UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
FOR QUARTERLY AND TRANSITION REPORTS 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, 1999
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 of 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)
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 USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of November 9, 1999:
Common Stock, $1 Par Value: 102,996,532
<PAGE>
<TABLE>
<CAPTION>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS,EXCEPT SHARE DATA)
(UNAUDITED)
SEPTEMBER 30, December 31,
1999 1998
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Real estate owned:
Real estate held for investment $ 3,471,754 $ 3,643,245
Less: accumulated depreciation 342,291 280,663
----------------- -----------------
3,129,463 3,362,582
Real estate under development 123,394 99,395
Real estate held for disposition 377,657 174,145
----------------- -----------------
Total real estate owned, net of accumulated depreciation 3,630,514 3,636,122
Cash and cash equivalents 9,050 18,529
Restricted cash 56,144 50,805
Deferred financing costs, net of accumulated amortization 14,930 10,894
Other assets 52,292 39,038
----------------- -----------------
Total assets $ 3,762,930 $ 3,755,388
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable-secured $ 1,031,344 $ 1,072,185
Notes payable-unsecured 1,145,727 1,045,564
Real estate taxes payable 35,708 29,078
Accrued interest payable 21,019 20,714
Security deposits and prepaid rent 21,757 21,125
Distributions payable 34,226 31,423
Accounts payable, accrued expenses and other liabilities 32,010 45,736
----------------- -----------------
Total liabilities 2,321,791 2,265,825
Minority interests 107,126 115,442
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 150,000 150,000
8,000,000 shares 7.50% Series D Cumulative
Convertible Redeemable 175,000 175,000
Common stock, $1 par value; 150,000,000 shares
authorized 102,616,349 shares issued and
outstanding (103,639,117 in 1998) 102,616 103,639
Additional paid-in capital 1,078,427 1,090,432
Distributions in excess of net income (269,163) (242,331)
Deferred compensation - unearned restricted stock awards (348) --
Notes receivable from officer-shareholders (7,519) (7,619)
----------------- -----------------
Total shareholders' equity 1,334,013 1,374,121
----------------- -----------------
Total liabilities and shareholders' equity $ 3,762,930 $ 3,755,388
================= =================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
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<TABLE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
-------------------------------- ---------------------------
Revenues:
<S> <C> <C> <C> <C>
Rental income $155,523 $123,471 $463,745 $346,164
Interest and other non-property income 701 576 1,631 2,735
------------- ------------ ------------ ------------
Total revenues 156,224 124,047 465,376 348,899
Expenses:
Rental expenses:
Real estate taxes and insurance 15,207 12,257 47,717 35,010
Personnel 17,308 13,558 50,347 36,858
Utilities 7,468 7,260 23,107 19,205
Repair and maintenance 10,735 10,104 30,440 26,408
Administrative and marketing 6,583 5,195 19,018 13,503
Other operating expenses 538 47 1,218 130
Property management 4,722 4,202 14,018 12,088
Real estate depreciation 29,957 26,901 90,814 73,376
Interest 39,014 27,224 116,011 75,784
Impairment loss on real estate owned --- --- 7,100 ---
General and administrative 3,065 2,534 9,509 7,306
Other depreciation and amortization 1,106 893 3,226 2,434
------------- ------------ ------------ ------------
Total expenses 135,703 110,175 412,525 302,102
------------- ------------ ------------ ------------
Income before gains on sales of investments, minority
interests and extraordinary item 20,521 13,872 52,851 46,797
Gains on sales of investments 48 13 32,454 20,474
------------- ------------ ------------ ------------
Income before minority interests and extraordinary item 20,569 13,885 85,305 67,271
Minority interests of outside partnerships (276) --- (657) ---
Minority interests of unitholders in operating partnerships (251) (78) (4,232) (1,200)
------------- ------------ ------------ ------------
Income before extraordinary item 20,042 13,807 80,416 66,071
Extraordinary item - early extinguishment of debt (166) --- 343 (116)
------------- ------------ ------------ ------------
Net income 19,876 13,807 80,759 65,955
Distributions to preferred shareholders-Series A and B (5,653) (5,650) (16,953) (16,953)
Distributions to preferred shareholders-Series D (Convertible) (3,788) --- (11,367) ---
------------- ------------ ------------ ------------
Net income available to common shareholders $10,435 $8,157 $52,439 $49,002
============= ============ ============ ============
Earnings per common share:
Basic $0.10 $0.08 $0.50 $0.50
============= ============ ============ ============
Diluted $0.10 $0.08 $0.50 $0.50
============= ============ ============ ============
Common distributions declared per share $0.2650 $0.2625 $0.7950 $0.7875
============= ============ ============ ============
Weighted average number of common shares outstanding-basic 103,439 103,104 103,897 98,786
Weighted average number of common shares outstanding -diluted 103,490 103,145 103,919 98,870
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 80,759 $ 65,955
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 94,040 75,810
Minority interests 4,889 1,200
Impairment loss on real estate owned 7,100 --
Amortization of deferred financing costs 2,613 1,500
Gains on sales of investments (32,454) (20,474)
Extraordinary item-early extinguishment of debt (343) 116
Changes in operating assets and liabilities:
Increase in operating assets (549) (6,636)
Increase (decrease) in operating liabilities (3,161) 9,469
-------------- ------------
Net cash provided by operating activities 152,894 126,940
INVESTING ACTIVITIES
Proceeds from sales of investments 119,150 142,580
Development of real estate assets, including acquisition of land (92,576) (63,006)
Acquisition of real estate, net of liabilities assumed (47,204) (172,123)
Capital expenditures to real estate assets (46,136) (55,290)
Funds held in escrow from 1031 exchanges pending the acquisition
of real estate (9,029) (10,211)
Net cash paid or acquired in connection with mergers (6,237) 321
Capital expenditures-non real estate assets (5,180) (2,895)
Other 1,132 (1,852)
-------------- ------------
Net cash used in investing activities (86,080) (162,476)
FINANCING ACTIVITIES
Proceeds from the issuance of a notes payable - unsecured 197,345 --
Proceeds from the issuance of a notes payable - secured 201,931 --
Proceeds from the issuance of common stock 12,971 71,754
Net borrowings of short-term bank debt 4,800 171,400
Distributions paid to common shareholders (80,823) (75,975)
Distributions paid to preferred shareholders (25,517) (16,959)
Distributions paid to minority interest operating partnership
unitholders (5,844) (2,078)
Non-scheduled payments on notes payable-secured (196,939) (54,949)
Balloon debt maturities and repurchase of notes payable - unsecured (101,641) (7,504)
Payment of notes payable-secured in connection with the sales of
investments (30,769) (9,889)
Repurchase of common stock (26,083) --
Scheduled principal payments on notes payable - secured (15,064) (7,382)
Payments of financing costs (6,649) (1,800)
Cash paid to redeem operating partnership units (3,551) (3,070)
Purchase of common stock for restricted stock awards (460) --
-------------- ------------
Net cash (used in) provided by financing activities (76,293) 63,548
-------------- ------------
Net (decrease) increase in cash and cash equivalents (9,479) 28,012
Cash and cash equivalents, beginning of period 18,529 473
-------------- ------------
Cash and cash equivalents, end of period $ 9,050 $ 28,485
============== ============
SUPPLEMENTAL INFORMATION:
Interest paid during the period $ 117,506 $ 75,968
Conversion of operating partnership units to common stock 1,005 --
Non-cash transactions associated with the acquisition of
properties:
Secured debt assumed -- 128,905
Issuance of operating partnership units -- 20,295
Issuance of common stock -- 5,240
Non-cash transactions associated with mergers:
Real estate assets acquired -- 313,700
Other operating assets acquired -- 8,848
Issuance of common stock -- 108,465
Issuance of operating partnership units -- 21,420
Secured debt assumed -- 179,440
Operating liabilities assumed -- 13,553
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED STOCK
<S> <C> <C>
Balance, December 31, 1998 $ 430,000
--------------------
Balance, September 30, 1999 $ 430,000
====================
COMMON STOCK, $1 PAR VALUE
Balance, December 31, 1998 $ 103,639
Issuance of common shares through dividend reinvestment and
stock purchase plan 1,216
Purchase of treasury stock (2,300)
Issuance of common shares to employees, officers and director-
shareholders 6
Conversion of minority interests of unitholders in operating
partnerships 55
Purchase of common stock for restricted stock awards (46)
Issuance of restricted stock awards 46
--------------------
Balance, September 30, 1999 $ 102,616
====================
ADDITIONAL PAID-IN CAPITAL
Balance, December 31, 1998 $ 1,090,432
Issuance of common shares through dividend reinvestment and
stock purchase plan 11,433
Purchase of treasury stock (23,783)
Issuance of common shares to employees, officers and director-
shareholders 161
Adjustment for cash purchase and conversion of minority
interests of unitholders in operating partnerships 184
--------------------
Balance, September 30, 1999 $ 1,078,427
====================
DISTRIBUTIONS IN EXCESS OF NET INCOME
Balance, December 31, 1998 $ (242,331)
Net income 80,759
Common stock distributions declared ($.795 per share) (79,271)
Preferred stock distributions declared-Series A ($1.73 per share) (7,278)
Preferred stock distributions declared-Series B ($1.61 per share) (9,675)
Preferred stock distributions declared-Series D ($1.42 per share) (11,367)
--------------------
Balance, September 30, 1999 $ (269,163)
====================
DEFERRED COMPENSATION - UNEARNED RESTRICTED STOCK AWARDS
Balance, December 31, 1998 $ -
Issuance of restricted stock awards (460)
Amortization of deferred compensation 112
--------------------
Balance, September 30, 1999 $ (348)
====================
NOTES RECEIVABLE FROM OFFICER-SHAREHOLDERS
Balance, December 31, 1998 $ (7,619)
Principal repayments 100
--------------------
Balance, September 30, 1999 $ (7,519)
====================
TOTAL SHAREHOLDERS' EQUITY $ 1,334,013
====================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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, and Heritage Communities, L.P.
(collectively, "United Dominion"). As of September 30, 1999, there were
38,338,636 units in the Operating Partnership outstanding, of which 30,926,136,
or 80.7% were owned by United Dominion and 7,412,501, or 19.3% were owned by
non-affiliated limited partners. In connection with the acquisition of ASR
Investments Corporation, United Dominion acquired Heritage Communities, L.P., a
Delaware limited partnership (Heritage OP). As of September 30, 1999, there were
3,945,674 units in the Heritage OP outstanding, of which 3,422,038 or 86.7% were
owned by United Dominion and 13.3% were owned by non-affiliated limited
partners. The financial statements of United Dominion include the minority
interests of the unitholders in the operating partnerships.
The accompanying interim unaudited consolidated financial statements have been
prepared according to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted according to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading. The accompanying consolidated
financial statements should be read in conjunction with the audited financial
statements and related notes appearing in United Dominion's December 31, 1998
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
In the opinion of management, the consolidated financial statements reflect all
adjustments which are necessary for the fair presentation of financial position
at September 30, 1999 and results of operations for the interim periods ended
September 30, 1999 and 1998. Such adjustments are normal and recurring in
nature. All significant inter-company accounts and transactions have been
eliminated in consolidation. The interim results presented are not necessarily
indicative of results that can be expected for a full year.
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the dates of the
financial statements and the amounts of revenues and expenses during the
reporting periods. Actual amounts realized or paid could differ from those
estimates.
Certain previously reported amounts have been reclassified to conform with the
current financial statement presentation.
2. Real Estate Held for Investment
At September 30, 1999, there are 265 communities with 74,340 apartment homes
classified as real estate held for investment. The following table summarizes
the components of real estate held for investment at September 30, 1999 and
December 31, 1998:
September 30, December 31,
Dollars in thousands 1999 1998
- -------------------------------------------------------------------------
Land and land improvements $ 619,184 $ 647,328
Buildings and improvements 2,683,469 2,819,312
Furniture, fixtures and equipment 163,057 169,364
Construction in progress 6,044 7,241
----------- -----------
Real estate held for investment 3,471,754 3,643,245
Accumulated depreciation (342,291) (280,663)
----------- -----------
Real estate held for investment, net
of accumulated depreciation $ 3,129,463 $ 3,362,582
=========== ===========
At the beginning of June 1999, United Dominion embarked on an accelerated
disposition plan for non-strategic properties. As a result of the review of its
real estate apartment portfolio, 21 properties included in real estate held for
investment were moved to real estate held for disposition during the second
quarter. Accordingly, through the review and analysis of communities targeted
for strategic disposition which included exiting one of United Dominion's major
markets, an aggregate $7.1 million impairment loss was recognized on five
communities. An impairment loss was indicated as a
2. Real Estate Held for Investment (CONTINUED)
6
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
result of the net book value of the assets held for disposition being greater
than the estimated fair market value less the cost of disposal.
3. Notes Payable - Secured
Notes payable-secured, which encumber $1.92 billion or 47.9% of United
Dominion's real estate owned, ($2.09 billion or 52.1% of United Dominion's real
estate owned is unencumbered) consist of the following at September 30, 1999:
<TABLE>
<CAPTION>
Principal Weighted Average Weighted Average No. Communities
Dollars in thousands Balance Interest Rate Years to Maturity Encumbered
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed-Rate Debt
Mortgage Notes Payable (a) $ 562,800 8.06% 7.0 85
Tax-Exempt Notes Payable 113,236 6.99% 13.1 16
REMIC Financings 69,249 7.88% 1.3 23
Secured Notes Payable (FNMA) (b)(c) 7,000 6.78% 4.5 0
------------------------------------------------------------------------
Total Fixed-Rate Notes Payable 752,285 7.87% 7.4 124
Variable-Rate Debt
Mortgage Notes Payable 23,769 7.50% 17.5 9
Tax-Exempt Notes Payable 66,615 4.17% 19.4 5
Secured Credit Facilities (FNMA) (c) 188,675 6.18% 4.5 19
------------------------------------------------------------------------
Total Variable-Rate Notes Payable 279,059 5.81% 9.1 33
------------------------------------------------------------------------
Total Notes Payable - Secured $ 1,031,344 7.31% 7.8 157
========================================================================
</TABLE>
(a) Includes fair value adjustments aggregating $15.4 million recorded in
connection with two statutory mergers consummated in 1998.
(b) United Dominion has one interest rate swap agreement associated with
secured debt with an aggregate notional value of $7 million under which
United Dominion pays a fixed rate of interest and receives a
variable rate on the notional amount. The interest rate swap agreement
effectively changes United Dominion's interest rate exposure on $7
million from a variable rate to a weighted average fixed rate of
approximately 6.78%.
(c) During the first nine months of 1999, United Dominion closed on $195.7
million of a $200 million revolving credit facility (the "Credit
Facility") with the Federal National Mortgage Association ("FNMA"). The
Credit Facility currently bears a variable rate of interest of 6.20%.
The financing is for an initial term of five years, bears interest at a
floating rate which can be fixed for periods of up to 270 days, and can
be extended for an additional five or ten years at United Dominion's
discretion. The current floating rate will be reset on December 1,
1999. The Company entered into two forward rate swap agreements dated
August 29, 1999 and August 31, 1999 for $10 million and $40 million,
respectively. The two agreements have an effective date of December 1,
1999 and a termination date of April 1, 2004. The agreements will be
used to synthetically fix the interest rate on $10 million of this
Credit Facility to a weighted average fixed rate of 6.47% and $40
million of this Credit Facility to a weighted average fixed rate
of 5.74%.
4. Notes Payable - Unsecured
A summary of notes payable - unsecured at September 30, 1999 and December 31,
1998 is as follows (dollars in thousands):
September 30, December 31,
1999 1998
------------- -------------
Commercial Banks
Borrowings outstanding under
credit facilities (a) (b) $244,800 $240,000
Insurance Companies--Senior Unsecured Notes
7.98% due March, 2000-2003 (c) 29,800 37,228
Other (d) 5,394 5,836
4. Notes Payable - Unsecured (continued)
Senior Unsecured Notes - Other
7
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
7.73% Medium-Term Notes due April 2005 (g) 25,000 --
7.53% Medium-Term Notes due April 2029 (e) (g) 15,000 --
7.60% Medium-Term Notes due January 2002 (g) 70,000 --
7.67% Medium-Term Notes due January 2004 (g) 58,000 --
7.65% Medium-Term Notes due January 2003 (f) (g) 10,000 --
7.22% Medium-Term Notes due February 2003 (g) 12,000 --
5.05% City of Portland, OR Bonds due October 2003 7,345 --
8.50% Monthly Income Notes due November 2008 60,863 62,500
8.13% Senior Notes due November 2000 146,150 150,000
7.25% Notes repaid April 1999 -- 75,000
8.50% Debentures due September 2024 (h) 150,000 150,000
7.95% Medium-Term Notes due July 2006 123,400 125,000
7.25% Notes due January 2007 112,975 125,000
7.07% Medium-Term Notes due November 2006 25,000 25,000
7.02% Medium-Term Notes due November 2005 50,000 50,000
----------- ----------
865,733 762,500
----------- ----------
Total Notes Payable - Unsecured $ 1,145,727 $1,045,564
=========== ==========
</TABLE>
(a) Weighted average interest rate of 6.0% at September 30, 1999 and
December 31, 1998.
(b) United Dominion has five interest rate swap agreements with an
aggregate notional value of $45 million under which United Dominion
pays a fixed rate of interest and receives a variable rate of interest
on the notional amounts. The interest rate swap agreements effectively
change United Dominion's interest rate exposure on $45 million of its
outstanding credit facilities from a variable rate to a weighted
average fixed rate of approximately 6.84%.
(c) Payable annually in four equal principal installments of $7.4 million.
(d) Includes $4.8 million and $5.4 million at September 30, 1999 and
December 31, 1998, respectively, of deferred gains from the termination
of interest rate risk management agreements.
(e) Notes include an investor put feature which grants options to redeem
the notes in April 2003, 2009, 2014 and 2019 at par.
(f) United Dominion has one interest rate swap agreement associated with
unsecured notes with an aggregate notional value of $10 million under
which United Dominion pays a fixed rate of interest and receives a
variable rate on the notional amount. The interest rate swap agreement
effectively changes United Dominion's interest rate exposure on the $10
million from a variable rate to a fixed rate of 7.65%.
(g) During the first nine months of 1999, United Dominion issued $190
million aggregate principal amounts of senior unsecured notes under its
$200 million Medium-Term Note Program, with a weighted average interest
rate of 7.6% and a weighted average term of 6.3 years.
(h) Debentures include an investor put feature which grants a one-time
option to redeem debentures in September 2004.
During the first nine months of 1999, United Dominion recognized a $343 thousand
extraordinary gain related to the repurchase of $19.1 million of its unsecured
notes payable at less than face value.
8
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. Earnings Per Share
Basic earnings per common share is computed based upon the weighted average
number of common shares outstanding during the period. Diluted earnings per
common share is computed based on common shares outstanding plus the effect of
dilutive stock options and other potentially dilutive common stock equivalents.
The dilutive effect of stock options and other potential common stock
equivalents is determined using the treasury stock method based on United
Dominion's average stock price. The early extinguishment of debt does not have
an effect on the earnings per share calculation for the periods presented. The
effect of the conversion of the operating partnership units and convertible
preferred stock is not dilutive and is therefore not included in the following
calculations. For the three and nine months ended September 30, 1999 and 1998,
the weighted average number of operating partnership units was 8,251,432 and
8,398,303 for 1999 and 3,077,181 and 2,482,255 for 1998, respectively. For the
three and nine months ended September 30, 1999, the weighted average number of
preferred shares was 12,307,692. The following table sets forth the computation
of basic and diluted earning per share.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
------------------------- -------------------------
<S> <C> <C> <C> <C>
In thousands, except per share data
Numerator for basic and diluted earnings
per share-net income available to common
shareholders $ 10,435 $ 8,157 $ 52,439 $ 49,002
Denominator:
Denominator for basic earnings per share-
weighted average shares 103,439 103,104 103,897 98,786
Effect of dilutive securities:
Employee stock options 51 41 22 84
-------------- ----------- -------------- -----------
Dilutive potential common shares
Denominator for dilutive earnings per
share-adjusted weighted average shares
and assumed conversions 103,490 103,145 103,919 98,870
============== =========== ============== ===========
Basic earnings per share $ .10 $ .08 $ .50 $ .50
============== =========== ============== ===========
Diluted earnings per share $ .10 $ .08 $ .50 $ .50
============== =========== ============== ===========
</TABLE>
6. Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (Statement 133),
as amended by Statement No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 -
an Amendment of FASB Statement No. 133", which is required to be adopted in
years beginning after June 15, 2000. Statement 133 permits early adoption as of
the beginning of any fiscal quarter after its issuance, however, United Dominion
does not anticipate adopting Statement 133 until such time as it is required.
Statement 133 will require United Dominion to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivative is a hedge, depending on the nature
of the hedge, changes in fair value of derivatives will either be offset against
the change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of the derivative's
change in fair value will be immediately recognized in earnings. United Dominion
has not yet determined what the effect of Statement 133 will be on earnings and
the financial position of United Dominion, however, management does not
anticipate that the adoption of Statement 133 will have a significant effect on
earnings or the financial position of United Dominion.
9
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto of United Dominion Realty Trust, Inc.
("United Dominion") appearing elsewhere in this report. This quarterly report
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1993, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward-looking statements include, without
limitation, statements concerning 1999 property acquisitions and dispositions,
1999 development activity and capital expenditures, 1999 capital raising
activities, 1999 rent growth, occupancy and rental expense growth. Such
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievement of United
Dominion to be materially different from the results of operations or plans
expressed or implied by such forward-looking statements. Such factors include,
among other things, unanticipated adverse business developments affecting United
Dominion, and/or its properties, adverse changes in the real estate markets and
general and local economies and business conditions. Although United Dominion
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
there can be no assurance that such statements included in this report will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by United Dominion or any other
person that the results or conditions described in such statements or the
objectives and plans of United Dominion will be achieved.
United Dominion operates in one defined business segment with activities related
to the ownership, acquisition, development, management and strategic disposition
of multifamily apartment communities nationwide. Management's strategy is to be
a national, highly efficient provider of quality apartment homes. During the
past several years, United Dominion has implemented this strategy through the
acquisition of portfolios of higher quality communities, the disposition of
non-strategic communities, a greater commitment to development and the upgrade
of its older communities. United Dominion seeks to be a market leader by
operating a sufficiently sized portfolio of apartments within each if its
targeted markets in order to drive down operating costs through economies of
scale and management efficiencies. United Dominion believes that geographic
market diversification increases investment opportunity and decreases the risk
associated with cyclical local real estate markets and economies. At September
30, 1999, United Dominion owned 318 communities with 85,216 apartment homes.
10
<PAGE>
The following table summarizes United Dominion's apartment information by
geographic location including its 34 major markets:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
As of September 30, 1999 September 30, 1999 September 30, 1999
------------------------------------------- ------------------ -------------------
Average Average
No. of % of Carrying Monthly Monthly
No. of Apartment Apartment Value Physical Rental Physical Rental
Market Communities Homes Homes (in thousands) Occupancy Rates (a) Occupancy Rates (a)
- --------------------------------------------------------------- --------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dallas/Ft. Worth, TX 29 8,956 11% $ 405,738 94.4% $ 622 94.8% $ 628
Houston, TX 25 6,180 7% 236,878 91.7% 573 91.3% 579
Phoenix, AZ 10 3,374 4% 194,320 90.9% 661 91.3% 663
Orlando, FL 14 3,940 5% 190,540 94.1% 664 95.2% 669
San Antonio, TX 13 3,840 4% 177,371 92.1% 619 91.9% 626
Tampa, FL 12 4,018 5% 175,947 92.2% 644 92.8% 649
Raleigh, NC 9 2,951 3% 144,272 92.6% 691 93.2% 695
Nashville, TN 11 3,064 4% 143,639 94.0% 603 94.7% 607
San Francisco, CA 4 980 1% 129,942 98.5% 1,477 99.0% 1,491
Charlotte, NC 10 2,490 3% 124,778 91.2% 678 91.4% 683
Columbus, OH 7 2,330 3% 121,808 93.8% 621 94.9% 624
Columbia, SC 11 3,320 4% 114,686 90.8% 530 91.0% 532
Wilmington, NC 10 2,710 3% 111,390 88.4% 594 92.0% 588
Monterey
Peninsula, CA 16 2,076 2% 106,675 93.9% 737 94.8% 755
Memphis, TN 7 2,196 3% 105,411 93.8% 593 94.9% 593
South Florida 6 1,638 2% 102,245 91.2% 826 89.7% 834
Greensboro, NC 8 2,123 2% 102,015 88.2% 624 88.8% 626
Richmond, VA 8 2,372 3% 98,051 93.4% 658 96.2% 663
Southern CA 5 1,578 2% 80,998 93.8% 695 92.7% 712
Baltimore, MD 7 1,596 2% 72,478 95.9% 693 96.9% 699
Atlanta, GA 6 1,426 2% 69,009 92.1% 689 93.9% 697
Portland, OR 4 996 1% 60,258 91.2% 682 90.3% 687
Jacksonville, FL 3 1,157 1% 56,410 90.1% 637 91.5% 640
Hampton Roads, VA 6 1,437 2% 54,104 94.4% 600 95.3% 605
Greenville, SC 6 1,436 2% 51,013 85.8% 546 86.1% 548
Sacramento, CA 2 914 1% 48,031 97.6% 643 97.6% 651
Seattle, WA 4 790 1% 46,917 92.0% 678 95.7% 684
Denver , CO 2 876 1% 44,592 93.0% 638 95.0% 651
Washington, DC 4 803 1% 44,056 96.1% 776 96.5% 782
Detroit, MI 4 744 1% 38,299 94.8% 688 96.1% 697
Indianapolis, IN 3 875 1% 33,210 94.5% 518 94.6% 519
Austin, TX 2 542 1% 23,625 93.6% 616 94.4% 625
Albuquerque, NM 3 530 1% 20,639 89.0% 526 92.6% 527
Tucson, AZ 2 408 -- 14,053 90.4% 445 91.8% 445
Other FL 7 1,666 2% 78,369 91.2% 618 91.7% 625
Eastern Shore, MD /
Delaware 6 1,156 1% 52,441 96.5% 663 96.3% 672
Other, MI 4 1,227 1% 50,729 88.9% 622 89.2% 627
Other North Carolina 4 1,052 1% 48,785 94.8% 583 95.7% 588
Other Virginia 6 1,154 1% 47,913 93.5% 621 94.9% 625
Other Midwest 5 969 1% 42,828 94.4% 603 94.9% 609
Other Washington State 2 536 1% 25,288 79.9% 699 85.8% 654
Other Georgia 2 468 1% 22,644 85.7% 659 84.6% 663
Other Texas 3 776 1% 22,322 87.2% 490 89.1% 492
Arkansas 2 512 1% 22,191 93.5% 592 94.8% 595
Nevada 1 384 -- 20,716 92.2% 644 92.7% 646
Other South Carolina 2 408 -- 13,601 91.3% 441 91.8% 446
Alabama 1 242 -- 8,762 91.8% 511 90.8% 514
----------------------------------------- --------------------- -----------------------
Total 318 85,216 100% $3,999,987 92.5% $640 93.2% $645
========================================= ===================== =======================
</TABLE>
(a) Average monthly rental rates represent potential rent collections
(gross potential rents less market adjustments), which approximate net
effective rents. These average rent figures exclude three acquisitions
completed in 1999 and development communities in lease-up.
Liquidity and Capital Resources
11
<PAGE>
As a qualified real estate investment trust ("REIT"), United Dominion
distributes a substantial portion of its cash flow to its shareholders in the
form of quarterly distributions. United Dominion believes that cash provided by
operations will be adequate to meet normal operating requirements and payment of
distributions in accordance with REIT requirements in both the short and
long-term. United Dominion utilizes a variety of primarily external financing
sources to fund portfolio growth, major capital improvement programs and balloon
debt payments. United Dominion'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. At September 30, 1999,
United Dominion had cash and cash equivalents of $9.1 million and amounts
available under its credit facilities aggregating $65.2 million.
United Dominion expects to meet its short-term liquidity requirements through
net cash provided by operations and borrowings under credit facilities. To meet
certain long-term liquidity requirements, such as scheduled debt maturities,
development activity and significant capital improvements, United Dominion uses
secured and unsecured notes payable and common and preferred equity. Although
United Dominion believes that it will have the capacity to meet its long-term
liquidity needs, there can be no assurance that such additional debt financing
or debt and equity offerings will be available or, if available, on terms
satisfactory to United Dominion. United Dominion may also fund its capital
requirements through: (i) proceeds from asset sales, (ii) common shares sold
through the Dividend Reinvestment and Stock Purchase Plan, (iii) retained
operating cash flow and (iv) the use of unused credit facilities. United
Dominion completed the majority of its 1999 financing activity during the first
half of 1999 (see Financing Activities). United Dominion has no significant debt
maturities until August 2000 at which time United Dominion's $200 million
revolving credit facility expires.
The following discussion explains the changes in net cash provided by operating
activities, net cash used in investing activities and net cash (used in)
provided by financing activities which are presented in United Dominion's
Consolidated Statement of Cash Flows.
Operating Activities
For the nine months ended September 30, 1999, United Dominion's cash flow from
operating activities was $152.9 million compared to $126.9 million for the same
period last year. The increase is primarily due to the increased operating
income from United Dominion's acquired communities as well as increases in
property operating income achieved primarily through higher rent growth as
discussed under "Results of Operations".
Investing Activities
During the nine months ended September 30, 1999, net cash used for investing
activities was $86.1 million compared to $162.5 million for the same period last
year. Changes in the level of investing activities from period to period reflect
the changing levels of United Dominion's acquisition, capital expenditure,
development and sales programs, as well as the impact of the capital market
environment on these activities.
During 1999, United Dominion's investment activities have consisted primarily of
the sale of non-strategic properties, with a portion of the proceeds used in the
acquisition of real estate. In addition, United Dominion has funded the
development of higher quality communities, as well as capital
expenditures on its apartment portfolio.
Disposition of Investments
As part of its strategic repositioning, United Dominion has undertaken proactive
portfolio review analyses with the objective of identifying communities that no
longer meet United Dominion's long-term investment objectives due to size,
location, age, quality or performance. The disposition program allows United
Dominion to reduce the age of its existing portfolio, which should result in
lower operating expense and capital expenditure growth associated with the older
communities, to exit non-core markets and to divest itself of communities that
are no longer strategically important. United Dominion intends to sell between
7,000 and 8,000 apartment homes during 1999 as part of the strategic
repositioning plan which will continue into 2000. It is anticipated that the
proceeds from the sales, estimated in the $250 million range, will be used to
fund acquisitions in order to complete tax-deferred exchanges to defer large
capital gains, to fund development activity, to reduce debt and to repurchase
common and
12
<PAGE>
preferred stock. The dispositions are expected to be moderately dilutive to
current earnings as the initial returns on investment in higher quality
communities and the interest rate on debt repaid are lower than the returns on
investment in the communities being sold.
In connection with its disposition strategy, for the nine months ended September
30, 1999, United Dominion sold 18 communities with 3,635 apartment homes for an
aggregate sales price of $122.6 million and a net book value of $87.8 million
which included two parcels of land located adjacent to two of the communities
sold. Proceeds received in connection with the sales were used to repay debt,
repurchase common stock and complete 1031 tax deferred exchanges (see
Acquisitions). For financial reporting purposes, gains on the sales of these
assets aggregated $32.5 million.
At September 30, 1999, there were 53 communities with 10,876 apartment homes and
three commercial properties classified as real estate held for disposition with
a net book value of $377.7 million (net of $41.5 million of accumulated
depreciation). These communities contributed property operating income (property
rental income less property operating expenses) of $9.1 million and $26.8
million for the three and nine month periods ended September 30, 1999.
Management believes that the majority of these properties will be disposed of
over the next twelve months.
In October 1999, United Dominion sold three additional apartment communities
with 761 homes for an aggregate sales price of $25.1 million. In addition,
United Dominion has entered into various contracts with a number of purchasers
to sell 24 communities with 5,649 apartment homes for an aggregate sales price
of $168.3 million. Furthermore, United Dominion has four communities with 513
apartment homes under letter of intent for an aggregate sales price of $17.1
million. For financial reporting purposes, aggregate gains on the sales of
investments are not expected to be material. The transactions are expected to
close during the fourth quarter of 1999 and the first quarter of 2000; however,
there can be no assurance that any of these transactions will be consummated as
planned.
Real Estate under Development
United Dominion focuses its development activity in certain of its significant
markets where it believes there will be stabilized demand. For the nine months
ended September 30, 1999, United Dominion invested $92.6 million on development
projects, including the acquisition of land.
At September 30, 1999, United Dominion had six apartment communities and two
additional phases to existing communities under development with 2,368 apartment
homes as outlined below (dollars in thousands except estimated cost per home):
<TABLE>
<CAPTION>
Development Estimated Estimated Expected
No. Apt. Completed Costs Development Cost per Completion
Property Location Homes Apt. Homes To Date Costs Home Date
- ---------------------------------------------------------------------------------------------------------------
NEW COMMUNITIES
- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sierra Foothills Phoenix, AZ 322 238 $ 19,136 $ 22,400 $ 69,600 4Q99
Alexander Court Columbus, OH 356 356 21,024 23,000 64,600 4Q99
Legends at Park Row Houston, TX 236 188 12,891 13,900 58,900 4Q99
Ashton at Waterford Lakes Orlando, FL 292 92 15,962 19,000 65,100 1Q00
The Meridian I Dallas, TX 250 -- 6,907 15,500 62,000 2Q00
Oaks at Weston Raleigh, NC 380 -- 4,740 30,200 79,500 1Q01
--------------------------------------------------------------
1,836 874 80,660 124,000 67,500 --
Additional Phases
- -----------------
Dominion Crown Point II Charlotte, NC 220 -- 6,950 14,800 67,300 1Q00
Carmel II San Antonio, TX 312 -- 3,156 19,700 63,100 4Q00
Land Held for Future Development -- -- 32,628 -- -- --
----------------------------------------------------------------
Total to Date 2,368 874 $123,394 $158,500 $66,900 --
================================================================
<CAPTION>
During 1999, the following development projects were completed (dollars in
thousands except estimated cost per home):
No. Apt. Development Cost per Date % Leased
Property Location Homes Costs Home Completed at 9/30/99
- -----------------------------------------------------------------------------------------------------------------
New Communities
- ---------------
<S> <C> <C> <C> <C> <C>
Stone Canyon Houston, TX 216 $ 10,227 $ 47,300 3/99 81.5%
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Dominion Franklin Nashville, TN 360 25,831 71,800 3/99 87.2%
Ashlar I Fort Myers, FL 260 18,919 72,800 5/99 89.2%
Additional Phases
- -----------------
Heritage Green II Columbus, OH 96 5,897 61,400 5/99 96.9%
---------------------
Total 932 $ 60,874 $65,300
=====================
</TABLE>
United Dominion is committed to completing its real estate currently under
development, which has an estimated cost to complete of $67.7 million.
Additional development starts planned for the remainder of 1999 will likely be
done with financial partners through joint ventures.
Acquisitions
During the nine months ended September 30, 1999, United Dominion acquired three
communities with 854 apartment homes at a total cost (including closing costs)
of $47.2 million or $55,300 per home. In October 1999, one additional apartment
community was acquired with 184 apartment homes for a total cost (including
closing costs) of $14.2 million or $77,000 per home. Through the remainder of
1999, United Dominion does not anticipate acquiring communities except to
reinvest a portion of the proceeds from property dispositions.
<TABLE>
<CAPTION>
Purchase
Purchase No. Apt. Price Cost
Location Date Name Homes (thousands) per Home
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nashville, Tennessee 01/07/99 Colonnade 288 $17,475 $60,700
San Bernadino, California 06/30/99 Grand Terrace 208 8,739 42,000
Pembroke Pines, Florida 07/26/99 Pembroke Bay 358 21,107 59,000
-----------------------
Total/Weighted Average 854 $47,321 $55,400
=======================
</TABLE>
Capital Expenditures
United Dominion capitalizes value enhancing improvements plus improvements that
substantially extend the useful life of an existing asset. In addition to United
Dominion's capital expenditures to upgrade and improve new acquisitions, a
significant portion of capital expenditures relate to United Dominion's same
communities. For the nine months ended September 30, 1999, United Dominion
invested $46.1 million on capital improvements to its total apartment portfolio,
of which, $21.1 million was used to fund capital expenditures to its same
community portfolio.
For the nine months ended September 30, 1999, non-revenue enhancing capital
expenditures related to United Dominion's same communities, including floor
coverings, HVAC equipment, roofs, appliances, landscaping, parking lots and
other non-revenue enhancing capital expenditures, aggregated $14.7 million or
$270 per home ($360 per home on an annualized basis). In addition, revenue
enhancing capital expenditures related to the same communities, including water
sub-metering, the additions of microwaves, washer-dryers, interior upgrades and
new business and fitness centers totaled $6.5 million or $119 per home ($159 per
home on an annualized basis) for the nine months ended September 30, 1999.
United Dominion has completed the majority of its same community upgrade program
and has reduced its capital expenditures related to same communities during the
first nine months of 1999, but will continue to selectively add revenue
enhancing improvements which are budgeted to provide a high return on
investment.
Financing Activities
Net cash used in financing activities during the nine months ended September 30,
1999 was $76.3 million compared to net cash provided by financing activities of
$63.5 million last year. The capital markets environment and the level of its
acquisition, development, capital expenditures and sales programs affect the
financing activities of United Dominion.
Cash (used in) Provided by Financing Activities
On March 18, 1999, United Dominion closed on the first part of a $200 million
revolving credit facility (the "Credit Facility") with the Federal National
Mortgage Association. The $102.3 million initially borrowed under the terms of
the Credit Facility has an initial interest rate of 5.70%, which is fixed
through December 1, 1999. In April 1999, United Dominion borrowed an additional
$16.6 million at an interest rate of 5.68% and $10.7 million at an interest
14
<PAGE>
rate of 5.72%. Each of the financings are for an initial term of five years,
bear interest at a floating rate which can be fixed for periods of up to 270
days, and can be extended for an additional five or ten years at United
Dominion's discretion. The proceeds from the Credit Facility were used to repay
a $91 million secured credit facility assumed in connection with the American
Apartment Communities II transaction and the remaining proceeds were used to
repay revolving bank debt. In August, an additional $66.0 million was borrowed
under the Credit Facility which has an initial interest rate of 6.53%. Proceeds
from the borrowing were used to replace $58 million in maturing secured debt and
the remaining $8 million was used to repay revolving bank debt.
In January 1999, United Dominion established a program for the sale of up to
$200 million aggregate principal amount of medium-term notes (the "MTN
Program"). During the first nine months of 1999, United Dominion sold an
aggregate of $190 million of senior unsecured notes under the MTN Program which
consisted of the following: (i) $70 million of 7.60% Notes due January 25, 2002,
(ii) $58 million of 7.67% Notes due January 26, 2004, (iii) $10 million of
variable-rate Notes due January 27, 2003 on which United Dominion subsequently
executed a swap fixing the rate at 7.65%, (iv) $12 million of 7.22% Notes due
February 19, 2003, (v) $25 million of 7.73% Notes due April 5, 2005 and (vi) $15
million of 7.53% Notes due April 27, 2029 (puttable to United Dominion beginning
2003). Net proceeds from the offerings were used to repay $7.5 million
amortizing unsecured debt, repay maturing mortgage debt, repay a $75 million
senior unsecured note that matured in April 1999 and repay revolving bank debt.
United Dominion issued 1,213,978 shares of its common stock and received $12.6
million under its Dividend Reinvestment and Stock Purchase Plan during the nine
months ended September 30, 1999 which included $0.9 million in optional cash
investments and $11.7 million of reinvested dividends.
For the nine months ended September 30, 1999, United Dominion paid distributions
to its common shareholders and unitholders in its operating partnerships
aggregating $86.7 million. The distributions to common shareholders and holders
of common operating partnership units equate to an annualized dividend rate of
$1.06 per share or unit. In addition, $25.5 million of preferred dividends were
paid to Series A, B and D preferred shareholders.
In May 1999, the Board of Directors authorized the repurchase of up to 5.5
million common shares, or 5% of the total common shares outstanding, using
proceeds from the disposition program. Such purchases will be made from time to
time in the open market or in privately negotiated transactions; the timing,
volume and price of such purchases will be at the discretion of management and
the Board. For the nine months ended September 30, 1999, United Dominion
repurchased 2,300,000 common shares at an average price of $11.34 per share.
Subsequent to September 30, 1999, United Dominion repurchased an additional
181,000 common shares at an average price of $10.88 per share. The Board of
Directors, in its October 1999 meeting, authorized United Dominion to repurchase
United Dominion's 9.25% Series A Cumulative Redeemable Preferred Stock and
its 8.60% Series B Cumulative Redeemable Preferred Stock from time to time as
market conditions permit.
During the first nine months of 1999, using proceeds from its disposition
program, United Dominion repurchased $19.1 million of certain of its higher rate
outstanding unsecured debt with a weighted average yield of 8.63%. In addition,
in connection with the sales program, United Dominion was relieved of $30.7
million of mortgage debt.
Credit Facilities
United Dominion has a $200 million unsecured revolving credit facility (the
"Bank Credit Facility") which expires in August 2000, and a $110 million
one-year unsecured line of credit (the "Line of Credit"). In September 1999,
United Dominion obtained the Line of Credit from eight banks which provides
United Dominion with access to up to $110 million in unsecured bank credit. The
$110 million Line of Credit replaced an expiring line of credit in the amount of
$50 million and provides United Dominion with access to an additional $60
million in funding. In September 1999, United Dominion's $15 million uncommitted
line of credit with a major U.S. financial institution expired.
At and for the nine months ended September 30, 1999, United Dominion had the
following credit facilities (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended September 30, 1999 At September 30, 1999
-------------------------------------- -----------------------
Weighted Average
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Amount of Amount Weighted Average Amount Weighted Average
Facility Facility Outstanding Interest Rate Outstanding Interest Rate
- ------------------------------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
Bank Credit Facility $ 200,000 $194,862 5.8% $194,800 6.0%
Line of Credit 110,000 33,461 6.1% 50,000 6.4%
---------- ------------------------ ------------------------
$ 310,000 $228,323 5.8% $ 244,800 6.0%
========== ======================== ========================
</TABLE>
Derivative Instruments
United Dominion has, from time to time, used derivative instruments to
synthetically alter on-balance sheet liabilities to hedge anticipated
transactions. Derivative contracts did not have a material impact on the results
of operations during the nine months ended September 30, 1999.
Market Risk Disclosures
United Dominion is exposed to market risk principally from interest rate risk
associated with variable-rate notes payable and maturing debt that has to be
refinanced. A large portion of United Dominion's market risk is exposure to
short-term interest rate fluctuations on variable-rate borrowings outstanding
under its various bank credit facilities, which was $244.8 million at September
30, 1999 and borrowings of $195.7 million outstanding under its revolving credit
facility with FNMA. The impact on United Dominion's financial statements of
refinancing fixed-rate debt that matured during the third quarter was not
material.
United Dominion's market risk has not changed materially from the amounts
reported in United Dominion's Annual Report on Form 10-K for the year ended
December 31, 1998.
Funds from Operations
Funds from operations ("FFO") is defined as income before gains (losses) on
sales of investments, minority interests of unitholders in operating
partnerships 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.
United Dominion computes FFO in accordance with the recommendations set forth by
the National Association of Real Estate Investment Trusts ("NAREIT"). United
Dominion 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 United Dominion's
operating performance and liquidity. 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 nine months ended September 30, 1999, FFO increased 28.8% to $132.2
million, compared with $102.7 million for the same period last year. The
increase in FFO was principally due to the increased net rental income from
United Dominion's apartment homes acquired and developed subsequent to January
1, 1998 as well as increased property operating income from its same community
portfolio.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) (in thousands)
-------------------------- -----------------------------
1999 1998 % Change 1999 1998 % Change
-------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Calculation of funds from operations:
Income before gains on sales of investments;
minority interests and extraordinary items $ 20,521 $ 13,872 47.9% $ 52,851 $ 46,797 12.9%
Adjustments:
Real estate depreciation, net of outside
partners' interest 29,651 26,901 10.2% 89,902 73,376 22.5%
Minority interests of outside partnerships (276) -- -- (657) -- --
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Distributions to preferred shareholders (9,441) (5,650) 67.1% (28,320) (16,953) 67.1%
Impairment loss on real estate owned -- -- -- 7,100 -- --
Adjustment for internal acquisition costs -- -- -- -- (544) --
-------------------------- -----------------------------
Funds from operations-basic $ 40,455 $ 35,123 15.2% $ 120,876 $ 102,676 17.7%
========================== =============================
Adjustments:
Distributions to preferred shareholders-
Series D (Convertible) 3,788 -- -- 11,367 -- --
-------------------------- -----------------------------
Funds from operations-diluted $ 44,243 $ 35,123 26.0% $ 132,243 $ 102,676 28.8%
========================== =============================
</TABLE>
Results of Operations
United Dominion's net income is primarily generated from the operations of its
apartment communities. For purposes of evaluating its comparative operating
performance, United Dominion categorizes its communities into two categories,
same community and non-mature. For the 1999 versus 1998 comparison, these
communities are as follows: (i) same community--those communities acquired,
developed and stabilized prior to January 1, 1998 and held throughout the first
nine months of 1999 and 1998 and (ii) non-mature--those communities acquired,
developed or sold subsequent to January 1, 1998.
For the three and nine months ended September 30, 1999, United Dominion reported
increases over the same period last year in rental income and rental expenses.
United Dominion's 122 non-mature communities with 30,824 apartment homes
provided a substantial portion of the aggregate reported increases. Compared to
the same periods last year, the acquisition and development of these non-mature
communities resulted in an increase in the weighted average number of apartment
homes by 18.4% and 26.0% for the three and nine months ended September 30, 1999,
respectively.
Same Communities
The operating performance for the three and nine months ended September 30, 1999
and 1998 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -----------------------------
1999 1998 % Change 1999 1998 % Change
-------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Property rental income $ 97,212 $ 94,765 2.6% $ 287,502 $ 278,980 3.1%
Property operating expenses (excluding
depreciation and amortization) (38,711) (38,984) (0.7)% (113,219) (112,547) 0.6%
-------------------------- -----------------------------
Property operating income $ 58,501 $ 55,781 4.9% $ 174,283 $ 166,433 4.7%
========================== ==============================
Physical occupancy 93.2% 94.0% (0.8)% 92.6% 93.1% (0.5)%
Average monthly rental rates $ 630 $ 610 3.3% $ 625 $ 604 3.5%
Operating margin 60.2% 58.9% 1.3% 60.6% 59.6% 1.0%
</TABLE>
For the three and nine months ended September 30, 1999, same community property
operating income was strong, increasing 4.9% and 4.7%, respectively, over the
same periods last year. During the first nine months of 1999, property rental
income for the same communities grew 3.1%, or $8.5 million over the same period
last year. The increase was attributable to an increase in average monthly rents
of 3.5% to $625 per home that was offset by a slight decrease of 0.5% in
physical occupancy to 92.6%. For the quarter ended September 30, 1999, property
rental income grew 2.6% or $2.4 million, reflecting an increase in average
monthly rents of 3.3% to $630 per home that was offset by a decrease of 0.8% in
physical occupancy to 93.2%. United Dominion expects to maintain annualized rent
growth in the 3% range during the remainder of the year.
For the nine months ended September 30, 1999, property operating expenses at the
same communities increased 0.6%, or $672 thousand. Utility expenses decreased
due to further progress on water sub-metering reimbursements, repair and
maintenance expense decreased due to benefit from the upgrade program undertaken
during the past several years and management expenses decreased due to better
economies of scale. However, United Dominion did experience increases in real
estate taxes due to general increases in property tax rates or revaluations. In
addition, personnel costs increased due to higher salaries and benefit costs and
administrative and marketing costs increased due to the addition of monitored
alarms in more communities during 1999 and higher technology costs. For the
17
<PAGE>
quarter, rental expenses were relatively flat, decreasing 0.7% or $273 thousand
for the same reasons previously described. United Dominion expects to maintain
annualized expense growth in the 2% range during the remainder of 1999.
For the nine month period, the operating margin (property operating income
divided by property rental income) improved 1.0% to 60.6% primarily as a result
of increased property rental income during this period. For the three month
period, the operating margin improved 1.3% to 60.2%.
Non-Mature Communities
The operating performance for the three and nine months ended September 30, 1999
and 1998 is summarized in the chart below (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30:
Disposition Development Total Non-Mature
1998 Acquisitions 1999 Acquisitions Communities Communities Communities
----------------- ----------------- ------------- --------------- ----------------
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
----------------- ----------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Property rental income $ 51,870 $ 21,354 $ 1,422 $ -- $ 911 $ 5,955 $ 3,785 $ 1,006 $ 57,988 $ 28,315
Property operating
expenses (excluding
depreciation and
amortization) (20,035) (10,176) (603) -- (696) (2,885) (1,755) (477) (23,089) (13,538)
----------------- ----------------- ------------- --------------- ----------------
Property operating
income $ 31,835 $ 11,178 $ 819 $ -- $ 215 $ 3,070 $ 2,030 $ 529 $ 34,899 $ 14,777
==================== ================= ================ ================= ===================
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30:
Disposition Development Total Non-Mature
1998 Acquisitions 1999 Acquisitions Communities Communities Communities
----------------- ----------------- ------------- --------------- ----------------
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
----------------- ----------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Property rental income $ 153,500 $ 41,756 $ 2,304 $ -- $ 10,909 $ 22,119 $ 8,470 $ 2,195 $ 175,183 $ 66,070
Property operating
expenses (excluding
depreciation and
amortization) (60,598) (18,759) (1,033) -- (5,200) (10,407) (4,204) (1,087) (71,035) (30,253)
----------------- ----------------- ------------- --------------- ----------------
Property operating
income $ 92,902 $ 22,997 $ 1,271 $ -- $ 5,709 $ 11,712 $ 4,266 $ 1,108 $ 104,148 $ 35,817
==================== ================= ================ ================= ===================
</TABLE>
For the quarter ended September 30, 1999, the non-mature communities had
physical occupancy of 93.1% (excluding Development Properties undergoing
lease-up) and an operating margin of 60.2%. For the nine months ended September
30, 1999, these communities had physical occupancy of 92.4% and an operating
margin of 59.5%.
1998 Acquisitions
American Apartment Communities II, Inc. (AAC)
The acquisition of 53 communities with 14,001 apartment homes on December 7,
1998 included in the statutory merger with AAC was on target with United
Dominion's pro forma acquisition expectations of a 9% return on investment for
the first year of ownership. During the nine months ended September 30, 1999,
the AAC portfolio provided an annualized first year return on investment of 8.9%
on an average investment of $779 million. For the quarter, on an average
investment of $781 million, the return on investment was 9.4%. These communities
achieved physical occupancy of 94.0% and 93.5% for the three and nine months
periods, which is higher than United Dominion's average physical occupancy
primarily due to the California communities included in this portfolio.
1998 Acquisitions (Excluding AAC)
Included in this category are 56 communities with 13,577 apartment homes
acquired in individual, portfolio and merger transactions by United Dominion
during 1998 (net of seven communities with 932 apartment homes sold). The return
on investment (property rental income less property operating expenses divided
by the average capital investment in real estate) for these communities for the
nine months ended September 30, 1999, on an average investment of $631 million,
was 8.3%. For the quarter, on an average investment of $640 million, the return
on investment was 8.1%. These communities continue to be upgraded and
repositioned which should improve their operating results over the long-term. In
addition, these communities are an active area of the disposition program.
18
<PAGE>
1999 Acquisitions
Included in this category are three communities with 854 apartment homes
acquired by United Dominion during the first nine months of 1999 that are
projected to have a first year average return on investment in the 8.5% to 9%
range. These communities did not have a material impact on 1999 results of
operation.
Disposition Communities
Included in this category are the 36 communities with 8,953 apartment homes sold
as part of United Dominion's strategic repositioning (see Disposition of
Investments under Liquidity and Capital Resources) since January 1, 1998. The
communities sold during 1998 and 1999 had an annualized return on investment
between 9% and 11%.
Development Communities
This represents the 2,034 homes developed at various times since January 1,
1998, which included the completion of three new communities and one additional
phase to an existing community during the first nine months of 1999. Once
stabilized, development communities are projected to generate an average return
on investment in excess of approximately 10%, however, the full impact on
property operating income is not realized until after the communities are
stabilized, which is generally six months after construction is completed.
United Dominion considers a development community stabilized on the earlier to
occur of (i) one year after completion of construction or (ii) attainment of 90%
physical occupancy. Construction activity is staged to allow for leasing and
occupancy during the construction period in order to minimize the lease-up
period subsequent to the completion of construction.
All Communities
The operating performance for the three and nine months ended September 30, 1999
and 1998 is summarized in the chart below (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- -------------------------------
1999 1998 % Change 1999 1998 % Change
--------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property rental income $ 155,200 $ 123,080 26.1% $ 462,685 $ 345,050 34.1%
Property operating expenses (excluding
depreciation and amortization) (61,800) (52,522) 17.7% (184,254) (142,800) 29.0%
--------------------------------- -------------------------------
Property operating income $ 93,400 $ 70,558 32.3% $ 278,431 $ 202,250 37.7%
================================= ===============================
Weighted average number of
apartment homes 85,673 72,365 18.4% 86,590 68,723 26.0%
Physical occupancy 93.2% 92.2% 1.0% 92.5% 91.6% 0.9%
</TABLE>
Due to the impact of the acquisition and development of 31,398 apartment homes
since January 1, 1998, the increase in the weighted average number of apartment
homes for the three and nine months ended September 30, 1999 resulted in
significant increases in property rental income and property operating expenses
for both the three and nine months ended September 30, 1999.
Reast Estate Depreciation
Real estate depreciation increased $3.0 million or 11.4% and $17.4 million or
23.8% for the three and nine months ended September 30, 1999, respectively over
the same period last year. This increase is directly attributable to the
addition of depreciable real estate assets as a result of United Dominion's
acquisition, development and capital expenditure programs during 1998 and 1999.
Interest Expense
Interest expense increased $11.8 million and $40.2 million for the three and
nine months ended September 30, 1999, respectively, over the same period last
year as the weighted average amount of debt employed during 1999 was higher than
it was for the same periods last year primarily due to debt assumed and issued
during 1998 to fund United Dominion's investment activities. For the nine month
period, the weighted average debt outstanding was $2.2 billion in 1999 versus
$1.4 billion in 1998 and for the three month period it was $2.2 billion in 1999
versus $1.5 billion in 1998. For both the three and nine months ended September
30, 1999, the weighted average interest rate on this debt was 7.4%, reflecting
no change from the same periods last year. For the three and nine months ended
September 30, 1999, total interest capitalized was $1.1 million and $4.3
million, respectively. For the three and nine months ended September 30, 1998,
total interest capitalized was $910 thousand and $2.2 million, respectively.
19
<PAGE>
General and Administrative
During the three and nine months ended September 30, 1999, general and
administrative expenses increased $531 thousand and $2.2 million, respectively
over the same period last year primarily due to (i) the added infrastructure
costs incurred due to the increased size of United Dominion, (ii) the change in
accounting for internal acquisition costs subsequent to March 19, 1998
commencing with the adoption of EITF No 97-11, "Accounting for Internal Costs
Relating to Real Estate Property Acquisitions", which required that United
Dominion expense direct internal costs related to identifying and acquiring
operating properties, and (iii) severance compensation fully expensed during the
first quarter of 1999.
Distribution to Preferred Shareholders
Distributions to preferred shareholders increased $3.8 million and $11.4 million
for the three and nine months ended September 30, 1999, respectively over the
same periods last year. The increase is the result of the issuance of 8 million
shares of 7.5% Series D Cumulative Convertible Redeemable Preferred Stock on
December 7, 1998 in connection with the acquisition of AAC.
Inflation
United Dominion believes that the direct effects of inflation on United
Dominion's operations have been inconsequential.
Information Technology
United Dominion is currently engaged in the development of an innovative on-site
property management system and a leasing automation system (the `systems") to
enable management to capture, review and analyze data to a greater extent than
is possible using available existing commercial software. United Dominion
believes these new systems will enable the company to become a more efficient
provider of a high quality living environment for our current residents, and
provide the scalability necessary to support future growth. United Dominion
intends to enter into a formal joint venture with another public multifamily
real estate company, our joint venture partner, and to continue development of
these systems and system software, through the joint venture entity. The system
development process is currently managed by the employees of United Dominion who
have significant related project management experience and the employees of the
joint venture partner. The actual programming and documentation of the system is
being conducted by these employees and third party consultants under the
supervision of these experienced project managers.
Current projections indicate that total development costs over a three-year
period will be approximately $7.5 million (including hardware costs and
expenses, the costs of employees and related overhead, and the costs of engaging
third party consultants) and that such development costs will be shared on an
equal basis by the joint venture partners. Once developed, the systems would be
used in place of current property management information systems for which a
license fee is paid to third parties. The leasing automation system would be
used to make the lease application process easier for residents and more
efficient for United Dominion.
The systems are currently projected to undergo an on-site test (i.e., a "beta
test") during the second quarter of 2000 and the systems should be functional by
the fourth quarter of 2000. The leasing automation system is currently in beta
testing at two communities and we intend, if such testing is successful, to
implement the system during the first quarter of 2000.
Neither United Dominion nor its joint venture partner have been engaged in the
development of systems software. There are several risks associated with the
development of the systems for internal use, such as: (i) the inability to
maintain the schedule or budget that has been projected for the development and
implementation of the software, and (ii) the systems may not have with the
functionality and efficiencies desired.
20
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of United Dominion's
computer programs or hardware that have date sensitive software or embedded
chips may recognize a date using "00"" as the year 1900 rather than the year
2000. This could result in system failure or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to process
transactions or engage in similar normal business activities.
United Dominion continues to identify and address issues regarding the
transition to Year 2000, as it is dependent on computer systems and applications
to conduct its business. United Dominion has performed a thorough assessment of
its personal computers, desktop software and major applications and is in the
process of completing its server environment assessment. To ensure that United
Dominion completed a formalized and thorough assessment of its Year 2000 issues,
United Dominion engaged an outside consulting firm to conduct a Year 2000
assessment and develop a remediation plan. The plan covers four stages: (i)
inventory, (ii) assessment, (iii) remediation and (iv) testing and
certification. Because United Dominion operates in a structured, standardized
environment, the assessment indicated a high degree of Year 2000 compliance with
few items for remediation. All mission-critical applications have been
determined to be Year 2000 compliant. Remediation of all desktop hardware and
software will be completed by November 30, 1999. None of the non-compliance
issues identified were mission-critical.
During the first quarter of 1999, United Dominion commenced the assessment phase
for non-IT operating equipment at its communities (gates, security, telephone,
elevator, HVAC systems and other such systems). This assessment was completed in
August 1999, with remediation to be completed by November 30, 1999.
United Dominion also assessed the Year 2000 compliance of vendors and other
external relationships to determine the extent to which United Dominion may be
vulnerable to such parties' failure to resolve their own Year 2000 issues.
United Dominion initiated formal communication with these parties. United
Dominion cannot ensure timely compliance of third parties and; therefore, could
be adversely affected by failure of a significant third party to become Year
2000 compliant. The effect, if any, on United Dominion's results of operations
from the failure of such third parties to be Year 2000 compliant is not
reasonably estimable.
United Dominion estimates that the total Year 2000 project cost will be
approximately $100,000, of which approximately 90% has been incurred as of
September 30, 1999. Amounts expended to ensure Year 2000 compliance have been
funded by cash flows from operations and are not expected to have a material
impact on United Dominion's financial position, results of operations, or cash
flows. United Dominion believes that its Year 2000 initiatives are adequate to
address reasonably likely Year 2000 issues.
<TABLE>
<CAPTION>
- ---------------------------- -------------------------- -------------------------- --------------------------
Assessment Remediation / Testing
% Complete Compliance Completion
- ---------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
IT - Mission-Critical
Applications 100% 100% November 1999
- ---------------------------- -------------------------- -------------------------- --------------------------
IT - Desktop
Hardware / Software 100% 100% November 1999
- ---------------------------- -------------------------- -------------------------- --------------------------
IT - Network
Hardware / Software 100% 100% November 1999
- ---------------------------- -------------------------- -------------------------- --------------------------
Operating Equipment Expected
at Communities 100% 100% Completion,
November 30, 1999
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
21
<PAGE>
Failure to correct a material Year 2000 problem could result in the failure of
certain normal business activities or operations. Management believes that, with
the implementation of new or upgraded business systems, as needed, and the
completion of the Year 2000 project as scheduled, the possibility of significant
interruptions of normal operations due to the failure of those systems will be
reduced. However, United Dominion is dependent on the power and
telecommunications infrastructure within the United States. The most reasonably
likely worst case scenario would be that United Dominion may experience
disruption in its operations if any of the third-party suppliers reported a
system failure. Although United Dominion's Year 2000 project will reduce the
level of uncertainty about the compliance and readiness of its material
third-party providers, due to the general uncertainty over Year 2000 readiness
of these third-party suppliers, United Dominion is unable to determine at this
time whether the consequences of Year 2000 failures will have a material impact.
The final phase of United Dominion's Year 2000 project relates to a contingency
plan. United Dominion maintains contingency plans in the normal course of
business designed to be deployed in the event of various potential business
interruptions.
22
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
Information required by Item 3 regarding Quantitative and Qualitative Disclosure
of Market Risk is included in Part I, Item 2 of this Form 10-Q included in
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
23
<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.
24
<PAGE>
EXHIBIT INDEX
Item 6 (a)
The exhibits listed below are filed as part of this Quarterly Report.
References under the caption Location to exhibits, forms, or other filings
indicate that the form or other filing has been filed, that the indexed exhibit
and the exhibit referred to are the same and that the exhibit referred to is
incorporated by reference.
<TABLE>
<CAPTION>
Exhibit Description Location
- ------- ----------- ---------
<S> <C> <C>
2(a) Agreement and Plan of Merger dated Exhibit 2(a) to the Company's Form S-4 Registration
as of December 19, 1997, between Statement (Registration No. 333-45305) filed with
Company, ASR Investment the the Commission on January 30, 1998.
Corporation and ASR Acquisition Sub,
Inc.
2(b) Agreement of Plan of Merger dated as Exhibit 2(c) to the Company's Form S-3 Registration
of September 10, 1998, between the Statement (Registration No. 333-64281) filed with
Company and American Apartment the Commission on September 25, 1998.
Communities II, Inc. including as
exhibits thereto the proposed terms
of the Series D Preferred Stock and the
proposed form of Investment Agreement
between the Company, United Dominion
Realty, L.P., American Apartment
Communities II, Inc., American
Apartment Communities Operating
Partnership, L.P., Schnitzer Investment
Corp., AAC Management LLC and LF
Strategic Realty Investors, L.P.
2(c) Partnership Interest Purchase and Exchange Exhibit 2(d) to the Company's Form S-3 Registration
Agreement dated as of September 10, 1998, Statement (Registration No. 333-64281) filed with
between the Company, United Dominion the Commission on September 25, 1998.
Realty, L.P., American Apartment
Communities Operating Partnership, L.P.,
AAC Management LLC, Schnitzer
Investment Corp., Fox Point Ltd. and
James D. Klingbeil including as an exhibit
thereto the proposed form of the Third
Amended and Restated Limited Partnership
Agreement of United Dominion Realty, L.P.
3(a) Restated Articles of Incorporation Exhibit 4(a)(ii) to the Company's Form S-3
Registration Statement (Registration No. 333-72885)
filed with the Commission on February 24, 1999.
3(b) Restated By-Laws Exhibit 3(b) to the Company's Annual Report
on Form 10-K for the year ended December
31, 1998.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
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(i)(d) Rights Agreement dated as of Exhibit 1 to the Company's Form 8-A
January 27, 1998, between the Company Registration Statement dated February 4, 1998.
and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
4(i)(d)(A) First Amended and Restated Rights Filed herewith.
Agreement dated as of September 14,
1999, between the Company and
ChaseMellon Sharelholder Services,
L.L.C., as Rights Agent
4(i)(e) Form of Rights Certificate Exhibit 4(e) to the Company's Form 8-A
Registration Statement dated February 4, 1998.
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
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) 364-day Credit Agreement dated Filed herewith.
as of September 16, 1999, between
the Company and certain subsidiaries
and a syndicate of banks represented
by Bank of America, N.A.
10(i) Employment Agreement between Exhibit 10(i) to the Company's Annual Report
the Company and John P. McCann on Form 10-K for the year ended December 31,
dated December 8, 1998. 1998.
10(ii) Employment Agreement between Exhibit 10(ii) to the Company's Annual Report
theCompany and John S. Schneider on Form 10-K for the year ended December 31,
dated December 8,1998. 1998.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10(iii) Employment Agreement between Exhibit 10(iii) to the Company's Annual Report
the Company and Richard Giannotti on Form 10-K for the year ended December 31,
dated December 8, 1998. 1998.
10(iv) Employment Agreement between Filed herewith.
the Company and A. William Hamill
dated September 30, 1999.
10(v) 1985 Stock Option Plan, Exhibit 10(iv) to the Company's Quarterly
as amended. Report on Form 10-Q for the quarter ended
June 30, 1998.
10(vi) 1991 Stock Purchase and Loan Exhibit 10(viii) to the Company's Quarterly Report
Plan. on Form 10-Q for the quarter ended March 31, 1997.
10(vii) Third Amended and Restated Exhibit 10(vi) to the Company's Annual Report
Agreement of Limited Partnership of on Form 10-K for the year ended December 31,
United Dominion Realty, L.P. 1998.
dated as of December 7, 1998.
10(vii)(a) Subordination Agreement dated Exhibit 10(vi)(a) to the Company's Form 10-Q for
April 16, 1998, between the the quarter ended March 31, 1998.
Company and United Dominion
Realty, L.P.
10(viii) Servicing and Purchase Exhibit 10(vii) to the Company's Form 10-Q for
Agreement dated as of June 24, the quarter ended June 30, 1999.
1999, including as an exhibit
thereto the Note and Participation
Agreement forms.
12 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges.
27 Financial Data Schedule. Filed herewith.
</TABLE>
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.
27
<PAGE>
United Dominion Realty Trust, Inc.
- ----------------------------------
(registrant)
Date: November 12, 1999 /s/ A. William Hamill
- ----------------------- -----------------------------
A. William Hamill
Executive Vice President and
Chief Financial Officer
Date: November 12, 1999 /s/ Robin R. Flanagan
- ----------------------- -----------------------------
Robin R. Flanagan
Assistant Vice President and
Chief Accounting Officer
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.
28
EXHIBIT 4(i)(d)(A)
- --------------------------------------------------------------------------------
UNITED DOMINION REALTY TRUST, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
---------------
First Amended and Restated Rights Agreement
Dated as of September 14, 1999
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
-----------------
Page
----
<S> <C> <C>
Section 1. Certain Definitions...................................................................................1
Section 2. Appointment of Rights Agent...........................................................................5
Section 3. Issue of Rights and Rights Certificates...............................................................6
Section 4. Form of Rights Certificates...........................................................................7
Section 5. Countersignature and Registration.....................................................................8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates..........................................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights; Restriction on Transfer of
Rights.....................................................................................10
Section 8. Cancellation and Destruction of Rights Certificates..................................................12
Section 9. Reservation and Availability of Series C Preferred Stock.............................................12
Section 10. Series C Preferred Stock Record Date.................................................................13
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights..........................14
Section 12. Certificates of Adjusted Purchase Price or Number of Shares..........................................21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................21
Section 14. Fractional Rights and Fractional Shares..............................................................24
Section 15. Rights of Action.....................................................................................25
Section 16. Agreement of Rights Holders..........................................................................25
Section 17. Rights Certificate Holder Not Deemed a Shareholder..................................................26
Section 18. Concerning the Rights Agent..........................................................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................26
Section 20. Duties of Rights Agent...............................................................................27
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 21. Change of Rights Agent...............................................................................29
Section 22. Issuance of New Rights Certificates..................................................................30
Section 23. Redemption and Termination...........................................................................30
Section 24. Exchange.............................................................................................31
Section 25. Notice of Certain Events.............................................................................32
Section 26. Notices..............................................................................................33
Section 27. Supplements and Amendments...........................................................................34
Section 28. Successors...........................................................................................35
Section 29. Determinations and Actions by the Board of Directors, etc............................................35
Section 30. Benefits of this Agreement...........................................................................35
Section 31. Severability.........................................................................................35
Section 32. Governing Law........................................................................................35
Section 33. Counterparts.........................................................................................36
Section 34. Descriptive Headings.................................................................................36
</TABLE>
Exhibit A - Form of Rights Certificate
(ii)
<PAGE>
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT
This First Amended and Restated Rights Agreement, dated as of September
14, 1999, (the "Agreement") between UNITED DOMINION REALTY TRUST, INC., a
Virginia corporation (the "Company"), and CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., a New Jersey limited liability company (the "Rights Agent"), provides as
follows:
W I T N E S S E T H
WHEREAS, in January of 1998, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each outstanding share of Common Stock of the Company to
shareholders of record at the Close of Business (as hereafter defined) on the
Record Date (as hereinafter defined) and authorized the issuance of one Right
(as such number may hereinafter be adjusted as provided herein) for each share
of Common Stock that shall be issued between the Record Date and the earliest of
the Distribution Date, the Redemption Date or the Expiration Date (as such terms
are hereinafter defined) unless the Board of Directors provides to the contrary
before or at the time of issuance of any such Common Stock, each Right initially
representing the right to purchase one Unit of Series C Preferred Stock, (as
hereinafter defined), and being in the form of the Rights Certificate attached
hereto as Exhibit A, upon the terms and subject to the conditions hereof (the
"Rights"); and
WHEREAS, on January 27, 1998, the Company entered into a Rights
Agreement with the Rights Agent (the "First Rights Agreement"); and
WHEREAS, on September 14, 1999, the Board of Directors of the Company
determined that it was in the best interests of the Company to amend the First
Rights Agreement to remove all of the provisions requiring the vote of the
Continuing Directors (as defined in the Rights Agreement), in the form of this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
alone or together with all Affiliates and Associates of such Person, shall at
any time be the Beneficial Owner of either or both of (i) more than 15% of the
shares of Common Stock then outstanding or (ii) more than 15% of the Rights then
outstanding, but shall not include (a) the Company, any Subsidiary of
<PAGE>
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan or, (b) any such Person
who has become and is such a Beneficial Owner solely because (1) of a reduction
in the aggregate number of shares of Common Stock outstanding due to a
repurchase of shares of Common Stock by the Company since the last date on which
such Person acquired Beneficial Ownership of any shares of Common Stock or (2)
it acquired such Beneficial Ownership in the good faith belief that such
acquisition would not (A) cause such Beneficial Ownership to exceed 15% of the
shares of Common Stock then outstanding and such Person relied in good faith in
computing the percentage of its Beneficial Ownership on publicly filed reports
or documents of the Company that are inaccurate or out-of-date or (B) otherwise
cause a Distribution Date or the adjustment provided for in Section 11(a) to
occur. Notwithstanding clause (b)(2) of the preceding sentence, if any Person
that is not an Acquiring Person due to such clause (b)(2) does not reduce its
percentage of Beneficial Ownership of shares of Common Stock to 15% or less by
the Close of Business on the fifth Business Day after notice from the Company
(the date of notice being the first day) that such Person's Beneficial Ownership
of shares of Common Stock so exceeds 15%, such Person shall, at the end of such
five Business Day period, become an Acquiring Person (and such clause (b)(2)
shall no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company, acting by a vote of those
directors of the Company whose approval would be required to redeem the Rights
under Section 23.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act;
(ii) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not be deemed to be the
"Beneficial Owner" of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange or (B) securities issuable upon exercise of the Rights.
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(iii) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote, including pursuant
to any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this subparagraph (iii) as a result
of an agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely from a revocable
proxy given in response to a public proxy solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) the beneficial ownership of such security is not
also then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iv) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (iii) of this paragraph (c)) or disposing of any
voting securities of the Company; provided, however, that notwithstanding any
provision of this Section 1(c), any Person engaged in business as an underwriter
of securities who acquires any securities of the Company through such Person's
participation in good faith in a firm commitment underwriting registered under
the Securities Act of 1933, as amended (the "Act"), shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," such securities until the
expiration of 40 days after the date of acquisition; and provided, further, that
in no case shall an officer or director of the Company be deemed (x) the
beneficial owner of any securities beneficially owned by another officer or
director of the Company solely by reason of actions undertaken by such persons
in their capacity as officers or directors of the Company; or (y) the beneficial
owner of securities held of record by the trustee of any employee benefit plan
of the Company or any Subsidiary of the Company for the benefit of any employee
of the Company or any Subsidiary of the Company, other than the officer or
director, by reason of any influence that such officer or director may have over
the voting of the securities held in the plan.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which national banking institutions in the Commonwealth of
Virginia or State of New Jersey are authorized or obligated by law or executive
order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., Richmond, Virginia time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Richmond, Virginia time, on
the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock of the Company,
except that "Common Stock" when used with reference to any Person other than the
Company, if such Person is a corporation, shall mean the capital stock of such
Person with the greatest voting power, or the equity securities or other equity
interest in such Person having power to control or direct
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the management of such Person, or any shares of capital stock or other equity
interests into which the foregoing shall be reclassified or changed.
(g) "Distribution Date" shall mean the earlier of (i) the
close of business on the tenth business day after the Stock Acquisition Date (as
hereinafter defined) or (ii) the close of business on the tenth business day
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act if, upon consummation
thereof, such Person would be an Acquiring Person (irrespective of whether any
shares were actually purchased pursuant to any such offer).
(h) "Equivalent Shares" shall mean shares of Series C
Preferred Stock (as hereinafter defined) and any other class or series of
capital stock of the Company that is entitled to participate in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company, on a proportional basis with the Common Stock. In
calculating the number of any class or series of Equivalent Shares for purposes
of Section 11 hereof, the number of shares, or fractions of a share, of such
class or series of capital stock that is entitled to the same dividend or
distribution as a whole share of Common Stock shall be deemed to be one share.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement, unless a different
date is otherwise specifically provided herein.
(j) "Exchange Date" shall mean the date on which the Board of
Directors authorizes the exchange of Rights for shares of Common Stock pursuant
to Section 24 hereof.
(k) "Expiration Date" shall mean the earliest of (i) the close
of business on the Final Expiration Date, or (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof, or (iii) the Exchange Date.
(l) "Final Expiration Date" shall mean February 4, 2008.
(m) "Person" shall mean any individual, firm, corporation,
partnership or other entity and any particular Person shall include any "group"
acting as described in Section 13(d)(3) of the Exchange Act.
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(n) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof, as adjusted in accordance with this Agreement and as in
effect from time to time.
(o) "Record Date" shall mean the Close of Business on February
4, 1998.
(p) "Rights" shall mean the rights to purchase Series C
Preferred Stock (or other securities) as provided in this Agreement.
(q) "Rights Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(r) "Section 11(a)(ii) Event" shall mean any occurrence of the
event described in the first sentence of Section 11(a)(ii) hereof.
(s) "Section 13 Event" shall mean any event described in
clause (w), (x), (y) or (z) of Section 13(a) hereof.
(t) "Series C Preferred Stock" shall mean shares of Series C
Junior Participating Cumulative Redeemable Preferred Stock, without par value,
of the Company.
(u) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(v) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities sufficient
to elect a majority of the directors or Persons having similar authority of such
corporation or other entity is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.
(w) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(x) "Unit" shall mean one one-thousandth of a share of Series
C Preferred Stock.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with
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Section 3 hereof, shall prior to the Distribution Date also be holders of Common
Stock) in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights and Rights Certificates.
(a) Until the Distribution Date, (x) the Rights shall be
evidenced (subject to the provisions of paragraphs (b) and (c) of this Section
3) by the certificates for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall be deemed
also to be certificates for Rights) and not by separate certificates, and (y)
the Rights shall be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). Subject
to the provisions of Section 7(e) hereof, as soon as practicable after the
Company has notified the Rights Agent of the occurrence of a Distribution Date,
the Rights Agent shall send by first-class, insured, postage prepaid mail, to
each such record holder of shares of the Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as provided herein. In
the event that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to Section 11(n) hereof, at the time of distribution of
the Rights Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights shall be evidenced solely by such Rights Certificates.
(b) Until the Distribution Date, the Rights shall be evidenced
by such certificates evidencing the Common Stock, and the registered holders of
the Common Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the transfer
of any certificates evidencing shares of Common Stock in respect of which Rights
have been issued shall also constitute, subject to the provisions of Section
7(e) hereof, the transfer of the Rights associated with such shares of Common
Stock.
(c) Unless the Board of Directors by resolution adopted at or
before the time of the issuance (including pursuant to the exercise of rights
under the Company's benefit plans) of any shares of Common Stock specifies to
the contrary, Rights shall be issued in respect of all shares of Common Stock
that are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing shares of
Common Stock outstanding prior to the Record Date that are issued upon transfer
or exchange of such Common Stock, shall also be deemed to be certificates for
Rights, and shall bear the following legend:
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This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between United
Dominion Realty Trust, Inc. (the "Company") and ChaseMellon Shareholder
Services, L.L.C., (the "Rights Agent") dated as of January 27, 1998
(the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights that are owned
or that were previously owned by a Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate of an Acquiring Person
may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute, subject to the provisions of
Section 7(e) hereof, the transfer of the Rights associated with the Common Stock
represented by such certificates.
In the event that the Company purchases or acquires any shares of
Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such shares of Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the shares of Common Stock that are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Distribution Date, and on their face shall entitle the holders
thereof to purchase such number of Units of Series C Preferred Stock as shall be
set forth therein at the price set forth therein (such exercise price per unit,
being hereinafter referred to as
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the "Purchase Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has a primary
purpose to avoid or effects the avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a person who was or became an Acquiring Person or
an Affiliate or an Associate of an Acquiring Person. Accordingly, this
Rights Certificate and the Rights represented hereby may become void in
the circumstances specified in Section 7(e) of the Rights Agreement.
The Company shall notify the Rights Agent, and, if such notification is given
orally, the Company shall confirm promptly the same in writing, at such time as
the Company has notice that any Person constitutes an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, and until such notice is received
by the Rights Agent the Rights Agent may conclusively presume for all purposes
that the foregoing legend need be imprinted only on Right Certificates
beneficially owned by Persons that the Company has previously identified to the
Rights Agent as constituting an Acquiring Person or an Affiliate or Associate of
an Acquiring Person and transferees of any such Persons.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned manually or by
facsimile by the Rights Agent and shall not be valid for any purpose unless so
countersigned. The Rights Certificates shall be countersigned by an authorized
signatory of the Rights Agent but it shall not
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be necessary for the same signatory to countersign all of the Rights
Certificates issued hereunder. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, (other
than Rights Certificates that have become void pursuant to Section 7(e) hereof
or that have been exchanged pursuant to Section 24 hereof) entitling the
registered holder to purchase a like number of Units of Series C Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitle such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment from the holder of the Rights of a sum sufficient to
cover any tax or
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governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Subject to Section 7(e) hereof, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights; Restriction on Transfer of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(ii), Section 11(a)(iii),
Section 13, Section 23(a), and Section 24 hereof) in whole or in part at any
time after the Distribution Date upon surrender of the Rights Certificate, with
the form of election to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together, except as otherwise provided
in Section 11(a)(ii) hereof, with payment of the aggregate Purchase Price with
respect to the total number of Units of Series C Preferred Stock (or Common
Stock or other securities or property, as the case may be) as to which
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each Unit of Series C Preferred
Stock pursuant to the exercise of a Right shall initially be $45.00 and shall be
subject to adjustment from time to time as provided in Section 11 hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per Unit of Series C Preferred Stock (or Common Stock,
other securities or property, as the case may be) to be purchased as set forth
below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly, (i) (A) requisition
from any transfer agent of the Units of Series C Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of Units of Series C Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of Units of Series C Preferred
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Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of Units of Series C Preferred Stock as are to be purchased (in which
case certificates for the Units of Series C Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced (including to zero) pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified bank check or bank draft
payable to the order of the Company. In the event that the Company is obligated
to issue other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effects the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no liability to
any holder of Rights Certificates or any other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or its Affiliates
or Associates, or any transferee thereof, hereunder.
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(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Series C Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Series
C Preferred Stock (or, following the occurrence of a Triggering Event, out of
its authorized and unissued Series C Preferred Stock or other securities, as the
case may be), the number of shares of Series C Preferred Stock (or such other
securities) that, except as provided in Section 11(a)(iii) hereof, will be
sufficient from time to time to permit the exercise in full of all outstanding
Rights and all Rights that are at the time issuable, in accordance with the
provisions of this Agreement.
(b) So long as the shares of Series C Preferred Stock (and,
following the occurrence of a Triggering Event, any other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance.
(c) The Company shall use its best efforts (i) to file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(ii) and (iii) hereof, or as soon as is required by law following
the Distribution Date, as the case may be, a registration statement under the
Act on an
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appropriate form, with respect to the securities purchasable upon exercise of
the Rights, (ii) to cause such registration statement to become effective as
soon as practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the Expiration
Date. The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating, and notify the Rights Agent, that the
exercisability of the Rights has been temporarily suspended. The Company shall
also issue a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Series C Preferred
Stock (or other securities, as the case may be) delivered upon exercise of the
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly authorized, validly issued,
fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for shares of Series C Preferred Stock (or
other securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax that may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of shares of Series C Preferred
Stock (or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
shares of Series C Preferred Stock (or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Series C Preferred Stock Record Date. Each person in whose
name any certificate for a number of Units of Series C Preferred Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such Units of
Series C Preferred Stock (or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and
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all applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Series C Preferred Stock (or
other securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which such transfer books are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate as
such shall not be entitled to any rights of a shareholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, and the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Series C Preferred Stock
payable in shares of Series C Preferred Stock, (B) subdivide the outstanding
Series C Preferred Stock, (C) combine the outstanding Series C Preferred Stock
into a smaller number of shares, or (D) issue any shares of its capital stock in
a reclassification of the Series C Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Series C
Preferred Stock or the number and kind of shares of other capital stock, as the
case may be, issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number of
shares of Series C Preferred Stock or the number and kind of shares of other
capital stock, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when the Series C Preferred Stock
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs that would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) Subject to Section 23 and Section 24 hereof, in the
event any Person becomes an Acquiring Person, then, proper provision shall be
made by the Company so that each record holder of each Right (except as provided
in Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof for the Purchase Price in accordance with terms of this
Agreement, such number of Units of Series C Preferred Stock (or, in lieu of
Series C Preferred Stock, at the option of the Company and to the extent
available, such number of shares
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of Common Stock) as shall equal the result obtained by multiplying the Purchase
Price by a fraction, the numerator of which is the number of Units of Series C
Preferred Stock for which a Right is then exercisable and the denominator of
which is 50% of the current market price of a share of Common Stock (determined
pursuant to Section 11(d) hereof) on the date of the first occurrence of a
Section 11(a)(ii) Event (such result being hereinafter referred to as the
"Adjustment Shares").
(iii) To the extent that the number of shares of Series C
Preferred Stock that are authorized by the Company's articles of incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a),
and subject to such limitations as are necessary to prevent a default under any
agreement for money borrowed as presently constituted to which the Company is a
party and subject to any limitations contained in Section 13.1-653 of the
Virginia Stock Corporation Act, the Company shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value"), over (2) the Purchase Price (such excess being
hereinafter referred to as the "Spread"), and (B) with respect to each Right,
make adequate provision to substitute for such unavailable Adjustment Shares,
upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company, (4) debt securities
of the Company, (5) other assets, or (6) any combination of the foregoing,
having, together with the Adjustment Shares issued upon exercise of such Right,
an aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within 30 days
following the first occurrence of a Section 11(a)(ii) Event, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of preferred stock of
the Company or Common Stock (to the extent such securities are available) and
then, if necessary, cash, which securities and/or assets in the aggregate are
equal to the Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of preferred
stock of the Company or Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth above may be
extended to the extent necessary, but not more than 90 days following the first
occurrence of a Section 11(a)(ii) Event, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be
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the current market price (as determined pursuant to Section 11(d) hereof) per
share of the Common Stock on the date of the first occurrence of a Section
11(a)(ii) Event.
(b) If at any time after the date of this Agreement the
Company shall fix a record date for the issuance of rights, options or warrants
to all holders of Common Stock or of any class or series of Equivalent Shares
entitling such holders (for a period expiring within 45 calendar days after such
record date) to subscribe for or to purchase Common Stock or Equivalent Shares
(or securities convertible into Common Stock or Equivalent Shares) at a price
per share (or having a conversion price per share, if a security convertible
into Common Stock or Equivalent Shares) less than the current market price of
such Common Stock or Equivalent Shares on such record date, then, in each such
case, each Right outstanding immediately prior to such record date shall
thereafter evidence the right to purchase, for the Purchase Price, that number
of Units of Series C Preferred Stock or Equivalent Shares obtained by
multiplying the number of Units of Series C Preferred Stock issuable upon
exercise of a Right immediately prior to such record date by a fraction, the
numerator of which shall be the total number of shares of Common Stock and
Equivalent Shares (if any) outstanding on such record date plus the number of
additional shares of Common Stock and Equivalent Shares (if any) to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible) and the denominator of which shall be the
total number of shares of Common Stock and Equivalent Shares (if any)
outstanding on such record date plus the number of shares of Common Stock or
Equivalent Shares, as the case may be, that the aggregate offering price of the
total number of shares of Common Stock or Equivalent Shares, as the case may be,
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price. In case such subscription price may be paid in a consideration, part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Common Stock and Equivalent Shares owned by or held for the account of
the Company or any Subsidiary of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, each Right shall be adjusted to evidence the
right to receive that number of Units of Series C Preferred Stock that such
Right would have entitled the holder to receive, for the Purchase Price, if such
record date had not been fixed.
(c) If at any time after the date of this Agreement the
Company shall fix a record date for the making of a distribution to all holders
of Common Stock or of any class or series of Equivalent Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of cash (other than a
regular quarterly cash dividend of the Company in compliance with Section
13.1-653 of the Virginia Stock Corporation Act), evidences of indebtedness,
assets, securities (other than Common Stock or any Equivalent Shares) or
subscription rights, options or warrants (excluding those referred to in Section
11(b) hereof), then, in each such case, each Right outstanding immediately prior
to such record date shall thereafter evidence the right to purchase, for the
Purchase Price, that number of Units of Series C Preferred Stock obtained by
multiplying
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the number of Units of Series C Preferred Stock issuable upon exercise of a
Right immediately prior to such record date by a fraction, the numerator of
which shall be the current market price of a share of Common Stock or an
Equivalent Share on the record date and the denominator of which shall be the
current market price of a share of Common Stock or an Equivalent Share on such
record date less the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, evidences of
indebtedness, assets or securities so to be distributed or of such subscription
rights, options or warrants applicable to a share of Common Stock or an
Equivalent Share, as the case may be. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, each Right shall be adjusted to evidence the right
to receive that number of Units of Series C Preferred Stock that such Right
would have entitled the holder to receive, for the Purchase Price, if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten consecutive Trading Days immediately following
such date; provided, however, that in the event that the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite 30 Trading Day or ten Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price" shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices quoted on the Nasdaq Stock Market, as reported by the National
Association of Securities Dealers, Inc. ("Nasdaq") or such other quotation
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the
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Common Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the fair value of
such shares on such date as determined in good faith by the Board of Directors
of the Company shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business or, if
the shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held or
not so listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Series C Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in Section 11(d)(i)
hereof (other than the last sentence thereof). If the current market price per
share of Series C Preferred Stock cannot be determined in the manner provided
above or if the Series C Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), the "current
market price" per share of Series C Preferred Stock shall be conclusively deemed
to be an amount equal to 1000 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock and Series C Preferred Stock occurring after the date of
this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Series C Preferred Stock is publicly
held or so listed or traded, "current market price" per share of the Series C
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current market price" of one
one-thousandth of a share of Series C Preferred Stock shall be equal to the
"current market price" of one share of Series C Preferred Stock divided by 1000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the number of Units of Series C Preferred Stock for which a Right
is exercisable or in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent in such number of
shares or in the Purchase Price; provided, however, that any adjustments that by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a Unit of Series C Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction that mandates such adjustment, or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Series C Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and, if required, the Purchase Price thereof shall be subject
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<PAGE>
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Series C Preferred Stock
contained in Section 11(a), (b), (c), (e), (g), (h), (i), (k) and (l) hereof,
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Series C Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the number or kind of shares purchasable upon exercise of
the Rights or to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the adjusted number of Units of Series
C Preferred Stock or other securities purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided below in this Section 11(h), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Units of Series C Preferred Stock obtained by (i) multiplying (x) the number of
Units of Series C Preferred Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price. On or after the
date of any adjustment of the Purchase Price, in lieu of any adjustment in the
number of Units of Series C Preferred Stock or any other capital stock
purchasable upon the exercise of a Right, the Company may elect to adjust the
number of Rights. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Units of Series C
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(h), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
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(i) Irrespective of any adjustment or change in the Purchase
Price or the number of Units of Series C Preferred Stock or the number and kind
of other securities issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit, the number of Units and the other terms that were
expressed in the initial Rights Certificates issued hereunder.
(j) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of the number of Units
of Series C Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of Units
of Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise before giving effect to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(k) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Series C Preferred Stock, (ii) issuance
wholly for cash of any shares of Series C Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of shares of Series C
Preferred Stock or securities that by their terms are convertible into or
exchangeable for shares of Series C Preferred Stock, (iv) stock dividend or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Series C Preferred Stock shall
not be taxable to such shareholders.
(l) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(m) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(m) hereof), (iii)
effect a statutory share exchange with any Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(m) hereof), or (iv)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(m) hereof), if at the time of or immediately after such
consolidation, merger, statutory share exchange or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights.
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(m) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Record Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section 12. Certificates of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Series C Preferred Stock or the Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (w) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (x)
any Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (y) the Company shall be a party to a
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statutory share exchange with any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m) hereof) after which
the Company is a Subsidiary of any other Person, or (z) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(m) hereof), then, and in
each such case, proper provision shall be made so that: (i) each record holder
of a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable shares of
Common Stock of the Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of shares of Common Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such shares for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(d)(i) hereof) per share of the Common
Stock of such Principal Party on the date of consummation of such Section 13
Event; and (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to ensure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(w), (x) or (y) of the first sentence of Section 13(a) hereof, the Person that
is the issuer of any securities into which shares of Common Stock of the Company
are converted in such merger, consolidation or statutory share exchange, and if
no securities are so issued, the Person that is the other party to such merger,
consolidation or statutory share exchange; and
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(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, statutory share exchange, sale or transfer unless the Principal Party
shall have a sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, statutory share
exchange or sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will
(i) prepare and file a registration statement under the
Act on an appropriate form with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date and similarly comply with applicable state securities laws; and
(ii) deliver to record holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or statutory share exchanges or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a)
hereof.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(n)
hereof, or to distribute Rights Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices on the Nasdaq Stock Market, as
reported by Nasdaq or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Series C Preferred Stock (other than fractions that are integral
multiples of one one-thousandth of a share of Series C Preferred Stock) upon
exercise of the Rights or to distribute certificates that evidence fractional
shares of Series C Preferred Stock (other than in such integral multiples). In
lieu of fractional shares of Series C Preferred Stock that are not in such
integral multiples, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one
one-thousandth of a share of Series C Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-thousandth of a share of
Series C Preferred Stock shall be one one-thousandth of the current market price
of a share of Series C Preferred Stock (as determined pursuant to Section 11(d)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
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Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock in respect of which Rights have been issued); and any registered
holder of any Rights Certificate (or, prior to the Distribution Date, of such
Common Stock), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of such Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company, subject to the last sentence of Section 7(e) hereof, nor
the Rights Agent shall be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental
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authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Units of Series C Preferred
Stock or any other securities of the Company that may at any time be issuable on
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, instruction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a
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party, or any corporation succeeding to the corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, any Vice-Chairman, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
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(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Series C
Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Series C Preferred Stock will, when
so issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer. At any time the
Rights Agent may apply to the Company for written instructions with respect to
any matter arising in connection with the Rights Agent's duties and obligations
arising under this Agreement. Such application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent with
respect to its duties or obligations under this Agreement and the date on and/or
after which such action shall be taken and the Rights Agent shall not be liable
for any action taken or omitted in accordance with a proposal included in any
such application on or after the date specified therein (which date shall be not
less than one Business Day after the Company receives such application, without
the Company's consent) unless, prior to taking or initiating any such action,
the Rights Agent has
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received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days notice in writing mailed to the Company, and to each transfer agent
of the Series C Preferred Stock or Common Stock, by registered or certified
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Series C Preferred
Stock or Common Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered
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holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
the Commonwealth of Virginia (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
Commonwealth of Virginia), in good standing, having a principal office in the
Commonwealth of Virginia, that is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by federal
or state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, the Company may,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights in
connection with the issuance or sale of shares of Common Stock following the
Distribution Date.
Section 23. Redemption and Termination.
(a) (i).The Company may, at its option, at any time prior to
the earlier of (A) the close of business on the tenth day following the Stock
Acquisition Date, or (B) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights (which shall not include any rights that have
become void pursuant to Section 7(e) hereof) at a redemption price of $.001 per
Right, as it may be appropriately adjusted by the Board of Directors of the
Company to reflect any stock split or combination, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price") and the Company may, at its
option, pay the Redemption Price either in shares of Common Stock (based on the
current market price (as determined pursuant to Section 11(d) hereof) per share
of the Common Stock at the time of redemption) or cash.
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(ii) In addition, the Board of Directors may redeem all,
but not less than all, of the then outstanding Rights at the Redemption Price
following the occurrence of a Stock Acquisition Date and following the
expiration of the right of redemption hereunder, if either (A)(1) a Person who
is an Acquiring Person shall have transferred or otherwise disposed of a number
of shares of Common Stock in one transaction or a series of transactions not
directly or indirectly involving the Company or any of its Subsidiaries, such
that such Person is thereafter a Beneficial Owner of 15% or less of the
outstanding shares of Common Stock and (2) there are no other Persons,
immediately following the occurrence of the event described in clause (1), who
are Acquiring Persons, or (B) in connection with the type of transaction
specified in Section 13(a) hereof in which all holders of Common Stock are
treated alike and not involving an Acquiring Person or an Affiliate or Associate
of an Acquiring Person or any other Person in which such Acquiring Person,
Affiliate or Associate has any interest, or any other Person acting directly or
indirectly on behalf of or in association with any such Acquiring Person,
Affiliate or Associate.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Triggering Event until
such time as the Company's right of redemption hereunder is not exercisable.
(b) Immediately upon the action of the Board of Directors of
the Company authorizing the redemption of the Rights pursuant to subsection (a)
of this Section 23 and without any further action and without any notice, the
right to exercise the Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors authorizing the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and to the holders of such Rights by mailing such notice to all
such holders at each holder's last address as it appears upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption shall state the method by which the
payment of the Redemption Price will be effected.
Section 24. Exchange.
(a) The Company may, at its option, by resolution of its Board
of Directors, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring with respect to the Common Stock after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
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(b) Immediately upon the action of the Board of Directors of
the Company authorizing the exchange of the Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of Rights held by such holder multiplied by the Exchange Ratio.
Promptly after the action of the Board of Directors authorizing the exchange of
the Rights, the Company shall give notice of such exchange to the Rights Agent
and to the holders of such Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer
agent for the Common Stock. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock for Rights will be effected.
(c) In the event that there shall not be sufficient shares of
Common Stock authorized but unissued to permit the exchange in full of such
Rights in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to authorize
such additional shares of Common Stock, the Company shall substitute, for each
share of Common Stock that would otherwise be issuable upon exchange of a Right,
a number of shares of other equity securities of the Company or fraction thereof
such that the current per share market price of one share of such other equity
securities multiplied by such number or fraction is equal to the current per
share market price of one share of Common Stock as of the date of issuance of
such shares of such other equity securities or fraction thereof.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates that evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this subsection (d), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to Section 11(d) hereof) for the
Trading Day immediately prior to the Exchange Date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Series C Preferred Stock or to make any other distribution to the
holders of Series C Preferred Stock (other than a regular quarterly cash
dividend of the Company in compliance with Section 13.1-653 of the Virginia
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Stock Corporation Act), or (ii) to offer to the holders of Series C Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Series C Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Series C Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Series C Preferred Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(m)
hereof), or to effect a statutory share exchange with any Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(m)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than a Subsidiary of the Company in one or more transactions each
of which complies with Section 11(m) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders
of the shares of Series C Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least 20 days prior to the record date for determining holders of
the shares of Series C Preferred Stock for purposes of such action, and in the
case of any such other action, at least 20 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
the shares of Series C Preferred Stock whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Series C Preferred Stock shall be deemed thereafter to refer, if appropriate,
not only to Series C Preferred Stock but also to Common Stock or other
securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
United Dominion Realty Trust, Inc.
10 South Sixth Street
Richmond, Virginia 23219
Attention: Corporate Secretary
33
<PAGE>
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
Overpark Center
85 Challenger Road
Ridgefield Park, New Jersey 07660
Attention: Mitzi Brinkman
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. No supplement
or amendment shall be made that changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of shares of Common Stock for
which a Right is exercisable; provided, however, that at any time prior to the
Distribution Date, the Board of Directors of the Company may amend this
Agreement to increase the Purchase Price or extend the Final Expiration Date.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
34
<PAGE>
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board, or the Company or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent, the
registered holders from time to time of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the Persons specified
above.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of
35
<PAGE>
Virginia and for all purposes shall be governed by and construed in accordance
with the laws of such Commonwealth applicable to contracts made and to be
performed entirely within such Commonwealth.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
UNITED DOMINION REALTY TRUST, INC.
By:_______________________________________
Name:____________________________
Title:___________________________
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:_______________________________________
Name:____________________________
Title:___________________________
37
<PAGE>
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R-
_________ Rights
NOT EXERCISABLE AFTER FEBRUARY 4, 2008, OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE COMPANY, AT ITS OPTION, MAY REDEEM THE RIGHTS EVIDENCED BY THIS
CERTIFICATE AT A REDEMPTION PRICE OF $.01 PER RIGHT OR EXCHANGE THE RIGHTS FOR
SHARES OF COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH
TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON.
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.](1)
Rights Certificate
This certifies that ________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of January 27, 1998 (the "Rights
Agreement"), between United Dominion Realty Trust, Inc., a Virginia corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company (the "Rights Agent"), to purchase from the Company at
any time prior to 5:00 P.M. (Richmond, Virginia time) on February 4, 2008 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, non-assessable
share (a "Unit") of Series C Junior Participating Cumulative Redeemable
Preferred Stock (the "Series C Preferred Stock") or other securities of the
Company, at a purchase price of $45.00 per Unit (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. (All capitalized terms not
defined herein shall have the meaning set forth in the Rights Agreement.) The
Purchase Price may be paid in cash or by certified bank check or bank draft
payable to the order of the Company. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of ______ __, [199_], based on the
Series C Preferred Stock as constituted at such date.
A-1
<PAGE>
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Series C Preferred Stock or other securities that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Under certain circumstances specified in Section 7(e) of the Rights Agreement,
Rights that are or were owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person may become null and void and no longer
exercisable by any Person (including any subsequent transferee). Copies of the
Rights Agreement are on file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights Agent or the Secretary
of the Corporation.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Units of Series C Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
then entitle such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Company, at its
option, may redeem the Rights evidenced by this Certificate at a redemption
price of $.001 per Right or exchange the Rights for shares of Common Stock.
No fractional shares of Series C Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions that
are integral multiples of one one-hundredth of a share of Series C Preferred
Stock), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Series C
Preferred Stock or of any other securities of the Company that may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or
A-2
<PAGE>
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated as of ___________ __, ______
[SEAL]
ATTEST: UNITED DOMINION REALTY TRUST, INC.
________________________________ By: ____________________________________
Secretary Title: _____________________________
A-3
<PAGE>
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By __________________________
Authorized Signature
A-4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
- ------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers
unto
______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________________, ____
----------------------------------
Signature
Signature Guaranteed:
A-5
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: _______________________, ____ _______________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: UNITED DOMINION REALTY TRUST, INC.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of Series C
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person that may be issuable upon the
exercise of the Rights) and requests that certificates for such shares (or other
securities) be issued in the name of and delivered to:
Please insert social security or other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
(Please print name and address)
1
Date: _______________, ____
--------------------------------
Signature
Signature Guaranteed:
A-7
<PAGE>
Certificate
------------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: _______________________, ____ ________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
(1) The bracketed language shall be inserted only if applicable.
A-8
<PAGE>
Path: DOCSOPEN\RICHMOND\07667\27789\000253\2g6204!.DOC
Doc #: 114266; V. 4
Doc Name: udrt rights plan
Author: Parks, Randall, 07667
Last Edit: 1/23/98
B-1
EXHIBIT 4(ii)(f)
364-DAY CREDIT AGREEMENT
Dated as of September 16, 1999
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
BANK OF AMERICA, N.A.,
as Administrative Agent
and
FIRST UNION NATIONAL BANK,
as Syndication Agent
Arranged by:
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
<PAGE>
TABLE OF CONTENTS
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
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES.................. 22
3.1 Default Rate................................................. 22
3.2 Extension and Conversion..................................... 23
3.3 Prepayments.................................................. 23
3.4 Termination and Reduction of Commitments..................... 24
3.5 Fees......................................................... 24
3.6 Capital Adequacy............................................. 24
3.7 Inability To Determine Interest Rate......................... 25
3.8 Illegality................................................... 25
3.9 Requirements of Law.......................................... 25
3.10 Taxes....................................................... 26
3.11 Indemnity................................................... 28
3.12 Pro Rata Treatment.......................................... 28
3.13 Sharing of Payments......................................... 29
3.14 Payments, Computations, Etc................................. 30
3.15 Evidence of Debt............................................ 31
SECTION 4 GUARANTY........................................................ 32
4.1 The Guarantee................................................ 32
4.2 Obligations Unconditional.................................... 32
4.3 Reinstatement................................................ 33
4.4 Certain Additional Waivers................................... 34
4.5 Remedies..................................................... 34
4.6 Rights of Contribution....................................... 34
4.7 Continuing Guarantee......................................... 35
SECTION 5 CONDITIONS...................................................... 35
5.1 Conditions to Closing........................................ 35
5.2 Conditions to All Extensions of Credit....................... 36
SECTION 6 REPRESENTATIONS AND WARRANTIES.................................. 37
6.1 Financial Condition.......................................... 37
6.2 No Material Adverse Changes.................................. 38
6.3 Organization; Existence; Compliance with Law................. 38
6.4 Power; Authorization; Enforceable Obligations................ 38
6.5 No Legal Bar................................................. 38
6.6 No Material Litigation....................................... 39
6.7 No Default................................................... 39
6.8 Ownership of Property; Liens................................. 39
6.9 Taxes........................................................ 39
i
<PAGE>
6.10 ERISA....................................................... 39
6.11 Governmental Regulations, Etc............................... 41
6.12 Subsidiaries................................................ 41
6.13 Purpose of Extensions of Credit............................. 42
6.14 Environmental Matters....................................... 42
6.15 Year 2000 Compliance........................................ 43
SECTION 7 AFFIRMATIVE COVENANTS........................................... 43
7.1 Financial Statements......................................... 43
7.2 Certificates; Other Information.............................. 44
7.3 Notices...................................................... 45
7.4 Payment of Obligations....................................... 46
7.5 Conduct of Business and Maintenance of Existence............. 46
7.6 Maintenance of Property; Insurance........................... 46
7.7 Inspection of Property; Books and Records; Discussions....... 47
7.8 Environmental Laws........................................... 47
7.9 Financial Covenants.......................................... 48
7.10 Agency Fees................................................. 49
7.11 Additional Guaranties and Stock Pledges..................... 49
7.12 Ownership of Subsidiaries................................... 49
7.13 Use of Proceeds............................................. 49
7.14 Year 2000 Compliance........................................ 49
SECTION 8 NEGATIVE COVENANTS.............................................. 50
8.1 Limitations on Debt.......................................... 50
8.2 Restriction on Liens......................................... 50
8.3 Consolidations, Mergers and Sales of Assets.................. 51
8.4 Loans and Investments........................................ 52
8.5 Transactions with Affiliates................................. 52
8.6 Transactions with Other Persons regarding this Agreement..... 53
8.7 Limitation on Certain Restrictions on Subsidiaries........... 53
SECTION 9 EVENTS OF DEFAULT............................................... 53
9.1 Events of Default............................................ 53
9.2 Acceleration; Remedies....................................... 56
SECTION 10 AGENCY PROVISIONS.............................................. 56
10.1 Appointment................................................. 56
10.2 Delegation of Duties........................................ 57
10.3 Exculpatory Provisions...................................... 57
10.4 Reliance on Communications.................................. 57
10.5 Notice of Default........................................... 58
10.6 Non-Reliance on Administrative Agent and Other Lenders...... 58
10.7 Indemnification............................................. 59
10.8 Administrative Agent in its Individual Capacity............. 59
10.9 Successor Administrative Agent.............................. 60
SECTION 11 MISCELLANEOUS.................................................. 60
11.1 Notices..................................................... 60
11.2 Right of Set-Off............................................ 61
ii
<PAGE>
11.3 Benefit of Agreement........................................ 62
11.4 No Waiver; Remedies Cumulative.............................. 64
11.5 Payment of Expenses, etc.................................... 64
11.6 Amendments, Waivers and Consents............................ 65
11.7 Counterparts................................................ 66
11.8 Headings.................................................... 66
11.9 Survival.................................................... 67
11.10 Governing Law; Submission to Jurisdiction; Venue........... 67
11.11 Severability............................................... 67
11.12 Entirety................................................... 68
11.13 Binding Effect; Termination................................ 68
11.14 Source of Funds............................................ 68
11.15 Conflict................................................... 69
iii
<PAGE>
SCHEDULES
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
iv
<PAGE>
364-DAY
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of September 16, 1999 (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"), BANK OF AMERICA, N.A., as
Administrative Agent (in such capacity, the "Administrative Agent") and FIRST
UNION NATIONAL BANK, as Syndication Agent.
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $110
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" means Bank of America, N.A. and its
successors and assigns.
1
<PAGE>
"Administrative Agent's Fee Letter" means that certain letter
agreement, dated as of September 13, 1999, 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.
"Aggregate Revolving Committed Amount" means the aggregate
amount of Revolving Commitments in effect from time to time, being
initially ONE HUNDRED TEN MILLION DOLLARS ($110,000,000).
"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":
Pricing S&P Moody's Eurodollar Base Rate Facility
Level Rating Rating Margin Margin Fee
------- ------ ------- ---------- --------- --------
I A- or above A3 or above 0.75% 0% 0.15%
II BBB+ Baa1 0.90% 0% 0.20%
III BBB Baa2 1.00% 0% 0.20%
IV BBB- Baa3 1.10% 0% 0.25%
V below BBB- below Baa3 1.60% 0% 0.30%
or unrated or unrated
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; provided, however, that if the ratings of S&P and Moody's are two
Pricing Levels apart, then the Applicable Percentage shall be based on
the Pricing Level that falls between the Pricing Levels that correspond
to the ratings of S&P and Moody's. 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
2
<PAGE>
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.
"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.
"Bank of America" means Bank of America, N.A. and its
successors.
"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.
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"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.
"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
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thereof, the interest with respect to which is exempt from federal
income taxation under Section 103 of the Internal Revenue 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).
"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.
"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 EBITDA" means, for any period for the
Consolidated Group, the sum of Consolidated EBITDA for such period
minus a reserve of $250 per apartment unit for such period. Except as
expressly provided otherwise, the applicable
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period shall be for the four consecutive fiscal quarters ending as of
the date of determination.
"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
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
fiscal 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 Coverage Ratio" means, for any period,
the ratio of Consolidated Adjusted EBITDA to Consolidated Interest
Expense.
"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.
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<PAGE>
"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 Realty" means, for any
period for any Realty of the Consolidated Group, an amount equal to (i)
the aggregate rental and other income from the operation of such Realty
during such period; minus (ii) all expenses and other proper charges
incurred in connection with the operation of such Realty (including,
without limitation, real estate taxes and bad debt expenses) during
such period; but, in any case, before payment of or provision for debt
service charges for such period, income taxes for such period, and
depreciation, amortization and other non-cash expenses for such period,
all on a consolidated basis determined in accordance with GAAP on a
consistent basis.
"Consolidated Net Operating Income from Unencumbered Realty"
means, for any period, an amount equal to (i) the aggregate rental and
other income from the operation of Consolidated Unencumbered Realty
during such period; minus (ii) all expenses and other proper charges
incurred in connection with the operation of Consolidated Unencumbered
Realty (including, without limitation, real estate taxes and bad debt
expenses) during such period; but, in any case, before payment of or
provision for debt service charges for such period, income taxes for
such period, and depreciation, amortization and other non-cash expenses
for such period, all on a consolidated basis determined in accordance
with GAAP on a consistent basis.
"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 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.
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"Consolidated Total Fixed Charge Coverage Ratio" means, for
any period, the ratio of Consolidated Adjusted 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 plus all cash dividends and distributions on preferred stock
or other preferred beneficial interests of members of the Consolidated
Group paid in the period of four consecutive fiscal quarters ending on
such day, all on a consolidated basis determined in accordance with
GAAP on a consistent basis.
"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 a
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.
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"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.
"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.
"Eligible Assignee" means (i) a Lender; (ii) an affiliate of a
Lender; and (iii) any other commercial bank, financial institution,
institutional lender or "accredited investor" (as defined in Regulation
D of the Securities and Exchange Commission) with (i) total assets of
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at least $25 billion, (ii) a long term unsecured debt rating of BBB+ or
better from S&P or its equivalent and (iii) an office in the United
States. Neither the Borrower nor an Affiliate of the Borrower shall
qualify as an Eligible Assignee.
"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 Internal Revenue 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 amendment to any Plan
requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
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"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 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 such day shall be the average rate quoted to the Administrative
Agent on such day on such transactions as determined by the
Administrative Agent.
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"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.
"Funds From Operations" for any period, with respect to any
Person, shall have the meaning given to such term in, and shall be
calculated in accordance with, the "white paper" issued in March 1995
by the National Association of Real Estate Investment Trusts.
"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 (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,
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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.
"Internal Revenue 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 Internal Revenue Code
shall be construed also to refer to any successor sections.
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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.
"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) Investments
permitted by Section 8.4(b) or (c).
"Permitted Securitization Transaction" means any
Securitization Transaction which (i) the structure and documentation
for such Securitization Transaction are reasonably satisfactory to the
Administrative Agent and the Required Lenders, (ii) the terms of such
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Securitization Transaction, including the discount applicable to the
Receivables which are subject of such financing and any termination
events, are (in the good faith understanding of the Administrative
Agent and the Required Lenders) consistent with those prevailing in the
market at the time of commitment thereto for similar transactions
involving a receivables originator/servicer of similar credit quality
and a receivables pool or other similar characteristics and (iii) the
documentation for such Securitization Transaction shall not be amended
or modified in any manner which is materially adverse to the interests
of the Lenders without the prior written consent of the Administrative
Agent and the Required Lenders.
"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 Bank of America 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 Bank of America 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 Bank
of America 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
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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.
"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 D, T, U, or X" means Regulation D, 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.
"REIT" means a real estate investment trust as defined in
Sections 856-860 of the Internal Revenue Code.
"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 sixty six and two-thirds percent
(66 2/3%) of the Commitments, or if the Commitments have been
terminated, Lenders having, at the time of determination thereof, more
than sixty six and two-thirds percent (66 2/3%) 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.
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"Responsible Officer" means the Chief Financial Officer, the
Controller, the Senior Vice President of Finance 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 Percentage of each Lender is set out on
Schedule 2.1(a).
"Revolving Committed Amount" means, for each Lender, the
amount of such Lender's Revolving Commitment at such time. The initial
Revolving Committed Amount of each Lender is set out on 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
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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.
"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.
"Tangible Fair Market Value of Assets" means, as of any date
for the Consolidated Group, the sum (without duplication) of (a) with
respect to any Realty owned by a member of the Consolidated Group for
six months or more, (i) the sum of (A) Consolidated Net Operating
Income for such Realty for the fiscal quarter most recently ended
multiplied by four, minus (B) a reserve of $250 per apartment unit,
divided by (ii) 9.50%, plus (b) with respect to any Realty owned by a
member of the Consolidated Group for six months or less, the actual
cost of such Realty, plus (c) with respect to any Realty currently
under development, the sum of (i) one hundred percent (100%) of the
GAAP value of the land associated with such Realty plus (ii) an amount
equal to 25% of the actual expenditures for improvements on such land
(up to, in the aggregate for all Realty currently under development,
ten percent (10%) of the sum of clauses (a), (b), (d) and (e)
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of this definition), plus (d) cash and Cash Equivalents, in each case
on a consolidated basis determined in accordance with GAAP applied on a
consistent basis, plus (e) one hundred percent (100%) of the GAAP value
of all land contributed to or otherwise invested in joint ventures.
"Termination Date" means August 4, 2000, 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 August 4, 1997, as amended and modified from time
to time, among the Borrower, the Guarantors and Lenders identified
therein and Bank of America, N.A., a national banking association
formerly known as 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 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 in either case
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.
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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.
(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 Aggregate 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
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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.
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).
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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.
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
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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 Aggregate 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.
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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.
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)
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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.
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,
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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.
(b) Each Lender that is not a United States person under Section
7701(a)(30) of the Internal Revenue Code, on or prior to the date of its
execution and delivery of this Credit Agreement in the case of each Lender
listed on the signature pages hereof and on or prior to the date on which it
becomes a Lender in the case of each other Lender, and from time to time
thereafter if requested in writing by the Borrower or the Administrative Agent
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower and the Administrative Agent with (i) Internal Revenue Service Form
W-8 BEN or W-8 ECI, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
to zero the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Credit Agreement is effectively connected
with the conduct of a trade or business in the United States, (ii) Internal
Revenue Service Form W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and/or (iii) any other form or
certificate required by any taxing authority (including any certificate required
by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Lender is entitled to an exemption from tax on payments pursuant to this
Credit Agreement or any of the other Credit Documents.
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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 Aggregate 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
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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 the Bankruptcy 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.
3.14 Payments, Computations, Etc.
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(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 Guaranteed Obligations;
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
Section 4 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:
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(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.
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.
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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 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
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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 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.
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(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(e)(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.
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(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 requested pursuant to Section 2.1, all conditions set forth in
Section 2 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.
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, 1998, 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 June 30, 1999,
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
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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 Internal Revenue 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
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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 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:
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(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 Internal
Revenue 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 Internal
Revenue 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 Internal Revenue 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 Internal Revenue 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 Internal
Revenue Code apply has been administered in compliance in all material respects
of such sections.
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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 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 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.
6.12 Subsidiaries.
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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 knowledge of the members of the Consolidated Group,
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.
(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
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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.
6.15 Year 2000 Compliance.
The Borrower has (i) initiated a review and assessment of all
areas within its and each of its Subsidiaries' businesses and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications may not be able to recognize and properly perform date-sensitive
functions after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
the Borrower believes that all computer applications (including those of its
suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so could not reasonably be expected to have a Material
Adverse Effect.
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).
(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.
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(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 (in accordance with
Section 11.1) 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 (such notice shall expressly state that it is a "notice 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 Internal
Revenue 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;
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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 Internal
Revenue 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.
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.
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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 (on a full replacement cost basis),
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 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) $1,600,000,000 plus (ii) 90% of the net proceeds (after
customary underwriting discounts and commissions and reasonable
offering expenses) from Equity Transactions occurring after June 30,
1999.
(b) Consolidated Funded Debt Ratio. Consolidated Funded Debt
shall not at any time exceed 60% of Tangible Fair Market Value of
Assets.
(c) Consolidated Priority Claims. Consolidated Priority Claims
will not at any time exceed 35% of Tangible Fair Market Value of
Assets.
(d) Consolidated Interest Coverage Ratio. As of the end each
fiscal quarter, the Consolidated Interest Coverage Ratio shall not be
less than 2.0:1.0.
(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 1.5:1.0.
(f) Consolidated Unsecured Debt to Consolidated Unencumbered
Realty. The ratio of Consolidated Unsecured Debt to Consolidated
Unencumbered Realty shall not at any time be greater than 0.55:1.0.
(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.
(h) Dividend Payouts. During any period the Borrower shall not
make distributions on common stock (excluding dividends paid resulting
from extraordinary gains which extraordinary gains are excluded from
the calculation of Funds From Operations) in an aggregate amount in
excess of ninety five percent (95%) of Funds From Operations
attributable to such period; provided, however, the Borrower may pay
dividends or distributions that exceed the amount permitted by the
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preceding subclause if such larger distribution is required in order
for the Borrower to maintain its status as a REIT.
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.
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.
7.14 Year 2000 Compliance.
The Credit Parties will promptly notify the Agent in the event
any Credit Party discovers or determines that any computer application
(including those of its suppliers, vendors and customers) that is material to
its or any of its Subsidiaries' business and operations will not be Year 2000
Compliant, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
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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 for 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;
(c) Liens not securing Debt which are incurred in the ordinary
course of business in connection with worker'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;
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(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 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;
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(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) Notwithstanding clause (a)(ii) above, make any Investment
in or acquisition of unimproved real property such that following such
investment or acquisition, Consolidated Unimproved Realty and purchase money
mortgages are at any time greater than ten percent (10%) of the Consolidated
Total Realty.
(c) Notwithstanding clause (a)(ii) above, make any capital
contribution or other Investment of land to or in joint ventures except for such
capital contributions and other Investments which in the aggregate do not exceed
$50 million.
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 default 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
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(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
(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
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(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
(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 Internal Revenue 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 Internal Revenue 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 Internal Revenue 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
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(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.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints Bank of America, N.A. as
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 Lender 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,
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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.
10.4 Reliance on Communications.
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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.
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
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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,
reasonable costs, reasonable 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
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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 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
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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) 819-1885
Telecopy: (804) 788-4607
if to the Administrative Agent:
Bank of America, N.A.
Real Estate Structured Debt
MD2-600-06-14
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn: Eleanor Mitchell-Wharton
Loan Administration
Telephone: (301) 493-7146
Telecopy: (301) 493-2885
with a copy to:
Bank of America, N.A.
Real Estate Structured Debt
MD2-600-06-14
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn: Kevin McCullough
Telephone: (301) 493-2879
Telecopy: (301) 493-2885
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 (subject to Section 3.13) 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
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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, with the prior written
consent of the Administrative Agent and the Borrower (provided that the
consent of the Borrower shall not be unreasonably delayed or withheld
and provided further that the consent of the Borrower shall not be
required during the existence and continuation of an Event of Default),
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 an Eligible Assignee; provided that (i) any such
assignment (other than any assignment to an existing Lender) shall be
in a minimum aggregate amount of $10,000,000 (or, if less, the
remaining amount of the Commitment of the assigning 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
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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). If the assignee is not
a United States person under Section 7701(a)(30) of the Internal
Revenue Code, it shall deliver to the Credit Parties and the
Administrative Agent certification as to exemption from deduction or
withholding of Non-Excluded Taxes in accordance with Section 3.10. 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 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
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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 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.
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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,
(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,
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(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.
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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 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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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
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(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: United Dominion Realty Trust, Inc.,
a Virginia corporation, general partner
By:_________________________
Name:
Title:
UDRT OF NORTH CAROLINA, L.L.C.,
a North Carolina limited liability company
By: United Dominion Realty Trust, Inc.,
a Virginia corporation, sole member
By:_________________________
Name:
Title:
UDR SOUTH CAROLINA TRUST,
a Maryland real estate investment trust
By:_________________________
Name:
Title:
UDR WESTERN RESIDENTIAL, INC.,
a Virginia corporation
By:_________________________
Name:
Title:
SOUTHWEST REIT HOLDING, INC.,
<PAGE>
a Texas corporation
By:_________________________
Name:
Title:
UDR OF TENNESSEE, L.P.,
a Virginia limited partnership
By: United Dominion Realty Trust, Inc.,
a Virginia corporation, general partner
By:_________________________
Name:
Title:
UDR OF TEXAS PROPERTIES, L.P.,
a Virginia limited partnership
By: UDR Western Residential, Inc.,
a Virginia corporation, general partner
By:_________________________
Name:
Title:
UDR CALIFORNIA PROPERTIES, L.L.C.,
a Virginia limited liability company
By: United Dominion Realty Trust, Inc.,
a Virginia corporation, sole member
By:_________________________
Name:
Title:
UDR VIRGINIA PROPERTIES, L.L.C.,
a Virginia limited liability company
By: United Dominion Realty Trust, Inc.,
a Virginia corporation, sole member
By:_________________________
Name:
Title:
<PAGE>
UDR FLORIDA PROPERTIES, L.L.C.,
a Virginia limited liability company
By: United Dominion Realty Trust, Inc.,
a Virginia corporation, sole member
By:_________________________
Name:
Title:
<PAGE>
LENDERS: BANK OF AMERICA, N.A.,
individually in its capacity as a
Lender and in its capacity as Administrative Agent
By:___________________________________
Name:
Title:
BANK HAPOALIM, B.M.
By:___________________________________
Name:
Title:
BRANCH BANKING & TRUST
By:___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By:___________________________________
Name:
Title:
COMERICA BANK
By:___________________________________
Name:
Title:
CRESTAR BANK
By:___________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:___________________________________
Name:
Title:
SOUTHTRUST BANK, NATIONAL ASSOCIATION
<PAGE>
By:___________________________________
Name:
Title:
<PAGE>
Schedule 2.1(a)
Schedule of Lenders and Commitments
Revolving Revolving Commitment
Lender Commitment Percentage
------ ---------- --------------------
Bank of America, N.A. $25,500,000 23.18181818%
First Union National Bank $25,000,000 22.72727273%
SouthTrust Bank, National Association $25,000,000 22.72727273%
Branch Banking & Trust $12,500,000 11.36363636%
The Chase Manhattan Bank $10,000,000 9.09090909%
Crestar Bank $ 5,000,000 4.54545454%
Comerica Bank $ 4,000,000 3.63636363%
Bank Hapoalim, B.M. $ 3,000,000 2.72727273%
Total $110,000,000 100.00%
<PAGE>
Schedule 2.1(b)(i)
FORM OF NOTICE OF BORROWING
Bank of America, N.A.,
as Administrative Agent for the Lenders
Real Estate Structured Debt
MD2-600-06-14
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn: Loan Administration
Re: 364-Day Credit Agreement dated as of September __, 1999 (as
amended and modified, the "Credit Agreement") among United
Dominion Realty Trust, Inc., the Guarantors and Lenders
identified therein and Bank of America, 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
(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).
(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.
(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
September 16, 1999
FOR VALUE RECEIVED, UNITED DOMINION REALTY TRUST, INC., a Virginia
corporation (the "Borrower"), hereby promises to pay to the order of
_____________________, its successors and assigns (the "Lender"), 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 the
Lender's Revolving Committed Amount or, if less, the aggregate unpaid principal
amount of all Revolving Loans made by the Lender to the 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 the date hereof (as amended and modified, the
"Credit Agreement") among the Borrower, United Dominion Realty, L.P., a Virginia
limited partnership, and the Subsidiaries of the Borrower identified therein, as
guarantors, the Lenders identified therein and Bank of America, 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
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 Borrower. In the event payment of amounts evidenced
by this Note is not made at any stated or accelerated maturity, the 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.
<PAGE>
IN WITNESS WHEREOF, the 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
Bank of America, N.A.,
as Administrative Agent for the Lenders
Real Estate Structured Debt
MD2-600-06-14
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn: Loan Administration
Re: 364-Day Credit Agreement dated as of September 16, 1999 (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
Bank of America, 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 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(e)(v) of the 364-Day Credit Agreement (the
"Credit Agreement"), dated as of September 16, 1999, among United Dominion
Realty Trust, Inc., a Virginia corporation, the Guarantors and Lenders
identified therein and Bank of America, 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
__________________, 1999. 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. Each of the following persons is now a duly elected and qualified
officer of the Corporation, holding the office(s) 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 and the other Credit Documents and to act as a
Responsible Officer on behalf of the Corporation under the Credit Agreement:
Name Office Signature
- ---- ------ ---------
________________________
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his/her name and
affixed the corporate seal of the Corporation.
__________________________,
Secretary
Date: September 16, 1999
(CORPORATE SEAL)
I, _______________, Vice President of _______________, hereby certify
that _______________, whose genuine signature appears above, is, and has been at
all times since _______________, a duly elected, qualified and acting Secretary
of _______________.
__________________________,
Vice President
Date: September 16, 1999
<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 September 16, 1999
(as amended, modified and supplemented, the "Credit Agreement") among United
Dominion Realty Trust, Inc., a Virginia corporation, the Guarantors and Lenders
identified therein, and Bank of America, 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 BANK OF AMERICA, N.A., in its capacity as
Administrative Agent under that certain 364-Day Credit Agreement dated as of
September 16, 1999 (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 Bank of America, 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.
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 Schedule
<PAGE>
6.12 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:
BANK OF AMERICA, N.A., as Administrative
Agent
By:____________________________
Name:
Title:
<PAGE>
Schedule A
to
Joinder Agreement
<PAGE>
Schedule 8.7
REMICs and Other Special Subsidiaries
<PAGE>
Schedule 11.1
Schedule of Lenders' Addresses
Bank of America, N.A. Real Estate Structured Debt
MD2-600-06-14
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn: Eleanor Mitchell-Wharton
Loan Administration
Telephone: (301) 493-7146
Telecopy: (301) 493-2885
with a copy to:
Bank of America, N.A.
Real Estate Structured Debt
MD2-600-06-14
6610 Rockledge Drive, 6th Floor
Bethesda, Maryland 20817
Attn: Kevin McCullough
Telephone: (301) 493-2879
Telecopy: (301) 493-2885
Bank Hapoalim, B.M. 1177 Avenue of the Americas
New York, New York 10036
Attn: Shaun Briedbart
Telephone: (212) 782-2186
Telecopy: (212) 782-2187
BB&T Branch Banking & Trust 110 South Stratford Road
Suite 301
Winston-Salem, North Carolina 27104
Attn: Rufus Yates
Telephone: (336) 733-3244
Telecopy: (336) 733-3254
The Chase Manhattan Bank 270 Park Avenue
31st Floor
New York, New York 10017
Attn: Marc Costantino
Telephone: (212) 270-9554
Telecopy: (212) 270-3513
<PAGE>
Comerica Bank 500 Woodward Street
7th Floor
Detroit, Michigan 48226
Attn: Leslie Vogel
Telephone: (313) 222-9290
Telecopy: (313)222-9295
Crestar Bank 8245 Boone Boulevard
Suite 820
Vienna, Virginia 22182
Attn: Nancy Richards
Telephone: (703) 902-9039
` Telecopy: (703) 902-9245
First Union National Bank One First Union Center
NC0166
Charlotte, North Carolina 28288
Attn: John Schissel
Telephone: (704) 383-1967
Telecopy: (704) 383-6205
Attn: Cindy Beam
Telephone: (704) 383-7534
Telecopy: (704) 383-6205
SouthTrust Bank,
National Association 420 North 20th Street
11th Floor
Birmingham, Alabama 35203
Attn: Lynn Feuerlein
Telephone: (205) 254-5870
Telecopy: (205) 254-8270
Attn: Ronnie Brantley
Telephone: (205) 254-4438
Telecopy: (205) 254-8270
<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 PARTY IDENTIFIED ON THE SIGNATURE PAGES AS
THE "ASSIGNEE" ("Assignee").
Reference is made to that 364-Day Credit Agreement dated as of
September 16, 1999 (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 Bank of America, 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
Assignee, and the Assignee hereby purchases and assumes, 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. The
Assignee represents that it is an Eligible Assignee within the meaning of the
term in the Credit Agreement. The Assignor and the Assignee hereby make and
agree 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) the 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) the 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 Commonwealth of Virginia.
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.
<PAGE>
4. The fee payable to the Administrative Agent in connection with this
Assignment is enclosed.
[remainder of page intentionally left blank.]
<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
BANK OF AMERICA, 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
ASSIGNEE
Total $ $
REVOLVING LOANS SUBJECT OF THIS ASSIGNMENT
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
--------- ---------- -----------
ASSIGNOR
ASSIGNEE
Total $ $
REVOLVING LOANS AFTER ASSIGNMENT
Revolving Revolving Revolving
Committed Commitment Loans
Amount Percentage Outstanding
--------- ---------- -----------
ASSIGNOR
ASSIGNEE
Total $ $
EXHIBIT 10(iv)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), entered into this 30th day of
September, 1999, between UNITED DOMINION REALTY TRUST, INC., a Virginia
corporation (the "Company") and A. WILLIAM HAMILL (the "Executive"), provides as
follows:
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises and undertakings hereinafter set forth, and the payments to be made to
the Executive hereunder, the parties hereto agree as follows:
1. Position and Duties.
a. The Company hereby agrees to employ and the Executive hereby accepts
the position of Chief Financial Officer of the Company, subject to the
supervision of the Chief Executive Officer of the Company, or such other senior
officer of the Company as may be prescribed by the Chief Executive Officer or
the Board of Directors of the Company (the "Board"). The Executive agrees that
the description of the executive position shall not limit the Company from
assigning to the Executive such other duties and functions in addition to or in
substitution of those described above.
b. The Executive agrees to serve the Company as a full time executive
officer with duties and authority as set forth in the Company's by-laws or as
otherwise prescribed by the Board, the Chief Executive Officer, or such other
senior officer prescribed by the Chief Executive Officer or the Board. The
Executive shall devote such time, attention, skill, and efforts to the
performance of his duties as a Company executive as shall be required therefore,
all under the supervision and direction of the Board, the Chief Executive
Officer, or such other senior officer prescribed by the Board. The Executive
agrees that during the period of his employment he will not, without the
approval of a majority of the independent directors of the Board, have any other
(i) real estate investment trust or business affiliations, or (ii) corporate
affiliations that conflict with the business of the Company or interfere with
the ability of the Executive to perform his duties for the Company or comply
with the covenants under this Agreement. Generally, the Board recognizes the
importance of the executive officers of the Company serving on the boards of
other companies whose businesses do not conflict with the business of the
Company. The Board consents to the Executive serving on the board of directors
of Sola International, Inc. and The Cookson Company provided that the
responsibilities as a board member do not interfere with carrying out the duties
and responsibilities as Chief Financial Officer of the Company.
-1-
<PAGE>
2. Term of Agreement.
This Agreement will take effect as of the date of this Agreement and
will end on December 31, 1999. After December 31, 1999, this Agreement will
automatically renew for successive one (1) year periods, ending as of December
31 of each year, unless sooner terminated in accordance with Section 4.
3. Compensation and Benefits.
a. Base Salary. The Executive's pay will not be less than $265,000 per
year, payable in accordance with the Company's regular payroll practices, unless
the Executive consents to a lesser base salary in writing.
b. Annual Incentive Compensation. The Executive's annual compensation
shall also include an annual incentive where the Executive has an opportunity to
earn a bonus of at least fifty (50%) of base salary based upon the Executive and
the Company meeting certain performance goals and objectives as determined by
the Compensation Committee of the Board (the "Compensation Committee"). The
Executive acknowledges that the Board or the Compensation Committee, as
appropriate, may elect to modify or terminate annual incentive compensation for
all executives at any time.
c. Long Term Incentive Compensation. The Executive's compensation shall
also include participation (i) in the Company's 1982 Stock Option Plan; (ii) in
the Company's 1991 Officers Stock Purchase and Loan Plan; and (iii) the
"shareholder value plan" or other long-term compensation plan for senior
officers of the Company adopted by the Compensation Committee or the Board, on
the same basis as similarly situated executive officers of the Company. The
Executive acknowledges that the Board or the Compensation Committee, as
appropriate, may elect to terminate or modify any or all long-term incentive
compensation at any time.
d. Associate Benefit Plans. The Executive will be eligible to
participate in any and all employee benefit plans, medical insurance plans,
retirement plans, and other benefit plans in effect for employees in similar
positions at the Company (the "Company Plans") or any other plans applicable for
other officers or executive officers of the Company. Such participation shall be
subject to the terms of the applicable plan documents and the Company's
generally applied policies. In addition, the Executive acknowledges that the
Company may elect to terminate or modify any or all Company Plans at any time.
e. Travel. It is contemplated that the Executive will be required to
incur travel and entertainment expense in the interests and on behalf of the
Company and in furtherance of its business. The Executive agrees to comply with
the travel and entertainment guidelines of the Company, which may be modified
from time to time (the "T&E Guidelines"). The Company at the end of each month
during the period of this Agreement will, upon submission of appropriate bills
or vouchers, reimburse expenses incurred by the Executive during such month in
compliance with
-2-
<PAGE>
the T&E Guidelines. The Executive agrees to maintain adequate records, in such
detail as the Company may reasonably request, of all expenses to be reimbursed
by the Company hereunder and to make such records available for inspection as
and when reasonably requested by the Company.
4. Employment Termination Outside of Change of Control.
a. Incapacity; Death. This Agreement may be terminated by the Company,
by delivery of a "Notice of Termination" (defined in Section 8) to the Executive
or his personal representative given at least thirty (30) days prior to the
effective date specified therein, in the event that the Executive shall be
unable to perform his duties hereunder for a period of more than three
consecutive months as a result of illness or incapacity.
This Agreement shall terminate on the death of the Executive.
b. Without Cause. This Agreement may be terminated by the Company,
without cause, by delivery of a "Notice of Termination" (defined in Section 8)
given to the Executive ten (10) days prior to the effective date of such
termination.
c. Severance Compensation. Upon termination of this Agreement pursuant
to Section 4 (a) or 4 (b), the Company shall pay to the Executive or his legal
representative certain compensation (the "Severance Compensation") as follows:
(i) Base Salary. The Executive shall be paid fifty-two (52)
weeks of base salary, and the Company shall continue in
effect for a period of fifty-two (52) weeks after the
effective date of the Executive's termination, all
health/life/disability insurance coverage provided to the
Executive and his immediate family on the day immediately
prior to the date of notice of termination or, if the
Executive shall so elect, the Company shall pay to the
Executive an amount equal to the portion of the premium
allocable to the Executive for providing such coverage,
provided, however, if such coverage cannot be continued
by the Company, the Company shall pay to the Executive an
amount sufficient for the Executive to obtain substantially
similar coverage for a period of fifty-two (52) weeks after
the effective date of termination.
(ii) Incentive Compensation. The Executive shall also be
entitled to annual incentive compensation, (i) actually
earned by the Executive, if any, pursuant to Section 3(b) of
this Agreement for the Company's current fiscal year
prorated through the effective date of termination, which
compensation shall be paid no later than forty-five (45)
days after the end of the Company's fiscal year and (ii)
an amount equal to the sum of the annual incentive
compensation earned by the Executive over the two calendar
years prior to the effective date of termination, divided
by two ("Average Annual Incentive Compensation").
Compensation pursuant to paragraph 3(c)(long term incentive
compensation) shall be governed by the terms of the subject
plans.
-3-
<PAGE>
(iii) Severance Compensation Reduction. In the event termination
is pursuant to Section 4 (a) of this Agreement, the portion
of Severance Compensation to be paid pursuant to Section
4(i) and (ii) shall be reduced by the amount of any life
insurance proceeds paid by or through the Company or
disability insurance payments for one (1) year, as
appropriate, payable to the Executive or his personal
representative or other beneficiary.
(iv) Timing. The Company, at its option, shall pay to the
Executive or his legal representative the sums
payable to such Executive or his legal representative
on account of the portion of Severance Compensation
consisting of (y) base salary either in a lump sum or
in monthly increments payable on the first day of
each month over the succeeding twelve (12) month
period; and (z) the Average Annual Incentive
Compensation within thirty (30) days after the
effective date of termination.
(v) Life Insurance. The Executive shall also be entitled to
direct the Company to change the beneficiary of any
non-group life insurance policy to another person or group.
d. By the Executive. This Agreement may be terminated by the Executive,
upon delivery of a "Notice of Termination" (defined in Section 8) given at least
ninety (90) days before the effective date of termination or for "Good Reason,"
which, for the purposes of this subsection, shall mean for the reasons set forth
in subsections 5(d)(i) to (vi). In such event, the Executive shall not be
entitled to any compensation under this Agreement for any period not worked
after the termination date, other than compensation to which the Executive is
entitled pursuant to Section 5.
e. For Cause. The Company may terminate this Agreement for cause by
providing a "Notice of Termination" (as defined in Section 8). In such event,
the Executive shall not be entitled to any compensation under this Agreement for
the period after the termination date, and any compensation paid to the
Executive shall be net of any sums owed by the Executive to the Company as a
result of the act for which the employment of the Executive was terminated. The
circumstances under which the Company will be deemed to have cause to terminate
this Agreement will be a breach of this Agreement or a serious offense
inconsistent with his duties as an Executive which shall include but not be
limited to the following:
(i) The Executive is convicted of or pleads nolo contendere to
any crime, other than a traffic offense or misdemeanor;
(ii) The Executive shall commit, with respect to the Company, an
act of fraud or embezzlement or shall have been grossly
negligent in the performance of his duties hereunder;
-4-
<PAGE>
(iii) The Executive engages in gross dereliction of duties,
refusal to perform assigned duties consistent with
his position, or repeated violation of the Company's
policies after written warning; or,
(iv) The Executive engages in drug abuse.
f. Consulting Services. Upon termination of this Agreement, the
Executive shall, for a period of up to one year following the effective date of
termination, render such advisory or consulting services to the Company as it
may reasonably request, taking into account the Executive's health, business
commitments, geographical location and other relevant circumstances. The intent
of this paragraph is not to obligate the Executive to perform any day-to-day
duties for the Company following termination of his employment but only to
assist management in effecting a smooth transition of the functions or projects
for which the Executive was responsible while an employee of the Company. Should
the Executive fail to render such advisory or consulting services, after 30
days' prior written notice to the Executive and the Executive's failure to
commence the rendering of such service, the Company's sole remedy shall be to
terminate payment of any remaining severance compensation. If this Agreement is
terminated pursuant to Section 4(d)(except where the termination is for "Good
Reason") or 4(e) and no Severance Compensation is paid to the Executive, the
Executive shall be paid on an hourly basis to the extent requested by the
Company to perform advisory or consulting services, based upon his base salary
prior to termination for the actual time spent for advisory or consulting
services for the Company.
g. Return of Company Property. The parties acknowledge and agree that
records, files, reports, manuals, handbooks, computer diskettes, computer
software, customer files and information, documents, equipment and the like,
relating to the Company's business or which are developed for or by the Company,
or which Executive shall develop, create, use, prepare or come into possession
of during his employment with the Company, shall remain the sole property of the
Company and Executive covenants to promptly deliver to the Company any and all
such property and any copies thereof no later than the termination of
Executive's employment with the Company.
h. Covenants. The Executive shall not be entitled to any Severance
Compensation or benefits for any period he is in violation of the Covenants in
Section 6.
5. Change of Control.
a. Change of Control. For purposes of this Agreement, "Change of
Control" shall mean (i) the merger or consolidation of the Company with any
other real estate investment trust, corporation or other business entity, in
which the Company is not the survivor (without respect to the legal structure of
the transaction), (ii) the transfer or sale of all or substantially all of the
assets of the Company other than to an affiliate or subsidiary of the Company,
(iii) the liquidation of the Company, or (iv) the acquisition by any person or
by a group of persons acting in concert, of more than 50% of the outstanding
voting securities of the Company, which results in the resignation or addition
of fifty percent (50%) or more members of the Board or the resignation or
addition of fifty percent (50%) or more independent members of the Board.
-5-
<PAGE>
b. Compensation Upon Termination. Following a Change in Control that
results in termination of the Executive's employment, the Executive shall be
entitled to the following benefits unless such termination is by the Executive
other than for "Good Reason" (as defined below):
(i) Compensation. The Company shall pay the Executive one
hundred fifty six (156) weeks of base salary at the rate in
effect at the time Notice of Termination is given, and the
equivalent of three years of annual incentive compensation
based upon the average annual incentive earned by the
Executive for the two calendar years prior to the effective
date of termination, plus all other amounts to which the
Executive is entitled under any compensation plan of the
Company.
(ii) Benefits. The Company shall provide the Executive with
life, disability, accident and health insurance coverage
(including any dependent coverage) substantially similar to
the coverage the Executive is receiving immediately prior
to the Notice of Termination, for a thirty six (36) month
period after the Executive's termination. Benefits
otherwise receivable by the Executive pursuant to this
subsection (ii) shall be reduced to the extent comparable
benefits are actually received by the Executive during the
thirty six (36) month period following termination, and any
such benefits actually received by the Executive shall be
reported to the Company.
(iii) Long-Term Incentive Compensation. All of the Executive's
outstanding options, stock appreciation rights and any
other awards in the nature of rights that may be exercised
shall become fully vested and immediately exercisable; all
restrictions on any outstanding other awards held by the
Executive (such as awards of restricted stock) shall lapse;
and the Executive's balance in any deferred compensation
plan or shareholder value plan shall become fully vested
and immediately payable; provided, however, that such
acceleration will not occur if, in the opinion of the
Company's accountants, such acceleration would preclude the
use of "pooling of interest" accounting treatment for a
Change of Control transaction that (a) would otherwise
qualify for such accounting treatment, and (b) is
contingent upon qualifying for such accounting treatment.
(iv) Timing. The Severance Payments shall be made no later than
the thirtieth (30th) business day following the effective
date of termination. However, if the amounts of the
Severance Payments cannot be finally determined on or
before such day, the Company shall pay to the Executive on
such day an estimate of the minimum amount of such payments
and shall pay the remainder of such payments as soon as the
amount thereof can be determined but in no event later than
the ninetieth (90th) day after the effective date of
termination.
-6-
<PAGE>
c. Limitation of Benefits.
(i) Notwithstanding anything in this Agreement to the contrary,
in the event it shall be determined that any benefit,
payment or distribution by the Company to or for the
benefit of Executive (whether payable or distributable
pursuant to the terms of this Agreement or otherwise)(such
benefits, payments or distributions are hereinafter
referred to as "Payments") would, if paid, be subject to
the excise tax (the "Excise Tax") imposed by Section 4999
of the Code, then the aggregate present value of the
Payments shall be reduced (but not below zero) to an amount
expressed in present value that maximizes the aggregate
present value of the Payments without causing the Payments
or any part thereof to be subject to the Excise Tax and
therefore nondeductible by the Company because of Section
280G of the Code (the "Reduced Amount"). For purposes of
this Section, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(ii) All determinations required to be made under this Section,
including whether an Excise Tax would otherwise be imposed,
whether the Payments shall be reduced, the amount of the
Reduced Amount, and the assumptions to be utilized in
arriving at such determinations, shall be made by Ernst &
Young, LLP or such other certified public accounting firm
acceptable to the Company, in its sole discretion (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and Executive within
fifteen (15) business days of the receipt of notice from
Executive that a Payment is due to be made, or such earlier
time as is requested by the Company. All fees and expenses
of the Accounting Firm shall be borne solely by the
Company. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Payments hereunder will
have been unnecessarily limited by this Section
("Underpayment"), consistent with the calculations required
to be made hereunder. The Accounting Firm shall determine
the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.
d. Good Reason. The Executive shall be entitled to terminate this
Agreement for Good Reason. For purposes of this Section 5, "Good Reason" shall
mean the occurrence, within two (2) years after a Change in Control, of any of
the following circumstances:
(i) the assignment to the Executive of any duties inconsistent
with the Executive's position and status as Chief Financial
Officer or a substantial adverse alteration in the nature
or status of the Executive's responsibilities from those in
effect immediately prior to the Change in Control;
-7-
<PAGE>
(ii) a ten percent (10%) or greater reduction by the Company in
the Executive's annual base salary as in effect on the date
hereof or as the same may be increased from time to time
except for across-the-board salary reductions affecting
senior executives of the Company and senior executives of
any person directly or indirectly in control of the
Company;
(iii) the Executive's relocation by the Company to a location not
within fifty miles of the Executive's present office or job
location;
(iv) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation, or to pay
to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the
Company, within thirty (30) days of the date such
compensation is due;
(v) the failure by the Company to continue in effect any annual
or long-term monetary incentive opportunity to which the
Executive was entitled, or any compensation plan in which
the Executive participates immediately prior to the Change
in Control which constitutes more than ten percent (10%) of
the Executive's total compensation; provided, however, that
the Company may modify the monetary incentive opportunities
so as to provide the Executive with the same or similar
monetary incentive opportunities;
the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement or a similar agreement satisfactory to the
Executive;
(vii) in the event the Executive terminates this Agreement for
Good Reason following a Change in Control as provided by
this Section 5, the Executive shall be entitled to the
compensation provided by Section 5(b), reduced by the
amount of compensation received by the Executive following
the Change in Control through the effective date of
termination.
e. Potential Change of Control. For purposes of this Agreement, a
"Potential Change in Control" shall be deemed to have occurred if (i) the
Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control; (ii) any person (including the Company)
publicly announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control; (iii) any person, who is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 9.5% or more of the combined voting power of the Company's
then outstanding securities increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by such person on the date
hereof; or (iv) the Board adopts a resolution to the effect that, for the
purposes of this Agreement, a Potential Change in Control has occurred. In the
event of a Potential Change in Control the Executive will remain in the employ
of the Company until the earliest of (x) a date which is six (6)
-8-
<PAGE>
months from the occurrence of such Potential Change in Control, or (y) the
occurrence of a Change in Control.
6. Confidentiality; Non-Competition and Non-Solicitation Covenants.
a. Basis for Covenants. The Executive acknowledges that i) he will be
employed as an executive officer in a managerial capacity; ii) his employment
with the Company gives him access to confidential and proprietary information
concerning the Company; iii) the agreements and covenants contained in this
Section 6 (the "Covenants") are essential to protect the business of the
Company; and iv) the Executive is to receive consideration pursuant to this
Agreement. Executive recognizes and acknowledges that the confidential
information described in Section 6(b) (the "Confidential Information") which he
will acquire in the course of his employment is utilized by the Company in all
geographic areas in which the Company does business. Further, the Confidential
Information will also be utilized in all geographic areas into which the Company
expands its business. Thus, Executive acknowledges that he will be a formidable
competitor in all areas where the Company conducts business. Executive also
acknowledges that the Covenants serve to protect the Company's investment in the
Confidential Information.
b. Confidentiality.
(i) The Executive acknowledges that he will be exposed to and
learn a substantial amount of information which is
proprietary and confidential to the Company, whether or not
he develops or creates such information. The Executive
acknowledges that such proprietary and confidential
information may include, but is not limited to, trade
secrets; acquisition or merger information; advertising and
promotional programs; resource or developmental projects;
plans or strategies for future business development;
financial or statistical data; customer information,
including, but not limited to, customer lists, sales
records, account records, sales and marketing programs,
pricing matters, and strategies and reports; and any
Company manuals, forms, techniques, and other business
procedures or methods, devices, computer software or
matters of any kind relating to or with respect to any
confidential program or projects of the Company, or any
other information of a similar nature made available to the
Executive and not known in the trade in which the Company
is engaged, which, if misused or disclosed, could adversely
affect the business or standing of the Company.
Confidential Information shall not include information that
is generally known or generally available to the public
through no fault of the Executive.
(ii) The Executive agrees that except as required by law, he
will not at any time divulge to any person, agency,
institution, company or other entity any information which
he knows or has reason to believe is proprietary or
confidential to the Company, including but not limited to
the types of information described in Section 6(b)(i), or
use such information to the
-9-
<PAGE>
competitive disadvantage of the Company. The Executive
agrees that his duties and obligations under this Section 6
will continue for 12 months from the termination of his
employment or as long as the Confidential Information
remains proprietary or confidential to the Company.
c. Non-Competition. During the period of the Executive's employment,
the Executive agrees that he will not, on behalf of anyone other than the
Company, engage in any managerial, executive, sales, or marketing activities
related to any business in which the Company is or becomes engaged during the
Executive's employment without the consent of the Board.
d. Non-Solicitation. The Executive agrees that for a twelve (12) month
period following the termination of his employment with the Company for any
reason (including the Executive's resignation), the Executive shall not,
directly or indirectly, hire or solicit any employee of the Company employed at
the time of his termination, or encourage any such employee to leave such
employment.
e. Scope of Covenants.
(i) Executive acknowledges that the Company intends to extend
business operations throughout the United States of
America. Therefore, for a period of twelve (12) months
after termination of Executive's employment for any reason
(including Executive's resignation), Executive agrees that
he shall not directly or indirectly carry on or participate
in the ownership of apartment communities of the same class
and quality of the communities owned by the Company that
directly competes with the Company anywhere within the
United States of America.
(ii) Independent of the preceding provision, Executive agrees
that he shall not, for a period of twelve (12) months after
termination of Executive's employment, directly or
indirectly carry on or participate in the ownership or
management of apartment communities of the same class and
quality of the apartment communities owned by the Company
that directly competes with the Company within any county
or city in which the Company conducts business.
(iii) These covenants shall not apply in the event the Executive
is terminated without cause, as a result of a Change of
Control, or by the Executive for Good Reason, which, for
the purposes of this subsection, shall mean any of the
reasons set forth in subsections 5(d)(i) to (iv).
f. Reasonableness of Covenants. The Executive agrees that the Covenants
are necessary for the reasonable and proper protection of the Company and that
the Covenants are reasonable in respect of subject matter, length of time, and
geographic
-10-
<PAGE>
scope. The Executive further acknowledges that the Covenants will not
unreasonably restrict him from earning a livelihood following the termination of
his employment with the Company.
g. Governing Law; Public Policy.
(i) The parties agree that it is not their intention to violate
any public policy or statutory or common law. The parties
intend that the provisions of this Agreement be enforced to
the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement
is sought. If any provision of this Agreement is found by a
court to be unenforceable, the parties authorize the court
to amend or modify the provision to make it enforceable in
the most restrictive fashion permitted by law.
(ii) The Executive and the Company are sophisticated parties and
fully understand (i) the ramifications of the
non-competition, non-solicitation and confidentiality
restrictions of this Agreement and (ii) that the laws of
each state with respect to the enforceability of such
provisions vary. The parties are specifically selecting the
internal laws of the Commonwealth of Virginia to govern
this Agreement in order that it be enforceable against all
of them.
h. Separate Agreement Upon Termination. The provisions of this Section
6 so far as they relate to the period after the end of the term of this
Agreement shall continue to have effect and shall operate as a separate
agreement between the Company and the Executive.
7. Successors and Assigns.
a. The Executive acknowledges and agrees that this Agreement is a
contract for his personal services, he is not entitled to assign, subcontract,
or transfer any of the obligations imposed or benefits provided under this
Agreement.
b. This Agreement shall be binding on and will inure to the benefit of
any successors or assigns of the Company.
8. Definitions. The following terms shall have the following meanings:
a. A "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and,
if appropriate, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provisions so indicated.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended.
-11-
<PAGE>
9. Miscellaneous.
a. Integration. This Agreement contains the complete agreement between
the Executive and the Company with respect to its subject matter. This Agreement
supersedes all previous and contemporaneous agreements, negotiations,
commitments, writings, and undertakings.
b. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Virginia, regardless of
choice of law rules. Any dispute arising between the parties related to or
involving this Agreement will be litigated in a court having jurisdiction in the
Commonwealth of Virginia.
c. Modifications. This Agreement may be modified or waived only by a
writing signed by both parties.
d. Waivers. Any waiver of a breach of this Agreement will not
constitute a waiver of any future breach, whether of a similar or dissimilar
nature.
e. Severability. The covenants in the various provisions of Section 6
are separate and independent contractual provisions. The invalidity or
unenforceability of any particular restrictive covenant or any other provision
of this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
WE AGREE TO THIS:
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By: _______________________________
Its: ________________________________
EXECUTIVE
- -----------------------------------
A. WILLIAM HAMILL
-12-
EXHIBIT 12
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
Three Months ended September 30, Nine Months ended September 30,
--------------------------------------- --------------------------------------
1999 1998 1999 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Income before extraordinary item $20,042 $13,807 $80,416 $66,071
Add:
Portion of rents representative
of the interest factor 306 155 795 401
Interest on indebtedness 39,014 27,224 116,011 75,784
================= ================= ================= =================
Earnings $59,362 $41,186 $197,222 $142,256
================= ================= ================= =================
Fixed charges and preferred stock dividend:
Interest on indebtedness $39,014 $27,224 $116,011 $75,784
Capitalized interest 1,074 910 4,259 2,223
Portion of rents representative
of the interest factor 306 155 795 401
----------------- ----------------- ----------------- -----------------
Fixed charges 40,394 28,289 121,065 78,408
----------------- ----------------- ----------------- -----------------
Add:
Preferred stock dividend 9,441 5,650 28,320 16,953
----------------- ----------------- ----------------- -----------------
Combined fixed charges and preferred
stock dividend $49,835 $33,939 $149,385 $95,361
================= ================= ================= =================
Ratio of earnings to fixed charges 1.47 x 1.46 x 1.63 x 1.81 x
Ratio of earnings to combined fixed charges
and preferred stock dividend 1.19 1.21 1.32 1.49
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 9,050
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 123,366
<PP&E> 3,972,805
<DEPRECIATION> 342,291
<TOTAL-ASSETS> 3,762,930
<CURRENT-LIABILITIES> 144,720
<BONDS> 2,177,071
0
430,000
<COMMON> 102,616
<OTHER-SE> 801,397
<TOTAL-LIABILITY-AND-EQUITY> 3,762,930
<SALES> 463,745
<TOTAL-REVENUES> 465,376
<CGS> 0
<TOTAL-COSTS> 185,865
<OTHER-EXPENSES> 110,649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116,011
<INCOME-PRETAX> 80,416
<INCOME-TAX> 0
<INCOME-CONTINUING> 80,416
<DISCONTINUED> 0
<EXTRAORDINARY> 343
<CHANGES> 0
<NET-INCOME> 80,759
<EPS-BASIC> .50
<EPS-DILUTED> .50
</TABLE>
