarantor shall be deemed true as of the Closing Date).
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Guaranteed Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Conditions to Closing.
This Credit Agreement shall become effective, and the initial
Extensions of Credit may be made, upon the satisfaction of the following
conditions precedent:
(a) Execution of Credit Agreement and Credit Documents.
Receipt of (i) multiple counterparts of this Credit Agreement, and (ii) a
Revolving Note and Competitive Note for each Lender and a Swingline Note for the
Swingline Lender.
(b) Financial Information. Receipt of financial information
regarding the Borrower and its subsidiaries, as may be requested by, and in each
case in form and substance satisfactory to the Administrative Agent and the
Lenders.
(c) Absence of Legal Proceedings. The absence of any action ,
suit, investigation or proceeding pending in any court or before any arbitrator
or governmental instrumentality which could reasonably be expected to have a
Material Adverse Effect.
(d) Legal Opinions. Receipt of multiple counterparts of
opinions of counsel for the Credit Parties relating to the Credit Documents and
the transactions contemplated herein, in form and substance satisfactory to the
Administrative Agent and the Required Lenders.
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(e) Corporate Documents. Receipt of the following (or their
equivalent) for each of the Credit Parties:
(i) Articles of Incorporation. Copies of the articles
of incorporation or charter documents certified to be true and complete
as of a recent date by the appropriate governmental authority of the
state of its incorporation or organization.
(ii) Resolutions. Copies of resolutions of the Board
of Directors or other governing body approving and adopting the
respective Credit Documents, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a secretary or
assistant secretary as of the Closing Date to be true and correct and
in force and effect as of such date.
(iii) Bylaws. Copies of the bylaws certified by a
secretary or assistant secretary as of the Closing Date to be true and
correct and in force and effect as of such date.
(iv) Good Standing. Copies of (A) certificates of
good standing, existence or its equivalent issued as of a recent date
by the appropriate governmental authorities of the respective states of
incorporation or organization and of each other state in which the
failure to qualify and be in good standing would have a Material
Adverse Effect and (B) where available, certificates indicating payment
of all corporate franchise taxes issued as of a recent date by the
appropriate governmental taxing authorities of such states.
(v) Officer's Certificate. An officer's certificate
for each of the Credit Parties dated as of the Closing Date
substantially in the form of Schedule 5.1(i)(v) with appropriate
insertions and attachments.
(f) Fees. Receipt of all fees, if any, owing pursuant to the
Administrative Agent's Fee Letter and Section 3.5.
(g) Subsection 5.2 Conditions. The conditions specified in
Section 5.2 shall be satisfied.
(h) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Credit Agreement shall
be reasonably satisfactory in form and substance to the Agent and the Required
Lenders.
5.2 Conditions to All Extensions of Credit.
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein or in any
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other Credit Documents or which are contained in any certificate furnished at
any time under or in connection herewith shall be true and correct in all
material respects on and as of the date of such Extension of Credit as if made
on and as of such date (except for those which expressly relate to an earlier
date).
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Credit
Agreement.
(c) No Material Adverse Effect. No circumstances, events or
conditions shall have occurred since the date of the audited financial
statements referenced in Section 6.1 which would have a Material Adverse Effect.
(d) Additional Conditions to Revolving Loans. If a Revolving
Loan is made pursuant to Section 2.1, all conditions set forth therein shall
have been satisfied.
(e) Additional Conditions to Swingline Loans. If a Swingline
Loan is made pursuant to Section 2.2, all conditions set forth therein shall
have been satisfied.
(f) Additional Conditions to Competitive Loans. If a
Competitive Loan is made pursuant to Section 2.3, all conditions set forth
therein shall have been satisfied.
Each request for Extension of Credit (including extensions and
conversions) and each acceptance by the Borrower of an Extension of Credit
(including extensions and conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a), (b) and (c), and in
(d), (e) or (f) of this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each of the members of the
Consolidated Group parties hereto (in the case of the Borrower, for itself and
for each of the other members of the Consolidated Group; and in the case of each
of the other Credit Parties, for itself) hereby represents and warrants to the
Administrative Agent and to each Lender that:
6.1 Financial Condition.
As to the Borrower, each of the financial statements described below
(copies of which have heretofore been provided to the Administrative Agent for
distribution to the Lenders), have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, are complete and
correct in all material respects and present fairly the financial condition and
results from operations of the entities and for the periods specified, subject
in the case of interim Borrower-prepared statements to normal year-end
adjustments:
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(i) an audited consolidated balance sheet of the Borrower and
its consolidated subsidiaries dated as of December 31, 1996, together
with related statements of operations, cash flows and shareholders'
equity certified by Ernst & Young LLP, independent auditors; and
(ii) a Borrower-prepared consolidated balance sheet of the
Borrower and its consolidated subsidiaries dated as of March 31, 1997,
together with related consolidated statements of operations and cash
flows.
6.2 No Material Adverse Changes.
Since the date of the audited financial statements referenced in
Section 6.1(i), there has been no circumstance, development or event relating to
or affecting the members of the Consolidated Group which has had or would be
reasonably expected to have a Material Adverse Effect.
6.3 Organization; Existence; Compliance with Law.
Except as disclosed on Schedule 6.3, each of the members of the
Consolidated Group (a) is duly organized, validly existing in good standing
under the laws of the jurisdiction of its incorporation or organization, except
in such jurisdictions where the failure to be so qualified and in good standing
would not, in the aggregate, have a Material Adverse Effect, (b) has the
corporate or other necessary power and authority, and the legal right to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified as a
foreign entity and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not, in the aggregate, have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
The Borrower is a "real estate investment trust" within the meaning
provided under the Code.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate or other
action to authorize the execution, delivery and performance by it of the Credit
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with acceptance of extensions of credit
or the making of the guaranties hereunder or with the execution, delivery or
performance of any Credit Documents by the Credit Parties (other than those
which have been obtained, such filings as are required by the Securities and
Exchange Commission and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit parties. Each Credit Document to which it is a party
constitutes a legal, valid and binding
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obligation of such Credit Party enforceable against such Credit Party in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any member of the
Consolidated Group (except those as to which waivers or consents have been
obtained), and will not result in, or require, the creation or imposition of any
Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or Contractual Obligation other than the Liens arising under
or contemplated in connection with the Credit Documents. No member of the
Consolidated Group is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a Material
Adverse Effect.
6.6 No Material Litigation.
No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against, any members of the Consolidated Group
or against any of their respective properties or revenues which (a) relate to
the Credit Documents or any of the transactions contemplated hereby or thereby,
or (b) if adversely determined, would reasonably be expected to have a Material
Adverse Effect.
6.7 No Default.
No Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens.
Each of members of the Consolidated Group has good title in fee simple
to, or a valid leasehold interest in, all its material real property, and good
title to, or a valid leasehold interest in, all its other material property, and
none of such property is subject to any Lien, except for liens permitted under
Section 8.2.
6.9 Taxes.
Each of the members of the Consolidated Group has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and has paid or received extensions regarding (a) all taxes shown to be
due and payable on said returns or (b) all taxes shown to be due and payable on
any assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any (i) taxes, fees or other
charges with respect to which the failure to pay, in the
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aggregate, would not have a Material Adverse Effect or (ii) taxes, fees or other
charges the amount or validity of which are currently being contested and with
respect to which reserves in conformity with GAAP have been provided on the
books of such Person), and no tax Lien has been filed, and, to the best
knowledge of the Credit Parties, no claim is being asserted, with respect to any
such tax, fee or other charge.
6.10 ERISA.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the date on
which this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
(c) No member of the Consolidated Group nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. No member of the Consolidated Group nor any
ERISA Affiliate would become subject to any withdrawal liability under ERISA if
any member of the Consolidated Group or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No member of the Consolidated Group nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject any member of
the Consolidated Group or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
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(e) No member of the Consolidated Group nor any ERISA Affiliates has
any material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply
has been administered in compliance in all material respects of such sections.
6.11 Governmental Regulations, Etc.
(a) No part of the proceeds of Extensions of Credit hereunder will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation G or Regulation U, or for the
purpose of purchasing or carrying or trading in any securities. If requested by
any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U. No indebtedness being reduced or retired out of the proceeds of Extensions of
Credit hereunder was or will be incurred for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U or any "margin
security" within the meaning of Regulation T. "Margin stock" within the meanings
of Regulation U does not constitute more than 25% of the value of the
consolidated assets of the Borrower and its Subsidiaries. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued pursuant
thereto, or Regulation G, T, U or X.
(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
none of the members of the Consolidated Group is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) Each of the members of the Consolidated Group has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of its
business.
(d) None of the members of the Consolidated Group is in violation of
any applicable statute, regulation or ordinance of the United States of America,
or of any state, city, town, municipality, county or any other jurisdiction, or
of any agency thereof (including without limitation, environmental laws and
regulations), which violation could reasonably be expected to have a Material
Adverse Effect.
(e) Each of the members of the Consolidated Group is current with all
material reports and documents, if any, required to be filed with any state or
federal securities commission or similar agency and is in full compliance in all
material respects with all applicable rules and regulations of such commissions.
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6.12 Subsidiaries.
Set forth on Schedule 6.12 are all the Subsidiaries of the Borrower at
the Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein.
6.13 Purpose of Extensions of Credit.
The Extensions of Credit will be used to refinance existing Funded
Debt, and to finance working capital and other corporate purposes.
6.14 Environmental Matters.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or operated by
the members of the Consolidated Group (the "Properties") and all operations at
the Properties are in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Law with respect to the Properties or
the businesses operated by the members of the Consolidated Group (the
"Businesses"), and there are no conditions relating to the Businesses or
Properties that could give rise to material liability under any applicable
Environmental Laws.
(b) To the respective Credit Party's knowledge, none of the Properties
contains any Materials of Environmental Concern at, on or under the Properties
in amounts or concentrations that constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
(c) None of the members of the Consolidated Group has received any
written notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Businesses.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf any members of the Consolidated Group during their ownership of the
Properties in violation of, or in a manner that would be reasonably likely to
give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any member of the Consolidated Group is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
any member of the Consolidated Group, the Properties or the Businesses.
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(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties or arising from or related to
the operations (including, without limitation, disposal) of any member of the
Consolidated Group in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties (in the case of the Borrower, for itself and
each of the other members of the Consolidated Group, and in the case of each of
the other Credit Parties, for itself) covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Loans remain outstanding and all amounts
owing hereunder or in connection herewith have been paid in full:
7.1 Financial Statements.
The Borrower shall furnish, or cause to be furnished, to the
Administrative Agent for distribution to the Lenders:
(a) Audited Financial Statements. As soon as available, but in
any event within 90 days after the end of each fiscal year, an audited
consolidated balance sheet of the Borrower and its subsidiaries as of
the end of the fiscal year and the related consolidated statements of
operations, shareholders' equity and cash flows for the year, audited
by Ernst & Young LLP, or other firm of independent certified public
accountants of nationally recognized standing, setting forth in each
case in comparative form the figures for the previous year, reported
without a "going concern" or like qualification or exception, or
qualification indicating that the scope of the audit was inadequate to
permit such independent certified public accountants to certify such
financial statements without such qualification.
(b) Borrower-Prepared Financial Statements. As soon as
available, but in any event within 60 days after the end of each of the
first three fiscal quarters, a Borrower-prepared consolidated balance
sheet of the Borrower and its subsidiaries as of the end of the quarter
and related Borrower-prepared consolidated statements of operations and
cash flows for such quarterly period and for the fiscal year to date,
in each case setting forth in comparative form the consolidated figures
for the corresponding period or periods of the preceding fiscal year or
the portion of the fiscal year ending with such period, as applicable,
in each case subject to normal recurring year-end audit adjustments.
All such financial statements shall be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and shall be prepared in reasonable detail and, in
the case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description
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of, and an estimation of the effect on the financial statements on
account of, a change in the application of accounting principles as provided in
Section 1.3.
7.2 Certificates; Other Information.
The Borrower shall furnish, or cause to be furnished, to the
Administrative Agent for distribution to the Lenders:
(a) Accountant's Certificate and Reports. Concurrently with
the delivery of the financial statements referred to in subsection
7.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such
certificate.
(b) Officer's Certificate. Concurrently with the delivery of
the financial statements referred to in Sections 7.1(a) and 7.1(b)
above, a certificate of a Responsible Officer stating that, to the best
of such Responsible Officer's knowledge and belief, (i) the financial
statements fairly present in all material respects the financial
condition of the parties covered by such financial statements, (ii)
during such period the members of the Consolidated Group have observed
or performed in all material respects the covenants and other
agreements hereunder and under the other Credit Documents relating to
them, and satisfied in all material respects the conditions, contained
in this Credit Agreement to be observed, performed or satisfied by
them, and (iii) such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate. Such certificate shall include the calculations required
to indicate compliance with Section 7.9. A form of Officer's
Certificate is attached as Schedule 7.2(b).
(c) Accountants' Reports. Promptly upon receipt, a copy of any
final (as distinguished from a preliminary or discussion draft)
"management letter" or other similar report submitted by independent
accountants or financial consultants to the members of the Consolidated
Group in connection with any annual, interim or special audit.
(d) Public Information. Within thirty days after the same are
sent, copies of all reports (other than those otherwise provided
pursuant to subsection 7.1) and other financial information which any
member of the Consolidated Group sends to its public stockholders, and
within thirty days after the same are filed, copies of all financial
statements and non-confidential reports which any member of the
Consolidated Group may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority.
(e) Other Information. Promptly, such additional financial and
other information as the Administrative Agent, at the request of any
Lender, may from time to time reasonably request.
7.3 Notices.
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The Borrower shall give notice to the Administrative Agent (which shall
promptly transmit such notice to each Lender) of:
(a) Defaults. Immediately (and in any event within two (2)
Business Days) after any Responsible Officer of any Credit Party knows
or has reason to know thereof, the occurrence of any Default or Event
of Default.
(b) Contractual Obligations. Promptly, the occurrence of any
default or event of default under any Contractual Obligation of any
member of the Consolidated Group which would reasonably be expected to
have a Material Adverse Effect.
(c) Legal Proceedings. Promptly, any litigation, or any
investigation or proceeding (including without limitation, any
environmental proceeding) known to any member of the Consolidated
Group, or any material development in respect thereof, affecting any
member of the Consolidated Group which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect.
(d) ERISA. Promptly, after any Responsible Officer of the
Borrower knows or has reason to know of (i) any event or condition,
including, but not limited to, any Reportable Event, that constitutes,
or might reasonably lead to, an ERISA Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against any of their
ERISA Affiliates, or of a determination that any Multiemployer Plan is
in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due
date (including extensions) thereof of all amounts which the members of
the Consolidated Group or any ERISA Affiliate are required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
respect; or (iv) any change in the funding status of any Plan that
reasonably could be expected to have a Material Adverse Effect;
together with a description of any such event or condition or a copy of
any such notice and a statement by the chief financial officer of the
Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is
being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the members of the Consolidated
Group shall furnish the Administrative Agent and the Lenders with such
additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
(e) Other. Promptly, any other development or event which a
Responsible Officer of the Borrower determines could reasonably be
expected to have a Material Adverse Effect.
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Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the relevant Credit Parties propose
to take with respect thereto.
7.4 Payment of Obligations.
Each of the members of the Consolidated Group shall pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, in accordance with prudent business practice (subject, where
applicable, to specified grace periods) all material obligations of each member
of the Consolidated Group of whatever nature and any additional costs that are
imposed as a result of any failure to so pay, discharge or otherwise satisfy
such obligations, other than (i) obligations with respect to which the failure
to pay, in the aggregate, would not have a Material Adverse Effect, or (ii)
obligations the amount or validity of which are being contested and with respect
to which reserves in conformity with GAAP have been provided on the books of the
appropriate members of the Consolidated Group.
7.5 Conduct of Business and Maintenance of Existence.
Each member of the Consolidated Group shall continue to engage in
business of the same general type as now conducted by it on the date hereof and
similar or related businesses, and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges, licenses and franchises necessary or desirable in the normal
conduct of its business; comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
7.6 Maintenance of Property; Insurance.
Each member of the Consolidated Group shall keep all material property
useful and necessary in its business in reasonably good working order and
condition (ordinary wear and tear excepted); maintain with financially sound and
reputable insurance companies casualty, liability and such other insurance
(which may include plans of self-insurance) with such coverage and deductibles,
and in such amounts as may be consistent with prudent business practice and in
any event consistent with normal industry practice (except to any greater extent
as may be required by the terms of any of the other Credit Documents); and
furnish to the Administrative Agent, upon written request, full information as
to the insurance carried.
7.7 Inspection of Property; Books and Records; Discussions.
Each member of the Consolidated Group shall keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its businesses and activities; and permit, during regular
business hours and upon reasonable notice by the Administrative Agent, the
Administrative Agent to visit and inspect any of its properties and examine and
make abstracts (including photocopies) from any of its books and records (other
than materials protected by the attorney-client privilege and materials which
the Credit Parties may not disclose without violation of a confidentiality
obligation binding upon them) at any reasonable
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time, and to discuss the business, operations, properties and financial and
other condition of the members of the Consolidated Group with officers and
employees of the members of the Consolidated Group and with their independent
certified public accountants. The cost of the inspection referred to in the
preceding sentence shall be for the account of the Lenders unless an Event of
Default has occurred and is continuing, in which case the cost of such
inspection shall be for the account of the Credit Parties.
7.8 Environmental Laws.
Each member of the Consolidated Group shall:
(a) Comply in all material respects with all applicable
Environmental Laws and obtain and comply in all material respects with
and maintain any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws
except to the extent that failure to do so would not reasonably be
expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with
all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the
failure to do or the pendency of such proceedings would not reasonably
be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective employees, agents, officers
and directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable
to the operations of the members of the Consolidated Group or the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the
extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. The
agreements in this paragraph shall survive repayment of the Loans and
all other amounts payable hereunder, and termination of the
Commitments.
7.9 Financial Covenants.
(a) Consolidated Adjusted Tangible Net Worth. Consolidated Adjusted
Tangible Net Worth will not at any time be less than the sum of (i) $950,000,000
plus (ii) 100% of the net proceeds (after customary underwriting discounts and
commissions and reasonable offering expenses) from Equity Transactions occurring
after March 31, 1997.
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(b) Consolidated Funded Debt Ratio. Consolidated Funded Debt shall not
at any time exceed 60% of Consolidated Adjusted Capitalization.
(c) Consolidated Priority Claims. Consolidated Priority Claims will not
at any time exceed 35% of Consolidated Adjusted Capitalization.
(d) Consolidated Senior Fixed Charge Coverage Ratio. As of the last day
of each fiscal quarter, the Consolidated Senior Fixed Charge Coverage Ratio
shall be not less than 1.75:1.0.
(e) Consolidated Total Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Total Fixed Charge Coverage Ratio shall be
not less than 1.4:1.0.
(f) Consolidated Unencumbered Realty to Consolidated Unsecured Debt
Ratio. The ratio of Consolidated Unencumbered Realty to Consolidated Unsecured
Debt shall not at any time be less than 1.8:1.0.
(g) Consolidated Unencumbered Interest Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Unencumbered Interest Coverage Ratio shall
be not less than 1.8:1.0.
7.10 Agency Fees.
The Borrower shall pay to the Administrative Agent the annual agency
fee and comply with the other agreements provided for in the Administrative
Agent's Fee Letter.
7.11 Additional Guaranties and Stock Pledges.
(a) Domestic Subsidiaries. Where the assets of Domestic Subsidiaries
which are not Guarantors hereunder (the "Non-Guarantor Subsidiaries") shall, at
any time exceed (i) five percent (5%) of Consolidated Assets in any instance, or
(ii) fifteen percent (15%) of Consolidated Assets collectively as a group (the
"Threshold Requirement"), then the Borrower shall promptly notify the
Administrative Agent thereof, and cause one or more Non-Guarantor Subsidiaries
to become a Guarantor hereunder by way of execution of a Joinder Agreement such
that immediately after the joinder of such Subsidiaries as Guarantors hereunder,
the remaining Non-Guarantor Subsidiaries shall not exceed the Threshold
Requirement. Delivery of any such Joinder Agreement shall be accompanied by
supporting resolutions, incumbency certificates, corporation formation and
organizational documentation and opinions of counsel as the Administrative Agent
may reasonably request.
(b) Foreign Subsidiaries. At any time any Person becomes a Foreign
Subsidiary, the Borrower will promptly notify the Administrative Agent thereof
and cause delivery of supporting resolutions, incumbency certificates,
corporation formation and organizational documentation and opinions of counsel
as the Administrative Agent may reasonably request.
7.12 Ownership of Subsidiaries.
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Except to the extent otherwise permitted in Section 8.4(b) and Section
8.7 and to the extent as would not cause a Change of Control and except as set
forth on Schedule 6.12, the Borrower shall, directly or indirectly, own at all
times 100% of the voting stock of each of its Subsidiaries.
7.13 Use of Proceeds.
Extensions of Credit will be used solely for the purposes provided in
Section 6.13.
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties (in the case of the Borrower, for itself and
each of the other members of the Consolidated Group, and in the case of each of
the other Credit Parties, for itself) covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Loans remain outstanding and all amounts
owing hereunder or in connection herewith, have been paid in full, no member of
the Consolidated Group shall:
8.1 Limitations on Debt.
Create, incur, assume or suffer to exist any Debt, except:
(a) Debt the existence or incurrence of which would not
violate the financial covenants of Section 7.9.
8.2 Restriction on Liens.
Create, assume, incur or suffer to exist any Lien on any Property or
asset of any kind, real or personal, tangible or intangible, now owned or
hereafter acquired by it or assign or subordinate any present or future right to
receive assets except:
(a) Liens securing Funded Debt the existence or incurrence of
which would not violate the financial covenants of Section 7.9;
(b) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons; provided that (A) with
respect to Liens securing state and local taxes, such taxes are not yet
payable, (B) with respect to Liens securing claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and the like,
such liens are (1) unfiled and no other action has been taken to
enforce the same and (2) the cumulative effect of all such Liens will
not have a Material Adverse Effect, or (C) with respect to taxes,
assessments or governmental charges or levies or claims or demand
secured by such Liens, payment is not at the time required;
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(c) Liens not securing Debt which are incurred in the ordinary
course of business in connection with workmen's compensation,
unemployment insurance, unemployment insurance, social security and
other like laws;
(d) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereto are being contested
in good faith by appropriate proceedings;
(e) zoning restrictions, easements, licenses, reservations,
covenants, conditions, waivers, restrictions on the use of property or
other minor encumbrances or irregularities of title which do not
materially impair the use of any property in the operation or business
of the Borrower or such Subsidiary or the value of such property for
the purpose of such business; and
(f) Liens on property or assets of such Subsidiary to secure
obligations of such Subsidiary solely to the Borrower or a Wholly-Owned
Subsidiary.
8.3 Consolidations, Mergers and Sales of Assets.
(a) Enter into a transaction of merger or consolidation,
except
(i) a member of the Consolidated Group may be a party
to a transaction of merger or consolidation with another member of the
Consolidated Group, provided that (A) if the Borrower is a party
thereto, it is the surviving corporation, or (B) if a Guarantor is a
party thereto, it shall be the surviving corporation or the surviving
corporation shall be a Domestic Subsidiary and shall become a Guarantor
hereunder as an Additional Credit Party pursuant to Section 7.11
concurrently therewith, and (C) no Default or Event of Default shall
exist either immediately prior to or immediately after giving effect
thereto; and
(ii) a member of the Consolidated Group (other than
the Borrower) may be a party to a transaction of merger or
consolidation with any other Person, provided that (A) the provisions
of Section 7.11 regarding joinder of certain Subsidiaries as Additional
Credit Parties hereunder shall be complied with, (B) no Default or
Event of Default shall exist either immediately prior to or immediately
after giving effect thereto, and (C) the provisions of subsection (c)
of this Section shall be complied with.
(b) other than as between Credit Parties, sell, lease,
transfer or otherwise dispose of assets, property
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and/or operations which in the aggregate in any fiscal year shall constitute
more than fifteen percent (15%) of Consolidated Total Realty at the end of the
immediately preceding fiscal year or contributed more than fifteen percent (15%)
Consolidated EBITDA for the immediately preceding fiscal year, without the prior
written consent of the Required Lenders (which consent shall not be unreasonably
withheld or delayed).
(c) Acquire all or any portion of the capital stock or
other ownership interest in any Person which is not a Subsidiary or all or any
substantial portion of the assets, property and/or operations of a Person which
is not a Subsidiary, without the prior written consent of the Required Lenders
(which consent shall not be unreasonably withheld or delayed), unless
(i) in the case of an acquisition of capital stock or
other ownership interest where after giving effect thereto, such Person
will not be a Subsidiary, then such acquisition will not cause a
violation of Section 8.4;
(ii) in the case of an acquisition of capital stock
or other ownership interest where after giving effect thereto, such
Person will be a Subsidiary, or in the case of an acquisition of
assets, property and/or operations then
(A) the aggregate cost of all such
acquisitions shall not exceed an amount equal to twenty-five
percent (25%) of Consolidated Assets at the end of the
immediately preceding fiscal year;
(B) the Board of Directors (or functional
equivalent) of the Person which is the subject of the
acquisition shall have approved the acquisition; and
(C) no Default or Event of Default would
exist after giving effect thereto on a Pro Forma Basis.
(d) In the case of the Borrower, liquidate, wind-up or
dissolve, whether voluntarily or involuntarily (or suffer to permit any such
liquidation or dissolution).
(e) Alter the character of their business in any material
respect from that conducted as of the Closing Date and similar or related
businesses.
(e) The foregoing provisions of this Section shall not
apply to leases of property and assets by members of the Consolidated Group to
individual tenants in the ordinary course of business.
8.4 Loans and Investments.
(a) Make loans, advances or Investments (including, for
purposes hereof, Guaranty Obligations) to or in respect of any other Person,
except for (i) Permitted Investments and (ii) other Investments which in the
aggregate do not at any time exceed five percent (5%) of Consolidated Assets.
(b) Invest in or acquire unimproved real property such that
following the investment, Consolidated Unimproved Realty and purchase money
mortgages are at any time greater than ten percent (10%) of the Consolidated
Total Realty.
8.5 Transactions with Affiliates.
Enter into any transaction, directly or indirectly, including without
limitation, the purchase, sale or exchange of property or the rendering of any
service to, any Affiliate or
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shareholder of the Borrower, except in the ordinary course of business pursuant
to the reasonable requirements of the business of the Borrower or such
Subsidiary and upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary than would be obtainable in a comparable arms-length
transaction with a person not an Affiliate or shareholder; provided that the
foregoing restrictions shall not apply to extensions of credit by the Borrower
to its officers and directors pursuant to the Borrower's Stock Purchase and Loan
Plan in an aggregate amount not to exceed at any time 5% of Consolidated
Adjusted Tangible Net Worth.
8.6 Transactions with Other Persons regarding this Agreement.
Enter into any agreement with any Person whereby any of them would
agree to any restriction on the Borrower's right with the Lenders' consent to
amend or waive any of the provisions of this Credit Agreement.
8.7 Limitation on Certain Restrictions on Subsidiaries.
Other than as presently exist in respect of REMICs and other special
Subsidiaries listed on Schedule 8.7, create or otherwise cause or suffer to
exist or become effective, directly or indirectly, any encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits owned by any member of the Consolidated Group, (ii) make loans or
advances to any member of the Consolidated Group, or (iii) transfer any of its
properties or assets to any member of the Consolidated Group, except for
encumbrances or restrictions existing under or by reason of (A) applicable law
or (B) this Credit Agreement unless, after giving effect thereto on a Pro Forma
Basis, the aggregate amount of Consolidated EBITDA attributable to all such
REMICs and other special Subsidiaries shall be less than 25% of Consolidated
EBITDA.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of
any of the Loans, or
(ii) default, and such defaults shall continue for five (5) or
more Business Days, in the payment when due of any interest on the Loans
or of any Fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made herein, in any of the other Credit Documents, or in any
statement or certificate
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delivered or required to be delivered pursuant hereto or thereto shall prove
untrue in any material respect on the date as of which it was deemed to have
been made; or
(c) Covenants.
(i) Default in the due performance or observance of any term,
covenant or agreement contained in Section 7.3(a), 7.9, 7.11, 7.13 or
8.1 through 8.7 (except in the case of negative covenants contained in
Sections 8.1 through 8.7, those Defaults which may occur or arise other
than on account of or by affirmative or intentional act of the Borrower
or event or condition which the Borrower shall with knowledge permit to
exist, all of which shall be subject to the provisions of clause (ii)
hereof), inclusive, or
(ii) Default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in subsections
(a), (b) or (c)(i) of this Section 9.1) contained in this Credit
Agreement and such default shall continue unremedied for a period of at
least 30 days after the earlier of a Responsible Officer of a Credit
Party becoming aware of such default or notice thereof by the
Administrative Agent or such longer period not to exceed an additional
30 days provided that the Borrower is diligently pursuing remedy of such
default; or
(d) Other Credit Documents. (i) Any Credit Party shall default in the
due performance or observance of any material term, covenant or agreement in any
of the other Credit Documents (subject to applicable grace or cure periods, if
any), or (ii) any Credit Document shall fail to be in full force and effect or
to give the Administrative Agent and/or the Lenders any material part of the
rights, powers and privileges purported to be created thereby; or
(e) Guaranties. The guaranty given by any Guarantor hereunder or any
material provision thereof shall cease to be in full force and effect, or any
Guarantor hereunder or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
any member of the Consolidated Group; or
(g) Defaults under Other Agreements.
(i) Any member of the Consolidated Group shall default in the
performance or observance (beyond the applicable grace period with
respect thereto, if any) of any material obligation or condition of any
contract or lease material to the Consolidated Group, taken as a whole;
or
(ii) With respect to any Debt (other than Debt outstanding
under this Credit Agreement) in excess of $25,000,000 in the aggregate
for the Consolidated Group taken as a whole, (A) (1) any member of the
Consolidated Group shall default in any payment (beyond the applicable
grace period with respect thereto, if any) with respect to any such
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Debt, or (2) the occurrence and continuance of a default in the
observance or performance relating to such Debt or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the effect of
which default or other event or condition is to cause, or permit, the
holder or holders of such Debt (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any notice or
lapse of time is required), any such Debt to become due prior to its
stated maturity; or (B) any such Debt shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(iii) The occurrence of an Event of Default under the 364-Day
Credit Agreement; or
(h) Judgments. Any member of the Consolidated Group shall fail within
30 days of the date due and payable to pay, bond or otherwise discharge any
judgment, settlement or order for the payment of money which judgment,
settlement or order, when aggregated with all other such judgments, settlements
or orders due and unpaid at such time, exceeds $5,000,000, and which is not
stayed on appeal (or for which no motion for stay is pending) or is not
otherwise being executed; or
(i) ERISA. Any of the following events or conditions, if such event or
condition could reasonably be expected to have a Material Adverse Effect shall
occur: (1) any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived, shall
exist with respect to any Plan, or any lien shall arise on the assets of a
member of the Consolidated Group or any ERISA Affiliate in favor of the PBGC or
a Plan; (2) an ERISA Event shall occur with respect to a Single Employer Plan,
which is, in the reasonable opinion of the Administrative Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA; (3) an
ERISA Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the reasonable opinion of the Administrative Agent,
likely to result in (i) the termination of such Plan for purposes of Title IV of
ERISA, or (ii) a member of the Consolidated Group or any ERISA Affiliate
incurring any liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency of (within the
meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur which may subject a member of the
Consolidated Group or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which a member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability; or
(j) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter,
the Administrative Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:
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(i) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans and any and all other indebtedness or
obligations of any and every kind owing by the Credit Parties to the
Administrative Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each of the Credit Parties.
(iii) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Administrative Agent and/or any
of the Lenders hereunder automatically shall immediately become due and payable
without presentment, demand, protest or the giving of any notice or other action
by the Administrative Agent or the Lenders, all of which are hereby waived by
the Credit Parties.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints NationsBank, N.A. as
administrative agent (in such capacity, the "Administrative Agent") of such
Lender to act as specified herein and the other Credit Documents, and each such
Lender hereby authorizes the Administrative Agent as the Administrative Agent
for such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Each Lenders further directs and authorizes the
Administrative Agent to execute releases (or similar agreements) to give effect
to the provisions of this Credit Agreement and the other Credit Documents.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Administrative Agent. The provisions of this Section are solely for
the benefit of the Administrative Agent and the Lenders and none of the Credit
Parties shall have any rights as a third party beneficiary of the provisions
hereof. In performing its functions and duties under this Credit Agreement and
the other Credit Documents, the Administrative Agent shall act solely as
Administrative Agent of the Lenders and
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does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for any Credit Party or any of their
respective Affiliates.
10.2 Delegation of Duties.
The Administrative Agent may execute any of its duties hereunder or
under the other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
10.3 Exculpatory Provisions.
The Administrative Agent and its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall not be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any of the Credit Parties
contained herein or in any of the other Credit Documents or in any certificate,
report, document, financial statement or other written or oral statement
referred to or provided for in, or received by the Administrative Agent under or
in connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit Documents, or
for any failure of any Credit Party to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be responsible to any Lender for
the effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Lenders or by or on behalf
of the Credit Parties to the Administrative Agent or any Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default or to inspect the properties, books
or records of the Credit Parties or any of their respective Affiliates.
10.4 Reliance on Communications.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Administrative Agent with reasonable care). The
Administrative Agent may deem and treat the Lenders as the owners of their
respective interests hereunder for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative
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Agent in accordance with Section 11.3(b) hereof. The Administrative Agent and
the Borrower shall be fully justified in failing or refusing to take any action
under this Credit Agreement or under any of the other Credit Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or under any of the other Credit Documents in accordance with a
request of the Required Lenders (or to the extent specifically provided in
Section 11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).
10.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or a Credit Party
referring to the Credit Document, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that each of the Administrative
Agent and its officers, directors, employees, Administrative Agents,
attorneys-in-fact or affiliates has not made any representations or warranties
to it and that no act by the Administrative Agent or any affiliate thereof
hereinafter taken, including any review of the affairs of any Credit Party or
any of their respective Affiliates, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrower,
the other Credit Parties or their respective Affiliates and made its own
decision to make its Loans hereunder and enter into this Credit Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower, the other
Credit Parties and their respective Affiliates.
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Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or creditworthiness
of the Borrower, the other Credit Parties or any of their respective Affiliates
which may come into the possession of the Administrative Agent or any of its
officers, directors, employees, Administrative Agents, attorneys-in-fact or
affiliates.
10.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitments (or if the Commitments have expired or been terminated, in
accordance with the respective principal amounts of outstanding Loans and
Participation Interests of the Lenders), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the final payment of all of
the obligations of the Borrower hereunder and under the other Credit Documents)
be imposed on, incurred by or asserted against the Administrative Agent in its
capacity as such in any way relating to or arising out of this Credit Agreement
or the other Credit Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Administrative Agent. If any
indemnity furnished to the Administrative Agent for any purpose shall, in the
opinion of the Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section shall survive the repayment of the
Loans and other obligations under the Credit Documents and the termination of
the Commitments hereunder.
10.8 Administrative Agent in its Individual Capacity.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower,
its Subsidiaries or their respective Affiliates as though the Administrative
Agent were not the Administrative Agent hereunder. With respect to the Loans
made by and all obligations of the Borrower hereunder and under the other Credit
Documents, the Administrative Agent shall have the same rights and powers under
this Credit Agreement as any Lender and may exercise the same as though it were
not the Administrative Agent, and the terms "Lender" and "Lenders" shall include
the Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent.
The Administrative Agent may, at any time, resign upon 20 days' written
notice to the Lenders and the Borrower, and may be removed, upon show of cause,
by the Required Lenders upon 30 days' written notice to the Administrative
Agent. Upon any such resignation or removal, the Required Lenders shall have the
right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the notice of
resignation or notice of removal, as appropriate, then the retiring
Administrative Agent shall select a successor Administrative Agent provided such
successor is a Lender hereunder or a commercial bank organized under the laws of
the United States of America or of any State thereof and has a
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combined capital and surplus of at least $400,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations as Administrative Agent, as appropriate, under this Credit Agreement
and the other Credit Documents and the provisions of this Section 10.9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower, Guarantors and the Administrative
Agent, set forth below, and, in the case of the Lenders, set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto:
if to the Borrower or the Guarantors:
United Dominion Realty Trust, Inc.
10 South Sixth Street
Richmond, Virginia 23219-3802
Attn: Chief Financial Officer
Telephone: (804) 344-1691
Telecopy: (804) 780-0431
with a copy to:
United Dominion Realty Trust, Inc.
10 South Sixth Street
Richmond, Virginia 23219-3802
Attn: General Counsel
Telephone: (804) 344-1685
Telecopy: (804) 788-4607
if to the Administrative Agent:
NationsBank, N.A.
101 N. Tryon Street
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Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-9046
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
Mid-Atlantic Corporate Finance
1111 E. Main Street
4th Floor Pavilion
Richmond, Virginia 23277-0001
Attn: Senior Bank Debt
Telephone: (804) 788-2244
Telecopy: (804) 788-3669
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 3.13 or Section 11.3(d) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder. It is specifically acknowledged and agreed
that no right of set-off shall be exercised against accounts identified as
holding tenant deposit accounts.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
Parties may assign or transfer any of its interests without prior
written consent of the Lenders; provided further that the rights of
each Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth in this
Section 11.3, provided however that nothing herein shall prevent or
prohibit any Lender from (i) pledging its Loans hereunder to a Federal
Reserve Bank in
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support of borrowings made by such Lender from such Federal Reserve
Bank, or (ii) granting assignments or selling participations in such
Lender's Loans and/or Commitments hereunder to its parent company
and/or to any Affiliate or Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of
its rights and obligations hereunder, pursuant to an assignment
agreement substantially in the form of Schedule 11.3(b), to (i) any
Lender or any Affiliate or Subsidiary of a Lender, or (ii) any other
commercial bank, financial institution or "accredited investor" (as
defined in Regulation D of the Securities and Exchange Commission)
reasonably acceptable to the Administrative Agent and, so long as no
Default or Event of Default has occurred and is continuing, the
Borrower; provided that (i) any such assignment (other than any
assignment to an existing Lender) shall be in a minimum aggregate
amount of $5,000,000 (or, if less, the remaining amount of the
Commitment being assigned by such Lender) of the Commitments and in
integral multiples of $1,000,000 above such amount and (ii) each such
assignment shall be of a constant, not varying, percentage of all such
Lender's rights and obligations under this Credit Agreement. Any
assignment hereunder shall be effective upon delivery to the
Administrative Agent of written notice of the assignment together with
a transfer fee of $3,500 payable to the Administrative Agent for its
own account from and after the later of (i) the effective date
specified in the applicable assignment agreement and (ii) the date of
recording of such assignment in the Register pursuant to the terms of
subsection (c) below. The assigning Lender will give prompt notice to
the Administrative Agent and the Borrower of any such assignment. Upon
the effectiveness of any such assignment (and after notice to, and (to
the extent required pursuant to the terms hereof), with the consent of,
the Borrower as provided herein), the assignee shall become a "Lender"
for all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Lender
shall be relieved of its obligations hereunder to the extent of the
Loans and Commitment components being assigned. Along such lines the
Borrower agrees that upon notice of any such assignment and surrender
of the appropriate Note or Notes, it will promptly provide to the
assigning Lender and to the assignee separate promissory notes in the
amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is given in
substitution for and replacement of the original Note or any
replacement notes thereof). By executing and delivering an assignment
agreement in accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to
and agree with each other and the other parties hereto as follows: (i)
such assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any
adverse claim; (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto or the
financial condition of any Credit Party or any of their respective
Affiliates or the performance or observance by any Credit Party of any
of its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto; (iii) such assignee represents and warrants that it is
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legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Credit Agreement and the other Credit Documents; (vi) such assignee
appoints and authorizes the Administrative Agent to take such action on
its behalf and to exercise such powers under this Credit Agreement or
any other Credit Document as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) Maintenance of Register. The Administrative Agent shall
maintain at one of its offices in Charlotte, North Carolina a copy of
each Lender assignment agreement delivered to it in accordance with the
terms of subsection (b) above and a register for the recordation of the
identity of the principal amount, type and Interest Period of each Loan
outstanding hereunder, the names, addresses and the Commitments of the
Lenders pursuant to the terms hereof from time to time (the
"Register"). The Administrative Agent will make reasonable efforts to
maintain the accuracy of the Register and to promptly update the
Register from time to time, as necessary. The entries in the Register
shall be conclusive in the absence of manifest error and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Credit Agreement. The
Register shall be available for inspection by the Borrower and each
Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the participant shall not constitute a Lender hereunder,
(ii) no such participant shall have, or be granted, rights to approve
any amendment or waiver relating to this Credit Agreement or the other
Credit Documents except to the extent any such amendment or waiver
would (A) reduce the principal of or rate of interest on or Fees in
respect of any Loans in which the participant is participating, (B)
postpone the date fixed for any payment of principal (including
extension of the Termination Date or the date of any mandatory
prepayment), interest or Fees in which the participant is
participating, or (C) except as expressly provided in the Credit
Documents, release any Guarantor from its guaranty obligations
hereunder, and (iii) sub-participations by the participant (except to
an affiliate, parent Borrower or affiliate of a parent Borrower of the
participant) shall be prohibited. In the case of any such
participation, the participant shall not have any rights under this
Credit Agreement or the other Credit Documents (the participant's
rights against the selling Lender in respect of such participation to
be those set forth in the participation agreement with such Lender
creating such participation) and all amounts payable by the
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Borrower hereunder shall be determined as if such Lender had not sold
such participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.6, 3.9, 3.10
and 3.11 on the same basis as if it were a Lender.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Administrative Agent or any
Lender and any of the Credit Parties shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Administrative Agent or any Lender
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle the Borrower or any other Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Administrative Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Administrative Agent in connection with the negotiation,
preparation, execution and delivery and administration of this Credit Agreement
and the other Credit Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and expenses of
Moore & Van Allen, PLLC, special counsel to the Administrative Agent) and any
amendment, waiver or consent relating hereto and thereto including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Credit Parties under this Credit Agreement and (B) of the Administrative Agent
and the Lenders in connection with enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Administrative Agent and each of the Lenders); (ii) pay and hold
each of the Lenders harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and save
each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender,
its officers, directors, employees, representatives and Administrative Agents
from and hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses incurred by any of them as a result of, or arising
out of, or in any way related to, or by reason of (A) any investigation,
litigation or other proceeding (whether or not any Lender is a party thereto)
related to the entering into and/or performance of any Credit Document or the
use of proceeds of any Loans (including other extensions of credit) hereunder or
the consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the presence or Release of any Materials of Environmental
Concern at, under or from any Property owned, operated or leased by the Borrower
or any of its Subsidiaries, or the failure by the Borrower or any of its
Subsidiaries to comply with any Environmental Law (but excluding, in the
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case of either of clause (A) or (B) above, any such losses, liabilities, claims,
damages or expenses to the extent incurred by reason of gross negligence or
willful misconduct on the part of the Person to be indemnified).
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
(a) without the consent of each Lender affected thereby, no such
amendment may:
(i) extend the final maturity of any Loan, or
extend or waive any principal amortization payment of any
Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability
of any post-default increase in interest rates) thereon or
Fees hereunder,
(iii) reduce or waive the principal amount of any
Loan,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a
waiver of any Default or Event of Default (other than an Event
of Default of the type described in Section 9.1(f) hereof) or
mandatory reduction in the Commitments shall not constitute a
change in the terms of any Commitment of any Lender),
(v) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted
under Section 8.3, release the Borrower or substantially all
of the other Credit Parties from its or their obligations
under the Credit Documents,
(vi) amend, modify or waive any provision of this Section
11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 9.1(a), 11.2, 11.3, 11.5 or 11.9,
(vii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(viii) consent to the assignment or transfer by the
Borrower (or another Credit Party) of any of its rights and
obligations under (or in respect of) the Credit Documents
except as permitted thereby; and
(b) without the consent of the Administrative Agent, no
provision of Section 10 may be amended.
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Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender
is entitled to vote as such Lender sees fit on any bankruptcy
reorganization plan that affects the Loans, and each Lender
acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use
cash collateral in the context of a bankruptcy or insolvency
proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery
of this Credit Agreement, the making of the Loans, the repayment of the Loans
and other obligations under the Credit Documents and the termination of the
Commitments hereunder, and all representations and warranties made by the Credit
Parties herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
VIRGINIA. Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document may be brought in the courts of the Commonwealth of
Virginia in the City of Richmond, or of the United States for the Eastern
District of Virginia, and, by execution and delivery of this Credit Agreement,
each of the Credit Parties hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the Credit Parties further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
11.1, such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of the Administrative Agent to serve
process in any other manner permitted by law or to commence legal proceedings or
to otherwise proceed against any Credit Party in any other jurisdiction.
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(b) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE ADMINISTRATIVE AGENT,
THE LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Borrower, the
Guarantors and the Administrative Agent, and the Administrative Agent shall have
received copies hereof (telefaxed or otherwise) which, when taken together, bear
the signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors, the
Administrative Agent and each Lender and their respective successors and
assigns.
(b) The term of this Credit Agreement shall be until no Loans, or any
other amounts payable hereunder or under any of the other Credit Documents shall
remain outstanding and until all of the Commitments hereunder shall have expired
or been terminated.
11.14 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower that
at least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
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(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a single
plan);
(c) to the extent that any part of such funds constitutes
assets of an insurance Borrower's general account, such insurance
Borrower has complied with all of the requirements of the regulations
issued under Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.15 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By:_________________________
Name:
Title:
GUARANTORS: UNITED DOMINION REALTY, L.P.,
a Virginia limited partnership
By:_________________________
Name:
Title:
UDRT OF NORTH CAROLINA, L.L.C.,
a North Carolina limited liability company
By:_________________________
Name:
Title:
UDRT OF ALABAMA, INC.,
an Alabama corporation
By:_________________________
Name:
Title:
UDR SOUTH CAROLINA TRUST,
a Maryland real estate investment trust
By:_________________________
Name:
Title:
<PAGE>
UDR WESTERN RESIDENTIAL, INC.,
a Virginia corporation
By:_________________________
Name:
Title:
SOUTH WEST REIT HOLDING, INC.,
a Texas corporation
By:_________________________
Name:
Title:
<PAGE>
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Administrative Agent
By:____________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:____________________________________
Name:
Title:
GUARANTY FEDERAL BANK
By:____________________________________
Name:
Title:
CRESTAR BANK
By:____________________________________
Name:
Title:
SIGNET BANK
By:____________________________________
Name:
Title:
<PAGE>
COMERICA BANK
By:____________________________________
Name:
Title:
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
BANK HAPOALIM B.M.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
THE SUMITOMO BANK, LTD.
By:____________________________________
Name:
Title:
<PAGE>
Schedule 2.1(a)
Schedule of Lenders and Commitments
<TABLE>
<CAPTION>
Revolving Revolving Commitment
Lender Commitment Percentage
<S> <C>
NationsBank, N.A. $ 40,000,000.00 20.000000%
First Union National Bank $ 38,000,000.00 19.000000%
Guaranty Federal $ 36,000,000.00 18.000000%
Crestar Bank $ 17,000,000.00 8.500000%
Signet Bank $ 17,000,000.00 8.500000%
Comerica Bank $ 16,000,000.00 8.000000%
DG Bank $ 16,000,000.00 8.000000%
Bank Hapoalim $ 12,000,000.00 6.000000%
Sumitomo Bank $ 8,000,000.00 4.000000%
---------------------- ---------
$ 200,000,000.00 100.000000%
</TABLE>
<PAGE>
Schedule 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N.A., NationsBank, N.A.,
as Administrative Agent for the Lenders as Swingline Lender
101 N. Tryon Street 101 N. Tryon Street
Independence Center, 15th Floor Independence Center, 15th Floor
NC1-001-15-04 NC1-001-15-04
Charlotte, North Carolina 28255 Charlotte, North Carolina 28255
Attention: Agency Services Attention: Agency Services
Re: Three-Year Credit Agreement dated as of August 4, 1997 (as
amended and modified, the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined herein shall have
the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, UNITED DOMINION REALTY TRUST, INC., a Virginia corporation,
being the Borrower under the above-referenced Credit Agreement hereby gives
notice pursuant to Section 2.1(b) of the Credit Agreement of a request for a
Revolving Loan or of a request for Swingline Loan pursuant to Section 2.2(b) of
the Credit Agreement as follows
________ Revolving Loan
________ Swingline Loan
(A) Date of Borrowing
(which is a Business Day) _______________________
(B) Principal Amount of
Borrowing _______________________
(C) Interest rate basis _______________________
(D) Interest Period and the
last day thereof _______________________
In accordance with the requirements of Section 5.2 of the Credit Agreement, the
undersigned Borrower hereby certifies that:
<PAGE>
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects as of the date of this request, and will be true and
correct after giving effect to the requested Extension of Credit
(except for those which expressly relate to an earlier date).
(b) No Default or Event of Default exists, or will exist after
giving effect to the requested Extension of Credit.
(c) As to any Credit Party, no involuntary action has been
commenced under applicable bankruptcy, insolvency or other similar law
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) as to any Credit Party or as to any substantial
part of the property of any Credit Party or for the winding up or
liquidation of its affairs, and remains undismissed, undischarged or
unbonded.
(d) No circumstances, events or conditions have occurred since
the date of the audited financial statements referenced in Section 6.1
of the Credit Agreement which would have a Material Adverse Effect.
(e) All conditions set forth in Section 2.1 as to the making
of Revolving Loans or in Section 2.2 as to the making of Swingline
Loans, as appropriate, have been satisfied.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By:_______________________________
Name:
Title:
<PAGE>
Schedule 2.1(e)
FORM OF REVOLVING NOTE
August 4, 1997
FOR VALUE RECEIVED, the undersigned Borrower, hereby promises to pay to
the order of ________________________, and its successors and assigns, on or
before the Termination Date to the office of the Administrative Agent in
immediately available funds as provided in the Credit Agreement, the principal
amount of such Lender's Revolving Committed Amount or, if less, the aggregate
unpaid principal amount of all Revolving Loans made by such Lender to the
undersigned Borrower, together with interest thereon at the rates and as
provided in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Three-Year
Credit Agreement dated as of August 4, 1997 (as amended and modified, the
"Credit Agreement") among United Dominion Realty Trust, Inc., a Virginia
corporation, United Dominion Realty, L.P., a Virginia limited partnership, the
Guarantors and Lenders identified therein and NationsBank, N.A., as
Administrative Agent. Terms used but not otherwise defined herein shall have the
meanings provided in the Credit Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
undersigned Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Note may, or shall, become immediately due and payable as provided in the
Credit Agreement without presentment, demand, protest or notice of any kind, all
of which are waived by the undersigned Borrower. In the event payment of amounts
evidenced by this Note is not made at any stated or accelerated maturity, the
undersigned Borrower agrees to pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the undersigned Borrower has caused this Note to be
duly executed as of the date first above written.
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By_________________________________
Name:
Title:
<PAGE>
Schedule 2.2(d)
FORM OF SWINGLINE NOTE
August 4, 1997
FOR VALUE RECEIVED, the undersigned Borrower, hereby promises to pay to
the order of NATIONSBANK, N.A., and its successors and assigns, on or before the
Termination Date to the office of the Administrative Agent in immediately
available funds as provided in the Credit Agreement, the principal amount of all
Swingline Loans in such amounts and on such dates as provided in the Credit
Agreement; together with interest thereon at the rates and as provided in the
Credit Agreement.
This Note is the Swingline Note referred to in the Three-Year Credit
Agreement dated as of August 4, 1997 (as amended and modified, the "Credit
Agreement") among United Dominion Realty Trust, Inc., a Virginia corporation,
United Dominion Realty, L.P., a Virginia limited partnership, the Guarantors and
Lenders identified therein and NationsBank, N.A., as Administrative Agent. Terms
used but not otherwise defined herein shall have the meanings provided in the
Credit Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
undersigned Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Note may, or shall, become immediately due and payable as provided in the
Credit Agreement without presentment, demand, protest or notice of any kind, all
of which are waived by the undersigned Borrower. In the event payment of amounts
evidenced by this Note is not made at any stated or accelerated maturity, the
undersigned Borrower agrees to pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the undersigned Borrower has caused this Note to be
duly executed as of the date first above written.
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By_________________________________
Name:
Title:
<PAGE>
Schedule 2.3(b)-1
FORM OF COMPETITIVE BID REQUEST
NationsBank, N.A.,
as Administrative Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-005-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Re: Three-Year Credit Agreement dated as of August 4, 1997 (as
amended and modified the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined shall have the
meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, UNITED DOMINION REALTY TRUST, INC., a Virginia
corporation, being the Borrower under the above-referenced Credit Agreement
hereby gives you notice pursuant to Section 2.3(b) of the Credit Agreement it
requests solicitation of Competitive Bids under the Credit Agreement, and in
connection therewith sets forth below the terms on which the related Competitive
Loan borrowing is requested to be made:
(A) Date of Competitive Loan borrowing
(which is a Business Day) __________________________
(B) Principal amount of
Competitive Loan borrowing __________________________
(C) Interest Period and the last
day thereof __________________________
In accordance with the requirements of Section 5.2, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (b) of such Section, and confirms that the matters
referenced in subsections (c), (d), (e) and (f) of such Section, are true and
correct.
UNITED DOMINION REALTY TRUST, INC.
By:______________________________
Name:
Title:
<PAGE>
Schedule 2.3(b)-2
FORM OF NOTICE OF RECEIPT OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
Attention:
Re: Three-Year Credit Agreement dated as of August 4, 1997 (as
amended and modified the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined shall have the
meanings provided in the Credit Agreement.
Dear Sirs:
UNITED DOMINION REALTY TRUST, INC., a Virginia corporation, being
Borrower under the above-referenced Credit Agreement made a Competitive Bid
Request on _______________, 19__, pursuant to Section 2.3(b) of the Credit
Agreement, and in that connection you are invited to submit a Competitive Bid by
10:00 A.M. (Charlotte, North Carolina time) ______________, 19__ [Date of
Proposed Competitive Loan Borrowing]. Your Competitive Bid must comply with
Section 2.3(c) of the Credit Agreement and the terms set forth below on which
the Competitive Bid Request was made:
(A) Date of Competitive Borrowing _________________________
(B) Principal amount of Competitive Borrowing _________________________
(C) Interest Period and the last day thereof _________________________
NATIONSBANK, N.A., as Administrative Agent
By:_____________________________________
Name:
Title:
<PAGE>
Schedule 2.3(c)
FORM OF COMPETITIVE BID
NationsBank, N.A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-005-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Re: Three-Year Credit Agreement dated as of August 4, 1997 (as
amended and modified the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined shall have the
meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, [Name of Lender], hereby makes a Competitive Bid
pursuant to Section 2.3(c) of the Credit Agreement, in response to the
Competitive Bid Request made by the Borrower on _____________________, 19__, and
in that connection sets forth below the terms on which such Competitive Bid is
made:
(A) Principal Amount ______________________________
(B) Competitive Bid Rate ______________________________
(C) Interest Period and last day thereof ______________________________
The undersigned hereby confirms that is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.3(e) of
the Credit Agreement.
[NAME OF LENDER]
By:___________________________________
Name:
Title:
<PAGE>
Schedule 2.3(e)
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
NationsBank, N.A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-005-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Re: Three-Year Credit Agreement dated as of August 4, 1997 (as
amended and modified the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined shall have the
meanings provided in the Credit Agreement.
Ladies and Gentlemen:
In accordance with Section 2.3(e) of the Credit Agreement, in
connection with our Competitive Bid Request dated __________________ and in
accordance with Section 2.3(e) of the Credit Agreement, we hereby accept the
following bids for maturity on [date]:
Principal Amount Competitive Bid Rate Lender
$ [%]
$ [%]
We hereby reject the following bids:
Principal Amount Competitive Bid Rate Lender
$ [%]
$ [%]
UNITED DOMINION REALTY TRUST, INC.
By:____________________________________
Name:
Title:
<PAGE>
Schedule 2.3(i)
FORM OF COMPETITIVE NOTE
August 4, 1997
FOR VALUE RECEIVED, the undersigned Borrower, hereby promises to pay to
the order of ________________________, and its successors and assigns, on or
before the Termination Date to the office of the Administrative Agent in
immediately available funds as provided in the Credit Agreement, the aggregate
principal amount of all Competitive Loans made by such Lender made by such
Lender to the undersigned Borrower, together with interest thereon at the rates
and as provided in the Credit Agreement.
This Note is one of the Competitive Notes referred to in the Three-Year
Credit Agreement dated as of August 4, 1997 (as amended and modified, the
"Credit Agreement") among United Dominion Realty Trust, Inc., a Virginia
corporation, United Dominion Realty, L.P., a Virginia limited partnership, the
Guarantors and Lenders identified therein and NationsBank, N.A., as
Administrative Agent. Terms used but not otherwise defined herein shall have the
meanings provided in the Credit Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
undersigned Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Note may, or shall, become immediately due and payable as provided in the
Credit Agreement without presentment, demand, protest or notice of any kind, all
of which are waived by the undersigned Borrower. In the event payment of amounts
evidenced by this Note is not made at any stated or accelerated maturity, the
undersigned Borrower agrees to pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the undersigned Borrower has caused this Note to be
duly executed as of the date first above written.
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By_________________________________
Name:
Title:
<PAGE>
Schedule 3.2
Form of Notice of Extension/Conversion
NationsBank, N.A.,
as Administrative Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Re: Three-Year Credit Agreement dated as of August 4, 1997 (as
amended and modified, the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined herein shall have
the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, UNITED DOMINION REALTY TRUST, INC. (the "Borrower"),
refers to the Credit Agreement dated as of August 4, 1997 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among the
Borrower, the Lenders and NationsBank, N.A., as Administrative Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives notice pursuant to Section 3.2 of the Credit Agreement that it requests an
extension or conversion of a Revolving Loan outstanding under the Credit
Agreement, and in connection therewith sets forth below the terms on which such
extension or conversion is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period) _______________________
(B) Principal Amount of
Extension or Conversion _______________________
(C) Interest rate basis _______________________
(D) Interest Period and the
last day thereof _______________________
In accordance with the requirements of Section 5.2 of the Credit
Agreement, the undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects as of the date of this request, and will be true and
correct after giving effect to the requested Extension of Credit
(except for those which expressly relate to an earlier date).
(b) No Default or Event of Default exists, or will exist after
giving effect to the requested Extension of Credit.
<PAGE>
(c) As to any Credit Party, no involuntary action has been
commenced under applicable bankruptcy, insolvency or other similar law
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) as to any Credit Party or as to any substantial
part of the property of any Credit Party or for the winding up or
liquidation of its affairs, and remains undismissed, undischarged or
unbonded.
(d) No circumstances, events or conditions have occurred since
the date of the audited financial statements referenced in Section 6.1
of the Credit Agreement which would have a Material Adverse Effect.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By:_________________________________
Name:
Title:
<PAGE>
Schedule 5.1(e)(v)
Officer's Certificate
Pursuant to Section 5.1(i)(v) of the Three-Year Credit Agreement (the
"Credit Agreement"), dated as of August 4, 1997, among UNITED DOMINION REALTY
TRUST, INC., a Virginia corporation, the Guarantors and Lenders identified
therein and NationsBank, N.A., as Administrative Agent, the undersigned
____________________ Secretary of _________________________ (the "Corporation")
hereby certifies as follows:
1. Attached hereto as Annex I is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Corporation on
__________________, 1996. The attached resolutions have not been rescinded or
modified and remain in full force and effect. The attached resolutions are the
only corporate proceedings of the Corporation now in force relating to or
affecting the matters referenced to therein.
2. Attached hereto as Annex II is a true and complete copy of the
By-laws of the Corporation as in effect on the date hereof.
3. Attached hereto as Annex III is a true and complete copy of the
Certificate of Incorporation of the Corporation and all amendments thereto as in
effect on the date hereof.
4. The following persons are now duly elected and qualified officers of
the Corporation, holding the offices indicated, and the signature appearing
opposite his name below is his true and genuine signature, and such officer is
duly authorized to execute and deliver on behalf of the Corporation the Credit
Agreement, the Notes to be issued pursuant thereto and the other Credit
Documents and to act as a Responsible Officer on behalf of the Corporation under
the Credit Agreement:
Name Office Signature
-----------------------
IN WITNESS WHEREOF, the undersigned has hereunto set his/her name and
affixed the corporate seal of the Corporation.
-------------------------------,
Secretary
(CORPORATE SEAL)
Date: __________________, 1996
I, ___________________, ___________________ of
________________________, hereby certify that ______________________, whose
genuine signature appears above, is, and has been at all times since
________________________, a duly elected, qualified and acting _________________
of____________________________________.
___________________________________ of
___________________________________
____________________________________, 1996
<PAGE>
Schedule 6.3
Qualifications Concerning Organization, Existence and Compliance with Law
<PAGE>
Schedule 6.12
Subsidiaries
<PAGE>
Schedule 7.2(b)
Form of Officer's Compliance Certificate
This Certificate is delivered in accordance with the provisions of
Section 7.2(b) of that Three-Year Credit Agreement dated as of August 4, 1997
(as amended, modified and supplemented, the "Credit Agreement") among UNITED
DOMINION REALTY TRUST, INC., a Virginia corporation, the Guarantors and Lenders
identified therein, and NationsBank, N.A., as Administrative Agent. Terms used
but not otherwise defined herein shall have the same meanings provided in the
Credit Agreement.
The undersigned, being a Responsible Officer of UNITED DOMINION REALTY
TRUST, INC., a Virginia corporation, hereby certifies, in my official capacity
and not in my individual capacity, that to the best of my knowledge and belief:
(a) the financial statements of the Borrower of this
Certificate fairly present the financial condition of the parties
covered by such financial statements in all material respects;
(b) during the period the Credit Parties have observed or
performed all of their covenants and other agreements in all
material respects, and satisfied in all material respects every
material condition, contained in this Credit Agreement to be
observed, performed or satisfied by them; and
(c) the undersigned has no actual knowledge of any Default or
Event of Default.
Detailed calculations demonstrating compliance with the financial covenants set
out in Section 7.9 of the Credit Agreement are attached to this Certificate.
This the ___________ day of ___________________, 199___.
UNITED DOMINION REALTY TRUST, INC.
By:___________________________
Name:
Title:
<PAGE>
Attachment to Officer's Certificate
Computation of Financial Covenants
<PAGE>
Schedule 7.11
Form of Joinder Agreement
THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________,
19__, is by and between _____________________, a ___________________ (the
"Applicant Guarantor"), and NATIONSBANK, N.A., in its capacity as Administrative
Agent under that certain Three-Year Credit Agreement dated as of August 4, 1997
(as amended and modified, the "Credit Agreement") by and among UNITED DOMINION
REALTY TRUST, INC., a Virginia corporation, the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative Agent. All of the
defined terms in the Credit Agreement are incorporated herein by reference.
The Applicant Guarantor has indicated its desire to become a Guarantor
or is required by the terms of Section 7.11 of the Credit Agreement to become, a
Guarantor under the Credit Agreement.
Accordingly, the Applicant Guarantor hereby agrees as follows with the
Administrative Agent, for the benefit of the Lenders:
1. The Applicant Guarantor hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Guarantor will be deemed
to be a party to the Credit Agreement and a "Guarantor" for all purposes of the
Credit Agreement and the other Credit Documents, and shall have all of the
obligations of a Guarantor thereunder as if it had executed the Credit Agreement
and the other Credit Documents. The Applicant Guarantor agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Documents,
including without limitation (i) all of the affirmative and negative covenants
set forth in Sections 7 and 8 of the Credit Agreement and (ii) all of the
undertakings and waivers set forth in Section 4 of the Credit Agreement. Without
limiting the generality of the foregoing terms of this paragraph 1, the
Applicant Guarantor hereby (A) jointly and severally together with the other
Guarantors, guarantees to each Lender, the Administrative Agent and the Issuing
Lender as provided in Section 4 of the Credit Agreement, the prompt payment and
performance of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof.
and (B) agrees that if any of the Guaranteed Obligations are not paid or
performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or
otherwise), the Applicant Guarantor will, jointly and severally together with
the other Guarantors, promptly pay and perform the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) in accordance
with the terms of such extension or renewal.
<PAGE>
2. The Applicant Guarantor acknowledges and confirms that it has
received a copy of the Credit Agreement and the Schedules and Exhibits thereto.
The information on the Schedules to the Credit Agreement is amended to provide
the information shown on the attached Schedule A.
3. The Applicant Guarantor hereby waives acceptance by the
Administrative Agent and the Lenders of the guaranty by the Applicant Guarantor
under Section 4 of the Credit Agreement upon the execution of this Joinder
Agreement by the Applicant Guarantor.
4. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
5. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Applicant Guarantor has caused this Joinder
Agreement to be duly executed by its authorized officers, and the Administrative
Agent, for the benefit of the Lenders, has caused the same to be accepted by its
authorized officer, as of the day and year first above written.
APPLICANT GUARANTOR
By:___________________________
Name:
Title:
Address for Notices:
Attn: _______________________
Telephone:
Telecopy:
Acknowledged and accepted:
NATIONSBANK, N.A., as Administrative Agent
By:____________________________
Name:
Title:
<PAGE>
Schedule A
to
Joinder Agreement
Address for
Applicant Guarantor Notices
<PAGE>
Schedule 8.6
Existing Investments
<PAGE>
Schedule 8.7
REMICs and Other Special Subsidiaries
<PAGE>
Schedule 11.1
Schedule of Lenders' Addresses
NationsBank, N.A. NationsBank, N.A.
Mid-Atlantic Corporate Finance
1111 E. Main Street
Richmond, Virginia 23277-0001
Attn: William K. Burton
Telephone: (804) 788-3637
Facsimile: (804) 788-3669
Signet Bank Signet Bank
7799 Leesburg Pike
Falls Church, Virginia 22043
Attn: Eric Lawrence
Telephone: (703) 714-5144
Facsimile: (703) 506-0284
Crestar Bank Crestar Bank
919 E. Main Street
8th Floor
Richmond, Virginia 23219
Attn: Richard Dickinson
Telephone: (804) 782-5956
Facsimile: (804) 782-7986
First Union National Bank First Union National Bank
301 South College Street, DC-6
6th Floor
Charlotte, North Carolina 28288
Attn: John Schissel
Telephone: (704) 383-1967
Facsimile: (704) 383-6205
Sumitomo Bank, Ltd. Sumitomo Bank, Ltd.
277 Park Avenue
6th Floor
New York, New York 10172
Attn: Honami Matsugasaki
Telephone: (212) 224-4176
Facsimile: (212) 224-4504
<PAGE>
DG Bank DG Bank
609 Fifth Avenue
New York, New York 10017-1021
Attn: Linda J. O'Connell
Telephone: (212) 745-1586
Facsimile: (212) 745-1556
Bank Hapoalim B.M. Bank Hapoalim B.M.
1515 Market Street
2nd Floor
Philadelphia, Pennsylvania 19102
Attn: Ellen Frank
Telephone: (215) 665-2251
Facsimile: (215) 665-2217
Guaranty Federal Bank Guaranty Federal Bank
8333 Douglas Avenue
Dallas, Texas 75225
Attn: Roger C. Davis
Telephone: (214) 260-2849
Facsimile: (214) 360-1678
Comerica Bank Comerica Bank
500 Woodward Street
7th Floor
Detroit, Michigan 48226
Attn: Dave Campbell
Telephone: (313) 222-9306
Facsimile: (313) 222-9295
<PAGE>
Schedule 11.3(b)
Form of Assignment and Acceptance
THIS ASSIGNMENT AND ACCEPTANCE dated as of _________________________,
1996 is entered into between THE LENDER IDENTIFIED ON THE SIGNATURE PAGES AS THE
"ASSIGNOR" (the "Assignor") and THE PARTIES IDENTIFIED ON THE SIGNATURE PAGES AS
"ASSIGNEES" ("Assignee").
Reference is made to that Three-Year Credit Agreement dated as of
August 4, 1997 (as amended and modified, the "Credit Agreement") among UNITED
DOMINION REALTY TRUST, INC., a Virginia corporation (the "Borrower"), the
Guarantors and Lenders identified therein and NationsBank, N.A., as
Administrative Agent. Terms defined in the Credit Agreement are used herein with
the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignees, and the Assignees hereby purchase and assume, without recourse, from
the Assignor, effective as of the Effective Date shown below, those rights and
interests of the Assignor under the Credit Agreement identified below (the
"Assigned Interests"), including the Loans and Commitments relating thereto,
together with unpaid interest and fees relating thereto accruing from the
Effective Date. The Assignor represents and warrants that it owns the interests
assigned hereby free and clear of liens, encumbrances or other claims. Each of
the Assignees represents that it is an Eligible Assignee within the meaning of
the term in the Credit Agreement. The Assignor and each of the Assignees hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 11.3 of the Credit Agreement, a copy of which
has been received by each such party. From and after the Effective Date (i) each
Assignee, if it is not already a Lender under the Credit Agreement, shall be a
party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and (ii) each Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement (other than the rights of indemnification referenced in Section 11.9
of the Credit Agreement).
2. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
<TABLE>
<CAPTION>
3. Terms of Assignment
<S> <C>
(a) Date of Assignment: ___________________, 199__
(b) Legal Name of Assignor: SEE SIGNATURE PAGE
(c) Legal Name of Assignee: SEE SIGNATURE PAGE
(d) Effective Date of Assignment: ___________________, 199__
</TABLE>
See Schedule I attached for a description of the Loans and Commitments (and the
percentage interests therein and relating thereto) which are the subject of this
Assignment and Acceptance.
4. The fee payable to the Paying Agent in connection with this
Assignment is enclosed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the execution of
this instrument by their duly authorized officers as of the date first above
written.
ASSIGNOR: ASSIGNEE:
By_________________________________ By____________________________
Name: Name:
Title: Title:
ACKNOWLEDGMENT AND CONSENT
NATIONSBANK, N.A. United Dominion Realty Trust, Inc.
as Administrative Agent
By_________________________________ By____________________________
Name: Name:
Title: Title:
<PAGE>
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
United Dominion Realty Trust, Inc.
REVOLVING LOANS PRIOR TO ASSIGNMENT
<TABLE>
<CAPTION>
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
<S> <C>
ASSIGNOR
ASSIGNEES
-------------------- -------------------- --------------------
$ $
</TABLE>
REVOLVING LOANS INTERESTS SUBJECT OF THIS ASSIGNMENT
<TABLE>
<CAPTION>
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
<S> <C>
ASSIGNOR
-------------------- -------------------- --------------------
$ $
</TABLE>
<PAGE>
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
United Dominion Realty Trust, Inc.
REVOLVING LOANS AFTER ASSIGNMENT
<TABLE>
<CAPTION>
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
ASSIGNOR
<S> <C>
ASSIGNEES
-------------------- -------------------- --------------------
$ $
</TABLE>
EXHIBIT 4(ii)(h)
364-DAY CREDIT AGREEMENT
Dated as of August 4, 1997
among
UNITED DOMINION REALTY TRUST, INC.,
as Borrower,
UNITED DOMINION REALTY, L.P.
and Certain Other Subsidiaries and Affiliates of the Borrower,
as Guarantors,
THE LENDERS NAMED HEREIN
AND
NATIONSBANK, N.A.,
as Administrative Agent
and
FIRST UNION NATIONAL BANK,
as Co-Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <C>
SECTION 1 DEFINITIONS ..........................................................................................1
1.1 Definitions.........................................................................................1
1.2 Computation of Time Periods........................................................................19
1.3 Accounting Terms...................................................................................19
SECTION 2 CREDIT FACILITIES ....................................................................................19
2.1 Revolving Loans....................................................................................19
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........................................................21
3.1 Default Rate.......................................................................................21
3.2 Extension and Conversion...........................................................................21
3.3 Prepayments........................................................................................22
3.4 Termination and Reduction of Commitments...........................................................22
3.5 Fees...............................................................................................22
3.6 Capital Adequacy...................................................................................23
3.7 Inability To Determine Interest Rate...............................................................23
3.8 Illegality.........................................................................................23
3.9 Requirements of Law................................................................................24
3.10 Taxes.............................................................................................25
3.11 Indemnity.........................................................................................27
3.12 Pro Rata Treatment................................................................................27
3.13 Sharing of Payments...............................................................................28
3.14 Payments, Computations, Etc.......................................................................29
3.15 Evidence of Debt..................................................................................30
SECTION 4 GUARANTY .............................................................................................31
4.1 The Guarantee......................................................................................31
4.2 Obligations Unconditional..........................................................................31
4.3 Reinstatement......................................................................................32
4.4 Certain Additional Waivers.........................................................................32
4.5 Remedies...........................................................................................33
4.6 Rights of Contribution.............................................................................33
4.7 Continuing Guarantee...............................................................................33
SECTION 5 CONDITIONS ...........................................................................................34
5.1 Conditions to Closing..............................................................................34
5.2 Conditions to All Extensions of Credit.............................................................35
SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................................36
6.1 Financial Condition................................................................................36
6.2 No Material Adverse Changes........................................................................36
6.3 Organization; Existence; Compliance with Law.......................................................36
6.4 Power; Authorization; Enforceable Obligations......................................................37
6.5 No Legal Bar.......................................................................................37
6.6 No Material Litigation.............................................................................37
6.7 No Default.........................................................................................38
6.8 Ownership of Property; Liens.......................................................................38
6.9 Taxes..............................................................................................38
6.10 ERISA.............................................................................................38
6.11 Governmental Regulations, Etc.....................................................................39
6.12 Subsidiaries......................................................................................40
6.13 Purpose of Extensions of Credit...................................................................40
6.14 Environmental Matters.............................................................................40
i
<PAGE>
SECTION 7 AFFIRMATIVE COVENANTS.................................................................................41
7.1 Financial Statements...............................................................................41
7.2 Certificates; Other Information....................................................................42
7.3 Notices............................................................................................43
7.4 Payment of Obligations.............................................................................44
7.5 Conduct of Business and Maintenance of Existence...................................................44
7.6 Maintenance of Property; Insurance.................................................................45
7.7 Inspection of Property; Books and Records; Discussions.............................................45
7.8 Environmental Laws.................................................................................45
7.9 Financial Covenants................................................................................46
7.10 Agency Fees.......................................................................................46
7.11 Additional Guaranties and Stock Pledges...........................................................47
7.12 Ownership of Subsidiaries.........................................................................47
7.13 Use of Proceeds...................................................................................47
SECTION 8 NEGATIVE COVENANTS ...................................................................................47
8.1 Limitations on Debt................................................................................47
8.2 Restriction on Liens...............................................................................48
8.3 Consolidations, Mergers and Sales of Assets........................................................48
8.4 Loans and Investments..............................................................................50
8.5 Transactions with Affiliates.......................................................................50
8.6 Transactions with Other Persons regarding this Agreement...........................................50
8.7 Limitation on Certain Restrictions on Subsidiaries.................................................50
SECTION 9 EVENTS OF DEFAULT.....................................................................................51
9.1 Events of Default..................................................................................51
9.2 Acceleration; Remedies.............................................................................53
SECTION 10 AGENCY PROVISIONS................................................................................... 54
10.1 Appointment.......................................................................................54
10.2 Delegation of Duties..............................................................................54
10.3 Exculpatory Provisions............................................................................54
10.4 Reliance on Communications........................................................................55
10.5 Notice of Default.................................................................................55
10.6 Non-Reliance on Administrative Agent and Other Lenders............................................56
10.7 Indemnification...................................................................................56
10.8 Administrative Agent in its Individual Capacity...................................................57
10.9 Successor Administrative Agent....................................................................57
ii
<PAGE>
SECTION 11 MISCELLANEOUS .......................................................................................57
11.1 Notices...........................................................................................57
11.2 Right of Set-Off..................................................................................59
11.3 Benefit of Agreement..............................................................................59
11.4 No Waiver; Remedies Cumulative....................................................................61
11.5 Payment of Expenses, etc..........................................................................62
11.6 Amendments, Waivers and Consents..................................................................62
11.7 Counterparts......................................................................................63
11.8 Headings..........................................................................................63
11.9 Survival..........................................................................................64
11.10 Governing Law; Submission to Jurisdiction; Venue.................................................64
11.11 Severability.....................................................................................64
11.12 Entirety.........................................................................................65
11.13 Binding Effect; Termination......................................................................65
11.14 Source of Funds..................................................................................65
11.15 Conflict.........................................................................................66
<PAGE>
SCHEDULES
</TABLE>
<TABLE>
<S> <C>
Schedule 2.1(a)............ Schedule of Lenders and Commitments
Schedule 2.1(b)(i)......... Form of Notice of Borrowing
Schedule 2.1(e)............ Form of Revolving Note
Schedule 3.2............... Form of Notice of Extension/Conversion
Schedule 5.1(e)(v)......... Officer's Certificate
Schedule 6.3............... Qualifications Concerning Organization, Existence and Compliance with Law
Schedule 6.12.............. Subsidiaries
Schedule 7.2(b)............ Form of Officer's Compliance Certificate
Schedule 7.11.............. Form of Joinder Agreement
Schedule 8.7............... REMICs and Other Special Subsidiaries
Schedule 11.1.............. Schedule of Lender's Addresses
Schedule 11.3(b)........... Form of Assignment and Acceptance
</TABLE>
<PAGE>
364-DAY
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of August 4, 1997 (the "Credit
Agreement"), is by and among UNITED DOMINION REALTY TRUST, INC., a Virginia
corporation (the "Borrower"), UNITED DOMINION REALTY, L.P., a Virginia limited
partnership and the other subsidiaries and affiliates identified on the
signature pages hereto and such other subsidiaries and affiliates as may from
time to time become Guarantors hereunder in accordance with the provisions
hereof (the "Guarantors"), the lenders named herein and such other lenders as
may become a party hereto (the "Lenders"), NATIONSBANK, N.A., as Administrative
Agent (in such capacity, the "Administrative Agent") and FIRST UNION NATIONAL
BANK, as Co-Agent.
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $50
million credit facility for the purposes hereinafter set forth;
WHEREAS, the Borrower intends to use the credit facility in part to
make loans and transfers to certain of its Subsidiaries and Affiliates,
including the Guarantors;
WHEREAS, the Guarantors acknowledge that establishment of the credit
facility inures to the mutual benefit of the Borrower and the Guarantors;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"Administrative Agent" shall have the meaning assigned to such
term in the heading hereof, together with any successors or assigns.
1
<PAGE>
"Administrative Agent's Fee Letter" means that certain letter
agreement, dated as of April 1, 1997, between the Administrative Agent
and the Borrower, as amended, modified, supplemented or replaced from
time to time.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agency Services Address" means NationsBank, N.A.,
NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255,
Attn: Agency Services, or such other address as may be identified by
written notice from the Administrative Agent to the Borrower.
"Aggregate Revolving Committed Amount" means the aggregate
amount of Revolving Commitments in effect from time to time, being
initially FIFTY MILLION DOLLARS ($50,000,000).
"Applicable Percentage" means for any day, the rate per annum
set forth below opposite the applicable rating for the Borrower's
senior unsecured (non-credit enhanced) long term debt then in effect,
it being understood that the Applicable Percentage for (i) Base Rate
Loans shall be the percentage set forth under the column "Base Rate
Margin", (ii) Eurodollar Loans shall be the percentage set forth under
the column "Eurodollar Margin", and (iii) the Facility Fee shall be the
percentage set forth under the column "Facility Fee":
<TABLE>
<CAPTION>
Pricing S&P Moody's Base Rate
Level Rating Rating Eurodollar Margin Margin Facility Fee
<S> <C>
I A- or above A3 or above 0.4000% 0% 0.1000%
II BBB+ Baa1 0.4750% 0% 0.1250%
III BBB Baa2 0.5500% 0% 0.1500%
IV BBB- Baa3 0.6125% 0% 0.1875%
V below BBB- below Baa3 0.8750% 0% 0.3750%
or unrated or unrated
</TABLE>
The numerical classification set forth under the column "Pricing Level"
shall be established based on the better of ratings by S&P and Moody's
for the Borrower's senior unsecured (non-credit enhanced) long term
debt. The Applicable Percentage shall be determined and adjusted on the
date five (5) Business Days after each change in debt rating.
Adjustments in the Applicable Percentage shall be effective as to all
Loans, existing and prospective, from the date of adjustment. The
Administrative Agent shall promptly notify the Lenders of changes in
the Applicable Percentage. Adjustments in the Applicable Percentage
shall be effective as to existing Extensions of Credit as well as new
Extensions of Credit made thereafter.
2
<PAGE>
"Attributable Debt" means, in connection with any
Sale-Leaseback Transaction occurring subsequent to the Closing Date,
the lesser of (i) the present value, discounted according to GAAP at
the debt rate implicit in the related lease, of the obligation of the
lessee for rental payments over the remaining term of such
lease(including any period for which such lease has been extended or
may, at the option of the lessor be extended) and (ii) the fair market
value of the assets subject to such Sale-Leaseback Transaction.
"Attributed Principal Amount" means, on any day, with respect
to any Securitization Transaction entered into by any member of the
Consolidated Group, the aggregate amount (with respect to any such
transaction, the "Invested Amount") paid to, or borrowed by, such
Person as of such date under such Securitization Transaction, minus the
aggregate amount received by the applicable Receivables Financier and
applied to the reduction of the Invested Amount under such
Securitization Transaction.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of ninety (90)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms hereof,
the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
3
<PAGE>
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to close, except that,
when used in connection with a Eurodollar Loan, such day shall also be
a day on which dealings between banks are carried on in U.S. dollar
deposits in London, England.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P
is at least A-2 (and not lower than A-3) or the equivalent thereof or
from Moody's is at least P-2 (and not lower than P-3) or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any
Approved Bank (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated at
least A-2 (and not lower than A-3) or the equivalent thereof by S&P or
at least P-2 (and not lower than P-3) or the equivalent by Moody's and
maturing within six months of the date of acquisition, (d) repurchase
agreements entered into by a Person with a bank or trust company
(including any of the Lenders) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which
such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations, (e) obligations of any State of the United
States or any political subdivision thereof, the interest with respect
to which is exempt from federal income taxation under Section 103 of
the Code, having a long term rating of at least AA- or Aa-3 by S&P or
Moody's, respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated A- (or the equivalent thereof) or better by S&P or A3
(or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days and (g) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Borrower Act of
1940, as amended, which are administered by reputable financial
institutions having capital of at least $100,000,000 and the portfolios
of which are limited to Investments of the character described in the
foregoing subdivisions (a) through (f).
4
<PAGE>
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control over,
voting stock of the Borrower (or other securities convertible into such
voting stock) representing 35% or more of the combined voting power of
all voting stock of the Borrower, or (ii) during any period of up to 24
consecutive months, commencing after the Closing Date, individuals who
at the beginning of such 24 month period were directors of the Borrower
(together with any new director whose election by the Borrower's Board
of Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office. As used
herein, "beneficial ownership" shall have the meaning provided in Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Commitment" means the Revolving Commitment.
"Commitment Percentage" means the Revolving Commitment
Percentage.
"Commitment Period" means the period from and including the
Closing Date to but not including the earlier of (i) the Termination
Date, or (ii) the date on which the Commitments terminate in accordance
with the provisions of this Credit Agreement.
"Consolidated Adjusted Capitalization" means at any date the
sum of (i) Consolidated Funded Debt plus (ii) Consolidated Adjusted
Tangible Net Worth.
"Consolidated Adjusted Tangible Net Worth" means at any date
(i) the sum of (A) the consolidated shareholders'
equity of the Consolidated Group plus (B) accumulated depreciation of
real estate owned to the extent reflected in the then book value of the
Consolidated Assets minus, without duplication,
5
<PAGE>
(ii) the sum of (A) the Intangible Assets of the
Consolidated Group plus (B) all Restricted Investments (valued at the
then book value thereof) of the Consolidated Group plus (C) Minority
Interests.
"Consolidated Assets" means the assets of the members of the
Consolidated Group determined in accordance with GAAP on a consolidated
basis.
"Consolidated Attributable Debt" means at any date the
Attributable Debt of the Consolidated Group, determined on a
consolidated basis.
"Consolidated EBITDA" means for any period for the
Consolidated Group, the sum of Consolidated Net Income plus
Consolidated Interest Expense plus all provisions for any Federal,
state or other income taxes plus depreciation, amortization and other
non-cash charges, in each case on a consolidated basis determined in
accordance with GAAP applied on a consistent basis, but excluding in
any event gains and losses on Investments and extraordinary gains and
losses, and taxes on such excluded gains and tax deductions or credits
on account of such excluded losses. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive
quarters ending as of the date of determination.
"Consolidated Funded Debt" means total Funded Debt of the
Consolidated Group on a consolidated basis determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Group" means the Borrower and its consolidated
Subsidiaries, as determined in accordance with GAAP.
"Consolidated Interest Expense" means for any period for the
Consolidated Group, all interest expense, including the amortization of
debt discount and premium, the interest component under capital leases
and the implied interest component under Securitization Transactions,
in each case on a consolidated basis determined in accordance with GAAP
applied on a consistent basis. The applicable period shall be for the
four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Mortgage Debt" means at any date the Mortgage
Debt of the Consolidated Group, determined on a consolidated basis.
"Consolidated Net Income" means for any period, the net income
of the Consolidated Group on a consolidated basis determined in
accordance with GAAP applied on a consistent basis. The applicable
period shall be for the four consecutive fiscal quarters ending as of
the date of determination.
"Consolidated Net Operating Income from Unencumbered Realty"
means for any period, earnings before deduction of interest, income
taxes, depreciation and amortization and before deduction of general
and administrative expenses and overhead, relating to Consolidated
Unencumbered Realty of the Consolidated Group on a consolidated basis
determined in accordance with GAAP on a consistent basis. The
applicable period shall be for the four consecutive fiscal quarters
ending as of the date of determination.
6
<PAGE>
"Consolidated Net Worth" means total stockholders' equity for
the Consolidated Group on a consolidated basis determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Priority Claims" means at any date the sum
(without duplication) of (i) Consolidated Mortgage Debt plus (ii)
Consolidated Attributable Debt plus (iii) Consolidated Subsidiary Debt
plus (iv) all preferred stock of Subsidiaries not owned by the Borrower
and/or one or more of its Wholly-Owned Subsidiaries, valued at the
higher of the voluntary or involuntary liquidation preference thereof.
"Consolidated Senior Fixed Charges" means, as of the last day
of each fiscal quarter for the Consolidated Group, the sum of the cash
portion of Consolidated Interest Expense paid on or in respect of
Consolidated Senior Funded Debt in the period of four consecutive
fiscal quarters ending on such day plus scheduled maturities of
Consolidated Senior Funded Debt (excluding the amount by which a final
installment exceeds the next preceding principal installment thereon)
in the period of four consecutive fiscal quarters ending on such day.
"Consolidated Senior Fixed Charge Coverage Ratio" means, for
any period, the ratio of Consolidated EBITDA to Consolidated Senior
Fixed Charges.
"Consolidated Senior Funded Debt" means Consolidated Funded
Debt (determined without including Subordinated Funded Debt).
"Consolidated Subsidiary Debt" means at any date all Debt of
Subsidiaries (exclusive of Debt owed to the Borrower), determined on a
consolidated basis.
"Consolidated Total Fixed Charge Coverage Ratio" means, for
any period, the ratio of Consolidated EBITDA to Consolidated Total
Fixed Charges.
"Consolidated Total Fixed Charges" means, as of the last day
of each fiscal quarter for the Consolidated Group, the sum of the cash
portion of Consolidated Interest Expense paid in the period of four
consecutive fiscal quarters ending on such day plus scheduled
maturities of Consolidated Funded Debt (excluding the amount by which a
final installment exceeds the next preceding principal installment
thereon) in the period of four consecutive fiscal quarters ending on
such day.
"Consolidated Total Realty" means, for the Consolidated Group
on a consolidated basis, the undepreciated cost of all Realty, whether
improved or not.
"Consolidated Unencumbered Interest Coverage Ratio" means, for
any period, the ratio of (i) Consolidated Net Operating Income from
Consolidated Unencumbered Realty to (ii) Consolidated Interest Expense
relating to Consolidated Unsecured Debt.
7
<PAGE>
"Consolidated Unencumbered Realty" means, for the Consolidated
Group on a consolidated basis, all Realty which is not encumbered by
Lien securing Funded Debt.
"Consolidated Unimproved Realty" means, for the Consolidated
Group on a consolidated basis, the undepreciated cost of all raw
unimproved land held for current or future development. For purposes
hereof, property under development where construction and development
is in progress shall not be considered to be unimproved to the extent
that completed buildings are available for rent and are at least 75%
leased. In such case, the undepreciated cost of the completed
building(s) together with a proportionate cost of the related land and
land improvements shall be considered as improved for purposes hereof.
"Consolidated Unsecured Debt" means, for the Consolidated
Group on a consolidated basis, all unsecured Consolidated Funded Debt.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or undertaking to which such Person is a party or
by which it or any of its property is bound.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, each Joinder Agreement, the Administrative
Agent's Fee Letter, and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business), (iv) all
obligations of such Person as lessee under capital leases, (v) all
obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or
substantially similar securities or property, (vi) all obligations of
such Person to reimburse any bank or other person in respect of amounts
payable under a letter of credit or similar instrument (being the
amount available to be drawn thereunder, whether or not then drawn),
(vii) all obligations of others secured by a Lien on any asset of such
Person, whether or not such obligation is assumed by such Person,
(viii) all obligations of others Guaranteed by such Person, (ix) all
obligations which in accordance with GAAP would be shown as liabilities
on a balance sheet of such Person, (x) the Attributed Principal Amount
under any Securitization Transaction and (xi) all obligations of such
Person owing under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
to which such Person is a party, where such transaction is considered
borrowed money indebtedness for tax purposes, but is classified as an
operating lease in accordance with GAAP. Debt of any Person shall
include Debt of any partnership or joint venture in such Person is a
general partner or joint venturer to the extent of recourse to such
Person for payment thereof.
8
<PAGE>
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at
such time, (i) has failed to make an Extension of Credit required
pursuant to the terms of this Credit Agreement, (ii) has failed to pay
to the Administrative Agent or any Lender an amount owed by such Lender
pursuant to the terms of the Credit Agreement or any other of the
Credit Documents, or (iii) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or to a receiver,
trustee or similar proceeding.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Credit Party" means any Credit Party which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Domestic Subsidiary" means any Subsidiary which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Transaction" means, with respect to any member of the
Consolidated Group, any issuance of shares of its capital stock or
other equity interest, other than an issuance (i) to a member of the
Consolidated Group or (ii) in connection with exercise by a present or
former employee, officer or director under a stock incentive plan,
stock option plan or other equity-based compensation plan or
arrangement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b) or (c) of
the Code.
9
<PAGE>
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (vi) the complete or
partial withdrawal of the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect
to any Plan; or (vii) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
--------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
"Extension of Credit" means, as to any Lender, the making of,
or participation in, a Loan by such Lender.
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"Facility Fee" shall have the meaning given such term in
Section 3.5(a).
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (B) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Administrative
Agent on such day on such transactions as determined by the
Administrative Agent.
"Foreign Credit Party" means a Credit Party which is not a
Domestic Credit Party.
"Foreign Subsidiary" means a Subsidiary which is not a
Domestic Subsidiary.
"Funded Debt" means at any date, with respect to any Person,
without duplication, all Debt of such Person.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantee" by any Person, means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guaranteed Obligations" means, as to each Guarantor, without
duplication, all obligations of the Borrower to the Lenders and the
Administrative Agent, whenever arising, under this Credit Agreement,
the Notes or the Credit Documents relating to the Obligations hereunder
(including interest accruing after a Bankruptcy Event, regardless of
whether such interest is allowed as a claim under the Bankruptcy Code).
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"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto, and each other Person which
may hereafter become a Guarantor by execution of a Joinder Agreement,
together with their successors and permitted assigns.
"Intangible Assets" of any Person means at any date the amount
of (i) all write-ups (other than write-ups resulting from write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) in the book value of any asset owned by
such Person and (ii) all unamortized debt discount and expense,
unamortized deferred charges, capitalized start-up costs, goodwill,
patents, licenses, trademarks, trade names, copyrights, organization or
developmental expenses, covenants not to compete and other intangible
items.
"Interbank Offered Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
(rounded upwards, if necessary, to the nearest whole multiple of 1/100
of 1%) equal to the rate of interest, determined by the Administrative
Agent on the basis of the offered rates for deposits in dollars for a
period of time corresponding to such Interest Period (and commencing on
the first day of such Interest Period), appearing on Telerate Page 3750
(or, if, for any reason, Telerate Page 3750 is not available, the
Reuters Screen LIBO Page) as of approximately 11:00 A.M. (London time)
two (2) Business Days before the first day of such Interest Period. As
used herein, "Telerate Page 3750" means the display designated as page
3750 by Dow Jones Telerate, Inc. (or such other page as may replace
such page on that service for the purpose of displaying the British
Bankers Association London interbank offered rates) and "Reuters Screen
LIBO Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank
offered rates of major banks).
"Interest Payment Date" means (i) as to any Base Rate Loan,
the last day of each March, June, September and December and the
Termination Date and (ii) as to any Eurodollar Loan, the last day of
each Interest Period for such Loan, the date of repayment of principal
of such Loan and the Termination Date, and in addition where the
applicable Interest Period is more than three months, then also the
date three months from the beginning of the Interest Period, and each
three months thereafter. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed
to be the next succeeding Business Day.
"Interest Period" means as to any Eurodollar Loan, a period of
one, two, three or six month's duration, as the Borrower may elect,
commencing in each case, on the date of the borrowing (including
conversions, extensions and renewals); provided, however, (A) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except where the next succeeding Business Day falls in the next
succeeding calendar month, then such Interest Period shall end on the
next preceding Business Day), (B) no Interest Period shall extend
beyond the Termination Date, and (C) where an Interest Period begins on
a day for which there is no numerically corresponding day in the
calendar month in which the Interest Period is to end, such Interest
Period shall end on the last day of such calendar month.
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"Invested Amount" shall have the meaning given such term in
the definition of Attributed Principal Amount.
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.11 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.11.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and their successors and assigns.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Consolidated Group taken as a
whole, (ii) the ability of the Credit Parties taken as a whole to
perform any material obligation under the Credit Documents to which
they are parties or (iii) the rights and remedies of the Lenders or the
Borrower under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Minority Interests" means any shares of stock of any class of
a Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Borrower and/or one or more Wholly-Owned
Subsidiaries. Minority Interests constituting preferred stock shall be
valued at the voluntary or involuntary liquidation value of such
preferred stock, whichever is greater, and by valuing common stock at
the book value of the capitalized surplus applicable thereto adjusted,
if necessary, to reflect any changes from the book value of such common
stock required by the foregoing method of valuing Minority Interests in
preferred stock.
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"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such Borrower in the business
of rating securities.
"Mortgage Debt" of any Person means at any date the aggregate
principal amount of all Debt of such Person secured by a Lien on any
real property owned or leased by it.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"Non-Excluded Taxes" means such term as is defined in Section
3.10.
"Note" or "Notes" means any Revolving Note.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Operating Partnership" means United Dominion Realty, L.P.,
together with any permitted successors and assigns.
"Participation Interest" means the purchase by a Lender of a
participation in Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) Investments consisting of stock,
obligations, securities or other property received in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors; (iii) acquisitions permitted by Section 8.3; (iv)
Investments by a member of the Consolidated Group or an Affiliate of a
member of the Consolidated Group in connection with a Permitted
Securitization Transaction; (v) Investments by a member of the
Consolidated Group in and to a Credit Party; and (vi) additional
Investments of a type not contemplated by the foregoing clauses in
aggregate amount outstanding, not to exceed the greater of (A)
$25,000,000 or (B) one percent (1%) of Consolidated Adjusted
Capitalization.
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"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in effect
at its principal office in Charlotte, North Carolina, with each change
in the Prime Rate being effective on the date such change is publicly
announced as effective (it being understood and agreed that the Prime
Rate is a reference rate used by NationsBank in determining interest
rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit by NationsBank to any
debtor).
"Pro Forma Basis" means, with respect to any transaction, that
such transaction shall be deemed to have occurred as of the first day
of the four fiscal-quarter period ending as of the most recent fiscal
quarter end preceding the date of such transaction with respect to
which the Administrative Agent and the Lenders have received the
officer's certificate in accordance with the provisions of Section
7.2(b). As used herein, "transaction" means and includes (i) any
corporate merger or consolidation as referred to in Section 8.3(a), and
(ii) any acquisition of capital stock or securities or any purchase,
lease or other acquisition of property as referred to in Section
8.3(c).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Realty" means all real property and interests therein,
together with all improvements thereon.
"Receivables" means any right of payment from or on behalf of
any obligor, whether constituting an account, chattel paper,
instrument, general intangible or otherwise, arising from the sale or
financing by a member of the Consolidated Group or merchandise or
services, and monies due thereunder, security in the merchandise and
services financed thereby, records related thereto, and the right to
payment of any interest or finance charges and other obligations with
respect thereto, proceeds from claims on insurance policies related
thereto, any other proceeds related thereto, and any other related
rights.
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"Receivables Financier" means, in connection with a
Securitization Transaction, the Person which provides financing for
such transaction whether by purchase, loan or otherwise in respect of
Receivables.
"Register" shall have the meaning given such term in Section
11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Required Lenders" means Lenders having, at the time of
determination thereof, more than fifty percent (50%) of the
Commitments, or if the Commitments have been terminated, Lenders
having, at the time of determination thereof, more than fifty percent
(50%) of the aggregate principal amount of the Loans outstanding
(taking into account in each case Participation Interests or obligation
to participate therein); provided that the Commitments of, and
outstanding principal amount of Loans (taking into account
Participation Interests therein) owing to, a Defaulting Lender shall be
excluded for purposes hereof in making a determination of Required
Lenders.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Responsible Officer" means the Chief Financial Officer, the
Controller or the Treasurer.
"Restricted Investments" means Investments, including loans
and advances, other than Permitted Investments.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding of up to such Lender's
Revolving Commitment as specified in Schedule 2.1(a), as such amount
may be reduced from time to time in accordance with the provisions
hereof.
"Revolving Commitment Percentage" means, for each Lender, a
fraction (expressed as a decimal) the numerator of which is the
Revolving Commitment of such Lender at such time and the denominator of
which is the Aggregate Revolving Committed Amount at such time. The
initial Revolving Commitment Percentages are set out on Schedule
2.1(a).
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"Revolving Committed Amount" means, collectively, the
aggregate amount of all of the Revolving Commitments as referenced in
Section 2.1(a) and, individually, the amount of each Lender's Revolving
Commitment as specified in Schedule 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term
in Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans in substantially the form attached as Schedule 2.1(e),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale-Leaseback Transaction" means any arrangement with any
Person (other than the Borrower or a Wholly-Owned Subsidiary or the
Operating Partnership) providing for the leasing by the Borrower or any
Subsidiary (as tenant) of real or personal property which has been or
is to be sold or transferred by the Borrower or such Subsidiary to such
Person or to any Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations
of the Borrower or such Subsidiary.
"Securitization Subsidiary" shall have the meaning provided in
the definition of "Securitization Transaction".
"Securitization Transaction" means any financing transaction
or series of financing transactions that have been or may be entered
into by a member of the Consolidated Group pursuant to which such
member of the Consolidated Group may sell, convey or otherwise transfer
to (i) a Subsidiary or affiliate (a "Securitization Subsidiary"), or
(ii) any other Person, or may grant a security interest in, any
Receivables or interests therein secured by merchandise or services
financed thereby (whether such Receivables are then existing or arising
in the future) of such member of the Consolidated Group, and any assets
related thereto, including without limitation, all security interests
in merchandise or services financed thereby, the proceeds of such
Receivables, and other assets which are customarily sold or in respect
of which security interests are customarily granted in connection with
securitization transactions involving such assets.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
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"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair saleable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subordinated Debt" means any Debt which by its terms is
specifically subordinated in right of payment to the prior payment of
the obligations of the Credit Parties under this Credit Agreement and
the other Credit Documents on terms and conditions satisfactory to the
Required Lenders.
"Subordinated Funded Debt" means at any date all unsecured
Funded Debt (i) no part of the principal of which is required to be
paid (whether by way of mandatory sinking fund, mandatory redemption or
otherwise) prior to the payment in full of the Loans hereunder and (ii)
the payment of the principal of and interest on which, and any other
obligations to the holder of such Debt, is subordinated to the prior
payment in full of the Loans hereunder (including interest accruing
after the date of commencement of any proceeding under any bankruptcy,
insolvency, or similar law in which such Person is a debtor).
"Subsidiary" means as to any Person, any corporation,
partnership, limited liability company or other entity of which
securities or other ownership interest having an ordinary voting power
to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly
owned by such Person. Unless otherwise provided, references to a
"Subsidiary" or "Subsidiaries" shall mean a Subsidiary or Subsidiaries
of the Borrower.
"Termination Date" means the date 364 days following the
Closing Date, or if extended with the written consent of each of the
Lenders, such later date not more than 364 days following the then
applicable Termination Date.
"Three Year Credit Agreement" means that Three Year Credit
Agreement dated as of the date hereof, as amended and modified, among
the Borrower, the Guarantors and Lenders identified therein and
NationsBank, N.A., as Administrative Agent.
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"Wholly-Owned Subsidiary" means as to any Person, any
Subsidiary all of the voting stock or other similar voting interests
are owned directly or indirectly by such Person. Unless otherwise
provided, references to "Wholly-Owned Subsidiary" shall mean
Wholly-Owned Subsidiaries of the Borrower.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until" each mean
"to but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. Financial statements, certificates and reports delivered
hereunder shall be accompanied by a description of any changes in application of
accounting principles and an estimation of the effects thereof. All calculations
made for the purposes of determining compliance with this Credit Agreement shall
(except as otherwise expressly provided herein) be made by application of GAAP
applied on a basis consistent with the most recent annual or quarterly financial
statements delivered pursuant to Section 7.1 hereof (or, prior to the delivery
of the first financial statements pursuant to Section 7.1 hereof, consistent
with the annual audited financial statements referenced in Section 6.1(i)
hereof); provided, however, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Administrative Agent or the Required Lenders shall so object in writing
within 30 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower to the Lenders as to which no such
objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans (the "Revolving Loans") to the Borrower from time to time in the
amount of such Lender's Revolving Commitment Percentage of such Revolving Loans
for the purposes hereinafter set forth; provided that (i) with regard to the
Lenders collectively, the aggregate principal amount of Loans outstanding at any
time shall not exceed the Aggregate Revolving Committed Amount, and (ii) with
regard to each Lender individually, such Lender's Revolving Commitment
Percentage of Loans outstanding at any time shall not exceed such Lender's
Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request, and may
be repaid and reborrowed in accordance with the provisions hereof.
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(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone notice
promptly confirmed in writing) to the Administrative Agent not later
than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day
prior to the date of the requested borrowing in the case of Base Rate
Loans, and on the third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Revolving
Loan is requested, (B) the date of the requested borrowing (which shall
be a Business Day), (C) the aggregate principal amount to be borrowed,
and (D) whether the borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if Eurodollar Loans are
requested, the Interest Period(s) therefor. If the Borrower shall fail
to specify in any such Notice of Borrowing (I) an applicable Interest
Period in the case of a Eurodollar Loan, then such notice shall be
deemed to be a request for an Interest Period of one month, or (II) the
type of Revolving Loan requested, then such notice shall be deemed to
be a request for a Eurodollar Loan with an Interest Period of one
month. The Administrative Agent shall give notice to each Lender
promptly upon receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such Lender's share of
any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Revolving Loan shall be in a
minimum aggregate principal amount of $5,000,000, in the case of
Eurodollar Loans, or $1,000,000 (or the remaining Revolving Committed
Amount, if less), in the case of Base Rate Loans, and integral
multiples of $1,000,000 in excess thereof.
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the
Administrative Agent for the account of the Borrower as specified in
Section 3.14(a), or in such other manner as the Administrative Agent
may specify in writing, by 2:30 P.M. (Charlotte, North Carolina time)
on the date specified in the applicable Notice of Borrowing in Dollars
and in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the
Administrative Agent by crediting the account of the Borrower on the
books of such office with the aggregate of the amounts made available
to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due
and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the Base
Rate plus the Applicable Percentage;
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(ii) Eurodollar Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Eurodollar Rate plus the Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) Revolving Notes. The Revolving Loans shall be evidenced by a duly
executed Revolving Note in favor of each Lender.
(f) Maximum Number of Eurodollar Loans. The Borrower will be limited to
a maximum number of ten (10) Eurodollar Loans outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest Periods
will be considered as separate Eurodollar Loans even if their Interest Periods
expire on the same date.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by law, interest on
the Loans and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate 2% greater
than the rate which would otherwise be applicable (or if no rate is applicable,
whether in respect of interest, fees or other amounts, then 2% greater than the
Base Rate).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have
the option, on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another interest
rate type; provided, however, that (i) except as provided in Section 3.8,
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or conversion,
(iii) Loans extended as, or converted into, Eurodollar Loans shall be subject to
the terms of the definition of "Interest Period" set forth in Section 1.1 and
shall be in such minimum amounts as provided in Section 2.1(b)(ii) , and (iv)
any request for extension or conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an Interest
Period of one month. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion (or telephone notice
promptly confirmed in writing) to the Administrative Agent prior to 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall be irrevocable and shall constitute a representation and warranty by the
Borrower of the matters specified in subsections (a) through (e) of Section 5.2.
In the event the Borrower fails to request extension or conversion of any
Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Administrative Agent shall give each
Lender notice as promptly as practicable of any such proposed extension or
conversion affecting any Loan.
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3.3 Prepayments.
(a) Voluntary Prepayments. Revolving Loans may be repaid in
whole or in part without premium or penalty; provided that (i) Eurodollar Loans
may be prepaid only upon three (3) Business Days' prior written notice to the
Administrative Agent and must be accompanied by payment of any amounts owing
under Section 3.11, and (ii) partial prepayments shall be minimum principal
amounts of $5,000,000, in the case of Eurodollar Loans, and $1,000,000, in the
case of Base Rate Loans, and in integral multiples of $1,000,000 in excess
thereof.
(b) Mandatory Prepayments. If at any time, the aggregate
principal amount of Loans shall exceed the Aggregate Revolving Committed Amount,
the Borrower shall immediately make payment on the Loans in an amount sufficient
to eliminate the excess.
(c) Application. Unless otherwise specified by the Borrower,
prepayments made hereunder shall be applied first to Revolving Loans which are
Base Rate Loans, then to Revolving Loans which are Eurodollar Loans in direct
order of Interest Period maturities. Amounts prepaid hereunder may be reborrowed
in accordance with the provisions hereof.
3.4 Termination and Reduction of Commitments
(a) Voluntary Reductions. The Revolving Commitments may be
terminated or permanently reduced in whole or in part by the Borrower upon three
(3) Business Days' prior written notice to the Administrative Agent, provided
that (i) after giving effect to any voluntary reduction the aggregate amount of
Loans shall not exceed the Aggregate Revolving Committed Amount, as reduced, and
(ii) partial reductions shall be minimum principal amount of $5,000,000, and in
integral multiples of $1,000,000 in excess thereof.
(b) Mandatory Reduction. The Commitments hereunder shall
terminate on the Termination Date.
3.5 Fees.
(a) Facility Fee. In consideration of the Commitments
hereunder, the Borrower agrees to pay to the Administrative Agent for the
ratable benefit of the Lenders a facility fee (the "Facility Fee") equal to the
Applicable Percentage per annum on the average daily Revolving Committed Amount
for the applicable period. The Facility Fee shall be payable quarterly in
arrears on the 15th day following the last day of each calendar quarter for the
immediately preceding quarter (or portion thereof) beginning with the first such
date to occur after the Closing Date.
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(b) Administrative Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, an annual administrative fee and such
other fees, if any, referred to in the Administrative Agent's Fee Letter.
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Administrative
Agent shall have determined (which determination shall be conclusive and binding
upon the Borrower) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the Administrative Agent shall give
telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. If such notice is given (a) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans and (b) any Loans that were to have been converted on the first
day of such Interest Period to or continued as Eurodollar Loans shall be
converted to or continued as Base Rate Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Base Rate
Loans to Eurodollar Loans.
3.8 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender, upon demand, without duplication, such amounts, if any, as may be
reasonably required pursuant to Section 3.11.
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3.9 Requirements of Law.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for (i) Non-Excluded
Taxes covered by Section 3.10 (including Non-Excluded Taxes imposed
solely by reason of any failure of such Lender to comply with its
obligations under Section 3.10(b)) and (ii) changes in taxes measured
by or imposed upon the overall net income, or franchise tax (imposed in
lieu of such net income tax), of such Lender or its applicable lending
office, branch, or any affiliate thereof));
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other
condition (excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, upon
notice to the Borrower from such Lender, through the Administrative Agent, in
accordance herewith, the Borrower shall be obligated to promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable, provided that, in
any such case, the Borrower may elect to convert the Eurodollar Loans made by
such Lender hereunder to Base Rate Loans by giving the Administrative Agent at
least one Business Day's notice of such election, in which case the Borrower
shall promptly pay to such Lender, upon demand, without duplication, such
amounts, if any, as may be reasonably required pursuant to Section 3.11. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Borrower, through the
Administrative Agent, certifying (x) that one of the events described in this
paragraph (a) has occurred and describing in reasonable detail the nature of
such event, (y) as to the increased cost or reduced amount resulting from such
event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Administrative Agent, to the Borrower shall be
conclusive and binding on the parties hereto in the absence of manifest error.
This covenant shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
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3.10 Taxes.
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any court, or governmental body, agency or other
official, excluding taxes measured by or imposed upon the overall net income of
any Lender or its applicable lending office, or any branch or affiliate thereof,
and all franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any Lender or its applicable lending office, or
any branch or affiliate thereof, in each case imposed in lieu of net income
taxes, imposed: (i) by the jurisdiction under the laws of which such Lender,
applicable lending office, branch or affiliate is organized or is located, or in
which its principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between the jurisdiction imposing such tax and such Lender,
applicable lending office, branch or affiliate other than a connection arising
solely from such Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or any Notes. If
any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
or withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Credit Agreement and any Notes, provided, however, that the Borrower shall be
entitled to deduct and withhold any Non-Excluded Taxes and shall not be required
to increase any such amounts payable to any Lender that is not organized under
the laws of the United States of America or a state thereof if such Lender fails
to comply with the requirements of paragraph (b) of this subsection whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this subsection shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
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(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X)(i) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Administrative Agent (A) two (2) duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Credit Agreement and any Notes
without deduction or withholding of any United States federal income
taxes and (B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Administrative Agent two
(2) further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent; or
(Y) in the case of any such Lender that is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i)
represent to the Borrower (for the benefit of the Borrower and the
Administrative Agent) that it is not a bank within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (ii) agree to
furnish to the Borrower on or before the date of any payment by the
Borrower, with a copy to the Administrative Agent two (2) accurate and
complete original signed copies of Internal Revenue Service Form W-8,
or successor applicable form certifying to such Lender's legal
entitlement at the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under this Credit
Agreement and any Notes (and to deliver to the Borrower and the
Administrative Agent two (2) further copies of such form on or before
the date it expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
Borrower or the Administrative Agent for filing and completing such
forms), and (iii) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower (for the
benefit of the Borrower and the Administrative Agent) such other forms
as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Administrative Agent. Each Person that shall become a Lender or
a participant of a Lender pursuant to subsection 11.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this subsection, provided
that in the case of a participant of a Lender the obligations of such
participant of a Lender pursuant to this subsection (b) shall be determined as
if the participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and statements to
the Lender from which the related participation shall have been purchased.
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3.11 Indemnity.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's gross negligence or willful misconduct) as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement or (c) the making of a prepayment of Eurodollar Loans on a
day which is not the last day of an Interest Period with respect thereto. With
respect to Eurodollar Loans, such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Percentage included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. The covenants of the Borrower
set forth in this Section 3.11 shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.
3.12 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of principal of any
Loan, each payment of interest on the Loans, each payment of Facility Fees, each
reduction of the Revolving Committed Amount and each conversion or extension of
any Loan, shall be allocated pro rata among the Lenders in accordance with the
respective principal amounts of their outstanding Loans and Participation
Interests.
(b) Advances. No Lender shall be responsible for the failure or delay
by any other Lender in its obligation to make its ratable share of a borrowing
hereunder (and further, no Lender shall be required to fulfill any obligation of
a Defaulting Lender); provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its ratable share of such borrowing available to
the Administrative Agent, the Administrative Agent may assume that such Lender
is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by such Lender within the time period specified therefor
hereunder, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the Federal Funds Rate for a
period of two (2) Business Days, and thereafter at the Base Rate, for the period
until such Lender makes such amount immediately available to the Administrative
Agent. If such Lender does not pay such amounts to the Administrative Agent
forthwith upon demand, the Administrative Agent may notify the Borrower and
request the Borrower to immediately pay such amount to the Administrative Agent
with interest at the Base Rate. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.
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3.13 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan or any other obligation owing to
such Lender under this Credit Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a participation in such Loans and other obligations in such amounts, and
make such other adjustments from time to time, as shall be equitable to the end
that all Lenders share such payment in accordance with their respective ratable
shares as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Administrative Agent shall fail to remit to the
Administrative Agent or any other Lender an amount payable by such Lender or the
Administrative Agent to the Administrative Agent or such other Lender pursuant
to this Credit Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the Administrative Agent or
such other Lender at a rate per annum equal to the Federal Funds Rate. If under
any applicable bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section 3.13 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.13 to share in the benefits of any recovery on such secured claim.
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3.14 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Administrative Agent in dollars in immediately
available funds, without offset, deduction, counterclaim or withholding of any
kind, at the Administrative Agent's office specified in Section 11.1 not later
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Administrative Agent may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Borrower maintained with the
Administrative Agent (with notice to the Borrower). The Borrower shall, at the
time it makes any payment under this Credit Agreement, specify to the
Administrative Agent the Loans, Fees, interest or other amounts payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
it fails so to specify, or if such application would be inconsistent with the
terms hereof, the Administrative Agent shall distribute such payment to the
Lenders in such manner as the Administrative Agent may determine to be
appropriate in respect of obligations owing by the Borrower hereunder, subject
to the terms of Section 3.12(a)). The Administrative Agent will distribute such
payments to such Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as received
prior to the end of such Business Day and otherwise the Administrative Agent
will distribute such payment to such Lenders on the next succeeding Business
Day. Whenever any payment hereunder shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. Except as expressly provided otherwise herein, all computations of interest
and fees shall be made on the basis of actual number of days elapsed over a year
of 360 days, except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
Interest shall accrue from and include the date of borrowing, but exclude the
date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received by the Administrative Agent or any Lender on account of the Guaranteed
Obligations or any other amounts outstanding under any of the Credit Documents
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Administrative Agent in connection with enforcing the rights of
the Lenders under the Credit Documents;
SECOND, to payment of any fees owed to the Administrative
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Loans owing to
such Lender;
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FOURTH, to the payment of all accrued interest and fees on or
in respect of the Loans;
FIFTH, to the payment of the outstanding principal amount of
the Guaranteed Obligations;
SIXTH, to all other Loans and other obligations which shall
have become due and payable under the Credit Documents or otherwise and
not repaid pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding Loans) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and
"SIXTH" above.
3.15 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register pursuant to
Section 11.3(c) hereof, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and Interest
Period of each such Loan hereunder, (ii) the amount of any principal or interest
due and payable or to become due and payable to each Lender hereunder and (iii)
the amount of any sum received by the Administrative Agent hereunder from or for
the account of the Borrower and each Lender's share thereof. The Administrative
Agent will make reasonable efforts to maintain the accuracy of the subaccounts
referred to in the preceding sentence and to promptly update such subaccounts
from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Administrative Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any Lender or the
Administrative Agent to maintain any such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms hereof.
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SECTION 4
GUARANTY
4.1 The Guarantee.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender and to the Administrative Agent as hereinafter provided the prompt
payment of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof.
The Guarantors hereby further agree that if any of the Guaranteed Obligations
are not paid in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as mandatory cash collateralization or otherwise),
the Guarantors will, jointly and severally, promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents, or any
other agreement or instrument referred to therein, or any substitution, release
or exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of the Guarantors
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that such Guarantor shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other
Guarantor of the Guaranteed Obligations for amounts paid under this Guaranty
until such time as the Lenders have been irrevocably paid in full, all
Commitments under the Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents. Without limiting the generality of the foregoing, it is
agreed that, to the fullest extent permitted by law, the occurrence of any one
or more of the following shall not alter or impair the liability of any
Guarantor hereunder which shall remain absolute and unconditional as described
above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
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(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents or any other agreement or instrument referred
to in the Credit Documents shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents or any other agreement or instrument referred to in
the Credit Documents shall be waived or any other guarantee of any of
the Guaranteed Obligations or any security therefor shall be released
or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Administrative
Agent or any Lender or Lenders as security for any of the Guaranteed
Obligations shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any of
the Credit Documents or any other agreement or instrument referred to in the
Credit Documents, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Each Guarantor agrees that such Guarantor shall have no right of
recourse to security for the Guaranteed Obligations, except through the exercise
of the rights of subrogation pursuant to Section 4.2.
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4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, the Guaranteed Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Section 9.2) for purposes of Section 4.1 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing the
Guaranteed Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or the Guaranteed
Obligations being deemed to have become automatically due and payable), the
Guaranteed Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.
4.6 Rights of Contribution.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "Guarantied
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guarantied Obligations; (ii) "Excess Payment" shall mean, in
respect of any Guarantied Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guarantied Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.6, shall mean, for
any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section 4.6 such subsequent Guarantor shall be deemed
to have been a Guarantor as of the Closing Date and the information pertaining
to, and only pertaining to, such Guarantor as of the date such Guarantor became
a Guarantor shall be deemed true as of the Closing Date).
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Guaranteed Obligations whenever arising.
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SECTION 5
CONDITIONS
5.1 Conditions to Closing.
This Credit Agreement shall become effective, and the initial
Extensions of Credit may be made, upon the satisfaction of the following
conditions precedent:
(a) Execution of Credit Agreement and Credit Documents.
Receipt of (i) multiple counterparts of this Credit Agreement, and (ii) a
Revolving Note for each Lender.
(b) Financial Information. Receipt of financial information
regarding the Borrower and its subsidiaries, as may be requested by, and in each
case in form and substance satisfactory to the Administrative Agent and the
Lenders.
(c) Absence of Legal Proceedings. The absence of any action ,
suit, investigation or proceeding pending in any court or before any arbitrator
or governmental instrumentality which could reasonably be expected to have a
Material Adverse Effect.
(d) Legal Opinions. Receipt of multiple counterparts of
opinions of counsel for the Credit Parties relating to the Credit Documents and
the transactions contemplated herein, in form and substance satisfactory to the
Administrative Agent and the Required Lenders.
(e) Corporate Documents. Receipt of the following (or their
equivalent) for each of the Credit Parties:
(i) Articles of Incorporation. Copies of the articles
of incorporation or charter documents certified to be true and complete
as of a recent date by the appropriate governmental authority of the
state of its incorporation or organization.
(ii) Resolutions. Copies of resolutions of the Board
of Directors or other governing body approving and adopting the
respective Credit Documents, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a secretary or
assistant secretary as of the Closing Date to be true and correct and
in force and effect as of such date.
(iii) Bylaws. Copies of the bylaws certified by a
secretary or assistant secretary as of the Closing Date to be true and
correct and in force and effect as of such date.
(iv) Good Standing. Copies of (A) certificates of
good standing, existence or its equivalent issued as of a recent date
by the appropriate governmental authorities of the respective states of
incorporation or organization and of each other state in which the
failure to qualify and be in good standing would have a Material
Adverse Effect and (B) where available, certificates indicating payment
of all corporate franchise taxes issued as of a recent date by the
appropriate governmental taxing authorities of such states.
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(v) Officer's Certificate. An officer's certificate
for each of the Credit Parties dated as of the Closing Date
substantially in the form of Schedule 5.1(i)(v) with appropriate
insertions and attachments.
(f) Fees. Receipt of all fees, if any, owing pursuant to the
Administrative Agent's Fee Letter and Section 3.5.
(g) Subsection 5.2 Conditions. The conditions specified in
Section 5.2 shall be satisfied.
(h) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Credit Agreement shall
be reasonably satisfactory in form and substance to the Agent and the Required
Lenders.
5.2 Conditions to All Extensions of Credit.
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein or in any other Credit Documents or
which are contained in any certificate furnished at any time under or in
connection herewith shall be true and correct in all material respects on and as
of the date of such Extension of Credit as if made on and as of such date
(except for those which expressly relate to an earlier date).
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Credit
Agreement.
(c) No Material Adverse Effect. No circumstances, events or
conditions shall have occurred since the date of the audited financial
statements referenced in Section 6.1 which would have a Material Adverse Effect.
(d) Additional Conditions to Revolving Loans. If a Revolving
Loan is made pursuant to Section 2.1, all conditions set forth therein shall
have been satisfied.
Each request for Extension of Credit (including extensions and
conversions) and each acceptance by the Borrower of an Extension of Credit
(including extensions and conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a), (b), (c) and (d) of
this subsection have been satisfied.
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SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each of the members of the
Consolidated Group parties hereto (in the case of the Borrower, for itself and
for each of the other members of the Consolidated Group; and in the case of each
of the other Credit Parties, for itself) hereby represents and warrants to the
Administrative Agent and to each Lender that:
6.1 Financial Condition.
As to the Borrower, each of the financial statements described below
(copies of which have heretofore been provided to the Administrative Agent for
distribution to the Lenders), have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, are complete and
correct in all material respects and present fairly the financial condition and
results from operations of the entities and for the periods specified, subject
in the case of interim Borrower-prepared statements to normal year-end
adjustments:
(i) an audited consolidated balance sheet of the Borrower and
its consolidated subsidiaries dated as of December 31, 1996, together
with related statements of operations, cash flows and shareholders'
equity certified by Ernst & Young LLP, independent auditors; and
(ii) a Borrower-prepared consolidated balance sheet of the
Borrower and its consolidated subsidiaries dated as of March 31, 1997,
together with related consolidated statements of operations and cash
flows.
6.2 No Material Adverse Changes.
Since the date of the audited financial statements referenced in
Section 6.1(i), there has been no circumstance, development or event relating to
or affecting the members of the Consolidated Group which has had or would be
reasonably expected to have a Material Adverse Effect.
6.3 Organization; Existence; Compliance with Law.
Except as disclosed on Schedule 6.3, each of the members of the
Consolidated Group (a) is duly organized, validly existing in good standing
under the laws of the jurisdiction of its incorporation or organization, except
in such jurisdictions where the failure to be so qualified and in good standing
would not, in the aggregate, have a Material Adverse Effect, (b) has the
corporate or other necessary power and authority, and the legal right to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified as a
foreign entity and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not, in the aggregate, have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
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The Borrower is a "real estate investment trust" within the meaning
provided under the Code.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate or other
action to authorize the execution, delivery and performance by it of the Credit
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with acceptance of extensions of credit
or the making of the guaranties hereunder or with the execution, delivery or
performance of any Credit Documents by the Credit Parties (other than those
which have been obtained, such filings as are required by the Securities and
Exchange Commission and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit parties. Each Credit Document to which it is a party
constitutes a legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
6.5 No Legal Bar.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any member of the
Consolidated Group (except those as to which waivers or consents have been
obtained), and will not result in, or require, the creation or imposition of any
Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or Contractual Obligation other than the Liens arising under
or contemplated in connection with the Credit Documents. No member of the
Consolidated Group is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a Material
Adverse Effect.
6.6 No Material Litigation.
No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against, any members of the Consolidated Group
or against any of their respective properties or revenues which (a) relate to
the Credit Documents or any of the transactions contemplated hereby or thereby,
or (b) if adversely determined, would reasonably be expected to have a Material
Adverse Effect.
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6.7 No Default.
No Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens.
Each of members of the Consolidated Group has good title in fee simple
to, or a valid leasehold interest in, all its material real property, and good
title to, or a valid leasehold interest in, all its other material property, and
none of such property is subject to any Lien, except for liens permitted under
Section 8.2.
6.9 Taxes.
Each of the members of the Consolidated Group has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and has paid or received extensions regarding (a) all taxes shown to be
due and payable on said returns or (b) all taxes shown to be due and payable on
any assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any (i) taxes, fees or other
charges with respect to which the failure to pay, in the aggregate, would not
have a Material Adverse Effect or (ii) taxes, fees or other charges the amount
or validity of which are currently being contested and with respect to which
reserves in conformity with GAAP have been provided on the books of such
Person), and no tax Lien has been filed, and, to the best knowledge of the
Credit Parties, no claim is being asserted, with respect to any such tax, fee or
other charge.
6.10 ERISA.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the date on
which this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
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(c) No member of the Consolidated Group nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. No member of the Consolidated Group nor any
ERISA Affiliate would become subject to any withdrawal liability under ERISA if
any member of the Consolidated Group or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No member of the Consolidated Group nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject any member of
the Consolidated Group or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(e) No member of the Consolidated Group nor any ERISA Affiliates has
any material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply
has been administered in compliance in all material respects of such sections.
6.11 Governmental Regulations, Etc.
(a) No part of the proceeds of Extensions of Credit hereunder will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation G or Regulation U, or for the
purpose of purchasing or carrying or trading in any securities. If requested by
any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U. No indebtedness being reduced or retired out of the proceeds of Extensions of
Credit hereunder was or will be incurred for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U or any "margin
security" within the meaning of Regulation T. "Margin stock" within the meanings
of Regulation U does not constitute more than 25% of the value of the
consolidated assets of the Borrower and its Subsidiaries. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued pursuant
thereto, or Regulation G, T, U or X.
(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
none of the members of the Consolidated Group is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
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(c) Each of the members of the Consolidated Group has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of its
business.
(d) None of the members of the Consolidated Group is in violation of
any applicable statute, regulation or ordinance of the United States of America,
or of any state, city, town, municipality, county or any other jurisdiction, or
of any agency thereof (including without limitation, environmental laws and
regulations), which violation could reasonably be expected to have a Material
Adverse Effect.
(e) Each of the members of the Consolidated Group is current with all
material reports and documents, if any, required to be filed with any state or
federal securities commission or similar agency and is in full compliance in all
material respects with all applicable rules and regulations of such commissions.
6.12 Subsidiaries.
Set forth on Schedule 6.12 are all the Subsidiaries of the Borrower at
the Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein.
6.13 Purpose of Extensions of Credit.
The Extensions of Credit will be used to refinance existing Funded
Debt, and to finance working capital and other corporate purposes.
6.14 Environmental Matters.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or operated by
the members of the Consolidated Group (the "Properties") and all operations at
the Properties are in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Law with respect to the Properties or
the businesses operated by the members of the Consolidated Group (the
"Businesses"), and there are no conditions relating to the Businesses or
Properties that could give rise to material liability under any applicable
Environmental Laws.
(b) To the respective Credit Party's knowledge, none of the Properties
contains any Materials of Environmental Concern at, on or under the Properties
in amounts or concentrations that constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
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(c) None of the members of the Consolidated Group has received any
written notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Businesses.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf any members of the Consolidated Group during their ownership of the
Properties in violation of, or in a manner that would be reasonably likely to
give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any member of the Consolidated Group is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
any member of the Consolidated Group, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties or arising from or related to
the operations (including, without limitation, disposal) of any member of the
Consolidated Group in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties (in the case of the Borrower, for itself and
each of the other members of the Consolidated Group, and in the case of each of
the other Credit Parties, for itself) covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Loans remain outstanding and all amounts
owing hereunder or in connection herewith have been paid in full:
7.1 Financial Statements.
The Borrower shall furnish, or cause to be furnished, to the
Administrative Agent for distribution to the Lenders:
(a) Audited Financial Statements. As soon as available, but in
any event within 90 days after the end of each fiscal year, an audited
consolidated balance sheet of the Borrower and its subsidiaries as of
the end of the fiscal year and the related consolidated statements of
operations, shareholders' equity and cash flows for the year, audited
by Ernst & Young LLP, or other firm of independent certified public
accountants of nationally recognized standing, setting forth in each
case in comparative form the figures for the previous year, reported
without a "going concern" or like qualification or exception, or
qualification indicating that the scope of the audit was inadequate to
permit such independent certified public accountants to certify such
financial statements without such qualification.
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(b) Borrower-Prepared Financial Statements. As soon as
available, but in any event within 60 days after the end of each of the
first three fiscal quarters, a Borrower-prepared consolidated balance
sheet of the Borrower and its subsidiaries as of the end of the quarter
and related Borrower-prepared consolidated statements of operations and
cash flows for such quarterly period and for the fiscal year to date,
in each case setting forth in comparative form the consolidated figures
for the corresponding period or periods of the preceding fiscal year or
the portion of the fiscal year ending with such period, as applicable,
in each case subject to normal recurring year-end audit adjustments.
All such financial statements shall be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and shall be prepared in reasonable detail and, in
the case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change in the application of accounting principles as provided in
Section 1.3.
7.2 Certificates; Other Information.
The Borrower shall furnish, or cause to be furnished, to the
Administrative Agent for distribution to the Lenders:
(a) Accountant's Certificate and Reports. Concurrently with
the delivery of the financial statements referred to in subsection
7.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such
certificate.
(b) Officer's Certificate. Concurrently with the delivery of
the financial statements referred to in Sections 7.1(a) and 7.1(b)
above, a certificate of a Responsible Officer stating that, to the best
of such Responsible Officer's knowledge and belief, (i) the financial
statements fairly present in all material respects the financial
condition of the parties covered by such financial statements, (ii)
during such period the members of the Consolidated Group have observed
or performed in all material respects the covenants and other
agreements hereunder and under the other Credit Documents relating to
them, and satisfied in all material respects the conditions, contained
in this Credit Agreement to be observed, performed or satisfied by
them, and (iii) such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate. Such certificate shall include the calculations required
to indicate compliance with Section 7.9. A form of Officer's
Certificate is attached as Schedule 7.2(b).
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(c) Accountants' Reports. Promptly upon receipt, a copy of any
final (as distinguished from a preliminary or discussion draft)
"management letter" or other similar report submitted by independent
accountants or financial consultants to the members of the Consolidated
Group in connection with any annual, interim or special audit.
(d) Public Information. Within thirty days after the same are
sent, copies of all reports (other than those otherwise provided
pursuant to subsection 7.1) and other financial information which any
member of the Consolidated Group sends to its public stockholders, and
within thirty days after the same are filed, copies of all financial
statements and non-confidential reports which any member of the
Consolidated Group may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority.
(e) Other Information. Promptly, such additional financial and
other information as the Administrative Agent, at the request of any
Lender, may from time to time reasonably request.
7.3 Notices.
Each of the Credit Parties shall give notice to the Administrative
Agent (which shall promptly transmit such notice to each Lender) of:
(a) Defaults. Immediately (and in any event within two (2)
Business Days) after any Responsible Officer of any Credit Party knows
or has reason to know thereof, the occurrence of any Default or Event
of Default.
(b) Contractual Obligations. Promptly, the occurrence of any
default or event of default under any Contractual Obligation of any
member of the Consolidated Group which would reasonably be expected to
have a Material Adverse Effect.
(c) Legal Proceedings. Promptly, any litigation, or any
investigation or proceeding (including without limitation, any
environmental proceeding) known to any member of the Consolidated
Group, or any material development in respect thereof, affecting any
member of the Consolidated Group which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect.
(d) ERISA. Promptly, after any Responsible Officer of the
Borrower knows or has reason to know of (i) any event or condition,
including, but not limited to, any Reportable Event, that constitutes,
or might reasonably lead to, an ERISA Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against any of their
ERISA Affiliates, or of a determination that any Multiemployer Plan is
in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due
date (including extensions) thereof of all amounts which the members of
the Consolidated Group or any ERISA Affiliate are required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
respect; or (iv) any change in the funding status of any Plan that
reasonably could be expected to have a Material Adverse Effect;
together with a description of any such event or condition or a copy of
any such notice and a statement by the chief financial officer of the
Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is
being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the members of the Consolidated
Group shall furnish the Administrative Agent and the Lenders with such
additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
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(e) Other. Promptly, any other development or event which a
Responsible Officer of the Borrower determines could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the relevant Credit Parties propose
to take with respect thereto.
7.4 Payment of Obligations.
Each member of the Consolidated Group shall pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, in accordance with prudent business practice (subject, where applicable, to
specified grace periods) all material obligations of each member of the
Consolidated Group of whatever nature and any additional costs that are imposed
as a result of any failure to so pay, discharge or otherwise satisfy such
obligations, other than (i) obligations with respect to which the failure to
pay, in the aggregate, would not have a Material Adverse Effect, or (ii)
obligations, the amount or validity of which are being contested and with
respect to which reserves in conformity with GAAP have been provided on the
books of the appropriate members of the Consolidated Group.
7.5 Conduct of Business and Maintenance of Existence.
Each member of the Consolidated Group shall continue to engage in
business of the same general type as now conducted by it on the date hereof and
similar or related businesses, and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges, licenses and franchises necessary or desirable in the normal
conduct of its business; comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
7.6 Maintenance of Property; Insurance.
Each member of the Consolidated Group shall keep all material property
useful and necessary in its business in reasonably good working order and
condition (ordinary wear and tear excepted); maintain with financially sound and
reputable insurance companies casualty, liability and such other insurance
(which may include plans of self-insurance) with such coverage and deductibles,
and in such amounts as may be consistent with prudent business practice and in
any event consistent with normal industry practice (except to any greater extent
as may be required by the terms of any of the other Credit Documents); and
furnish to the Administrative Agent, upon written request, full information as
to the insurance carried.
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7.7 Inspection of Property; Books and Records; Discussions.
Each member of the Consolidated Group shall keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its businesses and activities; and permit, during regular
business hours and upon reasonable notice by the Administrative Agent, the
Administrative Agent to visit and inspect any of its properties and examine and
make abstracts (including photocopies) from any of its books and records (other
than materials protected by the attorney-client privilege and materials which
the Credit Parties may not disclose without violation of a confidentiality
obligation binding upon them) at any reasonable time, and to discuss the
business, operations, properties and financial and other condition of the
members of the Consolidated Group with officers and employees of the members of
the Consolidated Group and with their independent certified public accountants.
The cost of the inspection referred to in the preceding sentence shall be for
the account of the Lenders unless an Event of Default has occurred and is
continuing, in which case the cost of such inspection shall be for the account
of the Credit Parties.
7.8 Environmental Laws.
Each member of the Consolidated Group shall:
(a) Comply in all material respects with all applicable
Environmental Laws and obtain and comply in all material respects with
and maintain any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws
except to the extent that failure to do so would not reasonably be
expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with
all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the
failure to do or the pendency of such proceedings would not reasonably
be expected to have a Material Adverse Effect; and
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(c) Defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective employees, agents, officers
and directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable
to the operations of the members of the Consolidated Group or the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the
extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. The
agreements in this paragraph shall survive repayment of the Loans and
all other amounts payable hereunder, and termination of the
Commitments.
7.9 Financial Covenants.
(a) Consolidated Adjusted Tangible Net Worth. Consolidated Adjusted
Tangible Net Worth will not at any time be less than the sum of (i) $950,000,000
plus (ii) 100% of the net proceeds (after customary underwriting discounts and
commissions and reasonable offering expenses) from Equity Transactions occurring
after March 31, 1997.
(b) Consolidated Funded Debt Ratio. Consolidated Funded Debt shall not
at any time exceed 60% of Consolidated Adjusted Capitalization.
(c) Consolidated Priority Claims. Consolidated Priority Claims will not
at any time exceed 35% of Consolidated Adjusted Capitalization.
(d) Consolidated Senior Fixed Charge Coverage Ratio. As of the last day
of each fiscal quarter, the Consolidated Senior Fixed Charge Coverage Ratio
shall be not less than 1.75:1.0.
(e) Consolidated Total Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Total Fixed Charge Coverage Ratio shall be
not less than 1.4:1.0.
(f) Consolidated Unencumbered Realty to Consolidated Unsecured Debt
Ratio. The ratio of Consolidated Unencumbered Realty to Consolidated Unsecured
Debt shall not at any time be less than 1.8:1.0.
(g) Consolidated Unencumbered Interest Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Unencumbered Interest Coverage Ratio shall
be not less than 1.8:1.0.
7.10 Agency Fees.
The Borrower shall pay to the Administrative Agent the annual agency
fee and comply with the other agreements provided for in the Administrative
Agent's Fee Letter.
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7.11 Additional Guaranties and Stock Pledges.
(a) Domestic Subsidiaries. Where the assets of Domestic Subsidiaries
which are not Guarantors hereunder (the "Non-Guarantor Subsidiaries") shall, at
any time exceed (i) five percent (5%) of Consolidated Assets in any instance, or
(ii) fifteen percent (15%) of Consolidated Assets collectively as a group (the
"Threshold Requirement"), then the Borrower shall promptly notify the
Administrative Agent thereof, and cause one or more Non-Guarantor Subsidiaries
to become a Guarantor hereunder by way of execution of a Joinder Agreement such
that immediately after the joinder of such Subsidiaries as Guarantors hereunder,
the remaining Non-Guarantor Subsidiaries shall not exceed the Threshold
Requirement. Delivery of any such Joinder Agreement shall be accompanied by
supporting resolutions, incumbency certificates, corporation formation and
organizational documentation and opinions of counsel as the Administrative Agent
may reasonably request.
(b) Foreign Subsidiaries. At any time any Person becomes a Foreign
Subsidiary, the Borrower will promptly notify the Administrative Agent thereof
and cause delivery of supporting resolutions, incumbency certificates,
corporation formation and organizational documentation and opinions of counsel
as the Administrative Agent may reasonably request.
7.12 Ownership of Subsidiaries.
Except to the extent otherwise permitted in Section 8.4(b) and Section
8.7 and to the extent as would not cause a Change of Control and except as set
forth on Schedule 6.12, the Borrower shall, directly or indirectly, own at all
times 100% of the voting stock of each of its Subsidiaries.
7.13 Use of Proceeds.
Extensions of Credit will be used solely for the purposes provided in
Section 6.13.
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties (in the case of the Borrower, for itself and
each of the other members of the Consolidated Group, and in the case of each of
the other Credit Parties, for itself) covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Loans remain outstanding and all amounts
owing hereunder or in connection herewith, have been paid in full, no member of
the Consolidated Group shall:
8.1 Limitations on Debt.
Create, incur, assume or suffer to exist any Debt, except:
(a) Debt the existence or incurrence of which would not
violate the financial covenants of Section 7.9.
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8.2 Restriction on Liens.
Create, assume, incur or suffer to exist any Lien on any Property or
asset of any kind, real or personal, tangible or intangible, now owned or
hereafter acquired by it or assign or subordinate any present or future right to
receive assets except:
(a) Liens securing Funded Debt the existence or incurrence of
which would not violate the financial covenants of Section 7.9;
(b) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons; provided that (A) with
respect to Liens securing state and local taxes, such taxes are not yet
payable, (B) with respect to Liens securing claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and the like,
such liens are (1) unfiled and no other action has been taken to
enforce the same and (2) the cumulative effect of all such Liens will
not have a Material Adverse Effect, or (C) with respect to taxes,
assessments or governmental charges or levies or claims or demand
secured by such Liens, payment is not at the time required;
(c) Liens not securing Debt which are incurred in the ordinary
course of business in connection with workmen's compensation,
unemployment insurance, unemployment insurance, social security and
other like laws;
(d) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereto are being contested
in good faith by appropriate proceedings;
(e) zoning restrictions, easements, licenses, reservations,
covenants, conditions, waivers, restrictions on the use of property or
other minor encumbrances or irregularities of title which do not
materially impair the use of any property in the operation or business
of the Borrower or such Subsidiary or the value of such property for
the purpose of such business; and
(f) Liens on property or assets of such Subsidiary to secure
obligations of such Subsidiary solely to the Borrower or a Wholly-Owned
Subsidiary.
8.3 Consolidations, Mergers and Sales of Assets.
(a) Enter into a transaction of merger or consolidation,
except
(i) a member of the Consolidated Group may be a party
to a transaction of merger or consolidation with another member of the
Consolidated Group, provided that (A) if the Borrower is a party
thereto, it is the surviving corporation, or (B) if a Guarantor is a
party thereto, it shall be the surviving corporation or the surviving
corporation shall be a Domestic Subsidiary and shall become a Guarantor
hereunder as an Additional Credit Party pursuant to Section 7.11
concurrently therewith, and (C) no Default or Event of Default shall
exist either immediately prior to or immediately after giving effect
thereto; and
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(ii) a member of the Consolidated Group (other than
the Borrower) may be a party to a transaction of merger or
consolidation with any other Person, provided that (A) the provisions
of Section 7.11 regarding joinder of certain Subsidiaries as Additional
Credit Parties hereunder shall be complied with, (B) no Default or
Event of Default shall exist either immediately prior to or immediately
after giving effect thereto, and (C) the provisions of subsection (c)
of this Section shall be complied with.
(b) other than as between Credit Parties, sell, lease,
transfer or otherwise dispose of assets, property and/or operations which in the
aggregate in any fiscal year shall constitute more than fifteen percent (15%) of
Consolidated Total Realty at the end of the immediately preceding fiscal year or
contributed more than fifteen percent (15%) Consolidated EBITDA for the
immediately preceding fiscal year, without the prior written consent of the
Required Lenders (which consent shall not be unreasonably withheld or delayed).
(c) Acquire all or any portion of the capital stock or
other ownership interest in any Person which is not a Subsidiary or all or any
substantial portion of the assets, property and/or operations of a Person which
is not a Subsidiary, without the prior written consent of the Required Lenders
(which consent shall not be unreasonably withheld or delayed), unless
(i) in the case of an acquisition of capital stock or
other ownership interest where after giving effect thereto, such Person
will not be a Subsidiary, then such acquisition will not cause a
violation of Section 8.4;
(ii) in the case of an acquisition of capital stock
or other ownership interest where after giving effect thereto, such
Person will be a Subsidiary, or in the case of an acquisition of
assets, property and/or operations then
(A) the aggregate cost of all such
acquisitions shall not exceed an amount equal to twenty-five
percent (25%) of Consolidated Assets at the end of the
immediately preceding fiscal year;
(B) the Board of Directors (or functional
equivalent) of the Person which is the subject of the
acquisition shall have approved the acquisition; and
(C) no Default or Event of Default would
exist after giving effect thereto on a Pro Forma Basis.
(d) In the case of the Borrower, liquidate, wind-up or
dissolve, whether voluntarily or involuntarily (or suffer to permit any such
liquidation or dissolution).
(e) Alter the character of their business in any material
respect from that conducted as of the Closing Date and similar or related
businesses.
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(e) The foregoing provisions of this Section shall not
apply to leases of property and assets by members of the Consolidated Group to
individual tenants in the ordinary course of business.
8.4 Loans and Investments.
(a) Make loans, advances or Investments (including, for
purposes hereof, Guaranty Obligations) to or in respect of any other Person,
except for (i) Permitted Investments and (ii) other Investments which in the
aggregate do not at any time exceed five percent (5%) of Consolidated Assets.
(b) Invest in or acquire unimproved real property such that
following the investment, Consolidated Unimproved Realty and purchase money
mortgages are at any time greater than ten percent (10%) of the Consolidated
Total Realty.
8.5 Transactions with Affiliates.
Enter into any transaction, directly or indirectly, including without
limitation, the purchase, sale or exchange of property or the rendering of any
service to, any Affiliate or shareholder of the Borrower, except in the ordinary
course of business pursuant to the reasonable requirements of the business of
the Borrower or such Subsidiary and upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would be obtainable in a
comparable arms-length transaction with a person not an Affiliate or
shareholder; provided that the foregoing restrictions shall not apply to
extensions of credit by the Borrower to its officers and directors pursuant to
the Borrower's Stock Purchase and Loan Plan in an aggregate amount not to exceed
at any time 5% of Consolidated Adjusted Tangible Net Worth.
8.6 Transactions with Other Persons regarding this Agreement.
Enter into any agreement with any Person whereby any of them would
agree to any restriction on the Borrower's right with the Lenders' consent to
amend or waive any of the provisions of this Credit Agreement.
8.7 Limitation on Certain Restrictions on Subsidiaries.
Other than as presently exist in respect of REMICs and other special
Subsidiaries listed on Schedule 8.7, create or otherwise cause or suffer to
exist or become effective, directly or indirectly, any encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits owned by any member of the Consolidated Group, (ii) make loans or
advances to any member of the Consolidated Group, or (iii) transfer any of its
properties or assets to any member of the Consolidated Group, except for
encumbrances or restrictions existing under or by reason of (A) applicable law
or (B) this Credit Agreement unless, after giving effect thereto on a Pro Forma
Basis, the aggregate amount of Consolidated EBITDA attributable to all such
REMICs and other special Subsidiaries shall be less than 25% of Consolidated
EBITDA.
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SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of
any of the Loans, or
(ii) default, and such defaults shall continue for five (5) or
more Business Days, in the payment when due of any interest on the Loans
or of any Fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove untrue in any material respect on the date as of which it
was deemed to have been made; or
(c) Covenants.
(i) Default in the due performance or observance of any term,
covenant or agreement contained in Section 7.3(a), 7.9, 7.11, 7.13 or
8.1 through 8.7 (except in the case of negative covenants contained in
Sections 8.1 through 8.7, those Defaults which may occur or arise other
than on account of or by affirmative or intentional act of the Borrower
or event or condition which the Borrower shall with knowledge permit to
exist, all of which shall be subject to the provisions of clause (ii)
hereof), inclusive, or
(ii) Default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in subsections
(a), (b) or (c)(i) of this Section 9.1) contained in this Credit
Agreement and such default shall continue unremedied for a period of at
least 30 days after the earlier of a Responsible Officer of a Credit
Party becoming aware of such default or notice thereof by the
Administrative Agent or such longer period not to exceed an additional
30 days provided that the Borrower is diligently pursuing remedy of such
default; or
(d) Other Credit Documents. (i) Any Credit Party shall default in the
due performance or observance of any material term, covenant or agreement in any
of the other Credit Documents (subject to applicable grace or cure periods, if
any), or (ii) any Credit Document shall fail to be in full force and effect or
to give the Administrative Agent and/or the Lenders any material part of the
rights, powers and privileges purported to be created thereby; or
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(e) Guaranties. The guaranty given by any Guarantor hereunder or any
material provision thereof shall cease to be in full force and effect, or any
Guarantor hereunder or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
any member of the Consolidated Group; or
(g) Defaults under Other Agreements.
(i) Any member of the Consolidated Group shall default in the
performance or observance (beyond the applicable grace period with
respect thereto, if any) of any material obligation or condition of any
contract or lease material to the Consolidated Group, taken as a whole;
or
(ii) With respect to any Debt (other than Debt outstanding
under this Credit Agreement) in excess of $25,000,000 in the aggregate
for the Consolidated Group taken as a whole, (A) (1) any member of the
Consolidated Group shall default in any payment (beyond the applicable
grace period with respect thereto, if any) with respect to any such
Debt, or (2) the occurrence and continuance of a default in the
observance or performance relating to such Debt or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the effect of
which default or other event or condition is to cause, or permit, the
holder or holders of such Debt (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any notice or
lapse of time is required), any such Debt to become due prior to its
stated maturity; or (B) any such Debt shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(iii) The occurrence of an Event of Default under the Three
Year Credit Agreement; or
(h) Judgments. Any member of the Consolidated Group shall fail within
30 days of the date due and payable to pay, bond or otherwise discharge any
judgment, settlement or order for the payment of money which judgment,
settlement or order, when aggregated with all other such judgments, settlements
or orders due and unpaid at such time, exceeds $5,000,000, and which is not
stayed on appeal (or for which no motion for stay is pending) or is not
otherwise being executed; or
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(i) ERISA. Any of the following events or conditions, if such event or
condition could reasonably be expected to have a Material Adverse Effect shall
occur: (1) any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived, shall
exist with respect to any Plan, or any lien shall arise on the assets of a
member of the Consolidated Group or any ERISA Affiliate in favor of the PBGC or
a Plan; (2) an ERISA Event shall occur with respect to a Single Employer Plan,
which is, in the reasonable opinion of the Administrative Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA; (3) an
ERISA Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the reasonable opinion of the Administrative Agent,
likely to result in (i) the termination of such Plan for purposes of Title IV of
ERISA, or (ii) a member of the Consolidated Group or any ERISA Affiliate
incurring any liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency of (within the
meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur which may subject a member of the
Consolidated Group or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which a member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability; or
(j) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter,
the Administrative Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:
(i) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans and any and all other indebtedness or
obligations of any and every kind owing by the Credit Parties to the
Administrative Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each of the Credit Parties.
(iii) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Administrative Agent and/or any
of the Lenders hereunder automatically shall immediately become due and payable
without presentment, demand, protest or the giving of any notice or other action
by the Administrative Agent or the Lenders, all of which are hereby waived by
the Credit Parties.
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SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints NationsBank, N.A. as
administrative agent (in such capacity, the "Administrative Agent") of such
Lender to act as specified herein and the other Credit Documents, and each such
Lender hereby authorizes the Administrative Agent as the Administrative Agent
for such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Each Lenders further directs and authorizes the
Administrative Agent to execute releases (or similar agreements) to give effect
to the provisions of this Credit Agreement and the other Credit Documents.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Administrative Agent. The provisions of this Section are solely for
the benefit of the Administrative Agent and the Lenders and none of the Credit
Parties shall have any rights as a third party beneficiary of the provisions
hereof. In performing its functions and duties under this Credit Agreement and
the other Credit Documents, the Administrative Agent shall act solely as
Administrative Agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation or relationship of agency or trust with or for
any Credit Party or any of their respective Affiliates.
10.2 Delegation of Duties.
The Administrative Agent may execute any of its duties hereunder or
under the other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
10.3 Exculpatory Provisions.
The Administrative Agent and its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall not be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any of the Credit Parties
contained herein or in any of the other Credit Documents or in any certificate,
report, document, financial statement or other written or oral statement
referred to or provided for in, or received by the Administrative Agent under or
in connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit Documents, or
for any failure of any Credit Party to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be responsible to any Lender for
the effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Lenders or by or on behalf
of the Credit Parties to the Administrative Agent or any Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default or to inspect the properties, books
or records of the Credit Parties or any of their respective Affiliates.
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10.4 Reliance on Communications.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Administrative Agent with reasonable care). The
Administrative Agent may deem and treat the Lenders as the owners of their
respective interests hereunder for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent in accordance with Section 11.3(b) hereof. The
Administrative Agent and the Borrower shall be fully justified in failing or
refusing to take any action under this Credit Agreement or under any of the
other Credit Documents unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or under any of the other Credit
Documents in accordance with a request of the Required Lenders (or to the extent
specifically provided in Section 11.6, all the Lenders) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders (including their successors and assigns).
10.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or a Credit Party
referring to the Credit Document, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders.
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10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that each of the Administrative
Agent and its officers, directors, employees, Administrative Agents,
attorneys-in-fact or affiliates has not made any representations or warranties
to it and that no act by the Administrative Agent or any affiliate thereof
hereinafter taken, including any review of the affairs of any Credit Party or
any of their respective Affiliates, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrower,
the other Credit Parties or their respective Affiliates and made its own
decision to make its Loans hereunder and enter into this Credit Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower, the other
Credit Parties and their respective Affiliates. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Borrower, the other Credit
Parties or any of their respective Affiliates which may come into the possession
of the Administrative Agent or any of its officers, directors, employees,
Administrative Agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitments (or if the Commitments have expired or been terminated, in
accordance with the respective principal amounts of outstanding Loans and
Participation Interests of the Lenders), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the final payment of all of
the obligations of the Borrower hereunder and under the other Credit Documents)
be imposed on, incurred by or asserted against the Administrative Agent in its
capacity as such in any way relating to or arising out of this Credit Agreement
or the other Credit Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Administrative Agent. If any
indemnity furnished to the Administrative Agent for any purpose shall, in the
opinion of the Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section shall survive the repayment of the
Loans and other obligations under the Credit Documents and the termination of
the Commitments hereunder.
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10.8 Administrative Agent in its Individual Capacity.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower,
its Subsidiaries or their respective Affiliates as though the Administrative
Agent were not the Administrative Agent hereunder. With respect to the Loans
made by and all obligations of the Borrower hereunder and under the other Credit
Documents, the Administrative Agent shall have the same rights and powers under
this Credit Agreement as any Lender and may exercise the same as though it were
not the Administrative Agent, and the terms "Lender" and "Lenders" shall include
the Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent.
The Administrative Agent may, at any time, resign upon 20 days' written
notice to the Lenders and the Borrower, and may be removed, upon show of cause,
by the Required Lenders upon 30 days' written notice to the Administrative
Agent. Upon any such resignation or removal, the Required Lenders shall have the
right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the notice of
resignation or notice of removal, as appropriate, then the retiring
Administrative Agent shall select a successor Administrative Agent provided such
successor is a Lender hereunder or a commercial bank organized under the laws of
the United States of America or of any State thereof and has a combined capital
and surplus of at least $400,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations as
Administrative Agent, as appropriate, under this Credit Agreement and the other
Credit Documents and the provisions of this Section 10.9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower, Guarantors and the Administrative
Agent, set forth below, and, in the case of the Lenders, set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto:
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if to the Borrower or the Guarantors:
United Dominion Realty Trust, Inc.
10 South Sixth Street
Richmond, Virginia 23219-3802
Attn: Chief Financial Officer
Telephone: (804) 344-1691
Telecopy: (804) 780-0431
with a copy to:
United Dominion Realty Trust, Inc.
10 South Sixth Street
Richmond, Virginia 23219-3802
Attn: General Counsel
Telephone: (804) 344-1685
Telecopy: (804) 788-4607
if to the Administrative Agent:
NationsBank, N.A.
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-9046
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
Mid-Atlantic Corporate Finance
1111 E. Main Street
4th Floor Pavilion
Richmond, Virginia 23277-0001
Attn: Senior Bank Debt
Telephone: (804) 788-2244
Telecopy: (804) 788-3669
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11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 3.13 or Section 11.3(d) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder. It is specifically acknowledged and agreed
that no right of set-off shall be exercised against accounts identified as
holding tenant deposit accounts.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
Parties may assign or transfer any of its interests without prior
written consent of the Lenders; provided further that the rights of
each Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth in this
Section 11.3, provided however that nothing herein shall prevent or
prohibit any Lender from (i) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling
participations in such Lender's Loans and/or Commitments hereunder to
its parent Borrower and/or to any Affiliate or Subsidiary of such
Lender.
(b) Assignments. Each Lender may assign all or a portion of
its rights and obligations hereunder, pursuant to an assignment
agreement substantially in the form of Schedule 11.3(b), to (i) any
Lender or any Affiliate or Subsidiary of a Lender, or (ii) any other
commercial bank, financial institution or "accredited investor" (as
defined in Regulation D of the Securities and Exchange Commission)
reasonably acceptable to the Administrative Agent and, so long as no
Default or Event of Default has occurred and is continuing, the
Borrower; provided that (i) any such assignment (other than any
assignment to an existing Lender) shall be in a minimum aggregate
amount of $5,000,000 (or, if less, the remaining amount of the
Commitment being assigned by such Lender) of the Commitments and in
integral multiples of $1,000,000 above such amount and (ii) each such
assignment shall be of a constant, not varying, percentage of all such
Lender's rights and obligations under this Credit Agreement. Any
assignment hereunder shall be effective upon delivery to the
Administrative Agent of written notice of the assignment together with
a transfer fee of $3,500 payable to the Administrative Agent for its
own account from and after the later of (i) the effective date
specified in the applicable assignment agreement and (ii) the date of
recording of such assignment in the Register pursuant to the terms of
subsection (c) below. The assigning Lender will give prompt notice to
the Administrative Agent and the Borrower of any such assignment. Upon
the effectiveness of any such assignment (and after notice to, and (to
the extent required pursuant to the terms hereof), with the consent of,
the Borrower as provided herein), the assignee shall become a "Lender"
for all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Lender
shall be relieved of its obligations hereunder to the extent of the
Loans and Commitment components being assigned. Along such lines the
Borrower agrees that upon notice of any such assignment and surrender
of the appropriate Note or Notes, it will promptly provide to the
assigning Lender and to the assignee separate promissory notes in the
amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is given in
substitution for and replacement of the original Note or any
replacement notes thereof). By executing and delivering an assignment
agreement in accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to
and agree with each other and the other parties hereto as follows: (i)
such assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any
adverse claim; (ii) except as set forth in clause (i) above, such
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assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto or the
financial condition of any Credit Party or any of their respective
Affiliates or the performance or observance by any Credit Party of any
of its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Credit Agreement and the other Credit Documents; (vi) such assignee
appoints and authorizes the Administrative Agent to take such action on
its behalf and to exercise such powers under this Credit Agreement or
any other Credit Document as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) Maintenance of Register. The Administrative Agent shall
maintain at one of its offices in Charlotte, North Carolina a copy of
each Lender assignment agreement delivered to it in accordance with the
terms of subsection (b) above and a register for the recordation of the
identity of the principal amount, type and Interest Period of each Loan
outstanding hereunder, the names, addresses and the Commitments of the
Lenders pursuant to the terms hereof from time to time (the
"Register"). The Administrative Agent will make reasonable efforts to
maintain the accuracy of the Register and to promptly update the
Register from time to time, as necessary. The entries in the Register
shall be conclusive in the absence of manifest error and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Credit Agreement. The
Register shall be available for inspection by the Borrower and each
Lender, at any reasonable time and from time to time upon reasonable
prior notice.
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(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the participant shall not constitute a Lender hereunder,
(ii) no such participant shall have, or be granted, rights to approve
any amendment or waiver relating to this Credit Agreement or the other
Credit Documents except to the extent any such amendment or waiver
would (A) reduce the principal of or rate of interest on or Fees in
respect of any Loans in which the participant is participating, (B)
postpone the date fixed for any payment of principal (including
extension of the Termination Date or the date of any mandatory
prepayment), interest or Fees in which the participant is
participating, or (C) except as expressly provided in the Credit
Documents, release any Guarantor from its guaranty obligations
hereunder, and (iii) sub-participations by the participant (except to
an affiliate, parent Borrower or affiliate of a parent Borrower of the
participant) shall be prohibited. In the case of any such
participation, the participant shall not have any rights under this
Credit Agreement or the other Credit Documents (the participant's
rights against the selling Lender in respect of such participation to
be those set forth in the participation agreement with such Lender
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.6, 3.9, 3.10
and 3.11 on the same basis as if it were a Lender.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Administrative Agent or any
Lender and any of the Credit Parties shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Administrative Agent or any Lender
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle the Borrower or any other Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Administrative Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
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11.5 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Administrative Agent in connection with the negotiation,
preparation, execution and delivery and administration of this Credit Agreement
and the other Credit Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and expenses of
Moore & Van Allen, PLLC, special counsel to the Administrative Agent) and any
amendment, waiver or consent relating hereto and thereto including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Credit Parties under this Credit Agreement and (B) of the Administrative Agent
and the Lenders in connection with enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Administrative Agent and each of the Lenders); (ii) pay and hold
each of the Lenders harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and save
each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender,
its officers, directors, employees, representatives and Administrative Agents
from and hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses incurred by any of them as a result of, or arising
out of, or in any way related to, or by reason of (A) any investigation,
litigation or other proceeding (whether or not any Lender is a party thereto)
related to the entering into and/or performance of any Credit Document or the
use of proceeds of any Loans (including other extensions of credit) hereunder or
the consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the presence or Release of any Materials of Environmental
Concern at, under or from any Property owned, operated or leased by the Borrower
or any of its Subsidiaries, or the failure by the Borrower or any of its
Subsidiaries to comply with any Environmental Law (but excluding, in the case of
either of clause (A) or (B) above, any such losses, liabilities, claims, damages
or expenses to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified).
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
(a) without the consent of each Lender affected thereby, no such
amendment may:
(i) extend the final maturity of any Loan, or extend or
waive any principal amortization payment of any Loan, or any
portion thereof,
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(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability
of any post-default increase in interest rates) thereon or
Fees hereunder,
(iii) reduce or waive the principal amount of any Loan,
(iv) increase the Commitment of a Lender over the
amount thereof in effect (it being understood and agreed
that a waiver of any Default or Event of Default (other than
an Event of Default of the type described in Section 9.1(f)
hereof) or mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of any
Lender),
(v) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted
under Section 8.3, release the Borrower or substantially all
of the other Credit Parties from its or their obligations
under the Credit Documents,
(vi) amend, modify or waive any provision of this
Section 11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
3.13, 3.14, 9.1(a), 11.2, 11.3, 11.5 or 11.9,
(vii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(viii) consent to the assignment or transfer by the
Borrower (or another Credit Party) of any of its rights and
obligations under (or in respect of) the Credit Documents
except as permitted thereby; and
(b) without the consent of the Administrative Agent, no
provision of Section 10 may be amended.
Notwithstanding the fact that the consent of all the Lenders
is required in certain circumstances as set forth above, (x) each
Lender is entitled to vote as such Lender sees fit on any bankruptcy
reorganization plan that affects the Loans, and each Lender
acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use
cash collateral in the context of a bankruptcy or insolvency
proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
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11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery of this
Credit Agreement, the making of the Loans, the repayment of the Loans and other
obligations under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the Credit Parties
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
VIRGINIA. Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document may be brought in the courts of the Commonwealth of
Virginia in the City of Richmond, or of the United States for the Eastern
District of Virginia, and, by execution and delivery of this Credit Agreement,
each of the Credit Parties hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the Credit Parties further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
11.1, such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of the Administrative Agent to serve
process in any other manner permitted by law or to commence legal proceedings or
to otherwise proceed against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE ADMINISTRATIVE AGENT,
THE LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
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<PAGE>
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Borrower, the
Guarantors and the Administrative Agent, and the Administrative Agent shall have
received copies hereof (telefaxed or otherwise) which, when taken together, bear
the signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors, the
Administrative Agent and each Lender and their respective successors and
assigns.
(b) The term of this Credit Agreement shall be until no Loans, or any
other amounts payable hereunder or under any of the other Credit Documents shall
remain outstanding and until all of the Commitments hereunder shall have expired
or been terminated.
11.14 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower that
at least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a single
plan);
(c) to the extent that any part of such funds constitutes
assets of an insurance Borrower's general account, such insurance
Borrower has complied with all of the requirements of the regulations
issued under Section 401(c)(1)(A) of ERISA; or
65
<PAGE>
(d) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.15 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
66
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By:_________________________
Name:
Title:
GUARANTORS: UNITED DOMINION REALTY, L.P.,
a Virginia limited partnership
By:_________________________
Name:
Title:
UDRT OF NORTH CAROLINA, L.L.C.,
a North Carolina limited liability company
By:_________________________
Name:
Title:
UDRT OF ALABAMA, INC.,
an Alabama corporation
By:_________________________
Name:
Title:
UDR SOUTH CAROLINA TRUST,
a Maryland real estate investment trust
By:_________________________
Name:
Title:
<PAGE>
UDR WESTERN RESIDENTIAL, INC.,
a Virginia corporation
By:_________________________
Name:
Title:
SOUTH WEST REIT HOLDING, INC.,
a Texas corporation
By:_________________________
Name:
Title:
<PAGE>
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Administrative Agent
By:___________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:____________________________________
Name:
Title:
GUARANTY FEDERAL BANK
By:____________________________________
Name:
Title:
CRESTAR BANK
By:____________________________________
Name:
Title:
SIGNET BANK
By:____________________________________
Name:
Title:
<PAGE>
COMERICA BANK
By:____________________________________
Name:
Title:
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
BANK HAPOALIM B.M.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
THE SUMITOMO BANK, LTD.
By:____________________________________
Name:
Title:
<PAGE>
Schedule 2.1(a)
Schedule of Lenders and Commitments
Revolving Commitment
Lender Revolving Commitment Percentage
NationsBank, N.A. $ 10,000,000.00 20.000000%
First Union National Bank $ 9,500,000.00 19.000000%
Guaranty Federal $ 9,000,000.00 18.000000%
Crestar Bank $ 4,250,000.00 8.500000%
Signet Bank $ 4,250,000.00 8.500000%
Comerica Bank $ 4,000,000.00 8.000000%
DG Bank $ 4,000,000.00 8.000000%
Bank Hapoalim $ 3,000,000.00 6.000000%
Sumitomo Bank $ 2,000,000.00 4.000000%
--------------------- ---------
$ 50,000,000.00 100.000000%
<PAGE>
Schedule 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N.A.,
as Administrative Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Re: 364-Day Credit Agreement dated as of August 4, 1997 (as
amended and modified, the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined herein shall have
the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, UNITED DOMINION REALTY TRUST, INC., a Virginia corporation,
being the Borrower under the above-referenced Credit Agreement hereby gives
notice pursuant to Section 2.1(b) of the Credit Agreement of a request for a
Revolving as follows
________ Revolving Loan
(A) Date of Borrowing
(which is a Business Day) _______________________
(B) Principal Amount of
Borrowing _______________________
(C) Interest rate basis _______________________
(D) Interest Period and the
last day thereof _______________________
In accordance with the requirements of Section 5.2 of the Credit Agreement, the
undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects as of the date of this request, and will be true and
correct after giving effect to the requested Extension of Credit
(except for those which expressly relate to an earlier date).
<PAGE>
(b) No Default or Event of Default exists, or will exist after
giving effect to the requested Extension of Credit.
(c) As to any Credit Party, no involuntary action has been
commenced under applicable bankruptcy, insolvency or other similar law
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) as to any Credit Party or as to any substantial
part of the property of any Credit Party or for the winding up or
liquidation of its affairs, and remains undismissed, undischarged or
unbonded.
(d) No circumstances, events or conditions have occurred since
the date of the audited financial statements referenced in Section 6.1
of the Credit Agreement which would have a Material Adverse Effect.
(e) All conditions set forth in Section 2.1 as to the making
of Revolving Loans have been satisfied.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By:_______________________________
Name:
Title:
<PAGE>
Schedule 2.1(e)
FORM OF REVOLVING NOTE
August 4, 1997
FOR VALUE RECEIVED, the undersigned Borrower, hereby promises to pay to
the order of ________________________, and its successors and assigns, on or
before the Termination Date to the office of the Administrative Agent in
immediately available funds as provided in the Credit Agreement, the principal
amount of such Lender's Revolving Committed Amount or, if less, the aggregate
unpaid principal amount of all Revolving Loans made by such Lender to the
undersigned Borrower, together with interest thereon at the rates and as
provided in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the 364-Day
Credit Agreement dated as of August 4, 1997 (as amended and modified, the
"Credit Agreement") among United Dominion Realty Trust, Inc., a Virginia
corporation, United Dominion Realty, L.P., a Virginia limited partnership, the
Guarantors and Lenders identified therein and NationsBank, N.A., as
Administrative Agent. Terms used but not otherwise defined herein shall have the
meanings provided in the Credit Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
undersigned Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Note may, or shall, become immediately due and payable as provided in the
Credit Agreement without presentment, demand, protest or notice of any kind, all
of which are waived by the undersigned Borrower. In the event payment of amounts
evidenced by this Note is not made at any stated or accelerated maturity, the
undersigned Borrower agrees to pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the undersigned Borrower has caused this Note to be
duly executed as of the date first above written.
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By_________________________________
Name:
Title:
<PAGE>
Schedule 3.2
Form of Notice of Extension/Conversion
NationsBank, N.A.,
as Administrative Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Re: 364-Day Credit Agreement dated as of August 4, 1997 (as
amended and modified, the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative
Agent. Terms used but not otherwise defined herein shall have
the meanings provided in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, UNITED DOMINION REALTY TRUST, INC. (the "Borrower"),
refers to the 364-Day Credit Agreement dated as of August 4, 1997 (as amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
the Borrower, the Lenders and NationsBank, N.A., as Administrative Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives notice pursuant to Section 3.2 of the Credit Agreement that it requests an
extension or conversion of a Revolving Loan outstanding under the Credit
Agreement, and in connection therewith sets forth below the terms on which such
extension or conversion is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period) _______________________
(B) Principal Amount of
Extension or Conversion _______________________
(C) Interest rate basis _______________________
(D) Interest Period and the
last day thereof _______________________
In accordance with the requirements of Section 5.2 of the Credit
Agreement, the undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects as of the date of this request, and will be true and
correct after giving effect to the requested Extension of Credit
(except for those which expressly relate to an earlier date).
<PAGE>
(b) No Default or Event of Default exists, or will exist after
giving effect to the requested Extension of Credit.
(c) As to any Credit Party, no involuntary action has been
commenced under applicable bankruptcy, insolvency or other similar law
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) as to any Credit Party or as to any substantial
part of the property of any Credit Party or for the winding up or
liquidation of its affairs, and remains undismissed, undischarged or
unbonded.
(d) No circumstances, events or conditions have occurred since
the date of the audited financial statements referenced in Section 6.1
of the Credit Agreement which would have a Material Adverse Effect.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By:_______________________________
Name:
Title:
<PAGE>
Schedule 5.1(e)(v)
Officer's Certificate
Pursuant to Section 5.1(i)(v) of the 364-Day Credit Agreement (the
"Credit Agreement"), dated as of August 4, 1997, among UNITED DOMINION REALTY
TRUST, INC., a Virginia corporation, the Guarantors and Lenders identified
therein and NationsBank, N.A., as Administrative Agent, the undersigned
____________________ Secretary of _________________________ (the "Corporation")
hereby certifies as follows:
1. Attached hereto as Annex I is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Corporation on
__________________, 1996. The attached resolutions have not been rescinded or
modified and remain in full force and effect. The attached resolutions are the
only corporate proceedings of the Corporation now in force relating to or
affecting the matters referenced to therein.
2. Attached hereto as Annex II is a true and complete copy of the
By-laws of the Corporation as in effect on the date hereof.
3. Attached hereto as Annex III is a true and complete copy of the
Certificate of Incorporation of the Corporation and all amendments thereto as in
effect on the date hereof.
4. The following persons are now duly elected and qualified officers of
the Corporation, holding the offices indicated, and the signature appearing
opposite his name below is his true and genuine signature, and such officer is
duly authorized to execute and deliver on behalf of the Corporation the Credit
Agreement, the Notes to be issued pursuant thereto and the other Credit
Documents and to act as a Responsible Officer on behalf of the Corporation under
the Credit Agreement:
Name Office Signature
_______________________
IN WITNESS WHEREOF, the undersigned has hereunto set his/her name and
affixed the corporate seal of the Corporation.
________________________________,
Secretary
(CORPORATE SEAL)
Date: __________________, 1996
I, ___________________, ___________________ of
________________________, hereby certify that ______________________, whose
genuine signature appears above, is, and has been at all times since
________________________, a duly elected, qualified and acting _________________
of ________________________.
___________________________________ of
___________________________________
_________________________, 1996
<PAGE>
Schedule 6.3
Qualifications Concerning Organization, Existence and Compliance with Law
<PAGE>
Schedule 6.12
Subsidiaries
<PAGE>
Schedule 7.2(b)
Form of Officer's Compliance Certificate
This Certificate is delivered in accordance with the provisions of
Section 7.2(b) of that 364-Day Credit Agreement dated as of August 4, 1997 (as
amended, modified and supplemented, the "Credit Agreement") among UNITED
DOMINION REALTY TRUST, INC., a Virginia corporation, the Guarantors and Lenders
identified therein, and NationsBank, N.A., as Administrative Agent. Terms used
but not otherwise defined herein shall have the same meanings provided in the
Credit Agreement.
The undersigned, being a Responsible Officer of UNITED DOMINION REALTY
TRUST, INC., a Virginia corporation, hereby certifies, in my official capacity
and not in my individual capacity, that to the best of my knowledge and belief:
(a) the financial statements of the Borrower of this
Certificate fairly present the financial condition of the parties
covered by such financial statements in all material respects;
(b) during the period the Credit Parties have observed or
performed all of their covenants and other agreements in all
material respects, and satisfied in all material respects every
material condition, contained in this Credit Agreement to be
observed, performed or satisfied by them; and
(c) the undersigned has no actual knowledge of any Default or
Event of Default.
Detailed calculations demonstrating compliance with the financial covenants set
out in Section 7.9 of the Credit Agreement are attached to this Certificate.
This the ___________ day of ___________________, 199___.
UNITED DOMINION REALTY TRUST, INC.
By:___________________________
Name:
Title:
<PAGE>
Attachment to Officer's Certificate
Computation of Financial Covenants
<PAGE>
Schedule 7.11
Form of Joinder Agreement
THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________,
19__, is by and between _____________________, a ___________________ (the
"Applicant Guarantor"), and NATIONSBANK, N.A., in its capacity as Administrative
Agent under that certain 364-Day Credit Agreement dated as of August 4, 1997 (as
amended and modified, the "Credit Agreement") by and among UNITED DOMINION
REALTY TRUST, INC., a Virginia corporation, the Guarantors and Lenders
identified therein and NationsBank, N.A., as Administrative Agent. All of the
defined terms in the Credit Agreement are incorporated herein by reference.
The Applicant Guarantor has indicated its desire to become a Guarantor
or is required by the terms of Section 7.11 of the Credit Agreement to become, a
Guarantor under the Credit Agreement.
Accordingly, the Applicant Guarantor hereby agrees as follows with the
Administrative Agent, for the benefit of the Lenders:
1. The Applicant Guarantor hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Guarantor will be deemed
to be a party to the Credit Agreement and a "Guarantor" for all purposes of the
Credit Agreement and the other Credit Documents, and shall have all of the
obligations of a Guarantor thereunder as if it had executed the Credit Agreement
and the other Credit Documents. The Applicant Guarantor agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Documents,
including without limitation (i) all of the affirmative and negative covenants
set forth in Sections 7 and 8 of the Credit Agreement and (ii) all of the
undertakings and waivers set forth in Section 4 of the Credit Agreement. Without
limiting the generality of the foregoing terms of this paragraph 1, the
Applicant Guarantor hereby (A) jointly and severally together with the other
Guarantors, guarantees to each Lender, the Administrative Agent and the Issuing
Lender as provided in Section 4 of the Credit Agreement, the prompt payment and
performance of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof.
and (B) agrees that if any of the Guaranteed Obligations are not paid or
performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or
otherwise), the Applicant Guarantor will, jointly and severally together with
the other Guarantors, promptly pay and perform the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) in accordance
with the terms of such extension or renewal.
<PAGE>
2. The Applicant Guarantor acknowledges and confirms that it has
received a copy of the Credit Agreement and the Schedules and Exhibits thereto.
The information on the Schedules to the Credit Agreement is amended to provide
the information shown on the attached Schedule A.
3. The Applicant Guarantor hereby waives acceptance by the
Administrative Agent and the Lenders of the guaranty by the Applicant Guarantor
under Section 4 of the Credit Agreement upon the execution of this Joinder
Agreement by the Applicant Guarantor.
4. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
5. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Applicant Guarantor has caused this Joinder
Agreement to be duly executed by its authorized officers, and the Administrative
Agent, for the benefit of the Lenders, has caused the same to be accepted by its
authorized officer, as of the day and year first above written.
APPLICANT GUARANTOR
By:_______________________
Name:
Title:
Address for Notices:
Attn: ___________________
Telephone:
Telecopy:
Acknowledged and accepted:
NATIONSBANK, N.A., as Administrative Agent
By:_______________________
Name:
Title:
<PAGE>
Schedule A
to
Joinder Agreement
Address for
Applicant Guarantor Notices
<PAGE>
Schedule 8.6
Existing Investments
<PAGE>
Schedule 8.7
REMICs and Other Special Subsidiaries
<PAGE>
Schedule 11.1
Schedule of Lenders' Addresses
NationsBank, N.A. NationsBank, N.A.
Mid-Atlantic Corporate Finance
1111 E. Main Street
Richmond, Virginia 23277-0001
Attn: William K. Burton
Telephone: (804) 788-3637
Facsimile: (804) 788-3669
Signet Bank Signet Bank
7799 Leesburg Pike
Falls Church, Virginia 22043
Attn: Eric Lawrence
Telephone: (703) 714-5144
Facsimile: (703) 506-0284
Crestar Bank Crestar Bank
919 E. Main Street
8th Floor
Richmond, Virginia 23219
Attn: Richard Dickinson
Telephone: (804) 782-5956
Facsimile: (804) 782-7986
First Union National Bank First Union National Bank
301 South College Street, DC-6
6th Floor
Charlotte, North Carolina 28288
Attn: John Schissel
Telephone: (704) 383-1967
Facsimile: (704) 383-6205
Sumitomo Bank, Ltd. Sumitomo Bank, Ltd.
277 Park Avenue
6th Floor
New York, New York 10172
Attn: Honami Matsugasaki
Telephone: (212) 224-4176
Facsimile: (212) 224-4504
<PAGE>
DG Bank DG Bank
609 Fifth Avenue
New York, New York 10017-1021
Attn: Linda J. O'Connell
Telephone: (212) 745-1586
Facsimile: (212) 745-1556
Bank Hapoalim B.M. Bank Hapoalim B.M.
1515 Market Street
2nd Floor
Philadelphia, Pennsylvania 19102
Attn: Ellen Frank
Telephone: (215) 665-2251
Facsimile: (215) 665-2217
Guaranty Federal Bank Guaranty Federal Bank
8333 Douglas Avenue
Dallas, Texas 75225
Attn: Roger C. Davis
Telephone: (214) 260-2849
Facsimile: (214) 360-1678
Comerica Bank Comerica Bank
500 Woodward Street
7th Floor
Detroit, Michigan 48226
Attn: Dave Campbell
Telephone: (313) 222-9306
Facsimile: (313) 222-9295
<PAGE>
Schedule 11.3(b)
Form of Assignment and Acceptance
THIS ASSIGNMENT AND ACCEPTANCE dated as of _________________________,
1996 is entered into between THE LENDER IDENTIFIED ON THE SIGNATURE PAGES AS THE
"ASSIGNOR" (the "Assignor") and THE PARTIES IDENTIFIED ON THE SIGNATURE PAGES AS
"ASSIGNEES" ("Assignee").
Reference is made to that 364-Day Credit Agreement dated as of August
4, 1997 (as amended and modified, the "Credit Agreement") among UNITED DOMINION
REALTY TRUST, INC., a Virginia corporation (the "Borrower"), the Guarantors and
Lenders identified therein and NationsBank, N.A., as Administrative Agent. Terms
defined in the Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignees, and the Assignees hereby purchase and assume, without recourse, from
the Assignor, effective as of the Effective Date shown below, those rights and
interests of the Assignor under the Credit Agreement identified below (the
"Assigned Interests"), including the Loans and Commitments relating thereto,
together with unpaid interest and fees relating thereto accruing from the
Effective Date. The Assignor represents and warrants that it owns the interests
assigned hereby free and clear of liens, encumbrances or other claims. Each of
the Assignees represents that it is an Eligible Assignee within the meaning of
the term in the Credit Agreement. The Assignor and each of the Assignees hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 11.3 of the Credit Agreement, a copy of which
has been received by each such party. From and after the Effective Date (i) each
Assignee, if it is not already a Lender under the Credit Agreement, shall be a
party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and (ii) each Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement (other than the rights of indemnification referenced in Section 11.9
of the Credit Agreement).
2. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
3. Terms of Assignment
(a) Date of Assignment: ___________________, 199__
(b) Legal Name of Assignor: SEE SIGNATURE PAGE
(c) Legal Name of Assignee: SEE SIGNATURE PAGE
(d) Effective Date of Assignment: ___________________, 199__
See Schedule I attached for a description of the Loans and Commitments (and the
percentage interests therein and relating thereto) which are the subject of this
Assignment and Acceptance.
4. The fee payable to the Paying Agent in connection with this
Assignment is enclosed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the execution of
this instrument by their duly authorized officers as of the date first above
written.
ASSIGNOR: ASSIGNEE:
By____________________________ By____________________________
Name: Name:
Title: Title:
ACKNOWLEDGMENT AND CONSENT
NATIONSBANK, N.A. United Dominion Realty Trust, Inc.
as Administrative Agent
By____________________________ By____________________________
Name: Name:
Title: Title:
<PAGE>
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
United Dominion Realty Trust, Inc.
REVOLVING LOANS PRIOR TO ASSIGNMENT
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
ASSIGNOR
ASSIGNEES
------------------ -------------------- ----------------
$ $
REVOLVING LOANS INTERESTS SUBJECT OF THIS ASSIGNMENT
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
ASSIGNOR
------------------ -------------------- -----------------
$ $
<PAGE>
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
United Dominion Realty Trust, Inc.
REVOLVING LOANS AFTER ASSIGNMENT
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
ASSIGNOR
ASSIGNEES
-------------- ---------------- --------------
$ $
EXHIBIT 10(ix)
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
UNITED DOMINION REALTY, L.P.
Dated as of August 30, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I.
DEFINED TERMS
<TABLE>
<S> <C>
1.01 Defined Terms............................................................. 1
ARTICLE II.
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 Continuation.............................................................. 8
2.02 Name, Office and Registered Agent......................................... 8
2.03 Partners.................................................................. 8
2.04 Term and Dissolution...................................................... 8
2.05 Filing of Certificate and Perfection of Limited Partnership............... 9
2.06 Certificates Describing Partnership Units................................. 9
ARTICLE III.
BUSINESS OF THE PARTNERSHIP
3.01 Business of the Partnership............................................... 10
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 Capital Contributions..................................................... 10
4.02 Additional Capital Contributions and Issuances of
Additional Partnership Interests......................................... 11
4.03 Loans to the Partnership.................................................. 12
4.04 Capital Accounts.......................................................... 12
4.05 Percentage Interests...................................................... 13
4.06 No Interest on Contributions.............................................. 13
4.07 Return of Capital Contributions........................................... 13
4.08 No Third Party Beneficiary................................................ 13
</TABLE>
i
<PAGE>
ARTICLE V.
<TABLE>
<S> <C>
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 Allocation of Profit and Loss............................................. 14
5.02 Distribution of Cash...................................................... 15
5.03 REIT Distribution Requirements............................................ 16
5.04 No Right to Distributions in Kind......................................... 16
5.05 Limitations on Return of Capital Contributions............................ 16
5.06 Distributions Upon Liquidation............................................ 17
5.07 Substantial Economic Effect............................................... 17
ARTICLE VI.
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 Management of the Partnership............................................. 18
6.02 Delegation of Authority................................................... 21
6.03 Indemnification and Exculpation of Indemnitees............................ 21
6.04 Liability of the General Partner.......................................... 22
6.05 Partnership Expenses...................................................... 23
6.06 Outside Activities........................................................ 23
6.07 Employment or Retention of Affiliates..................................... 24
6.08 Title to Partnership Assets............................................... 24
ARTICLE VII.
CHANGES IN GENERAL PARTNER AND THE COMPANY
7.01 Transfer of a General Partner's Partnership Interest;
Transactions Involving the Company....................................... 24
7.02 Admission of a Substitute or Additional General........................... 26
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution
of a General Partner..................................................... 27
7.04 Removal of a General Partner.............................................. 27
ARTICLE VIII.
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 Management of the Partnership............................................. 29
8.02 Power of Attorney......................................................... 29
8.03 Limitation on Liability of Limited Partners............................... 29
8.04 Ownership by Limited Partner of Corporate General
Partner or Affiliate..................................................... 29
8.05 Redemption Right.......................................................... 29
8.06 NYSE Listing and Securities Act Registration of
REIT Shares.............................................................. 33
</TABLE>
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ARTICLE IX.
<TABLE>
<S> <C>
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 Purchase for Investment................................................... 33
9.02 Restrictions on Transfer of Limited Partnership Interests................. 33
9.03 Admission of Substitute Limited Partner................................... 34
9.04 Rights of Assignees of Partnership Interests.............................. 35
9.05 Effect of Bankruptcy, Death, Incompetence or Termination
of a Limited Partner..................................................... 36
9.06 Joint Ownership of Interests.............................................. 36
ARTICLE X.
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 Books and Records......................................................... 37
10.02 Custody of Partnership Funds; Bank Accounts............................... 37
10.03 Fiscal and Taxable Year................................................... 37
10.04 Annual Tax Information and Report......................................... 37
10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments............. 37
10.06 Reports to Limited Partners............................................... 38
ARTICLE XI.
AMENDMENT OF AGREEMENT; MERGER; NOTICE
11.01 Amendment of Agreement; Merger............................................ 39
11.02 Notice to Limited Partners................................................ 39
ARTICLE XII.
GENERAL PROVISIONS
12.01 Notices................................................................... 39
12.02 Survival of Rights........................................................ 40
12.03 Additional Documents...................................................... 40
12.04 Severability.............................................................. 40
12.05 Entire Agreement.......................................................... 40
12.06 Rules of Construction..................................................... 40
12.07 Headings.................................................................. 40
12.08 Counterparts.............................................................. 40
12.09 Governing Law............................................................. 40
</TABLE>
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<PAGE>
EXHIBITS
EXHIBIT A - Partners, Capital Contributions and Percentage Interests
EXHIBIT B - Notice of Exercise of Redemption Right
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<PAGE>
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
UNITED DOMINION REALTY, L.P.
Dated as of August 30, 1997
RECITALS
United Dominion Realty, L.P. (the "Partnership") was formed as a
limited partnership under the laws of the Commonwealth of Virginia by a
Certificate of Limited Partnership filed with the Clerk of the State Corporation
Commission of Virginia on October 23, 1995 and commenced operations on November
4, 1995. This Second Amended and Restated Agreement of Limited Partnership is
entered into this 30th day of August, 1997 by and among United Dominion Realty
Trust, Inc. (the "Company") as the general partner (in such capacity, the
"General Partner") and the Limited Partners set forth on Exhibit A hereto, for
the purpose of amending and restating the First Amended and Restated Agreement
of Limited Partnership dated as of December 31, 1995 (the "First Restatement").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants
between the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the First Restatement to read in its entirety as follows:
ARTICLE I.
DEFINED TERMS
1.01 Defined Terms. The following defined terms used in this
Agreement shall have the meanings specified below:
"Act" means the Virginia Revised Uniform Limited Partnership Act, as it
may be amended from time to time.
"Additional Funds" is defined in Section 4.03.
"Additional Limited Partner" means a Person admitted to this
Partnership as a Limited Partner pursuant to Section 4.02.
"Affiliate" means, (i) any Person that, directly or indirectly,
controls or is controlled by or is under common control with such Person, (ii)
any other Person that owns, beneficially, directly or indirectly, 10% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or any
Person controlling, controlled by or under common control with such Person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities or partnership interests or otherwise.
"Agreed Value" means the fair market value of a Partner's non-cash
Capital Contribution as of the date of contribution as agreed to by the such
Partner and the General Partner. The name and address of each Partner, number of
Partnership Units issued to such Partner, and the Agreed Value of such Partner's
non-cash Capital Contributions as of the date of contribution thereof is set
forth on Exhibit A.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership, as amended from time to time.
"Capital Account" is defined in Section 4.04.
"Capital Contribution" means the total amount of capital contributed to
the Partnership by each Partner. Any reference to the Capital Contribution of a
Partner shall include the Capital Contribution made by a predecessor holder of
the Partnership Interest of such Partner. The paid-in Capital Contribution shall
mean the cash amount or the Agreed Value of other assets actually contributed by
each Partner to the capital of the Partnership.
"Capital Transaction" means the refinancing, sale, exchange,
condemnation, recovery of a damage award or insurance proceeds (other than
business or rental interruption insurance proceeds not reinvested in the repair
or reconstruction of Properties), or other disposition of any Property (or the
Partnership's interest therein).
"Cash Amount" means an amount of cash per Partnership Unit equal to the
Value of the REIT Shares Amount on the date of receipt by the General Partner of
a Notice of Redemption.
"Certificate" means any instrument or document that is required under
the laws of the Commonwealth of Virginia, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02) and filed for recording in the
appropriate public offices within the Commonwealth of Virginia or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the Commonwealth of Virginia or such other
jurisdiction.
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<PAGE>
"Charter" means the Articles of Incorporation of the Company, as
amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
successor provision of the Code.
"Commission" means the Securities and Exchange Commission.
"Company" means United Dominion Realty Trust, Inc., a Virginia
corporation.
"Conversion Factor" means 1.0, as adjusted pursuant to Section 8.05(f).
"Event of Bankruptcy" as to any Person means the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"General Partner" means the Company and any Person who becomes a
substitute or additional General Partner as provided herein, and any of their
successors as General Partner. At any time at which the Partnership has two or
more General Partners, all such General Partners shall designate one of such
General Partners as managing General Partner and may from time to time designate
a successor managing General Partner and, unless the context otherwise requires,
references to the General Partner shall mean the General Partner at the time so
designated as managing General Partner.
"General Partnership Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of such Person's status as the General Partner or a director, officer or
employee of the Partnership or the General Partner, and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time, in its sole and absolute discretion.
3
<PAGE>
"Investment Agreement" means the contribution, investment, subscription
or other agreement or agreements pursuant to which a Limited Partner contributes
property or cash to the Partnership in exchange for a Partnership Interest.
"Limited Partner" means any Person named as a Limited Partner on
Exhibit A attached hereto, and any Person who becomes a Substitute or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partnership Interest" means the ownership interest of a
Limited Partner in the Partnership at any particular time, including the right
of such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"Loss" is defined in Section 5.01(f).
"Minimum Limited Partnership Interest" means the lesser of (i) 1% or
(ii) if the total Capital Contributions to the Partnership exceeds $50 million,
1% divided by the ratio of the total Capital Contributions to the Partnership to
$50 million; provided, however, that the Minimum Limited Partnership Interest
shall not be less than 0.2% at any time.
"Notice of Redemption" means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.
"NYSE" means the New York Stock Exchange and includes any other
national securities exchange on which the REIT Shares are listed at the
determination date.
"Offer" is defined in Section 7.01(c).
"Original Limited Partner" means UDRT of North Carolina, L.L.C., a
North Carolina limited liability company.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"Partnership Interest" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
4
<PAGE>
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner's share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of cash pursuant to Section 5.02, which
record date shall be the same as the record date established by the General
Partner for a distribution to the holders of the REIT Shares.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder. The allocation of
Partnership Units among the Partners shall be as set forth on Exhibit A, as may
be amended from time to time.
"Percentage Interest" means at any time the percentage ownership
interest in the Partnership of each Partner, as determined by dividing the
Partnership Units owned by such Partner by the total number of Partnership Units
outstanding at such time. The Percentage Interest of each Partner shall be as
set forth on Exhibit A, as may be amended from time to time.
"Percentage Interest Adjustment Date" means the effective date of an
adjustment of the Partners' Percentage Interests pursuant to Section 4.05.
"Person" means any individual, partnership, corporation, joint venture,
trust or other entity.
"Profit" is defined in Section 5.01(f).
"Property" means any apartment property or other investment in which
the Partnership holds an ownership interest.
"Redeeming Partner" is defined in Section 8.05(a).
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as selected by the General Partner in its sole and absolute discretion
pursuant to Section 8.05(b).
"Redemption Right" is defined in Section 8.05(a).
5
<PAGE>
"Regulations" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through
860 of the Code.
"REIT Expenses" means (i) costs and expenses relating to the continuity
of existence of the Company and its Subsidiaries (all such entities shall, for
purposes of this section, be included within the definition of Company),
including, without limitation, taxes, fees and assessments associated therewith
and any costs, expenses or fees payable to any director, officer or employee of
the Company (including, without limitation, any costs of indemnification), (ii)
costs and expenses relating to any offer or registration of REIT Shares or other
securities by the Company and all statements, reports, fees and expenses
incidental thereto, including, without limitation, underwriting discounts and
selling commissions applicable to any such offer of securities and any costs and
expenses associated with any claims made by any holders of such securities or
any underwriters or placement agents thereof, (iii) costs and expenses incurred
in connection with the repurchase of any securities by the Company, (iv) costs
and expenses associated with the preparation and filing of any periodic or other
reports and communications by the Company under federal, state or local laws or
regulations, including filings with the Commission, (v) costs and expenses
associated with compliance by the Company with laws, rules and regulations
promulgated by any regulatory body, including the Commission and any securities
exchange, (vi) costs and expenses associated with any 401(k) plan, incentive
plan, bonus plan or other plan providing for compensation for the employees of
the Company, (vii) costs and expenses incurred by the Company relating to any
issuance or redemption of Partnership Interests, and (viii) all other operating
or administrative costs incurred by the Company in connection with the ordinary
course of the Company's or the Partnership's business (including the business of
any Subsidiary thereof).
"REIT Share" means a share of common stock of the Company, $1 par
value per share, or a share of the common stock of any Successor Entity.
"REIT Shares Amount" shall mean a whole number of REIT Shares equal to
the product of the number of Partnership Units offered for redemption by a
Redeeming Partner, multiplied by the Conversion Factor as adjusted to and
including the Specified Redemption Date plus cash in lieu of any fractional REIT
Shares based on the Value of a REIT Share as of the date of receipt by the
General Partner of a Notice of Redemption; provided that in the event the
Company issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase REIT Shares, or any other securities or property (collectively,
the "rights"), and the rights have not expired at the Specified Redemption Date,
then the REIT Shares Amount shall also include the rights issuable to a holder
of the REIT Shares Amount of REIT Shares on the record date fixed for purposes
of determining the holders of REIT Shares entitled to rights.
6
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Service" means the Internal Revenue Service.
"Specified Redemption Date" means (i) with respect to Partnership Units
to be redeemed for a Cash Amount, the first Business Day of the month that is at
least 20 business days after the receipt by the General Partner of the Notice of
Redemption, as the same may be extended pursuant to Section 8.05(d) and (ii)
with respect to Partnership Units to be redeemed for a REIT Shares Amount, the
fifth Business Day following the date of the General Partner's notice of its
election to purchase such Partnership Units pursuant to Section 8.05(b).
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities (including general partners' interests) or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.
"Subsidiary Partnership" means any partnership of which the majority of
the limited or general partnership interests therein are owned, directly or
indirectly, by the Partnership.
"Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03.
"Transaction" is defined in Section 7.01(c).
"Transfer" is defined in Section 9.02(a).
"Value" means, with respect to any security, the average of the daily
market price of such security for the twenty (20) consecutive trading days
immediately preceding the date of such valuation. The market price for each such
trading day shall be: (i) if such security is listed or admitted to trading on
any securities exchange or The Nasdaq National Market, the closing price,
regular way, on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (ii) if such security is not
listed or admitted to trading on any securities exchange or The Nasdaq National
Market, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a recognized quotation source designated by the Company, or (iii) if
such security is not listed or admitted to trading on any securities exchange or
The Nasdaq National Market and no such last reported sale price or closing bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a recognized quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than twenty (20) days prior to the date in
question) for which prices have been so reported; provided, that if there are no
bid and asked prices reported during the twenty (20) days prior to the date in
question, the value of such security shall be determined by the General Partner
acting in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event that any
security includes any additional rights the value of which is not included
within such price, then the value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate, and
included in determining the "Value" of such security.
7
<PAGE>
ARTICLE II.
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 Continuation. The Partners hereby agree to continue the
Partnership pursuant to the Act and upon the terms and conditions set forth in
this Agreement.
2.02 Name, Office and Registered Agent. The name of the Partnership
shall be United Dominion Realty, L.P. The specified office and place of business
of the Partnership shall be 10 South 6th Street, Richmond, Virginia 23219-3802.
The General Partner may at any time change the location of such office, provided
the General Partner gives notice to the Partners of any such change. The name
and address of the Partnership's registered agent is Katheryn E. Surface, United
Dominion Realty Trust, Inc., 10 South Sixth Street, Richmond Virginia
23219-3802. The sole duty of the registered agent as such is to forward to the
Partnership any notice that is served on her as registered agent.
2.03 Partners.
(a) The General Partner of the Partnership is the Company. Its
principal place of business shall be the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as
Limited Partners on Exhibit A hereto, as amended from time to time.
2.04 Term and Dissolution.
(a) The term of the Partnership shall continue in full force
and effect until December 31, 2051, except that the General Partner, in its sole
and absolute discretion, may extend the term of the Partnership and the
Partnership shall be dissolved upon the first to occur of any of the following
events:
(i) The occurrence of an Event of Bankruptcy as to a
General Partner or the dissolution, death or withdrawal of a
General Partner unless the Partnership is continued pursuant
to Section 2.04(c); provided, that if a General Partner is on
the date of such occurrence a partnership, the dissolution of
such General Partner as a result of the dissolution, death,
withdrawal, removal or Event of Bankruptcy of a partner in
such partnership shall not be an event of dissolution of the
Partnership if the business of such General Partner is
continued by the remaining partner or partners, either alone
or with additional partners, and such General Partner and such
partners comply with any other applicable requirements of this
Agreement;
8
<PAGE>
(ii) The passage of 90 days after the sale or other
disposition of all or substantially all of the assets of the
Partnership (provided that if the Partnership receives one or
more obligations as consideration for such sale or other
disposition, the Partnership shall continue, unless sooner
dissolved under the provisions of this Agreement, until such
time as all of such obligations are paid or satisfied in
full);
(iii) The redemption of all Limited Partnership
Interests (other than any of such interests held by the
Company or any Subsidiary thereof); or
(iv) The election by the General Partner that the
Partnership should be dissolved.
(b) Upon dissolution of the Partnership (unless the
Partnership is continued pursuant to Section 2.04(c)), the General Partner (or
its trustee, receiver, successor or legal representative) shall amend or cancel
the Certificate and liquidate the Partnership's assets and apply and distribute
the proceeds thereof in accordance with Section 5.06. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership's debts and
obligations), or (ii) distribute the assets to the Partners in kind.
(c) Notwithstanding Section 2.04(a)(i), upon the occurrence of
an Event of Bankruptcy as to a General Partner or the dissolution, death or
withdrawal of a General Partner, the Limited Partners, within 90 days after such
occurrence, may elect to continue the Partnership for the balance of the term
specified in Section 2.04(a) by selecting, subject to Section 7.02 and any other
provisions of this Agreement, a substitute General Partner by consent of a
majority in interest of the Limited Partners. If the Limited Partners elect to
continue the Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired an interest of
a Partner in the Partnership shall be governed by this Agreement.
2.05 Filing of Certificate and Perfection of Limited Partnership. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
2.06 Certificates Describing Partnership Units. At the request of a
Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner's interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the General
Partner, (ii) shall not be negotiable and (iii) shall bear the following legend:
9
<PAGE>
This certificate is not negotiable. The Partnership Units
represented by this certificate are governed by and
transferable only in accordance with the provisions of the
Agreement of Limited Partnership of United Dominion Realty,
L.P., as amended from time to time.
ARTICLE III.
BUSINESS OF THE PARTNERSHIP
3.01 Business of the Partnership. The purpose and nature of the
business to be conducted by the Partnership is (i) to conduct any business that
may be lawfully conducted by a limited partnership organized pursuant to the
Act, provided, however, that such business shall be limited to and conducted in
such a manner as to permit the Company at all times to qualify as a REIT, unless
the Company otherwise ceases to qualify as a REIT, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing. In
connection with the foregoing, and without limiting the Company's right in its
sole and absolute discretion to cease qualifying as a REIT, the Partners
acknowledge that the Company's current status as a REIT and the avoidance of
income and excise taxes on the Company inures to the benefit of all the Partners
and not solely to the Company. Notwithstanding the foregoing, the Limited
Partners acknowledge that the Company may terminate its status as a REIT under
the Code at any time to the full extent permitted by the Charter. Subject to
Article XI hereof, the General Partner shall also be empowered (but shall not be
required) to do any and all acts and things necessary or prudent to ensure that
the Partnership will not be classified as a "publicly traded partnership" for
purposes of Section 7704 of the Code.
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 Capital Contributions. The General Partner and the Limited
Partners have contributed to the capital of the Partnership cash or property in
an amount or having an Agreed Value set forth opposite their names on Exhibit A,
as amended from time to time.
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<PAGE>
4.02 Additional Capital Contributions and Issuances of Additional
Partnership Interests. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Partnership. The Partners, with the
consent of the General Partner, which consent may be withheld in its sole and
absolute discretion, may contribute additional capital to the Partnership, from
time to time, and receive additional Partnership Interests in respect thereof,
in the manner contemplated in this Section 4.02.
(a) Issuances of Additional Partnership Interests. The General
Partner is hereby authorized to cause the Partnership to issue such additional
Partnership Interests in the form of Partnership Units for any Partnership
purpose at any time or from time to time, to the Partners (including the General
Partner) or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited Partners. Any
additional Partnership Interests issued thereby may be issued in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Virginia law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership. Without limiting the foregoing, the General
Partner is expressly authorized to cause the Partnership to issue Partnership
Units for less than fair market value, so long as the General Partner concludes
in good faith that such issuance is in the best interests of the Company and the
Partnership. Upon each issuance of Partnership Units hereunder, the General
Partner shall amend Exhibit A attached hereto to reflect such issuance.
(b) Certain Deemed Contributions of Proceeds of Issuance of
Company Securities. If (i) the Company issues securities and contributes some or
all the proceeds raised in connection with such issuance to the Partnership and
(ii) the proceeds actually received and contributed by the Company to the
Partnership are less than the Partnership's share (as determined by the General
Partner, in its sole and absolute discretion) of the gross proceeds of such
issuance as a result of any underwriter's discount or other expenses paid or
incurred in connection with such issuance, then the Company shall be deemed to
have made Capital Contributions to the Partnership in the aggregate amount of
the Partnership's share of the gross proceeds of such issuance that are
contributed to the Partnership and the Partnership shall be deemed
simultaneously to have paid such offering expenses in connection with the
issuance of additional Partnership Units to the Company for such Capital
Contributions pursuant to Section 4.02(a). In any case in which the Company
contributes less than all of the proceeds of such issuance to the Partnership,
it shall be deemed to have contributed the gross proceeds of issuance of the
number of units of the issued security (or the number of dollars of principal in
the case of debt securities) equal to the quotient of the division of the amount
of proceeds contributed by the net proceeds per unit (or per dollar), and the
Partnership shall be deemed to have paid offering expenses equal to the product
of such number of units (or dollars) times the per unit (or per dollar) offering
expenses.
11
<PAGE>
(c) Minimum Limited Partnership Interest. In the event that
either a redemption pursuant to Section 8.05 or additional Capital Contributions
by the General Partner and the Original Limited Partner would result in the
Limited Partners (other than the Original Limited Partner), in the aggregate,
owning less than the Minimum Limited Partnership Interest, the General Partner
and the Limited Partners (other than the Original Limited Partner) shall form
another partnership and contribute sufficient Limited Partnership Interests
together with such other Limited Partners so that the Limited Partners (other
than the Original Limited Partner), in the aggregate, own at least the Minimum
Limited Partnership Interest.
4.03 Loans to the Partnership. If the General Partner determines that
it is in the best interests of the Company and the Partnership to provide for
additional Partnership funds ("Additional Funds") for any Partnership purpose,
the General Partner may (i) cause the Partnership to obtain such funds from
outside borrowings or (ii) elect to have the Company or a Subsidiary or
Subsidiaries of the Company loan such Additional Funds to the Partnership. The
loans to the Partnership shall be in exchange for such consideration and on such
terms and conditions as shall be established by the General Partner in its sole
and absolute discretion, all without the approval of any Limited Partners.
Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue debt securities for less than fair market value,
so long as the General Partner concludes in good faith that such issuance is in
the best interests of the Company and the Partnership.
4.04 Capital Accounts. A separate capital account (a "Capital Account")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a de minimis
Capital Contribution, (ii) the Partnership distributes to a Partner more than a
de minimis amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) in accordance with Regulations Section
1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously) would be allocated among the Partners
pursuant to Section 5.01 if there were a taxable disposition of such property
for its fair market value (as determined by the General Partner, in its sole and
absolute discretion, and taking into account Section 7701(g) of the Code) on the
date of the revaluation.
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4.05 Percentage Interests. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner's Percentage
Interest shall be adjusted by the General Partner effective as of the effective
date of each such increase or decrease to a percentage equal to the number of
Partnership Units held by such Partner divided by the aggregate number of
Partnership Units outstanding after giving effect to such increase or decrease.
If the Partners' Percentage Interests are adjusted pursuant to this Section
4.05, the Profits and Losses for the taxable year in which the adjustment occurs
shall be allocated between the several parts of the year (a) beginning on the
first day of the year and ending on the next following Percentage Interest
Adjustment Date, (b) beginning on the day following a Percentage Interest
Adjustment Date and ending on the next following Percentage Interest Adjustment
Date, and/or (c) beginning on the first day following the last Percentage
Interest Adjustment Date occurring during the year and ending on the last day of
the year, as may be appropriate, either (i) as if the taxable year had ended on
the last day of each part or (ii) based on the number of days in each part. The
General Partner, in its sole and absolute discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation among the Partners of Profits and
Losses allocated to any part of the year shall be based on the Percentage
Interests determined as of the first day of such part.
4.06 No Interest on Contributions. No Partner shall be
entitled to interest on its Capital Contribution.
4.07 Return of Capital Contributions. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
4.08 No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.
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ARTICLE V.
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 Allocation of Profit and Loss.
(a) General. Profit and Loss of the Partnership for each
fiscal year of the Partnership shall be allocated among the Partners in
accordance with their respective Percentage Interests.
(b) Minimum Gain Chargeback. Notwithstanding any provision to
the contrary, (i) any expense of the Partnership that is a "nonrecourse
deduction" within the meaning of Regulations Section 1.704-2(b)(1) shall be
allocated in accordance with the Partners' respective Percentage Interests, (ii)
any expense of the Partnership that is a "partner nonrecourse deduction" within
the meaning of Regulations Section 1.704-2(i)(2) shall be allocated in
accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net
decrease in Partnership Minimum Gain within the meaning of Regulations Section
1.704-2(f)(1) for any Partnership taxable year, items of gain and income shall
be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j),
and (iv) if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, items of gain and income shall be allocated among the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the ordering rules
contained in Regulations Section 1.704-2(j). A Partner's "interest in
partnership profits" for purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(c) Qualified Income Offset. If a Limited Partner receives in
any taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Limited Partner in accordance with this Section 5.01(c), to the extent
permitted by Regulations Section 1.704-1(b) and Section 5.01(d), items of
expense or loss shall be allocated to such Partner in an amount necessary to
offset the income or gain previously allocated to such Partner under this
Section 5.01(c).
(d) Capital Account Deficits. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(d).
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(e) Allocations Between Transferor and Transferee. If a
Partner transfers any part or all of its Partnership Interest, the distributive
shares of the various items of Profit and Loss allocable among the Partners
during such fiscal year of the Partnership shall be allocated between the
transferor and the transferee Partner either (i) as if the Partnership's fiscal
year had ended on the date of the transfer, or (ii) based on the number of days
of such fiscal year that each was a Partner without regard to the results of
Partnership activities in the respective portions of such fiscal year in which
the transferor and the transferee were Partners. The General Partner, in its
sole and absolute discretion, shall determine which method shall be used to
allocate the distributive shares of the various items of Profit and Loss between
the transferor and the transferee Partner.
(f) Definition of Profit and Loss. "Profit" and "Loss" and any
items of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially allocated
pursuant to Section 5.01(b), 5.01(c), or 5.01(d). All allocations of income,
Profit, gain, Loss, and expense (and all items contained therein) for federal
income tax purposes shall be identical to all allocations of such items set
forth in this Section 5.01, except as otherwise required by Section 704(c) of
the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have
the authority to elect the method to be used by the Partnership for allocating
items of income, gain, and expense as required by Section 704(c) of the Code
(including a method that may result in a Partner receiving a disproportionately
larger share of the Partnership's tax depreciation deductions) and such election
shall be binding on all Partners.
5.02 Distribution of Cash.
(a) The General Partner shall distribute cash on a quarterly
(or, at the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole and absolute discretion, to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter (or other distribution period) in accordance with their respective
Percentage Interests on the Partnership Record Date; provided, however, that if
a new or existing Partner acquires an additional Partnership Interest in
exchange for a Capital Contribution on any date other than a Partnership Record
Date, the cash distribution attributable to such additional Partnership Interest
for the Partnership Record Date following the issuance of such additional
Partnership Interest shall be reduced in the proportion that the number of days
that such additional Partnership Interest is held by such Partner bears to the
number of days between such Partnership Record Date and the immediately
preceding Partnership Record Date.
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(b) Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445, and 1446
of the Code. If the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to a Partner or its assignee (including by reason of Section 1446 of the
Code) and if the amount to be distributed to the Partner (the "Distributable
Amount") equals or exceeds the amount required to be withheld by the Partnership
(the "Withheld Amount"), the Withheld Amount shall be treated as a distribution
of cash to such Partner. If, however, the Distributable Amount is less than the
Withheld Amount, no amount shall be distributed to the Partner, the
Distributable Amount shall be treated as a distribution of cash to such Partner,
and the excess of the Withheld Amount over the Distributable Amount shall be
treated as a loan (a "Partnership Loan") from the Partnership to the Partner on
the day the Partnership pays over such excess to a taxing authority. A
Partnership Loan may be repaid, at the election of the General Partner in its
sole and absolute discretion, either (i) through withholding by the Partnership
with respect to subsequent distributions to the applicable Partner or assignee,
or (ii) at any time more than twelve (12) months after a Partnership Loan
arises, by cancellation of Partnership Units with a value equal to the unpaid
balance of the Partnership Loan (including accrued interest). Any amounts
treated as a Partnership Loan pursuant to this Section 5.02(b) shall bear
interest at the lesser of (i) the base rate on corporate loans at large United
States money center commercial banks, as published from time to time in The Wall
Street Journal (or an equivalent successor publication), or (ii) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date the Partnership is deemed to extend the loan until such loan is repaid in
full.
(c) In no event may a Partner receive a distribution of cash
with respect to a Partnership Unit if such Partner is entitled to receive a cash
dividend as the holder of record of a REIT Share for which all or part of such
Partnership Unit has been or will be exchanged.
5.03 REIT Distribution Requirements. Notwithstanding anything to the
contrary in this Agreement, the General Partner shall cause the Partnership to
distribute amounts sufficient to enable the Company to pay shareholder dividends
that will allow the Company to (i) meet its distribution requirement for
qualification as a REIT as set forth in Section 857(a)(1) of the Code and (ii)
avoid any federal income or excise tax liability imposed by the Code.
5.04 No Right to Distributions in Kind. No Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.
5.05 Limitations on Return of Capital Contributions. Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make, a distribution
that includes a return of all or part of a Partner's Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the liabilities to a Partner for the
return of his Capital Contribution, does not exceed the fair market value of the
Partnership's assets.
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5.06 Distributions Upon Liquidation.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed to
all Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. Any distributions pursuant to this Section 5.06 shall be made by the end
of the Partnership's taxable year in which the liquidation occurs (or, if later,
within 90 days after the date of the liquidation). To the extent deemed
advisable by the General Partner, appropriate arrangements (including the use of
a liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
(b) If the General Partner has a negative balance in its
Capital Account following a liquidation of the Partnership, as determined after
taking into account all Capital Account adjustments in accordance with Sections
5.01 and 5.02 resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the General Partner
shall contribute to the Partnership an amount of cash equal to the negative
balance in its Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and then to the Limited Partners in accordance
with Section 5.06(a). Such contribution by the General Partner shall be made by
the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).
5.07 Substantial Economic Effect. It is the intent of the Partners that
the allocations of Profit and Loss under the Agreement have substantial economic
effect (or be consistent with the Partners' interests in the Partnership in the
case of the allocation of losses attributable to nonrecourse debt) within the
meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
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ARTICLE VI.
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement,
the General Partner shall have full, complete and exclusive discretion to manage
and control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, operate, lease and
dispose of any real property and any other property or assets,
including, without limitation, equity interests in other
REITs, mortgage loans and participations therein, that the
General Partner determines are necessary or appropriate or in
the best interests of the business of the Company and the
Partnership;
(ii) to construct buildings and make other
improvements on the properties owned or leased by the
Partnership;
(iii) to authorize, issue, sell, redeem or otherwise
purchase any Partnership Interests or any securities
(including secured and unsecured debt obligations of the
Partnership, debt obligations of the Partnership convertible
into any class or series of Partnership Interests, or options,
rights, warrants or appreciation rights relating to any
Partnership Interests) of the Partnership;
(iv) to borrow or lend money for the Partnership,
issue or receive evidences of indebtedness in connection
therewith, refinance, increase the amount of, modify, amend or
change the terms of, or extend the time for the payment of,
any such indebtedness, and secure such indebtedness by
mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
(v) to guarantee or become a comaker of indebtedness
of the Company or any Subsidiary thereof, refinance, increase
the amount of, modify, amend or change the terms of, or extend
the time for the payment of, any such guarantee or
indebtedness, and secure such guarantee or indebtedness by
mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
(vi) to use assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent
with this Agreement, including, without limitation, payment,
either directly or by reimbursement, of all operating costs
and general administrative expenses of the Company, the
Partnership, or any Subsidiary of either to third parties or
to the Company as set forth in this Agreement;
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(vii) to lease all or any portion of any of the
Partnership's assets, whether or not the terms of such leases
extend beyond the termination date of the Partnership and
whether or not any portion of the Partnership's assets so
leased are to be occupied by the lessee, or, in turn,
subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may
determine;
(viii) to prosecute, defend, arbitrate, or compromise
any and all claims or liabilities in favor of or against the
Partnership, on such terms and in such manner as the General
Partner may reasonably determine, and similarly to prosecute,
settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership's assets; provided, however,
that the General Partner may not, without the consent of the
Limited Partners (other than the Original Limited Partner)
holding more than 50% of the Percentage Interests of the
Limited Partners (other than the Original Limited Partner),
confess a judgment against the Partnership;
(ix) to file applications, communicate, and otherwise
deal with any and all governmental agencies having
jurisdiction over, or in any way affecting, the Partnership's
assets or any other aspect of the Partnership business;
(x) to make or revoke any election permitted or
required of the Partnership by any taxing authority;
(xi) to maintain such insurance coverage for public
liability, fire and casualty, and any and all other insurance
for the protection of the Partnership, for the conservation of
Partnership assets, or for any other purpose convenient or
beneficial to the Partnership, in such amounts and such types,
as it shall determine from time to time;
(xii) to determine whether or not to apply any
insurance proceeds for any property to the restoration of such
property or to distribute the same;
(xiii) to establish one or more divisions of the
Partnership, to hire and dismiss employees of the Partnership
or any division of the Partnership, and to engage legal
counsel, accountants, consultants, real estate brokers, and
other professionals, as the General Partner may deem necessary
or appropriate in connection with the Partnership business, on
such terms (including provisions for compensation and
eligibility to participate in employee benefit plans, stock
option plans and similar plans funded by the Partnership) as
the General Partner may deem reasonable and proper;
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(xiv) to retain other services of any kind or nature
in connection with the Partnership business, and to pay
therefor such remuneration as the General Partner may deem
reasonable and proper;
(xv) to negotiate and conclude agreements on behalf
of the Partnership with respect to any of the rights, powers
and authority conferred upon the General Partner;
(xvi) to maintain accurate accounting records and to
file promptly all federal, state and local income tax returns
on behalf of the Partnership;
(xvii) to distribute Partnership cash or other
Partnership assets in accordance with this Agreement;
(xviii) to form or acquire an interest in, and
contribute property to, any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an
equity interest from time to time);
(xix) to establish Partnership reserves for working
capital, capital expenditures, contingent liabilities, or any
other valid Partnership purpose;
(xx) subject to Article XI, to merge, consolidate or
combine the Partnership with or into another Person;
(xxi) subject to Article XI, to do any and all acts
and things necessary or prudent to ensure that the Partnership
will not be classified as a "publicly traded partnership" for
purposes of Section 7704 of the Code; and
(xxii) to take such other action, execute,
acknowledge, swear to or deliver such other documents and
instruments, and perform any and all other acts that the
General Partner deems necessary or appropriate for the
formation, continuation and conduct of the business and
affairs of the Partnership (including, without limitation, all
actions consistent with allowing the General Partner at all
times to qualify as a REIT unless the General Partner
voluntarily terminates its REIT status) and to possess and
enjoy all of the rights and powers of a general partner as
provided by the Act.
(b) Except as otherwise provided herein, to the extent the
duties of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
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6.02 Delegation of Authority. The General Partner may delegate any or
all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the business
of the Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve.
6.03 Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, unless it is established that: (i) the act or omission of
the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be
made only out of the assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 6.03 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
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(d) The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of this Section 6.03; and actions
taken or omitted by an Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
6.04 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General Partner
acted in good faith. The General Partner shall not be in breach of any duty that
the General Partner may owe to the Limited Partners or the Partnership or any
other Persons under this Agreement or of any duty stated or implied by law or
equity provided the General Partner, acting in good faith, abides by the terms
of this Agreement.
(b) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, the Company and the
Company's shareholders collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or the
tax consequences of some, but not all, of the Limited Partners) in deciding
whether to cause the Partnership to take (or decline to take) any actions. In
any case in which the General Partner determines in good faith that the
interests of the Limited Partners and the General Partner's shareholders may
conflict, the Limited Partners further acknowledge and agree that the General
Partner shall be deemed to have discharged its fiduciary duties to the Limited
Partners by discharging such duties to the General Partner's shareholders. The
General Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with any such decisions, provided that the General Partner has acted in good
faith.
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(c) Subject to its obligations and duties as General Partner
set forth in Section 6.01, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the Company to
continue to qualify as a REIT or (ii) to prevent the Company from incurring any
taxes under Section 857, Section 4981, or any other provision of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 6.04 as in effect immediately prior to
such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when claims relating to such matters may arise or be asserted.
6.05 Partnership Expenses. In addition to the expenses that are
directly attributable to the Partnership, the Partnership shall pay the REIT
Expenses that are allocable to the Partnership. The General Partner, in its sole
and absolute discretion, shall determine what portion of the REIT Expenses are
allocable to the Partnership. If any REIT Expenses determined by the General
Partner to be allocable to the Partnership are paid by the General Partner, the
General Partner shall be reimbursed by the Partnership therefor.
6.06 Outside Activities. The Partners and any officer, director,
employee, agent, trustee, Affiliate, Subsidiary, or shareholder of any Partner
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities substantially similar or identical to those of the
Partnership. Neither the Partnership nor any of the Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any such business ventures, interests or
activities, and the Partners shall have no obligation pursuant to this Agreement
to offer any interest in any such business ventures, interests and activities to
the Partnership or any Partner, even if such opportunity is of a character
which, if presented to the Partnership or any Partner, could be taken by such
Person.
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6.07 Employment or Retention of Affiliates.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership (whether
as a buyer, lessor, lessee, manager, furnisher of goods or services, broker,
agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor which the General Partner
determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries
or other Persons in which it has an equity investment, and such Persons may
borrow funds from the Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Subsidiary or any other
Person.
(c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems are consistent with this Agreement and applicable law.
6.08 Title to Partnership Assets. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
ARTICLE VII.
CHANGES IN GENERAL PARTNER AND THE COMPANY
7.01 Transfer of a General Partner's Partnership Interest;
Transactions Involving the Company.
(a) Except as provided in Section 7.01(c), 7.01(d) or 7.03(a),
a General Partner shall not transfer all or any portion of its General
Partnership Interest or withdraw as General Partner.
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(b) Except as provided in Section 7.01(c) or 7.01(d), the
General Partner (or all General Partners if at any time there are two or more
General Partners) and the Original Limited Partner will at all times own in the
aggregate at least a 1% Percentage Interest.
(c) Except as otherwise provided in Section 7.01(d), the
Company shall not merge, consolidate or otherwise combine with or into another
Person or sell all or substantially all of its assets (other than in connection
with a change in the Company's state of incorporation or organizational form) (a
"Transaction"), unless one of the following conditions is met:
(i) the consent of Limited Partners (other than the
Company or any Subsidiary of the Company) holding more than
50% of the Percentage Interests of the Limited Partners (other
than those held by the Company or any Subsidiary of the
Company) is obtained;
(ii) the Transaction also includes a merger,
consolidation or combination of the Partnership or sale of
substantially all of the assets of the Partnership or other
transaction as a result of which all Limited Partners (other
than the Company or any Subsidiary) will receive for each
Partnership Unit an amount of cash, securities, or other
property (or a partnership interest or other security readily
convertible into such cash, securities, or other property) no
less than the product of the Conversion Factor and the
greatest amount of cash, securities or other property
(expressed as an amount per REIT Share) paid in the
Transaction in consideration for REIT Shares, provided, that
if, in connection with the Transaction, a purchase, tender or
exchange offer ("Offer") shall have been made to and accepted
by the holders of more than 50 percent of the outstanding REIT
Shares, all Limited Partners (other than the Company or any
Subsidiary) will receive no less than the amount of cash and
the fair market value of securities or other consideration
that they would have received had they (A) exercised their
Redemption Right and (B) sold, tendered or exchanged pursuant
to the Offer the REIT Shares received upon exercise of the
Redemption Right immediately prior to the expiration of the
Offer;
(iii) the Company is the surviving entity in the
Transaction and either (A) the holders of REIT Shares do not
receive cash, securities, or other property in the Transaction
or (B) all Limited Partners (other than the Company or any
Subsidiary) receive an amount of cash, securities, or other
property (expressed as an amount per Partnership Unit) that is
no less than the product of the Conversion Factor and the
greatest amount of cash, securities, or other property
(expressed as an amount per REIT Share) received in the
Transaction by any holder of REIT Shares; or
(iv) the Company merges, consolidates, or combines
with or into another entity and, immediately after such
merger, (A) substantially all of the assets of the surviving
entity, other than Partnership Units and the ownership
interests in any wholly-owned Subsidiaries held by the
Company, are contributed to the Partnership as a Capital
Contribution in exchange for Partnership Units with a fair
market value equal to the value of the assets so contributed
as determined pursuant to Section 704(c) of the Code, (B) any
successor or surviving corporation expressly agrees to assume
all obligations of the Company hereunder, and (C) the
Conversion Factor is adjusted appropriately to reflect the
ratio at which REIT Shares are converted into shares of the
surviving entity.
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The General Partner shall give the Limited Partners notice of any Transaction at
least 20 business days prior to the effective date of such Transaction,
provided, however, that the General Partner need not give any such notice prior
to the date on which the holders of REIT Shares are first notified of such
Transaction by the Company.
(d) Notwithstanding Sections 7.01(a), 7.01(b) and
7.01(c),
(i) a General Partner may transfer all or any portion
of its General Partnership Interest to (A) a wholly-owned
Subsidiary of such General Partner or (B) the owner of all of
the ownership interests of such General Partner, and following
a transfer of all of its General Partnership Interest, may
withdraw as General Partner; and
(ii) the Company may engage in a Transaction not
required by law or by the rules of any national securities
exchange on which the REIT Shares are listed to be submitted
to the vote of the holders of the REIT Shares and the General
Partner shall not be required to give notice to the Limited
Partners of any such Transaction as provided by Section
7.01(c).
7.02 Admission of a Substitute or Additional General Partner. A Person
shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional
General Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 in connection with
such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional
General Partner is a corporation or a partnership it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
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(c) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with the
Act, that none of the actions taken in connection with the admission of such
Person as a substitute or additional General Partner will cause (i) the
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability.
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to or removal of a partner in such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof. The merger of the
General Partner with or into any entity that is admitted as a substitute or
successor General Partner pursuant to Section 7.02 hereof shall not be deemed to
be the withdrawal, dissolution or removal of the General Partner.
(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to or removal of a partner in such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to continue the business of the Partnership for the balance of the term
specified in Section 2.04 hereof by selecting, subject to Section 7.02 hereof
and any other provisions of this Agreement, a substitute General Partner by
consent of the Limited Partners holding more than 50% of the Percentage
Interests of the Limited Partners. If the Limited Partners elect to continue the
business of the Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired an interest of
a Partner in the Partnership shall be governed by this Agreement.
7.04 Removal of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to, or
the dissolution of, a General Partner, such General Partner shall be deemed to
be removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners. The Limited Partners
may not remove the General Partner, with or without cause.
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(b) If a General Partner has been removed pursuant to this
Section 7.04 and the Partnership is continued pursuant to Section 7.03 hereof,
such General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership (i) to the substitute General Partner approved by
the Limited Partners in accordance with Section 7.03(b) hereof and otherwise
admitted to the Partnership in accordance with Section 7.02 hereof. At the time
of assignment, the removed General Partner shall be entitled to receive from the
substitute General Partner the fair market value of the General Partnership
Interest of such removed General Partner as reduced by any damages caused to the
Partnership by such General Partner. Such fair market value shall be determined
by an appraiser mutually agreed upon by the General Partner and a majority in
interest of the Limited Partners within 10 days following the removal of the
General Partner. In the event that the parties are unable to agree upon an
appraiser, the General Partner and a majority in interest of the Limited
Partners each shall select an appraiser, each of which appraisers shall complete
an appraisal of the fair market value of the General Partner's General
Partnership Interest within 30 days of the General Partner's removal, and the
fair market value of the General Partner's General Partnership Interest shall be
the average of the two appraisals; provided, however, that if the higher
appraisal exceeds the lower appraisal by more than 20% of the amount of the
lower appraisal, the two appraisers, no later than 40 days after the removal of
the General Partner, shall select a third appraiser who shall complete an
appraisal of the fair market value of the General Partner's General Partnership
Interest no later than 60 days after the removal of the General Partner. In such
case, the fair market value of the General Partner's General Partnership
Interest shall be the average of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General
Partner, during the time after default until transfer under Section 7.04(b),
shall be converted to that of a special Limited Partner; provided, however, such
removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expenses, Profit, gain or Loss, distributions or
allocations, as the case may be, payable or allocable to the Limited Partners as
such. Instead, such removed General Partner shall receive and be entitled to
retain only distributions or allocations of such items which it would have been
entitled to receive in its capacity as General Partner, until the transfer is
effective pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such
consents, shall take such actions and shall execute such documents as shall be
legally necessary and sufficient to effect all the foregoing provisions of this
Section 7.04.
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ARTICLE VIII.
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 Management of the Partnership. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02 Power of Attorney. Each Limited Partner hereby irrevocably
appoints the General Partner its true and lawful attorney-in-fact, who may act
for each Limited Partner and in its name, place and stead, and for its use and
benefit, to sign, acknowledge, swear to, deliver, file and record, at the
appropriate public offices, any and all documents, certificates, and instruments
as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement and the Act in accordance with their
terms, which power of attorney is coupled with an interest and shall survive the
death, dissolution or legal incapacity of the Limited Partner, or the transfer
by the Limited Partner of any part or all of its Partnership Interest.
8.03 Limitation on Liability of Limited Partners. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of its Capital Contribution, if any, as and when due hereunder. After
its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 Ownership by Limited Partner of Corporate General Partner or
Affiliate. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
8.05 Redemption Right.
(a) Subject to Sections 8.05(b), 8.05(c), 8.05(d), and
8.05(e), and the provisions of any agreement between the Partnership and any
Limited Partner with respect to Partnership Units held by such Limited Partners,
each Limited Partner, other than the Original Limited Partner, shall have the
right (the "Redemption Right") to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the Partnership Units held by such
Limited Partner at a redemption price equal to and in the form of the Cash
Amount to be paid by the Partnership, provided, that such Partnership Units
shall have been outstanding for at least one year. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the Partnership (with
a copy to the General Partner) by the Limited Partner who is exercising the
Redemption Right (the "Redeeming Partner"); provided, however, that the
Partnership shall not be obligated to satisfy such Redemption Right if the
General Partner elects to purchase the Partnership Units subject to the Notice
of Redemption pursuant to Section 8.05(b); and provided, further, that no
Limited Partner may deliver more than two Notices of Redemption during each
calendar year. A Limited Partner may not exercise the Redemption Right for less
than 1,000 Partnership Units or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner. The
Redeeming Partner shall have no right, with respect to any Partnership Units so
redeemed, to receive any distribution paid with respect to Partnership Units if
the record date for such distribution is on or after the Specified Redemption
Date.
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(b) Notwithstanding the provisions of Section 8.05(a), a
Limited Partner that exercises the Redemption Right shall be deemed to have
offered to sell the Partnership Units described in the Notice of Redemption to
the General Partner, and the General Partner may, in its sole and absolute
discretion but subject to the last sentence of this subsection (b), elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
General Partner (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the Redeeming Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Units. If the
General Partner shall elect to exercise its right to purchase Partnership Units
under this Section 8.05(b) with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within five Business Days after the receipt by the
General Partner of such Notice of Redemption. Such notice shall indicate whether
the General Partner will pay the Cash Amount or the REIT Shares Amount. Unless
the General Partner (in its sole and absolute discretion) shall exercise its
right to purchase Partnership Units from the Redeeming Partner pursuant to this
Section 8.05(b), the General Partner shall not have any obligation to the
Redeeming Partner or the Partnership with respect to the Redeeming Partner's
exercise of the Redemption Right. In the event the General Partner shall
exercise its right to purchase Partnership Units with respect to the exercise of
a Redemption Right in the manner described in the first sentence of this Section
8.05(b), the Partnership shall have no obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's exercise of such
Redemption Right, and each of the Redeeming Partner, the Partnership, and the
General Partner shall treat the transaction between the General Partner and the
Redeeming Partner for federal income tax purposes as a sale of the Redeeming
Partner's Partnership Units to the General Partner. Each Redeeming Partner
agrees to execute such documents as the Partnership may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right. If Section 5.05 hereof shall prevent the Partnership from satisfying, in
whole or in part, any exercise of the Redemption Right by a Redeeming Partner,
then the Company (whether or not it is then the General Partner) shall be deemed
to have elected pursuant to this Section 8.05(b) to purchase, and hereby agrees
to purchase, directly from such Redeeming Partner, such number of Partnership
Units as the Partnership is unable to redeem due to the operation of Section
5.05.
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(c) Notwithstanding the provisions of Section 8.05(a) and
8.05(b), a Limited Partner shall not be entitled to exercise the Redemption
Right if the delivery of REIT Shares to such Partner on the Specified Redemption
Date by the Company pursuant to Section 8.05(b) (regardless of whether or not
the Company would in fact exercise its rights under Section 8.05(b)) would (i)
result in REIT Shares being owned by fewer than 100 persons (determined without
reference to any rules of attribution), (ii) result in the Company being
"closely held" within the meaning of Section 856(h) of the Code, (iii) cause the
Company to own, directly or constructively, 10% or more of the ownership
interests in a tenant of the Company's, the Partnership's or a Subsidiary's real
property, within the meaning of Section 856(d)(2)(B) of the Code, (iv) in the
good faith opinion of the Board of Directors of the Company, otherwise
disqualify the Company as a REIT, or (v) in the opinion of counsel for the
Company, constitute or result in a violation of Section 5 of the Securities Act
of 1933, as amended (the "Securities Act"), or cause the acquisition of REIT
Shares by such Partner to be "integrated" with any other distribution of REIT
Shares for purposes of complying with the registration provisions of the
Securities Act. The Company, in its sole and absolute discretion, may waive the
restriction on redemption set forth in this Section 8.05(c); provided, however,
that in the event such restriction is waived, the Redeeming Partner shall be
paid the Cash Amount.
(d) Any Cash Amount to be paid to a Redeeming Partner pursuant
to this Section 8.05 shall be paid within 20 Business Days after the initial
date of receipt by the General Partner of the Notice of Redemption relating to
the Partnership Units to be redeemed; provided, however, that such 20-Business
Day period may be extended for up to an additional 180-day period to the extent
required for the Company to issue and sell securities the proceeds of which will
be contributed to the Partnership to provide cash for payment of the Cash
Amount. Notwithstanding the foregoing, the General Partner agrees to use its
best efforts to cause the closing of the acquisition of redeemed Partnership
Units hereunder to occur as quickly as reasonably possible.
(e) Notwithstanding any other provision of this Agreement, the
General Partner may place appropriate restrictions on the ability of the Limited
Partners to exercise their Redemption Rights as and if deemed necessary to
ensure that the Partnership does not constitute a "publicly traded partnership"
under section 7704 of the Code. If and when the General Partner determines that
imposing such restrictions is necessary, the General Partner shall give prompt
written notice thereof (a "Restriction Notice") to each of the Limited Partners,
which notice shall be accompanied by a copy of an opinion of counsel to the
Partnership which states that, in the opinion of such counsel, such restrictions
are necessary in order to avoid the Partnership being treated as a "publicly
traded partnership" under Section 7704 of the Code.
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(f) The Conversion Factor shall be adjusted from time to time
as follows:
(i) In the event that the Company (A) declares or
pays a dividend on its outstanding REIT Shares in REIT Shares
or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (B) subdivides its outstanding REIT
Shares, or (C) combines its outstanding REIT Shares into a
smaller number of REIT Shares, the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a fraction,
the numerator of which shall be the number of REIT Shares
issued and outstanding on the record date for such dividend,
distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator
of which shall be the actual number of REIT Shares (determined
without the above assumption) issued and outstanding on such
date.
(ii) In the event that the Company declares or pays a
dividend or other distribution on its outstanding REIT Shares
(other than (a) ordinary cash dividends or (b) dividends
payable in REIT Shares that give rise to an adjustment in the
Conversion Factor under subsection (i) hereof) and the Value
of the REIT Shares on the 20th trading day following the
record date ("Record Date") for such dividend or distribution
(the "Post-Distribution Value") is less than the Value of the
REIT Shares on the Business Day immediately preceding such
Record Date (the "Pre-Distribution Value"), then the
Conversion Factor in effect after the Record Date shall be
adjusted by multiplying the Conversion Factor in effect prior
to the Record Date by a fraction, the numerator of which is
the Pre-Distribution Value and the denominator of which is the
Post-Distribution Value, provided, however, that no adjustment
shall be made if (a) with respect to any cash dividend or
distribution with respect to REIT shares, the Partnership
distributes with respect to each Partnership Unit an amount
equal to the amount of such dividend or distribution
multiplied by the Conversion Factor or (b) with respect to any
dividend or distribution of securities or property other than
cash, the Partnership distributes with respect to each
Partnership Unit an amount of securities or other property
equal to the amount distributed with respect to each REIT
share multiplied by the Conversion Ratio or a partnership
interest or other security readily convertible into such
securities or other property.
(iii) Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of any
of the events described in subsections (i) and (ii),
retroactive to the record date, if any, for such event,
provided, however, that if the Partnership receives a Notice
of Redemption after the record date, but prior to the payment
date or effective date, of any dividend, distribution,
subdivision or combination referred to in subsection (i) or
(ii), the Conversion Factor shall be determined as if the
Company had received the Notice of Exchange immediately prior
to the record date for such dividend, distribution,
subdivision or combination.
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8.06 NYSE Listing and Securities Act Registration of REIT Shares. In
the event that the General Partner elects to acquire a Redeeming Partner's
Partnership Units by paying to such Partner the REIT Shares Amount, the REIT
Shares issued to the Redeeming Partner if and to the extent provided in such
Redeeming Partner's Registration Rights Agreement (a) registered under the
Securities Act and/or entitled to rights to Securities Act registration and (b)
listed on the NYSE.
ARTICLE IX.
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the
General Partner and to the Partnership that the acquisition of his Partnership
Interest is made as a principal for his account for investment purposes only and
not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign
or otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
9.02 Restrictions on Transfer of Limited Partnership Interests.
(a) Except as otherwise provided in this Article IX, no
Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer his Limited Partnership Interest, in whole or in part, whether
voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the written consent of the General Partner,
which consent may be withheld in the sole and absolute discretion of the General
Partner. The General Partner may require, as a condition of any Transfer, that
the transferor assume all costs incurred by the Partnership in connection
therewith.
(b) No Limited Partner may effect a Transfer of its Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the Securities Act or would otherwise
violate any applicable federal or state securities or blue sky law (including
investment suitability standards).
(c) No Transfer by a Limited Partner of its Partnership Units,
in whole or in part, may be made to any Person if (i) in the opinion of counsel
for the Partnership, the Transfer would result in the Partnership's being
treated as an association taxable as a corporation (other than a qualified REIT
subsidiary within the meaning of Section 856(i) of the Code), (ii) in the
opinion of counsel for the Partnership, the Transfer would adversely affect the
ability of the Company to continue to qualify as a REIT or subject the Company
to any additional taxes under Section 857 or Section 4981 of the Code, or (iii)
such Transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
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(d) No transfer of any Partnership Units may be made to a
lender to the Partnership or any Person who is related (within the meaning of
Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan
constitutes a nonrecourse liability (within the meaning of Regulations Section
1.752-1(a)(2)), without the consent of the General Partner, which may be
withheld in its sole and absolute discretion, provided that as a condition to
such consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Cash Amount
any Partnership Units in which a security interest is held simultaneously with
the time at which such lender would be deemed to be a partner in the Partnership
for purposes of allocating liabilities to such lender under Section 752 of the
Code.
(e) Section 9.02(a) shall not apply to any Transfer by a
Limited Partner pursuant to the exercise of its Redemption Right under Section
8.05 hereof.
(f) Any Transfer in contravention of any of the provisions of
this Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
9.03 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article IX, an
assignee of the Limited Partnership Interest of a Limited Partner (which shall
be understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Limited Partnership Interest) shall be deemed admitted
as a Limited Partner of the Partnership only upon the satisfactory completion of
the following:
(i) The assignee shall have accepted and agreed to
be bound by the terms and provisions of this Agreement by
executing a counterpart or an amendment thereof, including a
revised Exhibit A, and such other documents or instruments as
the General Partner may require in order to effect the
admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate
evidencing the admission of such Person as a Limited Partner
shall have been signed, acknowledged and filed for record in
accordance with the Act.
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(iii) The assignee shall have delivered a letter
containing the representation set forth in Section 9.01(a) and
the agreement set forth in Section 9.01(b).
(iv) If the assignee is a corporation, partnership
or trust, the assignee shall have provided the General Partner
with evidence satisfactory to counsel for the Partnership of
the assignee's authority to become a Limited Partner under the
terms and provisions of this Agreement.
(v) The assignee shall have executed a power of
attorney containing the terms and provisions set forth in
Section 8.02.
(vi) The assignee shall have paid all reasonable
legal fees of the Partnership and the General Partner and
filing and publication costs in connection with its
substitution as a Limited Partner.
(vii) The assignee has obtained the prior written
consent of the General Partner to its admission as a
Substitute Limited Partner, which consent may be given or
denied in the exercise of the General Partner's sole and
absolute discretion.
(b) For the purpose of allocating Profits and Losses and
distributing cash received by the Partnership, a Substitute Limited Partner
shall be treated as having become, and appearing in the records of the
Partnership as, a Partner upon the filing of the Certificate described in
Section 9.03(a)(ii) or, if no such filing is required, the later of the date
specified in the transfer documents or the date on which the General Partner has
received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the documentation
required by this Section and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article IX to the admission of such
Person as a Limited Partner of the Partnership.
9.04 Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Sections 9.01 and 9.02,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of its Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a
Limited Partner's Limited Partnership Interest, but does not become a Substitute
Limited Partner and desires to make a further assignment of such Limited
Partnership Interest, shall be subject to all the provisions of this Article IX
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of its Limited Partnership Interest.
35
<PAGE>
(c) The General Partner shall have the right, in its sole and
absolute discretion, to redeem the Limited Partnership Interest assigned by any
Limited Partner (an "Assigning Limited Partner") to any person who does not,
within 20 business days following the date of such assignment, become a
Substitute Limited Partner (an "Assignee"). In such case, the Assigning Limited
Partner and the Assignee shall be deemed to have tendered irrevocably to the
General Partner a Notice of Redemption with respect to all of the Limited
Partnership Interest assigned.
9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
9.06 Joint Ownership of Interests. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership that
the actions of a single joint owner can bind both owners under the applicable
laws of the state of residence of such joint owners. Upon the death of one owner
of a Partnership Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
36
<PAGE>
ARTICLE X.
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 Books and Records. At all times during the continuance of the
Partnership, the General Partner shall keep or cause to be kept at the
Partnership's specified office true and complete books of account in accordance
with generally accepted accounting principles, including: (a) a current list of
the full name and last known business address of each Partner, (b) a copy of the
Certificate of Limited Partnership and all certificates of amendment thereto,
(c) copies of the Partnership's federal, state and local income tax returns and
reports, (d) copies of the Agreement and any financial statements of the
Partnership for the three most recent years and (e) all documents and
information required under the Act. Any Partner or its duly authorized
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to inspect or copy such records during ordinary business
hours.
10.02 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall
be deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation
of the business of the Partnership may be invested by the General Partner in
investment grade instruments (or investment companies whose portfolio consists
primarily thereof), government obligations, certificates of deposit, bankers'
acceptances and municipal notes and bonds. The funds of the Partnership shall
not be commingled with the funds of any other Person except for such commingling
as may necessarily result from an investment in those investment companies
permitted by this Section 10.02(b).
10.03 Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04 Annual Tax Information and Report. Within 75 days after the end
of each fiscal year of the Partnership, the General Partner shall furnish to
each person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 Tax Matters Partner; Tax Elections; Special Basis
Adjustments.
(a) The General Partner shall be the Tax Matters Partner of
the Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax
Matters Partner, the General Partner shall have the right and obligation to take
all actions authorized and required, respectively, by the Code for the Tax
Matters Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition.
37
<PAGE>
(b) All elections required or permitted to be made by the
Partnership under the Code or any applicable state or local tax law shall be
made by the General Partner in its sole and absolute discretion.
(c) In the event of a transfer of all or any part of the
Partnership Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to adjust the
basis of the Properties. Notwithstanding anything contained in Article V of this
Agreement, any adjustments made pursuant to Section 754 shall affect only the
successor in interest to the transferring Partner and in no event shall be taken
into account in establishing, maintaining or computing Capital Accounts for the
other Partners for any purpose under this Agreement. Each Partner will furnish
the Partnership with all information necessary to give effect to such election.
10.06 Reports to Limited Partners.
(a) As soon as practicable after the close of each fiscal
quarter (other than the last quarter of the fiscal year), the General Partner
shall cause to be mailed to each Limited Partner a quarterly report containing
financial statements of the Partnership, or of the Company if such statements
are prepared solely on a consolidated basis with the Company, for such fiscal
quarter, presented in accordance with generally accepted accounting principles.
As soon as practicable after the close of each fiscal year, the General Partner
shall cause to be mailed to each Limited Partner an annual report containing
financial statements of the Partnership, or of the Company if such statements
are prepared solely on a consolidated basis with the Company, for such fiscal
year, presented in accordance with generally accepted accounting principles. The
annual financial statements shall be audited by accountants selected by the
General Partner.
(b) Any Partner shall further have the right to a private
audit of the books and records of the Partnership, provided such audit is made
for Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
38
<PAGE>
ARTICLE XI.
AMENDMENT OF AGREEMENT; MERGER; NOTICE
11.01 Amendment of Agreement; Merger. The General Partner's consent
shall be required for any amendment to the Agreement or any merger,
consolidation or combination of the Partnership. The General Partner, without
the consent of the Limited Partners, may amend this Agreement in any respect or
cause the Partnership to merge, consolidate or combine with or into any other
partnership, limited partnership, limited liability company or corporation as
contemplated in Section 7.01(c) or (d) hereof; provided, however, that the
following amendments and any other such merger, consolidation or combination of
the Partnership (a "Merger") shall require the consent of Limited Partners
(other than the Company or any Subsidiary of the Company) holding more than 50%
of the Percentage Interests of the Limited Partners (other than the Company or
any Subsidiary of the Company):
(a) any amendment affecting the operation of the Conversion
Factor or the Redemption Right (except as provided in Sections 7.01(c) or
8.05(e)) in a manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of
the Limited Partners to receive the distributions payable to them hereunder,
other than with respect to the issuance of additional Partnership Units pursuant
to Section 4.02; or
(c) any amendment that would alter the Partnership's
allocations of Profit and Loss to the Limited Partners, other than with respect
to the issuance of additional Partnership Units pursuant to Section 4.02.
The consent of each Limited Partner shall be required for any
amendment that would impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership.
11.02 Notice to Limited Partners. The General Partner shall notify the
Limited Partners of the substance of any amendment or Merger requiring the
consent of the Limited Partners pursuant to Section 11.01 at least 20 business
days prior to the effective date of such amendment or Merger.
ARTICLE XII.
GENERAL PROVISIONS
12.01 Notices. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
39
<PAGE>
12.02 Survival of Rights. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 Additional Documents. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
12.04 Severability. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be severable from this Agreement (to the extent
permitted by law) and in any event such illegality, invalidity or
unenforceability shall not affect the remainder hereof.
12.05 Entire Agreement. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
12.06 Rules of Construction. When the context in which words are used
in the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require. Unless the context otherwise
indicates, references to particular Articles and Sections are references to
Articles and Sections of this Agreement.
12.07 Headings. The Article headings or sections in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
12.08 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
40
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Second Amended and Restated Agreement of Limited Partnership,
all as of the ____ day of August, 1997.
GENERAL PARTNER:
UNITED DOMINION REALTY TRUST, INC.
By: /s/ Katheryn E. Surface
-----------------------
Katheryn E. Surface
Its: Vice President
LIMITED PARTNERS:
UDRT OF NORTH CAROLINA, L.L.C.
By: United Dominion Realty Trust, Inc.,
Sole Managing Member
By: /s/ Katheryn E. Surface
-----------------------
Katheryn E. Surface
Its: Vice President
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Agreed
Value of
Partner Cash Non-Cash Partnership Percentage
and Address Contribution Contribution Units Interest
<S> <C>
General Partner:
1,300 772,834.29 52,948.98 1%
128,700 76,510,594.71 5,241,947.00 99%
United Dominion Realty Trust, Inc.
10 South Sixth Street, Suite 203
Richmond, Virginia 23219
Limited Partners:
UDRT of North Carolina, L.L.C.
c/o United Dominion Realty Trust, Inc.
10 South Sixth Street, Suite 203
Richmond, Virginia 23219
</TABLE>
[UPDATE TO COME
FROM UDRT]
<PAGE>
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.05 of the Second Amended and Restated
Agreement of Limited Partnership (the "Agreement") of United Dominion Realty,
L.P., the undersigned hereby irrevocably (i) presents for redemption ________
Partnership Units in United Dominion Realty, L.P. in accordance with the terms
of the Agreement and the Redemption Right referred to in Section 8.05 thereof,
(ii) surrenders such Partnership Units and all right, title and interest
therein, and (iii) directs that the Cash Amount or REIT Shares Amount (as
defined in the Agreement) as determined by the General Partner deliverable upon
exercise of the Redemption Right be delivered to the address specified below,
and if REIT Shares (as defined in the Agreement) are to be delivered, such REIT
Shares be registered or placed in the name(s) and at the address(es) specified
below.
Dated:________ __, _____
Name of Limited Partner:
------------------------------
(Signature of Limited Partner)
------------------------------
(Mailing Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
If REIT Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
EXHIBIT 12
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months ended September 30, Nine Months Ended September 30,
-------------------------------- ---------------------------------
1997 1996 1997 1996
----------- ----------- ---------- ---------
<S> <C>
Net income before extraordinary item $23,309 $9,818 $55,099 $27,544
Add:
Portion of rents representative
of the interest factor 111 62 301 177
Interest on indebtedness 19,346 13,530 58,265 35,413
----------- -------------- ------------- -----------
Earnings $42,766 $23,410 $113,665 $63,134
=========== ============== ============= ===========
Fixed charges and preferred stock dividend:
Interest on indebtedness $19,346 $13,530 $58,265 $35,413
Capitalized interest 852 143 2,082 397
Portion of rents representative
of the interest factor 111 62 301 177
------------ ---------------- -------------- -----------
Fixed charges 20,309 13,735 60,648 35,987
------------ ---------------- -------------- -----------
Add:
Preferred stock dividend 5,653 2,428 11,692 7,284
------------ ---------------- -------------- -----------
Combined fixed charges and preferred stock dividend $25,962 $16,163 $72,340 $43,271
============ ================ ============== ===========
Ratio of earnings to fixed charges 2.11 x 1.70 x 1.87 x 1.75 x
Ratio of earnings to combined fixed charges
and preferred stock dividend 1.65 1.45 1.57 1.46
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,383
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 65,639
<PP&E> 2,382,267
<DEPRECIATION> 200,538
<TOTAL-ASSETS> 2,252,751
<CURRENT-LIABILITIES> 84,622
<BONDS> 1,100,145
0
255,000
<COMMON> 88,162
<OTHER-SE> 714,340
<TOTAL-LIABILITY-AND-EQUITY> 2,252,751
<SALES> 284,182
<TOTAL-REVENUES> 285,049
<CGS> 0
<TOTAL-COSTS> 121,216
<OTHER-EXPENSES> 63,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,265
<INCOME-PRETAX> 55,099
<INCOME-TAX> 0
<INCOME-CONTINUING> 55,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,099
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
